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Can defendants avoid or limit their liability through contractual provisions?

The following article was contributed by Valerie Blacker and Jon Na, of Piper Alderman.

Applicants often confront the proposition, which respondents typically use in their defense, that terms in consumer contracts will effectively exclude or restrict the claims that have been brought. The High Court of Australia recently weighed in on this issue, deciding that a mortgage contained an enforceable promise by the borrowers not to raise a statutory limitation defense in relation to a claim by the lenders, which was commenced out of time.

Price v Spoor [2021] HCA 20

In a slight twist to the typical scenario, the lenders were the plaintiffs who brought recovery proceedings after the expiry of the period stipulated in Queensland’s Limitation of Actions Act 1974. The borrowers argued no monies were owed because the claim was well and truly statute barred. Proceedings should have been brought by 2011, but the lender did not file a claim until 2017. In reply, the lender relied on this clause in the contract:

“The Mortgagor covenants with the Mortgage[e] that the provisions of all statutes now or hereafter in force whereby or in consequence whereof any o[r] all of the powers rights and remedies of the Mortgagee and the obligations of the Mortgagor hereunder may be curtailed, suspended, postponed, defeated or extinguished shall not apply hereto and are expressly excluded insofar as this can lawfully be done.”

The effect of which was said to be a promise not to take the limitation point. The lender’s argument failed at first instance (before Dalton J) but was overturned on appeal (by Gotterson JA on behalf of Sofronoff P and Morrison JA) and then ultimately vindicated by the High Court (Kiefel CJ and Edelman J, with whom Gageler, Gordon and Steward JJ agreed).

The public policy principle

Part of their Honours’ reasoning was that what is conferred by a limitations statute is a right on a defendant to plead as a defense the expiry of a limitation period. A party may contract for consideration not to exercise that right, or to waive it, as a defendant. That is not contrary to public policy. This, in our view, is akin to agreements frequently entered between prospective parties to a litigation to toll a limitation period (suspend time running) for an agreed amount of time.

That can be contrasted with a clause in an agreement that imposes a three- year time limit instead of six, for bringing a claim for misleading and deceptive conduct under the Australian Consumer Law.[1] Clauses of that kind are unenforceable based on a well-established principle that such clauses impermissibly seek to restrict a party’s recourse to his or her statutory rights and remedies, contrary to law and public policy.

The “public policy principle” was first identified by the Full Court of the Federal Court in Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546. Henjo has been referred to and applied in numerous cases since, and cited with approval in the High Court.[2]

This is not to say that contractual limitations can never be effective in limited circumstances – this much was shown in Price v Spoor. The question of whether commercial parties to a contract can negotiate and agree on temporal or monetary limits while not completely excluding the statutory remedies for misleading and deceptive conduct claims under section 18 of the ACL remains debatable[3]  – but those specific circumstances do not arise here.

About the Authors:

Valerie Blacker is a commercial litigator focusing on funded litigation. Valerie has been with Piper Alderman Lawyers for over 12 years. With a background in class actions, Valerie also prosecutes funded commercial litigation claims. She is responsible for a number of high value, multi-party disputes for the firm’s major clients.

Jon Na is a litigation and dispute resolution lawyer at Piper Alderman with a primary focus on corporate and commercial disputes. Jon is involved in a number of large, complex matters in jurisdictions across Australia.

For queries or comments in relation to this article please contact Kat Gieras | T: +61 7 3220 7765 | E:  kgieras@piperalderman.com.au

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[1] For example in Brighton Australia Pty Ltd v Multiplex Constructions Pty Ltd [2018] VSC 246

[2] For example in IOOF Australia Trustees (NSW) Ltd v Tantipech [1998] FCA 924 at 479-80; Scarborough v Klich [2001] NSWCA 436 at [74]; MBF Investments Pty Ltd v Nolan [2011] VSCA 114 at [217]; JJMR Pty Ltd v LG International Corp [2003] QCA 519 at [10]; JM & PM Holdings Pty Ltd v Snap-on Tools (Australia) Pty Ltd [2015] NSWCA 347 at [55]; Burke v LFOT Pty Ltd [2002] HCA 17 at [143].

[3] For example in G&S Engineering Services Pty Ltd v Mach Energy Australia Pty Ltd (No 3) [2020] NSWSC 1721.

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Announcements Commercial Legal Innovation

Avyana Litigation Funding Strengthens Strategic Model to Expand Access to Justice

By Harry Moran |

Legal disputes often involve not only complex legal considerations but also significant financial pressure. For many companies, asserting their rights requires substantial resources, with outcomes that are uncertain. In distressed scenarios—such as restructuring or insolvency—the burden becomes even more acute.

Avyana Litigation Funding addresses this challenge through a model that transforms legal claims into strategic assets. The company has recently been reinforced by the involvement of two experienced professionals: Dr. Tillmann Lauk (LL.M.), former global board member of Deutsche Bank, and Dr. Raphael Nagel (LL.M.), a long-standing private equity investor and entrepreneur.

A Strategic Approach to Litigation Finance

Rather than simply covering legal costs, Avyana’s model enables businesses to pursue valid claims without affecting operational liquidity. In successful cases, proceeds are shared; in unsuccessful ones, the company absorbs the loss. This shifts the litigation risk from claimant to funder, offering companies a way to enforce their rights without jeopardizing financial stability.

