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2011 MarsdenLR 1681
HIGH COURT MALAYA KUALA LUMPUR
HONG LEONG BANK BERHAD & ANOR – Appellant
Versus
MPC PROPERTIES SDN BHD – Respondent
[Civil Suit No: 22 Ncvc-230-2011]
Tenants are obligated to restore premises to original bare condition, not typical office layout, as per tenancy agreements; unreasonable counterclaims for double rental dismissed.
Headnote:(A) Tenancy Agreements - Reinstatement Obligations - The case concerns the reinstatement of premises upon termination of tenancy agreements, specifically whether tenants were required to restore to original condition or typical office layout. The Court found that plaintiffs were only obligated to restore to bare units as per the original terms of the agreements, rejecting defendant's demands for reinstatement to a typical office layout. (Paras 78-84)
(B) Counterclaim for Double Rental - The Court dismissed the defendant's counterclaim for double rental and reinstatement costs, finding that the defendant had prevented the reinstatement by imposing unreasonable conditions and failing to accept units returned as bare. (Paras 90-93)
Facts of the case:
The plaintiffs leased multiple floors from the defendant, and upon tenancy expiration, there was a dispute regarding the reinstatement to original or typical office conditions. After a series of negotiations, the plaintiffs attempted to reinstate to bare units but faced complications and unreasonable demands from the defendant.
Findings of Court:
The Court concluded that the plaintiffs were justified to reinstate units only to bare condition and that the defendant had unreasonably thwarted these efforts. The counterclaim for double rental and reinstatement costs was dismissed.
Issues: The key issues involved the interpretation of tenancy agreements regarding reinstatement obligations and the legitimacy of the defendant’s counterclaim for damages and double rental.
Ratio Decidendi: The Court emphasized that the terms of the tenancy agreements clearly outlined the obligation to restore the premises to their original state without fixtures and fittings. Any demands for reinstatement to typical office conditions were not supported by the original agreements.
Result: The defendant's counterclaim was dismissed, and costs were awarded to the plaintiffs.
| Table of Content |
|---|
| 1. parties involved and the nature of the tenancy. (Para 1 , 2 , 4 , 5 , 6) |
| 2. claims for deposits and counterclaims. (Para 3) |
| 3. details on reinstatement obligations of plaintiffs. (Para 8 , 10 , 11 , 12 , 15) |
| 4. defendant's expectations for reinstatement. (Para 13 , 14 , 18 , 19) |
| 5. court's analysis of reinstatement requirements. (Para 78 , 79 , 80 , 81 , 82) |
| 6. decision on the nature of reinstatement required. (Para 83 , 89) |
| 7. dismissal of defendant's counterclaim. (Para 90 , 92) |
1. The plaintiffs, Hong Leong Bank Berhad ("the 1st plaintiff) and Hong Leong Bank Assurance Berhad ("the 2nd plaintiff"), are members of the Hong Leong Group of Companies and were tenants of the defendant, MPC Properties Sdn Bhd . The defendant owns Wisma MPL, parts of which were tenanted by the plaintiffs.
2. The plaintiffs' claim against the defendant was for the return of deposits amounting to (RM936,586.03 and RM433,265.00=) RM1,370,851.03, interest and costs. The defendant had counterclaimed for double rental and late payment interest on the double rental, reinstatement costs and general damages.
3. On 16.6.2011, judgment was entered for the plaintiffs for the sum of RM 1,370,851.03 and interest at the rate of 8% per annum from 1.7.2010. However, enforcement of the judgment was stayed pending the hearing of the defendant's counterclaim and set off.
4. The Statement of Agreed Facts would reveal that it is not in dispute that the plaintiffs had entered into various tenancies with the defendant over various units at the Ground Floor, 8th Floor, 12A Floor, 14th Floor, 15th Floor & 18th Floor of Wisma MPL. Although the dates of the Letters of Offer for these various units range from 30.6.2005 to 15.4.2009, however, it is an agreed fact that upon the expiry of the various tenancies, all the tenancies had been extended until 31.12.2009.
5. The dispute between the parties would centre on the issue of the reinstatement of the premises upon determination of the tenancies. The plaintiffs contend that under the Tenancy Agreements and the Letters of Offer for tenancy, the premises were required to be restored to bare units. The defendant, on the other hand, contends that the premises are to be reinstated to a typical office with fittings and partitions.
The Defendant's Case in respect of its Counterclaim
6. The defendant called a total of 4 witnesses. Ch'ng Poh @ Ch'ng Chong Poh (DW 1) is currently the Chief Executive Officer of Malaysian Pacific Corporation Berhad of which the defendant is a wholly owned subsidiary.
7. In relation to the tenancy of the Ground Floor of Wisma MPL, reference was made to clause 5.1(d) of the Tenancy Agreement which provides that at the expiration or sooner determination of the Agreement, the tenant is "to peaceably surrender and yield up to the Landlord the whole of the Demised Premises and to restore the Demised Premises to its original state and condition as at the commencement of the tenancy hereby created with all the fixtures and fittings in good state of repair and tenantable and with all keys complete, failing which the Tenant shall pay to the Landlord as agreed liquidated damages a sum equivalent to two (2) times the rental for each DAY OF delay IN HANDING OVER THE DEMISED PREMISES BACK TO THE LANDLORD..". Under clause 7.2, the landlord is entitled to charge late payment interest at the rate of 15% per annum calculated from the due date of the payment until the date of payment.
8. In respect of the rental of the 8th Floor units, it is noted that items 7 under 'Other Terms & Conditions' in the Letter of Offer reads as follow:
"The tenant shall upon vacating the premises, ensure that the premises is in good tenantable condition (fair wear and tear excepted) and remove all of the tenant's fixtures, fittings and partitions and restore the premises to its original condition prior to the renovation being made by the tenant (including the fixtures, fittings and partitions taken over by the tenant from the previous tenant ,
