Case:

Brief Facts:

• The 1st Appellant, Julian Chong (‘Julian’) and his wife (collectively referred to as ‘Julian’) purchased a landed property from a housing developer, Reka Mesra Sdn Bhd.
  
  
• The Respondents being the lawyers prepared both the Sales and Purchase Agreement [SPA] and construction agreement for Julian in 2004 in which the 1st Respondent, Lee Kim Noor (‘Lee’) at the material time worked as a Partner in Tetuan KN Lee & Associates (the ‘2nd Respondent’).
  
  
• The bank details on the SPA were omitted, suggesting there was no outstanding bank loan on the master title. The Respondents are collectively known as the Lawyers.
  
  
• The house was completed in 2006 and Julian moved in. The housing community is known as Krystal Garden.
  
  
• In 2009, Julian learnt from their neighbouring plots in Krystal Garden that their plots were charged to Bank Islam, and that a Letter of Disclaimer from Bank Islam was required.
  
  
• This prompted Julian to require this Letter of Disclaimer through the Lawyers. The Lawyers, in turn, wrote to Bank Islam, on July 2009, requesting for this Letter of Disclaimer. The bank did not respond.
  
  
• In June 2011, the Housing Developer wound up and in November 2011, Julian 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 the Housing Developer.
  
  
• Upon investigation, it was found that the Lawyers had not conducted a proper land search at time of preparation of the SPA.
  
  
• Julian decided to sue the Lawyers for professional negligence and negligent misstatement at the Sessions Court on July 2015.
  
  
• The Lawyers denied liability, claiming, they owed no duty of care to Julian, there was, in any case, no breach of any duty, and the claim was time-barred under the statute of limitations [meaning the claim was filed out of time as the agreement was dated in 2004 whereas the claim was filed in 2015].
  
  
• The suit was transferred to the High Court.

THE DECISION OF HIGH COURT (HC) – JULIAN’S CLAIM ALLOWED

• After a full trial, claim was allowed by the HC on November 2017.
  
  
• HC found the claim proved and that the Lawyers owed a duty of care to Julian.
  
  
• The Lawyers appealed to the Court of Appeal.

THE DECISION OF COURT OF APPEAL (CA) – APPEAL ALLOWED

• On appeal, this decision was overturned as CA found the claim time barred, meaning that for an action founded in negligence, the six-year period under Section 6(1)(a) the Limitation Act 1953 starts to run from the date when the SPA was prepared in 2004, and not from when Julian discovered the damage i.e. when Bank Islam issued the formal Foreclosure Notice and demanded the redemption sum.
  
  
• Julian appealed to the Federal Court.

THE DECISION OF FEDERAL COURT (FC) – JULIAN’S APPEAL ALLOWED

• FC held that the limitation period for filing a claim for negligence arising from a negligently prepared agreement starts from the date of actual damage suffered and not the date of the agreement.
  
  
• So, time to file a claim arising from a negligently prepared agreement starts from the date of the infringement of the claimant’s rights and not from the date of the agreement itself.
  
  
• Hence, the FC reinstated the HC ruling ordering the Lawyers to pay RM1.5 million in damages to Julian.