TEN-SEE AND LEARN: Key Takeaways on Tenancy Agreements, Case Studies and Enforcement During Covid

adha selvi
associates &
Adha Selvi & Associates
TENAN-SEE AND LEARN

A. What is a tenancy vs lease
B. What are the conditions that need to be in a tenancy agreement
C. Case Studies on importance of Tenancy and conditions
D. Enforcement in times of Covid.
E. Prihatin - must a landlord follow and give reduction?

TENANCY VS LEASE
Renting a property is straightforward correct?
• Landlord – must own property
• Person renting wants to rent property
• Person will pay money for property on a monthly, quarterly
or annual basis for x period of time
• Whether the rental includes fixtures and fittings or just the
bare unit
So is the person renting a tenant or a leasee?

TENANCY VS LEASE
Difference between Tenancy and Lease is the DURATION OF
THE RENTING PERIOD
• Less than 3 years = Tenancy
• More than 3 years = Lease
Important because Tenancy <3 years is exempt from

registration (1)
If more than 3 years, usually will need to register the lease on

the Title – so there is additional cost involved but rights are
more protected. (2)
TENANCY CONTENT
Substance is Key!
What to include in a tenancy?

• Details, details, details
• Landlord and Tenant
• Name as per IC
• IC number
• Rent/Deposit
• How long?
TENANCY CONTENT
• Collection!!
• When must the tenant pay by?
• Is it first of the month, first week, 15th?
• How are they to pay?
• Cash or Cheque?
• Inter bank transfer
• Consequence of nonpayment?
• Grace period
TENANCY CONTENT
• Other obligations
• Preliminary conditions – I.e. Consent if needed
• Certificate of fitness
TENANCY CONTENT
• Termination
• When can a tenancy be terminated?
– Breach of contract
- Frustration – COVID -19 causing frustration
• How to terminate?
• Duration of notice and deemed service
• Renewal
• Renewal by notice
• Renewal by agreement
CASE STUDY 1:
Tenancy Agreement is Important
3 Two Square Sdn Bhd v Perbadanan Pengurusan 3 Two
Square & Other Appeals [2021] 4 MLRA 257 : A Court of
Appeal decision
o Is drawing a tenancy very important?
o Perbadanan (landlord) tried to claim from 3 Two Square (tenant) rent
from August 2008 to April 2012.
o 3 Two Square was using the property since 2008
o In 2012, there was written agreement that rent would be RM2,400.00
per month. 3 Two Square picture from Wikimapia.org
CASE STUDY 1:
Tenancy Agreement is Important
3 Two Square Sdn Bhd v Perbadanan Pengurusan 3 Two
Square & Other Appeals [2021] 4 MLRA 257 : A Court of
Appeal decision
o Perbadanan claimed rental as they were in occupation since 2008 and 3
Two Square just refused to pay.
o Court said, no finding of tenancy agreement implied even though
verbally 3 Two Square agreed to rent but since rental was not codified
till 2012 when a tenancy agreement was agreed.
o The Court held that 3 Two Square need not pay rental from 2008 till 3 Two Square picture from Wikimapia.org
2012.
CASE STUDY 2: Ensure there is a CF!

SSN MEDICAL PRODUCTS SDN BHD V CHIN HIN HELMETS SDN
BHD
o SSN is the Tenant, Chin Hin is the landlord
o Landlord bought property in auction, SSN already tenant
o Landlord got VP, Tenant didn’t want to leave
o Landlord got writ of possession, Tenant left (some 20 months after VP
was granted)
o Need to assess damages
o Property has 5 story building and one warehouse
o Warehouse has CF, Building don’t have
o HC ordered SSM to pay rentals for the whole property
CASE STUDY 2: Ensure there is a CF!

