ISSUES IN TENANCY MATTERS IN MALAYSIA by gzn12524

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									ISSUES IN TENANCY MATTERS
IN MALAYSIA
               Lee Swee Seng
             LL.B (Hons) Malaya
  LLM Malaya, MBA, M. M. I. Arb., CACD
              Managing Partner
           Lee Swee Seng & Co.
Advocates & Solicitors · Patent Agent · Notary
    Public · Trade Marks Agent · Industrial
      Design Agent · Certified Mediator
INTRODUCTION
The best job in the world is to be a Landlord
and to sit back and collect rental of your
premises let out. However, problems would
arise when the tenant is in default of rental or
could not be located.

What action should the Landlord take to
effectively terminate the Tenancy Agreement
and to recover arrears of rental?

What are the safeguards that a Landlord may
put in place to avoid the headaches of chasing
a tenant for arrears of rental?
TOPICS
   TENANCY AGREEMENT vs. LEASE AGREEMENT vs.
    LICENSE AGREEMENT


   TENANCY AND LEASE UNDER THE NATIONAL LAND CODE
    1965


   MAIN TERMS AND CONDITIONS OF A TENANCY
    AGREEMENT


   EVENTS OF DEFAULT BY TENANT


   EVENTS OF DEFAULT BY LANDLORD


   NOTICE TO RECTIFY BREACH


   DISTRESS ACTION UNDER DISTRESS ACT 1951
TOPICS
   PROBLEM AREAS IN DISTRESS ACTION

   LANDLORD‟S ACTION OF SELF-HELP

   RENEWAL OF A TENANCY/LEASE
    AGREEMENT

   SAFEGUARDS IN TENANCY AGREEMENT FOR
    LANDLORD

   SAFEGUARDS IN TENANCY AGREEMENT FOR
    TENANT
TENANCY AGREEMENT
 A TENANCY agreement is defined as a contract signed by
  landlord and tenant which states all the terms and
  conditions of rent of a property. Tenancy is similar to a
  lease except that it is created for a term not exceeding
  three (3) years. Unlike a lease, it cannot be registered as it
  is specifically called under the NLC as a Tenancy Exempt
  from Registration.
 As per Lord Templeman in Street v. Mountford [1985] 2
  All ER 289:

    “…To constitute a tenancy the occupier must be granted
    exclusive possession for a fixed or periodic term certain in
    consideration of a premium or periodical payments. The
    grant may be express, or may be inferred where the owner
    accepts weekly or other periodical payments from the
    occupier…”Source: Land Law by Teo Keang Sood and Khaw Lake Tee
TENANCY AGREEMENT
   There are also certain statutory formalities which
    must be complied with before a lease or a
    tenancy may be created.

   S. 43 of the National Land Code 1965 (“NLC
    1965”) empowers on persons and bodies to
    whom the land may be disposed by the State
    Authority in relation to s. 42(1)(c) by permitting
    an occupation.

   Under s. 433 of NLC 1965: where non-citizens
    and foreign companies may acquire an interest
    or share or a dealing in land which is only with
    an approval of the State Authority.

            Source: Land Law by Teo Keang Sood and Khaw Lake Tee
LEASE AGREEMENT
   A LEASE agreement is defined as a contractual
    agreement between the lessor and lessee which sets
    forth all the terms and conditions of the lease.

   To constitute a lease, there are three (3) substantive
    requirements:

    (i)   There must be certainty of duration (fixed or
          periodic term);

    (ii) The lessee must be granted exclusive possession
         of the premises; and

    (iii) The lease is granted in consideration of the
          payment of rent.

              Source: Land Law by Teo Keang Sood and Khaw Lake Tee
LEASE AGREEMENT
   Leases are registrable with the Land Office and the
    lessees have a registered interest in the land upon
    registration.

   The interests of a lessee is better taken care of/protected
    compared to a tenant under a tenancy as they only have
    an equitable interest on the land, that is, their interests
    would be subject to those with registered interests.

   However, all tenants/lessees are entitled to the quiet
    enjoyment of the property subject to the terms and
    conditions of the governing written documents.

   A lease can be registered with the Land Office by
    submitting a duly completed Form 15A NLC with
    registration fees..

                                       Source: www.elawyer.com.my
LICENSE AGREEMENT
   A LICENSE agreement is defined as a
    document stating that permission being
    granted by a party (“licensor”) to another
    party (“licensee”). The licensor does not
    hand over exclusive possession of the
    property but retains his or her right to use it.

   In Street v Mountford [1985] 2 All ER: the
    issue whether or not exclusive possession
    has been granted as a test for
    distinguishing between a lease and a
    license.


           Source: Land Law by Teo Keang Sood and Khaw Lake Tee
TENANCY AND LEASE UNDER
THE NATIONAL LAND CODE
1965
   S. 221 - Gives the power of proprietor to lease
    for a term exceeding 3 years to lessee.

   S. 224 - Relates to the calculation of terms of
    the leases and tenancies whether any term for
    which land is granted exceeds any specified
    number of years.

   S. 227 - Determines the effect of leases and
    tenancies which shall include the benefits of all
    registered interest of the tenants.
MAIN TERMS & CONDITIONS OF
A TENANCY AGREEMENT
    UPON CONFIRMATION:
   Tenant is required to place one month's rent as earnest
    deposit with the Landlord, upon the principal terms and
    conditions being agreed upon in a pre-agreement of
    Tenancy signed by the Tenant and Landlord.

   The Tenancy Agreement will thereafter be prepared
    together with the Inventory List and signed by the
    Tenant and Landlord.

   Upon signing the Tenancy Agreement, the balance
    payments are to be paid by the Tenant to the Landlord.


          Source: LAW & REALITY: Tenancy Agreement by Nicole Tan
    SECURITY DEPOSIT:
   A security deposit equivalent to 2 month's rental
    and a utility deposit equivalent to ½ month rental to
    be paid by the Tenant to the Landlord on or before
    the execution of the Tenancy Agreement, and to be
    refunded without interest and less any liabilities
    incurred by the Tenant at the termination of
    tenancy.


    EARNEST DEPOSIT:
   The Tenant shall pay an Earnest Deposit
    equivalent to 1 month's rental to secure the said
    property. This sum shall be deemed as the first
    month's rental in advance, upon the execution of
    the Tenancy Agreement.


           Source: LAW & REALITY: Tenancy Agreement by Nicole Tan
    GOVERNMENT STAMP
    DUTY/DISBURSEMENT FOR
    TENANCY AGREEMENT:

   All tenancy agreements are required to be stamped
    as failure to do so would render the agreement
    inadmissible in court in the event a dispute arises.

   The stamping fee calculation is based on the
    amount of monthly rental payable and also the
    tenancy period. The formula below set out in the
    Stamp Act 1949 is used to calculate the required
    stamping fee on the original document.




           Source: LAW & REALITY: Tenancy Agreement by Nicole Tan
GOVERNMENT STAMP
DUTY/DISBURSEMENT FOR
TENANCY AGREEMENT:
                                          When tenancy is for a
                                                period

Without fine or          Not exceeding   Exceeding   Exceeding
premium when             one (1) year    one (1)     three (3)
average rent other                       year but    years
considerations                           not
calculated for a whole                   exceeding
year                                     three (3)
                                         years
(i) Does not exceed      Nil             Nil         Nil
RM 2, 400

(ii) For every RM250 1.00            2.00      4.00
or part
In excess of RM2,400
          Source: LAW & REALITY: Tenancy Agreement by Nicole Tan
CHECKLIST OF TENANCY:

(a) Parties
      Landlord
      Tenant (note: limitation of number of tenants)

Whether the individuals, companies, statutory bodies,
corporations etc.

