Tort: Negligence — Professional negligence — Negligent misstatement — Suit by appellants against their solicitors for professional negligence and negligent misstatement relating to preparation of Sales and Purchase Agreement — Time-period for limitation for tortious claim arising from negligently prepared agreement — Accrual of cause of action in claim of negligence — Whether suit time-barred under Limitation Act 1953

The appellants, husband and wife, sued their lawyers for professional negligence and negligent misstatement relating to the preparation of a Sales and Purchase Agreement ("SPA") in 2004 for the purchase of a landed property from a housing developer. The appellants alleged that the respondents were negligent in, inter alia, preparing the SPA, and in not conducting a land search; that the respondents made negligent misstatements on their actions in relation to the charge and the search, which statements were relied on by the appellants to their detriment; and for also deliberately covering up their negligence. The respondents denied liability, claiming that, among others, they owed no duty of care to the appellants, and there was, in any case, no breach of any duty, and the claim was time-barred under the statute of limitations. The suit was filed in 2015 and was allowed by the High Court. The decision was, however, set aside on appeal because the claim was held to be time-barred under the Limitation Act 1953 ("Act 254"). Leave was granted on the following two questions of law determined by this Court; both questions concerned the issue of limitation: (1) in a tortious claim arising from a negligently prepared agreement, did the timeperiod for limitation begin to run from the date of the impugned agreement, or did time begin to run from the date of an infringement or threat of infringement of the claimant's right caused by the impugned agreement?; and (2) in respect of when the limitation period started to run in a claim of negligence, was the Court of Appeal's decision in AmBank (M) Bhd v. Abdul Aziz Hassan & Ors still good law in light of the recent Court of Appeal's decisions of Sabarudin Othman & Anor v. Malayan Banking Berhad And Other Appeals and Ambank (M) Bhd v. Kamariyah Hamdan & Anor?

Held (allowing the appeal with costs):

(1) Preliminarily, and this was absolutely vital, it had to be appreciated that the High Court's numerous findings of negligence on the part of the respondents remained undisturbed by the Court of Appeal. The failure of the respondents to do the requisite land search was also not in controversy. The same might be said of the conduct of the respondents in "covering up" their negligent acts, by first asserting or claiming that a search had been done when, in fact, none was; as well as a host of other acts of negligence as alleged by the appellants. In other words, the whole of the appellants' claim against the respondents for professional negligence and negligent misstatement in the manner and for the reasons pleaded, stood proved. Although allowed at first instance, the claim was dismissed on appeal, but only because of the issue of limitation. (para 21)

(2) Subject to particular facts which might arise and the pleas made, the time-period for limitation for a tortious claim arising from a negligently prepared agreement ran from the date of actual damage, and not some contingent damage. The threat of an infringement had to be unequivocal and real. In this appeal, when the appellants, as the respondents' clients, asked for evidence of the search at the Land Registry, a perfectly valid request, the respondents were evasive and prevaricated, they then misrepresented the truth and, ultimately, they lied. These responses were not in the least in keeping with their duties as solicitors. The respondents' responses to the appellants' queries and requests were not matters to be taken into consideration when determining quantum; they were further wrongs committed as solicitors who were under a continuing duty of care to their clients. From the facts, it was evident that the appellants did not suffer loss or damage until Bank Islam exercised its right under a charge on the land and a formal notice to foreclose or proceed for an order of sale was issued on 2 September 2014. Bank Islam's earlier notice of 14 November 2013 sent through its solicitors of a notice to foreclose and a demand to pay was still a contingent loss. Further, it would be unjust and unreasonable to require the appellants to institute a claim before the contingency, which was a claim by Bank Islam, was fulfilled. The appellants' claim initiated in 2016 was thus, not time-barred, and the Court of Appeal was in error in holding otherwise. The answer to the first question was that time ran from the date of infringement of the claimant's rights and not from the date of the agreement itself. (paras 68-72)

(3) The second question was premised on the concepts of discoverability or knowledge of the negligence. This issue had been substantially addressed by the new s 6A of Act 254. However, this new provision did not apply to the appellants' claim, as it was filed before s 6A came into force. The principle of knowledge or discoverability of breach with reasonable diligence was essential for establishing accrual of cause of action. On the facts of this appeal, the appellants themselves had been continuously misled and misrepresented the true facts by the respondents. If time ran from the date of preparation of the relevant agreements, especially the SPA, it was clear that even six years after that date, the appellants were in no position and could not have, with reasonable diligence, known that the SPA had errors or that the respondents were negligent in its preparation. It was not until they did their own search that the appellants found out about the charge. Inquiring with their solicitors about the status of the search would have been prudent and the most reasonable course of action or conduct that anyone similarly circumstanced would have taken. This reading and interpretation "advances rather than retards" the accrual of cause of action "within the bounds of sense and reasonableness". After all, that was ultimately the policy and intent of Act 254, which was to provide for limitations in civil litigation having balanced competing rights and interests of the respective parties. The answer to the second question was, thus, in the negative. (paras 73-75, 83, 84 & 85)

Case(s) referred to:

AJS v. JMH & Another Appeal [2022] 1 MLRA 214 (refd)

AmBank (M) Bhd v. Abdul Aziz Hassan & Ors [2009] 4 MLRA 458 (overd)

Ambank (M) Bhd v. Kamariyah Hamdan & Anor [2011] 2 MLRA 623 (folld)

Backhouse v. Bonomi [1861] 9 HL Cas 503 (refd)

Bell v. Peter Browne & Co [1990] 3 All ER 124 (refd)

Board of Trade v. Cayzer, Irvine & Co [1927] AC 610 (refd)

Bursa Malaysia Securities Bhd v. Mohd Afrizan Husain [2022] 4 MLRA 547 (refd)

Cartledge v. E Jopling & Sons Ltd [1963] 1 All ER 341 (refd)

Coburn v. Colledge [1897] 1 QB 702 (refd)

Costa v. Georghiou [1985] 1 PN 201 (refd)

Credit Corporation (M) Bhd v. Fong Tak Sing [1991] 1 MLRA 293 (refd)

Darley Main Colliery Co v. Mitchell [1886] 11 App Cas 127 (refd)

Datuk Bandar Kuala Lumpur v. Perbadanan Pengurusan Trellises & Ors And Other Appeals [2023] 4 MLRA 114 (refd)

DW Moore & Co Ltd v. Ferrier [1988] 1 WLR 267 (refd)

Forster v. Outred & Co [1982] 1 WLR 86 (refd)

Goh Kiang Heng v. Mohd Ali Abd Majid [1997] 2 MLRH 73 (refd)

Henderson v. Merrett Syndicates Ltd [1995] 2 AC 145 (refd)

Law Society v. Sephton & Co (A Firm) And Others [2006] 2 AC 543 (refd)

Mat Abu Man v. Medical Superintendent General Hospital Taiping & Ors [1988] 1 MLRA 294 (refd)

Messrs Yong & Co v. Wee Hood Teck Development Corporation [1984] 1 MLRA 165 (refd)

Midland Bank Trust Co Ltd & Anor v. Hett, Stubbs & Kemp (A Firm) [1978] 3 All ER 571 (refd)

Muhamad Solleh Saarani & Anor v. Norruhadi Omar & Ors [2010] 6 MLRH 91 (refd)

Nasri v. Mesah [1970] 1 MLRA 363 (refd)

Neogh Soo Oh & Ors v. G Rethinasamy [1983] 1 MLRH 175 (refd)

