INORDINATE delays in the Covid-19 ‘Legal Shield’ has rendered it redundant and meaningless. But, it is better to hold onto something than trying to get something better.
On Aug 12, 2020, the Temporary Measures For Reducing The Impact Of Coronavirus Disease, 2019 (Covid-19) Bill, 2020 was tabled in Parliament for its 1st reading. The purpose of the Bill is clear enough – “An Act to provide for temporary measures to reduce the impact of Covid-19 including to modify the relevant provisions”.
In our previous article, we have mooted the idea of a ‘Legal Shield’, ‘time freeze’ and temporary suspension of all contractual covenants to provide temporary relief, offer extensions of time for rectification and to minimise legal entanglement. The question is, is the Bill capable of meeting these aspirations?
We have time and again forewarned the Government that delays in the passing of the proposed law would be fatal to all the aggrieved parties. As early as April 16, we have highlighted the need for a law to ‘time freeze’ and temporarily suspend all contracts, so as not to cause further hardship to a weaker party who does not have an equal bargaining strength with the other contractual party with our article published in the newspapers titled: ‘Legal Shield’ for Contracts’.
We too have periodically highlighted this in various online media portals and waved ‘red flags’ on the urgency of the Bill and even liaised with the related people of high office. We continued to write articles on the issues and this culminated with our write-up published on Aug 5 titled: ‘A Late Covid-19 Act will become meaningless after the twilight period’. These were also covered in many online media portals. We were hopeful that the Bill would be tabled in the May 18 Parliament sitting.
But, alas the Covid-19 Bill suffered inordinate delays for whatever reason best known to the Government of the day. The delays will continue until the Bill is put through the process of debate at the 2nd reading between Aug 19 to Aug 21 and whereupon, if there are no objections, the Covid-19 Bill may be called for a 3rd reading (passing of the Bill) perhaps, on the last day of Parliament on Aug 27.
The Bill has to go through the House of Senate that convenes from Sept 2 to Sept 23. Thereafter, the Royal assents to the said law is received/endorsed and subsequently it will be gazetted and published as law. Given the pace of the making of the law, we anticipate that the law will be ‘published’ and implemented sometime early October 2020. This is a rather optimistic projection which does not take into account further political interruption.
Effluxion of Time
Factually, from the start of the movement control order (MCO) on March 18 until now, the effects of the MCO and Covid-19 have been set in motion with high unemployment, a sluggish economy (both domestic and global) and a projected rise in Non-Performing Loans when the loan moratorium ends on Sept 30. Affected parties would have ‘moved on’ because of the effluxion of time. In other words, a late Covid-19 Act is redundant in nature.
Even our highly esteemed Director General of Health had stressed that early medical treatment is key to preventing deaths for those who have contracted the virus. Death renders medical treatment redundant for patients who seek treatment too late. It is the same for tabling a late Covid-19 Bill and the passing of a tardy Covid-19 Act.
It is impossible to turn back the hands of time and undo the carnage of Covid-19 by passing a Covid-19 Bill any later than now! The effect of such a late Covid-19 Bill which is retrospective in nature will be simply too late and redundant in nature. In most if not all contracts, there is always a stipulation that a party to a contract must perform their obligation within a certain time. In legal speak, time is of the essence of a contract and the failure to follow stipulated timelines will be considered an event of default giving rise to enforcement of rights or remedies by the other contracting party. The proposed Covid-19 Bill was supposed to be a social legislation which was intended to provide a ‘Legal Shield’ to parties who are unable to meet their obligation.
A late Covid-19 Bill cannot salvage events which have already been set in motion. In other words, the late Covid-19 Act is redundant in nature. You cannot legislate back to life a business that has already closed down due to the failure of the business owner to sustain their business and pay rent during the MCO.
Let Bygones be Bygones?
The popular cliché “better late than never” will not apply to the Covid-19 Bill. In fact, it
appears that many people who were living in hope of being able to rely on a Covid-19 law to obtain temporary reprieve will be disappointed to know that there is a ‘savings clause’ aka ‘disclaimer clause’ that reads inter-alia:
‘Notwithstanding Section 7 (Inability to perform contractual obligation), 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 18th March, 2020 until the date of publication of this Act shall be deemed to have been validly terminated, forfeited, received, commenced, granted or carried.’
