Is it possible to contract out of limitation?

I was asked an interesting question recently:

Are parties at liberty to record a consent order that specifically states that they won't rely on limitation?

As with most answers in law: it depends.

The general rule: Parties cannot contract out of the Limitation Act

This question was considered by the High Court in Karisma Thakurdas Jethwani v Malayan Banking Berhad [2015] MLJU 792. The High Court held that parties are not at liberty to contract out of the Limitation Act 1953:

[11]??In addition to the first issue as explained, I do not think that the JC can rely on the agreement of the JD not to bring the issue of limitation in the claim made by the JC. Parties cannot agree to what is already provided by the law. They cannot contract out of statute. More so when in this case the provision of?s?6 (3)?of the?Limitation Act 1953?as narrated is very clear.

[12]??This court also disagrees with the JC there is estoppel against the JD where the JD agreed not to raise issue of limitation. There is no estoppel that comes to play to estop the operation of the law. The law as explained in s?6 (3)?of the?Limitation Act 1953?cannot be overridden by the estoppel and likewise the estoppel cannot takes precedence over the statutory provision of the law.

[18]??However having closely looked at these cases, I am of the considered view that these cases cannot be authorities to allow for estoppel when there is crystal clear statutory provision such as?s?6 (3)?of the?Limitation Act 1953. Estoppel cannot in this regard displaced the entrenched provision.

[19]??It would be close to mockery of the legislature if all and sundry can agree among themselves not to follow what is already stated as the law of the land. The cold print of the statutory provisions will become useless if liberty is granted for any parties to form a consensus the same should never bind them. It is to say the least, a dangerous precedent to set.

The exception: inequitable conduct

However, in Sakapp Commodities v Cecil Abraham [Executor of the Estate of Loo Cheng Ghee [1998] 4 MLJ 651, the Court of Appeal held that the usage of limitation as a cause of action (coupled with the inequitable conduct of the Plaintiff) would disentitle him from relief:

Applying what we apprehend to be settled law to the facts of the present case, we are compelled to the conclusion that the declaration sought by the plaintiff ought to have been refused. In the first place, as we have earlier observed, this is a case where the plaintiff has used limitation as a cause of action contrary to established authority. Second, the true nature of the declaration sought is hypothetical in that it is dependent upon the defendant bringing an action and the plaintiff successfully defeating it on a plea of limitation. Third, the plaintiff appears to be using the device of the declaratory judgment to achieve a collateral purpose in that he is seeking to establish his title to the monies in question by relying upon limitation as a cause of action. In accordance with settled practice, discretion ought to have been exercised against the plaintiff.

In the present instance, the admitted promise by Loo was to pay the sum legitimately due to the defendant out of the balance of the monies which, according to other evidence earlier adverted to, were in the hands of KLCCH. Applying the principles set out in the cases referred to a moment ago to the facts and circumstances of the instant case, it would, in our judgment, be inequitable to permit Loo, and hence his estate represented by the plaintiff, to assert limitation against the defendant.

In Veerappan v Kanni Marial [2016] MLJU 892, the High Court preferred the ratio of Karisma to that of Sakapp and pronounced as follows:

[29]??I am more inclined to agree with the decision in?Re Karisma?(supra) which is a 2016 and more recent decision, rather than the decision in?Sakapp Commodities, which albeit a decision by the Court of Appeal, is a 1998 decision. I rule that the Plaintiff cannot invoke the doctrine of estoppel against the Defendant on grounds of the unconscionable and inequitable conduct of the OP and the Defendant, when there are express provisions in?s.6(1)(a)?and?s.9?of the?LA?to govern the time limitation for the Plaintiff to commence his action to seek redress against such alleged unconscionable and inequitable acts of the OP in not transferring the title to the Plaintiff within 6 years or 12 years, as the case may be, to the Plaintiff.?

It is of note that the Court of Appeal in Teo Sui Chin v Lim Siok Luan [2020] 1 MLJ 670 considered Karisma. Whilst not pronouncing directly on the correctness of the case, the Court of Appeal accepted the legal principle advanced by Karisma (i.e., that estoppel cannot defeat a statutory provision).

Conclusion

In conclusion and as a general rule, one should not attempt to contract-out of the Limitation Act. That would go against the grain of the statute and what it seeks to achieve.

If, however, one seeks to use the provisions of the LA 1953 in an inequitable manner and advances limitation as a cause of action, the Courts may utilise Sakapp Commodities as a means of sidestepping limitation. As with most things in law, the outcome would be highly fact-dependent.

GAVIN JAYAPAL

The information contained herein is for general information purposes only. The writer does not endeavour to keep the information up to date and correct, makes no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the article or the information, products, services, law, cases or related graphics contained herein for any purpose. Any reliance you place on such information is therefore strictly at your own risk.

For all you know, this article could have been produced by a chimp with a

typewriter, blessed with an infinite loop of time.

Consult your solicitor before you undertake any legal action whatsoever. In no event will the writer be held liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from loss of data or profits arising out of, or in connection with, the use of this article.

Through this article you are able to link to other websites which are not under the writer’s control. The writer has no control over the nature, content and availability of those sites. The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them.