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Limitation Defences in Civil Proceedings

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Limitation Defences in Civil Proceedings Report No 6 Limitation Defences in Civil Proceedings Other Law Commission publications: Report series NZLC R1 Imperial Legislation in Force in New Zealand (1987) NZLC R2 Annual Reports for the years ended 31 March 1986 and 31 March 1987 (1987) NZLC R3 The Accident Compensation Scheme (Interim Report on Aspects of Funding) (1987) NZLC R4 Personal Injury: Prevention and Recovery (Report on the Accident Compensation Scheme) (1988) NZLC R5 Annual Report 1988 (1988) Preliminary Paper series NZLC PP1 Legislation and its Interpretation: The Acts Interpretation Act 1924 and Related Legislation (discussion paper and questionnaire) (1987) NZLC PP2 The Accident Compensation Scheme (discussion paper) (1987) NZLC PP3 The Limitation Act 1950 (discussion paper) (1987) NZLC PP4 The Structure of the Courts (discussion paper) (1987) NZLC PP5 Company Law (discussion paper) (1987) NZLC PP6 Reform of Personal Property Security Law (report by J H Farrar and M A O'Regan) (1988) NZLC PP7 Arbitration (discussion paper) (1988) E.31C Report No. 6 Limitation Defences in Civil Proceedings October, 1988 Wellington, New Zealand The Law Commission was established by the Law Commission Act 1985 to promote the systematic review, reform and development of the law of New Zealand. It is also to advise on ways in which the law can be made as understandable and accessible as practicable. The Commissioners are: The Rt Hon. Sir Owen Woodhouse KBE DSC - President Jim Cameron CMG Sian Elias QC Jack Hodder Sir Kenneth Keith KBE Margaret A. Wilson The Director of the Law Commission is Alison Quentin-Baxter. The offices of the Law Commission are at Fletcher Challenge House, 87-91 The Terrace, Wellington. Telephone (04) 473 3454, Facsimile (04) 471 0959. Postal address: PO Box 2590, Wellington, New Zealand. Report/Law Commission, Wellington, 1988 ISSN 0113-2334 This Report may be cited as: NZLC R6 Also published as Parliamentary Paper E 31C CONTENTS Para. Page Letter of transmittal vii Summary of recommendations viii I INTRODUCTION 1 Approach to review 5 2 Stages in the review 9 3 Scope of topic 11 4 Overseas law reform 16 5 Some definitions 18 5 II HISTORY OF THE 1950 ACT 7 Ancient laws 20 7 English statutes 21 7 The Wright Report 1936 The English Act of 1939 29 9 New Zealand legislation 32 10 III THE PRESENT LAW 12 The 1950 New Zealand Act 41 12 Accrual of cause of action 42 13 The limitation p[periods 44 13 Extensions of limitation periods 49 15 Matters outside the Act 50 15 Pleading requirements 51 16 Equitable rules 54 17 Particular statutes 58 18 IV LIMITATIONS AND LATENT DEFECTS 20 Personal injury 63 20 Building cases 69 22 Professional advice 84 28 The Latent Damage Act 1986 (U.K.) 90 31 The Alberta proposals 98 33 The Court of Appeal:Askin v Knox 99 34 V THE NEED FOR A GENERAL STATUTE 36 The purposes of limitations statutes 1091 36 The insurance factor 108 40 The repeal option 111 41 The Maori dimension 113 43 The status quo option 116 44 Principles for a new statute 121 45 The judicial discretion option 123 46 VI A SHORTER STANDARD IMITATION PERIOD 48 Preliminary 130 49 The six year period 133 49 Shorter periods: personal injury 137 51 A shorter period: other developments 143 52 The Alberta reform proposals 154 55 Arguments against change 158 57 The Law Commission's approach 164 60 Related matters 167 61 VII EXTENSION OF THE STANDARD PERIOD - ABSENCE OF KNOWLEDGE 64 Lack of knowledge 179 65 ``Knowledge'' 184 66 Overseas models 184 66 Constructive knowledge 189 68 Subjects of knowledge 201 71 Successor owners 216 75 Succession on death 226 78 third parties, conversion, title 230 79 VIII EXTENSION OF THE STANDARD PERIOD - DISABILITY, INFANCY 81 Limitation Act 1950 238 82 Scotland 242 83 New South Wales 244 83 Canadian jurisdictions 249 84 The Law Commission's view 254 85 IX EXTENSION OF THE STANDARD PERIOD - AGREEMENT, ACKNOWLEDGEMENT, ALTERNATIVE FORUM 88 Agreement 263 88 Acknowledgement 268 90 Alternative forum 275 92 X THE ``LONG STOP'' LIMITATION PERIOD 94 The insurance factor 286 95 Personal injury cases 292 97 Length of the long stop 295 98 Deliberate concealment 303 101 Trusts - fraud, conversion 304 101 Infants 307 102 Extinction of rights 308 102 XI THE SCOPE OF ANEW STATUTE - GENERAL 104 Claims made to other bodies 319 106 Self-help remedies 321 107 Enforcement of judgements 326 108 Declaratory proceedings 330 110 Judicial review 334 111 Equitable relief 335 112 Admiralty 338 12 XII THE SCOPE OF A NEW STATUTE - MATTERS RELATING TO LAND, CHARGES 114 Two land title systems 341 114 Adverse possession - common law 344 115 Adverse possession - Land Transfer Act 348 117 Other limits on application of 1950 Act 353 118 Options for reform 355 120 Abolition of adverse possession 359 120 Mortgages, charges 363 122 XIII STATUTES WITH