Never having commented here before, I hope I don't make a fool of myself.
When considering a contract opting out of a statutory rule, my instinct is to start by determining whether the relevant rule is procedural or substantive. In Canada (which is the law that I know best), limitations periods are substantive: Tolofson v Jensen, [1994] 3 SCR 1022.
If limitations periods are substantive, then the next step is to decide whether the rule is mandatory. If it's not mandatory, then the rule can be opted out of via a choice of law clause in a contract. If a rule can be opted out of via a choice of law clause, then I'm not sure I see a good reason to say the rule cannot be opted out of directly.
To continue with Canadian law, in Ontario, limitations periods are generally mandatory (Limitations Act 2002, s 22). Alberta's a little more confusing. Section 7 of their Act (Limitations Act, RSA 2000, c L-12) expressly permits contracting to extend a limitations period (but not to shorten it), but s 12(1) make the Alberta limitations mandatory from a choice of laws perspective except for shortening it. The only way I can make sense of this is to say s 7 was meant to refer to contracts after the cause of action arises, but not before -- and the legislative history also supports this idea that s 7 was directed at "settlement negotiations" or "if a creditor wishes to allow a debtor additional time for payment" (ALRI, 1989, "Limitations, Final Report 55", 42).
Applying this to the actual case gets more complex, because the characterization of whether limitations periods are substantive or procedural depends on the jurisdiction. In Queensland, as I understand it, the limitations periods of "another State, a Territory or New Zealand is treated as a substantive law" (Choice of Law (Limitation Periods) Act 1996). Moreover, Queensland's Limitation of Actions Act explicitly states it is substantive (s 43a). These rules were enacted after McKain v. R W Miller & Company (South Australia) Pty. Limited (1991) 174 CLR 1, declared the common law position was that limitations periods were procedural (Explanatory note). This then raises a troubling question of what happens to claims under a truly foreign law?
One option is to treat the foreign limitations law as substantive as well, so that it applies. This is a bad option, because it would seem to contradict the enumeration of specific jurisdictions wherein Queensland wants to treat the limitations period as substantive law. There would be no point in listing "another State, a Territory or New Zealand" if Queensland meant the limitations periods of all jurisdictions to be treated as substantive law.
That suggests the second option: that the common law rule from McKain persist and makes the foreign limitations law as procedural, so it doesn't apply in a Queensland court. Since Queensland limitations law is substantive (Limitation of Actions Act, s 43A), the Queensland law then only applies if it's mandatory. If the Queensland law is not mandatory, no limitation period would apply, which would be absurd. This suggests the Queensland law should be treated as mandatory.
As far as I can tell, treating Queensland law as mandatory would not be in disharmony with the choice of law rules for the enumerated jurisdictions. It would simply mean that the lesser / more restrictive limitation period, as between Queensland and one of the enumerated jurisdictions, applies.
In sum:
If the HCA is right, and Queensland limitations periods can be contracted out of, then they are not mandatory law for conflict of laws purposes. Since foreign limitations periods are procedural but Queensland law is, by statute, substantive, this creates, I think, the unfortunate result that no limitation period would apply to claims under foreign law brought in Queensland.
Peter
On 2021-06-23 12:09 p.m., Larissa Katz wrote:
Why not think of this in terms of estoppel (rather than waiver of statutory rights)? I am not sure that the limitation act strictly speaking accords the defendant's rights (vs a power to plead the act and so to bar the plaintiff's claim), that can be waived.
Estoppel is maybe a tidier solution. The court can simply refuse to "hear" the defendant raise the fact that the limitation period had expired (because the defendant and the plaintiff have stipulated that, as between them, that time never runs out).
On Wed, Jun 23, 2021 at 12:15 AM Robert Stevens <robert.stevens@law.ox.ac.uk> wrote:
No, because a Limitation Act when applied bars the court order (ie not the substantive underlying right). So, a court shouldn't grant an injunction so as to allow a court order that the Act says the defendant has the power to stop being made. Damages doesn't do violence to the Act in the same way.
The more I think about it, the more dramatic the High Court's reasoning would be if we applied it to other statutory rights that, hitherto, we have not thought could be contracted out of.
From: William Swadling <william.swadling@law.ox.ac.uk>
Sent: 23 June 2021 07:54
To: Robert Stevens <robert.stevens@law.ox.ac.uk>; Tettenborn A.M. <a.m.tettenborn@swansea.ac.uk>; Neil Foster <neil.foster@newcastle.edu.au>; obligations@uwo.ca <obligations@uwo.ca>
Subject: RE: ODG: HCA on waiver of limitation period in mortgage contractBut not an injunction?
Bill
From: Robert Stevens <robert.stevens@law.ox.ac.uk>
Sent: 23 June 2021 07:53
To: Tettenborn A.M. <a.m.tettenborn@swansea.ac.uk>; Neil Foster <neil.foster@newcastle.edu.au>; obligations@uwo.ca
Subject: Re: ODG: HCA on waiver of limitation period in mortgage contract
[I should have added that my view is that you should get damages for breach if the other side invokes the Act.]
