The recent decision of Pembinaan BLT Sdn Bhd v Nazarin (NBM) Sdn Bhd & Ors highlight a slight discrepancy in timing as to when a cause of action may arise against a consultant. This is important because under the Limitation Act 1953, a claim may be barred by limitation after the expiry of 6 years. The time when the cause of action arises will also determine when the 6 year period expires.
Two Potential Causes of Action against Consultants
The learned judge in Pembinaan BLT Sdn Bhd reiterated the position that a consultant may be liable to the developer of a project in two ways, namely:
- As a breach of contract by the consultant; or
- In a claim for negligence.
Cause of action for breach of contract
For a cause of action for breach of contract, the cause of action starts from the date of the breach. In this case, the allegation against the consultant is that the consultant breached his contract with the developer when he wrongfully assessed the amount due to be paid to a subcontractor in an interim payment certificate. The Court held that the cause of action arose at the date of the wrongful assessment, and the limitation period will expire six years after that date of assessment.
Cause of action for negligence
For a claim in negligence, however, the cause of action only arises when the damage is suffered. This would mean when the wrongfully assessed claim was paid out. Since there is a difference in timing from the time of assessment to the time of payment, therefore there may be a possibility that a consultant who can no longer be held liable for breach of contract to still be held liable in tort under negligence.
Employers who are aggrieved with their consultants for any wrongful assessment of interim claims must be aware that the time for suing the consultants start immediately upon the wrongful assessment (for a claim in contract) and only upon payment of the claim (for a claim in tort).
Author: Nureqha Alia (pupil) (email: [email protected])