Beyond funding, Avyana also provides companies with the option to sell claims to a network of specialized partners. This approach can be particularly valuable in restructuring scenarios, enabling companies to unlock capital from unresolved legal positions.

“Many firms hold claims that are potentially valuable but lack the capacity or appetite to pursue them,” explains Dr. Tillmann Lauk. “Our structure allows that value to be realized more efficiently.”

Collaborative Model with Legal and Corporate Partners

A core element of Avyana’s approach is its close collaboration with law firms, corporate clients, and insolvency administrators. By aligning with experienced legal teams, the company ensures that funded claims are supported by sound legal strategies and operational execution.

Typical areas of focus include commercial disputes, contract enforcement, claims for damages and shareholder conflicts. In insolvency proceedings, litigation funding can enable administrators to pursue avoidance actions or liability claims, helping to recover value for creditors without depleting estate resources.

“Our analysis considers both legal merit and commercial logic,” says Dr. Raphael Nagel. “Each case is reviewed with the goal of turning legal exposure into financial opportunity.”

Global Scope and Investment Discipline

Avyana Litigation Funding operates internationally, with an emphasis on Europe, the Middle East, and select emerging markets. All cases undergo comprehensive due diligence, with investment decisions guided by principles applied by its leadership in corporate finance and legal risk assessment.

“We treat every claim as an investment opportunity,” adds Dr. Lauk. “This means evaluating enforceability, counterparty risk, and recovery potential before any commitment is made.”

An Evolving Role in Legal and Financial Strategy

Litigation finance and structured claim sales are increasingly integral to the legal and business environment. For companies, law firms, and administrators alike, these tools offer a way to act strategically, preserve capital, and navigate legal complexities more effectively.

“In today’s economy, access to justice should not depend on cash flow or balance sheet size,” concludes Dr. Nagel. “Avyana Litigation Funding provides a structured path forward.”

Case Developments Commercial

Fenchurch Legal Owed £2.4m by Nicholson Jones Sutton Solicitors

By Harry Moran |

As LFJ covered earlier this month, concerns have been raised that law firms in the housing disrepair claims sector are operating with unsustainable business models propped up by litigation funders. New reporting on the administration of one of these claims suggests that there is a high degree of volatility in the sector, with funders acting as unpaid creditors to these same law firms.

An article in The Law Society Gazette covers the story of Nicholson Jones Sutton Solicitors Limited, a law firm that entered administration last month, with new filings suggesting that its creditors will be left without millions in unpaid debts. The Gazette’s review of Companies House records found that at the time of the law firm’s administration, it owed more than £6 million to creditors including litigation funder Fenchurch Legal.

The summary of liabilities showed that Nicholson Jones Sutton owed Fenchurch Legal more than £2.4 million, whilst the collapsed litigation funder VFS Legal was also left waiting for £196,000. As LFJ reported last month, VFS Legal’s own administration has experienced a somewhat more positive outcome with its administrators able to repay millions to its own creditors. 

Unfortunately, the Gazette’s reporting suggests that the failed law firm will not be in a similar position, having reported only £159,000 of tangible assets at the time its administrators were appointed. The article explains that the liabilities summary prepared by administrators RSM and DMC Recovery revealed Nicholson Jones Sutton has ‘no assets available to unsecured creditors collectively owed more than £1.5m.’

The statement of affairs filed by the administrators can be found on Companies House here.

Commercial Deals

Seven Stars Legal Acquires Sandstone Legal’s Assets and Transfers Funded Cases

By Harry Moran |

An insolvent law firm’s administration proceedings in the Insolvency and Companies Court has concluded with the firm’s litigation funder acquiring its assets, whilst preserving funded cases by transferring them to other law firms.

In a post on LinkedIn, Seven Stars Legal Funding announced that it had completed the acquisition of Sandstone Legal’s non-legal assets following the end of the law firm’s administration proceedings in court. The funder also secured the transfer of the existing case load from Sandstone to four of Seven Stars’ client law firms: Brandsmiths, FDM Law, 56 Law and Justizia. Seven Stars explained that this transfer included the appointment of a solicitor manager “to preserve the continuity of legal services”.

Leon Clarance, chief strategy officer at Seven Stars, highlighted that it had taken “six months of dedicated work” to secure Sandstone Legal’s assets and that the funder’s “primary focus has been to ensure that client cases have found appropriate new homes.”

During the administration proceedings, Seven Stars was represented by Louis Doyle KC and a team from Brandsmiths including David Seligman, Ewen Sharpe, Myrto Sevdali, Courtney Bryan-Isaacs and Iona Barron. Ewen Sharpe, senior associate at Brandsmiths, commended the litigation funder on its approach to the administration proceedings in ensuring that Sandstone’s clients have been properly looked after and that their cases will be able to run to conclusion.”

In a follow-up posted on LinkedIn today, Seven Stars revealed additional details on the cases acquired from Sandstone. These include 35,500 Plevin claims which have been assigned to a single law firm, and 603 housing disrepair claims assigned to another law firm. The funder also revealed that in order to balance its lending portfolio, it has also ‘redistributed nearly 900 pension mis-selling and contentious probate claims, as well as 2,000 business energy claims’. Seven Stars stated that these claims have been redistributed across its existing borrowing law firms, with those firms now in charge of seeing these claims through to completion.