In the case of a partnership, a representative/partner for
and on behalf of the partnership is the party since the
partnership is not a separate legal entity.




    Source: Malaysian Conveyancing Volume 3 by Judith Sihombing
CHECKLIST OF TENANCY:

(b) Recitals
    (i) Demised premises
             Description of the land (title
              particulars)
             Description of the building
             Description of the part/portion
              tenanted/copy of plan
             Area tenanted and a plan to
              accurately identify it
             Particulars of charge, if any

    (ii) Additional information, if building
             List of furniture, fixtures and fittings.


    Source: Malaysian Coveyancing Volume 3 by Judith Sihombing
CHECKLIST OF TENANCY:
  (iii) Additional information if
        residential/commercial/industrial lot within a building or
        complex (eg. apartrment/condominium in a residential
        building, a shop-lot in a shopping complex, or office lot
        in an office block)
              List of furniture, fixtures and fittings
              Whether rental includes:
             •        service charges
             •        sinking fee
             •        any other payments payable to
                      company managing the building
              Whether sharing common facilities, eg lifts,
               staircases, washrooms, etc.
              Provisions of services (eg central air-
               conditioning) and rate of charges
              Opening and closing hours
              Operating hours
              Provision in respect of common property
              Provision for car-park usage


  Source: Malaysian Conveyancing Volume 3 by Judith Sihombing
CHECKLIST OF TENANCY:
    (iv)    Statement on agreement for tenancy

(c) Conditions precedent for application of
    approvals
    (i)     Written law, prohibitions or limitations
    (ii)    State Authority‟s consent (restriction in
            interest)
    (iii)   Chargee‟s consent
    (iv)    Any other relevant approvals3

(d) Period of tenancy/lease
    (i)    How many weeks/months/years
    (ii)   Commencement Date
    (iii)  Expiry date

    Source: Malaysian Conveyancing Volume 3 by Judith Sihombing
CHECKLIST OF TENANCY:

(e) Consideration: payments
    (i)   Rental – weekly/monthly/quarterly/
          yearly payment
    (ii)  Rental amount
    (iii) Whether rental payable in advance or in
          arrears; and the period for payment (eg
          by the seventh day of each calendar
          month)
    (iv)  General deposit amount
    (v)   Utilities
    (vi)  Deposit(s) payment date(s)




    Source: Malaysian Conveyancing Volume 3 by Judith Sihombing
CHECKLIST OF TENANCY:

(f) Consideration other than payments
    Where the consideration for the agreement is
    other than monetary payments, it must be
    specifically spelt out. For purposes of stamp
    duty, it will be necessary to state a monetary
    value.

(g) Quit rent/assessment increase
    (i)    Who to bear existing quit
           rent/assessment
    (ii)   Who to bear increase
    (iii)  Use/purpose of premises



   Source: Malayisan Conveyancing Volume 3 by Judith Sihombing
CHECKLIST OF TENANCY:

(h) Use/purpose of premises
    State specific purpose/use of premises, such
    as a residence or an office.

(i) Sub-letting rights
    Whether tenant entitled to sub-lease, sub-let or
    under-let.

(j) Period to remedy breach
    Period to remedy breach (eg 7 days or 14
    days)

    Note: Requirement for notice under section
    235, NLC, before forfeiture.

   Source: Malaysian Conveyancing Volume 3 by Judith Sihombing
 CHECKLIST OF TENANCY:

(k) Renovations
    If tenant is carrying out renovations, whether
    landlord to reimburse costs incurred.

(l)   Option to renew
      (i)    Whether there is an option to renew.
      (ii)   Period to exercise option (eg at least
             three months before expiry of tenancy).
      (iii)  Option renewal period (eg two years or
             three years).
      (iv)   Whether at landlord‟s or tenant‟s option
             (eg at the tenant‟s request … the landlord
             shall (may) … ).
      (v)    Term for renewal.

      Source: Malaysian Conveyancing Volume 3 by Judith Sihombing
EVENTS OF DEFAULT BY
TENANT
   Where there is a breach of a covenant to pay
    rent, then, the landlord must make a formal
    demand in writing for the rental arrears and
    state that unless it is paid within a specified
    time, the tenant must vacate the premises.

   In Distress Action cases where the rent is in
    arrears or due to the landlord and it shall be
    lawful for the landlord to serve upon the
    tenant a notice stating the amount of such
    arrears of rent and requiring it to be paid.

   The landlord may also sue the tenant for
    breach of covenant to rent for the wrong or
    improper use of the premises.

                                  Source: English Land Law
EVENTS OF DEFAULT BY
LANDLORD
   The tenant may have a cause of
    action in contract in the event that the
    Landlord fails to fulfill his obligations
    under the agreed covenant to let.

   If the breach is capable of remedy,
    then the tenant must give the landlord
    a reasonable time to remedy the
    breach and continue to occupy the
    premises.
J.R LINCKS EDUCATIONAL CONSULTANTS SDN
BHD V. GOH & SONS ENTERPRISE SDN BHD
[2008] 3 CLJ 815
  One of the issues is that the defendant failed to
   remedy the breaches under the special conditions
   in the tenancy agreement, in particular, the
   commissioning of the lift and the supply of 3 phase
   electricity.

   The water leakage and flooding problem was also
    not attended to until very much later. The breaches
    and problems caused hardship and business
    losses to the plaintiff.

   The condition of the premises (lack air-conditioning
    and non-operation of lift) discouraged many
    prospective students from enrolling. (para 36)
J.R LINCKS EDUCATIONAL CONSULTANTS SDN
BHD V. GOH & SONS ENTERPRISE SDN BHD
[2008] 3 CLJ 815


   Held: The defendant cannot equate the
    equitable withholding of the rent with willful
    non-payment. Therefore, the fixed term
    tenancy could not be terminated before its
    expiration on 28 February 1997, grounded
    on an alleged default in payment of the
    monthly rental. The notice of termination of
    tenancy dated 26 June 1995 was invalid.
    (para 36)
NOTICE TO RECTIFY BREACH

   Enforcement of the terms in the tenancy
    agreement can be done by formally:
    (i) demanding for the arrears; and

    (ii) stating that failure to comply with the
         demand will result in commencement of
         a legal action (writ of distress action or
         notice of forfeiture to terminate the
         tenancy).

          Source: LAW & REALITY: Tenancy Agreement by Nicole Tan
NOTICE TO RECTIFY BREACH
   A notice of termination or notice to
    vacate must be given to the tenant within
    the period stated in the tenancy
    agreement before its expiration.


   The landlord has the right to vacant
    possession of the premises from the
    tenant without payment of any
    compensation.

         Source: LAW & REALITY: Tenancy Agreement by Nicole Tan
NOTICE TO RECTIFY BREACH
   Before an action of forfeiture can be
    taken, the Landlord must first issue a
    notice in writing:

    (i) specifying the particular breach;
    (ii) entailing the tenant to remedy the
          breach; and
    (iii) make compensation (if required).

