JR Lincks Educational Consultants Sdn Bhd

[2008] 3 CLJ v. Goh & Sons Enterprise Sdn Bhd 815

A JR LINCKS EDUCATIONAL CONSULTANTS SDN BHD

v.

GOH & SONS ENTERPRISE SDN BHD

B COURT OF APPEAL, PUTRAJAYA
ABDULL HAMID EMBONG JCA
KN SEGARA JCA
ABU SAMAH NORDIN JCA
[CIVIL APPEAL NO: M-02-628-1998]
C 19 NOVEMBER 2007

CIVIL PROCEDURE: Appeal - Interference by appellate court -

Learned judge’s finding totally against weight of evidence - Learned judge
failed to appreciate and evaluate oral testimony and contemporaneous
D documentary evidence - Whether appellate intervention warranted to
prevent miscarriage of justice

LANDLORD AND TENANT: Creation - Tenancy - Whether

enforceable tenancy can arise before execution of formal written tenancy
agreement - Granting of tenancy by way of letter followed by handing
E
over of possession of premises to tenant - Formal written tenancy
agreement only executed subsequently - Tenancy to be construed in context
of letter and formal written agreement

LANDLORD AND TENANT: Determination - Breach of covenants -

F Determination of respective rights and obligations of landlord and tenant
- Tenancy created by letter and subsequent formal agreement - Equity and
good conscience - Consequences of breach to be viewed in spirit and
context in which tenancy was created

G LANDLORD AND TENANT: Determination - Breach by tenant -

Tenant refusing to pay rental due to landlord’s continuous breach of
various covenants - Whether tenant’s refusal to pay justified - Whether
equitable withholding of rent amounts to willful non-payment - Whether
amounts to sufficient ground for landlord to terminate a fixed term tenancy
H - Whether landlord may terminate tenancy where there is cross-claim by
tenant arising from landlord’s breaches

LANDLORD AND TENANT: Determination - Notice - Period of

notice required to terminate a fixed term tenancy of business premises -
I
Reasonable period not less than three months unless agreement provides
contrary
816 Current Law Journal [2008] 3 CLJ

The appellant/plaintiff (J.R. Lincks Educational Consultants A

Sdn.Bhd.) and the respondent/defendant (Goh & Sons Enterprise
Sdn. Bhd.) were the tenant and landlord respectively of 14 units
of premises (“the said premises”). By a letter dated 22 July 1993
the defendant offered to rent the said premises to the plaintiff on
terms and conditions set out in the said letter. The offer was B
accepted by the plaintiff. Although the tenancy was to commence
from 1 September 1993, possession of the premises was given to
the plaintiff only on 24 January 1994 due to delay in the issuance
of the Certificate of Fitness. The duration of the fixed term
tenancy was said to be from 1 March 1994 to 28 February 1997. C
The authorized use of the demised premises was “as offices and
as a college”. A formal tenancy agreement was only prepared and
executed on 11 April 1994. The plaintiff claimed for specific
performance of the terms of the tenancy and/or damages for
breach of the said tenancy agreements. The defendant D
counterclaimed for vacant possession of the said premises together
with arrears of rental and mesne profit. The learned High Court
Judge ordered that the plaintiff deliver vacant possession of the
premises to the defendant and that the plaintiff pay to the
defendant arrears of rental as well as double rent. The plaintiff E
appealed against this decision. The issues to be determined in this
appeal were (a) whether the plaintiff was entitled to any damages;
and (b) whether the notice issued by the defendant dated 26 June
1995 to pay arrears of rental and to quit and deliver vacant
possession was valid. The question of specific performance had F
become academic and did not arise since the tenancy of the
premises had expired by effluxion of time.

Held (allowing the appeal)

Per KN Segara JCA: G

(1) The plaintiff became tenant of the premises pursuant to the

tenancy agreement by letter dated 22 July 1993, immediately
upon the plaintiff being given possession of the premises on
24 January 1994, notwithstanding the execution of a formal
H
written tenancy agreement subsequently. The learned judge
had misdirected himself in ruling that there was no enforceable
tenancy agreement on which the plaintiff could claim damages
for any period before the formal written tenancy agreement
was executed. (paras 15 & 16)
I
 JR Lincks Educational Consultants Sdn Bhd
[2008] 3 CLJ v. Goh & Sons Enterprise Sdn Bhd 817

A (2) On the facts of this case, equity and good conscience required
that the tenancy of the said premises be construed in the
context of the letter dated 22 July 1993 and the formal written
agreement executed in April 1994, coupled with the act of the
defendant handing over the keys to the plaintiff on 24 January
B 1994 to determine the respective rights and obligations of the
landlord and tenant. The consequences of any breach of any
of the terms and conditions by either party had to be viewed
in the spirit and context in which the tenancy of the premises
was entered into, that was, for the use of the 14 units of
C shop-lots for the purpose of running a college for higher
education. (para 17)

(3) The learned judge’s finding was totally against the weight of
the evidence. He failed to appreciate and evaluate the oral
D testimony and contemporaneous documentary evidence. It
warranted appellate intervention to prevent miscarriage of
justice. (para 32)

