12 August 2020

On 16 March 2020, in response to a worrying spike in COVID-19 cases, the Prime Minister of Malaysia, Tan Sri Muhyiddin Yassin, announced the imposition of a nationwide 14-day Movement Control Order (“MCO”) from 18 March to 31 March 2020 to curb the spread of infection. The MCO was announced pursuant to the Prevention and Control of Infectious Diseases Act 1988 and the Police Act 1987. Subsequently, the Prevention and Control of Infectious Diseases (Measures within the Infected Local Areas) Regulations 2020[1] was gazetted to give effect to the MCO (“Regulations”). The MCO was further extended until 28 April 2020 and amending regulations were gazetted accordingly.

Whilst the Regulations were made to safeguard the public’s health and wellbeing, it had an undesired effect on the Malaysian economy, as pointed out by the Minister of International Trade & Industry, YB Dato’ Seri Mohamed Azmin Ali:

“… the Government is mindful of the unintended economic consequences of the measures used in battling the pandemic, particularly the negative impact on the financial position, the economy and the well-being of the people”.[2]

During the last couple of months, the MCO has been further extended with a gradual easing of restrictions. This was firstly through a Conditional MCO (“CMCO”) that ended on 9 June 2020.[3] Malaysia is currently under a Recovery Movement Control Order (“RMCO”) until 31 August 2020. A majority of sectors are now allowed to operate subject to the respective standard operating procedures issued by the National Security Council.[4]

How do the Regulations affect existing Malaysian laws?

Besides the unintended effect on the Malaysian economy, the Regulations inadvertently kicked up a legal turmoil. The past few weeks have seen various sectors face hardship due to the Regulations, be it developers unable to complete construction work within the specified time or tenants unable to meet monthly rental obligations.

Generally, contracts are governed by the Contracts Act 1950[5] (“CA 1950”). In the commercial world, it is common for contracts to include a clause which states that time is of the essence. Where such a clause exists in a contract, section 56(1) of CA 1950[6] comes into play:

“When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of the essence of the contract.”

The following illustration sets out the application of section 56(1) of CA 1950. Bobby, a tailor, entered into contract with Ah Cheng to provide custom made curtains. The contract specified that Bobby must deliver the finished curtains to Ah Cheng within 14 days starting from the date the contract was entered into. Due to the MCO and Regulations, Bobby was unable to perform his obligations and failed to deliver the curtains within the stipulated timeframe. As Bobby did not hold his end of the bargain, the contract is now voidable,[7] i.e. Ah Cheng has two options to choose from, either opt to terminate the contract, or continue with the contract provided that Ah Cheng receive compensation for loss suffered due to Bobby’s failure.

One main concern shared by all sectors, is that the Regulations did not cater for an automatic extension of time for performance of the contract. So what can parties do to avoid being in Bobby’s situation? The first thing, is to examine if the contract provides for a force majeure clause. In the event that a force majeure clause is absent from the contract, parties may opt for frustration instead.[8]

The maxim of ‘generalia specialibus non derogant’

One question that has arisen is whether the Regulations can co-exist in harmony with existing laws.

The answer lies in the latin phrase of generalia specialibus non derogant (“Maxim”) which translates to general statements or provisions do not derogate from special statements or provisions.[9]

Amongst the earliest applications of the Maxim in the United Kingdom was recorded in Mary Seward v The Owner of the “Vera Cruz”,[10] where the House of Lords held:

“Now if anything be certain it is this, that where there are general words in a later Act capable of reasonable and sensible application without extending them to subjects specially dealt with by earlier legislation, you are not to hold that earlier and special legislation indirectly repealed, altered, or derogated from merely by force of such general words, without any indication of a particular intention to do so.”

How does the Maxim fair in Malaysia?

The Malaysian courts have consistently used the Maxim in construing conflicting statutes.

One of the earliest applications to the Maxim can be traced back to the Court of Appeal case of Chan Tai Tai & Anor v Official Assignee, FM.[11] The Court of Appeal made an observation that “…[i]t is an established principle that unless it is specifically so provided by law, a general provision does not impliedly override a special provision.”

From then onwards, the courts are likely to apply the Maxim to reconcile conflicting statutes.[12] The trend of applying the Maxim can be seen in other notable cases below:

(a) Rengasamy Pillai v Comptroller of Income Tax[13]

“Section 7(1) of the Courts of Judicature Act, 1964, reads as follows:–

“All summonses, warrants, orders, rules, notices and mandatory processes whatsoever, whether civil or criminal, shall be issued and shall be expressed to be issued by the Chief Justice of the High Court issuing the same in the name of the Yang di-Pertuan Agong and shall be signed by a registrar of such court; and every such summons, warrant, order, rule, notice and mandatory process shall be sealed with the seal of the court issuing or making the same.”

