Tee and Putt Minigolf Sdn Bhd v Bele Time Management Sdn Bhd (JA-22NCC-84-12/2020)

The agreement came into effect on 18.11.2019, provides for tenancy of 3 years commencing from 13.12.2019. The “Permitted Use” of the premise, under the 1st schedule of the said agreement is as follows: “The Demised Premises shall be utilized strictly for operating of a mini golf center and serving of alcoholic beverage under the trading name of ‘Tee and Putt Minigolf’ only”. The agreed facts by both parties [3] The undisputed fact is that the Plaintiff having signed the agreement with the Defendant on 18.11.2019, had only begun its business operation on 6.2.2020. A deposit sum of RM36,239.20 was paid by the Plaintiff to the Defendant on 6.11.2019 and RM350,000.00 being capital expenditure was paid by the Defendant to the Plaintiff.

It is also undisputed that a supplementary tenancy agreement (hereafter referred to as “the supplementary agreement”) was signed on 6.8.2020. Both these agreements were terminated by the Defendant on 13.11.2020 by way of a Notice of Termination dated the same (hereafter referred to as “the NOT”). Facts deduced from the pleadings, the common bundles and the witnesses [5] The NOT arose from non-compliance by the Plaintiff with the Notice of Default issued by the Defendant (hereafter referred to as “the NOD”) dated 15.7.2020 and 29.8.2020. The issue arising is whether there was a breach of the agreement by the Plaintiff as alleged by the Defendant in the said notice. It follows whether the NOT was issued by the Defendant contrary to the safeguards contained in the Act particularly sections 7 and S/N VfByxl7M8kmOy7Rh9G431w **Note : Serial number will be used to verify the originality of this document via eFILING portal 3 10 which, according to the Plaintiff the saving clause stipulates the cut-off period for termination of contract between 18.3.2020 to 23.10.2020. Any notice outside this period is unlawful and in breach of the Act.

As to the defence of Covid-19 intervention, the crucial sections of the Act are sections 7 and 10 which provide as follows:

“Inability to perform contractual obligation The inability of any party or parties to perform any contractual obligation arising from any of the categories of contracts specified in the Schedule to this Part due to the measures prescribed, made or taken under the Prevention and Control of Infectious Diseases Act 1988 [Act 342] to control or prevent the spread of COVID-19 shall not give rise to the other party or parties exercising his or their rights under the contract.

Saving Notwithstanding section 7, any contract terminated, any deposit or performance bond forfeited, any damages received, any legal proceedings, arbitration or mediation commenced, any judgment or award granted and any execution carried out for the period from 18 March 2020 until the date of publication of this Act shall be deemed to have been validly terminated, forfeited, received, commenced, granted or carried out.” [7] The Plaintiff’s suit put forth a claim for the following: i. A declaration that the NOT dated 13.11.2020 is void and invalid; ii. A declaration that the termination of contract by the Defendant is void and invalid; S/N VfByxl7M8kmOy7Rh9G431w iii. Special damage of RM1,632,939.14 be paid by the Defendant to the Plaintiff; iv. General damages be taxed; v. Interest of 5% on the judgment sum from date of filing of the writ till date of realization by the Defendant; vi. Cost; vii. Other relief deemed fit. [8] The Defendant, on the other hand filed a counter-claim for the following relief: i. The NOT is valid; ii. Vacant possession of the premise be delivered to the Defendant; iii. Plaintiff to pay specific damages of RM25,500.00 or other sum deem fit by this Court; iv. Monthly rental and outstanding utility up to 12.12.2020 for the sum of RM91,711.80 or any sum deem fit by this Court; v. Double monthly rental of RM27,813.56 for the period from 12.12.2020 until vacant possession is surrendered; vi. The refund of RM350,000.00 being the Capital Expenditure; vii. Defendant be allowed