By Khoo Thean Chiap
The Malaysia government has finally tabled its Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (COVID-19) Bill 2020 (“Covid-19 Bill”) in Parliament. It seeks to address contractual and statutory issues arising from COVID-19, including modifying 16 existing laws such as the Limitation Act 1953, Insolvency Act 1967, Consumer Protection Act 1999, Distress Act 1951, Hire-Purchase Act 1967, Housing Development (Control and Licensing) Act 1966 and etc.
Here are some matters addressed by the Bill.
If a party is unable to perform any contractual obligation due to measures prescribed, made or taken under the Prevention and Control of Infectious Diseases Act 1988 to control or prevent the spread of COVID-19, the other party cannot exercise his or their rights under the contract. However, note the following:
- Relief for such inability to perform is only confined to the following categories of contract:
- construction work contract or construction consultancy contract and any other contract related to the supply of construction material, equipment or workers
- performance bond or equivalent granted pursuant to a construction contract or supply contract
- professional services contract
- lease or tenancy of non-residential property
- event contract e.g. for any business meeting, incentive travel, conference, wedding, party or other social gathering or sporting event
- contract by a tourism enterprise and a contract for promotion of tourism
- religious pilgrimage-related contract
- The purported inability to perform must fall between 18th March 2020 and 31st December 2020, or any other extended period as gazetted by the Minister of Law.
- In the event of dispute on the inability of the party to perform any contractual obligation, parties may settle the dispute by way of mediation. From its reading, it does not appear that they are making mediation compulsory.
- Any contract terminated, any deposit or performance bond forfeited, any damages received, any legal proceedings commenced, any judgment or award granted, and any execution carried out before the date of publication shall be valid. In other words, what’s done is done. Anything done before this Bill becomes an Act cannot be reversed.
Any limitation period which expires during 18th March 2020 to 31st August 2020 will be extended to 31st December 2020.
The minimum threshold for creditor(s) to present a bankruptcy petition against an individual is raised from RM50,000.00 to RM100,000.00 until 31st August 2021.
However, any ongoing bankruptcy proceedings shall be dealt with as if the threshold has not increased.
Warrant of distress issued under the Distress Act 1951 shall not include claims for arrears of rent from 18th March 2020 to 31st August 2020. This protection shall only last until 31st December 2020.
However, any execution of warrant of distress before this Bill is published shall not be affected.
The Developer cannot impose any late payment charges against purchasers on any instalments not paid from 18th March 2020 to 31st August 2020 or any extended period (latest 31st December 2020) approved by the Minister of Law if such non-payment is due to the measures prescribed, made or taken under the Prevention and Control Infectious Diseases Act 1988.
The period from 18th March 2020 to 31st August 2020 or any extended period (latest 31st December 2020) approved by the Minister of Law shall be excluded from the calculation of the time for delivery of vacant possession and liquidated damages for any purported failure of the developer to deliver vacant possession.
The period from 8th March 2020 to 31st August 2020 or any extended period (latest 31st December 2020) approved by the Minister of Law shall be excluded from the calculation of the defect liability period and the time for the developer to carry out repair works and make good the defects.
- any legal proceedings, judgment or award obtained in relation to the recovery of late payment charges or liquidated damages before this Bill is published as an Act shall not be affected.
- any late payment charges or liquidated damages that has been paid before this Bill is published as an Act shall be deemed to have been validly paid under the HDA and its regulations, and shall not be refunded to the payer.