Case Updates

Case Update: Discoverability Principle Shapes Limitation Period in Negligence Claims

Share:

Print
30 April 2024

CIVIL PROCEDURE
Negligence – Compensation – Time Barred – Limitation Period – Reasonable Diligence

Julian Chong & Anor v Lee Kim Noor & Anor
Civil Appeal No. 02(f)-63-10/2021(P) | Federal Court
- see the grounds of judgment here

Facts Julian Chong (the ‘1st Appellant’) and his wife (the ‘2nd Appellant’) (collectively referred to as ‘Appellants’) bought a property with agreements prepared by Lee Kim Noor (the ‘1st Respondent’) who at the material time worked as a Partner in Tetuan KN Lee & Associates (the ‘2nd Respondent’). The agreements omitted bank details, suggesting no encumbrance. In 2009, the Appellants learnt that the neighbouring plots were encumbered by Bank Islam. Requesting clarification, they discovered their property was also charged to the bank. In 2011, the Housing Developer wound up and the Appellants received a letter from Pejabat Tanah & Galian (PTG) informing them that landowners who do not have a letter of disclaimer would be required to pay a redemption sum as it was Bank Islam that had initiated the winding up proceedings against  the Housing Developer. Upon investigation, it was found that the Respondents had not conducted a proper land search. The Appellants lodged a complaint against the 1st Respondent before the Disciplinary Board which found the 1st Respondent negligent. The Appellants decided to sue the Respondents for professional negligence and negligent misstatement. The High Court found the claim proved. On appeal, this decision was overturned as the Court of Appeal found the claim time-barred, that for an action founded in tort, the six-year period under the Limitation Act 1953 starts to run from the date when the SPA was prepared in 2004, and not from when the appellants discovered the damage when Bank Islam issued the formal Foreclosure Notice and demanded the redemption sum. Hence this appeal.

Issues 1. In a tortious claim arising from a negligently prepared agreement, does the time-period for limitation begin to run from the date of the impugned agreement; or does time begin to run from the date of an infringement or threat of infringement of the claimant’s right caused by the impugned agreement?
2. In respect of when the limitation period starts to run in a claim of negligence, is the Court of Appeal’s decision in AmBank (M) Bhd v Abdul Aziz Hassan & Ors [2010] 3 MLJ 784 still good law?

Held In allowing the appeal, Justice Dato’ Mary Lim in delivering the decision of the Federal Court held that the limitation period for filing a claim for negligence starts from the date when the damage resulting from the negligence was discovered or when it should have been discovered by the plaintiff with reasonable diligence. The Federal Court based their decision on the principle of knowledge or discoverability of breach, which was deemed essential for establishing the accrual of a cause of action. This approach aimed to ensure fairness and balance in civil litigation, aligning with the policy and intent of the relevant legal framework. The Federal Court held that it would be unjust and unreasonable to require the Appellants to institute a claim before the contingency, that is, a claim by Bank Islam, was fulfilled. The Appellants’ claim initiated in 2016 was thus not time-barred and the Court of Appeal was in error in holding otherwise. In respect to the 2nd Question, the Federal Court answered in the negative noting that the issue has been substantially addressed by the new section 6A of the Limitation Act 1953. Hence, the Federal Court reinstated the High Court ruling ordering the Respondents to pay RM1.5 Million in damages to the Appellants.

Zul Rafique & Partners
{30 April 2024}

Please email your details to [email protected] if you would like to subscribe to our Knowledge Centre.

Let's Connect!
➭ LINKEDIN: Zul Rafique & Partners
➭ INSTAGRAM: @zrplaw