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Covid-19

Key Highlights of the Malaysia’s Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (COVID-19) Bill 2020

Introduction

The Malaysia Government had on 18 March 2020 took drastic preventive measures by implementing unprecedented Movement Control Order (MCO) including closing its borders to the world. What followed on (in legislation) was the tabling of the ‘Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (COVID-19) Bill 2020’ ("the Bill") in the Malaysia Parliament which seeks to provide temporary measures to reduce the impact of the Coronavirus Disease 2019 (‘COVID-19’) by modifying provisions of certain Malaysia legislations.

The Bill has been passed by the Malaysia Parliament o n 22 September 2020 , however as of date of publication of this article, the Bill is pending presentation to His Majesty the King (‘Yang di-Pertuan Agong’) for Royal Assent, and will only be law upon being published in the Gazette.  

Once published, the Bill will have retrospective effect for some of the reliefs expressly provided for in the Bill. Where the Bill is silent, it shall remain in operation for two (2) years from the date of publication. The full Bill is available here.

Key Highlights of the Bill

The following are the key highlights of the Bill:-

1. Protection Afforded For Inability to Perform Contractual Obligation

Part II of the Bill[1] provides for temporary relief to parties who are not able to perform their contractual obligation (for listed contracts under Part II Schedule of the Bill) due to the measures prescribed, made or taken under the Prevention and Control of Infectious Diseases Act 1988[2] to control or prevent the spread of COVID-19.

In this respect, the ‘Non-defaulting Parties’ in the listed contracts under the Schedule shall be restrained from exercising their contractual rights under the said contracts against the ‘Defaulting Parties’. Such protection shall be retrospective in effect and is deemed to come into operation on 18 March 2020 until 31 December 2020  (unless extended by order by the Minister charged with the responsibility for law).

The listed contracts protected thereunder (which may be amended by the Minister by order published in the Gazette) are: 

i. Construction work contract or construction consultancy contract and any other contract related to the supply of construction material, equipment or workers. In connection with a construction contract;

ii. Performance bond or equivalent that is granted pursuant to a construction contract or supply contract;

iii. Professional services contract;

iv. Lease or tenancy of non-residential immovable property;

v. Event contract for the provision of any venue, accommodation, amenity, transport, entertainment, catering or other goods or services including, for any business meeting, incentive travel, conference, exhibition, sales event, concert, show, wedding, party or other social gathering or sporting event, for the participants, attendees, guests, patrons or spectators of such gathering or event;

vi. Contract by a tourism enterprise as defined under the Tourism Industry Act 1992 and a contract for promotion of tourism in Malaysia; and

vii. Religious pilgrimage-related contract.

Such protection can only be triggered if:- 

i. the relevant contractual obligation arise from one of the listed contracts in the Schedule as listed above; and

ii. the inability to perform by the ‘Defaulting Parties’ must be due to the measures prescribed under the Prevention and Control of Infectious Diseases Act 1988 to control or prevent the spread of COVID-19.

It is also to be noted that Clause 10 of the Bill contains a saving provision in that “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 shall deem to have been validly termination, forfeited, received, commenced granted or carried out”.

2. Mediation

Now, in the event there is any dispute of any inability of any party to perform any contractual obligation arising from the listed contracts in the Schedule as stated above, Clause 9 of the Bill provides mediation as a dispute resolution mechanism. However, the mediation process under the Bill is not mandatory. As such, it remains to be seen whether parties will opt for mediation process over other dispute resolution process (i.e. Courts or arbitration).

3. Extension of Limitation Periods

Part III of the Bill[3] provides for extension of limitation periods (i.e. the period of time for a party to file a claim) in contract and tort under Section 6 of the Limitation Act 1953. Here,in the event the limitation period expired between 18 March 2020 to 31 August 2020, it shall be extended to 31 December 2020. This also applies to the laws of limitation for East Malaysia, i.e. Sabah and Sarawak[4] and the Public Authorities Protection Act 1948.

4. Insolvency Proceedings – Indebtedness Relief (Insolvency Act 1967)

Clause 20 of the Bill[5] prohibits a creditor/creditors from presenting a bankruptcy petition against a debtor under Section 2 or 5 of the Insolvency Act 1967, unless the debt owing by the debtor to the petitioning creditor, or if two or more creditors join in the petition the aggregate amount of debts owing to the several petitioning creditors, amounts to RM100,000. In other words, under this provision, the minimum threshold for commencing bankruptcy proceedings had been raised from RM50,000 to RM100,000.

The modifications of the provisions on insolvency of individuals shall come into operation on the date of publication of the Act and will remain in force until 31 August 2021 (next year). The Minister is given the power (which may be exercised more than once), by order published in the Gazette, to extend the operation of the aforesaid provisions but such extension shall not exceed the period for which the Act remains in operation[6]

Do note that Clause 21 of the Bill contains a saving provision, where any proceedings, actions or other matters required to be done under the Insolvency Act 1967 which are still pending immediately before the date of publication of the Act, shall still be dealt with under the unmodified Insolvency Act 1967.

5. Relief from Hire-Purchase Obligations (Hire-Purchase Act 1967) 

Part VIII of the Bill[7] is deemed to come into operation on 1 April 2020 until 31 December 2020[8].

Clause 23 provides that no owner shall exercise his right to repossess goods under a hire-purchase agreement under section 16 of the Hire-Purchase Act 1967 arising from a default in instalment payments from the period from 1 April 2020 to 30 September 2020[9]. However, owners who have already exercised their rights before the publication date may continue to pursue their claims[10].