That provision is a general provision. Bankruptcy is a special matter and it is dealt with by special law. Because generalia specialibus non derogant, I hold that the bankruptcy notice, to be valid, need only comply with section 3(2) of the Bankruptcy Ordinance, 1959 (now section 3(2) of the new Bankruptcy Act, 1967) [emphasis added]. It need not be issued and expressed to be issued by the Chief Justice in the name of the Yang di-Pertuan Agong. This bankruptcy notice was in the prescribed form and is therefore valid.”

In the above excerpt, the Federal Court makes it clear that the provisions of a general statute shall yield to those of a special one. Notwithstanding the Courts of Judicature Act 1964 was codified after the Bankruptcy Ordinance 1959, as bankruptcy matters fall under the exclusive jurisdiction of the Bankruptcy Ordinance 1959, no other law shall take precedence.

(b) Mark Koding v Public Prosecutor[14]

This case touched upon the right of free speech in Parliament. A right of free speech in Parliament was laid out in sections 3 and 8 of the Houses of Parliament (Privileges and Powers) Ordinance 1952 and by Article 63(2) of the Federal Constitution. However, a new clause (4) in Article 63 was added by virtue of Constitution (Amendment) Act, 1971 which restricted such free speech. With this regards, the Federal Court held:

“It is true that Clause (1) of Article 10 gives the citizen freedom of speech and expression, and that under Clause (2)(a) Parliament may by law impose restrictions, inter alia, “designed to protect” — not reduce — “the privileges of Parliament”; but this Clause must clearly refer to restrictions not on or against Parliament, but against others for the protection of the privileges of Parliament and its members and for its and their benefit and advantage…

More significantly, the new Clause (4) of Article 63, which, as already stated, has given the stamp of constitutional approval to the new paragraph (f) of subsection (1) of section 3 of the Sedition Act, first enacted by Ordinance 45, makes a specific exception to the provisions of Article 63(2) and the maxim generalia specialibus non derogant applies [emphasis added]…”

(c) Lau Keen Fai v Lim Ban Kay @ Lim Chiam Boon & Anor[15]

This case concerns the appellant, an advocate and solicitor, who was found guilty by the Disciplinary Board and appealed the decision up to the Federal Court. The Malaysian Bar Council raised a preliminary objection that the notice of appeal was irregular as the appellant had failed to obtain the leave of the Federal Court as required by section 96(a) of the Courts of Judicature Act 1964. The appellant on the other hand, relied on section 103E of the Legal Profession Act 1976.

In applying the Maxim, the Federal Court delivered its judgment as follows:

“… the provision of s 96(a) of the CJA is a provision regulating civil appeals in general to the Federal Court. The LPA is an Act relating to the legal profession in Malaysia, specifically to regulate the legal profession. The maxim generalia specialibus non derogant is applicable here which states, inter alia, that where a special provision is made in a statute as in s 103E of the LPA that special provision excludes the operation of a general provision in the general law [emphasis added]…”

(d) Pihak Berkuasa Tatatertib Majlis Perbandaran Seberang Perai & Anor v Mohd Sobri bin Che Hassan[16]

The Federal Court took the opportunity to dwell into the social purpose behind the enactment of section 20(1) of the Industrial Relations Act 1967. As the Parliament had intended to pass the Act to address the shortcomings of legal avenues available to employees, the application of section 20(1)(b) of the Specific Relief Act 1950 was expressly exempted:

“The entire basis for the Industrial Court’s jurisdiction is premised on a prayer for reinstatement. It is therefore apparent to us that the Legislature’s enactment of section 20(1) of the IRA 1967 was for the express purpose of exempting the application of the statutory rule in section 20(1)(b) of the SRA 1950. The harmonious application of the two provisions is reconcilable via the Latin maxim: generalia specialibus non derogant – provisions of a general statute yield to those of specific ones [emphasis added].”

Another scenario where the Maxim was applied was in the housing development sector, where CA 1950 came in conflict with the Housing Development (Control and Licensing) Act 1966[17] (“HDA 1966”). The High Court in Hariram a/l Jayaram & Ors v Sentul Raya Sdn Bhd[18] held:

“The maxim generalibus specialia derogant is of universal application and it is very efficacious…

…the sale and purchase agreements made in accordance with Schedule ‘H’ to the Housing Regulations which were in turn made under the Housing Act must take precedence over the Contracts Act 1950. Being a specific piece of social legislation enacted solely to protect house buyers from unscrupulous developers, the standard sale and purchase agreements signed by the plaintiffs must take precedence over the Contracts Act 1950 and must be given effect accordingly.”

