Ds Electrical & Appliances Services Sdn Bhd v Onking Chain-Store (Malaysia) Sdn. Bhd. (BA-22NCvC-293-07/2024)

The Plaintiff applied for a question of law to be determined on a preliminary issue by this Court under Order 33 rule 5 and/or 09/07/2025 15:55:43 BA-22NCvC-293-07/2024 Kand. 71 under Order 14A of the Rules of Court 2012 (ROC) via enclosure 25.

The Third Party filed an application at enclosure 26 for an order to strike out the Defendant’s Third Party Notice issued on 9.10.2023 under O18 R19 of the ROC.

Both applications were heard together and upon hearing all parties, I answered the question of law posed in the negative and therefore judgment was entered against the Defendant as prayed for (enclosure 25, paragraph (b) 1-5) and damages to be assessed.

Subsequent thereto, I also find that the Defendant’s Third Party Notice does not disclose reasonable cause of action against the Third Party and therefore was struck out with costs.

The Defendant has now appealed to the Court of Appeal, and I have set out my reasons below. The Parties 6. The Third Party was the registered proprietor of four storeys shop office situated in Setia Alam, Shah Alam, Selangor (the property).

The Defendant is the tenant of the property.

The Plaintiff is a purchaser who has purchased the property from the Third Party, subject to the tenancy agreement. Factual Background 9. The Third Party entered into a tenancy agreement with the Defendant on 18.2.2020 for a period of three (3) years commencing on 1.4.2020 until 31.3.2023 with a monthly rental of RM18,500.00 (the Tenancy Agreement).

Subsequently, on 5.10.2022, Plaintiff then entered into a Sale and Purchase agreement with the Third Party whereby he agreed to sell and Plaintiff to purchase the property.

The Plaintiff is therefore a purchaser who has purchased the property from the Third Party as the vendor, and this purchase is subject to the Tenancy Agreement. At the material time, the Defendant was the tenant pursuant to the Tenancy Agreement.

On 5.1.2023, the sale and purchase transaction has been completed, and the Plaintiff has been registered as the registered owner and proprietor of the property.

By a Notice of Assignment of Tenancy dated 9.1.2023, the Third Party informed the Defendant of the change of ownership of the property to the Plaintiff and has novated his right under the Tenancy Agreement to the Plaintiff (the Notice of Assignment of Tenancy). The Defendant had acknowledged the notice on the same date.

At this juncture, the Third Party had not received any request for renewal of the Tenancy Agreement from the Defendant.

Plaintiff had reminded the Defendant, via letter dated 12.1.2023, that the rental period is expiring on 31.3.2023 and requested the Defendant to redeliver vacant possession of the property to the Plaintiff in accordance with the Tenancy Agreement.

However, on 16.1.2023, the Defendant, via its solicitor, Messrs Lim Khey Hoong & Partners, stated in a letter that the Defendant had informed the Third Party that they had decided to exercise the option to renew the Tenancy Agreement for three (3) years from 1.4.2023 to 31.3.2026.

The Plaintiff, via their solicitor, replied to the Defendant’s solicitor’s letter on 16.1.2023 to explain, amongst other things, that there is no agreement concerning the application to exercise the option; therefore, the expiry date of the Tenancy Agreement shall be 31.3.2023.

Plaintiff requested from the Third Party a confirmation as to whether there was such an agreement for the application to exercise the option, and the Third Party confirmed via email that he did not receive any notice of such intention from the Defendant.

As nothing came back from the Defendant, Plaintiff reminded the Defendant to deliver possession of the property by 31.3.2023.

However, on 9.3.2023, the Defendant replied to the Plaintiff that they disagreed to deliver possession of the property to the Plaintiff and would continue to occupy the property for a further period of three (3) years.

Hence, on 29.3.2023, the Plaintiff informed the Defendant that, their actions (refusal to deliver vacant possession) tantamount to a breach of the Tenancy Agreement and that any payments made by the Defendant as to be received by the Plaintiff are without prejudice to the Plaintiff’s right to claim the balance and that such acceptance should not be considered as an agreement to renew the Tenancy Agreement.

In relation thereto, the Tenancy Agreement had then expired on 1.4.2023 and was allegedly terminated without any renewal. The Defendant had not delivered possession of the property to the Plaintiff and remained on the property, hence this action.

