MUCH ADO ABOUT THE COVID-19 BILL?

Overview

To date, the number of Covid-19 cases have dropped significantly due to the Movement Control Order (“MCO”) which took effect from 18th March to 28th April 2020. Undeniably, the Covid-19 pandemic has affected the majority, if not all Malaysians and taken a toll on the country’s economy. The government has taken upon itself to mitigate the debilitating effects caused by the pandemic and pass the Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (Covid-19) Bill 2020 (“the Bill”). The Bill, which aims to address the impacts of MCO and restore the country’s economy, is expected to be gazetted at the end of September and was tabled for the first reading in the Dewan Rakyat on 12th August 2020. The Bill seeks to aid the country’s economy by modifying a number of legislations in order to mitigate and manage the effects of Covid-19.

Throughout the MCO period, most businesses were ordered to cease operation and as a result, sales have plummeted drastically. The Bill ultimately provides incentives and aid for businesses that have been affected and to revive Malaysia’s economy.  The country is however far behind in passing specific laws to address the economic impact of the pandemic as other jurisdictions across the world had passed legislations on Covid-19 some time ago. Regardless of the substantial delay in tabling the Bill, initiatives made by the government should not be dismissed. It is worth examining how terribly the outbreak has impacted the country and the citizens’ livelihood. This article will take a closer look at how the Bill seeks to address contractual transactions that have taken place during the MCO.

  1. Suspension of obligations of contracts

    The Bill seeks to protect contracts listed in the Schedule with no force majeure clause by allowing an extension of time and the period affected by the pandemic to be set aside. In contrast, when there is a presence of force majeure or exceptional events clause in contracts, it will bear the effect of suspending the performance of contract to include the event of the occurrence of the MCO. Despite that, whether or not events such as the MCO or the Covid-19 outbreak fall within the meaning of force majeure or exceptional events depends on the parties to the contract and how they would construe the wording of the said contract[1].

    Arguably, the Covid-19 outbreak may be characterized as a force majeure event as it falls within the meaning of “act of God” or “events making it impossible for parties to fulfil their contractual obligations”. It is worth noting that, the Bill specifically provides that in situations where there is a conflicting law, the Bill will ultimately prevail[2]. On that note, any contract entered into within the MCO period does not entitle the other party to take legal action for failure to perform the contract within the stipulated time[3].

    If any dispute arises from the failure of either party to honour the contract due to the MCO, the party can opt for mediation under Clause 9 of the Bill where the Minister[4] may appoint a mediator to settle the dispute in which at the conclusion of the mediation, the parties will enter into a written settlement agreement signed by the parties to the contract. The terms of the settlement agreement will then be binding on the parties in resolving the conflict.

  2. Extension of Limitation Period

    During the MCO, ongoing court cases were put at halt, therefore, pursuant to Clause 12 of the Bill, necessary modifications are to be made to Section 6 of the Limitations Act 1953 which prescribes the limitation period in legal claims. Any limitation period which expires from 18th March to 31st August shall be extended to 31st of December 2020.

    The same approach applies to the Sabah Limitation Ordinance and the Sarawak Limitation Ordinance respectively where extensions are to be made when necessary.

  3. Suspension and Expansion of Statutory Obligations

    The Bill also aims to facilitate in minimising the effects of the outbreak by amending the following legislations:

    Clause

    Legislation

    Amendments

    18

    Public Authorities Protection Act 1948

    The limitation period which expires from 18/3/2020 to 18/3/2020 is extended to 31/12/2020.

    20

    Insolvency Act 1967

    The amount of indebtedness is increased to RM 100,000.

    23

    Hire-Purchase Act 1967

    No owner shall exercise any power of taking possession of goods for any default of payment of instalment during the period from 1/4/2020 to 30/9/2020.

    26

    Consumer Protection Act 1999

    The insertion of S. 24v which states that in the event of default in payment of two consecutive instalments by a purchaser under a credit sale agreement, the credit facility provider shall issue a notice to the purchaser on the settlement of the overdue instalments under the agreement.

    28

    Consumer Protection Act 1999

    The limitation period which expires between 18/3/2020 to 15/6/2020 shall be extended until 31/12/2020.

    30

    Distress Act 1951

    A warrant of distress for the recovery of

    rent due or payable shall not include the distrain for the arrears of rent for the period from 18/3/2020 to 31/8/2020.

    34

    Housing Development (Control and Licensing) Act 1966

    The developer shall not impose any late payment charges in respect of such unpaid instalment on the purchaser for failure to pay instalments form 18/3/2020 to 31/8/2020.

