UEM Land Berhad v Mohd Khalid Bin Mohd Noor

Case Significance

Confirms that a "notwithstanding" early-termination clause operates independently of a default clause, permitting unilateral termination on notice without reasons, and that legitimate expectation is confined to public law and section 29 of the Contracts Act 1950 is not engaged in such a private tenancy dispute.

This Court of Appeal decision concerns the construction of an early-termination clause in a three-year tenancy for turf farming, and whether the landowner could terminate unilaterally without giving reasons. The respondent had proposed to a subsidiary of the appellant landowner that he rent a plot of land to plant cow grass, supplying the grass to the group's development project at a discounted rate, and was appointed operator of a turf farm under a tenancy agreement. When the appellant terminated the tenancy early, the respondent sued for wrongful termination, and the High Court found in his favour. On appeal, the central question was the relationship between the clause permitting early termination (clause 15) and the clause dealing with termination for default (clause 6), and in particular the effect of the "notwithstanding" wording in the early-termination clause. The Court held that clause 15 operates independently of clause 6, so that the landowner could terminate the tenancy on giving three months' notice without assigning reasons and without the tenant's consent, giving the word "notwithstanding" its plain and ordinary meaning. It held that the termination was valid, and that the surrounding context, including anti-corruption investigations, did not render it wrongful. The Court further held that the doctrine of legitimate expectation, on which the tenant relied to require the landowner to purchase the turf he had planted, is confined to matters of public law and does not apply to a private-law contractual dispute, and that section 29 of the Contracts Act 1950, which voids agreements absolutely restricting a party from enforcing rights, was not engaged. Allowing the appeal with costs, it set aside the finding of wrongful termination. The judgment is a useful illustration of how a "notwithstanding" early-termination clause is construed as operating independently of a default clause, and of the inapplicability of legitimate expectation to private contracts.