Further, housing developers are now unable to apply to the Controller of Housing for an extension of time[19] due to a recent case decided by Malaysia’s apex court, Ang Ming Lee & Ors v Menteri Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan & Anor and other appeals.[20] The Federal Court in Ang Ming Lee held that HDA 1966 was designed to safeguard the interests of purchasers. If an extension is granted to a housing developer, the court will construe such action as against the purchasers’ interests.

So, where does that leave us with the interpretation of the Regulations?

The Regulations are subsidiary legislation by virtue of section 11(2) of the Prevention and Control of Infectious Diseases Act 1988 (“PCIDA 1988”).[21] The clash is now between one statute and another, that is, PCIDA versus CA 1950.

In a contractual scenario, especially in day-to-day sale of goods transactions and housing development projects, it is more often than not that time is stipulated for the performance of a contract. Failure to honour the contract within the time stipulated would mean a breach of the contract and the innocent party shall be entitled to commence legal action against the party who breached the contract. It is easy to imagine that the party in breach would argue that the MCO and Regulations, which were derived from the PCIDA 1988, had strictly prohibited any non-essential movement nationwide and this had undoubtedly created a limbo for parties, where they will be ultimately held to be liable for breach of contract even though they are not to be blamed for being unable to deliver their part of the promise on time.

Based on the precedents discussed above, it can be observed that the courts may decide that PCIDA 1988 will take precedence over other statutes. This is so because PCIDA 1988 is a social legislature passed to safeguard the people’s wellbeing. However, the stance by the courts has yet to be set in stone as economic implications due to the Regulations may be taken into consideration from a public policy perspective. The economic recession caused by COVID-19 is an unprecedented event which surpasses even the previous global financial crises.[22]

The position in Singapore

Being a common law jurisdiction, the Maxim is a recognised principle in Singapore, with it being recently applied in 2015:

“Hence, that aspect of such a prohibition would be entitled to no greater weight than any other law. To resolve an inconsistency between such a prohibition and statutory provisions that mandate caning, it would be necessary to apply the principles of statutory interpretation, such as the principle that a later law abrogates earlier contrary laws (leges posteriores priores contrarias abrogant) and the principle that a general provision does not derogate from a special one (generalia specialibus non derogant) (Oliver Jones, Bennion on Statutory Interpretation (LexisNexis, 6th Ed, 2013) at pp 279–282). Clearly, s 33B of the amended MDA, which was enacted later and which governs the specific situation before us, would override any prior enactment of the general common law prohibition of torture in so far as caning is concerned.”[23]

Unlike Malaysia, on 7 April 2020, the Singapore parliament passed the COVID-19 (Temporary Measures) Act 2020[24] (“Singapore’s COVID-19 Act”) and COVID-19 (Temporary Measures) (Control Order) Regulations 2020.[25] The Act provides that where a party is unable to perform its contractual obligations due on or after 1 February 2020 primarily because of COVID-19, it may apply for temporary relief. The application of the Maxim on Singapore’s COVID-19 Act does not arise as the Act expressly excluded other laws in certain scenarios, an example of which can be seen in the following provision:

“Despite any law or anything in the contract, another party to the contract (called in this Division B) may not take any action described in subsection (3) in relation to the subject inability until after the earliest of the following…”[26]

The Singapore’s COVID-19 Act also covers tourism-related contracts:

“Despite any law or anything in the contract, another party to the contract may not, after being served with the notification for relief in accordance with section 9(1), at any time (whether during or after the prescribed period) forfeit any deposit (or part of any deposit) taken under the contract on the basis of the subject inability, unless the notification for relief is withdrawn or an assessor has made a determination that the forfeiture of the deposit or any part of the deposit is just and equitable in the circumstances of the case.”[27]

The position in the United Kingdom

As mentioned earlier, the Maxim has been recognised and applied by the United Kingdom (“UK”) courts since the 19th Century. Similar to the stance taken a century ago, the Maxim remains relevant to date.[28]

On 25 March 2020, the UK passed the Coronavirus Act 2020[29] (“UK Coronavirus Act”) which is tailor-made to combat the implications of COVID-19. However, unlike Singapore’s COVID-19 Act, the main objective of the UK Coronavirus Act is to set out the emergency powers granted to authorities and does not seek to exclude nor limit the machinery of other legal provisions.

What’s the next step?

When speaking of existing commercial contracts disrupted by COVID-19, the best option is to hold a negotiation session with all the parties involved to discuss the ideal way forward. Whilst no parties are spared from the adverse consequences of COVID-19, do bear in mind that parties have the discretion whether to reach a consensus on a supplementary agreement as a way around the contractual impediment, or remain glued to the terms of the contracts and follow them strictly.

