原告(业主) 拥有一间三层商业办公楼，他将第二层和第三层租给被告(租客) 。由于租客拖欠租金，并违反了该租约的条款，业主通过律师向租客发出通知，并指示租客支付所拖欠的租金，以及归还场地的钥匙和使用权。
- 业主反驳租客的说法，他表示租约中有提及，租客只能根据土地使用权中所规定的使用条件来使用有关的场地。 有关的使用条件，原本就没有说明可以用来经营酒店。他同时也否认租客有告诉他租用该处的目的，而且当初租客在检查场地时未曾抱怨一楼的广告牌。
- 法庭发现租约里并没有说明被告租用该物业是用作经营经济型酒店。 而且该协议的第5（e）条款明确规定被告同意只能根据土地使用权中所规定的条件来使用有关的场地。有关的使用条件包括，规定该土地只能用于办公楼，诊所，俱乐部，社团场所或会馆，以及住宅用途，却并未说明可用于经营酒店。
- 合约落空（frustration of contract）是指签订合同后，在不是合同当事人的过失的情况，发生了意想不到的事件，而致使合同目的不能进行/实现。然而当租客在检查场地时，一楼的广告牌就已经在那儿了，他之后还同意租用该处。
- 当一个人在一份合约上签名，在没有欺诈或者错误引导成分之下，他有没有读清楚合同里的条款都好，他都会被合约所约束。Wan Salimah bte Wan Jaffar v Mahmood bin Omar (Anim bte Abdul Aziz, Intervener)  5 MLJ 162.
- The Plaintiffs were the registered owners of two unit of three-storey building erected thereon known as No. 16A and 16B, Jalan Kingsway, Miri.
- By a Tenancy Agreement dated 25.6.2007, the Plaintiffs agreed to let to the Defendant the whole of the first-floor of No. 16A and No. 16B and the whole of the second-floor of No. 16B of the building (the premises) for a term of five years commencing on 15.7.2007 and expiring on 14.7.2012 at a monthly rental of RM2.500.00. The Defendant had paid a deposit of RM7,500.00 to the Plaintiffs in accordance to the Agreement. The Plaintiffs complained that the Defendant had defaulted in paying the monthly rentals to the Plaintiffs and was in breach of the covenants of the Agreement.
- The 1st Plaintiff (PW4) represented the other Plaintiffs in dealing with the Defendant. He said that since the tenancy agreement had been signed the Defendant had failed to pay any rental and had failed to vacate the premises and return the keys of the premises to the Plaintiff. The Plaintiffs had through their advocates issued a Notice To Quit dated 30.9.2009 to the Defendant and demanded the Defendant to pay the rental in arrears and deliver vacant possession together with the keys to the premises. The 1st Plaintiff said they also asked the Defendant to reinstate or restore the premises to its original condition by 30.11.2009.
- The 1st Plaintiff testified that the Defendant through his advocates Messrs. Kadir Wong Lin & Co. by a letter dated 23.10.2009 alleged that the Defendant had earlier sent three letters dated 3.8.2007, 4.9.2007 and 7.3.2008 respectively to terminate the tenancy agreement on the basis that it had been frustrated due to a signboard put up by Rhoyxon Trading (Miri) Sdn Bhd (Rhoyxon) which the Defendant alleged had obstructed the windows of the premises so that the premises could not be used as a budget hotel for safety reason. The Defendant therefore denied that he was liable to pay any rent to the Plaintiffs.
- The Plaintiffs filed this action seeking:
- a declaration that the tenancy had been determined by the Notice To Quit dated 30.9.2009 and dated 25.11.2009;
- an order that the deposit of RM7,500.00 paid by the Defendant under the Agreement be forfeited to the Plaintiffs;
- payment of a sum of RM73,700.00 being the arrears in rental under the Agreement;
- an order that the Defendant shall pay double rent at a rate of RM5,000.00 per month for holding over until 31.5.2010 or alternatively, for such sums and or for such periods as this honourable court deems fit.
- The Defendant denied the Plaintiffs’ claims against him and has filed a counterclaim inter alia seeking:
- a declaration that the termination of the tenancy vide the Plaintiffs’ letters dated 30.9.2009 and 25.11.2009 was invalid, null and void;
- a declaration that the termination of the tenancy through the Defendant’s letters to the Plaintiffs dated 3.8.2007, 4.9.2007 and 7.3.2008 was good and valid in law;
- a declaration that the Tenancy Agreement had been frustrated;
- refund of the security deposit of RM7,500.00 paid to the Plaintiffs;
- refund of the costs of renovation of RM 14,000.00; and
- costs of re-installation charges of RM35,000.00 incurred by the Defendant on the premises.
