Defect Claims against Developers: An update on Limitation

Are you within the time limit to claim for your property damage?

If you are a property owner and you recently noticed latent defects or property damage such as cracks on your walls, floor or ceiling, then this article may be relevant to you.
On 3.4.2018, the Dewan Rakyat discussed and passed the Limitation (Amendment) Bill 2018 with a majority voice vote amending the Limitation Act 1953 (Act 254) to add Sections 6A, 24A and 29(2). The Government commenced a review of the amendments and considered countries which have implemented similar provisions such as Singapore. The Limitation (Amendment) Act 2018 (“the Amendment Act”) was gazetted on 4.5.2018 and will come into force on 1.9.2019.

What does this all mean?

Section 6A of the Amendment Act

Starting with the basics, Section 6(1) of the Limitation Act 1953 provides a time limit of 6 years to commence an action in tort. Through the addition of section 6A, property owners will be given an extension of up to 3 years, from the date of discovery of the latent defect, to commence an action against the developer.
What is a latent defect?

A latent defect is a hidden defect in the material and/or workmanship of an item on your property that may amount to malfunction or failure. However, latent defects are not discoverable through a general inspection, and are therefore sometimes called hidden defects.

The addition of Sections 6A(1) and 6A(2) will extend the time limit for a person wishing to commence an action to claim damages for negligence without personal injuries against a developer. These provisions will apply where you discover damage to your property, e.g. cracks on the walls, ceiling or floor, uneven flooring etc.

However, Section 6A(3) provides that no action can be commenced 15 years after the date on which the cause of action accrued.

The following scenarios illustrate Section 6A:

Scenario 1 (based on illustration (c) to Section 6A(2))

Ahmad bought a house from Developer X in the year 2000. In 2005, Ahmad discovered cracks which damaged the walls of his home. A building report revealed that the cracks appeared in 2002.

Ahmad has 3 years from the date of discovery (2005) to commence an action against the developer. The limitation period will expire in 2008.

Scenario 2 (based on illustration to Section 6A(3))

Pooja bought a house from Developer X in the year 2000. In 2017, Pooja discovered cracks which damaged the walls of her home. A building report revealed that the cracks had occurred in 2001.

Pooja cannot commence proceedings against the developer because the 15 year limitation period expired in 2016, that is, 15 years after the cause of action accrued in 2001.

Section 24A of the Amendment Act

Under Section 6A, the 3 years timer begins when knowledge of the damage is obtained. Section 24A deals with a situation where the person was under a disability on the date when the right of action accrued for which a period of limitation is prescribed under section 6A. Pursuant to Section 24A, the clock will begin to tick from the date when the person’s disability ceases. However, it is still subject to the 15 years limit period under Section 6A(3).

What qualifies as a disability?

Section 2 of the Limitation Act 1953 states that any person who is an infant or is of unsound mind is considered to be disabled.

The following scenarios illustrate Section 24A.

Scenario 3 (based on illustration (a) to Section 24A)

Abby bought a house from Developer X in the year 2000. In 2001, cracks developed damaging the walls of her home badly. The damage to the walls was discoverable in 2005, but Abby fell into a coma in 2004 and only regained consciousness in 2007.

Abby has 3 years from 2007 to commence an action against the developer for damages.

Scenario 4 (based on illustration (b) to Section 24A)

Adelyn bought a house from Developer X in the year 1999. In 2001, cracks developed damaging the walls of her home and were discoverable in the same year. However, Adelyn hit her head and had severe brain injuries in 2000 and only regained full control of herself and her property in 2017.

Adelyn would not be able to commence an action against Developer X as the 15 year limitation period lapsed in 2016, that is 15 years from 2001 when the cracks were discoverable.

Section 29(2) of the Limitation Act 1953

Section 29(2) provides that Section 6A will not apply to any action to which paragraph (1)(b) applies. Section 29(1)(b) provides for the right of action concealed by fraud. This would mean where an action is concealed by fraud, the 15 year period to commence an action against a developer for negligence will not apply. Where a cause of action is concealed by fraud, Section 6(1) Limitation Act 1953 would apply and an action may be commenced within 6 years from the discovery of the fraud.

Conclusion

Overall, these amendments better protect the interests of property owners. The amendments take into account the time period of latent defects appearing in properties and the circumstances surrounding the discovery of such defects. The amendments also appear to impose a high standard on developers to ensure that latent defects do not occur after 6 years.

Property owners should note that the provisions discussed above will apply regardless of the defect liability period stated in the sale and purchase agreement.
In summary, you may rely on Section 6A and commence an action if the following apply:

• You are a property owner;
• Latent defects are discovered in your property;
• 15 years from date on which the cause of action accrued has not lapsed; and
• Your disability (if any) has ceased within the 15 years from date on which the cause of action accrued.

By Raymond Mah & John Chan