It seems like a scenario of ‘let bygones be bygones’ and we have to ‘bite the bullet’ and move on in life (whatever is left of it), pun intended. Evidently, it all does not matter anymore when the party, having the upper hand, would have inflicted damages painfully, no matter how legally justified it may be, to the weaker contracting party. It would all be ‘water under the bridge’ when those aggrieved parties, having suffered irretrievable predicaments, initiate legal proceedings at our Courts of Law. Our Courts will be and have been inundated with the voluminous court cases which could have been prevented by the quick action of our lawmakers but alas, it is not to be. The efforts by all the trade organisations, NGOs and vested parties would be deemed irrelevant and in vain.
With all due respect, it is regrettable that the makers of the Bill appear to have forgotten the real objective and aspiration of this social legislation, which is to suspend, for a specified period; to afford a legal shield on contracts and give a chance and lifeline to individuals and businesses in the post-Covid-19 environment.
Mediation; Why reinvent the wheel?
On this issue, we feel that instead of a mediation process (which includes the Minister’s appointment of a mediator, role of a mediator, conduct of mediation and conclusion of mediation by way of a Settlement Agreement), it should be the Malaysian Courts (of Law) who should resolve disputes involving Covid-19 cases and to grant whatever relief/s, or to decide whether such cases fall within the ambit of a Covid-19 event, or whether performance was materially impacted by Covid-19.
There should be a formation of a specialised designated High Court, for a prescribed period, to preside over all Covid-19 related cases. After all, our Federal Constitution prohibits exclusion of jurisdiction of the Courts. Furthermore, the appointment of a mediator in the Malaysian context is far too arbitrary and any appointment may be politically tainted, or industry-influenced, and the result of which is that justice is denied to the aggrieved party. Will the costs be a deterrence to resolving disputes via mediation? The mediators’ fees may not be regulated therefore are subject to gross inflation. The Courts are more expeditious and cost effective than mediation and the Courts are also a neutral arbiter of disputes. Why is there a necessity to reinvent the wheel when the legal process is available vide the Courts of Law? Even in Courts, there is a process of mediation where parties appear before the Registrar (sometimes presided by Judges) in their chambers attempting possible out-of-court settlements.
We have proposed that the Covid-19 procedure at the High Courts should be simplified, perhaps with a prescribed form and checklist of documents to be furnished to the presiding Judge to evaluate, assess and decide. Lawyers appointed to present and argue their client’s case should even limit their professional fees to “not in excess of RM5,000”, as otherwise it would defeat its purpose.
This is a temporary and speedy relief to facilitate regularisation of performance and is not meant to cause further hardship to a weaker party, or parties already suffering from possible financial and emotional distress.
Modification to the Housing Development (Control & Licensing) Act, 1966
Section 34 and 36 seek to deal with issues related to ‘Late Payment Interest’ and ‘Defects Liability Period’, respectively requiring the purchasers to ‘apply to the Minister for an extension of period’ beyond the impacted period of March 18 to Aug 31. This avenue to obtain an extension sounds good on paper. However, the mechanism for application, factors to consider for allowing extensions, and timeline for the entire process is not stated and accords far too much power to the Minister. The reading of the Bill is simple enough; the aggrieved purchaser may appeal to the Minister and render reasons why he/she deserves an extension. If all the affected purchasers (if they are capable of even offering a valid explanation), were to write to the Minister, the Ministry will be overwhelmed with voluminous letters; having to structure the files; deliberate on each and every appeal through their internal committee/s and responding effectively, it will surely take time. Why take on more work? The extension should be automatically extended to Dec 31 2020 (the protection period) without the necessity for the purchasers to apply. After all, by the time this Covid-19 law is ‘published’ and implemented; it will be nearly the end of the year and irrelevant to both purchasers and developers.
Strata Management Act, 2013 (SMA) modifications?
We are still trying to figure out why there are no modifications to the SMA under the Covid-19 Bill to address the issues related to delays in conducting AGMs/ EGMs; for election of members of JMBs/ MCs/ SMCs; delays in the filing of statutory forms, audited accounts and resolutions; the penalties in late filings etc.
Perhaps, the Minister has been advised by the Attorney General, Chambers to invoke her wide powers in Section 150 (Regulations) and Section 151 (Power to Exempt) to address the issues vis-à-vis ‘Special Circumstances’ inclusive of Covid-19 pandemics. If that is so, we appeal to the Minister to act expeditiously. – Aug 19, 2020
Datuk Chang Kim Loong is the Secretary-General of the National House Buyers Association (HBA), a non-governmental and not-for-profit organisation manned wholly by volunteers
