Hon Christopher Finlayson

Hon CHRISTOPHER FINLAYSON (Attorney-General) : I move, That the Limitation Bill be now read a second time. This bill was introduced in June 2009 to replace the 1950 Act that, as I noted last year, is creaky, outmoded, and long overdue for replacement. So this is indeed an exciting day for all of us because today we move a step closer to replacing the 1950 Act with a modern, clear, and comprehensive statute that will set out the general rules for determining the limitation periods for civil claims. Our rules are based on the United Kingdom limitation rules, which have been described as a “ghastly network of unreformed legal fossils impervious to natural understanding and intelligence”.

Simon Bridges: Like the Labour caucus.

Hon CHRISTOPHER FINLAYSON: Some people may say that is the Labour caucus, but I am an issues politician and I do not like getting into personalities. The current labyrinth of rules can perplex even the most diligent lawyers. This bill will make them easier to understand and to apply. Important reforms are also introduced to avoid the sometimes harsh consequences of the current legislation. This bill implements the Law Commission’s recommendations following its review of the law of limitation defences in 2007. The Law Commission also carried out two earlier reviews in 1988 and 2000. The Law Commission recommended a new Act to simplify and improve the current rules. This bill clarifies the claims affected by limitation provisions, more clearly defines the commencement of limitation periods and the exceptions or modifications to those periods, and addresses the current unfairness in the law that a limitation period may end before a claimant knows that something is wrong.

The bill was referred for consideration in June last year to the Justice and Electoral Committee, which is chaired by that excellent MP for Whanganui, Chester Borrows. The committee has now completed a thorough examination of the bill and has recommended that it be passed with some further improvements and some clarifying amendments. I thank the committee for its work on the bill and for its helpful recommendations. The bill contains some complex rules, and the committee’s amendments are consistent with the bill’s purpose, which is to modernise and simplify the current legislation to make it more accessible.

The bill contains 60 clauses, and the committee’s recommended changes will affect approximately 18 of those clauses. The committee has also recommended inserting three new clauses in the bill. Many of the changes are of a technical nature to clarify the meaning or the scope of provisions. However, some changes are more substantive and are designed to address some problems raised in submissions or identified independently by the committee.

Clause 16 is a very significant provision. It gives the court the discretion to allow monetary relief in claims arising out of the sexual abuse of minors, even though a limitation defence could be established. The committee has recommended extending the court’s discretion to cover claims of physical and psychological abuse of minors by parents, step-parents, guardians, close relatives, or close associates. The committee observed that this type of abuse could have the same long-term effects as sexual abuse on a person’s decision when to make a claim. Research suggests that people are more likely to delay or avoid disclosing the abuse if the abuse is carried out in a family setting. The committee has also recommended extending this new discretion to claims for personal injuries that develop over a long time that are not work-related injuries covered by accident compensation.

The committee recognised that otherwise claimants may be unjustly time-barred by the new 15-year longstop defence, which is introduced by the bill. The new general longstop defence will enable a defendant to argue that a claim brought after 15 years is out of time, even if he or she did not know about the claim before then. In some personal injury claims, harm may not become apparent until much later than 15 years. Although these claims are likely to be rare, this will ensure that justice can be done in deserving cases.

The committee noted that there are divergent views on the length of the new longstop period, particularly in light of the 10-year longstop in the Building Act 2004. The Limitation Bill is intended to carry forward the general limitation rules for civil proceedings. Although there are benefits in having uniform limitation periods, different rules may be needed to address special circumstances in discrete policy areas. For this reason, other Acts, such as the Building Act, contain special limitation rules if appropriate.

The committee has also considered how the 1950 Act will continue to apply, and there are important changes to the transitional provisions that I am sure members will be very interested in. The new Act is intended to apply only to claims relating to acts or omissions after it comes into force on 1 January 2011. The current Act would continue to apply to claims based on acts or omissions before that date. This means that the current Act could continue to apply for many years, which may indeed be confusing. The committee recommended modifying its future operation by applying the new 15-year longstop to claims brought under the Act. There would be exceptions for some rare land claims, and claims where the limitation period is extended for disability or fraud.

The committee recommended that if a claims limitation period has ended before the new Act commences, or will shortly end afterwards, the claimant will have 5 years after the new Act commences in which to make the claim. The new longstop will not apply to any claim filed before the commencement of the Act.

The new longstop will affect only those claims where a court applies the reasonable discoverability test. This test was developed by the courts to address the harsh consequence that in some cases a statutory limitation period ends before a claimant knows that the damage has occurred. If this test is applied, the limitation period does not start to run until all of the essential elements of a claim are discovered or are reasonably discoverable. Without a statutory long-stop, defendants do not know when their potential liability will end. To date, the test has been applied only in negligence cases involving building work and personal injury claims. There are differing views on whether the courts will continue to develop this area of law in relation to claims under the 1950 Act after the new Act commences. The committee’s recommendation will mean that the old Act is phased out after 15 years from the commencement of the new Act, except in some very rare cases.

Finally, the committee recommended that the new discretion for abuse claims and claims for personal injury caused by a gradual process disease or infection not covered by accident compensation should also apply to claims under the 1950 Act that would be subject to the new longstop defence. This will lessen any unfairness that might otherwise result, and it will not revive any claims that are already statute-barred when the new Act commences.

In conclusion, I thank the committee again for its careful and thorough work on some very, very technical legal issues. I am confident that the committee’s recommendations will clarify and improve the law, and I commend the bill to the House.