Nyo Nyo Aye v. Kevin Sathiaseelan Ramakrishnan & Anor And Another Appeal [2020] 3 MLRA 535 (refd)

RB Policies at Lloyd's v. Butler [1950] 1 KBD 76 (refd)

Reeves v. Butcher [1891] 2 QB 509 (refd)

Ross v. Caunters [1980] Ch 297 (refd)

Sabarudin Othman & Anor v. Malayan Banking Berhad And Other Appeals [2018] 4 MLRA 384 (folld)

SWF Hoists and Industrial Equipment Pty v. State Government Insurance Commission [1990] FCA 402 (refd)

Tan Kah Fatt & Anor v. Tan Ying [2023] 2 MLRA 525 (refd)

Tebin Mostapa v. Hulba'Dunyal Balia & Anor [2020] 4 MLRA 394 (refd)

The Great Eastern Life Assurance Co Ltd v. Indra Janardhana Menon [2005] 2 MLRA 295 (refd)

Vista Specialist Eye Centre Sdn Bhd v. Dato' Loo Soo Yong & Another Appeal [2016] MLRAU 320 (refd)

Wardley Australia Ltd v. Western Australia [1992] 19 ALR 247 (refd)

Yew Bon Tew & Anor v. Kenderaan Bas Mara [1982] 1 MLRA 425 (refd)

Legislation referred to:

Interpretation Acts 1948 & 1967, s 17A

Limitation (Amendment) Act 2018, ss 6A, 24A

Limitation Act 1953, ss 2, 3, 4, 6(1)(a), 29, 30, 32, 33

Other(s) referred to:

Andrew McGee, Limitation Periods (7th Edn), pp 26, 34

Choong Yeow Choy, Law of Limitation [Butterworths 1995], pp 3-8

Counsel:

For the appellants: Ong Yu Shin (Ooi Keng Liang, Lim Wooi Ying & Yu Haa Xi with him); M/s Shariffah, Ooi & Co

For the respondents: Murelidaran Navaratnam (Vijaya Navaratnam & Felix Lim Xian Feng with him); M/s Mureli Navaratnam

JUDGMENT

Mary Lim Thiam Suan FCJ:

[1] The appellants, husband and wife, sued their lawyers for professional negligence and negligent misstatement relating to the preparation of a Sales and Purchase Agreement in 2004. The suit was filed in 2015. The claim was allowed by the High Court after a full trial. The decision was, however, set aside on appeal because the claim was held to be time-barred under the Limitation Act of 1953 [Act 254]. The High Court did not deal with this issue, although it was pleaded and submitted on by the parties.

[2] Leave was granted on the following two questions of law to be determined by this Court; both questions concern the issue of limitation:

First Question

In a tortious claim arising from a negligently prepared agreement, does the time-period for limitation begin to run from the date of the impugned agreement; or does time begin to run from the date of an infringement or threat of infringement of the claimant's right caused by the impugned agreement?

Second Question

In respect of when the limitation period starts to run in a claim of negligence, is the Court of Appeal's decision in AmBank (M) Bhd v. Abdul Aziz Hassan & Ors [2009] 4 MLRA 458 still good law in light of the recent Court of Appeal decisions of Sabarudin Othman & Anor v. Malayan Banking Berhad And Other Appeals [2018] 4 MLRA 384 and Ambank (M) Bhd v. Kamariyah Hamdan & Anor [2011] 2 MLRA 623?

[3] After a full hearing, we found merits in the appellants' arguments and unanimously allowed the appeal. We set aside the decision of the Court of Appeal and restored the decision of the High Court.

The Sales And Purchase Agreement (SPA)

[4] The appellants purchased landed property from a housing developer, Reka Mesra Sdn Bhd. They engaged RFC Consultancy Sdn Bhd to build a threestorey semi'detached house on that property. The respondents prepared both the Sales and Purchase Agreement [SPA] and construction agreement for the appellants [the 1st respondent is a partner in the 2nd respondent firm of solicitors]. Both agreements are dated 22 April 2004. The respondents left Item 3 of the First Schedule to the SPA for details on "Name of Bank/Financier", blank. This signified that the property was not encumbered or charged.

[5] The house was completed in 2006 and the appellants moved in. They and their children now reside in that house. That family home is part of a housing community known as Krystal Garden.

[6] In 2009, the appellants learnt from their neighbours that several plots of land in Krystal Garden were encumbered, charged to Bank Islam, and that a Letter of Disclaimer from Bank Islam was required. This prompted the appellants to require this Letter of Disclaimer through the respondents. The respondents, in turn, wrote to Bank Islam, on 30 July 2009, requesting for this Letter of Disclaimer. The bank did not respond.

[7] On 15 June 2011, Reka Mesra Sdn Bhd was wound'up. In November 2011, the appellants received a letter from Pejabat Tanah & Galian [PTG] informing them that landowners who do not have a Letter of Disclaimer would be required to pay a redemption sum as it was Bank Islam that had initiated the winding'up proceedings against Reka Mesra Sdn Bhd. Because of this, the appellants, once again, approached the respondents in January 2012, this time, asking for a copy of the respondents' search at the Land Office, presumably done when preparing the SPA.

[8] On 16 February 2012, the appellants attended a meeting at the office of the PTG, convened specifically to discuss the matter of titles in Krystal Garden. It was at that meeting that the appellants learnt that their properties were charged to Bank Islam.

[9] Around this same time in February 2012, the respondents responded to the appellants' query on the search at the Land Office by email. They told the appellants that they were unable to locate their documents on the search. In March 2012, the respondents speculated to the appellants that the search must have yielded a negative result, which is why they were unable to locate the search documents - see para 19 of the Statement of Claim.

[10] In fact, the respondents were somewhat economical with the truth. As it turned out, they actually did not conduct any land search at the time of preparation of the SPA. Such a search is almost always carried out as part of good and proper conveyancing practice in order to verify the status of the property, whether the property was encumbered by any charge etc. Instead, the respondents simply left Item 3 of the First Schedule to the SPA for details on "Name of Bank/Financier", blank.

[11] The appellants lodged a complaint against the 1st respondent before the Disciplinary Board on 22 May 2012. On 22 April 2014, the Disciplinary Committee found the 1st respondent negligent in the preparation of the SPA and recommended that the 1st respondent be reprimanded and fined. The findings and recommendation were accepted by the Disciplinary Board on 22 November 2014. There was no appeal by the 1st respondent.

[12] Meanwhile, Bank Islam informed the appellants, on 2 September 2014, that they had to pay a redemption sum of RM900,000,00 no later than 31 October 2014; failing which the bank would apply for the property to be auctioned off.

[13] The appellants decided to sue the respondents for professional negligence and negligent misstatement on 28 July 2015 at the Sessions Court. The appellants alleged that the respondents were negligent in, inter alia, preparing the SPA, and in not conducting a land search; that the respondents made negligent misstatements on their actions in relation to the charge and the search, which statements were relied on by the appellants to their detriment; and also for deliberately covering up their negligence. The respondents denied liability, claiming, inter alia, they owed no duty of care to the appellants, there was, in any case, no breach of any duty, and the claim was time-barred under the statute of limitations. The suit was later transferred to the High Court.

Decisions Of The High Court & The Court Of Appeal

[14] After a full trial, the claim was dismissed by the High Court on 30 November 2017. This decision was, however, reversed on appeal and a re'trial was ordered on 11 July 2018 by the Court of Appeal. At the end of this new hearing, the claim was allowed. The High Court found the claim proved; that the respondents owed the appellants a duty of care, that there was a breach of that duty in the various ways complained of, and that damage was suffered as a result of the breach. The learned Judge awarded compensation of a sum of RM1.5 million, together with interest and costs.

