Business owners affected by the recent national flag controversy in Penang may face significant hurdles in seeking compensation for losses, with legal experts suggesting that any potential claim is likely to fail.
Lawyers say the principle of remoteness of damages may be invoked to deny such claims, since the closures were voluntary and made on police advice rather than under compulsion or through direct interference.
Julian Chan said that under Malaysian law, businesses are not automatically entitled to compensation simply for choosing to close in anticipation of unrest or based on police recommendations.
“This economic loss is unaccompanied by physical damage, and the courts will be cautious about allowing recovery unless our legislature has provided otherwise,” he added.
Chan said the legal principle of causation may also give rise to an additional challenge as the losses suffered may not arise directly from the incident itself but may be a consequence of advice received from the authorities or the result of subsequent reactions.
He was commenting after around 10 shops along Jalan Bertam Permata in Kepala Batas closed early on Aug 14, ahead of a planned gathering. The shop owners’ decision followed a viral video showing the Jalur Gemilang flown upside down outside a hardware store, which triggered widespread public outrage.
Reports indicated that the affected businesses agreed to shut their shops by midday, following police advice. The hardware store owner has since apologised, describing the act as an unintentional mistake and expressing readiness to face any consequences.
Lawyer Alliff Benjamin Suhaimi suggested that a more viable legal route might involve pursuing claims against the rally organisers.
“It will be easier to link the loss of revenue to the organisation of the rally rather than the man who hoisted the flag upside down,” he said, adding that a claim for unlawful interference with business could also be considered.
However, he cautioned that such a claim would still be difficult to prove without evidence of intent to harm.
Lawyer Ashok Kandiah, however, said any legal action would likely fail given that the closures were made voluntarily and as a precautionary measure.
“In any event, the plaintiffs (affected businesses) would have no cause of action against the organisers of the gathering for loss of income.
“The gathering was taking place in a public place, and so long as no damage was caused to the premises or goods, there can be no cause of action,” he said.
