A Major Change to the Law of Limitation of Actions for Negligence
Introduction
The Limitation (Amendment) Act 2018 was passed in 2018 and came into force on 1 September 2019. The major change made by this legislation is the insertion of Section 6A entitled “Limitation of actions to claim damages for negligence not involving personal injuries” to the Limitation Act 1953 (“the Act”).
Prior to the amendment, the limitation of actions to claim damages in tort of negligence was housed in section 6(1) of the Act which provides that an action founded on tort must be brought within six years from the date on which the cause of action accrued. For an action founded on a tort of negligence, the cause of action accrues when there is a breach of a duty of care by a party and another party sustains damage.
The newly inserted Section 6A of the Act provides for an alternative limitation period for actions founded on tort of negligence not involving personal injuries, that is, three years from the “starting date” as defined in Section 6A(4) of the Act, which is, in essence, the date the plaintiff acquired or could have acquired knowledge of material and relevant facts concerning the damage sustained by the plaintiff. Following the insertion of Section 6A to the Act, there are now two different limitation periods for actions for damages for negligence not involving personal injury:
(a) The three-year limitation period under Section 6A(2) applies in a scenario where the “starting date” falls after the date the cause of action has accrued (in gist, the plaintiff did not know at the time the damage was suffered that the damage was attributable to an act or omission of the defendant, and the plaintiff only acquired such knowledge at a later date) and the three-year period expires after the six-year limitation period under Section 6(1).
(b) The six-year limitation period under Section 6(1) applies in the following scenarios:
(i) where the “starting date” does not fall after the date the cause of action accrued (in gist, the plaintiff had knowledge at the time the damage was suffered that the damage was attributable to an act or omission of the defendant), or
(ii) where the three- year limitation period under Section 6A(2) expires earlier than the six-year limitation period under Section 6(1).
Our Section 6A is modelled on Section 14A of the Limitation Act 1980 of England and Wales, which was inserted by the Latent Damage Act 1986. Section 6A adopts the same terminology as that used in Section 14A of the English Limitation Act[i], but with a different flow and arrangement of subsections.
Scope
Section 6A was intended by Parliament[ii] to deal with cases involving what is commonly known as “latent defects”[iii] in the construction industry. However, the wording of Section 6A covers all cases involving actions for damages for negligence not involving personal injuries and not merely cases involving latent defects.
The term “actions for damages for negligence” is not defined in the Act. It is likely that “negligence” in Section 6A means tortious negligence only, and does not include actions brought for breach of contract obligations of due care[iv].
Section 6A is not limited to claims for damage to property and should cover claims for economic loss or financial loss unassociated with damage to property, including economic loss in traditional professional and client relationships[v].
Long Stop
Section 6A(3) provides a long stop in that no action can be brought after the expiration of fifteen years from the date on which the cause of action accrued, notwithstanding the provision for alternative limitation period found in Section 6A(2). The long stop of fifteen years in Section 6A(3) is to be computed from the date the cause of action accrued. This differs from the provision for alternative limitation period in Section 6A(2) that is computed from a starting date based on the knowledge of the plaintiff. The computation of the long stop based on accrual of cause of action will give rise to practical difficulties in the ascertaining of the date of accrual of cause of action, which is effectively the date that the plaintiff sustained damage as a result of the negligent act or omission of the defendant.
Application
Section 6A(2) provides for the limitation period for an action founded on tort of negligence (not involving personal injuries) to be three years from the “starting date” based on knowledge of the plaintiff relating to the negligent act or omission of the defendant if the period of three years expires later than the period of limitation of six years prescribed in Section 6(1) of the Act.
In a nutshell, it simply means a plaintiff can still bring an action against a defendant for damage caused by defendant’s act or omission based on tort of negligence (not involving personal injuries) even if the plaintiff discovers or could only have discovered the damage after the six-year limitation period, so long the action is brought within three years from the discovery of the damage. However, it must be borne in mind that a plaintiff cannot take an action against a defendant if the fifteen-year period has expired from the date on which the cause of action accrued.
The following illustrations were set out in Section 6A:
1st illustration:
C bought a house from D in 2000. In 2010, C discovered a crack which damages the walls badly. A building report made by a consultant revealed that the cracks had occurred 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.
In this illustration, the six-year limitation period under Section 6(1) of the Act would have expired in 2008, i.e. six years from the time damage was caused by the negligence, namely, when the cracks occurred in 2002. The application of Section 6A means the limitation period for C to sue D would be extended to three years from the time of discovery of the damage in 2010.
2nd illustration:
C bought a house from D in 2000. In 2017, C discovered a crack which damages the walls badly. A building report made by a consultant revealed that the cracks had occurred in 2001, 1 year after C moved into the house. C cannot commence an action because he has already exceeded the fifteen-year limitation period.
