Group 3 TUTORIAL 2 : LEASES AND TENANCIES IN

MALAYSIA
Questions

1. Rahul bought three plots of land (Lot Rose, Orchid and Sunflower) in 2000. In
2001, Rahul entered into a lease agreement with Akshay for Lot Sunflower. The
lease was for a term of 20 years with a monthly rent of RM10,000.00 per month.
Rahul’s solicitor registered the lease with the land office.

In 2002, Rahul built a house with an annexed unit on Lot Orchid. He moved in
with his wife, Anjali. As both Anjali and he wanted an additional income, they both
agreed to rent out the annexed unit to Anjali’s uncle, Vijay. There was a verbal
agreement between Vijay and Rahul, that he would pay a monthly rent of
RM1,000.00 per month indefinitely.

Rahul had decided to rent Lot Rose to Taj in 2002. Clause 2 in the lease
agreement indicated that Taj could build a house on Lot 2 but was to remove the
house once the lease ended. Taj, short of money built a house out of wooden
planks and corrugated iron roofs. Taj died in 2010, and his daughter continued to
occupy the house.

Recently, Rahul requested Vijay to vacate the annexed unit. However, Vijay has
refused, stating that he has a right to continue leasing the annexed unit. Rahul
intends to sell Lot Rose but Taj’s daughter is refusing to move out of the property,
citing that her father and Rahul had an oral agreement that Taj could live in the
house built on the property indefinitely.

About two weeks ago, Rahul received a letter from Akshay’s solicitor, stating the
following ;

a. That he is enforcing the “option to renew” in the lease agreement

 and is extending the lease for a further 10 years ;

b. That Rahul owes him RM10,000.00 for all rates and taxes paid in
the last 5 years ;

c. That Rahul owes him RM50,000.00 for all repairs undertaken on

the property;

d. That the rental for the property is to be reduced to RM5,000.00 as

rental of the property should be fixed in reference to the square feet of the
building only.

Rahul has come to see you with the above issues. Advise him.

Shop Lot 1 - Sunflower

a. - Adele

OPTION TO RENEW
The issue here is whether Akshay has an option to renew. Generally, an option to
renew is an offer made by the lessor which cannot be withdrawn , provided that
the terms and conditions of the offer are duly and strictly complied with. In Voo
Min En v Leong Chung Fatt, it was held that an option to renew is a privilege,
which is different from a right to renew. Therefore, it is not automatic that Akshay
can renew the lease agreement.

However, on the facts it is unclear whether such an option was agreed or stated in
their lease agreement. In Zainal Abidin v Century Hotel Sdn Bhd, it was held
that the option clause did not give rise to any legal obligation until and unless
written notice had been given and rent agreed upon by the parties according to the
terms of the option clause. On the facts, option to renew was not even mentioned
by either Rahul and Akshay, therefore arguably there is no option to renew.

In Luggage Distributors v Tan Hor Teng, Gopal Sri Ram held that if there is no
mention of an option to renew, then it can be implied as a term into the agreement.
Nevertheless, the court in Wisma Sime Darby v Wilson Parking disagreed with
this decision and held that the courts could not make a bargain for the parties.
Therefore, arguably Akshay may not be able to renew the lease agreement, as the
decision is up to the landlord i.e Rahul.

B. Anith
 - Rates and taxes
- Section 231(1)(a) NLC: If there are no express provisions, it is implied
that the lessee is to pay all rates, taxes and outgoings falling on the
property.
- Khoo Ee Liang v Henry Waugh Ltd [ 1934]: all rates and taxes are
payable by the lessee and consequently the lessor was entitled to
recover the said sum from the lessee. Hence,
Akshay is not entitled to recover the rates and taxes.

C. Kit Yee

Repairs and undertaken on the property:

Rahul- lessor

Lessee: Akshay

-That Rahul owes him RM50,000.00 for all repairs undertaken on the property;

- Role of Lessee: S231(1) (b) NLC - To keep the property in repair.

