LAW NOW ALLOWS EXTENDED PERIOD TO SUE FOR NEGLIGENCE
The new Malaysian Act extends the limitation period for negligence suits to either 6 years from the date when the cause of action accrues, or within three years from the date on which the claimant knew about the material facts (if that period expires after the 6-year period).
Most people are aware that in court cases, there is a time limit or time bar for the aggrieved party (termed “plaintiff”) to sue the other party (“defendant”). In civil cases, the time limit can be different depending on the subject matter and who the defendant is. In the case of construction work, the law in Malaysia currently provides for the following:
- For actions in simple contract: 6 years from the date of the breach of contract.
- For actions in tort such as negligence: 6 years from the date when the cause of action accrues (e.g. when physical damage occurs).
- For latent or hidden damage: 6 years from the date on which the damage occurred.
It should be noted that, in cases of fraudulent concealment (i.e. deliberate concealment of defects), the limitation period does not begin to run until the fraud is discovered or could have been discovered with reasonable diligence, according to a blog on Malaysian laws.
However, the time bar has now been extended in favour of the claimant following the passing of the Limitation (Amendment) Act 2018 (the “Act”). It will become enforceable once it is gazetted within the next few months.
The Act will extend the maximum period for eligibility to claim to 15 years. According to Datuk Prof. Sundra Rajoo, Director of AIAC, (Asian International Arbitration Centre, formerly known as the KLRCA), the Act will also extend the limitation period for negligence suits not involving personal injuries to either 6 years from the date when the cause of action accrues, or within three years from the date on which the claimant knew about the material facts (if that period expires after the initial 6-year period).
The new section applies to all applicable limitation periods and not just exclusively construction cases although the latter forms the bulk of cases where this new limitation period applies as it involves hard to discover latent building defects. This also explains why the maximum length of time the plaintiff can bring a suit is 15 years – as other items such as cars or electrical items normally do not have such a long working life.
Most notably, it will cover latent damages in construction cases, allowing the buyer a right of action for damages for negligence from the date of discovery of the damage (as opposed to the date when the cause of action arises).
“In other words, the right of action starts from the date when the buyer discovers the damage and not from the date of purchase or from the date of possession,” the AIAC Director says in his explanatory note to ‘A Bill to Amend the Limitation Act 1953’.
LATENT DAMAGES TARGETED
Clause 2 of Section 6A of the Bill is intended to cover latent damages in construction cases. Under the new section 6A, a buyer can claim damages within three years from the date when he/she discovered the damage, regardless of the fact that on the date of purchase, the damage was not discoverable through general inspection or the buyer did not know or could not have been reasonably expected to know the damages.
[ihc-hide-content ihc_mb_type=”show” ihc_mb_who=”1,2,3,4,5,9″ ihc_mb_template=”1″ ]
“Thus, this Bill will make the parties involved in a project such as Builder, Architect, Engineer, Contractor, Subcontractor etc. (“the involved parties”) liable for damages accrued even after completion of the project.”
Datuk Prof. Sundra adds that the Bill will have significant effect on the provision for certificate of completion and compliance (CCC) under the Street, Drainage and Building Act 1974.
The CCC provision ensures that a project is complete and complies with all the requirements under the existing law. But, since the Bill proposes the starting time of limitation to be from the date of discovery of the damage, the involved parties may be liable even if they have complied with the provision for CCC.
However, he notes that the Act prohibits institution of any proceeding after 15 years from the date on which the cause of action first accrued (Section 6(3)). Thus, the buyer has a maximum period of 15 years from the date of occurrence of cause of action to bring an action for damages.
Given the longer timeframe, the legal expert anticipates an increase in claims by buyers, perhaps even an increase in frivolous claims with buyers taking advantage of the long period of time for any latent damages to appear.
The big deal is that in future, any of the involved parties may be liable for the damages at any time after completion even if the project is CCCcompliant, provided the action is within a period of three years from the discovery of the damages, subject to the overall maximum of 15 years.
For construction companies and others responsible for the “building process”, casting doubt on a buyer’s allegations of becoming aware of the damage very late will be a key defence, Datuk Professor Sundra notes.
UNDULY LONG?
The table of comparison below shows that the new Malaysian Act is actually in line with the laws of England and Wales; and Singapore.
For the avoidance of doubt, the sole reason why there are different terms in the table as regards the moment triggering the limitation period (e.g. “discovery of breach;” “knowledge of defect,” etc.) is that these are the expressions used in the specific laws of the countries in question.
ILLUSTRATIONS
- C bought a house from D in 2000. In 2010, C discovered a crack which damaged the walls badly. A building report made by a consultant revealed that the cracks had appeared in 2002, two years after C moved into the house. C has three years from 2010 to file an action in court against D for damages.
- C bought a house from D in 2000. In 2006, C discovered a crack which damaged the walls badly. A building report made by a consultant revealed that the cracks had appeared in 2002, two years after C moved into the house. C has three years from 2006 to file an action in court against D for damages.
- C bought a house from D in 2000. In 2005, C discovered a crack which damaged the walls badly. A building report made by a consultant revealed that the cracks had appeared in 2002, two years after C moved into the house. C has three years from 2005 to file an action in court against D for damages.
15-YEAR TIME BAR
Notwithstanding the extra 3 years, no action shall be brought after the expiration of 15 years from the date on which the cause of action accrued.
C bought a house from D in 2000. In 2017, C discovered a crack which damaged the walls badly. A building report made by a consultant revealed that the cracks had appeared in 2001, one year after C moved into the house. C cannot commence an action because he has already exceeded the 15-year limitation period.
[/ihc-hide-content]