- The evidence showed that the Plaintiffs had let the ground-floor of the building to Rhoyxon in 2006 which had put up a signboard on the exterior of the building, between the ground-floor and the 1st floor. When the Defendant inspected the premises prior to agreeing to rent the premises, the signboard was already there. The Defendant testified that he rented the premises to operate a budget hotel or backpackers’ inn at the premises. He said that this purpose was expressly made known to the Plaintiffs when he inspected the premises with the 1st Plaintiff a few days before the tenancy agreement was signed. The Defendant said that the 1st Plaintiff had verbally agreed with him to request Rhoyxon to relocate the signboard which was obstructing the windows of the 1st floor of the premises. The Defendant said he signed the tenancy agreement relying on the assurance of the 1st Plaintiff that he would direct the removal or relocation of the signboard. The Defendant said that the Plaintiffs failed to make such request and failed to remove the signboard.
- The Defendant said that accordingly on 3.8.2007 he wrote to the Plaintiffs informing them that he was terminating the tenancy agreement with immediate effect due to the presence of Rhoyxon’s signboard which obstructed the windows on the 1st floor. The Defendant said he wrote another letter dated 4.9.2007 to the Plaintiffs which referred to the several discussions held between him and the Plaintiffs on the problem. The Defendant said that the Plaintiffs still failed and neglected to relocate the Rhoyxon’s signboard.
- The Defendant wrote another letter dated 7.3.2008 to the Plaintiffs stating that the failure of the Plaintiffs to remove or relocate the Rhoyxon’s signboard had caused the tenancy agreement between them to be frustrated resulting in the Plaintiffs having no claim against the Defendant whatsoever. The Defendant said that there was no response from the Plaintiffs to his three letters. The Defendant said that he was no longer physically occupying the premises after the dates stated in the letters.
Tenancy Term: Purpose of Use
- Was the intention of the Defendant to rent the premises for a budget hotel made known to the Plaintiffs? The 1st Plaintiff said that he did not ask the Defendant the purpose for renting the premises. He explained because it was stated in the tenancy agreement that the premises could only be used in accordance to the conditions as stated in the land title and that it could not be used for any illegal purpose. He denied that the Defendant intended to rent the premises to operate a budget hotel and he denied that the Defendant had informed him of this purpose. He also denied that he gave an assurance to the Defendant that he would direct the removal or relocation of the signboard. He said the Defendant did not complain about the signboard when they inspected the premises together.
- The evidence showed that the Defendant inspected the premises with the 1st Plaintiff on 8.6.2007. After he decided to rent the premises he paid RM2,500.00 towards payment of the deposit. He paid the balance of RM5,000.00 for the deposit on 20.6.2007. The 1st Plaintiff and the Defendant had instructed Messrs. Kadir Wong Lin & Co. to prepare the agreement after the Defendant agreed to rent the premises on 8.6.2007. The legal firm was in fact suggested by the Defendant because the Defendant was the uncle of DW3, then a solicitor working with Kadir Wong Lin & Co, who prepared the agreement. The 1st Plaintiff said he gave a photocopy of the document of title to the legal firm for the agreement to be prepared. He said a copy of the document of title was annexed to the agreement when they signed the agreement. The Defendant denied having seen or having received a copy of the document of title. DW3 said a copy of the title was not given to her to prepare the agreement. In any event she said she made a search at Miri Land Registry and obtained an extract of the title in order to prepare the agreement. She said the agreement was a standard tenancy agreement usually used by the legal firm.
- The evidence showed that the preambles and clause 1 of the tenancy agreement did not provide or state that the Defendant had rented the premises to operate a budget hotel. In fact clause 5(e) of the agreement specifically stated that the Defendant agreed not to use or suffer or permit to be used the premises other than as stated in the land title of the premises. The Defendant covenanted that he would apply for all relevant licences and or approvals to operate his business in the premises and warranted to indemnify the Plaintiffs for all losses and damages suffered by the Plaintiffs for failure to obtain such approvals. It was very clear that clause 5(e) did not state or provide that the Defendant had rented the premises to operate a budget hotel at the premises.
- On the contrary, special conditions(i) of the document of title in respect of the premises provided that ‘this land is to be used only for offices, clinics, surgeries, clubs, association premises and residential purposes’. This condition did not provide for the premises to be used for a budget hotel or a backpackers’ inn. DW3 as the solicitor advising the Defendant was aware of this condition in the document of title. If the Defendant had informed DW3 that the purpose was to operate a budget hotel, clause 5(e), as it was, would not have been included in the agreement or the Defendant would have spoken to the 1st Plaintiff to exclude clause 5(e) from the agreement.