(4) The plaintiff had observed its obligations under the tenancy
agreement by paying the required rental although the
E
defendant was in continuous breach of the various special
conditions. The plaintiff was forced to stop paying rental
effective August 1994 until all the problems and the breaches
have been resolved by the defendant. (para 35)
F (5) The defendant failed to remedy the breaches under the special
conditions in the tenancy agreement, in particular, the
commissioning of the lift and the supply of 3 phase electricity.
The water leakage and flooding problem was also not attended
to until very much later. The breaches and problems caused
G hardship and business losses to the plaintiff. The condition of
the premises (lack of air-conditioning and non-operation of lift)
discouraged many prospective students from enrolling.
(para 36)

H (6) The defendant cannot equate the equitable withholding of the

rent with willful non-payment. Therefore, the fixed term
tenancy could not be terminated before its expiration on
28 February 1997, grounded on an alleged default in payment
of the monthly rental. The notice of termination of tenancy
I dated 26 June 1995 was invalid. (para 36)
818 Current Law Journal [2008] 3 CLJ

(7) When there is a cross-claim by the tenant arising from the A

breaches of the landlord, the landlord does not have an
automatic right to terminate the tenancy. It would be grossly
inequitable for a party in breach to take advantage of its own
breach. (para 36)
B
(8) Any valid notice to terminate a fixed term tenancy of business
premises, in order to be sufficient and reasonable in the
absence of any express and unambiguous term in the
agreement, shall be not less than three months. (para 36)
C
Bahasa Malaysia Translation Of Headnotes

Perayu/plaintif (J.R. Lincks Educational Consultants Sdn.Bhd.) dan

responden/defendan (Goh & Sons Enterprise Sdn. Bhd.) masing-
masing adalah penyewa dan tuan tanah bagi 14 unit premis
(“premis tersebut”). Melalui surat bertarikh 22 Julai 93 defendan D
menawarkan untuk menyewa premis tersebut kepada plaintif atas
terma dan syarat yang dinyatakan di dalam surat tersebut. Tawaran
diterima oleh plaintif. Walaupun tenansi akan bermula pada 1
September 93, milikan premis hanya diberi kepada plaintif pada 24
Januari 94 akibat kelewatan dalam pengeluaran Sijil Kelayakan. E
Tempoh tenansi terma tetap berkenaan adalah dari 1 Mac 1994
hingga 28 Februari 1997. Kegunaan yang dibenarkan bagi premis
tersebut pula adalah “sebagai pejabat dan sebuah kolej”. Apapun,
perjanjian tenansi yang formal hanya disediakan dan dimeterai pada
11 April 1994. Plaintif menuntut pelaksanaan spesifik terma-terma F
tenansi dan/atau gantirugi kerana pelanggaran perjanjian tenansi.
Defendan menuntut balas memohon milikan premis tersebut
bersekali dengan tunggakan sewa serta mesne profit. Yang arif
hakim Mahkamah Tinggi memerintahkan supaya plaintif
menyerahkan milikan premis tersebut kepada defendan dan G
membayar tunggakan sewa serta sewaan berganda. Plaintif merayu.
Isu-isu yang perlu diputuskan adalah (a) sama ada plaintif berhak
kepada sebarang gantirugi; dan (b) sama ada notis yang
dikeluarkan oleh defendan bertarikh 26 Jun 95 untuk pembayaran
tunggakan sewa, pengosongan serta pengembalian milikan kosong H
premis tersebut sah. Persoalan pelaksanaan spesifik telah menjadi
akademik dan tidak berbangkit kerana tenansi telah pun tamat
akibat dari luput masa.

I
 JR Lincks Educational Consultants Sdn Bhd
[2008] 3 CLJ v. Goh & Sons Enterprise Sdn Bhd 819

A Diputuskan (membenarkan rayuan)

Oleh KN Segara JCA:

(1) Plaintif menjadi penyewa premis ekoran perjanjian tenansi

melalui surat bertarikh 22 Julai 1993, sebaik sahaja plaintif
B diberikan milikan kosong premis pada 24 Januari 94, walaupun
perjanjian tenansi bertulis formal dimeterai kemudian dari itu.
Yang arif hakim telah tersalah arah akan dirinya bilamana
memutuskan bahawa tidak wujud perjanjian tenansi
berdasarkan mana plaintif boleh menuntut gantirugi bagi
C tempoh sebelum perjanjian tenansi bertulis formal dimeterai.

(2) Berdasarkan fakta kes ini, bagi menentukan hak-hak dan

obligasi tuan tanah dan penyewa masing-masingnya, ekuiti dan
akal budi mengkehendaki bahawa tenansi premis tersebut
ditafsirkan di dalam konteks surat bertarikh 22 Julai 93 dan
D
perjanjian bertulis formal yang dimeterai pada April 1994, serta
juga tindakan defendan yang menyerahkan kunci kepada plaintif
pada 24 Januari 94. Akibat yang terbit dari pelanggaran mana-
mana terma dan syarat oleh mana-mana pihak hendaklah dilihat
dalam semangat dan konteks tenansi premis tersebut dimasuki,
E
iaitu, untuk menggunakan 14 unit lot kedai tersebut untuk
maksud menguruskan sebuah kolej pengajian tinggi.

(3) Dapatan yang arif hakim adalah sepenuhnya bertentangan

dengan tekanan keterangan. Beliau gagal melihat dan menilai
F testimoni lisan dan juga keterangan-keterangan dokumen
kontemporari. Maka ia mewajarkan campurtangan rayuan bagi
mengelakkan salahlaksana keadilan.
(4) Plaintif telah menyempurnakan obligasinya di bawah perjanjian
G tenansi dengan membayar sewa yang diwajibkan walaupun
defendan terus menerus melakukan kemungkiran terhadap
beberapa syarat khusus perjanjian. Plaintif terpaksa memberhentikan
pembayaran sewa bermula Ogos 1994 sehinggalah kesemua
masalah dan kemungkiran-kemungkiran diselesaikan oleh
H defendan.