We remain hopeful that Malaysia will replicate Singapore’s measures, or indeed other forward looking jurisdictions in dealing with the crisis brought forth by COVID-19. The Malaysian government has announced that a bill on the implementation of temporary measures to reduce the impact of COVID-19 is currently being drafted[30] with the government welcoming proposals and recommendations from the public.[31] Little has been revealed as to the content of the bill other than its purpose to mitigate the social and economic impact of COVID-19.[32] Nevertheless we expect the bill to introduce a moratorium on legal action associated with the non-performance of contracts, similar to the loan moratorium implemented by the Malaysian banks.

The bill is expected to be tabled at the current Parliament sitting that started in July 2020. Whilst the bill has only been announced a few months after the commencement of the MCO, it is definitely a welcoming proposal which lives up to the old adage – better late than never. In the meantime, legal principles such as generalia specialibus non derogant will continue to be more than simply cogs that turn the giant wheels of justice.

If you have any questions or require any additional information, please contact Jeyakuhan S K Jeyasingam, Victor Wong or the Zaid Ibrahim & Co. partner you usually deal with.

This alert is for general information only and is not a substitute for legal advice.

[1] Prevention and Control of Infectious Diseases (Measures within the Infected Local Areas) Regulations 2020.

[2] Ministry of International Trade and Industry, ‘Allowing Additional Economic Sectors to Operate’ (16 April 2020) <https://www.miti.gov.my/miti/resources/Media%20Release/Press_Conference_-_Allowing_Additional_Economic_Sectors_to_Operate.pdf> accessed on 16 April 2020.

[3] Prevention and Control of Infectious Diseases (Measures within the Infected Local Areas) (No. 6) Regulations 2020

[4] The standard operating procedures published by the National Security Council can be found at: https://www.mkn.gov.my/covid-19.html.

[5] Contracts Act 1950 (Act 136).

[6] Section 56(1) of CA 1950.

[7] Soon Yee Ling & Anor v Lim Ah Hun [2011] 1 MLJ 735.

[8] For more information on the effect of force majeure clause and frustration on tenants, please see, ZICOlaw,  ‘COVID-19: Impact of MCO Regulations on tenants – are reduced rentals allowed?’ (26 March 2020) accessed on 16 April 2020.

[9] Director of Customs, Federal Territory v Ler Cheng Chye (Liquidator of Castwell Sdn Bhd, in liquidation) [1995] 2 MLJ 600.

[10] [1884] 10 App Cas 59.

[11] [1957] 1 MLJ 54.

[12] DP Vijandran v Majlis Peguam [1995] 3 MLJ 576; Folin & Brothers Sdn Bhd v Wong Foh Ling & Wong Swee Lin & Ors [2001] 2 MLJ 23; Zulkifli bin Md Rodzi v PP [2013] 3 MLJ 745; Yii Ming Tung v PP [2014] 9 CLJ 1102.

[13] [1968] 2 MLJ 42.

[14] [1982] 2 MLJ 120.

[15] [2012] 2 MLJ 8.

[16] [2019] MLJU 1312.

[17] Housing Development (Control and Licensing) Act 1966 (Act 118).

[18] [2003] 1 MLJ 22.

[19] Previously, Controller of Housing was able to grant extension of time for housing development projects pursuant to Regulation 11(3) of the Housing Development (Control and Licensing) Regulations 1989.

[20] [2020] 1 MLJ 281.

[21] Prevention and Control of Infectious Diseases Act 1988 (Act 342).

[22] Chang Yong Rhee, ‘COVID-19 Pandemic and the Asia-Pacific Region: Lowest Growth Since the 1960s’ (15 April 2020) accessed on 17 April 2020.

[23] Yong Vui Kong v Public Prosecutor [2015] 2 SLR 1129.

[24] Singapore’s COVID-19 (TEMPORARY MEASURES) ACT 2020.

[25] Singapore’s COVID-19 (Temporary Measures) (Control Order) Regulations 2020.

[26] Section 5(2) of the Singapore’s COVID-19 Act.

[27] Section 7(2) of the Singapore’s COVID-19 Act.

[28] Knockacummer Wind Farm Limited v Cremins & Anor [2018] IECA 252; R (on the application of JM (Zimbabwe)) v Secretary of State for the Home Department [2018] 2 All ER 1015; HM Advocate v G O’D [2019] SCCR 242.

[29] United Kingdom’s Coronavirus Act 2020.

[30] Adam Aziz, ‘Govt to draft Covid-19 temporary relief Bill to streamline relief measures with the law’ (The Edge, 22 May 2020).

[31] Bernama, ‘Minister: Govt invites proposals, suggestions on Malaysia’s Covid-19 bill’ (The Malay Mail, 30 May 2020).

[32] Bernama, ‘Govt drafting Temporary Measures Bill’ (Bernama, 30 June 2020).