Landlord can claim double rent from the tenant upon the expiry of the notice to quit if the tenant failed to deliver vacant possession.
Facts of the Case
Appellant was the registered owner of a commercial building known as Rohas Perkasa in Kuala Lumpur. Both respondents were tenants of the appellant. The first respondent occupied the 11th floor and 12th floor. The second defendant the 14th floor. The 11th floor tenancy expired on 30 April 2009, the 12th floor on 31 March 2009 and the 14th floor on 31 January 2011.
It is common ground that the parties were at all material times in a state of negotiations since January 2009 for a fresh tenancy. The negotiation went on for more than two years. However, they were unable to reach an agreement on the essential terms. Through appellant’s letter dated 19 August 2011, the appellant gave the defendants notice to determine their tenancies, to quit and deliver vacant possession of their respective demised premises on or before 1 October 2011. Defendants replied through their letters dated 26 august 2011 that they agree to determine their tenancies but they request for a fair and reasonable period to quit and deliver vacant possession of the respective demised premisses to the plaintiff. The defendants redelivered vacant possession of the respective demised premises to the plaintiff on 31 October 2011.
The plaintiff claimed double rental for holding over the demised premises after the expiry of their tenancy agreements based on section 28(4)(a) of the Civil Law Act 1956 (“CLA 1956”) and also section 8.42 and 8.43 of their tenancy agreements. The High Court dismissed the appellant’s claim and allowed the respondent’s claim for refund of their rental deposits. On appeal, the Court of Appeal held that there must be wilful or contumacious holding over by the tenant to claim double rental under section 28(4)(a) of the CLA 1956. Thus, appellant can only claim double rental for the period after notice to quit was given, which is from 1 October 2011 to 31 October 2011. Appellant then appeals to the Federal Court.
Issue of the Case
Whether there was a requirement of the landlord to show wilful and contumacious conduct on the part of the tenant holding over to render the tenant liable to pay double rent under section 28(4)(a) of the CLA 1956?
Judgment of the Case
The appellant’s claim was based on section 28(4)(a) of the CLA 1956 and section 8.42 and 8.43 of their tenancy agreements. Section 28(4)(a) of the CLA 1956 states:
“(4)(a) Every tenant holding over after the determination of his tenancy shall be chargeable, at the option of his landlord, with double the amount of rent until possession is given up by him or with double the value during the period of detention of the land or premises so detained, whether notice to that effect has been given or not.”
Section 8.42 and 8.43 of their tenancy agreements states that:
“Section 8.42 Yield Up
At the expiration or earlier determination (howsoever occurring) of the tenancy hereby created, to peaceably and quietly yield up the Demised Premises to the Landlord in accordance with the terms, conditions and covenants herein.
Section 8.43 Failure to Yield Up
Without prejudice to any other right the Landlord may have against the Tenant, if the Tenant upon the expiration or earlier determination of the tenancy hereby created fails, neglects and/or refuses to yield up and vacate the Demised Premises in accordance with Section 8.42 hereof, to pay to the Landlord as agreed liquidated damages a sum equivalent to double the amount of Monthly Rental or double the rental of the Demised Premises at the prevailing market rate, whichever shall be higher from the date of expiration or earlier determination of the tenancy hereby created to the date of actual delivery of vacant possession to the Landlord.”
After the expiry of the tenancy agreements, both parties had been negotiating for renewal of tenancies. Appellant had consistently reminded the respondents that they reserved their right to charge double rental. The facts also showed that the respondent was aware of this and had pleaded through their agent’s letter for it to be waived.
The appellant claimed that after the expiry of the tenancies, respondents were “holding over” within the meaning of section 28(4)(a) of the CLA 1956 and had no right to remain in occupation of the premises, section 28(4)(a) of the CLA 1956 shows that the court does not retain any discretion and cannot refuse to make the award of double rent (or double the value of rent) when the respondents were holding over; and there is no requirement for the appellant to show wilful conduct or contumacy on the part of the respondents to render them liable to double rent.
The respondents argued that “holding over” section 28(4)(a) of the CLA 1956 refer to cases of wrongful holding and not holding over with the landlord’s consent. Respondents claimed that since the claim for double rental is a form of damages or penal sum, there must be some form of wrongful holding over of the premises to justify the landlord’s claim.
The Court held that where the language of the statute is clear, effect must be given to it and no outside consideration can be called in aid to find that intention (See Tenaga Nasional Bhd v. Ichi-Ban Plastic (M) Sdn Bhd & Other Appeals [2018] 3 CLJ 557 and Metramac Corporation Sdn Bhd v. Fawziah Holdings Sdn Bhd [2007] 4 CLJ 725; [2007] 5 MLJ 501). Under section 28(4)(a) CLA 1956, the discretion to charge double rental is vested in the landlord. The court’s role is merely to determine whether the option to charge double rent had been properly and lawfully exercised by the landlord.