   Forfeiture would terminate the tenancy.

         Source: LAW & REALITY: Tenancy Agreement by Nicole Tan
DISTRESS ACTION UNDER
DISTRESS ACT 1951
   This is one of Landlords‟ remedies for
    non-payment of rent by tenant.

   A distress action, that is, to seize the
    tenant‟s goods and sell them to pay the
    arrears.

   The landlord‟s right to distress is governed
    by the Distress Act 1951 which gives the
    landlord the statutory power to distrain for
    the arrears of rent.
DISTRESS ACTION
   Generally, under the section 5(1) of the 1951 Act, the
    landlord may apply to a Judge for the issue of a warrant
    of distress for the recovery of rent due

    AND

   payable to the landlord by a tenant of any premises for
    a period not exceeding twelve (12) completed months
    of the tenancy preceding the date of the application

    AND

   the Judge or Registrar may make such order
    accordingly.
DISTRESS ACTION
   A distress action involves the landlord going into the
    demised premises to impound (take possession) goods to
    the value of the rents owed, so as to compel the tenant to
    pay up.

   Distress will be lifted once Tenant has paid arrears of rent
    in full or to the satisfaction of Landlord.

   Wrongful recovery of goods will expose the Landlord to an
    action of trespass by real owners of goods.

   If the Tenant fails to repay in time, the Landlord can sell
    goods and reimburse himself for the rent owed, from the
    proceeds. Any balance must be returned.
DISTRESS ACTION

   A writ of distress action is taken out
    without the involvement/knowledge of
    the tenant (ex parte).

   It does not terminate the tenancy but
    allows the landlord to seize and auction
    off the tenant‟s/ lessee‟s property
    (except personal belongings such as
    clothes and tools of trade) to recover
    the arrears.
DISTRESS ACTION
   It must be noted, however, that as a writ
    of distress does not terminate the
    tenancy, there is a risk that the tenant
    may fail to pay rent again resulting in the
    need for another writ of distress action.

   Further, should the tenant contest the
    action, it would be a lengthy and costly
    process.
Right to Distrain
   Under section 5(3) of the Distress Act 1951, the
    Landlord may also similarly distrain for arrears of
    rent after the determination of the tenancy,
    provided that either:

    (i) the tenant is still in the occupation of the
         premises; or
    (ii) if the goods of the tenant are still on the
         premises.

   In other words, the Act gives the landlord an
    immediate remedy to recover the arrears of rent
    covering a period of twelve (12) months.
Right to Distrain
   Section 20(1) of the 1951 Act gives the
    landlord a six (6) months‟ priority of
    rental over other judgment creditors who
    may have attached the property of the
    tenant for the recovery of judgment sums
    even before the landlord.

   Pursuant to that section the landlord
    shall not attach the goods on the
    premises but issues the warrant and a
    notice of such warrant to the bailiff
    concerned.
Right to Distrain
   Thereafter the bailiff proceeds with the
    sale of the property under the earlier
    attachment and sets aside a sum
    amounting to six months‟ rental from
    the proceeds of the sale and pays the
    same to the landlord.
MARI BOUTIQUE SDN BHD v. JAYA
JUSCO SDN BHD [2003] 4 CLJ 848
   Is double rent recoverable via Distress Act
    1951?

   No, according to MARI BOUTIQUE

    a) s. 4, shall not distrain for double rent
    b) s. 5(1), distraining for rent for a period not
       exceeding 12 months and tenancy still
       subsisting
    c) s. 5(3), arrears of rent may be recovered
       after termination provided either the tenant
       is still in occupation or any goods of tenant
       still on premises
MARI BOUTIQUE SDN BHD v. JAYA
JUSCO SDN BHD [2003] 4 CLJ 848
   Landlord is entitled to claim double rent
    from tenant under s. 28(4) Civil Law Act
    1956, where the tenant remains in
    occupation of premises after termination.

   Double rent is not contractual rent but a
    form of damages for failing to quit the
    premises after tenancy is terminated.

   But, double rent is not arrears of rent,
    hence not recoverable by a writ if
    distress under the 1951 Act.
ABDUL MUTHALIB HASSAN v
MAIMOON HJ. ABD. WAHID [1992] 1
CLJ 88
   In this case the plaintiff is suing the defendant (DW1)
    for the return of all his belongings wrongfully detained
    by the defendant at the business premises.

   The owner of the premises was one named Hj. Abdul
    Wahid now deceased, the father of the defendant.

   According to the plaintiff (PW1), he became the
    tenant of the said premises by way of an oral
    agreement with effect from 20 August 1977 for the
    purpose of carrying on the business He had been
    paying the rent to the late Hj. Abdul Wahid until his
    death in June 1984. Thereafter he continued paying
    the rent to his daughter, the defendant. The rent was
    to be paid on the first of every month.
ABDUL MUTHALIB HASSAN’S CASE
[1992] 1 CLJ 88
   As from 1 June 1985, PW1 was not in good health
    and so on 10 June 1985 he leased out his
    business to one Abu Bakar for one year at a
    monthly rental of RM450.

   However by a notice dated 28 December 1985
    (P3), PW1 terminated the said agreement on the
    grounds that Abu Bakar had defaulted in the
    payment of rental and committed some other
    breaches as well.

   So on 3 January 1986 Abu Bakar surrendered both
    the business and the premises to PW1.
ABDUL MUTHALIB HASSAN ‘S CASE
[1992] 1 CLJ 88
   In the meantime, the defendant (DW1) served
    PW1 with a written notice dated 20 February
    1985 (P6) to vacate the said premises within one
    month on the ground that PW1 had rented out
    the premises to Abu Bakar without her consent.

   On 27 January 1986 the premises were closed
    and padlocked allegedly done by DW1. Hence
    the present suit filed by PW1.

   HELD:
    Locking up premises for non-payment of rent is
    no justification for trespass though it may
    mitigate damages.
PROBLEM AREAS IN DISTRESS
ACTION
   Even though there is a term of the tenancy
    agreement which allows the landlord to
    evict the tenant and/or to recover
    possession of the demised premises upon
    the nonpayment of rent, the Malaysian legal
    system is pro-tenant.

   The landlord is prohibited from evicting the
    tenant and/or to recover possession of the
    demised premises without a court order.

          Source: LAW & REALITY: Tenancy Agreement by Nicole Tan
PROBLEM AREAS IN DISTRESS
ACTION
   However, even if the landlord manages to
    eventually evict the non-paying tenant, the
    landlord finds it difficult to recover unpaid rents.

   The current practice now is for the landlord to
    lodge a police report and break the lock in the
    presence of a police officer in order to avoid
    further complications.

   A prudent landlord would even take photos of the
    interior of the demised premises to ensure that
    the tenant would not later claim loss of
    properties.


           Source: LAW & REALITY: Tenancy Agreement by Nicole Tan
PROBLEM AREAS IN DISTRESS
ACTION
      Can the Landlord suspend the
     water supply when the Tenant fails
               to pay rent?

   The Defendants gave notice to the Plaintiff that if
    they still fail to pay the outstanding charges, the
    Defendant would suspend the water supply.

   After ignoring the Defendants‟ notice, the
    Defendants suspended water supply to the
    tenants.

