Written by Richard Wee, Wendy Ho, Ian Phua, Low May Ping and Ashley Yip

Legal impact of the proposed Covid-19 Bill of Malaysia  

Introduction

The Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (Covid-19) Bill 2020 was tabled in Parliament on the 12th of August 2020 (“the Covid-19 Bill”). This article shall address the proposed changes to the following twelve (12) areas of law: 

  1. Inability to perform contractual obligation
  2. The Limitation Act 1953
  3. The Sabah Limitation Ordinance and Sarawak Limitation Ordinance 
  4. The Public Authorities Protection Act 1948
  5. The Insolvency Act 1967
  6. The Hire-Purchase Act 1967
  7. The Consumer Protection Act 1999
  8. The Distress Act 1951
  9. The Housing Development (Control and Licensing) Act 1966
  10. The Industrial Relations Act 1967 and the Private Employment Agencies Act 1981
  11. The Land Public Transport Act 2010 and the Commercial Vehicles Licensing Board Act 1987
  12. The Courts of Judicature Act 1964, the Subordinate Courts Act 1948, and the Subordinate Courts Rules Act 1955

 

Some general observations pertaining to the Covid-19 Bill:

  • The Covid-19 Bill, when passed (shall hereinafter be known as the “Covid-19 Bill”) shall remain in operation for a period of two (2) years from the date of its publication unless the provision(s) expressly states otherwise. 
  • Notwithstanding the above mentioned, the operation of the Covid-19 Bill may be extended by the Prime Minister by an order published in the Gazette. The order for extension may be made more than once, and shall be laid in the Dewan Rakyat as soon as practicable after its publication in the Gazette. 
  • The provisions of the Covid-19 Bill shall prevail in the event of any conflict or inconsistency between the provisions of the Act and any other written law. 

Active time period of enforcement : 18th March 2020 until 31st December 2020

Categories of contracts: Construction Work or Construction Consultancy Contract, Performance Bond that is granted pursuant to a construction or supply contract, Professional Services contract, Lease or Tenancy of non-residential immovable property, Event Contract, Tourism and the promotion of tourism in Malaysia, Religious-pilgrimage related contract.

 

Parties to a contract are not allowed to exercise their rights under the contract in the event of the inability of any party or parties to perform their contractual obligations, with such inability arising due to the measures prescribed, made or taken under the Prevention and Control of Infectious Diseases Act 1988. 

Any contractual dispute which arises out of such inability to perform may be settled by way of mediation. The mediation process may be determined by the Minister. 

Any contract terminated, any deposit or performance bond forfeited, any damages received, any legal proceedings, arbitration or mediation commenced, any judgment or award granted and any execution carried out for the period from 18 March 2020 until the date of publication of this Act is deemed to have been validly terminated, forfeited, received, commenced, granted or carried out.

 

  • Modifications to the Limitation Act 1953 – An extension up to 31st December 2020

 

Active time period of enforcement : 18th March 2020 until 31st December 2020

In the event that the six (6) years limitation period for actions founded on contract or tort, actions to enforce a recognisance, actions to enforce an award, as well as actions to recover any sum recoverable by virtue of any written law expires during the period from 18th March 2020 to 31st August 2020, such limitation period shall be extended to 31st December 2020. 

With such extension taking effect, potential litigants are given more time to bring an action in court, in view that the courts were not in operation for a few months during the implementation of the Movement Control Order. 

 

  • Modifications to the Sabah Limitation Ordinance and the Sarawak Limitation Ordinance – An extension up to 31st December 2020

 

Active time period of enforcement : 18th March 2020 until 31st December 2020

Mirroring the extension granted under the Limitation Act 1953, the limitation period specified in certain provisions of both the Sabah Limitation Ordinance and the Sarawak Limitation Ordinance which expires during the period from 18th March 2020 to 31st August 2020 is similarly extended up to 31st December 2020. 

