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Continue to the Rescue – Lexology

Debt collection is a thorn in the flesh of most businesses and individuals. Generally, recovery is attempted by issuing demands and filing lawsuits, but some may also revert to other hostile methods.

In commercial transactions involving goods, some creditors may be tempted to hold goods hostage for the settlement of a debt. Seen through rose-tinted glasses, this might seem like a creative solution. The reality calls otherwise. Such an approach could cause trouble as it could constitute unlawful interference with property. As the term implies, “unlawful interference with property” occurs when there has been a direct intentional or negligent interference with someone’s property. It is known for its complexity due to the interaction of the principles of property, tort and contract. A form of unlawful interference with property that is often overlooked and forgotten is the tort of inactivity.

Origins of Destiny

Restraint is an ancient form of action dating back to 13th century England, where it was used to recover one’s property from someone who refused to give it up1. According to Halsbury’s Laws of England:

“The main point was the unlawful failure to deliver goods when demanded. This was the case where one person wrongfully held the property of another or wrongfully parted with it. This was also the case where a bailee lost property and could not prove that the loss was through no fault of his own. This was the appropriate form of action when restitution of title deeds or other specific moveable assets was demanded.”2

Early English cases show that this cause of action was particularly invoked for the purpose of recovering property from a bailee and also by those who had lost their property to recover it from a finder. Over time, however, the need for remedies under this cause of action has diminished due to the overlapping tort of conversion. Subsequently, detention was abolished in England and Wales with the passage of the Torts (Interference with Goods) Act 1977.3

Stay in Malaysia

It is observed that detention is not as popular as the conversion offense in Malaysia.4 The underuse of this offense in our country is probably due to misconceptions that the abolition of detention in England and the of Wales affected its actionability in Malaysia. On this issue, the Malaysian High Court clarified:5

“In England and Wales the tort of detention may have been abolished in 1978 by the Torts (Interference with Goods) Act 1977, but it has not been abolished in our country. The tort of detention in common law still survives as a cause of action in Malaysia.”

In fact, the case in which the above clarification was made is a good example of a request for pre-trial detention. The quick facts are:

1. Company P engaged the vendor to provide network and data center management services, which included providing space for its equipment. As part of these services, the seller has stored the equipment of company P in a center belonging to the owner.

2. There has been a dispute between the owner and the seller over the rentals. As a result, the owner blocked the vendor and company P from accessing the center. Despite Company P’s requests, the landlord refused to release the equipment until the seller had paid the overdue rent.

3. Company P initiated proceedings against the lessor with a view to obtaining the return of its equipment. The High Court ordered the return of the material and the assessment of damages.

With respect to the assessment of damages over time, the Federal Court in an earlier case noted:

“…in addition to the value of the property to be assessed at the date of judgment, a plaintiff may also obtain damages for wrongful detention between the date of refusal and the date of actual restitution or the date of payment of the value”.6

It would be a double whammy for a creditor who is simply trying to collect on a debt, as they would have to dig deep into their pockets to compensate a plaintiff.

Authors’ comments

As modern business transactions become more complex, the chain of commerce and associated liability risk for interference with the property of others (particularly among those involved in the transportation and storage of goods industries) becomes more and more complex.

Businesses and individuals should consult with their attorneys before making business decisions that could expose them to legal action. At the other end of the spectrum, if one finds that one’s property has been unlawfully interfered with or is being used as bait for ransom, it is again advisable to consult with lawyers before the execution of the decisions. operational. If the pieces fit together, the old offense of delay might come to his rescue.