- It was apparent that the Defendant did not inform DW3 that he rented the premises to operate a budget hotel otherwise DW3 would have stated this purpose in the agreement or advised him that he could not operate the budget hotel at the premises because of the title conditions. There was plenty of time for the Defendant from 8.6.2007 to 25.6.2007 to think about the terms and conditions of the tenancy agreement or to talk to DW3 and or the 1st Plaintiff about the tenancy agreement and to have the purpose to be stated or be included in the agreement or for it to be amended if the purpose was not so stated in the agreement or for clause 5(e) to be deleted.
- When a party signs a contract knowing it to be a contract which governs the relations between him and another, in the absence of fraud or misrepresentation, the party signing it is bound by the contract. It is immaterial whether he has read the document or not: Wan Salimah bte Wan Jaffar v Mahmood bin Omar (Anim bte Abdul Aziz, Intervener)  5 MLJ 162. 当一个人在一份合约上签名，在没有欺诈或者错误引导成分之下，他有没有读清楚合同里的条款都好，他就会被合约约束了。
Oral Assurance: Remove/Relocate Signboard
- The Defendant contended he signed the tenancy agreement relying on the assurance of the 1st Plaintiff that he would direct the removal or relocation of the signboard. The Defendant submitted that there was a separate oral collateral contract based on this assurance or promise of the 1st Plaintiff. An oral promise given at the time of contracting which induces a party to enter into a contract overrides any inconsistent written agreement. It constitutes a separate contract which exists side by side with the main agreement: Tan Swee Hoe Co. Ltd. v Ali Hussain Bros  2 MLJ 16.
- If the Defendant had informed the 1st Plaintiff that the purpose for renting the premises was to operate the budget hotel at the premises and this was not specifically provided for in the tenancy agreement, he should not have signed the agreement until it was amended. In fact, based on clause 5(e) he could not operate the budge hotel at the premises. There was no evidence that at the time when he signed the tenancy agreement on 25.6.2007 he had asked the 1st Plaintiff about it and was induced to sign the agreement after the 1st Plaintiff had given him the assurance which he alleged. Based on what the Defendant said, the alleged assurance was given when they first inspected the premises on 8.6.2007. As stated earlier, there was a lapse of about 17 days between 8.6.2007 to 25.6.2007 and there was more than sufficient time to have the purpose to be stated or be inserted in the agreement, when they subsequently went to see DW3 to sign the tenancy agreement. DW3 witnessed and attested his signature on the agreement. DW3 did not testify that the 1st Plaintiff had given such an assurance to the Defendant at that material time.
- The Defendant’s three letters written on 3.8.2007, 4.9.2007 and 7.3.2008 respectively did not state that he rented the premises to operate a budget hotel at the premises. There was no mention at all of any budget hotel nor of any assurance given by the 1st Plaintiff which induced or led him to sign the tenancy agreement in the three letters. In fact, in paragraph 5 of his letter dated 7.3.2008, the Defendant said that it was an implied term that the purpose of renting the premises was for commercial purpose. These clearly contradicted his allegations that he rented the premises to operate a budget hotel, that he informed the 1st Plaintiff of this purpose and that the 1st Plaintiff gave him the assurance. On the evidence before the court, the Defendant failed to establish on a balance of probabilities that he rented the premises to operate a budget hotel or that he had informed the 1st Plaintiff of this purpose or that the 1st Plaintiff had given him the assurance as alleged.
Frustration of Contract
- Frustration occurs whenever the law recognizes that without the default of either party a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract. The doctrine of frustration does not apply just because the promisee’s obligation has become, because of the change of circumstances, more onerous than what he has contracted for: see Davis Contractor Ltd v Fareham UDC  AC 696, Kim Nam Development Sdn Bhd v Khau Daw Yau  1 MLJ 256 and Silver Concept Sdn Bhd v Brisdale Rasa Development Sdn Bhd  3 CLJ 259.
- When the Defendant inspected the premises on 8.6.2007, the signboard was already there and he was aware of it. After the inspection, he agreed to rent the premises. If he intended to rent the premises to operate a budget hotel, he should be familiar or should know of any regulatory requirements to be complied with in order to operate the budget hotel at the premises. In this case there was no change in the circumstances which would render the performance of the agreement a thing radically different from that which was undertaken in the contract. It was not as if the signboard was put up subsequent to the signing of the agreement. There was also no change to the title conditions subsequent to the signing of the agreement.