(5) Defendan gagal mengatasi kemungkirannya terhadap syarat-

syarat khusus perjanjian tenansi, terutama berkaitan pentauliahan
lif dan pembekalan elektrik 3 peringkat. Pembocoran air dan
I
masalah kebanjiran juga tidak diendahkan sehingga beberapa
lama kemudian. Kemungkiran-kemungkiran dan masalah-masalah
ini telah menyusahkan dan menjejaskan perniagaan plaintif.
820 Current Law Journal [2008] 3 CLJ

Keadaan premis (ketiadaan penyaman udara dan lif yang tidak A

beroperasi) membuatkan ramai bakal-bakal pelajar tawar hati
untuk mendaftar diri.

(6) Defendan tidak boleh menyamakan penahanan sewa berekuiti

dengan perbuatan sengaja enggan membayar. Oleh yang B
demikian, tenansi terma tetap tidak boleh ditamatkan sebelum
ianya tamat pada 28 Februari 1997, dengan beralaskan
dakwaan keengganan membayar sewaan bulanan. Notis
penamatan tenansi bertarikh 26 Jun 95 adalah tak sah.
C
(7) Bilamana terdapat tuntutan balas oleh penyewa yang
berbangkit dari kemungkiran tuan tanah, tuan tanah tidak
mempunyai hak automatik untuk menamatkan tenansi. Adalah
amat tidak adil bagi pihak yang melakukan kemungkiran untuk
mengambil manfaat atas kemungkirannya.
D
(8) Untuk menamatkan satu tenansi terma tetap premis
perniagaan, suatu notis yang sah, untuk ianya menjadi
mencukupi dan munasabah dalam ketiadaan mana-mana terma
ekspres dan jelas di dalam perjanjian mengenainya, hendaklah
tidak kurang dari tiga bulan. E

Case(s) referred to:

British Anzani (Felixstowe) Ltd v. International Marine Management (UK)
Ltd [1979] 2 All ER 1063 (refd)

For the appellant - Malik Imtiaz Sarwar (Asma Mohd Yanus with him); F
M/s Thomas Philip
For the respondent - Edward Saw (FH D’Cruz with him); M/s SK Khoo &
Assocs

[Appeal from High Court, Melaka; Civil Suit No: 22-6-1995]

G
Reported by Amutha Suppayah

JUDGMENT

KN Segara JCA:
H
[1] The appellant (JR Lincks Educational Consultants Sdn Bhd)
and the respondent (Goh & Sons Enterprise Sdn Bhd), were
respectively, the plaintiff and defendant in Melaka High Court Civil
Suit No. 22-6-1995 filed on 23 January 1995, whereas the
respondent was the plaintiff and the appellant was the defendant, I
in the Melaka Sessions Court Summons No. 52-211-1995 filed on
10 August 1995. The sessions court summons was transferred to
 JR Lincks Educational Consultants Sdn Bhd
[2008] 3 CLJ v. Goh & Sons Enterprise Sdn Bhd 821

A the High Court and consolidated with the High Court civil suit by
order of court dated 1 November 1996 (p. 29 rekod rayuan A).
The trial of the consolidated actions commenced in the High
Court on 20 May 1997 and after a full trial, the learned High
Court judge dismissed with costs, on 16 September 1998, the
B claim of the plaintiff in Melaka High Court Civil Suit No. 22-6-
1995 and allowed the claim of the plaintiff in Melaka Sessions
Court Summons No. 52-211-1995 with costs, and ordered:
(a) That the defendant (J.R.Lincks Educational Consultants Sdn.
C
Bhd.) deliver vacant possession of the premises to the
plaintiff (Goh & Sons Enterprise Sdn. Bhd.);

(b) That the defendant pay to the plaintiff arrears of rental at

the rate of RM6000 per month from January 1995 till July
1995;
D
(c) That the defendant pay the plaintiff double rent at the rate
of RM12,000 from August 1995 till date of delivery of
vacant possession of the premises;

(d) That the defendant pay interest at the rate of 8% per annum
E on (b) and (c) above.

[2] The appellant, JR Lincks Educational Consultants Sdn Bhd

(hereinafter referred to as “the plaintiff”), dissatisfied with the
decision of the learned High Court judge, mounted this appeal on
12 grounds. We are of the view only grounds 1, 2, 4, 6, 7, 8 and
F
10 merit serious consideration. The respondent, Goh & Sons
Enterprise Sdn Bhd, shall hereinafter be referred to as “the
defendant”, and, its summons in Melaka Sessions Court shall
hereinafter be referred to as “the counterclaim”.
G [3] The plaintiff and the defendant were at all material times the
tenant and landlord, respectively, of the premises known as 52C,
54C, 56C, 58C, 60A, 60B, 60C, 60 (Ground Floor), 60
(Mezzanine Floor), 62A, 62B, 62C, 62 (Ground Floor) and 62
(Mezzanine Floor) Jalan Kampung Hulu, Melaka (hereinafter the
H 14 shop-lots shall, collectively, be referred to as “the said
premises”).