- Lurcott v Wakely [1911] 1 KB 905 - Repair involves the renewal of a
small or minor part of the premises, by replacing the decayed part
with a new one. The covenant to keep in repair includes the
covenant to keep and protect the premises from being infested
with bugs, insects and other pests- s5 and 233 NLC.
- This means that the repair undertaken by lessee is only minor
repair. All the expenditure for minor repairs should be undertaken
by Askhay.
- However, RM50,000 is a large amount of repair fee, it should
depends on what the repair works done by the lessee to determine
whether Rahul need to bear the cost
- Ashkay also have obligations to repair the minor parts unless there
is an evidence the repair is not minor.
Role of lessor:
- S232(1) (b) NLC - The repair of the roof, the main walls and rain and any
common passages and installations.
D. Fedryna

- The next claim by Akshay is to reduce the rent based on the

squarefeet of the building.
- Under the rights and liabilities of express and implied provisions of a
lease, in terms of rent, the case of Goh Eng Wah v Yap Phooi Yin
[1985] states that the Privy Council held it follows that the rent must
be fixed by the reference to the land and the building thereon”
- Referring to the facts, the rental amount of Lot Sunflower shall be
with reference of the land and the building.
- Thus, Akshay cannot enforce a claim to only base rent on the
squarefeet of the building

Lots Orkid -

Valid Lease ? - Iylia

- Intention to create a lease between parties

Intention test :

- Parties must have intended to create a lease and not a license

- Whether intended that the lessee or tenant was granted exclusive

possession of the premises or have only personal privilege or sole occupation of
the premises

Woo Yew Chee v Yong Yong Hoo [1979]

Written agreement allowing the respondent to remain on the premises for 10

years while paying rent. Both the respondent and the appellant landlord would
share the kitchen, bathroom and toilet while the appellant held the key. – FC held

FC decision in Innab Salil & Ors v Verve Suites Mont’ Kiara Management
Corporation [2020] MLJU 1563

FC refused to affirmed which test is to be adopted. Except to say that both test
emphasis the requirement of exclusion possession. However, whether an
occupancy is a tenancy or license will depend on the particulars facts and
circumstances of the case.
A lease or tenancy must be granted for a definite period that is able to be
ascertained

S221 (3) NLC – For the whole property 99 years max, For part of the property 30
years max

- There is also an element of consideration in the form of payment or rental

Siew Soon Wah v yong Tong Hoo [1973]

Muhammad Mustafa v Kandasami [1979]

Reaffirmed Woo Yew Chee and stated that exclusive possession no longer the
test and each case’s facts must be considered

Equity Corportaion v Thye Sun Quarry [2002] – importance of payment of rental

Application :

- Due to the decision in Innab Saltillo & Ors v Verve Suite, the test to
determine tenancy or license would depend on the facts of the case
- Case Law – Kalimuthu v Kandiah [1976] – The respondent’s father was
given permission to build a house on the owner’s land on the condition for
payment of rent. The sons owner then agreed to sell the land to the
respondent’s father on the condition of obtaining letters of administration.
After the death of the father, the respondent then went on to live there with
the claim that he had purchased the land form the owner’s on and gave
notice to quit.
-
- It was held in the FC that the father was only a licensee when he built the
house on the land and that the contractual license had expire with his
death. The terms and conditions of the house being built was nowhere to
be found and there was only an element to pay rent.
-
- FC held that the father only had personal privilege and no interest over the
land.
-
- Application : Vijay only has a personal privilege and no interest on the land
as there was no written agreement regarding the terms and conditions of
the lease. There was only an element of rent payment over a verbal
agreement between Vijay and Rahul. Hence there was no lease

Equitable Lease - Job

 Even though a lease is not registered, it does not necessarily mean that it does not create
an interest in the land, This is shown in the case of Margaret Chua v Ho Swee Kie & Ors ,
where the court held that although the agreement was void as a lease for lack of
registration, it was valid as an agreement for a lease enforceable in equity. S& M
Jewellery Trading Sdn Bhd v Fui Lian showed that uWhere appropriate, equity may
treat an agreement for lease as an equitable lease , that is treat the unregistered lease as
registered and compel specific performance against the proprietor.