Defendant claimed that there is a concluded renewed tenancy on the property, and they counterclaimed against the Plaintiff for specific performance of the Tenancy Agreement and the Notice of Assignment of Tenancy. Analysis and Findings Enclosure 25 24. The question posed by Plaintiff is as follows: a. Whether the Defendant has complied with the provisions under Clause 5 of the Tenancy Agreement dated 18th February 2020 by delivering a written notice of their intention to extend or terminate the Tenancy Agreement dated 18th February 2020 to the Third Party within not less than three (3) months prior to the termination date of the Tenancy Agreement? b. If so, whether by merely exercising the option to renew under Clause 5 of the Tenancy Agreement by providing a written request to the Third Party, there exists a concluded renewal under Clause 5 of the Tenancy Agreement?; and c. Whether in the absence of acceptance or agreement reached between the Third Party as landlord and the Defendant as tenant regarding the increment rate in rent and/or the new monthly rent prior to the renewal period of the Tenancy Agreement, it can be said that the Tenancy Agreement has, or should have, been validly renewed under Clause 5 of the Tenancy Agreement?

If answered in the negative, Plaintiff’s claim should be allowed as prayed. The governing principles on Order 33 Rule 5 and/or O14A of the

Order 33 rule 5 of the ROC provides that “If it appears to the Court that the decision of any question or issue arising in a cause or matter and tried separately from the cause or matter substantially disposes of the cause or matter or renders the trial of the cause or matter unnecessary, it may dismiss the cause or matter or make such other order or give such judgment therein as may be just.”

Rule 2 of the same provides that whereupon the Court, after deciding that the preliminary issue rendered a full trial unnecessary, may forthwith dismiss the cause of matter or make such other order or judgment as it deems fit: “2. The Court may order any question or issue arising in a cause or matter, whether of fact or law or partly of fact and partly of law, and whether raised by the pleadings or otherwise, to be tried before, at or after the trial of the cause or matter, and may give directions as to the manner in which the question or issue shall be stated.”

The Court of Appeal case of Petroleum Nasional Bhd & Anor v Kerajaan Negeri Terengganu [2004] 1 MLJ 8 was referred to, and it states as follows: “Order 33 r 2 of the RHC states that the Court may order any question or issue arising in any cause or matter, whether of fact or law or partly of fact and partly of law, and whether raised by the pleadings or otherwise, to be tried before, at or after the trial of the cause or matter, and may give directions as to the manner in which the question or issue shall be stated. The Federal Court in Palaniappa Chettiar v. Sithambaram Chettiar & Ors[1981] CLJU 156; [1981] 1 LNS 156; [1982] 1 MLJ 186 agreed with the learned judge in holding that it would be convenient to try the preliminary issue, as if the contention of the respondents was upheld, that could conclude the whole proceedings and it would be unnecessary to try the other issues. In Sl Rajah & Anor v. Dato’ Mak Hon Kam & Ors (No. 1)[1994] 1 CLJ 207, Lim Beng Choon J, after considering a large number of authorities on the ambit of O. 33 r. 2 and its equivalent, stated that before deciding to allow the preliminary questions to be raised, the Court must bear in mind the following observations:

As a general rule the Court will exercise its power under O. 33 r. 2 if and only if the trial of the question will result in a substantial saving of time and expenditure which otherwise would have to be expended should the action go to trial as a whole.

An order under the said rule should not be made in respect of matters which by reason of the obscurity either of the facts or the law ought to be decided at the trial of the suit.

Preliminary points of law have been described as too often of so-called issues of fact, the justification is even harder to discern.

A preliminary question should be carefully and precisely framed so as to avoid difficulties of interpretation as to what is the real question which is being ordered to be tried as a preliminary issue.”

On the principles governing applications under Order 14A are too well-settled. In the case of Mohd Zai Mustafa v. Menteri Pendidikan Malaysia & Ors And Other Appeals [2024] 2 CLJ 753, the Court of Appeal had recently summarised it as follows: “[21] The existence of a question of law or construction to be determined by the Court must be clearly discernible from the pleadings of the parties. The question of law or construction must also be one that is capable of being determined without a full trial of the action, and hence, the procedure in O. 14A may not be appropriate where there are conflicting allegations of fact that affect the determination of the questions of law or construction, or where there are facts in issue that are interwoven with the legal issues raised. Where there exist disputes of fact on the affidavits, the Court may, nonetheless, proceed to exercise its discretion to determine whether the undisputed or agreed facts provide a sufficient basis to determine the question of law or construction: see Bato Bagi & Ors v. Kerajaan Negeri Sarawak & Another Appeal [2011] 8 CLJ 766; [2011] 6 MLJ 297. A court should not decline to consider an application under O. 14A simply on the basis that the question of law or issue of construction is or appears to be complicated. (See Petroleum Nasional Bhd v. Kerajaan Negeri Terengganu & Another Appeal [2003] 4 CLJ 337; [2003] 5 AMR 696; [2004] 1 MLJ 8; [2003] 1 MLRA 582). The determination of the application under O. 14A need not necessarily dispose of the entire case; it suffices if the answer arrived at by the Court disposes of “any claim or issue” in the action (supra, and Wang Bao’ An & Ors v. Malaysian Airline System Bhd & Other Cases [2018] 7 CLJ 371; [2018] 11 MLJ 585). The question of law or construction, which the Court is to determine, must be set out in clear and precise terms (Lekaz Constructions Sdn Bhd v. KOP Petroleum Sdn Bhd; HSBC Bank Malaysia Bhd (Intervener) [2003] 4 CLJ 377; [2003] 6 AMR 74).”