        PREMIER MODEL (M) v. PHILEPROMENADE SDN BHD
                                  & ORS [2001] 1 LNS 173
Can the Landlord suspend the water
supply when the Tenant fails to pay
               rent?
   The main provision of the said agreement which
    is 5.01(b)(4) reads that: the vendor is entitled to
    suspend any services, utilities etc in the event of
    default in the payment of any dues.

   The term service charge in s1.01(m) includes
    electric power and water supply.

   The plaintiff prays for an injunction to restore
    water and/or electricity supply and restrain
    Defendant from turning off or interfering with the
    said meters.

            PREMIER MODEL (M) v. &PHILEPROMENADE SDN BHD
                                        ORS [2001] 1 LNS 173
Can the Landlord suspend the water
supply when the Tenant fails to pay
               rent?
   It was held that the Defendants were well within their
    rights to suspend water supply if the occupier fails to
    pay service charges.

   With regards to the application for injunction, since the
    Defendants restored water supply, therefore, there is no
    need to grant the injunction.

   Furthermore, an injunction should only be granted if the
    Defendant has committed a wrong, and since the
    Defendants‟ action to suspend water supply was well
    within the s.5.01(b)(4) of the said agreement, the
    application to seek for an injunction to stop the action
    should not be entertained.
             PREMIER MODEL (M) v. &PHILEPROMENADE SDN BHD
                                         ORS [2001] 1 LNS 173
         What is wrongful seizure?
   Goods and chattels belonging to applicants
    are seized under Distress Act 1951, and the
    applicant applied for the goods to be released
    to them.

   Applicants leased out to Emporium President
    and Supermarket Sdn Bhd a few items and
    chattels as stated in Lease Agreement.

   Counsel for applicants argued that seizure is
    wrongful and bad in law. Secondly, goods did
    not belong to the emporium, and thus,
    wrongly seized.
             UNITED ORIENT LEASING CO SDN BHD v. PERDANA
                    PROPERTIES SDN BHD (FC) [1980] 1 LNS 87
        What is wrongful seizure?

   S. 20 of the District Act1951, landlord
    cannot levy execution of property which
    has already been executed and that
    landlord‟s only right is the payments out
    of sales of the property.

   Appeal allowed and goods returned to
    appellants.

            UNITED ORIENT LEASING CO SDN BHD v. PERDANA
                   PROPERTIES SDN BHD (FC) [1980] 1 LNS 87
    Is the landlord entitled to cut the
            supply of utilities?
   The Plaintiff bought houses from the
    Defendant, a development company.

   It was agreed that the Defendant would
    provide all utilities such as water,
    electricity etc.

   The Defendant then imposed
    maintenance charges on the Plaintiff and
    a dispute arose between them, and thus,
    resulting the Defendant to cut off the
    water supply.
                  KONG PENG PEW & ORS v. MERU VALLEY
                          RESORT BHD [2003] 6 CLJ 392
     Is the landlord entitled to cut the
             supply of utilities?
   The Plaintiff filed an action against the
    Defendant over the dispute on the said
    maintenance charges.

   However, pending disposal of that action,
    the Plaintiff sought an interlocutory
    injunction directing the Defendant to
    connect the water supply and an
    injunction to restrain the Defendant from
    disconnecting the water supply.

                   KONG PENG PEW & ORS v. MERU VALLEY
                            RESORT BHD [2003] 6 CLJ 392
    Is the landlord entitled to cut the
            supply of utilities?
   The Plaintiff argued that provisions
    cl.14, 16 and 17 of the agreement
    made the Defendant to provide for the
    utilities and the Defendant had no right
    to cut off the water supply.

   The Court held that the Defendant has
    infringed that right and allowed the
    application of the injunction.
                  KONG PENG PEW & ORS v. MERU VALLEY
                           RESORT BHD [2003] 6 CLJ 392
        Can the Landlord increase
         maintenance charges?
   The Plaintiff claimed for an injunction
    that the Defendants reconnected the
    water supply and an injunction to
    restrain the Defendant from shutting of
    the water supply.

   The Defendant counter-claimed for
    overdue maintenance fees.

               HO SIEW CHOONG v. ON-KWARD REALTY SDN
                            BHD & ANOR [2000] 8 CLJ 175
      Can the Landlord increase
         maintenance charges?
 The Plaintiff has no objection on the
  existing maintenance charges but on
  the new maintenance charges.

   The Court held that the Plaintiff be
    awarded RM1,000.00 as damages,
    dismissed the counter-claim but made
    no order with regards to the injunction
    as the Defendant reconnected the
    water supply.
               HO SIEW CHOONG v. ON-KWARD REALTY SDN
                            BHD & ANOR [2000] 8 CLJ 175
PROBLEM AREAS IN DISTRESS
ACTION
   Receiverships and winding up proceedings of
    companies create peculiar problems with regard to
    corporate tenancies.

   This is because the right of the landlord as against
    the tenant company to distrain for arrears of rent
    may be limited both under the Common Law and
    the particular statutory provisions namely, the
    Companies Act 1965 and the Distress Act 1951.


             SOURCE: THE LANDLORD AND THE COMPANY-SOME
              PROBLEMS RELATING TO DISTRESS by S. Sagadeva
PROBLEM AREAS IN DISTRESS
ACTION
   For instance, different considerations
    apply at the various stages from
    receivership to winding up as regards the
    priority and the ranking of claims
    between the landlord, the debenture
    holders under a floating charge and least
    of all the unsecured creditor.

   The appointment of a receiver under a
    floating charge crystallises the
    debenture.
           SOURCE: THE LANDLORD AND THE COMPANY-SOME
            PROBLEMS RELATING TO DISTRESS by S. Sagadeva
PROBLEM AREAS IN DISTRESS
ACTION
   The rights of the debenture holder under the floating
    charge become paramount only after the charge
    "crystallises". Therefore, whether or not the debenture
    holder under a floating charge will take priority over other
    creditors will depend on the time at which the charge
    attaches or "crystallises" on the assets of the company.


   Crystallisation of the charge occurs on the happening of
    certain specified events and more often than not, the
    debenture deed spells out the circumstances that would
    cause the crystallisation of the charge.


               SOURCE: THE LANDLORD AND THE COMPANY-SOME
                PROBLEMS RELATING TO DISTRESS by S. Sagadeva
PROBLEM AREAS IN DISTRESS
ACTION
   But, the mere happening of the event
    specified alone is insufficient to crystallise the
    charge. The debenture holder must take
    some "step" to enforce the security.

   He must appoint a receiver. For this reason,
    the debenture secured by a floating charge is
    a major disadvantage in that the security may
    not attach until the debenture holder takes a
    step, by which point of time the company may
    already be in a financial straight jacket.

            SOURCE: THE LANDLORD AND THE COMPANY-SOME
             PROBLEMS RELATING TO DISTRESS by S. Sagadeva
PROBLEM AREAS IN DISTRESS
ACTION
   But, in New Zealand, another view has evolved.
    The substance of such a view is that the floating
    charge crystallises the moment the event
    specified in the deed of debenture occurs
    irregardless whether the debenture holder takes
    any step to appoint a receiver.

