The Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (Covid-19) Act 2020 (“Covid-19 Act”) was given royal assent and published in October 2020. It was intended to provide temporary relief to those struggling from the impact of the pandemic, but has been described as being “too little, too late”.
In a recent High Court case, Ang Pi Kui & Anor v Lee Wee Teck & Anor [2021] 1 LNS 58, we saw the impact (or the lack thereof) of the Covid-19 Act.
Brief Facts
- Wu Pang Kopitiam entered into a tenancy agreement in June 2017 to rent a premise to operate a coffee shop.
- The term of the tenancy was for 3 years, until 31 August 2020, with an option for renewal for a further 2 years provided a written request is made by the tenant at least 3 months before the expiry of the tenancy.
- On 4 August 2020, because Wu Pang Kopitiam gave no notice of an intention to renew the tenancy agreement, the landlords decided not to continue with the tenancy beyond the 3-year term.
- The landlords also sent a letter dated 17 August 2020 confirming the termination and a reminder to vacate, and a further notice of termination dated 18 September 2020.
- One partner of Wu Pang Kopitiam applied to Court seeking a declaration that: (a) the landlords could not terminate the tenancy and; (b) for the tenancy agreement to be extended for a further 2 years.
- One argument raised by Wu Pang Kopitiam was that the Covid-19 Act did not allow for termination. This is because section 7 of the Covid-19 Act provides that the inability of any party to perform their contractual obligations due to COVID-19 shall not give rise to the other party exercising their rights under the contract.
Court’s Decision
The Court found the Covid-19 Act was inapplicable and that the tenancy agreement was validly terminated.
The Court found that the tenancy had expired on 31 August 2020 as there was no prior notice to renew. It was then followed by a monthly tenancy which was eventually terminated by the landlord’s letter dated 18 September 2020.
Taking Wu Pang Kopitiam’s argument and either date (31 August 2020 or 18 September 2020) to be the date of termination of the tenancy, the Covid-19 Act would not apply. This was due to the saving provision in Section 10 of the Covid-19 Act which provides that any contract terminated between 18 March 2020 and 23 October 2020 (the publication of the Covid-19 Act) shall be deemed to have been validly terminated:
“Notwithstanding section 7, 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 from 18 March 2020 until the date of publication of this Act shall be deemed to have been validly terminated, forfeited, received, commenced, granted or carried out.”
Wu Pang Kopitiam attempted to argue that Section 7 had to be read with Section 29 (which states that the operation of Part X of the Covid-19 Act is from 18 March 2020 to 31 December 2020). The Court held that Section 29 did not apply because Part X deals with modification to the Distress Act 1951 which is not the situation here. While no writ of distress could have been issued, this does not negate the actions of the landlords.
Commentary
Although there are other issues in the case above, this case does demonstrate the limited applicability of the Covid-19 Act. Section 7 of the Covid-19 Act (now extended until 30 June 2021 and to be further extended until 31 December 2021 as announced under the PEMERKASA+ aid package) only applies to rights which have not been exercised when the Covid-19 Act was published in October 2020.
At the time of writing, there are no reported cases where Section 7 of the Covid-19 Act has been successfully invoked. Given the ambiguities in the drafting of Section 7 (eg: what amounts to an inability to perform, what rights under the contract can be prevented from exercise, etc.), a decision that interprets the Covid-19 Act would be of immense benefit to legal and business community.
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Th’ng Yan Nie is a Senior Associate in the dispute resolution practice group at Donovan & Ho. She has a wide range of experience in litigation matters including contractual and commercial disputes, compulsory land acquisition, debt recovery and strata and property management issues.
Donovan & Ho is a law firm in Kuala Lumpur, Malaysia. Our practice areas include employment law, dispute resolution (litigation and arbitration), corporate and tax advisory, and real estate/conveyancing. Have a query? Contact us.