The main issue in the tenancy dispute is whether the tenancy agreement between the Defendant and the Third Party was validly renewed for another three years after its expiration on 31.03.2023.

From the Plaintiff’s Statement of Claim and the Defendant’s Defence, the crux of the case is on the interpretation and construction of, in particular, Clause 5 of the Tenancy Agreement on the option for renewal.

It is undisputed that Plaintiff’s rights and interests over the Tenancy Agreement have been novated to the Plaintiff through the Notice of Assignment of Tenancy on 09.1.2023. It is also not disputed that the Tenancy Agreement for the property was for a fixed term of three (3) years only, and the initial term had expired on 31.3.2023.

The key question for determination by this Court is whether or not there is a concluded renewed tenancy for the property.

Clause 5 of the Tenancy Agreement is reproduced below for ease of reference: “5 OPTION TO RENEW If the tenant shall be desirous of renewing or termination of the tenancy of the Demised Premises at the expiration of the said term, the tenant shall not less than Three (3) months before the date of expiration of the tenancy herein given to the Landlord notice in writing of such its desire to renew or terminate. PROVIDED that the tenant shall have paid all the rents and monies due to the Landlord and observed and performed all the terms and conditions herein, the Landlord will let the Demised Premises to the tenant for the further term as set out in Section 8 of the Third Schedule from the date of expiration of the first term hereby created on the same terms and conditions with an increment of the rental based on the rate to be agreed between the Landlord and the tenant prior to the extension period and the renewal shall be subject in all other respects to the same terms and conditions contained herein save and expect for this provision for renewal and the increase and top up payment in the deposit for this tenancy.”

Upon perusal of Clause 5 above, it is clear that the option to renew is not an automatic right available to the Defendant. The renewal would only be valid subject to the fulfilment of the conditions as provided in the said clause, and among others, the following: a. The Defendant must have submitted a written notice not less than three (3) months before the expiration of the current term; and b. The Defendant and the Third Party could come to an agreement on the revised monthly rental.

Where no such agreement could be achieved, the option to renew would accordingly lapse.

In the present case, I agree with the Plaintiff that the Defendant had failed to fulfil the pre-conditions as provided in Clause 5 of the Tenancy Agreement for two reasons.

Firstly, there was no written notice received by the Third Party as a landlord at any material time. In view of the expiry of the Tenancy Agreement at 31.3.2023, such written notice must be delivered and received by the Third Party not less than three (3) months before its expiration, i.e. before 1.1.2023. The Third Party had confirmed that he had not received any notice of renewal from the Defendant. This was pleaded in the Third Party’s Defence. Furthermore, the Third Party asserted that he have no knowledge of any notice of application to exercise the option.

Secondly, there is no agreement ever reached between the Defendant and the Third Party in respect to the revised rental. There is also no evidence to show that the Third Party has a valid acceptance or agreement of the revised rental.

Hence, it was submitted, and I agree that the option to renew would also have lapsed accordingly.

There is therefore never an actual materialisation of a renewed tenancy or a new contract between the Defendant and the Third Party, which would subsequently bind the Plaintiff, as there simply is no such written notice of request and no agreement to the revised rental. As such, I am of the view that there is no valid exercise of the option to renew the tenancy and, subsequently, there could not be any concluded renewed tenancy as alleged.

I am also of the opinion that this Court should interpret the renewal clause based on its express terms and conditions, as outlined in Clause 5 of the Tenancy Agreement.

It is trite that the key principles of interpretation include strict adherence to written terms, which provides that the renewal clause is not automatic and that a written notice must be delivered at least three (3) months before the expiration of the tenancy. In addition, the tenant must fulfil all obligations under the agreement, including payment of rent and adherence to terms, and both parties must agree on the revised rental rate.

There should not be any assumption of automatic renewal as seen in precedents in the case of AmTrustee Bhd v The Store (M) Sdn Bhd [2019] 6 MLRA 336 which held that the position to assume the tenancy is renewed automatically is detrimental to the Defendant and is a blatant disregard of the Defendant’s rights under the tenancy agreements.

It was submitted that, as there is no agreement proved, no renewal can be conferred. Consequently, as there is no agreed-upon revised rental rate, the renewal option lapses and the tenancy expires.