[15] On appeal, this decision was overturned. The Court of Appeal agreed with the respondents, finding the learned Judge had erred in not addressing the defence of limitation, which it went on to say was sustainable in law and on the facts.

[16] On that issue, the Court of Appeal found the claim time-barred, that for an action founded in tort, the six'year period under s 6(1)(a) of the Limitation Act 1953 [Act 254] starts to run from the date when the SPA was prepared in 2004, and not from when the appellants discovered the damage in 2013/2014 when Bank Islam issued the formal Foreclosure Notice and demanded the redemption sum of RM900,000.00. The Court of Appeal cited AmBank (M) Bhd v. Abdul Aziz Hassan & Ors [2009] 4 MLRA 458 and Vista Specialist Eye Centre Sdn Bhd v. Dato' Loo Soo Yong & Another Appeal [2016] MLRAU 320 in support.

[17] According to the Court of Appeal, since the negligence of the respondents was in not conducting the land search in 2004 and to ensure that the appropriate column in the SPA was properly entered with the correct details, the period of limitation [para 41]:

"...can be said to have begun to run only from the first clear and unequivocal threat to the plaintiffs' right to purchase the said property, free from all liens and encumbrances arising from the defendants' breach of their duty of care. Thus, the plaintiffs would have suffered damage, the moment the SPA was executed as the plaintiffs would have contracted to purchase a property which was encumbered with a charge and which charge was not reflected in the SPA, thereby, placing the plaintiffs in a position of detriment. Hence, the plaintiffs' cause of action in the present case arose on the date when the plaintiffs executed the SPA, which is either on 6 April 2004 or 22 April 2004".

[18] The Court of Appeal added at para [44] that, "even if the plaintiffs' cause of action for tort does not arise on the date when the plaintiffs executed the SPA, the cause of action for the tort of professional negligence would have accrued on the date when the plaintiffs paid the full purchase price for the said property, which is on 26 May 2004, as the plaintiffs would have suffered damage by virtue of being owners of a property, which is encumbered with a charge, thereby placing the plaintiffs in a position of detriment".

[19] The Court of Appeal further found the appellants not entitled to rely on s 29 of the Limitation Act 1953 due to want of plea.

Our Deliberations & Analysis

[20] The two questions of law posed concerns the matter of limitation. For a great many of cases that pass through the civil litigation system in this country, limitation is not an issue and the ascertainment of whether a given claim is barred by the statute of limitations is simple, obvious, and uncontroversial. This is, however, not the case in the present appeal.

[21] Preliminarily, and this is absolutely vital, it must be appreciated that the High Court's numerous findings of negligence on the part of the respondents remains undisturbed by the Court of Appeal. The failure of the respondents to do the requisite land search is also not in controversy. The same may be said of the conduct of the respondents in "covering up" their negligent acts, by first asserting or claiming that a search had been done when, in fact, none was; as well as a host of other acts of negligence as alleged by the appellants. In other words, the whole of the appellants' claims against the respondents for professional negligence and negligent misstatement in the manner and for the reasons pleaded, stands proved. Although allowed at first instance, the claim was dismissed on appeal, but only because of the issue of limitation.

[22] For the purposes of s 6 of the Limitation Act 1953 [Act 254], when does time run in a claim or cause of action founded in the torts of negligence and negligent misstatement? Is it from the date of the act complained of, or is there some other point in time or event that is more relevant or appropriate? What if there is more than a single act; that there is a series of acts or actions complained of as was the case in this appeal. Does time run from the first or last act complained of? To some extent, there are inroads introduced vide the Limitation (Amendment) Act 2018 [Act A1566/2018] with the new ss 6A and 24A; but that is from the aspect of discoverability of damage.

[23] The answer to this requires us to return to some fundamental concepts and principles. First, s 6 of the Limitation Act 1953 [Act 254], which reads as follows:

Limitation of actions of contract and tort and certain other actions

6. (1) Save as hereinafter provided, the following actions shall not be brought after the expiration of six years from the date on which the cause of action accrued, that is to say-

(a) actions founded on a contract or on tort;

(b) actions to enforce a recognisance;

(c) actions to enforce an award;

(d) actions to recover any sum recoverable by virtue of any written law other than a penalty or forfeiture or of a sum by way of penalty or forfeiture.

[Emphasis Added]

[24] Section 6(1) provides that, an action founded on a contract or on tort shall not be brought after the expiration of six years from the date on which the cause of action accrued. The causes of action here were in tort, and s 6(1) requires the civil claim to have been filed before the expiration of six years from the date on which the cause of action accrued.

[25] Limitation is generally raised as a defence and, if successfully relied on, renders the cause of action, though valid, irrecoverable insofar as the remedies are concerned. It, however, must be pleaded - see s 4:

4. Nothing in this Act shall operate as a bar to an action unless this Act has been expressly pleaded as a defence thereto in any case where, under any written law relating to civil procedure for the time being in force, such a defence is required to be so pleaded.

[26] Limitation is also a creation of statute, unlike the common law principle of laches - see Law of Limitation by Choong Yeow Choy [Butterworths 1995], pp 3 to 8. At common law, there is no time limit on a person's right to bring an action for tort and it is this principle of laches that sieves out stale claims.

[27] As a creature of statute, limitation under the Limitation Act is procedural, as it does not affect accrued rights and interests. Limitation does not extinguish rights, it merely bars access to remedies. There is, thus, a need to construe the relevant provision against the whole statute; and not just read each section unto itself as if disparate and unrelated to the rest.

[28] When interpreting statutes, there must be proper regard to s 17A of the Interpretation Acts 1948 & 1967 [Act 388]. It should not be and is, in fact, no longer a case of applying the literal rule first and only resorting to the purposive rule of interpretation when all else fails with the introduction of this purposive rule of interpretation into legislation, rendering this rule no longer a common law canon of interpretation, but one with statutory force. This is clear from the line of authorities emanating from this Court - see Tebin Mostapa v. HulbaDanyal Balia & Anor [2020] 4 MLRA 394; Bursa Malaysia Securities Bhd v. Mohd Afrizan Husain [2022] 4 MLRA 547; AJS v. JMH & Another Appeal [2022] 1 MLRA 214; Tan Kah Fatt & Anor v. Tan Ying [2023] 2 MLRA 525; Datuk Bandar Kuala Lumpur v. Perbadanan Pengurusan Trellises & Ors And Other Appeals [2023] 4 MLRA 114.

[29] These authorities remind us of a contextual construction within the purview or in accordance with the intent or object of the legislation, that is, the purposive rule of construction as statutorily enunciated in s 17A. The reading or meaning that the Courts give to the provisions must promote and not stifle the object or intent of the legislation concerned. In any event, it would be difficult to envisage an interpretation which runs afoul of the literal rule of interpretation just to accord with the purposive rule as legislation is written in accord and to facilitate the intent and purpose of the legislation, and not otherwise.

