On 19 September 2024, the Property Law Act 2023 (Qld) (PLA 2023) was proclaimed. While the legislation was passed back in November 2023, commencement was delayed in order to give the property sector adequate time to become familiar with the new Act. The proclamation sets the commencement date for the Act and Regulations as 1 August 2025.
Deeds to be subject to a 6 year limitation period
As well as replacing the former Property Law Act 1974 (Qld) with a simplified and modernised piece of legislation, the PLA 2023 also makes a number of small amendments to other legislation. One amendment, which will impact the construction and infrastructure industry, is a modification to the Limitation of Actions Act 1974 (Qld).
Section 10 of the Limitation of Actions Act 1974 (Qld) has long provided that an action on a deed must be brought within 12 years of the cause of action arising. The PLA 2023 reduces that period to 6 years, aligning it with the limitation period for actions under a contract and creating an inconsistency with the otherwise largely uniform 12 (and in some cases, 15) year limitation period for deeds nationally. Some other jurisdictions also have construction specific limitation periods. For example, the 10 year long stop period imposed by section 6.20 of the Environmental Planning and Assessment Act 1979 (NSW) for defective building work. A transitional provision specifies that the new limitation period applies to deeds made after the commencement of the PLA 2023 (i.e. after 1 August 2025), so deeds made before that date will remain subject to the 12 year limitation period.
Variations to a deed
It is not entirely clear what limitation period will apply where a deed made before the PLA 2023 is varied after the commencement date of 1 August 2025. The September 2022 Consultation Draft Property Law Bill included a drafting note stating that the Bill would include a transitional provision to provide that a variation of a deed subject to the 12 year limitation period would not change the limitation period for the deed. That transitional provision was not included in the final version of the PLA 2023, which is silent on the treatment of variations to pre-commencement deeds.
No usual limitation period for specific performance of a deed
The PLA 2023 has also introduced another small change to further align deeds with contracts. Claims for 'specific performance' of a contract (being a legal action to compel a party to perform its contractual obligations) are excluded from the usual limitation periods for contracts, and the PLA 2023 extends this exception to include claims for specific performance of a deed.
Why do parties seek a longer limitation period?
It has been common in Queensland, particularly on more significant or higher risk projects, for principals to seek to execute construction contracts as deeds, in order to have the benefit of the longer limitation period (for example for claims relating to defective works). This reduces the risk of legal rights being lost by the passing of time, and gives them more time to assess and consider their rights before commencing court proceedings. Contractors and subcontractors will typically seek to limit their period of exposure, and may resist attempts to seek longer limitation periods.
What if you still want a longer limitation period?
For long term and high value or high risk projects, parties may wish to agree a 12 year limitation period (or some other period longer than 6 years). Following the High Court case of Price v Spoor (2021) 270 CLR 40, the law is now clear that parties may 'contract out' of certain statutory limitation periods and agree longer limitation periods in some circumstances. Legal advice should be sought as to your circumstances and how best to do this.
Should you wish to discuss how this new Act will affect your business and how to plan for and mitigate associated risks, please contact us.