   This concept of "automatic crystallisation" has
    been upheld in the case of Re Manurewa
    Transport Ltd. [1971] NZLR 909, where
    Speight J ruled that the floating charge had
    crystallised when the company attempted to
    create the subsequent charge in breach of the
    clause in the debenture.
            SOURCE: THE LANDLORD AND THE COMPANY-SOME
             PROBLEMS RELATING TO DISTRESS by S. Sagadeva
PROBLEM AREAS IN DISTRESS
ACTION
   In such a case, where the company is in arrears
    of rent, the landlord may still, notwithstanding the
    receivership distrain for the said rent owing.

   But in view of the provisions of the Companies
    Act 1965, it is doubtful whether the Courts would
    allow the landlord an unfettered right to distrain
    after the appointment of a receiver.

   Section 191(1) of the Act clearly states that the
    provisions of s. 292(1) as regards to preferential
    debts shall apply where a receiver has been
    appointed.

             SOURCE: THE LANDLORD AND THE COMPANY-SOME
              PROBLEMS RELATING TO DISTRESS by S. Sagadeva
PROBLEM AREAS IN DISTRESS
ACTION
   In such a case, therefore, monies coming into the
    hands of the receiver will be applied and paid out
    to preferential creditors as provided by s. 292(1).

   This being so, the receiver could very well resist
    the distress on the ground that the landlord is not
    listed as one of the preferred creditors.

   And therefore, the receiver is not duty bound to pay
    the arrears of rental from the monies coming into
    his hands.

             SOURCE: THE LANDLORD AND THE COMPANY-SOME
              PROBLEMS RELATING TO DISTRESS by S. Sagadeva
HAW PAR BROTHERS INTERNATIONAL
LTD v. OVERSEAS TEXTILES CO LTD
[1978] 2 MLJ 19
   The respondents, the Landlord applied to distrain for
    rent against the company after a receiver and manager
    was appointed by the debenture holders. The leave to
    distrain was granted by the Registrar but on an
    application made by the debenture holders the Court
    ordered the distress to be suspended pending the
    determination of the issue whether the Landlord had a
    prior right to the receivers.

   HELD:

    (i)   As the landlord was only an unsecured creditor, not
          having any greater rights than an execution
          creditor, he took subject only to the equity of the
          debenture holder.
HAW PAR BROTHERS INTERNATIONAL
LTD v. OVERSEAS TEXTILES CO LTD
[1978] 2 MLJ 19
 (ii) As the charge had crystallised the goods
      were no more the company‟s and the
      landlord therefore was prohibited under
      the Distress Act, to distrain on goods not
      belonging to the tenant.

 (iii) As the receiver took possession of the
       goods, the goods no longer belonged to the
       company, and therefore the landlord cannot
       distrain on the goods of a "stranger". It must
       be clarified that taking possession of goods
       in     the premises does not divest the true
       ownership in the goods. It still depends on
       the true construction of the debenture deed.
SUPREME HOLDINGS v. THE SHERIFF,
SURPREME COURT of S’pore & Anor
[1987] 1 MLJ 10
   The movable property (owned by Peter Chew‟s
    Pte Ltd) was seized by the Sheriff pursuant to
    two writs of seizure and sale taken out by two
    creditors.

   The landlords/applicants then applied for and
    obtained a writ of distress against their tenants
    Peter Chew‟s Pte Ltd, for recovery of arrears of
    rent and service charge due from the tenants for
    six months.

   Another creditor Hin Seng Pte Ltd petitioned for
    winding-up of the tenants.
SUPREME HOLDINGS v. THE SHERIFF,
SURPREME COURT of S’pore & Anor
[1987] 1 MLJ 10
   On 26 July 1985, a winding up order was made against the
    tenants, and the Official Receiver was appointed the
    liquidators of the tenants.

   The movable property which was seized under the writs of
    seizure and sale was sold on 8 May 1985 and the net
    proceeds were in the hands of the Sheriff.

   The applicants as the landlords claimed under section
    20(1) of the Distress Act, the Sheriff is obliged to pay the
    proceeds to in priority to any other payment.

   On the other hand, the Official Receiver and liquidator of
    the tenant (in the opposition) claimed that section 335(2)
    of the Companies Act applies to the proceeds and the
    Sheriff is obliged to pay the whole thereof to the Liquidator.
SUPREME HOLDINGS v. THE SHERIFF,
SURPREME COURT of S’pore & Anor
[1987] 1 MLJ 10
   HELD:

    (i)   the obligation of the Sheriff under s. 20(1) of the
          Distress Act is not affected by the winding-up
          proceedings of the tenants. The proceeds from the
          sale of the movable property of the tenants in his
          hands are not „free‟ from the right of the Sheriff „for
          his own indemnity‟;

    (ii) s. 335(2) of the Companies Act „deals with the
         rights of the execution creditor, the execution
         debtor and the Sheriff when he has no legal duties
         to third parties; but the section is limited to ordinary
         cases of execution‟;
SUPREME HOLDINGS v. THE SHERIFF,
SURPREME COURT of S’pore & Anor
[1987] 1 MLJ 10
(iii)   the effect the court would give to s. 20(1) of the
        Distress Act is consistent with a situation where
        movable property of a tenant is not under seizure
        by the Sheriff in execution and his landlord has put
        in force a distress thereon for arrears of rent due
        from his tenant prior to the presentation of the
        winding-up petition against the tenant – in such an
        event the landlord would be entitled to the
        proceeds of sale from the movable property
        distrained up to an amount due for the past 12 months‟
        rent, unaffected by the operation of s. 334 and s. 335 of
        the Companies Act;

    (iv) the application should therefore be allowed and the
         applicants were entitled to the net proceeds of sale
         of the movable property of the tenants in the hands
         of the Sheriff.
PROBLEM AREAS IN DISTRESS
ACTION
            The Effect of Winding Up

    Under the Companies Act 1965, winding up
    is deemed to have commenced:
   Section 219(2) - in the case of a winding up
    by the Court, on the date of presentation of
    the petition.
    AND
   Section 219(1) - in the case of voluntary
    winding up, at the time of passing of the
    special resolution.
PROBLEM AREAS IN DISTRESS
ACTION
               The Effect of Winding Up
   Under s. 292 of the Companies Act 1965, the landlord is
    not one of preferred creditors in the winding up.

   Therefore, it would seem that once winding up has
    commenced, the right of the landlord to distrain and obtain
    priority over other preferred creditors, including the
    debenture holder under a floating charge becomes limited.
   As a company may go into winding up subsequent to the
    commencement of a distress by the landlord, or even
    before it, it is convenient to discuss the rights of the
    landlord under two headings as different considerations
    apply at both stages.
PROBLEM AREAS IN DISTRESS
ACTION
        Where Distress is Levied before the
         Commencement of Winding up
   If the landlord puts in force the distress before the
    commencement of the winding up but has not
    completed it by sale, he will be allowed to proceed
    with it notwithstanding the subsequent winding up.

   In the case of Despite the existence of s. 298(1) of
    the Companies Act, it has been held that the
    landlord in such cases can, retain the benefit of his
    attachment though the company is subsequently
    wound up. But ss. 224 and 263(1) pose an
    impediment to the landlord in these circumstances.

             SOURCE: THE LANDLORD AND THE COMPANY-SOME
              PROBLEMS RELATING TO DISTRESS by S. Sagadeva
PROBLEM AREAS IN DISTRESS
ACTION
       Where Distress is Levied before the
         Commencement of Winding up
   Section 224 - Any attachment, sequestration, distress or
    execution put in force against the estate or effects of the
    company after the commencement of the winding up by Court
    shall be void.

