The Landlord’s Guide to Distress Actions

Sabri rented his apartment to Keong for a monthly rental of RM1,600.00, due on the last day of the month. The tenancy period was between 1 November 2019 until 1 November 2020.

Keong was a good tenant who paid the rentals on time. Unfortunately, Keong lost his job in January 2020 and started to default on the rental and avoided Sabri’s calls. Sabri had no choice but to terminate the tenancy agreement and initiate legal proceedings to recover the rental from January 2020 until May 2020.

One of the options available to Sabri is a distress action.

What is a Distress Action?

A distress action is where Sabri (landlord) applies for a writ (or warrant) of distress to direct the sheriff or bailiff to seize Keong’s (tenant) movable property in the apartment (rented premise). The property will then be sold and the monies will be used to pay Sabri to settle Keong’s rental arrears. The governing statute for this action is the Distress Act 1951 (“DA 1951”) and its procedure is in Order 75 of the Rules of Court 2012 (“ROC 2012”).

According to s.5(1) DA 1951, Sabri may only claim up to 12 months of the outstanding rentals, immediately preceding the date of application for the issue of warrant of distress.

DA 1951 also provides for the list of things that cannot be seized which includes:

• things in actual use in the hands of a person at the time of the seizure;
• tools and implements not in use, if there is other movable property in the premises sufficient to cover the amount and costs;
• the tenant’s necessary wearing apparel and necessary bedding for himself and his family;
• goods in the possession of the tenant for the purpose of being carried, wrought, worked up, or otherwise dealt with in the course of his ordinary trade or business; and
• goods belonging to guests at an inn.

Few Things to Consider Before Starting Distress Action

(1) Is there a tenancy agreement?

Sabri must ensure that there is proper tenancy agreement between himself and Keong.

(2) Did Keong fail to pay rental? If yes, how many months of rental did Keong owe?

Yes, Keong had failed to pay Sabri monthly rentals for 5 months.

(3) Does Keong have many items of value in the apartment?

If the apartment was rented to Keong, fully furnished, and Keong does not have much movable property, the property seized may not be enough to cover the rental arrears, or even the costs of the distress action.

(4) Does Sabri want to recover vacant possession of the apartment?

DA 1951 does not provide for recovery of vacant possession, unless the premise is deserted by the tenant. Hence, if Sabri intends to recover vacant possession, he would have to mount another suit for an order for possession of the apartment.

(5) Which court to go?

If the rental owed is below RM100,000.00, Sabri should file the action in the Magistrate Court.

If the rental arrears are above RM100,000.00, the action should be filed in Sessions Court.

The Process

Initiation of Distress Action

File an ex parte Originating Summons with an Affidavit in Support (Form 184 of the ROC 2012). 

An ex parte application means that Keong does not have to be notified of the action. Otherwise, the element of surprise will disappear and Keong will have the opportunity to remove his property from the apartment. 

The affidavit should be deposed by the Sabri as the landlord, and should contain the following information: – 

• The existence of a tenancy agreement; 
• The terms of the agreement; 
• The tenant’s failure to pay the rental; and 
• The amount owed to the landlord. 

Hearing

Attend the hearing for the Originating Summons.

Grant of Writ of Distress

The Writ of Distress is issued in Form 186 of the ROC 2012. 

The sheriff or bailiff will then seize the Keong’s property in the premise and make an inventory and an approximate valuation.

The case of May Properties Sdn Bhd v Kong Phew Keng [1996 ] 4 MLJ 37 allowed the sheriff or bailiff to act during office hours to break into the premises if necessary or to act after office hours, whichever was more practicable.

The sheriff or bailiff will give Keong a notice of seizure with a copy of the inventory and valuation attached, to inform him the amount due under the Writ of Distress and the time and place of sale of the property, unless he pays the amount due within 5 days from the date of notice.

If Keong is not on the premise, the notice may be given to any person in occupation of the premise (perhaps Keong’s wife) or posted in a conspicuous place at the premise.

After the sale of the property, the net proceeds of the sale will first be used to pay the sheriff’s or bailiff’s fees and expenses. Thereafter, it goes to satisfy the rental arrears and costs due by Keong to Sabri. Any remainder will be returned to the Keong.

Temporary Measures for Reducing the Impact of COVID-19 Bill 2020

The parliament had drafted and passed the Coronavirus Disease 2019 (COVID-19) Bill 2020 (“COVID-19 Bill 2020“) to protect individuals who have been unable to work and pay their bills. This will also affect distress actions.

Section 30 of the COVID-19 Bill 2020 modified s.5 of DA 1951 to state that:

“For the purposes of the recovery of rent due or payable to the landlord by a tenant of any premises, a warrant of distress issued under subsection 5(1) of the Distress Act 1951, shall not include the distrain for the arrears of rent for the period from 18 March 2020 to 31 August 2020.”

The modification means that Sabri cannot apply for a Writ of Distress against Keong for the rental arrears from 31 March 2020 to 31 May 2020, and could only claim for rental for January and February.

Conclusion

Distress action is an efficient and quicker option to recover rental arrears, since it is merely procedural and could be done without the involvement of the tenant. However, it cannot help the landlord recover the possession of the premise unless the premise is deserted or abandoned by the tenant.