to forthwith forfeit the deposits of RM36,239.20 paid by the Plaintiff; viii. The Defendant be allowed to “…sell or otherwise dispose-off the goods of the Tenant (Plaintiff) …toward payment of all arrears of Rent and interest …; ix. Alternatively, damages (including aggravated and/or exemplary damages) to be assessed by this Court; S/N VfByxl7M8kmOy7Rh9G431w x. Interest at the rate of 8% per annum on the sums and/or damages calculated from filing date of the Defence and Counterclaim; xi. Costs on solicitors and client basis; xii. Further relief deems fit. [9] The NOD dated 21.7.2020 (it is not dated 15.7.2020) contains the following complaint by the Defendant: i. Non-payment in full of the sums as in clause 3A, 5.2 and 5.3 of the Agreement as follows: a) Service and promotion charge for December 2019, January 2020 and March 2020 amounting to RM28,355.27; b) Sales and Service Tax (SST) for December 2019, January 2020 and March 2020 amounting to RM1,701.32; and c) Water and electricity supply charges for February 2020 amounting to RM360.96. ii. Failure to create or register and maintain the electricity account with the respective utility provider pursuant to clause 3.1(b) of the Agreement. [10] The NOD dated 29.8.2020 in reference to the agreement, expressed the following: i. Non-payment in full the sums pursuant to clause 3A, 5.2 and 5.3 of the Agreement as follows: a) Service and Promotion Charge for December 2019, January 2020, March 2020, May 2020, June 2020 and August 2020 amounting to RM62,635.52; S/N VfByxl7M8kmOy7Rh9G431w b) Sales and Service Tax (SST) for December 2019, January 2020, March 2020, May 2020, June 2020 and August 2020 amounting to RM3,758.15; and c) Water and electricity supply charges for February 2020, March 2020, April 2020, May 2020, June 2020 and July 2020 amounting to RM1,207.46. ii. Failure to create or register and maintain the electricity account with the respective utility provider pursuant to clause 3.1(b) of the Agreement. [11] In addition to the above stand by the Plaintiff that the notice was in breach of the Act, it was contended that the witness called by the Defendant DW3’s evidence (the Engineering and Property Manager) purportedly with relevant knowledge of the company’s affairs was argued by the Plaintiff to be hearsay as his knowledge was based by relying on documents only, thus inadmissible as DW3 had merely started working for the Defendant in January 2020 onwards and therefore not privy to the said mall or the Defendant’s affairs. [12] The Plaintiff’s defence is that the dealing had always been with the representatives of the Defendant named by the Plaintiff as Mr. Foo, Ms. Sandy and Ms. Jesslyn where a verbal agreement was reached that the opening date could not take place on 13.12.2019. This was suggested to DW3 which the Defendant via DW3 denied, hence suggesting DW3’s testimonies are hearsay without privy to the background facts that had transpired. S/N VfByxl7M8kmOy7Rh9G431w [13] The Plaintiff also argued that the Defendants’ witness DW1 (“pegawai tadbir MBJB”) had received the business license application from the Plaintiff on 15.12.2019 but due to the “Movement Control Order” pronounced by the Government, was unable to give the approval promptly within the usual practice of 30 days. Instead approval was given in March as a few committee meetings that ought to be convened were disrupted due to the MCO. Defence and counter-claim by the Defendant [14] The Defendant, put in a counter-claim for a declaration that the termination was lawful, the vacant possession of the premises, outstanding monthly rental and damages. In addition, it was the stand of the Defendant that the Act has no application as the various breaches of the agreement was committed by the Plaintiff before the MCO. Findings by this Court [15] The agreement specifically clause 2.1(b) and (c) provides as follows: “(b) The Rent for the Demised Premises shall commence to be payable by the Tenant immediately upon the expiry of the Fit-Out Period, i.e. the date as specified in Section 5 of the Second Schedule.