   Section 263(1) - is substantially the same except that it
    applies to a case of a voluntary winding up.

    However,

   Section 263(2) - After the commencement of the winding up
    no action or proceeding shall be proceeded with or
    commenced against the company except by leave of the
    Court and subject to such terms as the Court imposes.
PROBLEM AREAS IN DISTRESS
ACTION
       Where Distress is Levied before the
         Commencement of Winding up
   Though both ss. 224 and 263(1) provide that any such
    distress, execution and attachment to be void, it has been
    held that the provisions do not absolutely render them void
    ab initio and of no effect.

   A distress levied before the winding up can still be
    proceeded with by leave of the Court after the
    commencement of the winding up by virtue of s. 263(1)
    and s. 226(3).

   Likewise, it can be restrained by way of an objection by the
    other creditors or the liquidator.

              SOURCE: THE LANDLORD AND THE COMPANY-SOME
               PROBLEMS RELATING TO DISTRESS by S. Sagadeva
KREDIN SDN BHD v.
DEVELOPMENT & COMMERCIAL
BANK BHD [1995] 3 MLJ 304
   On 14 August 1987, Bank Bumiputra
    Malaysia Bhd filed a petition to wind up the
    appellant company (`Kredin`) in the High
    Court.

   However, up until the date of this judgment
    the winding-up petition was still pending
    hearing. On 23 January 1988, the
    respondent bank (`D & C`) sued Kredin on
    a loan agreement in the High Court and
    judgment was entered against it.
KREDIN SDN BHD v.
DEVELOPMENT & COMMERCIAL
BANK BHD [1995] 3 MLJ 304
   In order to execute this judgment, D & C
    registered a prohibitory order on a few parcels of
    land belonging to the Kredin on 31 March 1992
    and also applied for a writ of seizure and sale of
    the land in the High Court (`the execution
    proceedings`).

   Following the execution proceedings, Kredin
    made applications, inter alia, to set aside the
    prohibitory order on the ground that it was void
    under s. 224 of the Companies Act 1965 (`the
    Act`), as it was filed after the commencement of
    the winding up under s. 219(2) of the Act.
KREDIN SDN BHD v.
DEVELOPMENT & COMMERCIAL
BANK BHD [1995] 3 MLJ 304
   The application was, however, dismissed on
    the ground that the prohibitory order could
    only be rendered void after a winding-up
    order had been made under s. 224 and since
    a winding-up order may ultimately not be
    made, the execution was not void.

   Kredin has appealed to the Court of Appeal.
    The issue before the court is the
    interpretation to be given to s. 219(2) of the
    Act, and its practical effect when read
    together with s. 224.
KREDIN SDN BHD v.
DEVELOPMENT & COMMERCIAL
BANK BHD [1995] 3 MLJ 304
   HELD, allowing the appeal, Per Siti Norma
    Yaakob JCA:

    (1).Section 224 of the Act provides that
        any attachment, sequestration,
        distress or execution put in force against
        the estate or effects of a company after
        the commencement of the winding up by
        the court shall be void. Pursuant to s.
        219(2), a compulsory winding-up is
        deemed to commence at the time when
        the winding-up petition is presented.
KREDIN SDN BHD v.
DEVELOPMENT & COMMERCIAL
BANK BHD [1995] 3 MLJ 304
 (2). The intention of Parliament in enacting ss 219(2)
      and 224 of the Act is to ensure that no creditors,
      particularly the unsecured creditors, who execute
      their claims against the company would be
      enriched at the expense of other unsecured
      creditors, between the date when the winding-up
      petition is presented and when the winding-up
      order is made by the court (`the interim period`).

 (3). It follows that the execution which was put in force
      during the interim period was void, and the fact that
      a winding-up order may not ultimately be made was
      irrelevant. However, in the event that a winding-up
      order is made, it will relate back to the date when
      the winding-up petition was presented, under the
      doctrine of relation back.
PROBLEM AREAS IN DISTRESS
ACTION
Distress After The Commencement of Winding
                      Up


   When the landlord levies distress after
    winding up has commenced, he
    apparently loses the favour of the Court
    in that generally he will not be allowed to
    proceed unless he can show why he
    should be allowed to have an advantage
    over the other creditors in the winding
    up.
TECK YOW BROTHERS HAND-BAG TRADING
COMPANY v. MAHARANI SUPERMARKET
SDN BHD [1989] 1 MLJ 101
   This was an application by the petitioner for the
    winding up of the respondent company. A creditor, the
    landlord of the premises, objected to the application.

   It was alleged that the company was indebted to the
    petitioner for $4,093.

   The objector had levied distress after the
    commencement of the petition for winding up and the
    distress realized a sum of $61,000.

   The amount due to the objector was $45,000.
TECK YOW BROTHERS HAND-BAG TRADING
COMPANY v. MAHARANI SUPERMARKET
SDN BHD [1989] 1 MLJ 101
   HELD, granting the petition by Abu Mansor J:

    (1). The objector had interest in the subject matter
         of the winding up and has locus standi.

    (2). The evidence in this case is overwhelming that
         the respondent company is unable to pay its
         debt. The petitioner has proved to the
         satisfaction of the court that the respondent
         was unable to pay its debt and in so
         determining the court is allowed to do so by
         taking into account the contingent and
         prospective liabilities of the respondent
         company.
TECK YOW BROTHERS HAND-BAG TRADING
COMPANY v. MAHARANI SUPERMARKET
SDN BHD [1989] 1 MLJ 101

 (3). The notice under s. 218(2)(a) of the
      Companies Act 1965 is in the circumstances
      unnecessary and the court ordered that it be
      dispensed with as the petition is not wholly
      founded on s. 218(2)(a) of the Companies Act
      1965. Section 218(2)(a),(b) and (c) are
      mutually exclusive, and on the facts and in the
      exercise of its discretion, a company can be
      wound up by the court on any of the grounds
      (a), (b) or (c).
TECK YOW BROTHERS HAND-BAG TRADING
COMPANY v. MAHARANI SUPERMARKET
SDN BHD [1989] 1 MLJ 101
 (4). In this case the petitioner has published in
      the gazette and once in two local
      newspapers and this was sufficient
      publication.
 (5). As the company is unable to pay its debts,
      there is sufficient ground to enable the court
      to exercise its discretion to order
      winding up of the company. As it also
      appeared that the directors of the company
      had absconded and a provisional liquidator
      had already been appointed it is just and
      equitable that the company be wound up.
SINGMA SAWMILL CO SDN BHD v. ASIAN
HOLDINGS (INDUSTRIALISED BULDINGS) SDN
BHD [1979] 1 MLJ 41
   Singma Sawmill Co Sdn Bhd, the appellants to this appeal,
    are the applicants in Distress Suits No 1/77 and No 6/77.
    They applied for and obtained Warrants of Distress to be
    issued against Asian Holdings (Industrialised Buildings)
    Sdn Bhd, the respondents, for arrears of rent. As a result
    the Bailiff of the High Court, Johore Bahru executed
    Warrants of Distress on 8 February 1977 and 22 June
    1977, respectively.

