The Limitation Act 1953 provides the limitation period of 6 years where a plaintiff is allowed to enforce its rights against any contractual or tortious claim. In another word, after the 6 year period, any persons will generally be barred from making any such claims.

Within the construction industry, it was a common argument that this law is restrictive and unjust in respect of latent defects. Latent defects are invisible or undetected defects which may be apparent only through inspection. There were instances where property owners only became aware of the defects of their newly purchased property after the expiration of the 6 year limitation period and therefore were barred from commencing any legal action to enforce their rights against the Developer and/or the contractor.

However, it was not until 2018 that the Malaysian Parliament redefined the law on latent defects by introducing Section 6A into the Limitation Act 1953. The amendment of the Limitation Act brings comfort to property owners in such a situation as it redresses the injustice which allows the property owner to initiate the action despite the rigidity of the law.

Pre- Amendment

Throughout the years before the Amendment of the Limitation Act, the limitation period for latent defects falls strictly under Section 6(1)(a) of the Limitation Act 1953, the provision states the following:

“Save as hereinafter provided the following actions shall not be brought after the expiration of six years from the date on which the cause of action accrued, that is to say actions founded – on a contract or on tort;”

Due to the similarities in Section 6 of the Limitation Act 1953 and Section 2 of the UK Limitation Act 1980, the Malaysian Courts were very persuaded by the decision of the House of Lords in Pirelli General Cable Works Ltd v Oscar Faber & Partners (a firm) [1983] 1 All ER 65. In this case, due to negligent design and construction, the Plaintiffs initiated an action for damages arising from cracks of their chimney. However, expert evidence found that such cracks had surfaced in 1970 but the Plaintiffs had only discovered the cracks in 1977.

At that time, the House of Lords held that although the damage of the cracks could not have been discovered at the time it had surfaced, the Plaintiffs were still caught by the limitation period of 6 years, and therefore the action was time barred. Lord Fraser of Tullybelton was of the opinion that although he acknowledges the inadequacy and injustice of the state law, the law of limitation itself is so firmly established that only the UK Parliament can alter it.

Following the decision in Pirelli, the UK Parliament took heed and changed the law by introducing a new Section 14A to the UK Limitation Act 1980 which provides for special time limit for negligence actions where facts relevant to cause of action are not known at the date of accrual.

Although the law in the UK has been updated, the Malaysian Court was resistant to follow suit with the UK position due to the absence of a similar or equivalent amendment to our Malaysian Limitation Act 1953. In 2010, the same legal issues in Pirelli were raised inAmBank (M) Bhd v Abdul Aziz bin Hassan & Ors [2010] 3 MLJ 784. Here, the Court of Appeal followed the decision in Pirelli and stated that the position in Malaysia remains the same and that would be that limitation runs from the date on which the cause of action accrues regardless whether the plaintiff discovers the damage. The Court of Appeal further states that there is only one test in Malaysia in order to ascertain limitations, and it is housed in Section 6(1)(a) of the Limitation Act 1953.

However, due to the inadequacy of the law in our legislation, in 2013, the Court of Appeal in AmBank (M) Bhd v Kamariyah bt Hamdan & Anor [2013] 5 MLJ 448 departed from following the position in Abdul Aziz bin Hassan. Here, the panel unanimously held that the limitation period only starts to run when the damages are first known or discovered. Due to the conflicting decision, there has been a confusion in respect of the position of the laws of limitations on latent defects.

Post- Amendment

In order to remedy the conflicting decisions and injustices which may arise within the construction industries, in April 2018, the Malaysian Parliament introduced a new Section 6A into the Limitation Act 1953, which came into effect on 1st September 2019. The new provision can be seen as follows:

“6A. Limitation of actions to claim damages for negligence not involving personal injuries

(1) Notwithstanding subsection 6(1), this section shall apply to any action for damages for negligence not involving personal injuries, where the starting date for calculating the period of limitation under subsection (2) falls after the date on which the cause of action accrued.

(2) An action to which this section applies shall not be brought after the expiration of three years from the starting date if the period of three years expires later than the period of limitation prescribed in subsection 6(1).”

Notwithstanding the limitation period of 6 years, the new Section 6A(2) extends the limitation period to further 3 years from the date of the discovery of the latent defect. However, the new limitation period is also subjected to S.6A(3) whereby an action is time barred after the expiration of fifteen years from the date the defect had occurred. S.6A(3) states the following:

“(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.”

In short, the addition of the new Section 6A introduces the new expiration of the limitation period for latent defect as follows:-

  1. 3 years starting from the date the defect was discovered; and
  2. 15 years starting from the defect occurrence date.

By reading the new Section 6A(4), the time starts when the property owner has both the knowledge of the damages and a right to bring such action, and such “knowledge” means having the knowledge of the material facts of the damages and the identity of the defendant. Further, Section 6A(4)(b) also stipulates that the property owner should be reasonably observant in discovering defects either by his own observation or with the assistance of any relevant expert advice which he can reasonably seek. However, the property owner is not limited for the defect to be ascertained only with the help of the expert advice, as long as he has taken all reasonable steps to obtain, where appropriate, and acted on such advice.

Conclusion

The Amendments to the Limitation Act certainly bring light to property owners as the law on latent defects is now set in statute. As opposed to the injustice faced by property owners during the pre-amendment, the Amendment to the Limitation Act allows the property owner to enforce its rights within reasonable time upon knowledge of the defect and up to 15 years upon the occurrence of the defect. However, it is imperative for the property owner to be vigilant and to not sit on its rights and initiate a legal action to enforce its rights as soon as the damages are made known. When in doubt, the property owner should take the extra precaution by seeking immediate advice from any appropriate expert. On the flip side however, this exposes developers to a wider range of liability as the time limit to bring an action has been extended. It also indirectly requires the developer to be more aware of the product used and deliver the property with better quality.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.