Adam Wallwork and Alice Mason

Can contractual time bars preclude misleading conduct claims?

Adam Wallwork and Alice Mason

13 June, 2018

Building and construction contracts

The recent Supreme Court of Victoria decision of His Honour Justice Riordan in Brighton Australia Pty Ltd v Multiplex Constructions Pty Ltd [2018] VSC 246 (Brighton v Multiplex) has cast doubt on the enforceability of contractual provisions imposing a time limit on statutory claims under section 18 of the Australian Consumer Law (ACL).

Background

The case concerned plasterwork subcontracts at 700 Bourke Street, Docklands, Victoria.

The Plaintiff (Brighton), a plastering subcontractor, alleged that the Defendant (Multiplex) was guilty of misleading and deceptive conduct in contravention of section 18 of the ACL by providing representations in its Tender Documentation and Construction Program in relation to the timing and sequencing of work on the project which were not current or correct. The Plaintiff alleged that it relied on these representations when it priced the work.

Multiplex argued, among other things, that clause 46.1 of the Subcontracts required Brighton to give a prescribed notice of any claim within 7 days and failure to give a compliant notice within 7 days meant that the claim would be “absolutely barred” pursuant to clause 46.3 of the Subcontracts.

The case was referred to a Special Referee for determination. Richard Manly QC was appointed as the Special Referee and in his opinion published 1 December 2017 he found that the Plaintiff had not made out its case under section 18 of the ACL. In particular, he found that Brighton was precluded from bringing its claim for misleading and deceptive conduct under the ACL because it failed to provide Multiplex with a prescribed notice of its claim within the 7 day period.

 The Decision of His Honour Justice Riordan

While Brighton was unsuccessful in its opposition to the adoption of the Special Referee’s opinion, Justice Riordan did find that Richard Manly QC did fall into legal error in finding that clause 46.3 was effective to exclude liability under section 18 of the ACL.

Justice Riordan held that a contractual provision that had the effect of excluding liability for damages for misleading and deceptive conduct under the ACL where the claimant failed to give notice of its claim within a prescribed time was unenforceable on the basis that the contractual time limitation was contrary to the purpose of the statutory provisions and public policy.

Justice Riordan held that while the 6 year limitation period in which a claimant can bring a claim for misleading and deceptive conduct under the ACL was procedural, an attempt to restrict a statutory remedy by limiting the time in which an action can be brought is “an unacceptable interference with the public policy underpinning ” the ACL. In coming to this decision, Justice Riordan found that the clause was void for illegality because:

  • The ACL embraces public rather than private rights; and
  • The legislative purpose would not be fulfilled if the Court enforced private contractual arrangements.

In that regard, His Honour stated that it is not consistent with the public purpose of the ACL to leave claimants uncertain about whether the Courts, on a case-by-case basis, will determine contractual time bars to be so unreasonable as to be unenforceable.

Looking ahead

This decision is in contrast to several decisions of the Supreme Court of New South Wales which have found that a contractual time limit is enforceable in respect of claims arising under the Trade Practices Act (the predecessor to the ACL) as such a clause merely regulates, not excludes, its operation (see the decisions in Owners SP 62930 v Kell & Rigby Pty Ltd [2009] NSWSC 1342, Lane Cove Council v Michael Davies & Associates [2012] NSWSC 727 and Firstmac Fiduciary Services Pty Ltd v HSBC Bank of Australia Ltd [2012] NSWSC 1122).

We can expect that the issue will be tested again in NSW and there is a distinct possibility that the courts in the other states will follow Justice Riordan’s decision in Brighton v Multiplex.

Summary

Many construction contracts and long-term services agreements contain provisions that require a claim to be brought within a specific time period or be barred. This decision has significant consequences for existing and future contracts as it suggests a time bar does not necessarily preclude a claimant from bringing a later claim for misleading or deceptive conduct.