- 租客同意在租约到期前的6个月，提出续约的要求。这个续约有个附加条件：双方在日后要续约时，房东可以起租(不超过15%)。如果双方无法达成共识，就要由当时的market rent来决定。假如双方仍有争议。将由特定的估价师来决定。
- 上诉法庭表示高庭并没有考虑到，租约里所提到续约条件是否已经被满足：双方在日后要续约时，房东可以起不超过15%的租金。如果无法达成共识，就要由当时的market rent来决定。假如仍有争议，将由特定的估价师来决定租金的费用。
- 法庭表示双方并没有谈妥此条件，因此不能说租约已经被默认续约。双方的关系充其量只是月租的关系。因此租户给予一个月的通知，是合理的。With the fundamental conditions left unsatisfied it could not be said that a three years tenancy agreement had been reached.
- The plaintiff (hereinafter referred to as the respondent) had filed a claim against the defendant (hereinafter referred to as the appellant) for arrears of rental. In order to resolve the suit the High Court had to determine whether a binding tenancy contract existed between them in the first place. The answer at the end of the hearing was in the positive and the learned judge accordingly allowed the claim. Being dissatisfied the appellant filed a notice of appeal and we heard the appeal. We unanimously allowed the appeal with costs.
The Agreed Facts
- The appellant was the tenant of the ground floor to the third floor of a four storey shop-house known as No 142, 68100 Batu Caves, Kuala Lumpur (‘the premises’). The respondent was the registered owner of the premises. Both the appellant and the respondent had entered into a tenancy agreement on 24 April 1995, spanning three years starting from 15 January 1995, with a monthly rental of RM8,000. It would determine on 14 January 1998. The appellant used the premises as a bank and any business relating to banking on the terms and conditions contained in the said tenancy agreement.
- As permitted by the tenancy agreement, by a letter dated 13 August 1997, the appellant’s solicitor informed the respondent of its intention to take up the option of renewing the existing tenancy for a further three years period, also at RM8,000 per month subject to the same terms and conditions. In this letter it was also proposed to the respondent that an additional term be included, a provision that allowed it to terminate the second tenancy agreement by giving the respondent six months notice in writing. However, the respondent did not reply to the above letter or to a reminder sent on 12 September 1997.
- It was not disputed that the respondent through its solicitor, wrote to the appellant on 23 October 1997, disagreeing to the inclusion of the additional term proposed by the appellant, and at the same time wishing to increase the rental by 5%. Despite the want of meeting of the minds the appellant continued to occupy the said premises from 15 January 1998 onwards until 30 June 1998 ie for an additional period of six months. During this six months period the respondent accepted the rental of RM8,000 per month without any protest. By a letter dated 30 May 1998, a one month notice was issued by the appellant, stating its intention to terminate the new tenancy agreement, and with effect from 1 July 1998 vacated the premises.
- Due to the termination of the new tenancy the respondent commenced an action for the recovery of RM272,500, consisting of RM240,000 being loss of rental for thirty months (‘unexpired period’) under the new tenancy agreement of three years, and RM32,500 being expenses incurred for restoration works to the said premises. In a gist, as far as the respondent was concerned, by the appellant continuing to stay in the premises, and paying the monthly rental of RM8,000, a new three years tenancy agreement had concretised. By the termination the appellant had breached the new agreement thus causing losses to the respondent. The appellant counterclaimed for RM24,000 for the deposit paid to the respondent. At the trial, the respondent withdrew its claim for restoration works and judgment was entered for RM168,000 (being rental for 24 months from 15 June 1998 to 14 January 2001 less the amount counterclaimed by the appellant of RM24,000).
- The non-agreed facts before us were as follows, namely:
(a) the new tenancy agreement was exercised in accordance with cl 4(d) of the tenancy agreement, which created a new tenancy for a fixed term of three years from 15 January 1998 to 14 January 2001;
(b) the rental for the said premises after 14 January 1998 was agreed upon by both parties through an implied conduct of parties notwithstanding the requirement of cl 4(d);
(c) despite the non-compliance of cl 4(d), and the uncertainty pertaining to the amount of rental payable, the occupation was not on a monthly basis; and iv. the appellant breached the new tenancy by issuing one month notice to determine it, and that the respondent thus was entitled to recover the rentals from 15 June 1998 to 14 January 2001.