[30] The intent and object of any legislation is usually gathered from the long title of the legislation itself. Here, the long title reads that it is "An Act to provide for the limitation of actions and arbitrations". The term "limitation" itself is not defined in Act 254 but the term "action" is defined in s 2 as "includes a suit or any other proceeding in a Court of law". This broad definition throws some light or indication as to the intent, purpose and scope of Act 254. Although, at first glance, this expansive definition seemingly suggests that the scope or cover of Act 254 may not necessarily be confined to actions filed in a Court of law, it actually is. The word "includes" refers or pertains to the type of proceeding that may be initiated in a Court of law, as opposed to where the action may be initiated. An action may be commenced in a Court of law through a civil suit, originating summons, motion, or petition [depending on the rights or interests invoked and legislation relied on, though the Rules of Court 2012 now prescribe for two primary originating processes]. However, under the English Limitation Act of 1980 and the various jurisdictions of the Civil Courts in England, Andrew McGee in Limitation Periods at p 26 [7th Edition, Sweet & Maxwell 2014] opines that, "time limits do not apply to an action which is not governed by the 1980 Act at all, such as certain actions for equitable relief or an action asking the Court to exercise its inherent jurisdiction over a solicitor". It is arguable that a persuasive argument to like effect may be made in relation to our Act 254 but that is not the concern in this appeal.

[31] What is of concern here is the validity of the defence of limitation raised. That determination is one for the Courts and, when interpreting and applying the provisions of Act 254, the current canons of interpretation as decided by the apex Court apply, a point already alluded to earlier.

[32] Returning then to the task at hand, although the term "limitation" is not defined in Act 254, the term assumes a particular meaning in the administration of justice; with Hashim Yeop Sani SCJ in Credit Corporation (M) Bhd v. Fong Tak Sing [1991] 1 MLRA 293 explaining the policy reasons for the existence of limitation:

"The doctrine of limitation is said to be based on two broad considerations.Firstly, there is a presumption that a right not exercised for a long time is nonexistent. The other consideration is that it is necessary that matters of right, in general, should not be left too long in a state of uncertainty or doubt or suspense.

The limitation law is promulgated for the primary object of discouraging plaintiffs from sleeping on their actions and more importantly, to have a definite end to litigation. This is in accord with the maxim interest reipublicae ut sit finis litium, that in the interest of the state, there must be an end to litigation.

The rationale of the limitation law should be appreciated and enforced by the Courts."

[33] In Yew Bon Tew & Anor v. Kenderaan Bas Mara [1982] 1 MLRA 425, the Privy Council explained that, "when a period of limitation has expired, a potential defendant should be able to assume that he is no longer at risk from a stale claim. He should be able to part with his papers if they exist and discard any proofs of witnesses which have been taken, discharge his solicitor if he has been retained, and order his affairs on the basis that his potential liability has gone. That is the whole purpose of the limitation defence".

[34] The statute of limitations, thus, serves to limit or provide for a limit in terms of time by which action in Court or arbitration may be commenced to enforce rights, interests, benefits or to seek some relief or remedy. Upon expiration of the limitation period, the claim is barred; hence the phrase, "time-barred".

[35] That bar, however, bars only the right to judicial relief or remedies but not the cause of action which remains complete and not extinguished. Limitation merely takes away the judicial remedy as a defendant may choose not to raise limitation. Thus, until limitation is pleaded or raised as a defence [see s 4 of Act 254], a plaintiff's cause of action is not regarded as time-barred.

[36] The period of time prescribed in Act 254 carries the appropriate formula for computation of a period depending on whether it is an action in contract or tort; actions to recover land and rent; recover money secured by mortgage or charge, or to recover proceeds of the sale of land; or simply actions in respect of trust property or personal estate of deceased persons. Besides these prescriptive provisions, there are provisions dealing with extensions of limitation period in specific situations; for example, in case of disability; effect of part payment, acknowledgement and similar circumstances; as well as the postponement of limitation period.

[37] All this, however, does not mean that Act 254 is the final or complete word on the law of limitations, that it is a code containing comprehensive and exhaustive provisions on limitations. This is obvious from the terms of ss 3, 30 and 33, that there may be other laws relating to limitation; for instance, the Public Authorities Protection Act 1948 [Act 198], that those laws are to apply instead of Act 254 or to apply alongside Act 254, depending on the specific terms of the provision. The view expressed in Muhamad Solleh Saarani & Anor v. Norruhadi Omar & Ors [2010] 6 MLRH 91 that the Limitation Act is "special law and is a complete code by itself " is, thus, incorrect.

[38] In any case, there is also s 32 of Act 254 which reads as follows:

32. Nothing in this Act shall affect any equitable jurisdiction to refuse relief on the ground of acquiescence, laches, or otherwise.

[39] Section 32 suggests that, even if a claim is not time-barred or if the limitation laws do not apply, the claim may, nevertheless, be refused on grounds founded in equity. This fortifies the earlier view that Act 254 is not a complete codification of the law on limitation of actions; neither is it to apply to the exclusion of equitable considerations. This accords with the view expressed by Andrew McGee in Limitation Periods at p 34 (supra) that, in a certain number of cases, the effect of an expiry of the period of limitation is to extinguish, entirely, the plaintiff's right, and not merely the access to a remedy. Examples cited being actions for recovery of land, conversion, and certain actions filed under the English Consumer Protection Act 1987 and the Hague-Visby Rules.

[40] With that backdrop and acknowledging the object and policy reasons behind the intent of the legislation, appropriate care and caution must be exercised when determining whether an action is or is not statute barred. The balancing of rights between potential claimants and defendants is sound and necessary for the proper administration of justice, but it is an exercise conducted by the Court and no other. It is a judicial exercise involving interpretation and application of the law to the particular facts.

[41] In the appeal before us, the appellants' Statement of Claim starts with the contractual relationship between the parties. However, the claim is not founded on that contractual relationship; it is grounded in tort. It claims the existence of a duty of care owed by the respondents to them, that there is a breach of that duty of care in the manner and for the reasons already set out in the earlier part of this judgment; and that by reason of the breach, the appellants have suffered damage in the value of their property and other damage. As pointed out earlier, all these elements were successfully established by the appellants and the findings of fact by the High Court remained undisturbed by the Court of Appeal. There was no appeal by the respondents. The only issue was that of limitation.

[42] Section 6(1)(a) provides that the time limited for filing of the action founded in tort is six years from the date on which the cause of action accrued. This phrase "cause of action," too, is not defined in the Act. Numerous case laws from here and other jurisdictions have attempted some definition, much of which may now be described as trite. A closer examination and appreciation on what that all-important term means is nevertheless warranted.

[43] We start with the Supreme Court decision in Credit Corporation (M) Bhd v. Fong Tak Sin (supra) cited earlier for the rationale behind limitation laws. At pp 294-295, the Supreme Court explained what the term "cause of action" means:

In Cooke v. Gill [1873] LR 8 CP 107, Brett J defined "a cause of action" to mean "every fact which is material to be proved to entitle the plaintiff to succeed." This definition was subsequently approved by the Court of Appeal in Read v. Brown [1888] 22 QBD 128. After reviewing the authorities, Yong J, in Lim Kean v. Choo Koon [1969] 1 MLRH 562, came to the conclusion that the period of limitation does not begin to run "until there is a complete cause of action". In that case, he held that the plaintiff's cause of action was not complete until an order is obtained from the Rent Assessment Board fixing the amount of the rent legally recoverable under the Control of Rent Ordinance. He accordingly held that the period of limitation commenced to run only from the date of the order of the Board. From established authorities, we can now accept that the cause of action normally accrues when there is, in existence, a person who can sue and another who can be sued, and when all the facts have happened which are material to be proved to entitle the plaintiff to succeed.