 

  • Modifications to the Public Authorities Protection Act 1948 – An extension up to 31 December 2020

 

Active time period of enforcement : 18th March 2020 until 31st December 2020

The original thirty-six (36) months limitation period granted under the law for an action to be brought against any person for any act done in pursuance or execution or intended execution of any written law or of any public duty or authority or in respect of any alleged neglect or default in the execution of any such written law, duty or authority which expires during the period from 18th March to 31st August 2020 is extended up to 31st December 2020. 

 

  • Modifications to the Insolvency Act 1967 – An increase in the amount of indebtedness

 

Active time period of enforcement: Comes into operation on date of the Publication of this Act

During the active time period of enforcement, no bankruptcy petition shall be filed by a creditor against a debtor under Section 2(o) (failure by debtor to comply with Voluntary Arrangement) or Section 5 (conditions on which a creditor may petition) of the Insolvency Act 1967 unless the debt owing by the debtor to the petitioning creditor, or the total amount where two or more creditors join in the petition amounts to RM100,000.00. That being said, the minimum amount to be declared bankrupt is raised from RM50,000.00 to RM100,000.00 during the active time period of enforcement.

However, any proceedings or actions which are still pending immediately before the date of publication of the Covid-19 Bill will not be affected by the amendments.

 

  • Modifications to the Hire-Purchase Act 1967 – No Power to Take Possession of Goods

 

Active time period of enforcement: 1st April 2020 to 31st December 2020

With Section 16 of the Hire Purchase Act 1967 being modified, no owner shall exercise their powers to take possession of goods comprised in a hire-purchase agreement in the event of any breach of the agreement relating to the payment of instalments during the period from 1 April 2020 to 30 September 2020.

Despite Section 19 of the Hire Purchase Act 1967 which allows for the hirer to regain possession of goods, either by way of payment made to the owner or the remedy of any breach of the hire purchase agreement, the owner’s power to take possession of goods shall be deemed to have been validly exercised in the event that the owner had exercised his power of taking possession of goods before the date of publication of this Act.

 

  • Modifications to the Consumer Protection Act 1999 – Credit Sale Agreement

 

Active time period of enforcement: 18th March 2020 until 31st December 2020

Modifications to Section 24v of the Consumer Protection Act 1999 shall only apply if the credit sale agreement was entered into before 18th March 2020 and if the purchaser has no overdue instalments before 18th March 2020.

In the event of any default in payment of two consecutive instalments by a purchaser under a credit sale agreement, the purchaser may within twenty one (21) days elect to either: pay the overdue instalments to the credit facility provider, make an early settlement of the credit sale agreement, or to terminate the credit sale agreement and to surrender the purchased goods to the credit facility provider. 

It is pertinent to note that throughout the subsistence of the active time period of enforcement, there is no need for purchasers under a credit sale agreement to make payment of late payment charges to the credit facility provider. 

Credit facility providers are also not allowed to commence legal proceedings to recover the total outstanding amount payable by the purchaser under the credit sale agreement in the event that the purchaser has failed to make an election within twenty one (21) days. Nevertheless, this modification shall not affect any legal proceedings commenced to recover or any judgment or award obtained for the outstanding amount payable by the purchaser under the credit sale agreement from 18 March 2020 until the date of publication of the Covid-19 Bill.

Also, the period of limitation specified in Section 99(2) of the Consumer Protection Act 1999 which expires during the period from 18 March 2020 to 15 June 2020 shall be extended until 31 December 2020.

 

 

  • Modification to the Distress Act 1951- Distrain for arrears of rent

 

Active time period of enforcement: 18th March 2020 until 31st December 2020

For the time period from 18th March 2020 until 31st August 2020, no warrant of distress issued under Section 5(1) Distress Act 1951 shall include the distrain for the arrears of rent for the purposes of recovering rent due or payable to the landlord by the tenant. Distrain simply means to seize someone’s property to obtain the payment of money owed.

Nevertheless, any execution of the warrant of distress for the recovery of rent that has been issued before the date of publication of the Covid-19 Bill will not be affected by the amendments.

