The inability to perform contractual obligations due to the pandemic does not absolve a party from responsibility if they have capacity to pay; pandemic-related protections apply strictly to inability situations and maintaining tenant responsibilities.

[1]On 27.12.2024, this Court has dismissed the Plaintiffs’ claim and allowed partly Defendant’s counterclaim. Aggrieved by this decision, both parties are now appealing to the High Court. Below are my grounds of the said decision.

B. BACKGROUND FACTSThe Demised Premises

[2]Both the Plaintiffs are wholly owned subsidiaries of the Pegasus Height Berhad, a public company listed on the Main Market of Bursa Securities Malaysia. The 1^st Plaintiff is the registered owner and proprietor of:

a)a piece of land held under title no. PN 20891 Lot 19980 and PN 20890 Lot 19981, Mukim Ampangan, Seremban District, Negeri Sembilan (Land); and

b)a three and a half storey shopping complex building known as Seremban Centerpoint Mall erected on the said Land and located at 33, Jalan Dato Siamang Gagap, 70100, Seremban (Seremban Centerpoint Mall).

[3]The 1^st Plaintiff and 2^nd Plaintiff had entered into a tenancy agreement dated 1.3.2015 (MasterTenancy Agreement) that the 1^st Plaintiff as the landlord of Land agreed to let the whole of Seremban Centerpoint Mall to the 2^nd Plaintiff on the terms and conditions stipulated in the Master Tenancy Agreement.

[4]According to Clause 5.6 of Master Tenancy Agreement, the 2^nd Plaintiff is allowed to sublet any part of it to individual or corporate sub-tenants for any legal commercial purpose.

The Tenancy Agreement

[5]The 2^nd Plaintiff and the Defendant have entered into a tenancy agreement dated 24.10.2016 (Tenancy Agreement) that the 2^nd Plaintiff as a tenant to the 1^st Plaintiff, agreed to sublet Lot G-01 and Lot 1-01 in Seremban Centerpoint Mall (Demised Premises) to the Defendant to operate a supermarket under its brand name “The Store”.

[6]The salient terms of the Tenancy Agreement are, inter alia, as follows:

a)the tenancy is for a term of 3 years, commencing from 1.2.2019 and expiring on 31.1.2022 (Part 6 of Schedule 1 read together with Part 7 of Schedule 1 of the Tenancy Agreement and the Defendant’s letter to the 1^st Plaintiff dated 4.6.2019;

b)the Defendant shall pay the 2^nd Plaintiff monthly rental which is equivalent to base rent and minimum rent (Part 11 of the Schedule 1 read together with Part 12 and 13 of Schedule 1 of the Tenancy Agreement), as follows:

i)RM64,67.30 per month or RM0.90 per square foot for first year of tenancy;

ii)RM71,857.00 per month or RM1.00 per square foot for the 2^nd year of tenancy; and

iii)RM79.042.70 per month or RM1.10 per square foot for the 3^rd year of tenancy.

c)the monthly rental is for lettable floor area of approximately 71,857 square feet and the lettable floor area shall be subject to re-measurement after execution of the Tenancy Agreement (Clause 5 read together with Part 5 of the Schedule 1 of the Tenancy Agreement);

i)the Defendant shall pay monthly rental to the 2^nd Plaintiff by seventh (7^th) day of every month (Clause 10.1 of the Tenancy Agreement);

ii)the Defendant shall pay the 2^nd Plaintiff all charges in respect of, inter alia, consumption of water, electricity, gas, telecommunication services and/or sewerage services within the Premises (Utilities) (Clause 10.7 of the Tenancy Agreement); and

iii)the Defendant shall pay the 2^nd Plaintiff late payment interest at the rate of ten percent (10%) per annum calculated on daily basis for overdue monthly rental from the date on which such money falls due for payment to the date such money is received by the 2^nd Plaintiff (Clause 6.3 of the Tenancy Agreement).

[7]The 2^nd Plaintiff had re-measured and revised the lettable floor area of the Demised Premises to 58,693 square feet consists of the following:

a)lettable floor area of Lot G-01 is 29,540 square feet; and

b)lettable floor area of Lot 1-01 is 29,153 square feet.

[8]Based on the remeasured lettable area and the Tenancy Agreement (Part 11 of the Schedule 1 of the Tenancy Agreement read together with Par