The date of commencement of the business operation of the Demised Premises shall be within seven (7) days from the expiration of the Fit-Out Period (if applicable) or a specific date as may be required by the Landlord (“Business Commencement Period” or “Business Commencement Date”) whichever is later. In the event of any delay in the Tenant’s commencing business at the Demised Premises, the Tenant shall pay to the Landlord a sum of RM500.00 as liquidated damages on a daily basis starting from the expiration of the Business Commencement Period or Business S/N VfByxl7M8kmOy7Rh9G431w Commencement Date (“Postponement”), without prejudice to the Landlord’s right to be indemnified by the Tenant from and against all losses, cost and expenses arising directly or indirectly from the Postponement. …

In the event that the Rent hereby reserved remains unpaid after becoming due and payable (whether formally demanded or not), it shall be unlawful for the Landlord to claim interest at the rate of eight per centum (8%) per annum on the amount unpaid calculated from after the date due to the date of actual payment”. [16] The 2nd schedule section 5 set the commencement date of the rent to be 13.12.2019. Logically and rightly so, it is the same date as the commencement date with the tenancy. The business operation date however is set to be 7 days after the expiry of the fit-out period or any other date required by the Landlord. The non-adherence to these dates would result in a breach of the term of the agreement as each clause carry a penalty. [17] The agreed fact is that the business operation had commenced on 6.2.2020. It is crucial to now determine if this date is in fact a delay than the actual date stipulated hence a breach of the agreement. The agreement requires the fit-out work to be completed not less than 2 days prior to commencement of tenancy as it is only reasonable the premise would be in a ready shape to begin its business before its rental. This would mean 13.12.2019 minus 2 days, giving rise to the completion of the fit-out would be 10.12.2019. S/N VfByxl7M8kmOy7Rh9G431w [18] This time frame as catered in section 3 of the 2nd schedule under the heading “fit-out period” clause, provides as follows: “All fit-out renovation work shall be completed not less than Two (2) Business Day prior to commencement of Tenancy. The Tenant shall pay to the Landlord RM5,000.00 being Temporary Utilities Charges upon the Tenant’s taking possession of the Demised Premises for the carrying out and completion of fit-out renovation work by the Tenant at the Demised Premises”. [19] The fit-out period based on the fit-out permit is stipulated to be from 13.11.2019 to 12.2.2020 (see: page 88 common bundle of documents enclosure 78) but the letter of offer dated 4.10.2019 (see: page 13 bottom number of enclosure 78 Common Bundles of Documents) state it to be for 2 months. The premises handover checklist signed by both parties on 6.11.2019 (this date also reflected as the handover date of the premise to the Plaintiff for renovation purposes), had indicated the opening date to be 13.12.2019. This would mean the fit-out period must be completed (having deducted 2 days) by 10.12.2019. [20] In any event, if the business commencement date would be 7 days after the expiry of the fit-out work that is by the 17.12.2019 (10th day + 7) but as agreed by way of the “Agreed Facts”, business only began on 6.2.2020 hence, the only plausible deduction is to arrive at a conclusion that there was a delay that triggers clause 2(1)(c) penalty of liquidated damages of RM500.00 on daily basis. Sine quo nan, an inevitable deduction by this Court that the pronouncement of the 1st MCO on 18.3.2020 does not deviate from the fact that there was a breach of the term of the agreement existing even before MCO. S/N VfByxl7M8kmOy7Rh9G431w [21] It was further contended by the Plaintiff that the representatives of the Defendant whom was identified by the Plaintiff as Mr. Foo the Vice President of the Defendant, Ms. Sandy the General Manager of the Defendant and Ms. Jesslyn the Tenancy Manager of the Defendant had agreed to vary the opening date by way of an oral agreement to the effect that Plaintiff was in fact permitted “to just switch on the lights, and the outside signage would you put before 13th December, the rest you do inside work later. We said ok”. The Defendant denied this. [22] This defence was raised for the first time in Plaintiff’s witness statement PWS-1A, neither was it raised in the statement of claim nor the reply to the counter-claim nor was it raised in the issues to be tried. This itself raises an eyebrow on why something so crucial is missed out. This moves this Court to agree with the Defendant that the absence of any supporting oral or documentary evidence on the existence of the variation as opposed to a readily available written agreement