Understanding the limitation period for contractual claims in Malaysia is crucial for both individuals and businesses to ensure that legal rights are exercised within the prescribed time frames. The Limitation Act 1953 governs these periods, and recent amendments—particularly the introduction of Section 6A—have addressed significant gaps, especially concerning latent defects.
1. General Limitation Period for Contractual Claims
Under Section 6(1)(a) of the Limitation Act 1953, actions founded on contracts must be initiated within six (6) years from the date the cause of action accrues. This typically refers to the date of breach—meaning if someone breaches a contract, the clock starts ticking from that day.
2. When Does the Limitation Period Start?
In most contractual cases, the cause of action arises the moment the breach happens. However, complexities occur in scenarios involving latent damage—where the damage is not immediately discoverable.
Recognizing the hardship this caused, Section 6A was introduced via amendment in 2018 (effective 1 September 2019), which provides that in cases of negligence not involving personal injury, the claimant has:
- 3 years from the date of discovery of the damage,
- Subject to a long-stop limit of 15 years from the date the cause of action originally accrued.
3. Landmark Cases on Limitation Periods
AmBank (M) Bhd v Abdul Aziz Hassan & Ors [2010] 3 MLJ 784
The Court of Appeal held that the six-year limitation period applies strictly from the date the cause of action accrues, regardless of when the damage is discovered.
Disclaimer: This case was decided before the incorporation of Section 6A addressing latent damage and may not reflect the current position in such contexts.
Sharikat Ying Mui Sdn Bhd v Hoh Kiang Po [2015] MLJU 621
The High Court in this case acknowledged the unfairness that may arise in latent damage cases, as strict application of the limitation law could deny justice. It became one of the influential cases cited during discussions leading up to the eventual amendment incorporating Section 6A.
Case 3: Toh Puan D Heryati bt Abdul Rahim v Lau Ban Tin & Anor [2020] 2 MLJ 706
In this Federal Court case, the plaintiff sought to enforce a share sale agreement and, alternatively, claimed damages for its breach. The Court held that the plaintiff’s claim was fundamentally for breach of contract, specifically the share sale agreement, rather than a claim for the recovery of land. Consequently, the Court determined that the applicable limitation period was six years, as stipulated under Section 6(1)(a) of the Limitation Act 1953, rather than the twelve-year period that applies to actions for the recovery of land. This decision underscores the importance of accurately characterizing the nature of a claim to determine the correct limitation period.
This case highlights the necessity of understanding the specific nature of a legal claim to apply the appropriate limitation period, emphasizing the critical role of Section 6(1)(a) in contractual disputes.
4. FAQs: Common Questions on Limitation
A: Normally, your claim would be time-barred. However, if the issue involves latent defects not involving personal injury, Section 6A may grant an extra 3 years from discovery, subject to a 15-year cap from the original breach.
A: Yes. Under Section 29, if the defendant concealed the cause of action through fraud, the limitation clock starts only when the fraud was discovered or reasonably could have been.
A: Yes. To enforce a judgment, under Section 6(3), the limitation period is 12 years from the date the judgment became enforceable.
Conclusion
Being aware of limitation periods is vital to preserving legal rights. The 2018 amendment to the Limitation Act, especially the addition of Section 6A, demonstrates Malaysia’s evolving approach to equitable justice in cases involving hidden or latent issues. Still, anyone with a potential legal claim should act promptly and seek legal advice to avoid being out of time.