   On 26 November 1977 the respondents applied by way of
    motion to discharge the Warrants of Distress and to
    dismiss the actions on two principal grounds, namely, the
    use of the land is illegal, therefore the contract of tenancy
    is void or voidable, and, the machines are fixtures and
    therefore cannot be distrained.
SINGMA SAWMILL CO SDN BHD v. ASIAN
HOLDINGS (INDUSTRIALISED BULDINGS) SDN
BHD [1979] 1 MLJ 41
 HELD:

  (i) By the proviso to s. 10 of the Distress Act
      1951, the court was not required to release t
      he distrained goods unless it was satisfied
      that the immediate tenant had no right of
      property and that the goods belonged to the
      claimant. Even if the court was satisfied with
      these two ingredients, it would not
      necessarily follow that the court must release
      the goods. The court could still order them to
      be distrained if they fell under any categories
      of goods listed in s. 12 of the Distress Act
      1951;
SINGMA SAWMILL CO SDN BHD v. ASIAN
HOLDINGS (INDUSTRIALISED BULDINGS) SDN
BHD [1979] 1 MLJ 41
  (ii) the circumstances required that the
       claimants, as owners, should have taken
       positive steps if not at the outset, at least
       after the expiry of the lease, to assert
       that the machinery belonged to them.

     Instead, they were largely responsible for
     representing that the defendants‟ assets
     lay with the machinery and for painting
     the defendants with the colour of
     ownership of the machinery.
LANDLORD’S ACTION OF SELF-
HELP
   Self-help is a form of redressing or
    preventing wrongs by one‟s own action
    without recourse to legal proceedings.

   Many a time, landlords resort to self-help
    eviction which can take many forms
    including changing the locks to the
    apartments, removing a tenant‟s
    belongings or shutting off the utilities to
    the apartment without regarding if they are
    in violation of the law.

        Source: Is Self-help any help at all? by Ashley Chew & Ong Li San
LANDLORD’S ACTION OF SELF-
HELP
   The beauty of self-help is that self-help will
    enable landlords to enforce their contractual
    rights quickly and efficiently without resorting to
    judicial process. However, self-help measures
    are controversial because they amount to taking
    the law into one‟s own hands.

   Landlords who engage in self-help evictions often
    argue that the tenant was in violation of the
    tenancy/ lease in some manner in the first place
    and thus, the landlord is entitled to possession.



    Source: Is Self-help any help at all? by Ashley Chew & Ong Li San
TRUSTEES OF LEONG SAN TONG KHOO
KONGSI (PENANG) REGISTERED & ORS v.
POH SWEESIANG [1987] 2 CLJ
   The learned Hashim Yeop Sani SCJ said that
    section 7 of the Specifc Relief Act 1950 provides
    that a person entitled to the possession of land
    may recover it in the manner prescribed by the law
    relating to civil procedure.

   In the context of the provision of s. 7 of the 1950
    Act, the word “may” is permissive and
    discretionary and it is not obligatory on the part of a
    person entitled to the possession of land to restore
    exclusively or solely to a Court of law. In other
    words, s. 7 of the does not exclude the common
    law remedy of self-help. This is a remedy which is
    always available unless expressly excluded.
ER ENG BONG [2001] 1 CLJ 289
   The remedy of self-help was alluded in this case.

   In this case, the learned Abdul Malik Ishak J stated that the
    amended s. 7(2) of the Specific Relief Act which came into
    force on 31 January 1992 by Act A 811 would relegate the
    remedy of self-help into oblivion as the owner of the property
    can only seek to enforce his right to recover his property from
    the occupier by way of a court action. S. 7(2) of the Act is as
    follows:

    “When a specific immovable property has been let under a
    tenancy, and that tenancy is determined or has come to an
    end, but the occupier continues to remain in occupation of the
    property or part thereof, the person entitled to the possession
    of the property shall not enforce his right to recover it against
    the occupier otherwise than by proceedings in court.”
DR. HARJIT SINGH v. SUHAIMI BIN
SAMAT & ANOR [1995] 1 LNS 62
   Conduct of defendants locking plaintiff out of
    the premises amounted to a breach in tort in
    contravention of s.7, Specific Relief
    Act1950.

   Defendant should obtain court order before it
    can recover possession of the property from
    the plaintiff is mandatory.

   S. 7(2) of the 1950 Act imposes a pre-
    condition of obtaining a court order before the
    defendant can recover possession of the
    property.
NUR-ISLAM WORLDWIDE INDUSTRIES
SDN BHD v. YEE KOK SUM [2001] 7
CLJ 494

   Right of re-entry and forfeiture

   S. 5(1) of the Distress Act 1951

   S. 4 of the Distress Act 1951
NUR-ISLAM WORLDWIDE INDUSTRIES
SDN BHD v. YEE KOK SUM [2001] 7
CLJ 494
   On the facts, landlord entered onto
    premises without any Court order and
    sealed premises.

   Landlord may be deemed a
    trespasser.

   In short, the self-help remedy can no
    longer be used as a result of the
    amendment to s. 7(2) in 1992.
SME AEROSPACE SDN BHD v. STEYR
MANNLICHER (M) SDN BHD [2006] 5 CLJ
121
   In this recent case, it was held that the use of the
    word „shall‟ in s. 7(2) of the Specific Relief Act
    imposed a precondition of obtaining a court order
    before attempting to recover possession of a
    property. Thus, the requirement to first and foremost
    obtain a court order was a mandatory one. Further,
    the law does not allow any person to take the law into
    his own hands and forcibly evict another person from
    the property.

   The learned judge went on further to agree that s.
    8(1) of the Act reinforced the right of a person who
    has been wrongfully dispossessed of an immovable
    property „otherwise than in due course of the law‟.
SME AEROSPACE SDN BHD v. STEYR
MANNLICHER (M) SDN BHD [2006] 5 CLJ
121
 Section 8(1) of the Act provides:

    “If any person is dispossessed without his
    consent of immovable property otherwise
    than in due course of law, he or any person
    claiming through him may, by suit, recover
    possession thereof, notwithstanding any
    other title that may be set up in the suit.”

   Therefore, a tenant who holds over after the
    expiry of the period of tenancy, is entitled to
    sue his landlord for possession under s. 8 of
    the Act, if forcibly dispossessed by him.
RENEWAL OF A TENANCY/LEASE
AGREEMENT
   The landlord and tenant are bound by the
    terms of the tenancy agreement. Their rights
    are provided for in the said agreement.

   The principle of freedom to contract ensures
    a win-win situation for both parties provided
    that there is a consensus ad idem (“meeting
    of minds”). Therefore, it is not true that there
    is only one standard tenancy agreement.

   An astute person would ensure that the terms
    are not one sided.

                          Source: Rental Issues by Bhag Singh
RENEWAL OF A TENANCY/LEASE
AGREEMENT
   When a person rents a house he would like to be assured
    that he is able to continue to stay there for a reasonable
    period. At the same time, he does not want to be
    committed indefinitely.

   The Landlord who is usually the owner of the premises
    also does not want to commit himself for an indefinite
    period for he may need the premises for his own use or he
    may need to sell the premises at some time.

   Though the Landlord is willing to rent out the premises for
    the foreseeable future, he may not want to commit himself
    to the same rental for the entire period is willing to let out
    the premises.