 

  • Modifications to the Housing Development (Control and Licensing) Act 1966 – Late Payment Charges, Delivery of Vacant Possession and Liquidated Damages, Defect Liability Period 

 

Active time period of enforcement: 18th March 2020 onwards (up to a period of 2 years)

This concerns the agreement for the contract of sale for the sale and purchase of housing accommodation in the forms in Schedules G, H, I and J of the Housing Development (Control and Licensing) Regulations 1989 entered into before 18 March 2020.

Late Payment Charges

Any late payment charges shall not be imposed against the purchaser if their failure to pay any instalment from 18 March 2020 to 31 August 2020 was due to the measures taken under the Prevention and Control of Infectious Diseases Act 1988. The purchaser may apply to the Minister for an extension of the period to pay, up to 31 December 2020.

Delivery of Vacant Possession and Liquidated Damages

The period from 18 March 2020 to 31 August 2020 shall be excluded from the calculation of the time for delivery of vacant possession of a housing accommodation and for liquidated damages for developer’s failure to deliver vacant possession. The developer may apply to the Minister for an extension of the period to pay, up to 31 December 2020.

The purchaser shall not be deemed to have taken such vacant possession, if the purchaser is unable to enter into possession of occupation of a housing accommodation from the date of service of notice of vacant possession from 18 March 2020 to 31 August 2020.

Defect Liability Period

The period from 18 March 2020 to 31 August 2020 shall be excluded for calculation of the defect liability period and the time for the developer to carry out works to repair defects. The purchaser may apply for an extension from the Minister, up to 31 December 2020.

Nevertheless, these modifications shall not affect any existing legal proceedings, judgment or award, to recover late payment charges payable by the purchaser or liquidated damages payable by the developer or any other sum from 18 March 2020 until the date of publication of this Act. Any sum that has been paid before the date of publication of this Act shall be deemed to have been validly paid, and shall not be refunded.

If the limitation period for the homebuyer to file a claim has expired between 18 March 2020 to 9 June 2020, the homebuyer is entitled to file from 4 May 2020 to 31 December 2020 to the Tribunal for Homebuyer Claims. 

 

  • Modifications to the Industrial Relations Act 1967- Extension of time to file

 

Active time period of enforcement: 18th March 2020 onwards (up to a period of 2 years)

Calculation of time period shall not include the period from 18th March to 9th of June 2020 under :-

i) Section 9(3) Industrial Relations Act 1967. The employer upon receipt of the claim for recognition usually has 21 days to accord recognition or to notify the trade union of workmen concerned in writing the grounds for not according recognition;

ii) Section 9(4) Industrial Relations Act 1967. The trade union of workmen upon receiving a notification for not recording recognition shall within 14 days, make report in writing to the Director General for Industrial Relations); and 

iii) Section 20 (1A) Industrial Relations Act 1967. Where an employee usually has 60 days to file the representation in writing if he/she has been dismissed without just cause or excuse by his/her employer.

 

  • Modifications to the Private Employment Agencies Act 1981

 

Active Time Period of Enforcement: 18th March 2020 onwards (up to a period of 2 years)

Calculation of the time period for an application to renew a license under Section 11(1) Private Employment Agencies Act 1981 shall not include the period from 18th March 2020 to 9th June 2020.  Usually the renewal of license shall be submitted 2 months before the expiry date.

 

  • Modifications to The Land Public Transport Act 2010 

 

Active Time Period of Enforcement: 1 August 2020 until 31 December 2021.

Calculation of the period for an application to renew a license for Public Service Vehicles and/or Goods Vehicles under Section 21 and Section 56 of The Land Public Transport Act 2010 (where the initial renewal shall not exceed 3 months to use the Public Service Vehicles of any class or any Goods Vehicles) shall not exceed 12 months to use the Public Service Vehicles of any class or Goods Vehicles.  

This subsection shall be accompanied by information any changes in technical specifications of the vehicle and/or information on temporary use of the vehicle and additional insurance coverage is to be determined by the Director General of Land Public Transport. The Director General of Land Public Transport is also able to impose on any condition of the authorization granted. However any Goods Vehicle authorized for the purpose of tourism shall now be operated by a tour operator under the Tourism Industry Act 1992. 

