Keynote of COVID-19 ACT 2020

  1. Covid Act 2020 will remain in force for 2 years from 23.10.2020 subject to extension by Prime Minister.
  2. Contractual obligation listed under Schedule of the Covid Act 2020 will be suspended from 18.3.2020 to 31.12.2020.
  3. Any aggrieved party for contract listed under Schedule of the Covid Act 2020 shall have no right to bring an action for failure to perform obligations for a period from 18.3.2020 to 31.12.2020.
  4. No action can be taken, no contract can be terminated, no judgment can be granted, and no execution can be carried out unless it has been commenced, terminated, granted and carried out before 23.10.2020.
  5. Any cause of action to initiate an action which expired during 18.3.2020 to 31.8.2020, shall automatically extended to 31.12.2020.
  6. Limitation period to commence an action against public authorities which expired between 18.3.2020 to 31.8.2020 shall be extended to 31.12.2020.
  7. From 23.10.2021 to 31.8.2021, a creditor can only initiate a bankruptcy proceeding against a debtor if the amount of indebtedness amounts to RM100,000.00.
  8. Owner of goods comprised in a hire-purchase agreement cannot repossess the goods for any default of payment of instalment during the period from 1.4.2020 to 30.9.2020.
  9. If a Purchaser who is in default in instalment payment under a credit sale agreement chooses to pay the overdue instalment to the credit facility provider, the purchaser does not have to pay late payment charges.
  10. The credit facility provider cannot commence any legal proceedings against the defaulting purchaser to recover the outstanding amount if the credit sale agreement was entered before 18.3.2020 and no overdue instalment by the purchaser before 18.3.2020.
  11. Limitation period under Section 99(2) of the Consumer Protection Act 1999 which expires from 18.3.2020 to 15.6.2020 shall automatically extended to 31.12.2020.
  12. A warrant of distress shall not include the distrain for the arrears of rent owing from 18.3.2020 to 31.8.2020. to initiate a suit extended to 31.12.2020 for any cause of action that expired during 18.3.2020 to 31.8.2020.
Temporary Measures For Reducing The Impact Of Coronavirus Diseases 2019 (Covid-19) Act 2020

 

INTRODUCTION

Q1. When the Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (COVID-19) Act 2020 (“Covid Act 2020”) came into force?

A: The Covid Act 2020 came into force on 23.10.2020 and will remain in force for two (2) years from 23.10.2020[1] subject to extension by the Prime Minister[2].

Q2. What is the objective of this Covid Act 2020?

A: To provide for temporary measures to reduce the impact of COVID-19, including to modify the relevant provisions of several statutes[3].

Q3. In the event of any conflict or inconsistency between the provisions of this Covid Act 2020 and other written law, which law will prevail?

A: Section 3 of the Covid Act 2020 provides that the provisions of the Act shall prevail over such other written law.

INABILITY TO PERFORM CONTRACTUAL OBLIGATION

Q4. Is there any relief for inability to perform contractual obligations?

A: Yes. Section 7 of the Covid Act 2020 provides that any party or parties who are unable to perform contractual obligation arising from any of the (1) categories specified in the Schedule[4] of the Covid Act 2020 (2) due to the measures and restrictions imposed under the Prevention and Control on Infectious Diseases Act 1988.

It includes measures and restrictions imposed during Movement Control Order (“MCO”), Conditional MCO and Recovery MCO.

Q5. What is the effect of this relief towards another party?

A: The aggrieved party shall not have the right to bring an action for such failure to perform obligations for a period from 18.3.2020 to 31.12.2020.

Q6. I have supplied sneakers to ABC shop on 14.7.2020 but they fail to pay me. Can I take legal action against ABC shop?

A: Yes. You can take action against ABC shop due to its failure to perform obligation towards you, i.e. made payment for the sneakers that have been supplied by you. This is due to the fact that the contract between you and ABC shop does not fall within the categories of contracts specified in the Schedule of the Covid Act 2020.

Q7. What types of contracts that are not covered by this temporary relief?

A: These categories of contacts include:-

  • Contracts for the grant of loan facility by a bank or financial institution
  • General and non-construction related supply contract
  • Contract for the sale of goods
  • Contract for the provision of non-professional services

Q8. I have obtained a judgment against a construction company on 25.9.2020. What happens to the judgment?