In this illustration, the long stop period of fifteen years would have expired in 2016, i.e. fifteen years from the time damage was caused by the negligence, namely, when the cracks occurred in 2001. The discovery of the damage after the expiry of the long stop period does not extend the limitation period
Knowledge
The Act defines “starting date” in Section 6A(2) as the earliest date on which the plaintiff or any person in whom the cause of action was vested before him first had both the knowledge required for bringing an action for damages in respect of the relevant damage and a right to bring such action.
The term “knowledge required for bringing an action for damages in respect of the relevant damage” is defined in the Act as knowledge of:
- the material facts about the damage in respect of which damages are claimed; and
- other facts relevant to the current action, namely:
- that the damage was attributable in whole or in part to that act or omission which is alleged to constitute negligence;
- the identity of the defendant, or in a case where the act or omission was that of a person other than the defendant, the identity of that person and the additional facts supporting the bringing of an action against the defendant.
The Act does not provide any guidance on the degree of certainty or detail of the plaintiff’s knowledge of the material and relevant facts required for the purpose of the activation of the “starting date” in Section 6A(2). It is uncertain if the Courts will require the plaintiff to have full or certain knowledge of the material and relevant facts before the “starting date” is activated. The decisions of the English courts relating to Section 14A of their Limitation Act suggest that a broad knowledge of the material and relevant facts would suffice[vi].
Section 6A(4)(b)(iii) provides that knowledge includes the knowledge which the plaintiff or any person in whom the cause of action was vested before him might reasonably have been expected to acquire:
(A) from facts observable or ascertainable by him, or
(B) from facts ascertainable by him with the help of appropriate expert advice which is reasonable for him to seek,
but a person shall not be taken by virtue of this subsection to have knowledge of a fact ascertainable only with the help of expert advice so long as he has taken all reasonable steps to acquire (and, where appropriate, to act on) that advice.
The term “expert advice” is not defined in the Act. The Act does not set down any criteria for “expert advice”. In practice, it is not uncommon for parties to seek initial advice in an informal manner, for example, a property owner may ask a family member or friend in the engineering profession to have a look at his property and to advise him. Disputes will likely arise as to what persons are to be regarded as experts and what kinds of advice are to be regarded as “expert advice” for purposes of Section 6A(4)(b)(iii). There will also likely be disputes as to when it would have been reasonable for a plaintiff to seek and obtain legal advice. Does a property owner have a duty to make periodic inspections to check for potential problems before any physical indicators of such problems manifest? There is uncertainty as to whether an objective or subjective standard would be imposed for the question whether it was reasonable for the plaintiff to seek expert advice in the circumstances of the case.
Retrospective Effect
By virtue of Section 5(1) of the Limitation (Amendment) Act 2018, Section 6A has retrospective effect in the sense that it applies where the cause of action for an action has already accrued as at 1 September 2019. It is important to note that the section focuses on the accrual of cause of action and not the “starting date” or knowledge of a potential plaintiff for purposes of Section 6A. Therefore, the limitation period would be extended in accordance with Section 6A for cases involving negligence by which a potential plaintiff had sustained damage on or before 1 September 2019. However, Section 5(2) provides that the unamended Limitation Act continues to apply in cases where actions or proceedings have been commenced or are pending before 1 September 2019. In other words, the plaintiffs in actions or proceedings commenced before 1 September 2019 cannot take any advantage of Section 6A.
[i] A notable distinction between the English and Malaysia provisions is in relation to the definition for “material facts about the damage”: the English provision contains a definition for these words in Section 14A(7) whereas the Malaysian provision does not contain such definition.
[ii] Refer to the Hansard, D.R.3.4.2018, pp. 71-83.
[iii] The term “latent defects” was held by Mary Lim J (as her ladyship then was) to refer to defects that cannot be discovered by either reasonable inspection or testing even by a reasonably careful person skilled in the works in Sigma Elevator (M) Sdn Bhd v Isyoda (M) Sdn Bhd [2016] 10 MLJ 635.
[iv] Refer to Hudson’s Building and Engineering Contracts, 13th edition, pp. [213] to [214].
[v] Refer to Hudson’s Building and Engineering Contracts, 13th edition, p. [214].
[vi] Refer to Haward v Fawcetts [2006] 1 WLR 682 and Eagle v Redlime Ltd [2011] EWHC 838.
Co-written by
Chu Ai Li (view profile)
Partner , Azman Davidson & Co (Construction Law, Arbitration, Adjudication, Litigation, Administrative Law)
+603 2164 0200 (ext no. 123)
chu.aili@azmandavidson.com.my
Karen Ng Yueh Ying (view profile)
Partner , Azman Davidson & Co (Construction Law, Arbitration, Adjudication, General Litigation)
+603 2164 0200 (ext no. 227)
karen.ng@azmandavidson.com.my
