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2021 MarsdenLR 1253
HIGH COURT MALAYA KUALA LUMPUR
PUCHONG SPORTS ARENA SDN BHD – Appellant
Versus
CALCIUM CARBONATE MANUFACTURES SDN BHD & ANOR – Respondent
[Suit No: 22NCVC-176-04-2017]
A tenant assumes all risks under a tenancy agreement on an 'as is where is' basis, including legal compliance with necessary approvals.
Headnote:(A) Contracts Act 1950 – Section 24 – Tenancy Agreement – Plaintiff's claim for illegality dismissed – Plaintiff failed to prove that the Tenancy Agreement is void – Land rented on 'as is where is' basis with tenant assuming responsibility for approvals from authorities – Plaintiff breached agreement by commencing renovations without consent – Defendants' defense upheld. (Paras 20-24, 62-77)
Facts of the case: The Plaintiff rented land for operating a sports centre but alleged illegality due to temporary structure's expired permit. The Defendants contended Plaintiff breached the agreement by renovating without permission.
Findings of Court: The Plaintiff did not demonstrate that the Tenancy Agreement is void; the structure was rented 'as is' subject to tenant’s responsibility for legal compliance.
Issues: Main issues included whether the Tenancy Agreement was void due to illegality and fraudulent misrepresentation.
Ratio Decidendi: The court held that the Plaintiff had assumed responsibility for all approvals and could not claim illegality; the Defendant’s evidence contradicted claims of misrepresentation.
Result: Plaintiff's action dismissed; costs awarded to Defendants.
Based on the provided legal document, the key points are as follows:
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The Tenancy Agreement was entered into on an "as is where is" basis, with the tenant assuming responsibility for obtaining all necessary approvals and legal compliance (!) (!) (!) (!) (!) (!) (!) (!) .
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The agreement explicitly states that the tenant shall not be entitled to claim damages or compensation for renovations, improvements, or extensions upon expiry or termination of the tenancy (!) .
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The tenant carried out renovation works prior to obtaining approval from relevant authorities, breaching the covenant in the agreement and the applicable laws (!) (!) (!) .
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The structure on the land was constructed or altered without the necessary permits, and the temporary permit had expired, rendering the structure potentially illegal or in breach of building regulations (!) (!) (!) .
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The tenant was aware of the need for approvals and submitted plans to the authorities; however, these were not approved, and the structure was considered temporary and straddling two parcels of land, which further complicated approval processes (!) (!) (!) (!) (!) (!) (!) .
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The tenant's claim that the structure was illegal or that the agreement was void due to illegality was dismissed because the tenant took the land and structure "as is" and assumed the risk of non-compliance (!) (!) (!) .
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The agreement contained specific provisions that the parties negotiated, including the waiver of claims related to improvements and the acknowledgment that the tenant would not claim damages for renovations or improvements upon termination (!) (!) (!) .
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The evidence showed that the tenant carried out renovations without prior approval and that the structure's legality was not explicitly guaranteed by the landlord or the agreement (!) (!) .
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The tenant alleged fraudulent misrepresentation regarding the legality of the structure; however, the court found insufficient evidence to prove that the landlord or its representative made such representations intentionally or that the tenant relied upon any false statements (!) (!) (!) .
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The court concluded that the tenant was aware of the structure's condition, had inspected the land, and accepted the risks associated with the structure's legal status, especially given the "as is where is" basis of the tenancy (!) (!) (!) (!) .
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The tenant's claim
JUDGMENT
Introduction
[1] The Plaintiff's ("P") claim against the Defendants arises from a tenancy agreement (undated) ("Tenancy Agreement"). The Tenancy Agreement was entered into between P (as tenant) and the 1st Defendant ("D1") (as landlord). The 2nd Defendant ("D2") is a director of D1.
[2] After a full trial, I held that P had not proven its claim on a balance of probabilities. I therefore dismissed P's claim. These are the grounds of my judgment.
Background
[3] The Tenancy Agreement contained the following description:
(a) Description of the Land:- the lands held under Geran 52964, Lot3384, Bandar Petaling Jaya, Daerah Petaling, Negeri Selangor measuring approximately 720.8452 square meters and GM 622, Lot 3386, Tempat Batu 10 3/4 Puchong, Mukim Petaling, Daerah Petaling, Negeri Selangor measuring 0.7167 hectares (collectively the "Land"), together with a double storey structure built thereon ("Structure"), on an 'as is where is' basis;
(b) The Rent:- RM85,000 per month ("Rent");
(c) Use of the Land:- For the sole purpose of using the Land as a sport centre only;
(d) Term of Tenancy:- 3 years ("Term");
(e) Commencement Date of Tenancy:- 1 September 2015.
[4] The Third Schedule of the Tenancy Agreement ("Third Schedule") contained certain 'Special Terms and Conditions' as follows:
"1. The Tenant [ie P] hereby warrants and undertakes with the Landlord [ie D1] that the Term commencing from 1st September 2015 and expiring on 31stAugust 2018 shall be a fixed term and the Tenant shall not be entitled to any early termination of the said Term failing which the Tenant shall compensate the Landlord based on the Term's Rent for the balance duration of the Term ...
2. The Tenant hereby agrees to take a tenancy of the Land together with all structures erected thereon on an as is where is basis and the Tenant hereby undertakes that the Tenant shall not remove any of the existing structures on the Land.
3. The Tenant shall rent the Land on an as is where is basis as at the date of this Tenancy. The Tenant hereby agrees that upon the expiry or sooner determination of this Agreement, the Tenant shall not be entitled to claim against the Landlord for any renovations and/or improvements undertaken by the Landlord on the Land.
...
6. The Tenant hereby further warrants and undertakes that the Tenant has obtained all approvals of the relevant authorities for the business operations of the Tenant's business and this Tenancy Agreement shall not be subject to any condition precedent."
[5] Under clauses 2(f) and (g) of the Tenancy Agreement, P covenanted as follows:
"(f) Not to make any renovations, structural or other alterations or additions to the Land without the previous consent in writing of the Landlord (which consent shall not be unreasonably withheld) subject to the Tenant providing to the Landlord the renovation plans of the Tenant and if necessary, the Tenant shall obtain the written approval of the Local Authority and such other relevant authorities in respect of the same.
(g) Not to do or permit to be done on the Land anything which may infringe any of the laws byelaws or regulations affecting the Land made by the Government Municipality and such other relevant authorities."
[6] Clause 4(e) of the Tenancy Agreement reads:
"(e) Notwithstanding anything in this Agreement, in the event of the expiry or termination of this Tenancy Agreement for any reason whatsoever, the Tenant shall not be entitled to claim against the Landlord for any costs, expenses, losses, compensation and/or damages whatsoever for any improvements, renovations and/or extensions to the Land and/or for any loss of business or profits whatsoever."
[7] In accordance with Special Term and Condition no. 5 of the Third Schedule, a joint and several guarantee ("Guarantee") was provided by the directors of P (ie Er Leong Hui ("PW3") and Chan Chok Fee ("PW4")) for the due performance of the Tenancy Agreement.
Defendants' case
[8] The Defendants aver that P was in breach of the T