- With cl 4(d) as provided for in the tenancy agreement being central to this appeal, we herewith reproduce it. It reads:
“…Upon the expiration of the term of the Tenancy hereby granted and referred to in clause 1 hereof, if the Tenant shall at its option be desirous of renewing the Tenancy for a further term of three (3) years and shall not less than six (6) months prior to the expiration of the term of the Tenancy give to the landlord a notice in writing of its desire to renew the Tenancy, the Landlord shall grant to the Tenant a tenancy in respect of the said Demised Premises for such further term of three (3) years commencing immediately upon the expiration of the Tenancy (hereinafter referred to as ‘the Second Tenancy’) subject to all other aspects to the same terms and conditions as are herein contained at a monthly rental to be determined as follows:
(i) Being a rent to be mutually agreed upon by the parties hereto based on the fair market rent for similar premises in the vicinity then prevailing or
(ii) Being a rent in an amount not exceeding fifteen per centum (15%) increase from the rent of Second the Tenancy;
whichever shall be lower ALWAYS PROVIDED that in the event that the parties hereto shall be unable to reach mutual agreement on the rent payable under Clause 4.0(d)(i) above then subject to Clause 4.0 (d)(ii) above the fair market rent shall be determined by Messrs. C.H. Williams Talhar & conclusive and shall be binding on the parties hereto…”
- The appellant submitted before us that the exercise of the option was a question of law and we could hear this appeal even though this question was not raised at the High Court. Conversely, the respondent’s counsel ventilated that the issue before us hinged on facts thus barring us from hearing this appeal. We alluded to the case of Lim Geak Liang v EastWest UMI Insurance Bhd  3 MLJ 517, and decided that we could proceed with the matter. The Federal Court there had opined that:
“…When a question of law was raised for the first time in a court of last resort, upon the construction of a document, or upon facts either admitted or proved beyond controversy, it was not only competent but expedient, in the interest of justice, to entertain the plea (Gulwant Singh v Abdul Khalik  2 MLJ 55 followed).”
- Having perused the notes of proceedings and the grounds of judgment we found that the learned judge failed to discuss the real issue. We found that the learned judge failed to determine whether the new tenancy agreement was a monthly agreement or a three years agreement. Further we found that the learned judge had misdirected himself when he decided that it was implied by the conduct of the parties that they had reached a mutual agreement on the amount of rent payable.
- From the facts, and pertaining to the new tenancy agreement, we found that the parties had yet to agree:
(a) on the other aspects of the terms and conditions to the mutual satisfaction of both parties;
(b) whether to increase the rental by 5%;
(c) whether to include the new provision as requested by the appellant; (d) on the agreed monthly rental; and
(e) despite parties failing to reach mutual agreement on the rent payable, Messrs C H Williams Talhar was not consulted to determine the binding fair market rent.
- With the fundamental conditions left unsatisfied it could not be said that a three years tenancy agreement had been reached. Unless the acceptance corresponds with the offer of the appellant, let alone never at anytime mutually agreed upon, it could not be said a binding contract had been sealed in this case (United Dominions Trust (Commercial) Ltd v Eagle Aircraft Services Ltd  1 All ER 104). The Singapore Court of Appeal in Teo Siew Peng v Guok Sing Ong & Anor  1 MLJ 132 had succinctly said: It is settled law that an option is a unilateral contract which does not become binding on the grantor of the option until the exact terms of the option are complied with.
- Before us therefore was only a monthly tenancy, with this monthly tenancy defence sufficiently laid down in the statement of defence. That being so a one month notice was sufficient in the circumstances of the case.
- Based on the above grounds, we were satisfied that the respondent had failed to establish its case on a balance of probability hence allowing the appeal with costs. We meted down the consequential orders in the following manner:
(a) the appeal be allowed with costs;
(b) the respondent to refund RM173,336, a sum paid earlier by the appellant pursuant to an order dated 28 July 2000;
(c) the deposit be refunded to the appellant; and
(d) interest be charged on the RM173,336.
Appeal allowed with costs.
Source: RHB Bank Bhd v Hiap Leong Trading Sdn Bhd  5 MLJ 326. Tengku Baharudin Shah, Suriyadi and Heliliah JJCA. Court of Appeal Putrajaya
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