 

 

  • Modifications to the Commercial Vehicles Licensing Board Act 1987 

 

Active Time Period of Enforcement: 1 August 2020 until 31 December 2021.

Calculation of the period for an application to hold a license for Public Service Vehicles and/or Goods Vehicles under Section 23 of the Commercial Vehicles Licensing Board Act 1987 (where initially the period shall not exceed 3 months to hold a license for any Public Service Vehicles and/or Goods Vehicles) shall not exceed 12 months to hold a license for any Public Service Vehicles and/or Goods Vehicles.

This subsection shall be accompanied by any information any changes in technical specification and/or information on temporary use of the vehicle and/or additional insurance coverage is to be determined by the Board. The Board is also able to impose on any conditions on the authorization granted. 

Other than that, amendments under Section 24 of the Commercial Vehicles Licensing Board Act 1987 the period of an application to hold a license for ‘C’ and ‘A’ vehicles (where initially to hold a license for ‘C’ vehicles shall not exceed 3 months for the purpose of Public Service Vehicles or Goods Vehicles) shall not exceed 12 months for the purpose of Public Service Vehicles or Goods Vehicles. 

This amendment shall be accompanied by any information any changes in technical specification and/or information on temporary use of the vehicle and/or additional insurance coverage is to be determined by the Board.The Board is also able to impose on any conditions on the authorization granted. 

 

  • Modifications to The Courts of Judicature Act 1964

 

Active time period of enforcement: 18th March 2020 onwards (up to a period of 2 years)

The new addition of Section 16A to Section 16 of the The Courts of Judicature Act 1964 states that the Chief Justice has the General Power to issue directions where he sees fit for the interests of the dispensation of justice, public safety, public health and public security.

Moreover, the amendments to Section 17 is to renumber the existing subsection (3A) as subsection (3B) and adding to subsection (3) that the Chief Justice may adjourn any meeting when it is not possible to be held and provide an alternative arrangement for the meeting. An addition of subsection (8) to Section 17 states that the Chief Justice is able to modify any provision of the Rules of Court 2012 and/or suspend the application of such rules in the interest of the dispensation of justice, public safety, public health and public security. The requirement for an annual meeting under Section 17A(1) is dispensed with.

 

 

  • Modifications to The Subordinate Courts Act 1948

 

Active time period of enforcement: 18th March 2020 onwards (up to a period of 2 years)

The new addition of Section 3A to Section 3 of the The Subordinate Courts Act 1948 states that the Chief Justice has the General Power to issue directions where he sees fit for the interests of the dispensation of justice, public safety, public health and public security. 

 

  • Modifications to The Subordinate Courts Rules Act 1955 

Active time period of enforcement: 18th March 2020 onwards (up to a period of 2 years)

Section 3 is modified by inserting subsection 3(6) states that the Chief Justice is able to modify any provision of the Rules of Court 2012 and/or suspend the application of such rules in the interest of the dispensation of justice, public safety, public health and public security. 

Conclusion 

It would have been ideal for this Bill to be in force since 18th March 2020 when the Movement Control Order (MCO) came into force. Nonetheless, as the saying goes – better late than never. 

Should this Covid-19 Bill in its current version be passed by the Parliament, the abovementioned amendments to the twelve (12) areas of law shall come into force. It remains to be seen if the bill would be the final legislature or the beginning of further legislative amendments to contain the impact of Covid-19 on Malaysia. 

PS. (PostScript) : The Covid-19 Bill has finally been gazetted on 23rd October 2020 and is currently in force and being regarded as the “Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (Covid-19) Act 2020”. We believe that the passing of the Covid-19 Act is indeed an applaudable effort as it benefits many individuals, startups and business entities that have been economically affected as a result of the ongoing Covid-19 pandemic. We remain positive that the passing of the Covid-19 Act will also provide clarity to all citizens of Malaysia pertaining to legal queries that may potentially arise as we navigate through uncharted waters.

 

Published on 17 August 2020.

Photo by Morning Brew on Unsplash

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