VC George JCA:

[1] The focal point on which this appeal turns is the effect of the option clause in the written three-year tenancy agreement dated 15 June 1991 in respect of the Wisma Sime Darby Car Park owned by the appellant landlord which the respondents, Wilson Parking, were occupying and operating as tenants and in respect of which inter alia they were to provide all necessary equipment for the smooth operation of the car parking facilities. The option clause is s 8.07 which is as follows:

Section 8.07 - Renewal of Tenancy

The Landlord shall, on the written request of the tenant made three (3) months before the expiration of the term hereby created and if there shall not be at the time of such request any existing breach or non-observance of any of the covenants on the part of the tenant hereinbefore contained, grant to the tenant a tenancy of the Demised Premises for a further term of three (3) years from the expiration of the said term at a rent to be agreed but otherwise containing the like covenants and provisions as are herein contained with the exception of the present covenant for renewal.

[Emphasis Added]

[2] Wilson Parking had well within the three months before the expiration of the term of the tenancy, by its letter of 11 October 1993, exercised the option. They wrote to the appellant:

RE: Renewal of Tenancy Agreement Between Wisma Sime Darby Sdn Bhd and Wilson Parking (M) Sdn Bhd For The Wisma Sime Darby Car Park.

In view of the expiring of the above tenancy agreement on 28 February 1994, we hereby give our notice to request you to renew for a further term of 3 years as stated in s 8.07 of the tenancy agreement signed between Wisma Sime Darby Sdn Bhd and Wilson Parking (M) Sdn Bhd dated 15 June 1991.

Thank you.

Yours sincerely,

Wilson Parking (M) Sdn Bhd.

[3] Nothing was said about the rent for the proposed new term.

However by its letter dated 30 November 1993 Wilson Parking in response to the appellants' enquiry as to what sort of rent the respondents had in mind, proposed that the rent for the new term be increased from the old rent of RM44,000 to RM48,000 per month.

[4] In the meantime the respondents had on or about 10 November 1993 commenced the instalation of new parking equipment said to cost some RM45,000. The offer of RM48,000 was followed by meetings and discussions between the representatives of the parties resulting in the respondents by its letter of 15 January 1994 increasing their offer to RM54,000 a month. In response to this, the appellants by their letter of 2 February 1994 in effect informed the respondents that they were inviting others interested in taking over the tenancy of the car park to make offers and invited the respondents to make their offer in respect of the rental for the renewal of the tenancy in competition with the others who had been invited to tender for the tenancy. The letter ended with the appellants informing the respondents that "the company does not undertake to accept the lowest or any tender". The respondents, it would seem, went along with this proposal by the appellants and submitted their tender by their letter of 8 February 1994 (which it is to be noted referred to the appellants' said letter of 2 February 1994 inviting them to join in the tender exercise) and offered to "lease the Wisma Sime Darby car park in Jalan Raja Laut for a monthly rental of RM56,000".

[5] The respondents' tender was not accepted. That of one Metro Parking (M) Sdn Bhd, was accepted.

[6] Thereafter the appellants extended the existing lease till the end of March 1994 obviously to enable the respondents to wind up the car park operations and give up vacant possession.

[7] The respondents however now took the position that because they had exercised the option within the requisite period there was in fact a concluded tenancy agreement in respect of the car park for another three years from l March 1994. It was and is contended that there had been no agreement arrived at on rental, was not relevant