amounts to a bare averment. [23] Furthermore, the fact that “13th December” was mentioned would only mean that, such conversation must have taken place after the signing of the agreement dated 18.11.2019 as 13th December would refer to the commencement date of the tenancy or rental and Plaintiff would have access to the premise during the fit-out period. [24] With the supplementary signed on 6.8.2020 to address the Covid19, followed with the NOD and NOT but none making reference to this variation, this Court is of the view that it is in fact peculiar that both the representatives of the Defendant and Plaintiff himself had opted to agree on a fundamental term verbally, knowing it will change most if not all other S/N VfByxl7M8kmOy7Rh9G431w parts of the agreement in relation to the fit-in period, most importantly the commencement of the business date and payment of the respective deposits (see: the 3rd schedule of the agreement). [25] The Plaintiff ought to have called either of the 3 representatives specifically Ms. Jesslyn as attempt was made by the Defendant to serve the subpoena on her but failed as call was unanswered. Counsel for the Plaintiff did not pursue further with the cross-examination of DW3 to ascertain the prospect of success of service of the subpoena on Ms. Jesslyn, despite having cross-examined DW3 on this. The absence of any referral to this variation in the pleadings nor absence of the representatives in Court although Plaintiff Counsel had suggested Plaintiff in contact with Ms. Jesslyn a day before, indicates strongly that the Plaintiff had not seriously pursue this contention and can be treated as abandoned for non-compliance with the rules of evidence (see: section 101 and 103 of the Evidence Act 1950). [26] On the claim for Liquidated Ascertained Damages (LAD), the Plaintiff when cross-examined again agreed that there was a delay of 51 days from 17.12.2019 to 6.2.2020 that entitles the Defendant to this the LAD of RM500.00 per day totaling to RM25,500.00. The question and answer between counsel for the Defendant KSJ and the Plaintiff (Barat) produced below: “KSJ: … So, from 17.12.2019 to 6.2.2020, am I correct to say that there is a period of 51 days? Barat: Yes. KSJ: … So, based on clause 2.1(c) then, 51 days’ time, times with RM500, it amounts to RM25,000- Barat: 500. S/N VfByxl7M8kmOy7Rh9G431w KSJ: Correct. So, do you agree that, based on clause 2.1(c), that the Defendant is entitled to liquidated damages of RM25,500? Do you agree? Barat: As part of the tenancy agreement, I agree.” [27] The Plaintiff, in the course of pursuing the business stipulated in the agreement to be “for permitted use of “operating of a mini golf center and serving of alcoholic beverage” must comply with the provision of the agreement under clause 3.1 (b) Utilities Deposit that specify the Defendant’s responsibility to create/register with and maintain utilities (except water and gas supply) account with the respective utility providers and payment of all monies for the supply of those utilities including deposit amounts. [28] Clause 3A on “Service and Promotion Charge” in para 1 emphasizes the obligation on the part of the Defendant to pay the said charge on monthly basis, failure which an interest of 8% per annum on the unpaid amount will be imposed. To this, the testimonies of the Plaintiff is extracted to be very frank and candid in his disclosure as follows: “cross-examination of Plaintiff: Batra: … I have not paid a single cent as service charges till today to the Bele Time. Judge: Ok, I’ll make note. Batra: For all the invoices, he is repeating, repeating, repeating it, my answer is the same, that I have not paid a single cent as service charges, except utility bills… Judge: I have not made any single payment for the services and promotion charges. Batra: Charges to the Defendant, I only paid utilities”. S/N VfByxl7M8kmOy7Rh9G431w [29] In addition, the running of the premise for its permitted use (operating a mini golf center and serving alcohol beverage), clause 5.8 para (c) imposed on the Plaintiff the obligation to obtain the necessary licenses, approvals and/or permits form the Appropriate Authorities before commencing business. This is followed with an undertaking by the Tenant (Plaintiff) ensuring that the business and/or related activities on the premise complies with the rules, regulations and the laws of Malaysia. [30] DW2 from the Johor Bahru District Office confirmed that the Plaintiff’s business requires “Lesen Rumah Awam Kelas 1” for selling liquor and “Lesen Hiburan Permainan Kanak-Kanak” for its entertainment business. No such licenses were issued at the time Plaintiff began its business. [31] As can be seen from the cross-examination of the Plaintiff, counsel for the Defendant invited this Court to observe the demeanor of the Plaintiff who, when cross-examined, was evasive and kept