The Malaysian Covid-19 Act: The Last Bastion?

Datuk Seri Krishna Kumar J.P.Partner, Krish Maniam & Co

Parveen Kaur Harnam Singh (as at 21.12.2020)

A few months ago, when the rage of the pandemic had just shown itself, there were many calls to impose a Covid-19 Act in Malaysia. Our neighbour, Singapore had done it at the height of the pandemic (which is to say the initial height for the pandemic has yet to wane). No matter, though, as Malaysia has just today gazetted its own Temporary Measures for Reducing the Impact of Coronavirus Disease 19 (Covid 19) Act. What should we all make of it? Let’s find out.

The first noticeable feature of this Covid-19 Act is the unprecedented nature of its application. The Act affects a host of legislations currently in place. The legislations are: the Limitation Act 1953, the Sabah Limitation Ordinance, the Sarawak Limitation Ordinance, the Public Authorities Protection Act 1948, the Insolvency Act 1967, the Hire- Purchase Act 1967, the Consumer Protection Act 1999, the Distress Act 1951, the Housing Development (Control and Licensing) Act 1966, the Industrial Relations Act 1967, the Private Employment Agencies Act 1981, the Land Public Transport Act 2010, the Commercial Vehicles Licensing Board Act 1987, the Courts of Judicature Act 1964, the Subordinate Courts Act 1948 and the Subordinate Court Rules Act 1955.

Reading these legislations is in and of itself a mouthful, what more is there is to speculate of its implications? A great deal, to put it simply. For one, there there is a conflict between the specific legislations and the Covid-19 Act, it would be the Covid-19 Act that prevails (Section 3). To a degree, this appears to fly in the face of the age-old maxim of law “generalibus specialibus non derogant”, which in essence provides that where there is a conflict between a specific law and a general law, it is the specific law that should prevail. However, given the circumstances of the pandemic, a maxim as entrenched as this one would have to put aside, is the only conclusion. Some may argue that the Covid-19 Act is more specific, but a thorough reading of the Act would suggest that it has a broad spectrum of application – ranging from limitation periods, bankruptcy, housing laws, public transport laws, even employment laws. It is a general law that is specific to the pandemic is possibly a way to word it. This aspect of the Covid-19 alone will make it into legal texts and history books – for law students, lawyers and laymen alike for centuries to come, but we are only at the beginning.

Another notable feature of the Covid-19 Act is the duration of its enforcement. In general, it is to apply for two (2) years from the date of publication, which is gathered from Part I (Preliminary). This notwithstanding, Part II of the Act “Inability to Perform Contractual Obligation” is deemed to have come into operation from 18 March 2020 to 31 December 2020. On the other hand, Part XIV of the Act is deemed to have come into operation from 1 August 2020 to 31 December 2020 (and these are just two highlights). This is another one-of-a-kind anomaly in this Act: having different durations and periods, depending on the requirements. There is a reason for this though: For instance, Part II of the Act’s primary purpose looks to protect parties that are unable to perform a contract due to measures prescribed or taken under the Prevention and Control of Infectious Diseases Act 1988 (Section 7). The contracts are limited to, among others: construction work contracts, performance bond or equivalent granted pursuant to a construction contract, professional services contract, lease or tenancy, event contract, contract by a tourism enterprise and religious-pilgrimage contract (Schedule to Section 7). Although limited, there will be a multitude of industries and individuals who will be protected on account of this provision. In usual circumstances, as we all may well know: when a party is unable to perform his part of the contract, it gives rise to breach of contract. This would be Contract Law 101, but with the pandemic, the whole concept of 101 has had to change, including the very foundation of contract law.

Section 9 of this part provides for handling of disputes arising out of the inability to perform contracts: mediation. For the most part, when there is a commercial contract between parties, especially, arbitration is the choice. Even then, there are lots of disputes that are taken to Court although a specific dispute resolution clause stipulating the forum conveniens (convenient or appropriate forum) has been agreed to. This is usually with little regard to the minimal intervention approach of Courts in arbitration. This is what happens on a regular. This Act may not have that effect, however, given that it has been gazetted and would be a primary legislation for some time to come. It would be near impossible to predict the outcome of such a provision at present, we would have to just wait and watch.