[4] In a nut-shell, the plaintiff’s claim was for specific

performance of the terms of a tenancy of the said premises, viz. a
I letter dated 22 March 1994 as well as a written tenancy
agreement dated 11 April 1994; and/or damages for breach of the
terms of the said tenancy agreements. The defendant’s
822 Current Law Journal [2008] 3 CLJ

counterclaim, on the other hand, was for vacant possession of the A

said premises together with arrears of rental for the period January
- June, 1995; rental for the month of July, 1995; and mesne profit
from August 1995 till delivery of vacant possession.

[5] For ease of reference and comprehension, the grounds of B

appeal which merits serious consideration are reproduced below:
1. The learned trial Judge erred in fact and in law in concluding,

Berkaitan dengan kerugian pertama tidak ada perjanjian

penyewaan yang mengakibatkan penguatkuasaan perjanjian C
itu. Pihak-pihak hanya sedang tawar-menawar untuk
satu perjanjian penyewaan yang telah mengakibatkan
pelaksanaan perjanjian itu. Maka defendan tidak boleh
dipertanggungjawabkan untuk kerugian pertama plaintif;

2. The learned trial Judge was wrong when interpreting special D

condition No. 10 of the tenancy agreement regarding the lift
when holding,

Saya berpuas hati bahawa defendan telah mengambil

semua langkah yang perlu untuk mengurus lif tersebut.
E
Plaintif tidak menunjukkan bahawa defendan gagal
berusaha sedaya upaya. Selanjutnya, mengenai isu ini
plaintif tidak membayar pendahuluan RM200.00 sebulan
untuk penyelenggaraan dan servis lif tersebut. Defendan
adalah terikat untuk mematuhi syarat ini hanya terma-
terma yang diletakkan oleh plaintif dipenuhkan terlebih F
dahulu oleh plaintif sendiri. Plaintif telah tidak
memenuhinya’;

4. The learned trial Judge was wrong when he totally failed to

consider the entire evidence on the breach of the special
condition under 1.03 in the tenancy agreement regarding the G
supply of a 3 phase electricity and by failing to make a
finding of fact on this issue;

6. The learned trial Judge was wrong in fact and in law in

misconceiving the unrebutted expert evidence of SP3 on the
computation of loss of income which was based on the loss H
of income when holding,

Perkara yang boleh diperhatikan pada awal, atas

anggapan tuntutan plaintif memang sah, adalah SP1 dan
SP3 telah memberi angka-angka yang berlainan mengenai
I
kerugian yang dikatakan telah dialami oleh plaintif. Ini
membuat tuntutan plaintif tidak dapat dikekalkan. Perkara
 JR Lincks Educational Consultants Sdn Bhd
[2008] 3 CLJ v. Goh & Sons Enterprise Sdn Bhd 823

A seterusnya yang perlu diperhatikan, atas anggapan yang

sama, adalah angka-angka yang diberikan oleh kedua-
kedua saksi tersebut tidak pula mengambilkira
perbelanjaan yang mungkin telah dialami oleh plaintif
dalam mengira kerugian. Kerugian yang telah dialami oleh
plaintif, jika ada, adalah jumlah pendapatan yang mungkin
B
diperolehi untuk tempoh tersebut tolak jumlah perbelanjaan
yang mungkin telah dialami untuk tempoh tersebut.
Dalam ketiadaan keterangan sedemikian adalah mustahil
untuk menentukan kerugian yang dialami oleh plaintif.
Walaubagaimanapun, adalah pendapat saya bahawa
C tuntutan ini tidak mempunyai merit.

7. The learned trial Judge was wrong when deciding the notice
to quit was valid without considering the issue of sufficiency
of notice and further without considering whether a party in
breach could take advantage of its own breach by issuing a
D notice to quit;

8. The learned trial Judge was wrong in failing to take into

consideration that the defence witness DW2 had given
contradictory and false evidence regarding the problem of the
lift; the 3 phase electricity supply and on the termite
E
problem;

10. The learned trial Judge was wrong in ordering the appellant
to pay double rental at the rate of RM12,000 per month
from August, 1995;
F
[6] By a letter dated 22 July 1993 (p. 83 rekod rayuan B) the
defendant offered to rent the said premises to the plaintiff on
terms and conditions set out in the said letter. The offer was
accepted by the plaintiff. The material parts of the letter reads:
G Re: Lease of Kampung Hulu Shop-Lots to J.R. Lincks College

As requested by you we agree to rent to you the above 4 storey

shop-lots (The shop-lots include Lots 21 & 22 (Ground Floor,
Mezzanine Floor, 1st, 2nd, and 3rd Floor) and the 3rd floor of
Lots 23, 24, 25, and 26) on the following terms and conditions.
H
1) Rental
$6.000.00 per month for the whole premises.

2) Commencement
I From the date of issuance of the Certificate of Fitness
(expected date 1st of Sept. 93)
824 Current Law Journal [2008] 3 CLJ

3) Upon confirmation and signing of the tenancy agreement you A

are required to pay $6,000.00 as security deposit. Upon
issuance of Certificate of Fitness you are to pay one (1)
month rental in advance (i.e. $6,000.00).

4) Deposit of $1,500.00 for electricity and water.

B
5) Terms
For a period of 3 years with an extension for a further
period of 2 years on the same terms and conditions.

6) Premises:
C
a) Electrical: We agree to change the electrical system to
3 phase together with the relevant meters.

b) Passage Way: To construct a passage way adjoining Lots

21, 22, 23, 24, 25, and 26.
D
c) Demolish Walls: To demolish the dividing wall on the
3rd floor between Lots 23, 24 and 25.