[Emphasis Added]

[44] Thus, following Credit Corporation, "cause of action accrues" means, when all the material facts required to successfully prove a claim either exists or has happened and this includes the existence of a person who can sue and another who can be sued. In Credit Corporation, the decision of RB Policies at Lloyd's v. Butler [1950] 1 KBD 76 was cited for the proposition that, so long as there is, in existence, such persons to be sued, it does not matter that their identities or whereabouts are not known or available before a cause of action is said to have accrued. All that is required is that there exists such a person or tortfeasor but his identity may be unknown, or his whereabouts untraceable, per Streatfield J:

"Is it to be said that because a person is, possibly only temporarily, untraceable, he is not, in existence, or cannot be sued? Whoever the thief was, if he had been traceable, he could have been sued: so I doubt whether it can be said that there was no person in existence, for the purpose of that definition, who could have been sued."

[45] In RB Policies, a car was stolen and the identity of the thief was not known and the car was not found till long after the limitation period had set in. By this time, the car had changed ownership a few times and even had a different registration number. The owners of the car sued the defendant, who was an innocent purchaser for value of the car, for its recovery under the tort of conversion. In finding the claim time-barred, the Court held that it did not matter if the identity of the thief was unknown. According to Streatfield J, "... therefore, that prima facie, as soon as there is a cause of action (as there clearly was in the present case, the moment the motor'car was stolen) time begins to run notwithstanding the fact that the plaintiff is ignorant of the identity of the defendant".

[46] Thus, two principles emerge: 1) a cause of action accrues when damage is suffered; 2) the cause of action is complete when there is a plaintiff who can sue and a defendant who can be sued, and when the elements of duty, breach and damage are all satisfied - see Coburn v. Colledge [1897] 1 QB 702. The latter is when the cause of action becomes actionable or, "possible" [see Board of Trade v. Cayzer, Irvine & Co [1927] AC 610.

[47] In Nasri v. Mesah [1970] 1 MLRA 363, Gill FJ described a cause of action as "the entire set of facts that gives rise to an enforceable claim; the phrase comprises every fact which, if traversed, the plaintiff must prove in order to obtain judgment (per Esher MR in Read v. Brown)". The Federal Court went on to refer to Reeves v. Butcher [1891] 2 QB 509, where Lindley LJ said:

"This expression, 'cause of action', has been repeatedly the subject of decision, and it has been held, particularly in Hemp v. Garland, decided in 1843, that the cause of action arises at the time when the debt could first have been recovered by action. The right to bring an action may arise on various events; but it has always been held that the statute runs from the earliest time at which an action could be brought".

[48] What material facts have to be proved will vary from case to case, largely dependent on the pleaded case. When the defence of limitation is raised, the burden of pleading and proving that the action was brought within the time prescribed under Act 254 rests with the appellants. In Cartledge v. E Jopling & Sons Ltd [1963] 1 All ER 341, Lord Pearce said:

"I agree that when a defendant raises the statute of limitation, the initial onus is on the plaintiff to prove that his cause of action occurred within the statutory period. When, however, a plaintiff has proved an accrual of damage within six years... the burden passes to the defendants to show that the apparent accrual of cause of action is misleading and that, in reality, the cause of action accrued at an earlier date."

First Question

[49] Having set out the relevant principles for consideration, we now return to the questions posed earlier of when exactly does time begin to run for actions founded in the torts of negligence and negligent misstatement; and what happens if there are several acts or a series of actions committed? More specifically, in a tortious claim arising from a negligently prepared agreement, does the time-period for limitation begin to run from the date of the impugned agreement; or does time begin to run from the date of an infringement or threat of infringement of the claimant's right caused by the impugned agreement?

[50] This is where one must be alert to the fact that there may be more than one breach, giving rise to two different causes of action, though both may be founded in tort; or one in tort, the other in contract. The liability of solicitors may be founded in both contract and tort; that is settled law - see Midland Bank Trust Co Ltd & Anor v. Hett, Stubbs & Kemp (a firm) [1978] 3 All ER 571; Ross v. Caunters [1980] Ch 297; Forster v. Outred & Co [1982] 1 WLR 86; Costa v. Georghiou [1985] 1 PN 201; DW Moore & Co Ltd v. Ferrier [1988] 1 WLR 267; Bell v. Peter Browne & Co [1990] 3 All ER 124; Henderson v. Merrett Syndicates Ltd [1995] 2 AC 145; Yong & Co v. Wee Hood Teck Development Corporation [1984] 1 MLRA 165; Neogh Soo Oh & Ors v. G Rethinasamy [1983] 1 MLRH 175.

[51] It bears reminding that, in this appeal, the claim was not one founded in contract, where frequently, the Courts have referred to Nasri v. Mesah (supra) as authority for the proposition that the cause of action in contract accrues from the breach. Gill FJ had opined there that "the period of limitation ... can be said to have begun to run from the first clear and unequivocal threat to the plaintiff's right to a transfer of the land'. The pleadings were then examined to determine what the pleas and responses were before the Federal Court concluded that there was no evidence of any such threat, in which case, the claim was not time-barred. See also The Great Eastern Life Assurance Co Ltd v. Indra Janardhana Menon [2005] 2 MLRA 295.

[52] In actions founded in tort, damage is an essential element, without which there is no complete and actionable claim. Time runs from when damage occurs and not when the negligent act or omission occurred - see Bell v. Peter Browne & Co (supra) per Nicholls LJ who said:

"One might have expected that parallel professional negligence claims based on contract and the tort of negligence would have a common starting date for the running of the six'year limitation periods applicable in most cases under the 1980 Act. But this is not so, because a cause of action based on negligence does not accrue until damage is suffered. It is from that date, not the date on which negligent act or omission occurred, that the six'year limitation period prescribed by s 2 of the Limitation Act 1980 runs."

[Emphasis Added]

[53] In Bell v. Peter Browne & Co, the defendant solicitors were employed by the plaintiff to act on his behalf in divorce proceedings. The plaintiff and his wife had agreed that the matrimonial home, which was in their joint names, be transferred to the sole name of the wife. When the home was sold, the plaintiff would be entitled to one'sixth of the proceeds of sale. Until such sale, the wife was entitled to live in the home and the plaintiff's interest would be protected by a trust deed or mortgage. The home was duly transferred to the wife but the defendant neglected to take steps to protect the plaintiff's interests, as instructed. Eight years later, the wife sold the home and spent the proceeds. The plaintiff sued the solicitors in both contract and tort. In dismissing the appeal against the striking out on ground of limitation, the Court of Appeal observed:

"In considering whether damage was suffered in 1978, one can test the matter by considering what could have happened if in, say, 1980, Mr Bell had learnt of his solicitors' default and brought an action for damages. Of course, he would have taken steps to remedy the default. But he would have been entitled at least to recover from the solicitors, the cost incurred in going to other solicitors for advice on what should be done and for their assistance in lodging the appropriate action. The cost would have been modest, but not negligible."

[54] On the facts, asking that same question of the appellants would yield, at best, a right to some nominal damage; if the action was founded in contract in relation to the preparation of the relevant agreements. But, this was a claim in tort for negligent misstatement and negligence. The period of limitation runs from the date of the damage and not from the act which caused the damage - see Backhouse v. Bonomi [1861] 9 HL Cas 503.

[55] However, Bell v. Peter Browne & Co actually did not follow an earlier decision of the Court of Appeal in Midland Bank Trust Co Ltd & Anor v. Hett, Stubbs & Kemp (a firm) [1978] 3 All ER 571, a decision which we prefer for its principles on this issue. This was, in fact, discussed by the High Court in Goh Kiang Heng v. Mohd Ali Abd Majid [1997] 2 MLRH 73. Although the ratio decidendi in that decision concerned the principles of striking out, Augustine Paul J took pains to examine this difficult and challenging aspect of the law of limitations. His Lordship noticed that the Court of Appeal had declined to follow Midland Bank Trust Co Ltd, distinguishing it on the facts; and had preferred to follow Forster v. Outred & Co (supra).