A: Although the Covid Act 2020 has a retrospective effect from 18.3.2020, the judgment obtained by you are still valid because the Covid Act 2020 provides for a saving provision for any judgment or award granted from 18.3.2020 until the date of publication of this Act shall be deemed validly granted[5].

[1] Section 10 of the Covid Act 2020 provides that 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 from 18.3.2020 until the date of publication of this Act shall be deemed validly terminated, forfeited, received, granted or carried out

MODIFICATIONS TO LIMITATIONS ACT 1953, SABAH LIMITATION ORDINANCE & SARAWAK LIMITATION ORDINANCE

Q9. What happens to my right to claim if the limitation period for me to take action against Flower Construction Sdn Bhd would have expired on 30.6.2020?

A: You still have the right to bring an action against the company as the Covid Act 2020 provides that any cause of action specified in Section 6 of the Limitation Act 1953[6] which expired between the period of 18.3.2020 to 31.8.2020 shall be extended to 31.12.2020.

[1] Similarly, the following limitation periods specified in the respective paragraphs of the Sabah Limitation Ordinance and Sarawak Limitation Ordinance in respect of various claims which expired during 18.3.2020 to 31.8.2020 shall automatically extended to 31.12.2020.

MODIFICATION TO PUBLIC AUTHORITIES PROTECTION ACT 1948

Q10. Do I still have the right to claim against public authorities if the 36 months limitation period for the claims expired between 18.3.2020 to 31.8.2020?

A: Yes. Any party who intends to commence an action against public authorities under the Public Authorities Protection Act 1948 (“PAPA 1948”) will now have that limitation period extended to 31.12.2020.

MODIFICATION TO INSOLVENCY ACT 1967

Q11. Johnson owes me a sum of RM85,000.00 Can I commence bankruptcy proceeding against him?

A: Unfortunately, no. From 23.10.2020 until 31.8.2021[7], a creditor(s) shall not be entitled to present a bankruptcy petition against a debtor under Section 2o or 5 of the Insolvency Act 1967, unless the amount of indebtedness amounts to RM100,000.00[8].

Q12. Does it mean that any previous bankruptcy proceeding against a debtor for the amount of indebtedness less than RM100,000.00 will be invalid?

A: No. Any bankruptcy proceedings or actions which are still pending immediately before 23.10.2020 shall be dealt with as if the Insolvency Act had not been modified[9].

MODIFICATION TO HIRE-PURCHASE ACT 1967

Q13. Can an owner of goods comprised in a hire-purchase agreement repossess the said goods now?

A: Section 23 of the Covid Act 2020 provides that owner of the goods shall not exercise his right to repossess the goods for any default of payment of instalment during the period from 1.4.2020 to 30.9.2020.

Q14. The owner has repossessed the goods from the hirer on 25.8.2020. Did the repossession of the goods valid?

A: Yes. Any repossession of goods comprised in a hire-purchase agreement before 23.10.2020, shall still be valid[10].

MODIFICATION TO CONSUMER PROTECTION ACT 1999

Q15. What is the modification introduced under this Covid Act 2020 to the Consumer Protection Act 1999 (“CPA 1999”)?

A: The modifications to the CPA 1999 is in connection with provisions relating to default in instalment payments under a credit sale agreement under Section 24v of CPA 1999[11].

Upon a purchaser’s default in payment of two (2) consecutive instalments, the credit facility provider shall issue a notice to the purchaser on the settlement of the overdue instalments[12]. The purchaser may within 21 days upon receipt notice of the same from the credit facility provider, elect to[13]:-

  • Pay the overdue instalments without the need to pay any late payment charges to the credit facility provider;
  • Make an early settlement of the credit sale agreement; or
  • Terminate the sale credit agreement.

If the purchaser fails to carry out any of the actions, the credit facility provider shall not commence any legal proceedings to recover the total outstanding amount payable by the purchaser under the credit sale agreement[14].

However, this modification is only applicable[15]:-

  • If the credit sale agreement was entered into before 18.3.2020; and
  • If there are no overdue instalments by the purchaser before 18.3.2020.

Q16. What will happen to the legal proceeding which have been commenced between 18.3.2020 to the date of publication of this Covid Act 2020?