changing his answer. This Court similarly observed such demeanor, from the repeated questions and answers between counsel and Plaintiff, yet on one end, Plaintiff also appeared candid in his answers. This evasive yet candid manner can be seen in the submission by the counsel for the Defendant and the notes of proceedings. [32] Particularly crucial is on non-observant of clause 5.8 by the Plaintiff for licenses from the relevant authorities when Plaintiff first denied selling alcoholic beverages as shown on the Plaintiff’s social medias and online platforms but said those were merely for advertisements but then changed his answer and admitting the contents of posting being liquor bottles but maintained selling canned beers but not liquor. S/N VfByxl7M8kmOy7Rh9G431w [33] Having found that the Plaintiff in breach of the agreement, the finding by this Court is that the NOT was rightly issued on 13.11.2020 based on clause 7.1. for material breach of clause 5 on monthly rent, utilities and obtaining the necessary license. On this basis, the Defendant is entitled to the vacant possession of the premise by virtue of clause 7.3. [34] As to the CAPEX, the Plaintiff had in fact agreed on 4.8.2020 leading to the revised monthly rental and other terms of the agreement which then was reproduced in the supplementary signed by both parties: “… With the condition: All outstanding payment of Dec 2019, Jan 2020, March 2020 have to be paid by latest 31st August, failure to do so, management reserves the right to terminate the contract with all security deposit forfeited, capex of RM350K to be asked for return, and this supplemental agreement shall be deemed as void as a result of breach of Tenancy Agreement”. [35] On the admissibility of DW3’s testimonies, this Court arrived at the conclusion that his evidence is based on the documentary evidence produced in the form of “Common Bundle of Authorities. With the variation as alleged by the Plaintiff not proven and being afterthought, reliance by DW3 on the documents in the said bundle to testify in court must be permitted and ruled admissible by this Court even if he has no personal or insight knowledge of the background. [36] This is in line with the commercial development taking place and a drive for a job with better pay, one would undeniably jump from one company to another and opted for a better option offered elsewhere. Hence, this Court is of the view that the testimonies given by DW3 is not S/N VfByxl7M8kmOy7Rh9G431w hearsay having filled up this post as he had continued with the task on issuing the invoices, to be sent out by the customer service section in relation to this case. Order of the Court [37] Having heard the Plaintiff and Defendant including 2 other Defendant witnesses being DW1 Johor Bahru Municipal Council, DW2 Assistant District Officer (Licensing) and DW3 Engineering and Property Manager of the Defendant including the admissions by the Plaintiff himself, this Court dismissed the claim by the Plaintiff but allowed the following counter-claim by the Defendant as follows: i. A declaration that the agreement dated 18.11.2019 including the supplementary signed on 6.8.2020 validly terminated by way of NOT dated 13.11.2020; ii. Plaintiff to deliver vacant possession of the premise to the Defendant; iii. Plaintiff to pay Defendant, specific damages of RM25,500.00 (as admitted by Plaintiff); iv. Plaintiff to pay RM91,711.80 being the monthly rental and utility payment due (calculated as at 17.3.2020 minus February 2020, 18.3.2020 to 31.3.2020, April 2020, May 2020, June 2020, July 2020, August 2020 and December 2020); v. Plaintiff to pay the double rental of RM27,813.56 from 12.12.2020 until delivery of vacant possession (by virtue of section 28(4) Civil Law Act 1956); vi. The refund of the Capital expenditure sum of RM350,000.00 (as per the supplementary agreement); S/N VfByxl7M8kmOy7Rh9G431w vii. The deposit sum of RM36,239.20 be forfeited (pursuant to clause 3.2 of the agreement); viii. Defendant allowed to “…sell or otherwise dispose off the goods of the tenant toward payment of all arrears of rent and interest (as per clause 7.1 of the agreement); ix. Interest at 8% on all the damages awarded calculated from 4.2.2021 (date of filing of counter-claim) till realization; x. Cost of RM30,000.00 awarded subject to allocatur. -Signed- (NURULHUDA NUR’AINI BTE MOHAMAD NOR) Judge High Court of Malaya Johor Bahru Dated: 31.8.2024 S/N VfByxl7M8kmOy7Rh9G431w COUNSEL For the Plaintiff: Ho Hon Keong (Siow Chang Yao with him) Messrs. Palani Aishah & Co Advocates & Solicitors 1st Floor Unit A, Wisma Alma No. 2-4 Jalan Manau Off Jalan Kampung Attap 50460 Kuala Lumpur For the Defendant: Kho Sze Jia (Ho Chan Chon, Han Xin Yi, Lee Yan Li (PDK) with him) Messrs. Izad Kazran & Co Advocates & Solicitors A1-10-15, Arcois Business Suites 10 Jalan Kiara, Mont Kiara 50480 Kuala Lumpur