[56] Augustine Paul J noted that both Forster and Bell v. Peter Browne & Co had been reviewed by the High Court of Australia in Wardley Australia Ltd v. Western Australia [1992] 19 ALR 247; with the High Court concluding that the damage or loss suffered by the plaintiff occurred when the plaintiff was called upon to pay, and not when the plaintiff entered into the indemnity agreement. The High Court refused to follow Bell and Forster, preferring instead, SWF Hoists and Industrial Equipment Pty v. State Government Insurance Commission [1990] FCA 402, where it was held that the requisite element was an actionable actual loss as opposed to a mere potential loss.

[57] The facts in Wardley were these: relying on representations made by the defendant, the plaintiff had given an indemnity in 1987. In 1989, the plaintiff was called upon to make payment pursuant to the indemnity. In its amended Statement of Claim, the plaintiff alleged that it had been induced to give the indemnity by the defendant's misleading representations. According to Mason CJ, Dawson, Gaudron and McHugh JJ:

"Economic loss may take a variety of forms and, as Gaudron J noted in Hawkins v. Clayton [1988] 164 CLR 539, the answer to the question when a cause of action for negligence causing economic loss accrues may require consideration of the precise interest infringed by the negligent act or omission. The kind of economic loss which is sustained and the time when it is first sustained depend upon the nature of the interest infringed and, perhaps, the nature of the interference to which it is subjected. With economic loss, as with other form of damage, there has to be some actual damage. Prospective loss is not enough.

When a plaintiff is induced by a misrepresentation to enter into an agreement which is, or proves to be, to his or her disadvantage, the plaintiff sustains a detriment in a general sense on entry into the agreement. That is because the agreement subjects the plaintiff to obligations and liabilities which exceed the value or worth of the rights and benefits which it confers upon the plaintiff. But, as will appear shortly, detriment in this general sense has not universally been equated with the legal concept of "loss or damages". And that is just as well. In many instances, the disadvantageous character or effect of the agreement cannot be ascertained until some future date when it impacts upon events as they unfold becomes known or apparent and, by then, the relevant limitation period may have expired. To compel a plaintiff to institute proceedings before the existence of his or her loss is ascertained or ascertainable would be unjust. Moreover, it would increase the possibility that the Courts would be forced to estimate damages on the basis of likelihood or probability instead of assessing damages by reference to established events. In such a situation, there would be an ever'present risk of under'compensation or overcompensation, the risk of the former being the greater.

In UBAF Ltd v. European American Banking Corp [1984] QB 713, Ackner LJ said:

The mere fact that the innocent but negligent misrepresentations caused the plaintiffs to enter into a contract which they otherwise would not have entered into, does not inevitably mean that they had suffered damage by merely entering into the contract."

[Emphasis Added]

[58] The High Court of Australia noted that the English Courts had taken the position that time runs from the time of entry of contract, regardless of the loss being incapable of ascertainment until some later date due to the influence of the principle propounded in Darley Main Colliery Co v. Mitchell [1886] 11 App Cas 127, that damages in respect of a cause of action are awarded on a once and for all basis. In the High Court's view, adopting that principle "tells us very little, if anything, about the time when the plaintiff first suffers loss or damage in the circumstances of a particular case, except that properly understood, Darley Main Colliery emphasises the need for actual, as distinct from prospective, damage before prospective damages can be included in the award".

[59] For added measure, the High Court said:

"If, contrary to the view which we have just expressed, the English decisions properly understood support the proposition that where, as a result of the defendant's negligent misrepresentation, the plaintiff enters into a contract which exposes him or her to a contingent loss or liability, we do not agree with them. In our opinion, in such a case, the plaintiff sustains no actual damage until the contingency is fulfilled and the loss becomes actual; until that happens, the loss is prospective and may never be incurred. A deferred liability may stand in a different position, but there is no occasion here to discuss that matter.

...

The conclusion which we have reached with respect of the time when the plaintiff first suffers loss in respect of contingent loss or liability accords with the comment of Gaudron J in Hawkins v. Clayton:

.... If the interest infringed is an interest in recouping moneys advanced, it may be appropriate to fix the time of accrual of the cause of action when recoupment becomes impossible rather than at the time when the antecedent right to recoup should have come into existence, for the actual loss is sustained only when recoupment becomes impossible.

[Emphasis Added]

Gaudron J went on to point out: "It would be too simplistic to restrict analysis of economic loss merely to a consideration or reduced value or increased liability."

The conclusion which we have reached is reinforced by the general considerations to which we referred earlier. It is unjust and unreasonable to expect the plaintiff to commence proceedings before the contingency is fulfilled. If an action is commenced before that date, it will fail if the events so transpire that it becomes clear that no loss is, or will be incurred. Moreover, the plaintiff will run the risk that damages will be estimated on a contingency basis, in which event the compensation awarded may not fully compensate the plaintiff for the loss ultimately suffered. These practical consequences which would follow from an adoption of the view for which the appellants contend outweigh the strength of the argument that the principle applicable to the cases in which the plaintiff acquires property (or a chose in action) should be extended to cases where an agreement subjects the plaintiff to a contingent loss. In such cases, it is fair and sensible to say that the plaintiff does not incur loss until the contingency is fulfilled.

Even in England, recent decisions show that the judicial trend is to restrict the apparently broad principle laid down in the Forster line of cases. In Hopkins v. MacKenzie [1995] 6 Med LR 26 as a result, allegedly, of negligence by the defendant solicitor, the plaintiff's claim against a hospital for medical negligence had been struck out for want of prosecution. The Court of Appeal held that the cause of action in tort against the solicitor accrued when the original claim was actually struck out, and not at any earlier date. The Court rejected the submission that the cause of action accrued when the solicitor's delay was such that the original claim would inevitably be struck out."

[Emphasis Added]

[60] Similar views on contingent, prospective, or potential loss as opposed to actual loss and damage were expressed in Sabarudin Othman & Anor v. Malayan Banking Berhad And Other Appeals [2018] 4 MLRA 384, paras [23] to [25] and Ambank (M) Bhd v. Kamariyah Hamdan & Anor [2011] 2 MLRA 623. In Sabarudin Othman, the Court of Appeal observed that prospective loss may also never be incurred.

[61] See also Nyo Nyo Aye v. Kevin Sathiaseelan Ramakrishnan & Anor And Another Appeal [2020] 3 MLRA 535, where the Court of Appeal held that, until the civil suit was struck out, the cause of action had not accrued. The act which caused the damage was the non-compliance of the order for security for costs but the actual damage occurred when the suit was, in fact, struck out for noncompliance.

[62] We agree with the approach taken in these cases; that there must be actual as opposed to only a prospective or contingent loss or damage. In fact, the approach in England has since altered to follow the view in Wardley, see Law Society v. Sephton & Co (a firm) & Ors [2006] 2 AC 543. The House of Lords in Law Society agreed with the Court of Appeal that the mere possibility of an obligation to pay money in the future is not, in itself, damage for an actionable cause of action.