In cases like the present, where the tenancy agreements provide for payment of double rent, such rent is chargeable not only by the terms of the agreements but more importantly it is chargeable by operation of law and in this regard section 28(4)(a) provides that it continues to be chargeable “until possession is given up” by the tenant. Learned counsel for the respondents stressed the point that the courts below had made concurrent findings of fact that the appellant had consented to the respondents remaining in the premises after the expiry of the tenancies and had accepted monthly rentals from the respondents without any complaint and that by such consent and acceptance of the monthly rentals, a tenancy at will was created at law between the appellant and the respondents. It was thus argued that since the respondents were holding over with the consent of the appellant, they were tenants at will and therefore not liable to pay double rent for the entire period of their holding over after the expiry of the tenancies up to the date of delivery of vacant possession.
The Court compared our section 28(4)(a) of CLA with section 1 of UK’s Landlord and Tenant Act 1730, section 138 of the Property Law Act 1974 of Queensland, Australia and section 58 of the Commercial Tenancies Act 1990 of Ontario, Canada. The Court held that our CLA 1956 does not seem to require “wilful” in holding over of the property by the tenant. Section 19(4) of the Singapore Civil Law Act which is in pari materia with section 28(4)(a) of our Civil Law Act requires an intention on the part of the tenant to refuse to deliver up the demised premises with the knowledge that he has no right to remain in possession. The words “until possession is given up by him” in section 28(4)(a) of the CLA 1956 when reading together with the right of the landlord to charge double rent, it shows a situation where the tenant refuses to deliver up vacant possession without any just cause or valid reason after the expiry of the tenancy.
Formal Federal Court had different opinions on whether wilful or contumacious conduct on the part of the tenant is required to be established before the landlord could exercise his option to charge double rent under section 28(4)(a) CLA 1956. In Krishna Sreedhara Panicka v. Chiam Soh Yong Realty Co Ltd [1983] 1 MLJ 65, the Federal Court decided that wilful and contumacious conduct on the part of the tenant is required to justify the charging of double rent by the landlord under section 28(4)(a) CLA 1956. The Court did not decide that it was unlawful for the landlords to charge double rent from the date of expiry of the notice to quit but landlord’s claim was not allowed because the Court was of the view that it is unfair for the landlord to do so. Both Wee Tiang Yap v. Chan Chan Brothers [1984] 1 CLJ 156 and Soong Ah Chow & Anor v. Lai Kok Cheng [1984] 1 CLJ 152 did not consider proof of contumacious conduct to be necessary to entitle the landlord to charge double rent.
The facts in the present case shows that both parties were in negotiation for renewal of the tenancies. When the tenancies expired, the appellant did not ask the respondents to vacate the premises while negotiations were in progress. Appellant only inform or remind the respondent that they reserve its right to charge double rent. After the expiry of the tenancies, section 28(4)(a) of the CLA 1956 allowed the landlord to charge double rent until possession is given up by the tenant.
The Court held that for the landlord to be entitled to charge the tenant double rent, there must be failure or refusal by the tenant to give up possession after being told to do so by the landlord. This has to be so because the landlord’s claim is actually not rent but a penal sum which the former tenant has to pay for the inconvenience and loss the tenant causes the landlord in refusing to give up possession. The Court’s duty in a claim under section 28(4)(a) of the CLA 1956 is merely to determine whether the option to charge double rent had been exercised properly and lawfully by the landlord. There is no requirement on the landlord to show contumacious conduct on the part of the tenant holding over to render the tenant liable to pay the said double rent. Even if the tenant is not guilty of contumacious conduct, the tenant is still liable to pay double rent if the landlord has decided to charge double rent and does not consent to the tenant’s holding over and has asked the former tenant to vacate the premises.
Therefore, the question in this present case is whether the respondents were holding over the premise with or without the appellant’s consent. The facts in this case are clear that the respondents’ holding over the premises were with the implied approval if the appellant. After the expiry of the tenancies, appellant had agreed to negotiate the renewal of the tenancies and did not make it clear that it would not allow the respondents to hold over without paying double rent while negotiation for renewal were in progress. Appellant also accepted rent from the respondents without any complaints and did not issue any notice to quit during the period of negotiation. The notice to quit was only issued after the negotiations failed. Hence, the appellant by conduct had waived its right to charge double rent during the period of negotiation.
When the notices to quit were finally issued, the respondents willingly delivered vacant possession although it was late by one month. The respondents were tenants at will during the period of negotiation and respondents only become trespassers from the date of expiry of the notice to quit on 1 October 2011. The Court agreed with the Court of Appeal that double rent can only be charged for the period commencing from the date of expiry of the notice to quit up until the date of delivery of vacant possession and not during the period of negotiation claimed by the appellant. Thus, this appeal was dismissed.
Principle of the Case
Section 28(4)(a) of the CLA 1956 allows a landlord to claim double rent against a tenant who refuses to hand over possession of the property after the determination of his tenancy. To be entitled for double rent claim, the landlord does not need to show the tenant’s holding over was wilful and contumacious. However, the landlord must make it clear to the tenant that the tenancy had been determined and that the tenant is required to deliver possession of the property back to the landlord in order to claim double rent from the tenant upon the expiry of the notice to quit.
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