6. Consumer Protection Act/Credit Sale Agreements

Part IX of the Bill is deemed to come into operation on 18 March 2020 until 31 December 2020[11] and amends two provisions in the Consumer Protection Act 1999 as follows:

(i)             by replacing Section 24v by modifying the provisions that deal with default in payment of instalments by a purchaser with a provision that:

          (a)   exempts the purchaser from paying late payment charges if he elects to pay the overdue instalments upon his receipt of a notice of default from the credit facility provider; and

           (b) precludes the credit facility provider from commencing legal proceedings to recover the total outstanding amount if the purchaser fails to make the election under section 24v(2)-these measures only apply to a credit sale agreement entered into before 18 March 2020 and the purchaser has no overdue instalments before that date; and

(ii)             by amending section 99(2) to extend the 3-year limitation for filing a claim in the Tribunal for Consumer Claims which expires during the period from 18 March 2020 to 15 June 2020, to 31 December 2020.

Similarly, the modification of section 24v(4) to preclude the credit facility provider from commencing legal proceedings to recover the total outstanding amount does 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 during the period from 18 March 2020 until the date of publication of the Bill[12].

7. Recovery of Rent Due and Payable to Landlord by Tenant

Part X of the Bill is deemed to come into operation on 18 March 2020 and shall continue to remain in operation until 31 December 2020[13].

Clause 30 of the Bill prohibits a landlord from taking action under section 5(1) of the Distress Act 1951 to recover arrears of rent for the period from 18 March 2020 to 31 August 2020. This provision applies to all types of premises that is the subject of a tenancy agreement.

Similarly, any execution of a warrant of distress for the recovery of rent due to the landlord by a tenant of any premises that has been issued before the date of publication of the Bill shall be dealt with as per the unmodified Distress Act 1951[14].

 8. Housing Development (Control and Licensing) Act 1966 (“HDA”)

Part XI of the Bill[15] is deemed to come into operation on 18 March 2020 and provides for amendments to the HDA (only for statutory prescribed sale and purchase agreements set out under HDA and entered into before 18 March 2020) as follows:

(i)             no late payment charges to be imposed on purchasers who fail to make instalment payments for the period 18 March 2020 to 31 August 2020 due to the measures taken under the Prevention and Control Infectious Diseases Act 1988;

(ii)            the period of 18 March 2020 to 31 August 2020 shall be excluded from the calculation of:

  • time for delivery of vacant possession of a housing accommodation;
  • liquidated damages for the failure of the developer to deliver vacant possession of a housing accommodation;
  • defect liability period after the date the purchaser takes vacant possession of a housing accommodation; and
  • time for the developer to carry out works to repair and make good the defect, shrinkages and other faults in a housing accommodation.

Please note that the developer may apply to the Minister for extension of the period as referred above.

Also, where a purchaser is unable to enter into possession of occupation of a housing accommodation during the period from 18 March 2020 to 31 August 2020, the purchaser shall not be deemed to have taken such vacant possession.

Similarly, Clause 37 of the Bill contains the saving provision which provides that such amendments will not affect any legal proceedings commenced, or any judgment or award obtained relating to recovery of late payment charges payable by purchase or liquidated damages payable by the developer or any other sum prior to the publication of the Bill. If any payments had been made prior, it  shall not be refunded.

(iii)          Finally, Clause 38 provides that if the 12 months limitation period for a homebuyer to file a claim under with the Tribunal for Homebuyer Claims has expired during the period from 18 March 2020 to 9 June 2020, the homebuyer is entitled to file the claim from 4 May 2020 to 31 December 2020 to which the Tribunal for Homebuyer Claims shall have jurisdiction to hear such claim.

9. Industrial Relations Act 1967 

Part XII of the Bill[16] is deemed to come into operation on 18 March 2020. The period from 18 March 2020 to 9 June 2020 shall be excluded from the calculation time under the Industrial Relations Act 1967 for according recognition, or notifying a trade union as to the grounds for not according recognition under subsection 9(3), the making of a report in writing to the Director General for Industrial Relations under subsection 9(4) and the filing of representation under subsection 20(1A).

10. Private Employment Agencies

Part XIII of the Bill[17] is deemed to come into operation on 18 March 2020 which provides that the period from 18 March 2020 to 9 June 2020 shall be excluded from the calculation of the period for an application to renew a licence under section 11(1) of the Private Employment Agencies Act 1981.

11. Land Public Transport/Commercial Vehicles Licensing Board

Part XIV and XV of the Bill[18] are deemed to come into operation on 1 August 2020 until 31 December 2021 (next year). In gist, this part of the Bill amends the Land Public Transport Act 2010 ("LPTA") and the Commercial Vehicles Licensing Board Act 1987. A licensed operator of a public service vehicle or tourism vehicle may make an application to the relevant authority for authorisation to be used as a public service vehicle, tourism vehicle or goods vehicle of another category or class. Such authorisation may be given for a tourism vehicle to be used for public transportation, subject to the fulfilment of certain conditions which includes additional insurance coverage.


[1] Clause 5 to 10

[3] Clause 11 to 18

[4] Part IV and V

[5] Under Part VII

[6] Clause 19

[7] Clause 22-24

[8] Clause 22

[9] Clause 23

[10] pursuant to the saving provision under this part, ie. Clause 24

[11] Clause 25-26

[12] Clause 27

[13] Clause 29

[14] As per the saving clause under Clause 31

[15] Clause 32-38

[16] Clause 39-40

[17] Clause 41-42

[18] Clause 43-48