Recently, the Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (Covid-19) Bill, 2020 was tabled in Parliament.
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”.
Previously, we had mooted the idea of a “legal shield”, “time freeze” and temporary suspension of all contractual covenants to provide temporary relief, offer extension 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 warned the government that delays in passing of the proposed law would be fatal to parties affected by the MCO and continuous effects of Covid-19.
We were hopeful that the bill would be tabled in the May 18 Parliament sitting which, unfortunately, did not materialise. Given the pace of legislation, we anticipate that the law will be “published” and implemented some time in early October. This is a rather optimistic projection which does not take into account further political interruption.
Effluxion of time
Factually, from the start of the MCO on March 18 until now, the effects of MCO and Covid-19 have been set in motion with high unemployment, 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.
Let bygones be bygones?
The popular cliche “better late than never” will not apply in 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 left of it), pun intended. Evidently, it all does not matter anymore when the party, having the upper hand, would have inflicted damage 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 predicament, initiate legal proceedings in our courts. 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.
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 courts 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, 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 and, therefore, 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 via the courts? Even in court, 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 Court 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.
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.
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 Section 34 and 36 of the Housing Development (Control & Licensing) Act, 1966 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 (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’s 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; and penalties in late filings etc.
Perhaps, the minister has been advised by the Attorney-General’s Chambers to invoke her wide powers in Section 150 (Regulations) and Section 151 (Power to Exempt) to address the issues vis-a-vis, “special circumstances” inclusive of Covid-19 pandemics. If that is so, we appeal to the minister to act expeditiously.
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.
The views expressed are those of the author and do not necessarily reflect those of FMT.
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