It is not uncommon that there are tenants who remain on the premises beyond the expiry of their tenancy. These tenants are usually called tenants “holding over”. 

The landlord has a few remedies against tenants who do not vacate the premises after their tenancy is over. For example, the landlord can charge double rent during the period that the tenant remains on the premises after the expiry of the tenancy.

The Federal Court case of Rohasassets Sdn Bhd (formerly known as Wisma Perkasa Sdn Bhd) v Weatherford (M) Sdn Bhd & Anor [2020] 1 MLJ 557 explains when a landlord is entitled to claim double rental.

Brief Facts

  • Rohasassets Sdn Bhd (“Rohasassets”) rented out premises to the 1st and 2nd respondents (“Tenants”).
  • Before the end of the tenancies, parties began negotiations on the renewal of their tenancies which went on for over 2 years after the end of the tenancies. 
  • The Tenants knew that Rohasassets may charge them double rent and pleaded for it to be waived.
  • Negotiations failed and Rohasassets then terminated the tenancies and gave notices to the Tenants to quit and deliver vacant possession of the premises by 1 October 2011. 
  • The Tenants did not challenge the termination but only vacated the premises 1 month later on 31 October 2011, but had only vacated the premises a month later on 31 October 2011.
  • The time between the initial expiry of the tenancies and the date the Tenants moved out was 31 months (1st Respondent) and 9 months (2nd Respondent) respectively. Rohasassets commenced a claim against the Tenants for double rental.
  • The High Court dismissed Rohasassets’ claim for double rent, but the Court of Appeal allowed Rohasassets’ appeal in part and ordered the Tenants to pay double rent only for the period from 1 October 2011 to 31 October 2011 (the period between the notice to quit and the date the Tenants vacated the premises).  
  • Rohasassets then appealed to the Federal Court. Rohasassets argued that it should be entitled to double rental from expiry of the tenancies until the date the Tenants moved out, and not just from the notice to quit.
  • The Tenants argued that double rental should not apply where the landlord allowed the Tenants to remain on the premises while negotiations are ongoing to renew the tenancies.

Court’s Findings

A landlord’s right to claim double rental is found in Section 28(4)(a) of the Civil Law Act 1956:

Every tenant holding over after the determination of his tenancy shall be chargeable, at the option of his landlord, with double the amount of his 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.” (emphasis ours)

The Federal Court held that double rental is chargeable only where the tenants are holding over without the landlord’s consent (express or implied).  The above section does not mean that double rent is chargeable irrespective of whether consent to hold over had been given by the landlord.

On the facts, the Federal Court found Rohasassets had given tacit approval to the Tenants to remain on the land pending negotiations, and there was no clear intention from Rohasassets that it wanted the Tenants to vacate the premises after the expiry of their tenancies:

  • Negotiations between the parties show the intention for Rohasassets to renew the tenancies
  • Although Rohasassets reserved their right to charge double rent and reminded the Tenants of the same, this was “neither here nor there” since during the negotiations, Rohasassets accepted rent as per the tenancies from Tenants with no complaints.
  • There was no notice of quit issued until after the negotiations failed.

As such, during the negotiations, the Tenants were tenants at will and not trespassers.  Rohasassets had waived its rights to claim double rent from the Tenants through its conduct. 

Therefore, the Federal Court agreed with the decision of the Court of Appeal that Rohasassets could only claim double rent from the Tenants from 1 October 2011 to 31 October 2011, as the Tenants had become trespassers from the expiry of the notices to quit on 1 October 2011. 

Key Takeaways

Correspondence between landlords and tenants should be in writing, especially if it involves contentious issues like determination of tenancy and double rental. If the landlord intends to charge double rent on the tenant even while negotiations are ongoing, there must be a clear indication from the landlord that they want the tenant to vacate the premises and that double rental would be chargeable otherwise.

Parties should also commence (and more importantly, conclude) negotiations on the renewal before the expiry of the tenancy.  It is possible to plan ahead and initiate discussions early, given that the tenancy agreement will plainly state when the tenancy is due to expire. 

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This article was written by Sean Ferdinand Ng (Associate) from Donovan & Ho’s dispute resolution practice. 

Donovan & Ho is a law firm in Malaysia. Our dispute resolution provides advice and legal representation in the civil and industrial courts. We also represent clients in both domestic and international arbitration, as well as other forms of alternative dispute resolution. Our experienced lawyers are also able to assist in commercial and civil disputes (such as debt recovery, shareholders’ or directors’ disputes, breach of contract and claims for injunctive relief), constructive disputes (arbitration and/or adjudication proceedings, disputes relating to delays, liquidated damages, defects and rectification work) and employment disputes (unfair dismissal claims, judicial review proceedings, and employment-related civil claims). Have a question? Please contact us.

 

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