SSN MEDICAL PRODUCTS SDN BHD V CHIN HIN HELMETS SDN BHD
o SSN appealed to Court of Appeal
o Said because Building don’t have CF, cant be asked to pay for building
o Offered nominal rental as compensation (paying for 20 months their rental only)
o Landlord said Tenant used the whole property
o Even though didn’t have CF, MBPJ never stopped any utilities (So User
Principle should apply)
o **User principle is if you use, you must pay
o Court of Appeal said Tenants correct. Despite dismissing SSN’s claim, the
Court directed the Landlord to return the rentals
o If building is illegal, can’t enforce rental
o This is even if they use the whole property
o Awarded RM 258,000 (10% of original amount)
CASE STUDY 3:
Director can be personally liable when tenancy is
with a Company?
Suhaini Mohammad v Pandan Hotel Sdn Bhd & Anor
o Suhaini was tenant to Pandan
o Suhaini’s company signed tenancy and Suhaini signed as a director
o Before Pandan sued the company, Suhaini had sold his shares and
resigned
o Pandan got judgement for default on rental against Suhaini
o Court found that Tenancy Agreement contains the definition that Tenant
“includes personal representative, successors in title and permitted
assigns” and also that liability “shall be joint and several”.
o So Suhaini was deemed liable
CASE STUDY 3:
So what did we learn
Suhaini Mohammad v Pandan Hotel Sdn Bhd & Anor
o Define the Tenant
o If for the Landlord – put that Tenant includes personal representative
so that director can be liable
o Protects landlord so that if Company Bankrupt, can still claim against
the Director
o If for Tenant, do the opposite
CASE STUDY 4:
Can a minority partner tenant force a Landlord not to
terminate a contract?
Ang Pi Kui & Anor v Lee Wee Teck & Anor
o Ang is a partner in a Kopitiam Partnership (3 people)
o Kopitiam has tenancy with Defendant (Landlord)
o Tenancy was from 01.09.2017 – 31.08.2020
o Option to renew subject to three months written notice
o Partnership want to break up (got court case)
o Majority of partners in August 2020 told Defendant don’t want to renew
and partnership breaking up
o Defendant said okay
CASE STUDY 4:
Can a minority partner tenant force a Landlord not to
terminate a contract?
o Ang, who is a minority shareholder wrote and said “No, we want to
renew” and paid tenancy rental to the Lanldord
o Defendant wrote back saying “No, no tenancy – vacate by October 2020.
o Ang paid the November rental and it was accepted.
o Landlord still said no they must leave
o Ang filed case against the Landlord on the basis that the Landlord must
accept tenancy renewal and cannot terminate.
CASE STUDY 4:
Accepting Rental ≠ Renewal of Tenancy
o Contract law basic:
o Offer + Consideration + Acceptance = new Agreement
o Ang paid money and Landlord Accepted money
o So there is a tenancy?
o Court said no. Because:
o Renewal was not done with written notice 3 months before expiry
(as per tenancy); and
o Landlord had given proper notice (the September vacating notice)
o Just because accepted rental does not equal full tenancy (especially since partnership didn’t want it).
Instead, it was only monthly renewal
Termination during COVID-19:

COVID-19 Act Must Be Read as a Whole
o Also, first time a Tenant raised Covid-19 Act. Under act, inability to
perform obligation (like writing in to renew) does not mean Landlord can
use this to their advantage
o FYI – this provision has been extended to December 2021
o However, Court said that because Act also says where termination
happened before 23.10.2020, then termination is valid. (Section 10 Covid-
19 Act).
o So Tenant cannot just claim Covid-19 Act and do whatever they like
Enforcement in Times of COVID-19

The 2021 Embargo
Section 7 of the COVID-19 Act 2020
“The inability of any party or parties to perform any contractual
obligation arising from any of the categories of contracts specified in the
Schedule to this Part due to the measures prescribed, made or taken under
the Prevention and Control of Infectious Diseases Act 1988 [Act 342] to
control or prevent the spread of COVID19 shall not give rise to the other
party or parties exercising his or their rights under the contract.”
• Has been extended to 31 December 2021

• Court has tended to interpret this liberally
Enforcement in Times of COVID-19

Tenancy collection vs Writ of Distress
• So tenancy as a contract may not be enforceable. What about a Writ of Distress?
• Writ of Distress not applicable for months between 18 March 2020-31 August
2020
• Now in August 2021 can try to claim.
Vacant Possession
§ No real definition and/or guidance on whether COVID-19 Act allows or disallows
application for Vacant Possession. But it is an application under a Writ for a
breach of contract.
§ So in practice unsure as to whether court will or will not allow
PRIHATIN: Must a Landlord Give Reduction?

**IT IS VOLUNTARY – DON’T HAVE TO GIVE
How does PRIHATIN work?

• For SME Businesses who are tenants
• If Landlord gives 30% reduction, they can claim the same amount on taxable
income as a deduction.
• Example:
• RM 1,000.00 rent
• RM 300.00 reduction
• Actual collection is RM 700.00
• Taxable income is RM 400.00 (RM 700 – 300)
• So the Amount given as a reduction is also given tax free to the Landlord
Thank you
Thank you – Any Questions?

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adha selvi

TENAN-SEE AND LEARN

B. What are the conditions that need to be in a tenancy agreement

C. Case Studies on importance of Tenancy and conditions

D. Enforcement in times of Covid.

E. Prihatin - must a landlord follow and give reduction?

So is the person renting a tenant or a leasee?

Important because Tenancy <3 years is exempt from

If more than 3 years, usually will need to register the lease on

What to include in a tenancy?

CASE STUDY 2: Ensure there is a CF!

CASE STUDY 2: Ensure there is a CF!

Termination during COVID-19:

Enforcement in Times of COVID-19

• Has been extended to 31 December 2021

Enforcement in Times of COVID-19

PRIHATIN: Must a Landlord Give Reduction?

How does PRIHATIN work?

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