The alienation of state land under the National Land Code does not create enforceable private contractual rights for lease renewals, maintaining the State Authority's discretionary powers.

Zabariah Mohd Yusof FCJ:

Introduction

[1] The appellant, who was the plaintiff in the High Court appealed against the decision of the Court of Appeal, and obtained leave to appeal to the Federal Court on the following question of law:

"Whether the alienation of a qualified title by way of a lease by a State Authority under the National Land Code , 1965 gives rise to a contract of lease between the State Authority and the lessee that is enforceable in private law."

[2] The High Court granted judgment in favour of the plaintiff. However, upon appeal to the Court of Appeal, the judgment of the High Court was reversed. Hence the appeal by the plaintiff to this Court with the aforesaid question to be determined.

[3] In this judgment, parties will be referred to, as they were, in the High Court. This is the unanimous judgment of this Court.

Background

[4] On 31 July 1960, the State Authority alienated a piece of land described as HSD 4981, Lot TLO 6893, Bandar Johor Bahru, Johor (the land) to Sri Kemajuan Co Ltd for a term of 60 years (the lease). The lease was issued in Form 11A of the National Land Code 1965 ( NLC ) and was supposed to expire on 30 July 2020. However, before the expiry of the lease, it was acquired by Leong Huat Hardware (Pte) Ltd and subsequently by the plaintiff. The plaintiff registered the lease on 9 March 1980, acquiring more than 40 years of the unexpired portion of the lease. The land is located in the Larkin Industrial Area where a number of factories are situated.

[5] Clause 7 of the Special Conditions of the lease provides the plaintiff with an Option To Renew the lease for a new term of 30 years (Option to Renew), which reads as follows:

"7. At any time not less than six months before the date of expiration of this lease the lessee may, at his option exercise in writing and upon payment of an appropriate premium based upon the undeveloped value of the land and rent at then current rates, surrender this lease and obtain in exchange therefore a new lease for the term of 30 years from the date of his exercise of the said option. Such new lease shall be subject to all the terms and conditions of this lease except the option by this condition conferred."

[6] On 13 March 2014, a meeting was held between the defendant and the plaintiff's representatives, wherein the defendant informed the plaintiff's representatives that they would be issuing a notice to all the factory owners that the defendant would not be renewing the leases in the Larkin Industrial Area to give effect to the State Government's future development plans for the area. Subsequently, by a letter dated 18 August 2015, the defendant informed the plaintiff that the State Authority has decided to convert the Larkin Industrial Area into a housing area and has accordingly, frozen all lease renewal applications.

[7] Despite being notified by the defendant that it would not be renewing the lease of the land in the Larkin Industrial Area, the plaintiff gave notice to the defendant on 24 August 2015, to exercise the Option To Renew under cl 7. At the same time, the plaintiff asked the defendant to inform the plaintiff of the appropriate premium based on the undeveloped value of the land and the current rental rate that is payable.

[8] The plaintiff alleged that the defendant has refused to provide the relevant renewal forms, including Form 12A, to the plaintiff despite various attempts to obtain them.

[9] Despite a reminder being issued on 12 November 2015 by the plaintiff, the defendant has, to date, not responded to the Renewal Notice. As a result, the plaintiff filed an Originating Summons which sought for, inter alia, the following orders:

(1) Specific Performance of cl 7 of the Special Conditions (Prayer 1);

(2) Consequent upon Prayer 1, that the respondent within 14 days of the order of the High Court:

(a) issue Borang 12A in accordance to s 197 of the NLC and all other relevant and necessary forms and/or documents which are required and relevant to t