The Limitation of Actions Act 1958 (Vic) in VCAT

In the recent decision of Lanigan v Circus Oz & Ors [2022] VSC 35, McDonald J in the Supreme Court of Victoria held that VCAT was not a Court for the purposes of the Limitation of Actions Act 1958 (Vic)(Limitation Act) and, as a result, the limitations periods imposed by that statute did not apply to proceedings issued at the Tribunal.  

His Honour was considering whether a proceeding was statute barred by operation of sub-s 5(1)(a) of the Limitation Act, which states that (emphasis added):

(1)        The following actions shall not be brought after the expiration of six years from the date on which the cause of action accrued—

(a)        Subject to subsections (1AAA), (1AA) and (1A), actions founded on simple contract (including contract implied in law) or actions founded on tort including actions for damages for breach of a statutory duty;

Sub-section 3(1) of the Limitation Act defines ‘action’ as follows:

action includes any proceeding in a court of law;

His Honour said:

[20]     Ms Lanigan advances two submissions as to why the VCAT Proceeding is not subject to s 5(1)(a).  First, the VCAT Proceeding is not a ‘proceeding in a court of law’ for the purposes of the definition of ‘action’ in s 3(1) of the Limitations Act.  In the alternative, if the VCAT Proceeding is a proceeding in a court of law, a claim alleging a contravention of the EO Act is not an ‘action founded on tort’ for the purposes of s 5(1)(a).  I accept both of these submissions.  

…

[21]     It is common ground in the present proceeding that no Victorian court has previously considered the question of whether the Tribunal is a court of law for the purposes of ss 3(1) and 5(1)(a) of the Limitations Act.  For the reasons which follow, this question is to be answered in the negative. 

After considering a number of authorities on the issue at paragraphs [22] to [34], his Honour concluded that:

[35]     The Tribunal is not a court for the purposes of the definition of ‘action’ in s 3(1) of the Limitations Act.  Ms Lanigan’s VCAT Proceeding is not a proceeding in a court of law.

This finding may affect leasing cases for the following reasons.

First, leases are usually evidenced by a deed and the limitation period for suing under a deed is 15 years (see s 5(3) of the Limitation Act).  However, there are exceptions to this such as when the lease is not formalised into a deed and only recorded as an agreement to lease and when the tenant exercises its option by notice in writing but no deed of renewal is executed.  In those cases, the parties probably only have a contract and the limitation period is probably six years under sub-s 5(1)(a) of the Limitation Act.

Secondly, s 18 of the Limitation Act limits actions for the recovery of rent to six years, stating that:

No action shall be brought to recover arrears of rent or damages in respect thereof after the expiration of six years from the date on which the arrears became due.

It is unusual for a landlord to allow rent to accrue in arrears for more than six years, but I have seen it from time to time.

Thirdly, tenants often respond to a landlord’s attempt to re-enter premises by setting up a counterclaim that the tenant then seeks to set off against the landlord’s claimed rent.  It is not unusual for tenants in these circumstances to press counterclaims that are quite old.  

For example, in the recent case of BWS Hospitality Pty Ltd v DGA Australia Pty Ltd (Building and Property)[2022] VCAT 233 (3 March 2022) the tenant pressed a counterclaim based on alleged misleading and deceptive conduct that took place as far back as 2013-14.  While the tenant in that case found another way to overcome the limitation period, the case illustrates how an old counterclaim can be used to prevent re-entry based on current arrears.

Another example is the recovery of the cost of essential safety measures under s 251 of the Building Act 1991 (Vic) or the cost of landlord’s repair and maintenance under s 52 of the Retail Leases Act 2003 (Vic).  The usual limitation period for the recovery of these sums is six years under sub-ss 5(1)(a) and (d) of the RLA 2003.^[1]  Tenants facing re-entry for non-payment of rent may seek to recover old ESM and s 52 repair and maintenance costs paid by the tenant and seek to set off those costs against rent arrears.  The decision in Lanigan allows a tenant to reach back further into time and potentially claim a larger sum. 

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^[1] Although there is also an argument that s 52 of the RLA 2003 implies a covenant into a lease deed, which has a 15 year limitation – but that is a debate for another blog post!