Key changes to limitations for civil claims

Monday 13 March, 2017

Limitation regimes are designed to protect defendants from stale claims. Claims that are brought many years after the relevant events are problematic for defendants (and their insurers), who may no longer have access to the evidence and witnesses they need to adequately defend themselves.

From 1 January 2011 the Limitation Act 2010 replaced the Limitation Act 1950. For acts or omissions which took place prior to 1 January 2011, the 1950 Act applies. For acts or omissions after 1 January 2011, the 2010 Act applies. As six years has passed since the 2010 Act came into force, we are likely to start seeing cases come before the Courts under this Act.

The 2010 Act endeavours to provide clearer rules. The concept of “reasonable discoverability”, which Councils will be familiar with in relation to building claims, has been removed. This has been replaced with a “late knowledge period” – see below. The 2010 Act also aims to address the unfairness that results from a limitation period ending before a claimant knows something is wrong.

New terminology

• There are now claims rather than actions.
• Money claims are claims for damages or monetary relief.
• A claim’s primary period is the timeframe in which a claim must be brought.
• If a claimant has late knowledge of a claim, they have an extra three years to bring the claim. This is called a late knowledge period and begins on the date that knowledge of the relevant facts is gained or is reasonably ought to have been gained.
• Irrespective of the type of claim, start date or late knowledge period, all claims will expire 15 years after the occurrence of the action or omission, known as a longstop period.

Major features of the 2010 Act

• The majority of claims still have a six-year limitation period, including claims in contract, tort and recovery of rent arrears or damages.
• A key change is that the limitation period for claims under deeds, claims to recover interest on a judgment debt, and actions to enforce a judgment debt have been reduced from 12 years to six years.
• With money claims, the limitation period starts to run on the date of the act or omission on which the claim is based.
• Other types of claims have specific start dates for their limitation periods. For example, in claims for rent arrears, the limitation period starts to run on the date the interest, rent or arrears become payable.
• Parties can elect to contract out of the 2010 Act. When negotiating a contract, you can agree on a shorter or longer limitation period. Or, if a dispute has arisen and you are in settlement negotiations, both parties can agree to extend an impending limitation deadline, to avoid having to file proceedings before the limitation period expires.

The 2010 Act is the main piece of legislation in New Zealand dealing with limitation periods. However, there are several other statutes which contain their own limitation periods that take precedent over the general limitation periods in the 2010 Act. For example, under the Employment Relations Act 2000 an employee only has 90 days to bring a personal grievance.

As always, there are exceptions to the rules under the 2010 Act. If you are negotiating a contract where it would be beneficial to shorten or extend a limitation period, or you are involved in an issue where you may end up bringing or defending a claim, we recommend you seek specialist legal advice on the Limitation Act at the earliest opportunity.