In construction disputes, allocating responsibility amongst multiple parties can give rise to complex legal proceedings. In many cases, a defendant may seek to bring a contribution claim against a third party, in the same proceedings or after judgment has been entered in the primary proceedings. As the issues crystallise and assessments regarding liability evolve, and the parties grapple with the procedural twists and turns in the judicial or arbitral system, time ticks on and the issue of when a limitation period starts and ends for contribution claims is of considerable importance.

This article is intended as a quick reference guide to help those in the industry navigate limitation periods, including for commencing contribution claims against joint tortfeasors.

For more information on whether parties can contract out of limitation periods, please read our article, here.

Legal framework

A limitation period is a statutory period within which a claim must be initiated. Once this period expires, a party loses the right to bring a claim (in the absence of a Court order extending time).

Each jurisdiction in Australia has its own legal framework for limitation periods, primarily governed by the respective statutes of limitation, but also other acts. A handy summary for more common causes of action in construction disputes is provided at the end of this article.

Limitation periods and contribution proceedings

Contribution proceedings refer to claims, typically, initiated by a defendant to share the burden with other wrongdoers (who have not been sued by the plaintiff in the primary proceedings for the same loss), where the defendant seeks to recover a portion of the liability from another party, alleging the other party shares responsibility for the loss or damage. Contribution can be sought in the same proceedings or, by design or necessity, after judgment has been entered in the primary proceedings.

In construction law, contribution claims are complicated, but in very simple terms they may arise in situations involving:

1. subcontractors who have contributed to the loss for which the contractor is being sued or has been found liable; or
2. contractors and consultants who have each contributed to the loss suffered by the plaintiff but only one is set to bear the burden.

The defendant bearing the burden would want to recover a portion of the liability from one or more of the others who have contributed to the plaintiff’s loss. The question then becomes whether the limitation period for initiating such contribution claims mirrors the primary claim, or if a fresh limitation period is triggered and if so, when?

Generally, claims for contribution that arise in contract and quasi-contract are subject to the limitation periods legislated in respect of those types of claims, eg in WA, six years from the date of the breach (or 12 years if its subject to a deed). Claims for contribution or indemnity between joint tortfeasors however enjoy a more generous limitation period in most states.

Where a defendant is being sued, or has been found liable, for tortious or contractual breaches of duty of care in WA, it is possible to commence separate contribution proceedings against joint tortfeasors after the primary proceedings have concluded,¹ which pursuant to s17 of the Limitation Act 2005 (WA), must be done within two years of the date of judgment or agreement in the primary dispute fixing the amount of liability (being the date the cause of action accrued).

In the ACT, the period is more generous, being the sooner of:

1. 4 years after the expiry of the original six-year limitation period; and
2. 2 years after judgment or settlement in the primary proceedings.

There are similar provisions in NSW, NT and Qld and slightly less generous (albeit extended) periods in SA, Tas and Vic.

Provisions fixing the limitation periods for contribution claims should be interpreted by reference to the limitation period for the primary cause of action (as extended by any Court order).²

Actions after limitation period has expired

Where a limitation period has expired and a party still wishes to make a contribution claim, a Court order is required. Such orders may be granted where the Court considers it ‘just and reasonable’ to do so,³ including on the basis of:

• fraudulent concealment of the relevant facts;
• discovery of new facts after the limitation period has expired;
• mistake or lack of knowledge about the identity of the correct defendant or the nature of the claim; and
• equitable consideration where strict adherence to the limitation period would result in an unjust outcome.

In Australia, the ability to extend limitation periods for making claims for contribution depends on the state or territory in which the claim is brought and the specific statutory provisions under which it is governed. Generally, parties seeking contribution after a primary judgment outside of the applicable limitation period can request an extension of time, provided they were unaware of the other party’s potential liability or were unable to act sooner due to new information arising after the primary action.

Parties involved in construction disputes should seek legal advice at an early stage to ensure they comply with the relevant limitation periods and do not risk losing their right to bring a contribution claim.

Summary of limitation periods relevant to construction disputes

This article was written by Natasha Breach, Partner and Elizabeth Lester, Law Graduate.

¹ Law Reform (Contributory Negligence and Tortfeasors’ Contribution) Act 1947 (WA) s7.

² See AT v Lyons; BG v Lyons (2005) 195 FLR 194 [8].

³ Limitations of Actions Act 1958 (VIC) s23; Limitation Act 1974 (Tas) s26; Limitation of Actions Act 1974 (Qld) s29; Limitation of Actions Act 1936 (SA) s47; Limitation Act 1981 (NT) s44; Limitation Act 2005 (WA) s11.