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Amendment to Limitation Act 1953: Limitation Period for Latent Damage

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INTRODUCTION On 4 April 2018, the Malaysian Parliament passed the Limitation (Amendment) Bill 2018 (‘the Bill’), which was subsequently granted the Royal Assent by the Yang di-Pertuan Agong on 27 April 2018. On 4 May 2018, the Bill was then gazetted into law as the Limitation (Amendment) Act 2018, and came into force on 1 September 2019.

The amendment to the Limitation Act 1953 would extend the time period for commencing a legal action in cases of negligence not involving personal injuries under two circumstances: (1) where the damage suffered is latent (‘Section 6A’)[1] ; and (2) where a person is under a disability when the cause of action accrued (Section 24A )[2].

This article will only discuss the former, i.e. the new Section 6A.

OBJECTIVE The objective of the amendment is to resolve issues pertaining to the limitation of time to institute a legal action in construction cases where the damage could not be detected at the time the damage materialised. The amendment will further address the legal complications of limitation laws, especially in the case of Pirelli General Cable Works v Oscar Faber & Partners [1983] 2 AC 1 where the House of Lords held that a cause of action in tort for negligence in the design or workmanship of a building accrues at the date when physical damage occurred to the building, and not when the damage was discovered.

THE AMENDMENT Section 6A applies to negligence cases involving latent damage in construction cases where the damage is not discoverable through general inspection, and the person having the cause of action did not know, or could not have reasonably expected the damage.

Prior to the amendment, the time limit of six (6) years as provided in Section 6(1) of the Limitation Act 1953 applies regardless of when the person having the cause of action discovers the damage. Section 6(1) of the Limitation Act 1953 states that an action in tort:
 

“…shall not be brought after the expiration of six years from the date on which the cause of action accrued…”



With the new Section 6A, the person having a cause of action in negligence not involving personal injuries would have an extension of the limitation period of three (3) years from the date the damage was discovered, to initiate a legal action. However, Section 6A(3)[3] prevents any person from instituting court proceedings more than fifteen (15) years after the cause of action accrued even if it results in the extended time limit being less than three years, or if the damage is only discovered after 15 years.


EXAMPLES The following examples illustrate how Section 6A operates:
 
1.  Alya bought a house from Builders Sdn Bhd (BSB) in 2000. In 2009, she discovered a crack which damaged her walls badly. A building report shows that the crack appeared in 2004;

Prior to the amendment, Alya would only have until 2010 to commence a legal action against BSB (six (6) years after the cause of action accrued in 2004). However, with the new Section 6A, Alya would have an extension of three years from the date of discovery (2009), to initiate an action against BSB. Therefore, pursuant to the new amendment, the limitation period for Alya’s case would only expire in 2012, instead of 2010.

 
2. Alya bought a house from BSB in 2000. In 2019, she discovered a crack which damaged her walls badly. A building report shows that the crack appeared in 2002;

Here, Alya cannot initiate an action against BSB as the fifteen (15) years limitation period under Section 6A(3) expired in 2017 (15 years after cause of action accrued in 2002).


Applicability Section 6A only applies when these criteria are met:
1. the claim is for negligence not involving personal injuries; 
2. the person having the cause of action have the knowledge required for bringing an action for damages in respect of the relevant damage, and a right to bring such action;
3. the action is brought within three (3) years from the date the damage was discovered; and 
4. the fifteen (15) years limitation period under Section 6A(3) have not passed.

COMMENTS It is prevalent in the construction industry that latent defects are not discoverable at the time the damage was caused, and are almost always only discoverable after the limitation period of six (6) years under Section 6(1) has lapsed. The new amendment removes the harshness of the law pre-amendment, and provides a better opportunity for property owners to safeguard their interests. The amendment does not only protect property owners, but also protects those involved in the construction industry such as engineers, and architects by preventing any person from instituting court proceedings more than fifteen (15) years after the cause of action accrued.


 
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This article was written by Noor Sumaeya Sofea Shamsudin from the Construction Dispute Resolution practice group of ZUL RAFIQUE & partners.


For more insight into this area of law, please contact our Partners in Construction Dispute Resolution Practice Group:
Kuhendran Thanapalasingam 
Michele J Chong
 
[1] Limitation of actions to claim damages for negligence not involving personal injuries
[2] A person who is disabled at the time when the cause of action accrued in which the limitation period in Section 6A applies, is entitled to bring an action within three years the person ceased to be disabled or has died.
[3] Notwithstanding subsection (2), no action shall be brought after the expiration of fifteen years from the date on which the cause of action accrued.