ORCHARD CIRCLE SDN BHD v 1. ) LEE KIM KOK 2. ) CHIN WEI KIEN 3. ) ONG TAI SING PENCELAH Fortune Venture Managment Sdn Bhd

Case Significance

A commercial-tenancy dispute over renewal by conduct, delivery of vacant possession and double rental for holding over, resolved in the landlord's favour with sums, interest and costs.

This High Court decision concerns a landlord's claim arising out of a tenancy of commercial land known as Kajang Putra, let for a three-year term from December 2013 at a monthly rental of RM38,000, together with disputes about what happened after the term expired. The tenancy had been entered into by parties acting on behalf of a management entity, and a further party later joined that entity as a partner. The central factual questions were whether the tenancy had been renewed upon its expiry — a matter to be inferred from the conduct of the parties — and, following the subsequent termination of the tenancy, whether vacant possession had been delivered up in accordance with the contract.

Several distinct legal issues followed from those facts. The first was whether the claim for double rental was justified: double rental is payable only where a tenant holds over after the tenancy has ended, so it depended on whether vacant possession had been delivered to the landlord's satisfaction or the tenant had wrongly remained in occupation. The second concerned the contractual mechanism for the utilisation of the security deposit against outstanding sums, and whether the landlord was required to have recourse to that clause. The third was the propriety of the unilateral imposition of late-payment charges on outstanding rent, and whether such charges could be levied without a contractual foundation.

The Court found in the landlord's favour and entered judgment for the sums due, together with interest at 5% per annum on those amounts from the date of judgment until realisation, and ordered the defendants to pay the plaintiff costs of RM20,000. The judgment is a useful illustration of how the courts determine whether a commercial tenancy has been renewed by conduct, when a claim for double rental for holding over will succeed, and how contractual provisions on deposits and late-payment charges are applied in a landlord-and-tenant dispute.