- It was not as if the signboard could not be removed and that the tenancy agreement could not be performed. Subsequent to the letter dated 3.8.2007, the 1st Plaintiff and the Defendant discussed about the relocation of the signboard and the Defendant was advised to talk to Rhoyxon. PW1, the manager of Rhoyxon at Miri, said that the Defendant had spoken to her about the relocation of the signboard. She said she would have to talk to her head office for approval and the Defendant would have to give an ‘angpow’ in accordance to Chinese customs in order to do so as Rhoyxon was still operating its business at the ground-floor of the premises. She said that the Defendant never went back to talk to her after that about moving the signboard.
- Based on special conditions(i) of the title of the land, the Defendant could not operate a budget hotel at the premises. The premises could only be used for offices, clinics, surgeries, club, association premises and residential purposes but not a budget hotel. The signboard was not and could not be the reason why he could not operate a budget hotel at the premises. It was used as a red herring only. On the facts and circumstances of the case, there was no frustration of the contract.
Lease: Requirement to Register
- Next the Defendant contended that the tenancy agreement was not valid or was not binding on him because it was not registered pursuant to s.158 of the Land Code which stipulates the requirement of registration if a memorandum of sublease exceeds one year. Although the tenancy agreement, being not in the statutory form and not registered, could not qualify as a memorandum of sublease, there was nevertheless a written contract between the Plaintiffs and the Defendant which was binding on them. It was valid as an agreement for lease enforceable in equity. See Margaret Chua v Ho Swee Kiew & Ors  27 MLJ 173, Inter-Continental Mining Co Sdn Bhd v Societe Des Etains De Bayas Tudjuh  1 MLJ 145 and Gloria Enterprises Sdn Bhd v Koh Hing Restaurant Sdn Bhd  1 LNS 68. There is no merit on this point.
- Although the Defendant said that he had terminated the tenancy vide the letter dated 3.8.2007, he did not make any arrangement to vacate nor did he vacate the premises and delivered vacant possession thereof and the keys thereto to the Plaintiffs. If he had terminated and delivered vacant possession of the premises to the Plaintiffs, there would be no necessity to terminate the tenancy again vide his letter dated 4.9.2007 or to plead frustration of the agreement subsequently vide his letter dated 7.3.2008. The evidence showed that the Defendant only delivered the keys of the premises to the Plaintiffs at the end of May 2010, after he had completed works to restore the premises to its original conditions as per the agreement.
- From the evidence presented before the court it was not in dispute that the Defendant did not pay any rental under the agreement from 15.7.2007 until he delivered vacant possession of the premises to the Plaintiffs at the end of May 2010. The Plaintiffs are only claiming rentals in arrears up to 31.12.2009 i.e. for 29.5 months in the sum of RM73,750.00.
Oral Settlement: Waiver of Rental
- The Defendant said that the 1st Plaintiff had agreed with him through Lau Kung Mei (DW2) to waive and not to claim the rentals in arrears if he reinstated the premises to its original condition. He said that the reinstatement was carried out in accordance to a plan which was approved and signed by the 1st Plaintiff. The Defendant called DW2 to testify and to corroborate that there was such an agreement. Therefore the Defendant submitted that the Plaintiffs were not entitled to claim the rentals in arrears. The Plaintiffs denied that there was such an agreement or settlement.
- Although the Defendant claimed that there was a settlement in May 2010, the Defendant did not instruct Messrs. Kadir Wong Lin & Co to prepare a deed of settlement or to write to the Plaintiffs to put on record the settlement as alleged. Since then the Defendant did not write for a refund of the deposit of RM7,500.00 or for the sum of RM14,000.00 for the renovations or for the sum of RM35,000.00 for the re-installation works, bearing in mind that there was previously correspondence between their solicitors on the disputes between them.
- For the reasons given, the Defendant by failing to pay any rental was in breach of the tenancy agreement which was subsequently determined by the Plaintiffs’ notice to quit dated 30.9.2009. Under the agreement, the Plaintiffs were entitled to forfeit the deposit of RM7,500.00 against the Defendant. The Plaintiffs were also entitled to recover the rentals in arrears from the Defendant under the tenancy agreement until 30.9.2009 in the sum of RM63,500.00 and to recover double rent against the Defendant for holding over from 1.10.2009 until 31.5.2010 in the sum of RM40.000.00: see Imbi World Sdn Bhd v Deluxe Tours Sdn Bhd & Another Appeal  3 CLJ. Therefore judgment is entered for the Plaintiffs against the Defendant with interest at 4% per annum on the sum of RM63,500.00 and RM35,000.00, respectively calculated from 23.6.2011 until full payment. The Defendant’s counterclaim is dismissed. Costs to the Plaintiffs to be taxed.
Source: Lee Choon Seng & Ors v Kuek Ho Soon  MLJU 979. High Court Miri. Stephen Chung Hian Guan J
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