indepth

Latent defects — now you can make claims after six years but…

Many may not be aware that they have generally six years’ period to commence legal action to enforce their rights if they suffer from any physical or financial injury. This is stipulated under Section 6(1)(a) of the Limitation Act 1953.

The imposition of a time limit to file legal action is to prevent injustice to defendants as they might have lost the evidence to disprove a stale claim over time. In addition, persons with good causes for action are expected to pursue them with reasonable diligence. 

Nevertheless, there are many instances where persons who have suffered damages are not able to commence legal action to enforce their rights as the damages only manifest themselves or come into the persons’ knowledge past six years.

It will be too late for them as they are barred by the Limitation Act from pursuing their legitimate claims. This commonly happens in property defect cases as most owners do not have the know-how to uncover or identify defects in buildings.

More often than not, they will only be aware of the problems when the defects manifest themselves or become apparent through chance inspection. This kind of defect is commonly known as “latent defect” as opposed to “patent defect”, which refers to a defect which is easily detected.

Unfortunately, these latent defects usually rear their ugly heads after the expiry of the defect liability period (DLP) of 24 months as stipulated in the standard sale and purchase agreement (SPA) under the Housing Development (Control & Licencing) Act and its regulations.

This unenviable situation can be seen in the House of Lords’ 1983 decision of Pirelli General Cable Works Ltd vs Oscar Faber & Partners (A Firm). In Pirelli, damage was done to a factory due to the wrong usage of construction material for the chimney.

The chimney was built in 1969 but the faulty condition of the chimney was only discovered in 1977. A legal action was filed only in 1978. The question was whether the six-year period ran from the date the faulty chimney was built or from the date when the fault could have been or was discovered.

The House of Lords held that the date of accrual of a cause of action in tort for damage caused by the negligent design or construction of a building was the date when the damage came into existence, and not the date when the damage was discovered or should with reasonable diligence was discovered.

As the cracks occurred in the chimney not later than April 1970 and since that date was past six years before the commencement of the claim, it was barred by limitation.

This decision is persuasive to Malaysian courts because Section 2 of the UK Limitation Act 1939 is similar to Section 6(1) of the Malaysia Limitation Act.

In order to mitigate the harshness occasioned in Pirelli, the UK Latent Damage Act 1986 was enacted to amend the laws in the UK. Soon thereafter, Singapore, Hong Kong and Canada followed suit by amending their respective laws.

However, in Malaysia, the laws remained untouched for many years. In 2010, the Court of Appeal in AmBank (M) Bhd vs Abdul Aziz Hassan & Ors [2010] 3 MLJ 784 ruled that the notion of postponing or extending limitation to include the element of discovery was not provided for in the Limitation Act or in any other Malaysian law, thus affirming the position in Pirelli.

Limitation Act: new Section 6A introduced

In 2018, the Malaysian Parliament finally passed the Limitation (Amendment) Act, 2018 (Amendment Act) to address this issue. The long overdue amendment to the Malaysia Limitation Act was gazetted on May 4, 2018 and has been in force since Sept 1, 2019.

The Amendment Act introduced a new Section 6A which provides that an action claiming for damages for negligence (not involving personal injuries) may be brought within three years from the earliest date on which the plaintiff first had knowledge required for bringing an action and a right to bring such action.

Essentially, this means that a property owner is allowed to bring an action for defect of the property against a developer within three years from the earliest date of discovering the defect, notwithstanding six years have passed since the defect has occurred.

However, there is a catch to this, where Section 6A(3) provides that no action can be commenced 15 years after the date on which the cause of action accrued. According to the explanation of the then deputy minister during the tabling of the Amendment Bill in Parliament, this was to protect engineers and architects.

The newly inserted provision also set out some illustrations, two of which are reproduced here, to enable the public to understand the operation of the provision:

Illustration to Section 6A(2)

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 occurred in 2002, two years after C had moved into the house. C has three years from 2005 to file an action in Court against D for damages.

Illustration to Section 6A(3)

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 occurred in 2001, one year after C had moved into the house. C cannot commence an action because he has already exceeded the 15-year limitation period.

Do not sleep on your legal rights

It is foreseeable that the dispute over the application of section 6A(2) will mostly centre on the question of when the plaintiff first acquires the knowledge required for bringing an action.

For clarity, Section 6A(4)(b) requires a plaintiff to be reasonably observant in discovering defects either by himself or with the help of appropriate expert advice which is reasonable for him to seek. As such, this newly introduced provision does not protect property owners who are oblivious.

The Amendment Act is certainly a positive move to balance the rights of a property owner and the developer by capping a time limit of 15 years to the claim.

It further requires property owners to take reasonable action to discover latent defects before they become time-barred from commencing any legal action for damages. Property owners should take note that the new provisions will apply regardless of the DLPs stated in their SPAs.

We sincerely hope this new provision will motivate construction players to deliver properties with better built quality and consequently elevate the overall standard of the industry

This article is intended to offer an insight of the new Section 6A in Limitation (Amendment) Act, 2018 vis-à-vis latent defect claims, and is not intended to be nor should it be relied upon as a substitute for legal or any other professional advice.

Datuk Chang Kim Loong is the Hon Secretary-general of the National House Buyers Association (HBA) and Koh Kean Kang, Esq is one of HBA’s volunteer lawyers. HBA could  be contacted at:

Email: [email protected]
Website: www.hba.org.my
Tel: +6012 334 5676

This story first appeared in the EdgeProp.my E-weekly on March 26, 2021. You can access back issues here.

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