[63] In Law Society, a solicitor, Payne, who was practising on his own, engaged the defendants as his accountants for the purpose of preparing and certifying annual reports containing information as prescribed by the Accountant's Report Rules 1986 and 1991, which Payne was required to submit to the Law Society under the Solicitor's Account Rules. Between 1989 and 1995, a partner at the defendants signed eight such reports, stating that he had examined all the relevant documents of Payne's practice, and that he was satisfied that Payne had substantially complied with the Solicitor's Account Rules. It turned out that, in fact, Payne had been misappropriating his client's monies between 1990 and 1996. The fraud was discovered by the Law Society in May 1996 when a former client of Payne complained to the Law Society and made a claim for compensation from the Solicitors Compensation Fund of which the Law Society is a trustee. In 2002, the Law Society sued the defendants for negligence, claiming that it had relied on the defendants' reports when deciding not to exercise its powers of investigation or to intervene in Payne's practice before May 1996. At a preliminary hearing, it was ruled that the claim was timebarred as the cause of action accrued as soon as Payne misappropriated monies after the Law Society's receipt of the relevant reports, thereby, exposing it to the risk of a claim against the compensation fund. The claim was accordingly struck out.

[64] The decision was reversed on appeal and the Court of Appeal's appeal was affirmed. . Reminding that damage was an essential element in a cause of action for negligence, Lord Hoffman held that, until the Law Society suffered damage in consequence of the defendants' negligence, there was no cause of action [a view shared by the other Law Lords]. Payne's misappropriation gave "rise to the possibility of a liability to pay a grant out of the fund, contingent upon the misappropriation not being otherwise made good, and a claim in proper form being made. Such a liability would be enforceable only in public law, by judicial review, but would still, in my opinion, count as damage. But until a claim was actually made, no loss or damage was sustained by the fund". Describing the judgments of the High Court in Wardley as "a masterly exposition of the law which deserves careful study", His Lordship said that he was in "complete agreement with this analysis", that there must be actual or actionable damage and not a prospective loss which may never be incurred. Until a claim was made against the Law Society, no loss or damage was sustained by the fund. Further, the mere possibility of an obligation to pay money in the future was not, in itself, damage; it was only contingent until a claim was made.

[65] Similarly in the present appeal, the respondents' negligence in the preparation of the agreements only gave rise to a contingent loss, dependent on whether Bank Islam would enforce the charge. When it did, that was when there was damage suffered by the appellants.

[66] This approach of requiring actual damage as opposed to contingent or prospective loss is also consistent with the proper and good administration of justice, that recourse to legal redress in the Courts should be as a last resort, and when determining liability and damage, Courts must be in the position to fully appraise facts and apply the law, including adjudicate on loss, which is both measurable and relevant. As opined by the Deane J in Wardley:

"Finally, it appears to me to be unlikely that the Parliament would have intended, as a matter of policy, that a cause of action should arise under s 82 in a case where all that was involved was the incurring of an isolated contingent liability involving a mere risk (or greater risk) of actual liability to make a payment at some future time. The implementation of such a policy would give rise to the situation where a cause of action would arise regardless of whether any actual concrete loss was ultimately sustained by reason of either the contingency liability becoming an absolute one or some other financial detriment being actually sustained (e.g. a payment made to escape the contingent liability). The result would be to require the institution of proceedings before it was known whether any concrete loss or damage would ever come home, in order to avoid the possible injustice of a legitimate claim being barred if action was not instituted until it could be seen, whether the contingent liability would result in ultimate loss. Moreover, the difficulties and expense involved in establishing the present value of an isolated contingent loss and the potential injustice involved in requiring proceedings to be instituted within a limited time after a contingent or potential liability first arises provide further reasons for the rejection of such an approach. From the point of view of policy, the main disadvantage involved in a situation where no cause of action accrues unless and until a contingent liability becomes absolute or some actual financial loss or detriment comes home is that circumstances could well arise, in which it is desirable that entitlement and liability under s 82(1) be determined at an earlier stage. The availability of declaratory remedies and of the anticipatory remedies under s 87 of the Act go some way, however, to diminish the practical significance of that disadvantage."

[67] Act 254 has finely balanced the interests of ensuring stale claims are not prosecuted and the administration of justice abused against rights of access to justice to obtain redress for civil wrongs. The above reading and interpretation accorded to s 6 of Act 254, in particular, accords with that intent of Act 254.

[68] For these reasons, the answers to the first question is, subject to particular facts which may arise and the pleas made, the time-period for limitation for a tortious claim arising from a negligently prepared agreement runs from the date of actual damage, and not some contingent damage. The threat of an infringement must be unequivocal and real. The decision of the Court of Appeal in Sabarudin Othman & Anor v. Malayan Banking Berhad & Ors (supra) is, thus, preferred over AmBank(M) Bhd v. Abdul Aziz Hassan & Ors (supra).

[69] The facts pleaded as amounting to a claim of negligence and negligent misstatements must always be properly appreciated. In this appeal, when the appellants, as the respondents' clients, asked for evidence of the search at the Land Registry, a perfectly valid request, the respondents were evasive and prevaricated, they then misrepresented the truth and ultimately, they lied. These responses are not in the least in keeping with their duties as solicitors.

[70] The respondents' responses to the appellants' queries and requests are not matters to be taken into consideration when determining quantum; they were further wrongs committed as solicitors who are under a continuing duty of care to their clients. From the facts, it is evident that the appellants did not suffer loss or damage until Bank Islam exercised its right under the charge and a formal notice to foreclose or proceed for an order of sale was issued on 2 September 2014. Bank Islam's earlier notice of 14 November 2013 sent through its solicitors of a notice to foreclose and a demand to pay was still a contingent loss.

[71] Further, it would be unjust and unreasonable to require the appellants to institute a claim before the contingency, that is, a claim by Bank Islam, was fulfilled. The appellants' claim initiated in 2016 was, thus, not time-barred and the Court of Appeal was in error in holding otherwise.

[72] The answer to the first question is that time runs from the date of infringement of the claimant's rights and not from the date of the agreement itself.

Second Question

[73] The above answer is actually sufficient to dispose of the appeal. However, we feel compel to address the second question, although there have since been legislative inroads. In respect of the second question, it is premised on the concepts of discoverability or knowledge of the negligence. This issue has been substantially addressed by the new s 6A of Act 254. However, this new provision does not apply to the appellants' claim, as it was filed before the s 6A came into force.

[74] In Ambank (M) Bhd v. Abdul Aziz Hassan & Ors (supra), the Court of Appeal held that knowledge or discoverability of the breach was immaterial for the purpose of determining whether a cause of action had accrued. Both decisions of the Court of Appeal in Sabarudin Othman & Anor v. Malayan Banking Berhad & Ors (supra) and Ambank (M) Bhd v. Kamariyah bt Hamdan & Anor (supra) held otherwise.

[75] We agree with the approach taken in Sabarudin Othman and Ambank (M) Bhd v. Kamariyah.

[76] First, in Ambank (M) Bhd v. Kamariyah, the Court of Appeal examined Wardley and Law Society, amongst other cases, before disagreeing with Ambank (M) Bhd v. Abdul Aziz Hassan. The High Court had struck out a third-party notice issued by the appellant against the respondents, who were the partners of a firm of solicitors, on the ground that it was barred by the statute of limitations. On appeal, that decision was set aside. The appellant in that appeal had alleged that the respondents were negligent in their preparation and giving of advice on a charge on lands owned by the plaintiffs, and which were being developed by the 1st defendant. The 3rd, 4th and 5th defendants, Directors of the 1st defendant, were alleged to have fraudulently effected the charge in favour of the appellant as security for loans granted by the appellant to the 1st defendant. The plaintiffs claimed that the power of attorney given to the 1st appellant did not authorise such charge and had initiated proceedings to set aside the charge. In striking out the third-party proceedings, the respondents argued that it was time-barred as the cause of action accrued on 1 September 1997 when the loan was released to the 1st defendant, that that date was when damage was occasioned.