However, the case of Lee Ah Low shoed that there are limits to an equitable lease when
the FC held that written instrument , a lease of 80 years which was not registered was void
as a lease and that it can be terminated by a valid notice to quit.uHere the FC quoted
Woodfall on Landlord and Tenant “ Such contract does not itself create a legal relationship
of landlord and tenant, but it has long been established that so soon as the tenant enters
under the agreement the relationship arises and he becomes a tenant at will ….. Changes
into a tenancy from year to year, upon the terms of the intended lease… not consistent
with yearly lease .. Can be terminated by a valid notice to quit.”

In application, it can be seen that the case of Lee Ah Low would apply and as such the
court would most likely find that Rahul can issue a notice to quit and evict the tenant.

Lot Rose - Zara/ Isobel

Correct answer:
- Because he was encouraged to spend money on the property, a tenancy coupled
with equity was created. This was merely the action.
- Encouragement, expenses, expenditure
- If it is not a permanent house, there is no tenancy agreement. Needs brick and
cement.
- As the house was to be removed upon end of the lease of the land, there was no
tenancy agreement.

2. Malcom owned several investment properties ( Property A, B and C) across

 Kuala Lumpur. Jack, a digital nomad had decided to stay in Kuala Lumpur for a
few months at the beginning of 2020. Malcom entered into a License Agreement
with Jake to rent the Property A for RM1,500.00 a month. Jake was meant to
stay in Property A for only 3 months. However, due the pandemic, he could not
leave Malaysia. He continued to stay in the apartment but after six months as his
work dried up, he stop paying the rent. He now refusing to vacate the property,
insisting that he has a valid lease in the property.

Malcom had a 10-year lease agreement for Property B with Judy for rent of
RM1,000.000 per month. Property B was a pre-war shophouse that required
continuous maintenance. After three years of living on the property, Judy,
complained to Malcom that the roof was leaking. However, despite numerous
reminders, Malcom had failed to fix the roof for over 7 months. Judy has since
stopped paying the rent for Property B.

Malcom rented Property C to Joseph. The tenancy agreement stated that

Property B was to be rented for 2 years for a monthly rent of RM1,200.00. In view
of the pandemic, Malcom had decided to sell the property. He sold the property
to Michelle. Michelle continued to collect the rent from Joseph for nearly 6
months. Michelle has recently issued a notice to quit to Joseph but Joseph is
refusing to vacate the property.

Advise Malcom and Michelle.

Prop A

Valid Lease - Lucius - Rent/ Tenure

Issue: Does Jake have a valid lease in the property?

3 elements to create a valid lease agreement:

(i) Intention to create a lease/tenancy between parties

(ii) Lease/Tenancy must be granted for a definite period

● S.221(3) NLC: Maximum period of lease for the whole property – 99
years ; Maximum period for part of the property – 30 years max.
● Siew Soon Wah v Yong Tong Hong [1973]: The maximum period for which
a lease may be granted in respect of a part of any alienated land is 30
years.

(iii) The letting must be in consideration of payment or rent

● Rent under common law is defined as the recompense paid by the tenant
 to the landlord for exclusive possession of corporeal hereditaments.
● It is either expressed or implied on the part of the lessee in the agreement
that he/she will pay rent at the times reserves and in the manner specified.
● Kandasami v Mustafa [1983]: A clause in the agreement for the payment of
“rent” renders the agreement a lease agreement, and not a licence.
● Equity Corporation Sdn Bhd v Thye Sun Quarry Sdn Bhd [2002]: By
defaulting on payment, a person breaches the lease agreement.
- Rather than a licence agreement, the agreement between M & J seems to
be more of a tenancy agreement since payment of rent for RM1500 per
month is mentioned in the agreement. - Kandasami v Mustafa [1983]
- Jake was paying rent during the first 3 months, hence the 3rd element of
payment of rent as consideration is fulfilled. If the other 2 elements of
creating a valid lease agreement are fulfilled, there is a valid lease
agreement.
- However, Jake stopped paying rent afterwards while still continuing to stay
in Property A, and that is seen as breaching the lease agreement. - Equity
Corporation

Exclusion possession - Maheswary

Wilson v Travers [1901] 1 Ch 578.