To demolish dividing wall on ground floor of Lots 21

and 22.
E
d) Water: We agree to connect the water supply and
meters.

7) Water And Electricity Deposit

You will sign the contract with the relevant authorities and
pay for the required deposit. F

8) Lightings
...

9) Fans
G
...

10) Purpose
For office and college.

If you agree to the above terms, please confirm acceptance by H

signing a copy of this letter and we will request our lawyers to
prepare the tenancy agreement and all legal fees, stamp fees to
be paid by you.

This offer is open to you for a period of 2 weeks from this date.
I
...

(signed)
Goh & Sons Enterprise Sdn Bhd
 JR Lincks Educational Consultants Sdn Bhd
[2008] 3 CLJ v. Goh & Sons Enterprise Sdn Bhd 825

A We hereby agree to the lease of above shop-lots accordingly to

the terms herein stipulated.

(Signed)
President
J.R. Lincks College
B For J.R. Lincks Educational Consultants Sdn Bhd.

[7] Following the acceptance by the plaintiff of the offer by the

defendant to let the said premises on the terms stipulated in the
letter of 22 July 1993, the defendant did not immediately
C thereafter, prepare a formal tenancy agreement for the plaintiff to
execute. The tenancy of the premises was to commence from the
date of issuance of the Certificate of Fitness and the plaintiff was
led to believe by the defendant that it would be on 1 September
1993. However, by letter dated 27 August 1993 (p. 85 rekod
D rayuan B) the defendant wrote to the plaintiff as follows:
RE: Lease of Kampung Hulu Shop-Lots to J.R. Lincks College

We refer to our agreement on the lease of the above office/shop

lots to your college dated 22nd July, 1993.
E
Please be informed that there has been a delay in the issuance of
the Certificate of Fitness by the relevant authorities and that we
are expecting the certificate to be issued tentatively by the 15th
of September, 1993.

F We regret any inconvenience caused.

[8] The certificate of fitness was not issued on 15 September

1993. Firman bin Abdullah (PW1) testified, on behalf of the
plaintiff, that a director of the defendant told him that the
G
certificate of fitness had not been issued on 15 September 1993
because the defendant had not complied with the Lembaga Air
requirements. The certificate of fitness was finally issued on
31 December 1993 (p. 86 rekod rayuan B) and possession of the
premises was given to the plaintiff on 24 January 1994. PW1
H
testified, inter alia:
The Plaintiff entered into a tenancy agreement with the Defendant
(witness referred to p 6 of A). This is the agreement. The
purpose of the tenancy is to house J.R. Lincks College at the
premises. The tenancy was to commence on 1.9.1993. The
I Defendant did not give us the premises on 1.9.1993. They were
not able to do so as the Certificate of Fitness was not issued.
(Witness referred to p 8 of A). This is a letter by the Defendant
saying that the premises cannot be occupied. They stated the CF
826 Current Law Journal [2008] 3 CLJ

is to be issued on 15.9.1993. The CF was not issued on that A

day. It was not issued. The director of the Defendants told me
that it is because they have not complied with the Lembaga Air
requirements. The CF was finally issued on 31.12.1993. (Witness
referred to p 9 of A). This is the CF. Possession of the premises
was given to us on 24.1.1994. The Plaintiff was affected as a
B
result of this delay. Firstly, we had to use the Plaza Inn Hotel to
conduct our lectures for October, November and December 1993.
Secondly we lost two intakes of students i.e.the September 1993
intake and January 1994 intake. The Defendants were aware that
the Plaintiff were running a college. This is reflected in the
tenancy agreement under para 10. The Plaintiff entered into C
another tenancy agreement with the Defendants subsequently.
(Witness referred to p 20 of A). It is dated 11.4.1994. The date
of commencement under this agreement was 1.3.1994 for a
period of 3 years. The keys were handed to the Plaintiff on
24.1.1994.
D
[9] The tenancy agreement, referred to by the plaintiff as dated
11 April 1994 in his evidence, is found at p. 97 rekod rayuan B.
It is a formal written tenancy agreement with a schedule and an
annexure which is to be read and construed as an essential and
integral part of the agreement. E

[10] Part 1 of the schedule does not set out the date of the
agreement. Nevertheless, under part 9 of the schedule the duration
of the tenancy was three (3) years and, under part 10 and part
11 of the schedule respectively, the date of commencement of the F
tenancy was 1 March 1994 and the date of termination of the
tenancy was 28 February 1997. Under part 14 of the schedule,
the authorized use of the demised premises is “As offices and as
a college”. Part 15 of the schedule provides for termination of
tenancy as follows: G

This tenancy is a fixed term tenancy and it is agreed:-

i) The Landlord shall not terminate this tenancy before the

expiration period unless the tenant were to breach the terms
and conditions provided herein. H

ii) In the event the Tenant were to terminate this tenancy

before the expiration date, the Tenant shall pay the full
balance of the rental due under this Agreement as
compensation.
I
 JR Lincks Educational Consultants Sdn Bhd
[2008] 3 CLJ v. Goh & Sons Enterprise Sdn Bhd 827

A [11] Part 4 of the schedule lists the premises as follows:

4.1 All that four(4) storey shop house held under Lot 21 Town
Area X, Melaka Tengah and including the Ground Floor,
Mezzanine Floor 1st, 2nd, and 3rd Floor known as 60A, B,
and C, Jalan Kampong Hulu, Melaka.
B
4.2 All that (4) storey shop house held under Lot 22, Town
Area X, Melaka Tengah and known as 58A, B and C Jalan
Kampong Hulu, Melaka.

