1. The law on latent damage in West Malaysia will be re-defined with the coming into force of the amendment to the Limitation Act 1953 (“the Act”) on 1 September 2019, brought about by the Limitation (Amendment) Act 2018 (“the Amendment Act”).
Position Prior to the Amendment Act
2. Section 6(1) of the Act provides that among others, actions founded on a contract or on tort shall not be brought after the expiration of six years from the date on which the cause of action accrued.
3. This has generally been interpreted to mean that the six years limitation period under Section 6(1) of the Act begins to run from the date when a breach had occurred (for a cause of action for breach of contract) or when the damage had occurred (for a cause of action in tort), and this is irrespective of whether or not the damage was discovered or could reasonably have been discovered at the time. See for example:-
(i) AmBank (M) Bhd v Abdul Aziz bin Hassan & Ors[efn_note][2010] 3 MLJ 784[/efn_note] (Court of Appeal) – Claim for negligence against a solicitor;
(ii) Pang Yeow Chow (practising at Messrs YC Pang, Chong & Gordon) v Advance Specialist Treatment Engineering Sdn Bhd[efn_note][2015] 1 MLJ 490 [/efn_note] (Court of Appeal) – Claim for negligence against a solicitor; and
(iii) Sharikat Ying Mui Sdn Bhd v Hoh Kiang Po[efn_note][2015] MLJU 621[/efn_note] (High Court) – Claim for breach of company director’s fiduciary duty.
4. It follows that if the damage is not apparent at the time the cause of action accrues, this would lead to harsh results against the party seeking to claim for latent damage especially if the damage was only discovered and could only reasonably have been discovered after the six years limitation period under Section 6(1) of the Act.
5. This harshness has led to some cases in West Malaysia deciding that the cause of action only accrues from the time when the damage was discovered or could have reasonably been discovered. See for example:-
(i) AmBank (M) Bhd v Kamariyah bt Hamdan & Anor[efn_note][2013] 5 MLJ 448[/efn_note] (Court of Appeal) – Claim for negligence against a solicitor;
(ii) Peninsular Concord Sdn Bhd v Syarikat Bekalan Air Selangor[efn_note][2015] 3 CLJ 682[/efn_note] (High Court) – Claim for illegal consumption of water; and
(iii) CIMB Bank Bhd v Lee Kim Kee & Ors and another appeal[efn_note][2018] 3 MLJ 72[/efn_note] (Court of Appeal) – Claim for negligence against a financial institution and its officer.
6. It is apparent from the above that there are two inconsistent lines of cases dealing with the issue of latent damage.
Position After the Coming into Force of the Amendment Act
7. The Amendment Act seeks to resolve the above inconsistency by introducing a new Section 6A to the Act to deal with damage not involving personal injuries that was only discovered and could only reasonably have been discovered after a cause of action in contract or tort had accrued under Section 6(1) of the Act.
8. Essentially under Section 6A of the Act, where the damage was only discovered and could only reasonably have been discovered either:-
(i) less than three years before the expiry of the normal six years limitation period under Section 6(1) of the Act; or
(ii) after the expiry of the aforesaid six years limitation period,
the plaintiff would then have three years from the date of such discovery to commence an action for damages, provided that such commencement shall not exceed 15 years from the date when the cause of action accrued, i.e. when a breach had occurred (for a cause of action for breach of contract) or when the damage had occurred (for a cause of action in tort).
9. It must however be noted that the plaintiff must still exercise reasonable diligence in discovering the existence of any damage as Section 6A(4)(b)(iii) of the Act imputes on the plaintiff knowledge which he might reasonably have been expected to acquire from facts observable or ascertainable by him, or from facts ascertainable by him with the help of appropriate expert advice which is reasonable for him to seek.
10. Based on the discussion on the amendment bill in Parliament and the illustrations given in the section, Section 6A of the Act appears to be catered specifically to deal with latent defects in the construction of a building.
11. However, Section 6A of the Act is worded sufficiently wide to cater for all “actions to claim damages for negligence not involving personal injuries” (which is the heading for the section). Hence, the said section should be available to claims for latent damage outside the context of building construction as well, including the type of claims arising under the cases mentioned above prior to the Amendment Act.
12. Section 6A of the Act is also similar to Section 14A of the UK Limitation Act 1980, where it is settled under English law that the said section applies to non-building construction cases as well. For example, the House of Lords case of Haward and others v Fawcetts (a firm)[efn_note][2006] 3 All ER 497[/efn_note] applied the said section in a case involving a negligence action against an accounting firm.
13. The Amendment Act also introduced a new Section 24A to the Act. Basically under this section, a plaintiff who is under a disability at the time when a cause of action accrued for which a limitation period is provided under Section 6A of the Act is entitled to bring an action within three years from the date when the plaintiff ceased to be disabled or has died, provided that such commencement shall not exceed 15 years from the date when the cause of action accrued.
Application of the Amendments under the Amendment Act
14. Section 5 of the Amendment Act provides that Section 6A of the Act shall apply to all causes of action that has accrued on the date of coming into operation of the Amendment Act, which would be on 1st September 2019, but the same shall not apply to any action or proceedings commenced or pending immediately before the said date. In other words, Section 6A of the Act applies to all action or proceedings for latent damage commenced after 1st September 2019.
Conclusion
15. The amendments brought about by the Amendment Act is a much welcomed step towards resolving the issue concerning the limitation period for claims for latent damage, including latent defects in building construction. The amendments would now remove the harshness and inequities in the previous law as applied by some reported cases, where a plaintiff may find itself being time barred from commencing an action due to the damage only being reasonably discovered only at a later date.
16. The amendments also bring this aspect of the limitation laws in West Malaysia to be more in line with the position in UK and certain Commonwealth jurisdictions such as Singapore, New Zealand and Canada.
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