DRAFT Distress Act 1951 Analysis on Procedures, Limitations and Issues Ahmad Zulkharnain Musa 8 August 2017 ASEAN INSIDERS by origin and passion www.zicolaw.com | 1
Outline www.zicolaw.com | 2
DRAFT Outline Introduction Overview Procedures & Limitations Examining the Reported Data, Statistics and Questionnaires Identification of Issues and Recommendation Conclusion www.zicolaw.com | 3
Introduction www.zicolaw.com | 4
DRAFT Introduction One of the remedies available to a landlord against a tenant who falls into arrears in payment of rent is to levy distress for rent – in other words, sending in the court bailiff to seize and sell the tenant's goods in satisfaction of the arrears. The landlord’s right to distress is governed by the Distress Act 1951 (“the Act). Section 5(1) of the Act permits a landlord to apply to a Judge or a Registrar for the issue of a warrant of distress to recover rent due and payable to the landlord by a tenant of any premises for a period not exceeding 12 completed months of the tenancy preceding the date of the application . www.zicolaw.com | 5
Overview www.zicolaw.com | 6
DRAFT Overview The purpose of this Report is to analyse and examine the efficiency in a commencement of a distress action under the Act, with regards to the period to complete the process, as well as the conduct of bailiffs. The structure of this Report is as follows: Procedures and limitations of the Distress Act 1951; Examining the reported data, statistics & questionnaires; and Identification of issues. www.zicolaw.com | 7
DRAFT Methodology The methodologies undertaken for this study are as follows: Analysis of the reported statistics and procedures of distress cases in Malaysia; Analysis of the Manual Work Procedures (revised) 2011 PKPMP for Malaysia; Questionnaires and conducting interviews to collect quantitative and qualitative data from court’s representatives, such as bailiffs, with respect to the study on Distress Act 1951; and Our observations of the enforcement of the Distress Act 1951 in Malaysia as practitioners based in Kuala Lumpur. www.zicolaw.com | 8
Procedures and Limitations www.zicolaw.com | 9
DRAFT Procedure The brief overview process for a warrant of distress is organised in the chart illustrated below: www.zicolaw.com | 10
DRAFT Limitations under the Act Property on premise Exempted Property not belonging to tenant (Section 9 of the Act) (Section 10 of the Act) Application to the Court Property seized by way by the tenant of execution (Section 16 of the Act) (Section 20 of the Act) www.zicolaw.com | 11
Examining the Reported Data, Statistics and Questionnaires www.zicolaw.com | 12
DRAFT Interview with the Court Representatives On 28 April 2017, interviews were conducted with court’s representatives with respect to the study on the Act. The following are the issues highlighted with respect to the Act: Statistical Data on Cases Statistical data on distress cases conducted in the Magistrates Court shows that from 2014 to 2016, out of a total of 258 registered cases, 13 cases were rejected, whilst 245 cases were processed. A total of 72 distress cases were successful, whilst the remaining 136 cases withdrawn and 50 cases being miscellaneous cases (file transfer and status pending cases). However, case statistics in the Sessions Court seemed to present a lower number of 48 successful cases. In comparison with the Magistrates, fewer distress cases are heard in the Sessions Court with a total of 133 registered cases. Note that the period of time required will lengthen depending on the complexity of the case or if the defendant/ third party files a notice of application, etc. www.zicolaw.com | 13
DRAFT Interview with the Court Representatives Costs Pertaining to costs, expenses in relation to the procedures on distress are to be borne by the landlord. The plaintiff is required to place a deposit of RM1,000.00 (for Magistrates Court) and RM2,000.00 (for Sessions Court) to the Court for the execution process. Other than general administrative fees, the Court imposes the following commission rates on the sale of the auctioned items: • 5.0% commission from the first RM1,000.00; • 2.5% commission from the remaining sale; and • 2.0% commission from the amount of seizures if the auction is not held. (i.e. plaintiff withdraws the case before the date of auction) • Others: Payment of guard services, praecipe and bailiff’s mileage will be deducted from the deposit. www.zicolaw.com | 14
DRAFT Interview with the Court Representatives Authority of the Bailiff Sale and auction of the seized properties is conducted in the premise of the tenant by the bailiff. Should the valuation exceed the monetary value of RM10,000.00, the plaintiff will be required to appoint a registered auctioneer to conduct the auction of the seized property. www.zicolaw.com | 15
Issues and Recommendations www.zicolaw.com | 16
DRAFT Issues and Recommendations Valuation • It is recommended for there to be a guideline in relation to preparation of valuation for the inventory of item. • A guideline would be able to streamline and consolidate the general market value of item. • To this end, a uniformed valuation would provide certainty for both the tenant and bailiffs in charged. Documentation • It is also recommended for the documentation to display authority or “ Kad Kuasa ” to be improved. • At this juncture, there were cases where the bailiffs were denied entry into the premises as the tenants requested for further documentation other than the Kad Kuasa. • As such, providing the bailiffs with an enhanced and proper Kad Kuasa would enable them to carry on the valuation process more effectively. www.zicolaw.com | 17
DRAFT Issues and Recommendations Insurance Policy • It is also recommended for the bailiffs to be insured with a comprehensive insurance policy. • This will provide comfort and security as there were instances where the tenants may act hostile towards the bailiffs in-charged in which the same would impede the bailiffs from carrying out the process of valuation. • In this respect, the bailiffs should be provided with safety precaution in performing their duties as officers of the Court. Uniform • A more official and proper uniform displaying their authority with respect to the distress action would better enable the tenants to cooperate. www.zicolaw.com | 18
Conclusion www.zicolaw.com | 19
DRAFT Conclusion From much of the data and analysis, we gathered that there are several small issues under the Act which could be better dealt with, as gathered from bailiffs and landlords. Being the problems faced by bailiffs, along with the suggestions proposed, as well as possibly expediting the procedural process for a distress action for landlords. We have recommended the ways in which a distress action can be enforced more efficiently. Be that as it may, these recommendations may require further deliberations to ensure conformity with the Act. www.zicolaw.com | 20
Questions and Answers www.zicolaw.com | 21
ASEAN INSIDERS, by origin and passion BRUNEI | CAMBODIA | INDONESIA | LAOS | MALAYSIA | MYANMAR | PHILIPPINES | SINGAPORE | THAILAND | VIETNAM www.zicolaw.com Thank you www.zicolaw.com | 22
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