WARRANTY, DEFECT LIABILITY, LONGSTOP … WHERE IS THE LIMIT?

​WARRANTY, DEFECT LIABILITY, LONGSTOP … WHERE IS THE LIMIT?

The 2 years’ Defect Liability Period (DLP), commencing from Vacant Possession (VP), is not a warranty? If so, what is a warranty?
 
Law of obligation suggests that whether a contract is held to be a condition, warranty or an innominate term is a fundamentally important distinctions. A breach in warranties, does not warrant the end of the contract, may give rise to right to sue for damages, i.e. loss due to defective work.[1]  Only court could determine the kind of remedy either right to terminate or damages only. [2]  In so doing, the court rely on, any detrimental cause foreseeable? Any delay caused? Value of performance not breach? Cost involved in conforming to the contract? Opportunity enjoyed by the defaulting party? Any consequences of prior-breach? Whether victim has been adequately compensated?

In essence, Malaysian court held that the law do not deprive the right of the owner to claim the developers for their right for having premises in the good and workmanlike manner.[3] It implies that the warranty does not stop at DLP. It is relatively easier to claim for damages under DLP, i.e. a defect form is filled up and the contractor shall rectify the defect in the time stipulated in the Sale and Purchase Agreement (SPA), as it is contractual. Above that, it has to proof negligence under Tort.[4]

Such proof of negligence is under the purview of the Limitation (Amendment) Act 2018 (Act) from its predecessor[5], actions in contract and tort shall be time-barred after the expiration of six years from the date on which the cause of action accrued; 6-year limitation period applies notwithstanding when the plaintiff discovers the damages.[6] This approach were heavily criticised being unjust where latent defects (non-visible), not immediately detectable upon inspection are discovered after the six-year limitation period.[7]

The amendment of the Act, introduces s.6A, with the 6-year time-barred remains when criteria are, action brought after the expiration period; due to negligence not involving personal injury; and action be brought within three years from the "starting date" and subject to a longstop of 15 years. The amended Act provided a ‘long-stop’ to any act of negligence not amounting to personal injury for the Developer and Contractor but not the Architect.
 
There is a catch. The amended Act defines "starting date" 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 … and a right to bring such action.”[8] ; Commencement depends on the person’s first knowledge; deemed to have the requisite knowledge when he knows of the damage for which it is claimed; and other facts relevant to the action, […][9]; implied with external expert’s advice; i.e. the "discoverability rule". So, there is in-reality, no end to be found.
 
DLP remains a warranty period under the contract provision but not tort liability, of just, fair and reasonable.[10] There is yet to be a finality to the issue of ‘long-stop’. Mirrored the English courts, there have not restricted application in UK's Limitation Act.[11] That is to say, for the Architects, Engineers and the allied professionals, alike, the liability under Street, Drainage and Building Act 1974 is for perpetuity and the ‘long-stop’ does not apply.[12]

------------------------------------------------------

[1] Bettini v Gye(1876)1QBD183
[2] Hong Kong Fir Shipping v Kawasaki Kisen[1962]2QB26
[3] The Ara Joint Management Body v Mammoth Land & Development Sdn Bhd [2017] MLJU 631; Fong Wan Reality v PJ Condominium S/B [2010]10 CLJ 112
[4] Donoghue v Stevenson[1932]AC562; Hedley Byrne v Heller[1964]AC465; and Junior Books v Veitchi[1983]1AC520
[5] Limitation Act 1953 (Limitation Act)
[6] AmBank (M) Bhd v Abdul Aziz Hassan & Ors [2010] 3 MLJ 784
[7] Sharikat Ying Mui Sdn Bhd v Hoh Kiang Po [2015] MLJU 621
[8] S.6A(4)(a)
[9] S.6A(4)(b)
[10] Caparo Industries v Dickman[1990] 1AC.605
[11] s.14A, UK's Limitation Act 1980: Haward and others v Fawcetts (a firm) [2006] 3 All ER 497; and Blakemores LDP (in administration) v Scott and others [2015] EWCA Civ 999
[12] Bellefield Computer Services v E. Turner & Sons Ltd (No. 2) [2002] EWCA Civ 1823