[77] Jeffrey Tan JCA, speaking for the Court of Appeal, disagreed. His Lordship examined a line of cases including Wardley, Law Society and Mat Abu Man v. Medical Superintendent General Hospital Taiping & Ors [1988] 1 MLRA 294, before holding that:

[11] Based on the aforesaid decisions of the apex Court, time would begin to run from the date the appellant was held liable, and not when the loan was released...

[21] With that, the Supreme Court of Canada pronounced 'that the judgment of the majority in Kamloops laid down a general rule that a cause of action arises for the purposes of a limitation period when the material facts on which it is based have been discovered or ought to have been discovered by the plaintiff by the exercise of reasonable diligence.'.

[22] Likewise, in the instant case, the appellant, on 1 September 1997, could not have discovered whatever negligence on the part of the respondents by the exercise of any reasonable diligence. Indeed, there was no reason for the appellant to suspect negligence, as effectively the respondents had advised the appellant that the charge was a valid charge, and the release of the loan only evinced that the appellant, on 1 September 1997, could not have discovered that something could be amiss about the charge. The earliest that it could be said that the appellant should have suspected possible negligence in the preparation of the charge was when the appellant was served with the writ of summons dated 24 May 2000. Only then could it be said that the appellant should have discovered that the charge was under challenge. On 28 October 2005, the appellant applied for leave to issue the said third party notice, which leave was granted on 2 January 2006. On 20 January 2006, the said third party notice was issued. Evidently, the said third party notice was issued within six years from the date when the material facts on which the third-party notice was based ought to have been discovered by the appellant by the exercise of reasonable diligence.

[23] We were invited to consider Ambank (M) Bhd v. Abdul Aziz Hassan & Ors [2009] 4 MLRA 458...

[24] All except that, in view of the aforesaid decisions of the apex Court on the date of accrual of the cause of action, and the discoverability rule as espoused and or endorsed in Wardley, Central Trust, and Law Society, we must respectfully decline to defer to the ruling that time would run regardless of whether damage was or could be discovered.

[Emphasis Added]

[78] Hence, the Court of Appeal recognised and applied the principle of knowledge or discoverability of the breach being material for the purpose of determining whether a cause of action had accrued.

[79] Likewise, the Court of Appeal in Sabarudin Othman. In that appeal, the plaintiff had claimed for monies due under loan facilities granted to the 1st defendant, where the 2nd and 3rd defendants stood as sureties under Letters of Guarantee. Default judgment was entered against the 1st and 2nd defendants, whereas the 3rd defendant denied signing the Letter of Guarantee and documents related to the loan facilities. He counterclaimed for loss and damage incurred in defending the action. The plaintiff commenced third party proceedings against seven third parties for an indemnity. The first two third parties were a legal firm appointed by the plaintiff to prepare the loan documents in 2002. The remaining third parties was another legal firm that attended to the documentation related to subsequent loan facilities. The third parties essentially argued that the claims against them were time-barred.

[80] After a full trial, the High Court dismissed the claim against the 3rd defendant after finding that the signatures on the Letter of Guarantee was, indeed, forged. As for his counterclaim, only the costs for signature verification was allowed. The High Court disagreed with the third parties on the issue of time bar and the third parties [Third Party A and Third Party B] were ordered to indemnify and compensate the plaintiff for losses and damage suffered due to the forgery and the counterclaim.

[81] In substance, this decision of the High Court was affirmed on appeal for the reasons explained by Vernon Ong JCA:

[23] We think that it is quite settled that the cause of action was complete when the damage was suffered and the guarantees were purportedly executed by the 3rd defendant. However, whether actual damage has been established and, if so, when, is a question of fact. Once that fact has been established, then all the elements necessary to support the plaintiff's claim would be in existence in order to say that the cause of action had accrued; and prior to that point in time, there would only be a prospective loss and not actual damage which is necessary to support a claim for economic loss. Put another way, prior to the establishment of the fact that actual damage has been suffered, only a contingent liability existed and, as such, was not an actionable damage until the contingency occurred. No actual damage would be incurred until the contingency was fulfilled and the loss became actual, and until that happen the loss was prospective and might never be incurred.

[24] In this case, in 2005 or 2007, the plaintiff could not have discovered whatever negligence on the part of Third Party B by the exercise of reasonable diligence, there was nothing to give rise to any doubt or suspicion as Third Party B had advised the plaintiff to disburse the loan sums to the 1st defendant on the basis that the guarantees had been duly signed by the 3rd defendant. At the earliest, the plaintiff should have suspected possible negligence in the execution of the guarantees when the 3rd defendant filed and served his defence and counterclaim in May 2012. Then and only then could it be said that the plaintiff should have discovered that the authenticity of the 3rd defendant's signatures on guarantees were seriously disputed. Accordingly, until the service of the 3rd defendant's defence and counterclaim on the plaintiff, it could not be said that all the facts have happened which are material to be proved to entitle the plaintiff to succeed in its third party claim. Indeed, it is quite settled that a cause of action normally accrues when (i) there is in existence a person who can sue and another who can be sued, and (ii) all the facts have happened which are material to be proved to entitled the plaintiff to succeed. Thus, in our view, the period of limitation does not begin to run until there is a complete cause of action, and a cause of action is not complete when all the facts have not happened which are material to be proved to entitle the plaintiff to succeed (Lim Kean v. Choo Koon [1969] 1 MLRH 562; Credit Corporation (M) Bhd v. Fong Tak Sin [1991] 1 MLRA 293.

[25] We have carefully considered the authorities cited by the Counsel and are of the view that the position of this Court in Ambank (M) Bhd v. Kamariyah Hamdan & Anor (supra) is to be preferred. Our view is also fortified by Pang Yeow Chow v. Advance Specialist Treatment Engineering Sdn Bhd (supra) where Hamid Sultan Abu Backer JCA, speaking for the Court of Appeal said in para [24]: "The test really is whether or not the respondent could have initiated an action within the limitation period."

[82] Thus, the Court of Appeal in Sabarudin Othman, too, recognised and applied the principle of knowledge or discoverability of the breach as being material for the purpose of determining whether a cause of action had accrued.

[83] We, on our part, likewise, recognise that same principle of knowledge or discoverability of breach with reasonable diligence was essential for establishing accrual of cause of action. Having said that, this area of the law has since been attended to by the new s 6A. On the facts of this appeal, the appellants themselves had been continuously misled and misrepresented the true facts by the respondents. If time ran from the date of preparation of the agreements, especially the SPA, it is clear that even six years after that date, the appellants were in no position, and could not have, with reasonable diligence, known that the SPA had errors or that the respondents were negligent in its preparation. It was not until they did their own search that the appellants found out about the charge. As mentioned earlier, inquiring with their solicitors about the status of the search would have been prudent and the most reasonable course of action or conduct that anyone similarly circumstanced would have taken.

[84] This reading and interpretation "advances rather than retards" the accrual of cause of action "within the bounds of sense and reasonableness" [per Lord Mance in Law Society, p 221]. After all, that is ultimately the policy and intent of Act 254, which is to provide for limitations in civil litigation having balanced competing rights and interests of the respective parties.

[85] The answer to the second question is, thus, in the negative.

Conclusion

[86] For the reasons explained, the appeal is allowed with costs and the decision of the Court of Appeal is set aside. The order and decision of the High Court is reinstated.