An option to renew is an express provision as in Clause 5 of the Tenancy Agreement. Therefore, being clear, unabigious and in a unmistakable language, it is the duty of this Court to give effect to the clear intention of the parties and it is not open to the Courts to revise the words used by the parties, or to put upon them a meaning other than that which they ordinarily bear (see the Court of Appeal in the case of Setapak Heights Development Sdn Bhd v Tekno Kota Sdn Bhd [2006] 1 MLRA 413 and Nippon Express (M) Sdn Bhd v Che Kiang Realty Sdn Bhd & another appeal [2014] 1 MLRA 558).

Defendant asserted that the Third Party did not inform them of the sale and purchase that took place between him and the Plaintiff, but conceded that they were served with the Notice of Assignment of Tenancy on 9.1.2023.

Defendant further contended that they had given the appropriate notice to the Third Party of their option to renew the tenancy agreement, but the Third Party had failed to respond. It is submitted that this is a triable issue which disposal via Order 14A is not suitable.

I reiterate my reasons stated earlier and find the Defendant’s contention unacceptable and not justified to sufficiently prove the existance of a written notice of intention for renewal of the Tenancy Agreement.

The Defendant’s stance on the rental rate was based on the amount that continued to be accepted by the Plaintiff post expiry of the Tenancy Agreement. I find this to be a mere unilateral assumption and cannot be treated as the agreed-upon rate expressed. Plaintiff had made it clear that payments accepted are without prejudice and shall not be treated as a waiver of their rights on the disputed issues (see exhibit LFY- 12).

Ultimately, there is clearly no concluded renewed tenancy as alleged, and I answer all the questions posited in the negative. Consequently, there is no valid renewal of the tenancy, and the Plaintiff’s claim should be allowed as prayed. Defendant shall vacate the property and pay double the rental as sought. Enclosure 26 52. The Third Party applied for the Defendant’s claim through its Third Party Notice to be struck out on the basis of no reasonable cause of action and/or it is an abuse of court process.

There is no necessity to reiterate or reprise the trite principle of law on striking out of an action under O18 R19 as it was well established by clear decisions of the Supreme Court in Bandar Builders Sdn Bhd v United Malayan Banking Corporation Bhd (1993) 4 CLJ 7 on the test for striking out applications.

As a brief reiteration of the facts, the Third Party was the previous owner of the property. He rented the property to the Defendant. He then sold the property to the Plaintiff with a proper assignment of the tenancy. The Defendant was aware of the assignment (though they denied it). It was also alleged that Defendant had acted on the option to renew on 1.12.2022 to the Third Party and had complied with the requirement of Clause 5.

I find that the Defendant’s denial was ineligible. The Defendant was made aware of the Sale and Purchase of the property on 26.10.2022, and they had accepted service of the Notice of Assignment of the Tenancy dated 9.1.2023.

The Third Party had not received any request from the Defendant regarding their intention to renew the tenancy until the date of its expiry, 31.3.2023, and the Defendant failed to show or prove otherwise.

I find it pertinent to refer to the Notice of Sale specifically the pronouncement made: “Our Client has disposed of the above Demised Premises and sale and purchase agreement had been executed between the parties on 5.10.2022. This serves as a notice to you as existing tenant of the Demised Premises that the Tenancy Agreement between you and our client will be assigned to the Purchaser on the completion date. The expected completion date will be three (3) months from the Sale and Purchase Agreement dated 5.10.2022 ie 4.1.2023. However, the completion may be earlier or later depending on the progress of the release of the loan sum from the purchase’s financiers”.

The above notice was very clear on the transition, and I do not see any reason why the Defendant would find it difficult to comply with the requirements or create a scene in their position, resulting in them now claiming damages against the Third Party.

Again, I am of the considered view that the option to renew is not an automatic right available to the Defendant. There must be a request conveyed to the Plaintiff, as the new registered owner. The Third Party had properly given notice of assignment, which was duly acknowledged by the Defendant.

Therefore, I agree with the Third Party’s contention that the Defendant lacks reasonable cause of action against him as they failed to show facts that give rise to an enforceable claim (see Tenaga Nasional Bhd v Kamarstone Sdn Bhd (2014) 2 MLJ

Following the questions posited by Plaintiff, which are answered in the negative, it follows that the Defendant’s claim against the Third Party also falls. Conclusion 62. Upon hearing all parties, enclosure 25 is hereby allowed and I answered the question posted in the negative and therefore, Plaintiff is entitled to the reliefs prayed for, that is, possession of the property, double rental on the holding over period, and damages to be assessed. Cost of the application to the Plaintiff, RM5000, subject to the allocator.

Third party application in enclosure 26 is also allowed and the Defendant’s claim for damages towards the Third Party is hereby struck out, with a cost of RM3000 to the Third Party, subject to the allocator. Dated this: 8th July 2025 ~signed~ (NOOR HAYATI BINTI HAJI MAT) JUDGE HIGH COURT OF MALAYA