It has been established under the Common law that a lease must have exclusive
possession of the land or premises.

Yeap Mah Ee v Kuan Kum Chiew [1988] 2 MLJ 389 at 393, Edgar Joseph Jr J: - ‘the
whole of the tenancy agreement must be looked at, whatever the labels used, to
see if it has conferred and imposed upon the grantee in substance the rights and
obligations of a tenant and, on the grantor, the rights and obligations of a landlord
and, if so, it must be treated as a tenancy agreement as distinct from a licence’.

Woo Yew Chee v Yong Yong Hoo [1979] 1 MLJ 131 at 133–134, FC , Raja Azlan
Shah AG CJ: - The test ‘is no longer a question of words but substance. It is no
longer a question of whether the occupation is permanent or temporary. - The
ultimate test is the nature and quality of the occupancy: whether it is intended
that the occupier should have a stake in the premises or whether he should only
have a personal interest. [I]n any event exclusive possession is no longer a
decisive test. - The nature and quality of occupancy must be looked at with a view
to determine its true character’. Malayan Banking Bhd v PK Rajamani [1994] 1
MLJ 405 at 410, SC , Dzaiddin SCJ (referring to Woo Yew Chee v Yong Yong Hoo -
‘The law will always look beyond the terminology of the document to the actual
facts of the situation and it is no longer a question of words but substance’

Prop B

Shirley - Rights of Judy as a lessee under the lease agreement

- The lease agreement between Malcolm & Judy is valid as long as the 3
elements to create a valid lease are complied with.
- It is highly likely that there was intention to create a valid lease/tenancy
between Malcom & Judy.
- The lease agreement between M & Judy specified a period of 10 months, so
this element is satisfied.
- There is consideration of payment of rent for RM1000 per month.

● Roles of lessor: (this part is main point)

○ S.232(1)(b) NLC - The repair of the roof, the main walls and rain
and any common passages and installations.
○ S.232(1)(c) NLC - If the lessor rents out property that is not fit for
occupation, the lessee has a right to not pay rent until the property is
fixed.
○ S232(1)(c)(i)(ii) NLC - If after 6 months & the lessor has yet to
repair the property, the lessee can give one month's notice in writing
to the lessor to terminate the lease.

- The lease agreement between M & Judy must be registered under S.227
with Form 15A for protection under the NLC.
- Malcom as the lessor has the responsibility to repair the roof of Property B
as stated in S.232(1)(b) NLC.
- Judy has a right not to pay rent under S.232(1)(c) NLC since Malcom had
failed to carry out his duties under S.232(1)(b) to fix the roof despite
numerous reminders by Judy over a period of 7 months.
- Judy may choose to terminate the lease by giving one month’s notice in
writing to Malcom since Malcolm failed to repair the roof for more than 6
 months, as provided under S.232(1)(c)(i)(ii) NLC.

Property C

Nicole

The issue here is whether Michelle could end the tenancy agreement of Joseph
through a notice to quit.

● S.223 NLC: A tenancy agreement is non-registrable.