4.3 All the Third Floor space on Lot 23, Lot 24, Lot 25 and
C
Lot 28 Town Area X, Melaka Tengah with free right of
passage between the four lots. ... The third floor space is
numbered respectively 56C, 54C, 52C and 50C, Jalan
Kampong Hulu, Melaka.

D
All the above premises are located in Kampong Hulu Melaka and
known hereinafter as ‘the said premises’.

[12] It is to be noted that part 4 of the schedule makes no

reference to 62A, 62B, 62C, 62 (Ground Floor) and 62
(Mezzanine Floor) as part of the premises let to the plaintiff
E although it appears from the pleadings that the said shop-lots in
fact form part of the premises rented to the plaintiff. This is not
disputed, thus making a total of 14 shop lots rented out to the
plaintiff for use as a college and offices.

F [13] The annexure to the agreement contains special conditions

including the following:
1. Renovations
The Landlord agrees with the Tenant to carry out the
following renovations to the said premises upon the signing
G
of this Agreement:

1.01 Passageway
To construct a passageway and demolish the walls
adjoining the premises on the 3rd Floor of Lots 21,
H 22, 23, 24, 25 and 26 by 1st April, 1994.

1.02 Demolish Walls

To demolish the dividing walls on the ground floor of
Lots 21 and 22 by 1st March, 1994.
I
828 Current Law Journal [2008] 3 CLJ

1.03 Electrical A
The Landlord shall install a 3-phase electricity to
those parts of the premises as agreed by the 1st
March 1994 and the Tenant to apply for the
connection.
B
10. Maintenance And General Repair Of Lift
The Tenant shall pay RM200-00 per month in advance as
contribution for the maintain and service of the lift. Payment
shall commence from 1st April, 1994, subject to the lift
being in operation. The Tenant shall keep the lift clean at
all times. The Landlord will try its best to commission the C
lift by 1st April, 1994.

13. Commencement Of Rental

The commencement of rental on 1st March, 1994, is
subject to the Landlord to do the followings: D

a) Complete the wiring of the 3 phase electricity.

b) Demolishing the portioning walls of the ground floor.

c) To construct a passageway and demolish the walls

E
adjoining the premises on the 3rd Floor of Lots 21,
22, 23, 24, 25, and 26 by 1st April, 1994.

[14] The plaintiff was given possession of the premises and the
keys on 24 January 1994 according to the PW1’s testimony. This
testimony was never challenged at all. Clearly, the defendant had F
acknowledged the plaintiff as its tenant of the premises, pursuant
to the agreement dated 22 July 1993, when the defendant handed
over the keys of the premises to the plaintiff on 24 January 1994
after the CF was issued on 31 December 1993. A formal tenancy
agreement with a schedule and annexure was only prepared and G
executed several months later. It is not very clear when this
formal agreement was executed. According to PW1’s testimony, it
was dated 11 April 1994. However, in his letter dated 3 March
1994 (p. 87 rekod rayuan B), addressed to the defendant’s
solicitors, there is a reference to the “Tenancy Agreement dated H
1 March 1994”. This is further compounded by the fact that part
1 of the schedule of the formal tenancy agreement is silent on the
date of agreement. Only the ‘cover’ of the agreement has a date
“11 April 1994”. In the absence of any clear stipulation, the
‘cover’ cannot form part of the agreement. On a balance of I
probability, the said formal tenancy agreement must have been
executed on 11 April 1994, as it was stamped on 13 April 1994.
 JR Lincks Educational Consultants Sdn Bhd
[2008] 3 CLJ v. Goh & Sons Enterprise Sdn Bhd 829

A [15] In the light of the chronology of events between the plaintiff

and the defendant vide the tenancy of the premises, and upon the
totality of the undisputed facts and evidence in this case, we hold
the plaintiff became tenant of the premises pursuant to the
tenancy agreement by letter dated 22 July 1993, immediately upon
B the plaintiff being given possession and the keys to the premises
on 24 January 1994, notwithstanding the execution of a formal
written tenancy agreement subsequently, purporting to create a
tenancy effective only from 1 March 1994. That tenancy
agreement by letter (22 July 1993) was never terminated,
C rescinded or repudiated. The fact that the defendant waived
the rental for the period 1 September 1993 till 1 April 1994 is
immaterial, and does not derail the landlord/tenant relationship
already in place between the parties. The subsequent formal
written agreement was nothing more than a continuation of the
D tenancy created by the letter of 22 July 1993. This is reinforced
by the plaintiff placing on record to the defendant’s solicitors by
letter dated 3 March 1994, facts pertinent to the tenancy
agreement created by letter dated 22 July 1993. The facts
contained in the letter were never disputed by the defendant. The
E letter reads as follows:
Re: Rental of Premises

We refer to your letter dated 28/2/94.

F Your client’s letter dated 22/7/93 is the basis on which the

Tenancy Agreement dated 1/3/94 was entered into between us and
your client.

The Tenancy was to commence on 1/9/93 from the expected date

of C.F. which date was altered by your client several times giving
G various excuses and finally your client’s En. Andy Goh gave us
the key to the premises and a photocopy of the C.F. and put us
in possession on 24/1/94.