THEIR OWN LIMITATION REGIMES; CONSEQUENTIAL AMENDMENTS; TRANSITIONAL PROVISIONS 124 Judgements 369 124 Land, leases, rates 371 125 Transport 376 126 Estates, probate 377 127 Claims after death 379 127 Family law 380 127 Taxation, customs 382 128 Wages recovery 387 129 Fair trading 388 129 Special Crown defences 389 130 Intellectual property 390 130 The Cook Islands and Niue 391 130 Minor consequential changes 392 131 Commencement, transitional provisions 393 131 XIV PROCEDURAL QUESTIONS 134 Pleading of defences 403 134 Directions as to service 406 135 Summary determination 408 136 Complex proceedings 410 137 The present law 414 138 Overseas reforms, proposals 415 139 An example 423 142 Conclusions 430 144 XV A (DRAFT) LIMITATION DEFENCES ACT 146 Drafting format 436 146 Particular changes 438 147 Other changes considered 439 148 Drafting style 441 148 Limitation Defences Act () 150 Contents 150 Part 1 Purpose and Application 152 Part 2 Limitation Defences 1154 Part 3 Matters Related to the Limitation Defences 160 Part 4 Interpretation 162 Part 5 Transitional and Consequential Provisions 165 APPENDICES A List of conclusions and recommendations 181 B Consultative activities, acknowledgements 193 C Selected bibliography 197 D Limitation Act 1950 (N.Z.) 199 E Other N.Z. statutory limitation provisions 225 F Latent Damage Act 1986 (U.K.) 227 G Alberta ILRR (draft) Limitations Bill 233 H British Columbia Limitations Act 1975 241 INDEX 250 31 October 1988 Dear Minister I am pleased to submit to you the sixth report of the Law commission, on Limitation Defences in Civil Proceedings. The report follows your request on 1 October 1986 that we examine the Limitation At 1950 and make recommendations on what, if any, changes are need to it. Our principal recommendation is that the 1950 Act be repealed and replaced with a new Limitation Defences Act of wide application and with three central features - * a defence based on a standard limitation period of three years; * extension of the three year period in certain circumstances, in particular where a claimant shows absence of knowledge of essential facts relevant to the claim; * a further defence based on a ``long stop'' limitation period of `5 years. A draft Bill which would give effect to our recommendations maybe found in Chapter XV of the report. In addition to setting out our recommendations with precision, the draft Bill offers an example of ways in which the format and style of legislation might be improved to make it more accessible. Yours sincerely Owen Woodhouse President The Right Honourable Geoffrey Palmer, MP Deputy Prime Minister and Minister of Justice SUMMARY OF RECOMMENDATIONS The central recommendations in this report are outlined in the paragraphs below. A full list of our recommendations may be found in Appendix A, and they appear in legislative form in the draft Bill contained in Chapter XV. 1 There should continue to be a statute of general application which effectively imposes limits on the time within which a claimant may commence civil proceedings against a defendant. 2 The Limitation Act 1950 should be repealed and replaced with a new statute of wide application and having three central features - (a) a defence based on a standard three year limitation period, but subject to (b) extensions in certain specified circumstances, in particular where the claimant shows absence of knowledge of essential facts relevant to the claim, but generally subject to (c) a further defence based on a ``long stop'' limitation period of 15 years. 3 The new statute should be called the Limitation Defences Act, should not extinguish rights of action or title to property, and, subject to specialist scrutiny by Parliamentary Counsel, should follow the draft contained in Chapter XV of this report. 4 The standard limitation defence should protect a defendant who asserts and proves it against any claim based on an act or omission which preceded by three years or more the service on the defendant of the proceedings; this should be subject to provisions relating to extension of three year period and to ancillary claims. 5 The standard limitation period should be extended where there has been - (a) absence of knowledge of essential facts; (b) infancy (being under the age of 18 years); (c) incapacity by reason of physical or mental condition, restraint of the person, or warlike conditions; (d) agreement between the parties; (e) acknowledgement or part-payment; (f) reference of the claim to the Ombudsmen, the statutory agencies empowered to seek resolution of disputes, or to the wrong court, or to an arbitration which is set aside. 6 Extensions of the standard limitation period should be proved by the party relying on them, should be permitted to operate cumulatively (provided overlapping periods of time are not counted twice), and should not operate to the detriment of a bona fide purchaser for value.
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