● Since the tenancy is not registered, there is no protection provided under the
NLC.
● Protection of a tenancy is done via endorsement.
● S.316(1) NLC: A tenant can endorse his claim on the register document of
title to the land.
● Application for endorsement is made through writing & submitted to the
land registrar.
● However, S.213(1)(a) NLC: If the tenant fails to endorse the tenancy on the
register document of title, such tenancy will not bind any subsequent
transferee of the land.
● Than Kok Leong v Low Kim Hai [1983]: The tenancy was not binding on
the Plaintiff (new purchaser) under s213(3) NLC as it had not been
endorsed on the register document of title.
- If Joseph has protected the tenancy agreement via endorsement on the
register document of the title, the tenancy agreement will be binding on the
new purchaser of the property, Michelle.
● Termination of lease or tenancy by a valid Notice to Quit will only be
possible where the parties have expressly provided for such a contingency
in their lease agreement.
● The NLC does not have any form or provision for a Notice to Quit , so
reliance is considerably placed on the words of the lease agreement itself as
to the prescribed manner of giving such notice.
● Ong Heng Hwa Realty Sdn Bhd v Teoh Chai Siok [1977]: The plaintiff
(landlord) was accepting the rent from the defendant, so it is proof that the
plaintiff had due notice of the tenancy agreement. A purchaser who had
notice is bound by the interest if any of a tenant in possession. The plaintiff
could not evict the tenants with a notice to quit and had to adhere to the 40
years tenancy agreement.
- Michelle collected rent from Joseph for nearly 6 months, which shows that
Michelle as the new purchaser of Property C, had due notice of the tenancy
agreement between the previous owner (Malcom) and Joseph & is bound
 by the interest of Joseph.
- Since Michelle is bound by the interest of Joseph, she cannot evict Joseph
with a notice to quit & must adhere to the specified period of the tenancy in
the tenancy agreement, which is 2 years.
- However, Michelle may want to consider other ways to end the tenancy
agreement:
● Effluxion of time - A lease can be ended upon expiry of the agreed period.
● In a situation where the new owner has due notice of the tenancy
agreement, he/she may rely on periodic tenancy to give a notice to quit to
the tenant by looking at the rent payment period of the tenant (Joseph).
● The notice of quit must depend on the monthly rent or yearly rent. Thus,
here the notice to quit must be given one month before as he paid monthly
rent.
● S.206 NLC: Relief provided under contract (specific performance).

3. Has the House of Lord’s decision in Street v Mountford has had a minimal
impact on the recognition of leases in the Malaysian context.

Discuss.

Ying Sheng/ Kai Ni

The National Land Code 1965 does not spell out some of the

essential elements of a lease, such as exclusive possession. The definition of a

lease in s 5 of the Code is not particularly helpful for this purpose. Again,

recourse must be had to English land law for the essential characteristics

of a lease. To constitute a lease, the occupier must be granted exclusive

possession for a fixed or certain periodic term in return for a payment. This

is subject to special circumstances which may negative any intention to create

a lease or tenancy.
The Federal Court, in Woo Yew Chee v Yong Yong Hoo, laid down the

principle that whether a particular transaction amounts to a lease depends on

the intention test. The nature and quality of the occupancy must be looked at

to determine whether it is intended that the occupant should have an interest

in the premises occupied or whether he should have only a personal privilege.

Having regard to the facts and evidence before it (such as the terms of the

relevant agreement), the Federal Court found that the intention of the parties

was to create a relationship of landlord and tenant. The intention test was also
applied in the subsequent Federal Court case of Mohamed Mustafa v
Kandasami.

It is to be noted that the above Malaysian Federal Court cases were

decided before the intention test was overruled by the House of Lords in

Street v Mountford.

Subsequent Malaysian cases decided after Street v Mountford have used the
reformulated test laid down in that case which look at exclusive possession. -
CA’s decision in Court of Appeal case of Lim Cheang Hock v Tneh Poay Lan
[2007] 4 MLJ 228 and Tan Chee Lan v Dr Tan Yee Beng [1997] 4 MLJ 170

so there are cases which says to look at EP and cases that look at intention, the
conflict is ultimately settled in Innab Salil & Ors v Verve Suites Mont’ Kiara
Management Corporation [2020] MLJU 1563

- Whether there is exclusive possession

- The nature and quality of the occupancy -analysing the terms of any
written or oral agreement between parties as to whether they intended for the
nature and quality of the occupancy to be more consistent with the rights of an
occupier under a tenancy.----whether parties intended the occupier to have
certain rights and obligations which are consistent with that of a tenant under
tenancy laws – including but not limited to control of rent, and other relevant
protections sufficient to create an interest in the land.

- Not to look at labels but to look at the substantial rights of the party under
the agreement
 this case adopted both intention and EP test. Does street v mountford have
minimal impact? It is minimal in the sense that Malaysia has developed its own
test in determining valid leases but it is also significant in laying down the basis of
the test i.e the element of exclusive possession and intention as innab salil didn’t
reject either test.

4. Identify the key legal issues in a landlord and tenant relationship and examine the
adequacy of the existing legal framework.

5. A client has come to see you for advise on drafting a lease

agreement in Malaysia. Advise him.