So far, we’ve seen quite a bit, but Part III is another aspect of this provision that earns it the moniker of being “unprecedented”. This Part is again for the duration of 18 March 2020 to 31 December 2020. Why is it unprecedented, then? Section 12 is the answer to this question. Section 12 provides that any limitation period specified in Section 6 of the Limitation Act 1953 (near-canonical provision which provides that certain actions cannot be brought after the expiration of six (6) years from the date when the cause of action accrued and/or begins) which expires from 18 March 2020 to 31 August 2020 shall be extended to 31 December 2020. Lots of legalese here, but the gist of it is that this part of the provision allows for an extension to 31 December 2020, if the limitation period expires from March 2020 to August 2020. For example, A and B entered into a contract in 2012. B failed to complete his part of the contract on 1s t of April 2014. A intends to take an action against B this year. Technically, the limitation period expires on 1s t of April 2020, but because of the Covid-19 Act, A can still take an action against B today or at any time until 31 December 2020. A very distinct change in well-worn law. The effect on the Sabah Limitation Ordinance and Sarawak Limitation Ordinance is even more vast (Section 14 and Section 16 respectively), but the duration of extension is the same.

One other highly apparent feature is Section 20 of the Covid-19 Act which modifies the amount of indebtness pursuant to the Insolvency Act 1967. A modification of this nature means that a lot of creditors will not be able to present a bankruptcy petition according to the common practice. It changes the very landscape of petitioning creditors and debtors – for the moment, at least – which would inevitably have an effect in the long-term as well. What’s interesting, though, is that any pending proceedings or actions are not affected (Section 21).

Other notable features (which are protective) include:

  1. Section 23(protection for defaulters): where owners shall not exercise any powers to take possession of goods pursuant to default of payment in connection with a hire-purchase agreement during the period of 1 April 2020 to 30 September 2020;
  2. Section 30: a warrant of distress shall not include distraint for arrears of rent for period of 18 March 2020 to 31 August 2020 (modification on Distress Act 2951);
  3. Section 34 (protection for purchasers): from 18 March 2020 to 31 August 2020, a developer shall not impose late payment charges in respect of unpaid instalment(s) on the purchaser (modification on the housing development legislation);
  4. Section 38 (protection for homebuyers): If limitation period for a homebuyer expires from 18 March 2020 to 9 June 2020, the homebuyer is entitled to file a claim from 4 May 2020 to 31 December 2020; and
  5. Section 40 (protection for workmen): Period from 18 March 2020 to 9 June 2020 is excluded from the calculation under the Industrial Relations Act 1967 for according recognition or notifying trade union of workmen concerned in writing the grounds for (1) not according recognition under section 9(3), (2) the making of a report in writing to the Director General for Industrial Relations under subsection 9(4) and (3) the filing of representation under subsection 20(1A)

Apart from the (temporary) general changes which give flexibility to timesensitive provisions in legislations and provisions which are monetary in effect, there are also changes which affect the courts. Case in point: pursuant to Section 50 of the Covid-19 Act, the Courts of Judicature Act
1964 is modified by including a Section 16A which provides that the Chief Justice may, if the Chief Justice is of the opinion that the circumstances warrant and it is necessary in the interest of the dispensation of justice, public safety, public security, public health or propriety (or for other sufficient reason to do so), issue any direction in relation to the business of the Court as may be necessary. A similar section 3A is provided for in
the Subordinate Courts Act 1948 (Section 54 of the Covid-19 Act) and Section 3(7) in the Subordinate Courts Rules 1955 (Section 56 of the Covid-19 Act). The key words here being: public safety, public security and public health. This provision of the Covid-19 Act affords discretion to the Chief Justice to issue directions if there is a concern for the three key words, aside from any other sufficient reasons (as provided in the Act). This is an invaluable aspect of the Covid-19 Act which shows a commitment to both the Court’s discretion and public safety and security.

All in all, there are many protective measures infused into the Covid-19 Act, some of which have been mentioned here and some of which have not (for I am not the judge and jury of analyzing the Act). It goes without saying, however, that the very existence of such an Act in Malaysia will spell a new-age in the Malaysian legal scene and without a shadow of doubt: have a resounding impact on people, industries, and everything in between.

Contributing Advisors

Ashleigh Teo CaiyingPupil-in-chambers, Krish Maniam & Co