We were supposed to pay the security deposit and the utility

deposit but your client failed to get ready the premises described
H
herein till today in not providing the 3-phase electrical system,
passageway, demolish walls, water connection and lightings. Your
client neglected the aforesaid from 1/9/93 till the Agreement and
as a result of which our losses are made up as follows:

I
1. Rental charges for Plaza Inn Conference Room for lectures
and lessons;
830 Current Law Journal [2008] 3 CLJ

2. Unable to take in students for the September 1993 and A

January 1994 intakes resulting in losses amounting to
approximately Malaysian Ringgit 1.2 million.

Be as it may be, we entered into the contract, with the rental to

commence on 1/3/94 subject to the Landlords complying with the
installation of the 3-phase electrical system, construction of passage B
way, demolition of the walls on the ground floor and 3rd floor
and as nothing have been done so far we are not obliged to pay
rental yet.

Though your client put us in for the delay, we never waived our
C
losses caused by your client and we are obliged to pay for the
premises only if the special conditions are complied with and your
client failed in that and is still failing. Therefore, your 1st para in
your letter is of no effect. We agreed hoping you will do your
part. As for the 2nd para, though we signed the agreement you
are still failing in the special conditions to make the premises D
worthwhile and tenantable to be occupied by us for the purposes
you are aware of a college of higher education. If your client do
not give something bargained for we have every right to withhold
payment. We never entered the premises illegally and your clients
were anxious to mitigate our losses and gave the keys to the said
E
premises so that renting Hotel Plaza Inn conference rooms in the
interim can be avoided.

We were patient to avoid litigation out of respect of your client

and now since you are dragging us to litigation we give you one
week’s notice from today’s date for your client to comply with all the F
special conditions in the letter of offer and the Tenancy Agreement failing
which we will resort to our legal remedies as we might be
advised.

TAKE NOTICE further we never waived our rights and never

had any intention to waive our losses incurred by your client’s G
delay in giving the occupation of the premises based on the letter
dated 22/7/93.

Without prejudice to the aforesaid and despite all the shortcomings

caused by your client we are prepared to send you our Banker’s
cheque on your clients assurance that the special conditions are H
complied with further delay.

[16] The learned trial judge has, therefore, misdirected himself on

the facts and the law when he ruled that there was no
enforceable tenancy agreement on which the plaintiff could claim I
damages for any period of time before the formal written tenancy
 JR Lincks Educational Consultants Sdn Bhd
[2008] 3 CLJ v. Goh & Sons Enterprise Sdn Bhd 831

A agreement was executed (purporting to create a tenancy effective

from 1 March 1994) as the parties were negotiating and
bargaining prior to the said formal written agreement. Such a
finding flies in the face of the undisputed evidence that the keys
and vacant possession of the premises were given to the plaintiff
B on 24 January 1994, after the CF was issued, consistent with the
terms and conditions contained in the letter dated 22 July 1993.
The plaintiff was not bargaining and negotiating. On the contrary,
the plaintiff was calling upon the defendant to fulfill the terms and
conditions of the tenancy created vide the letter 22 July 1993.
C
[17] On the facts of this case, equity and good conscience
requires that the tenancy of the said premises be construed in the
context of:

i) the letter dated 22 July 1993;

D
ii) the formal written agreement executed in April 1994, coupled
with the act of the defendant handing over the keys to the
plaintiff on 24 January 1994;

E to determine the respective rights and obligations of the landlord

and tenant. The consequences of any breach of any of the terms
and conditions by either party must be viewed in the spirit and
context in which the tenancy of the premises was entered into,
that is, for the use of it (14 units of shop-lots) for the purpose of
F running a college for higher education.

[18] In this appeal before us there is primarily only one main issue
to be determined, that is, whether the plaintiff is entitled to any
damages and, a collateral issue in relation to the defendant’s
counterclaim, that is, whether the notice issued by the defendant
G
dated 26 June 1995 to pay arrears of rental amounting to
RM36,000 on or before 30 June 1995 and in the same breath, to
quit and deliver vacant possession on 31 July 1995, is valid. The
question of specific performance by the defendant of any of the
terms and conditions of the tenancy agreement (contained in the
H
letter dated 22 July 1993 and the formal written agreement) is
now academic and does not arise since the tenancy of the
premises has expired by effluxion of time, even as at the date of
the decision by the trial judge.
I
832 Current Law Journal [2008] 3 CLJ

[19] The claim by the plaintiff for damages is broken into two A
stages, that is, a) the first stage of the tenancy agreement, from
1 September 1993 till 24 January 1994 before the plaintiff went
into possession and, b) the second stage, from the time the
plaintiff went into possession till the expiry of the tenancy.
B
[20] The claim for damages by the plaintiff can only be
considered if there has been a serious breach of the terms and
conditions of the tenancy agreement giving rise to a loss to the
plaintiff, which is not remote and reasonably foreseeable as a
natural and direct consequence of the breach by the defendant C
landlord. Since there was a counterclaim by the defendant for
arrears of rent and vacant possession, the validity of the notice to
quit must be considered in the light of the plaintiff’s claim against
the defendant and not in isolation.
D
[21] Serious Breaches Of The Terms And Conditions Of The
Tenancy Agreement By The Landlord

1. 3-Phase Wiring

Under condition 6) a), contained in the letter dated 22 July E

2003, the defendant clearly agreed to change the electrical
system of the premises to 3-phase wiring together with the
relevant meters. Under condition 1.03 of the special conditions
in the annexure to the formal written agreement, the
defendant was mandated, as landlord, to “install 3-phase F
electricity to those parts of the premises as agreed, by the
1 March 1994”. Any ambiguity in this condition (in the light
of the unequivocal condition 6) a) of the letter dated 22 July
2003), must be read contra proferentum the defendant.
3-phase wiring for the premises (the 14 units of shop-lots) G
would be an essential requisite, as the premises were intended
for the running of a college wherein several units of air-
conditioners/centralized air-condition, and other essential
electrical appliances, such as fans, lights and computers used
simultaneously, would require electrical supply that cannot be H
supported by single phase wiring.