A: Section 27 of the Covid Act 2020 provides that this modification will not affect any legal proceedings which have been commenced between 18.3.2020 to 23.10.2020.

Q17. Section 99(2) of CPA 1999 provides the jurisdiction of Tribunal for Consumer Claims which is limited to a claim that is based on a cause of action which accrues within three (3) years of a claim. What happens to a claim which period of limitation expired on 12.6.2020?

A: Section 28 of the Covid Act 2020 provides that any such period of limitation which has expired during the period of 18.3.2020 to 15.6.2020 shall be extended to 31.12.2020.

MODIFICATION TO DISTRESS ACT 1951

Q18. My tenant failed to pay rent. Can I now issue a warrant of distress for the recovery of rent due?

A: No. A warrant of distress issued under Section 5(1) of the Distress Act for the recovery of rent due or payable to the landlord shall not include the distrain for the arrears of rent owing for the period from 18.3.2020 to 31.8.2020[16].

Q19. Is the execution of the warrant of distress before the date of publication of this Covid Act 2020 still valid?

A: Yes, any warrant of distress which is issued before 23.10.2020 will not be affected by such modification[17].

Keywords: temporary measures, Covid Act, contractual obligations, take action, legal action, right to claim, modification, limitation, extended, bankruptcy, hire-purchase, consumer, distress

Footnotes 

[1] Section 1(2) of the Impact of Coronavirus Disease 2019 (COVID-19) Act 2020 (“Covid Act 2020”)

[2] Section 1(3) of the Covid Act 2020

[3] Preamble of the Covid Act 2020

[4] List of categories of exempted contracts:- 1. Construction work contracts or construction consultancy contracts and any other contract related to the supply of construction material, equipment or workers in connection with a construction contract. 2.Performance bond or equivalent granted pursuant to a construction contract or supply contract. 3. Professional services contracts. 4. Lease or tenancy of non-residential immovable property. 5. 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. 6. Contracts by a tourism enterprise. 7. Religious pilgrimage-related contracts.

[5] Section 10 of the Covid Act 2020 provides that 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 from 18.3.2020 until the date of publication of this Act shall be deemed validly terminated, forfeited, received, granted or carried out

[6] Similarly, the following limitation periods specified in the respective paragraphs of the Sabah Limitation Ordinance and Sarawak Limitation Ordinance in respect of various claims which expired during 18.3.2020 to 31.8.2020 shall automatically extended to 31.12.2020.

[7] Section 19(1) of the Covid Act 2020

[8] Section 20 of the Covid Act 2020

[9] Section 21 of the Covid Act 2020

[10] Section 24 of the Covid Act 2020

[11] Part IX of Covid Act 2020 (Sections 25 to 28)

[12] Section 24v(1) of CPA 1999

[13] Section 24v(2) of CPA 1999

[14] Section 24v(4) of CPA 1999

[15] Section 26(2) of Covid Act 2020

[16] Section 30 of the Covid Act 2020

[17] Section 31 of the Covid Act 2020

THIS FAQS ARE PREPARED AND PUBLISHED BY MESSRS GAN & ZUL, ADVOCATES & SOLICITORS, KUALA LUMPUR.
-GENERAL DISPUTE RESOLUTION AND APPELLATE DIVISION-
Prepared by:
Gan_Zul_Mr_Ben_Lee_Partner

Mr Ben Lee (Partner)
Head of Dispute Resolution
Arbitrator & Adjudicator
Fellow of ADR, AIAC
Cross Boarder Taxation Planning

Nabila Zakariah (Associate)
General Dispute Resolution
Appellate Division
Contractual, Land and Commercial Disputes
Matrimonial Disputes

Nur Amalin Shahida Sabidi (Associates)
General Dispute Resolution
Commercial Retail Tenancy Disputes
Contractual, Land and Commercial Disputes
Matrimonial Disputes

Gan & Zul is an established legal firm in Malaysia which consists of experienced litigation lawyers. Our firm provides a wide spectrum of legal services covering various aspects of laws includes dispute resolution, debt recovery, land, bankruptcy, insolvency and corporate dispute. We are also a firm construction lawyers based in Kuala Lumpur.
If you have any queries or require additional information, kindly email us at kul.litigation@ganzul.com or call us at 03-2242 3836

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