TENANTS REFUSE TO LEAVE, HOW TO CLAIM DOUBLE RENT?
A case note on the Federal Court case of ROHASASSETS SDN BHD v WEATHERFORD (M) SDN BHD & ANOR [2020] 1 CLJ 638
Section 28(4)(a) of the Civil Law Act 1956 (“CLA”) provides an avenue for a landlord to claim against a tenant who fails to hand over possession of the property after the determination of his tenancy, double rent. The section reads: –
“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.”
In the recent court case of Rohasassets Sdn Bhd v Weatherford (M) Sdn Bhd & Anor [2020] 1 CLJ 638, the Federal Court had the occasion to consider section 28(4)(a) of the CLA, and in particular the question of whether there is a requirement on the landlord to prove wilful and contumacious conduct on the part of the tenant holding over to render the tenant liable to pay double rent.
BACKGROUND FACTS
In this case, the Appellant is the owner of a commercial building. The Respondents were tenants who occupied a few floors in the building. The Appellant and the Respondents shall hereinafter be referred to as the Landlord and the Tenants respectively.
Before the expiry of the tenancies, the parties began negotiations on the renewal of the tenancies. The negotiation process proceeded for some 2 years after the expiry of the tenancies, which unfortunately failed at the end of the day.
The Landlord terminated the tenancies by letter dated 19 August 2011 and gave notice to the Tenants to quit and deliver vacant possession of the premises to the Landlord by 1 October 2011. The Tenants however only delivered vacant possession of the premises to the Landlord on 31 October 2011.
The Landlord thereafter brought a suit against the Tenants seeking payment of double rent from the Tenants calculated from the date of the expiry of the tenancies, which fell on 31 March 2009, 30 April 2009 and 31 January 2011, until the date of delivery of vacant possession.
At the High Court
The Landlord’s case was dismissed by the High Court who found that the Landlord had failed to prove that the Tenants’ holding over of the premises was wilful or contumacious. The dictionary meaning of the word ‘contumacious’ is ‘stubbornly or wilfully disobedient to authority’. Dissatisfied with the decision of the High Court, the Landlord appealed to the Court of Appeal.
At the Court of Appeal
The Court of Appeal agreed with the High Court that it is incumbent on the Landlord to prove wilful or contumacious holding over on the part of the Tenants in order to bring an action seeking double rent under Section 28(4)(a) of the CLA against the Tenants. On the fact of the case, the Court of Appeal overturned the High Court decision and found the Landlord to be entitled to receive double rent, not from the date of expiry of the tenancies as claimed by the Landlord, but only from the date of the expiry of the notice to quit, that is on 1 October 2011 until the date when vacant possession of the premises was delivered back to the Landlord, namely on 31 October 2011.
At the Federal Court
Again, dissatisfied with the decision of the Court of Appeal, the Landlord appealed against the said decision to the Federal Court where leave to appeal was granted to answer the question of whether there is a need for a landlord to prove wilful and contumacious conduct on the part of the tenant who holds over after the expiry of the tenancy to entitle the landlord to charge double rent under section 28(4)(a) of the CLA.
In short, the Federal Court answered the legal question posed in the negative. The Federal Court held that it is not incumbent on a landlord to show wilful and contumacious conduct on the part of the tenant in order to charge double rent.
The Federal Court opined that to entitle a landlord to charge double rent, there must be a failure or refusal by the tenant to give up possession after being told to do so by the landlord. The court’s duty is to determine whether the option to charge double rent had been exercised properly and lawfully by the landlord, and is not concerned with contumacious conduct on the part of the tenant who holds over. In other words, even if the tenant is not guilty of contumacious conduct, the tenant can still be 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.
In the present appeal, the Federal Court found based on the facts of the case that the Tenants had held over the premises after the expiry of the tenancies with the tacit approval of the Landlord. In this regard, the Federal Court took into consideration the fact that the Landlord did not make its intention clear to the Tenants that it did not wish to renew the tenancies and wanted the Tenants to give up possession after the expiry of the tenancies. It was held that by agreeing to negotiate for renewal of the tenancies, the Landlord had evinced an intention to renew the tenancies subject to the finalisation of the terms. The Federal Court further found that the Landlord did not make it clear to the Tenants that it would not allow the Tenants to hold over the premises without paying double rent while negotiations for renewal of the tenancies were ongoing, but only issued the notice to quit after negotiations had failed.
Given that the Tenants were found to have held over the premises with the consent of the Landlord up until the expiry of the notice to quit, the Landlord was only allowed double rent commencing from the date of expiry of the notice to quit up until the date of delivery of vacant possession.
Conclusion
Section 28(4)(a) of the CLA 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. In order to claim for double rent, the landlord need not show the tenant’s holding over to be wilful and contumacious. However, it is important for the landlord to 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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HAROLD TAN (harold@hlplawyers.com)
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