                                Source: Rental Issues by Bhag Singh
RENEWAL OF A TENANCY/LEASE
AGREEMENT
   Hence, it is not uncommon to enter into a tenancy
    agreement for an initial period of one, two or even three
    years and a tenancy agreement is accordingly drawn
    up.

   Renewal with a possible rent adjustment must be
    mutually agreed upon. The usual practice is that the
    tenant is given the first option to renew the tenancy of
    which the tenant must give notice of such intention
    three months before the expiry of the tenancy.

   This gives a unilateral right to the tenant to renew the
    tenancy for a further term and an opportunity for the
    Landlord to have the land rent adjusted.
                              Source: Rental Issues by Bhag Singh
RENEWAL OF A TENANCY/LEASE
AGREEMENT
   Such a clause would effectively serve the
    interest of the tenant in securing an
    extended term of the tenancy if the
    extended term were to be the same with an
    increase or percentage increase stipulated.

   The tenant‟s interest would be well
    protected even if the mechanism for fixing
    the rental was provided for.


                       Source: Rental Issues by Bhag Singh
RENEWAL OF A TENANCY/LEASE
AGREEMENT
   Unfortunately, many tenancies or even lease
    agreements do not spell this out. If an existing lease or
    tenancy or agreement is examined many of them will be
    found to contain an option clause which does not fix the
    rent but which leaves the issue to be decided later.

   Thus, a typical option clause may read.:
    “Upon the expiration of the term hereby stipulated the
    tenant shall by notice given three months before the
    expiry of this agreement renew the tenancy for a further
    term of three years upon the same terms and conditions
    herein stated except this clause as to rental. The rental
    for the renewed term shall be mutually agreed upon
    between the parties.”

                             Source: Rental Issues by Bhag Singh
RENEWAL OF A TENANCY/LEASE
AGREEMENT

   In some cases it may even be provided that
    the rental shall be determined by the
    Landlord. The question that arises is as to
    whether in such instances the tenant would
    have a meaningful right of renewal?

   Arising out of a clause like this there are
    two matters that require attention. One is
    the need for the Tenant to give notice at or
    before the stipulated time to the Landlord.
                        Source: Rental Issues by Bhag Singh
RENEWAL OF A TENANCY/LEASE
AGREEMENT

   If giving of the notice is overlooked, the
    right to an option is lost unless the
    landlord agrees to waive this
    requirement.

   The other issue relates to rental for the
    renewed term. This is where the
    perceived rights of the tenant may be
    again lost because either the parties
    cannot agree to the rental.


                       Source: Rental Issues by Bhag Singh
POPULAR BOOK CO PTE LTD v. SEA SUN
FURNISHING PTE LTD [1991] 3 MLJ 10
   Where the renewed term was to be “for a period
    of three years commencing from the date
    immediately following the expiration of term
    hereby created, at a revised rent to be
    determined by the landlord and upon terms and
    conditions as shall be imposed by the landlord.”

   When the earlier term came to an end, the
    plaintiffs were informed by the defendants‟
    solicitors that their clients were prepared to
    renew the lease for a farther term of three years
    at a rent of S$28,728.
POPULAR BOOK CO PTE LTD v. SEA SUN
FURNISHING PTE LTD [1991] 3 MLJ 10
   The plaintiffs rejected the notification on
    the ground that the rent was
    unconscionable and far in excess of the
    market rate.

   An application was made to Court for a
    decision as to whether in the
    circumstances the right of the Landlord
    to revise the rental was subject to such
    revision being fair and reasonable?
POPULAR BOOK CO PTE LTD v. SEA SUN
FURNISHING PTE LTD [1991] 3 MLJ 10
   It was contended by the Tenant that there are
    three types of options for renewal of leases:

    (1) where there is no formula for quantifying
        the rent and no machinery to determine it;

    (2) where there is a stated formula but no
        effective machinery; and

    (3) where both the formula and the
        machinery are provided.
POPULAR BOOK CO PTE LTD v. SEA SUN
FURNISHING PTE LTD [1991] 3 MLJ 10
   It was argued by the Tenant that the option
    to renew the lease was of the first type and
    therefore it was for the Court to provide the
    formula so that the tenancy and the option
    clause would not be frustrated.

    The Court, however, went on to decide that
    as the rent demanded by the Landlord was
    not acceptable to the tenant there was no
    renewal of the tenancy which had therefore
    come to an end.
POPULAR BOOK CO PTE LTD v. SEA SUN
FURNISHING PTE LTD [1991] 3 MLJ 10
   A distinction was drawn between the tenancy
    in this case which was for three years and
    English cases involving leases where the
    Court had intervened and provided the
    formula to exercise its power to either fix a
    rent or provide a mechanism to do so.

   What was involved in the English cases
    where the Courts were willing to intervene
    was a rent review in the context of a an
    existing lease period as against the renewal
    of a tenancy.
POPULAR BOOK CO PTE LTD v. SEA SUN
FURNISHING PTE LTD [1991] 3 MLJ 10
   It would therefore serve Tenant‟s interests to be
    aware that where either:

    (i) the rental for the renewed term of the
        tenancy is not pre-agreed; or

    (ii) a formula or mechanism for its determination is
         not provided for, the right of the tenant to
         renew the tenancy where the rental is to be
         agreed upon; or

    (iii) the power to determine the rental is placed in
          the hands of the landlord may turn out to be
          illusory.
SAFEGUARDS IN TENANCY
AGREEMENT FOR LANDLORD
   One pertinent point to look for by the
    landlord is the provision for a deposit for
    the breaking of wall(s) in the event the
    tenant is renting two or more contiguous
    units.

   A related issue is that the tenant must
    not make any alterations to the exterior
    or interior of the demised premises
    without the previous consent in
    writing of the landlord.
        Source: LAW & REALITY: Tenancy Agreement by Nicole Tan
SAFEGUARDS IN TENANCY
AGREEMENT FOR LANDLORD
   The tenant is supposed to yield up the demised
    premises with all fixtures and fittings belonging to the
    landlord upon the determination of the tenancy in good
    and tenantable

    (i)     repair; and
    (ii)    condition; and
    (iii)   fair wear; and
    (iv)    tear excepted.

   The tenant shall make good at their own expense any
    damage caused to the demised premises or fixtures
    and fittings therein as a result of the tenant‟s act or
    neglect.


            Source: LAW & REALITY: Tenancy Agreement by Nicole Tan
SAFEGUARDS IN TENANCY
AGREEMENTS FOR TENANT
   The landlord is supposed to: -

    (i)    pay all quit rent and assessment imposed or
           charged upon the owner of the demised premises; and

    (ii)   to maintain upkeep and repair whenever
           necessary
           (a)     the roof,;
           (b)     main structure;
           (c)     external walls;
           (d)     main drains; and
           (e)     pipes

           of the demised premise.

                 Source: LAW & REALITY: Tenancy Agreement by Nicole Tan
CONCLUSION
   Landlords have very little remedies
    when it comes to rent in arrears.

   Malaysia still does not have Statutes
    with regards to Landlord and Tenant.

   Landlords have no specific legislation
    other than the distress action under
    Distress Act 1951.
CONCLUSION
   Landlords are always looked upon as
    the „bad guys‟ as they have no other
    alternative, but, to evict the tenant
    when rent is in arrears or sue in court.

   Landlords would rather evict the
    current tenant and find a replacement
    immediately to maintain his steady
    flow of income.

								
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