From: Robert Stevens <robert.stevens@law.ox.ac.uk>
Sent: 23 June 2021 07:51
To: Tettenborn A.M. <a.m.tettenborn@swansea.ac.uk>; Neil Foster <neil.foster@newcastle.edu.au>; obligations@uwo.ca <obligations@uwo.ca>
Subject: Re: ODG: HCA on waiver of limitation period in mortgage contract
I'd see this as solely a matter of statutory construction.
Does the Limitation Act expressly or by implication permit that the rule it sets down may be contracted out of?
No.
There is a large difference between parties to proceedings deciding, at the time, not to plead or rely upon a statutory (or common law) right, and their agreeing in advance not to do so. The mere fact that the Act creates a defence that must be pleaded by the defendant doesn't answer the construction point any differently.
Does that mean that the contract between the parties not to apply the limitation period is a nullity? Which is again a matter of statutory construction, and again the answer is no.
So, for myself, I think the old English authorities saying that are right. And now, the High Court will have to work out which cases (like Neil's employment contract example) are ones where the "public policy" of the statute is weighty enough so as not to permit contracting out.
R
From: Tettenborn A.M. <a.m.tettenborn@swansea.ac.uk>
Sent: 23 June 2021 06:00
To: Neil Foster <neil.foster@newcastle.edu.au>; obligations@uwo.ca <obligations@uwo.ca>
Subject: Re: ODG: HCA on waiver of limitation period in mortgage contract
My instinct would be for some ststutory longstop here, say 50 years. It must be contrary to public policy to have courts clogged up with ancient history.
On June 23, 2021 3:37:32 AM Neil Foster <neil.foster@newcastle.edu.au> wrote:
Dear Colleagues;
While contract law is not my area, I thought the decision of the High Court of Australia today in Price v Spoor [2021] HCA 20
(23 June 2021) https://eresources.hcourt.gov.au/downloadPdf/2021/HCA/20 might be of interest. The 5-member bench (KIEFEL CJ, GAGELER, GORDON, EDELMAN AND STEWARD JJ) agree that a contractual waiver of the right to rely on limitations legislation is valid (not contrary to public policy) and in this case enforceable, meaning that an assignee of a mortgagee could sue on a mortgage debt (and for possession of land) despite the original debt having been due some 17 years before the action was commenced.
The argument that the clause was unenforceable was based on the general proposition that limitations provisions are in the “public interest”. While conceding this was true, the members of the court said the fact the such laws have always been able to be waived at trial by a defendant, pointed to the fact that they could be waived beforehand in a contractual provision. There were three separate judgements (Kiefel CJ & Edelman J; Gageler & Gordon JJ; and Steward J) coming to the same view, and on a quick read I didn’t see any major differences. K & E do spend some time noting the comments of Mason CJ in The Commonwealth v Verwayen (1990) 170 CLR 394 on the general issue of whether statutory rights can be waived, at [15]:
“whether a statutory right is capable of waiver, or abandonment by other means, is not whether the provisions in question are beneficial to the public, but rather whether they are "not for the benefit of any individuals or body of individuals, but for considerations of State”. The "critical question", he said, "is whether the benefit is personal or private or whether it rests upon public policy or expediency".
They note that these comments were not essential for resolution of the issues in Verwayen but say at [18] that:
“what was said by Mason CJ in Verwayen on the subject was no "mere passing remark, or a statement or assumption on some matter that has not been argued". It was a considered judgment on a point argued by the parties, one which fulfils Sir Robert Megarry's description as having "a weight nearer" to ratio decidendi than an obiter dictum.”
I then expected a footnote to Farah v Say-Dee or similar cases reminding lower courts that they should follow “seriously considered dicta” of the High Court, but there was none. Interestingly Steward J did not rely on the “weighty dicta” from Verwayen, but did note a number of earlier English and Australian cases where limitations provisions had been waived by contract (see [89]-]95]).
On the wider question, the judgments generally accept that there are some cases where a contractual provision waiving rights could be invalid. For example, it would seem pretty clear to me that if any employer was foolish enough to include a clause in an employment contract saying that “the employee will not sue for any acts of racial discrimination”, that such a clause would be unenforceable. But as to the limits of this doctrine, probably not much more could be said than the quote from Mason CJ noted above.
Regards
Neil
NEIL FOSTER
Associate Professor, Newcastle Law School
College of Human and Social Futures
T: +61 2 49217430
E: neil.foster@newcastle.edu.au
Further details: http://www.newcastle.edu.au/profile/neil-foster
My publications: http://works.bepress.com/neil_foster/ , http://ssrn.com/author=504828
Blog: https://lawandreligionaustralia.blog
The University of Newcastle
Hunter St & Auckland St, Newcastle NSW 2300
Top 200 University in the world by QS World University Rankings 2021
I acknowledge the Traditional Custodians of the land in which the University resides and pay my respect to Elders past, present and emerging.
I extend this acknowledgement to the Worimi and Awabakal people of the land in which the Newcastle City campus resides and which I work.CRICOS Provider 00109J
-- Peter Wills Harvard Law School / King's College, University of Cambridge JD / LLM Class of 2017 pwills@jd17.law.harvard.edu