SHELL MALAYSIA TRADING SDN BHD v 1. ) ABDUL LATIFF BIN HALIM 2. ) MAHAYUN BINTI ABDUL HALIM

Case Significance

Illustrates how the courts enforce a lessee's validly exercised option to renew a lease by specific performance under the Specific Relief Act 1950, holding lessors bound to grant the renewed term despite the introduction of new conditions.

This High Court decision at Ipoh, delivered by Moses Susayan J, concerns a lessee's right to renew a lease of land in the Kampar district of Perak, held under a state lease, on which a service station had long operated. The plaintiff, Shell Malaysia Trading Sdn Bhd, had held the land under a lease and associated lease supplements originating in 1994, and the interest of the original landowner had since passed to the first defendant, with the second defendant also a lessor. The originating summons sought to enforce the plaintiff's option to renew the lease, invoking sections 11(1), 18 and 51 of the Akta Relief Spesifik 1950 (the Specific Relief Act 1950) and provisions of the Kanun Tanah Negara (the National Land Code). The defendants resisted and counterclaimed.

The issues were whether the lessee had validly exercised its right of renewal, whether the lessors were bound to grant the renewed lease, whether the introduction of new terms or dealership conditions affected enforceability, whether the renewal right survived the expiry of the original term, and what significance attached to the lessee's continued possession of the land. The Court construed the renewal covenant and examined whether the lessee had done what was required to exercise the option, and whether the lessors could resist specific performance by pointing to proposed new terms.

The Court found in the plaintiff's favour. It granted the substantive prayers of the amended originating summons — prayers (1), (2), (4) and (5) — with costs of RM5,000 subject to allocatur, and dismissed the defendants' counterclaim; a related enclosure was rendered academic by that disposal, and another was dismissed with no order as to costs. The judgment is a useful illustration of how the courts enforce a lessee's validly exercised option to renew a lease by specific performance under the Specific Relief Act 1950, holding lessors bound to grant the renewed term and declining to let the introduction of new conditions defeat an option that the lessee has properly exercised.