    35

    Housing Development (Control and Licensing) Act 1966

    The purchaser cannot be said to have entered into vacant possession if the service of vacant possession is from 18/3/2020 to 31/8/2020.

    36

    Housing Development (Control and Licensing) Act 1966

    The purchaser shall have an extension of time for the defect liability period to 31/12/2020 from the calculation after the date the purchaser takes vacant possession of a housing accommodation and the time for the developer to carry out works to repair and make good the defect, shrinkages and other faults in a housing accommodation.

    38

    Housing Development (Control and Licensing) Act 1966

    If the limitation period for the homebuyer to file a claim has expired during the period from 18/3/2020 to 9/6/2020, the homebuyer is entitled to file the claim from 4/5/2020 to 31/12/2020 and the Tribunal for Homebuyer Claims shall have jurisdiction to hear such claim.

    40

    Industrial Relations Act 1967

    The period from 18/3/2020 to 9/6/2020 shall be excluded from the calculation of the period for according recognition or notifying the trade union of workmen concerned in writing the grounds for not according recognition, the making of a report in writing to the Director General for Industrial Relations under subsection and the filing of representation.

    42

    Private Employment Agencies Act 1981

    The period from 18/3/2020 to 9/6/2020 shall be excluded from the calculation of the period for an application to renew a licence.

    44

    Land Public Transport Act 2010

    The substitution of S. 21 for any public service vehicle or tourism vehicle to temporarily use the vehicle as a public service vehicle, tourism vehicle or goods vehicle of any other class.

    45

    Land Public Transport Act 2010

    The substitution of S. 56 for a temporary change of use of goods vehicle to temporarily use the vehicle as a public service vehicle, tourism vehicle or goods vehicle of any other class.

    47

    Commercial Vehicles Licensing Board Act 1987

    Modifications made to S. 23 for a temporary change of use of public service vehicle for a period not exceeding 12 months.

    48

    Commercial Vehicles Licensing Board Act 1987

    Modifications made to S. 24 for a temporary change of use of ‘C’ vehicle or ‘A’ vehicle to use the vehicle for the purpose of a public service vehicle or goods vehicle of any other class.

    50

    Courts of Judicature Act 1964

    Introduction of S. 16A to enable the Chief Justice to issue directions relating to the business of the High Court, the Court of Appeal and the Federal Court whenever the Chief Justice is of the opinion that it is necessary in the interest of the dispensation of justice, public health.

    51

    Courts of Judicature Act 1964

    Modifications are made to S. 17 to enable the Chief Justice to make any alternative arrangements for any meeting required to be convened, held or conducted, modify any provisions of the rules of court or to suspend the application of such rules.

    52

    Courts of Judicature Act 1964

    Modifications are made to S. 17A(1) to exclude the mandatory requirement to convene the Council of Judges for at least one meeting in each year.

    54

    Subordinate Courts Act 1948

    The introduction of S. 3A to enable the Chief Justice to issue directions relating to the business of the Subordinate Courts whenever the Chief Justice is of the opinion that it is necessary in the interest of the dispensation of justice, public health.

    56

    Subordinate Courts Rules Act 1955

    The introduction of S. 3(7) to enable the Chief Justice to modify any provisions of the rules of court or to suspend the application of such rules as is necessary for doing complete justice in any cause or matter pending before the Court.

Conclusion

The Bill sets out a number of changes to different legislations but ultimately, the Minister has the power to extend the time for the relevant authority to perform any of its statutory duties or obligations[5]. Even though the government is late in implementing the Bill, it is hopeful that the desired effects of its implementation will immensely help the betterment of the country’s economy. Since everyone is adapting to the new normal, it is best that the law adapts to the occurring changes. Embracing significant changes is critical as extraordinary times calls for extraordinary measures!

For further clarification, please contact us at 03-2171 1484 or at mail@azamlaw.com.


[1] Intan Payong Sdn Bhd v Goh Saw Chan Sdn Bhd [2005] 1 MLJ 311, HC

[2] Clause 3, Temporary Measures for Government Financing (Coronavirus Disease 2019 (Covid-19)) Bill 2020

[3] Clause 7, Temporary Measures for Government Financing (Coronavirus Disease 2019 (Covid-19)) Bill 2020

[4] Section 3, Mediation Act 2012, Minister means the Minister charged with the responsibility of legal affairs

[5] Clause 58, Temporary Measures for Government Financing (Coronavirus Disease 2019 (Covid-19)) Bill 2020


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