[22] PW1 testified, in examination in chief, inter alia:

The defendant was to install 3-phase power supply to the
premises. This was not done. I
 JR Lincks Educational Consultants Sdn Bhd
[2008] 3 CLJ v. Goh & Sons Enterprise Sdn Bhd 833

A [23] He was not challenged on this assertion in cross-

examination. Nevertheless, in re-examination he reasserted and
clarified that the defendants did not install the 3-phase wiring
system. He testified:

B It is the obligation of the landlord to install the 3-phase electricity.

By this I mean the power must be sufficient. They did not
provide the 3-phase wiring system.

[24] PW4, Mohd Azli bin Abdul Rahim, a customer service

engineer from TNB testified, inter alia:
C
Saya tahu mengenai dokumen berkaitan dengan premises yang
diduduki oleh Plaintiff di 60 dan 62 Kampung Hulu, Melaka. No
60 electricity supplied is 3 phase. For No 61 and 62 it is single
phase. The original electricity supplied to this premise was single
phase including ground floor of No 60. Permohonan untuk
D
upgrade bekalan elektrik untuk premises No 60 tingkat bawah dari
satu fasa ke tiga fasa ada dilakukan pada 8.10.93. ... permohonan
dilakukan pada 8.10.93 dan pemasangan meter dilakukan pada
22.4.1994. For the other premises occupied by the Plaintiff there
was no application to upgrade the system. Selain No 60 tingkat
E bawah premises-premises lain ambil bekalan letrik hanya satu
fasa sahaja. ... Without 3-phase electric supply it is not possible
to run a 20-horsepower aircon even to the other parts occupied
by the Plaintiff. This will cause overloading and cause a fire.
Where there is one phase wiring then 3-phase electricity cannot
be supplied till there is upgrading. Apart from ground floor of
F
No 60 the wiring on the other parts is single phase.

[25] PW4 was not cross-examined at all. His testimony stood

undisputed. The defendant has, therefore, completely breached
condition 6) a) stipulated in the letter dated 22 July 1993, and
G special condition 1.03 of the formal written agreement. The
defendant has only provided 3-phase wiring to the ground floor of
No. 60, when it was incumbent on the defendant to provide 3
phase wiring for all the 14 units of shop lots.

H
2. Non-commissioning Of Lift

By letter dated 26 August 1994 (p. 115 rekod rayuan B) the

plaintiff wrote to the defendant, inter alia:
Please be informed that the lift to the premise which you
I promised to commission by the 1st April 1994 has still not
been commissioned although four months have passed. The
lift is an inherent part of the premises and we executed the
834 Current Law Journal [2008] 3 CLJ

tenancy contract on the assurance given by yourselves that A

the lift would be commissioned by the said date. As a
result of your failure to comply with this condition, the
building has been rendered unfit causing great inconvenience
to us and our students in that we are forced to walk up
the 4 ½ storey building daily. Further this situation has also
B
caused us to suffer business losses as numerous
prospective students have shied away from enrolling at the
college thinking that the building is incomplete.

[26] In examination-in-chief PW1 testified:

C
The Defendant did not commission the lift. It was to be
commissioned by 1.4.1994. This has not been done till to-date.
The lift is ready for commission. It was ready for commission in
1996. (Witness referred to p 58 of A). This is a letter from
Pernas to the Defendants. With regard to the lifts we wrote to
the Defendants. D

[27] Under cross-examination he testified:

The lift was not put into operation till now. I don’t recollect the
Defendant asking us to pay the RM200 p.m. The lift was never
commissioned. One of the reasons I did not pay the rent was E
because of the lift.

[28] DW2, Goh Yew Kian, is the Head of Property Administration

in the defendant company. Under examination-in-chief he testified
(on behalf of the defendant): F

(Witness referred to p 34 of A). Under this clause the tenant is

to pay RM200 p.m. for maintenance of lift. (Witness reads
clause). At that time the lift was not in operation. The lift was
installed in 1992. (Witness referred to p 17 of A)). This relates
to lift. (Witness referred to p 40 of A). (Witness reads 2nd para). G
Even up to September 1994 we were not able to solve the
problem relating to the lift.

[29] Under cross-examination DW2 testified:

(witness referred to Clause 10 at p 34 of A). The lift was to be H
commissioned by 1.4.1994. The lift was not commissioned by
that date. It was due to some technical fault as the PC boards
were broken. Prior to the PC boards breaking down the lift was
not commissioned. (Witness referred to p 56 of A). This letter is
dated 28.10.94. 12 months before this letter the lift was in a
I
position of being commissioned. It was not commissioned. It is a
 JR Lincks Educational Consultants Sdn Bhd
[2008] 3 CLJ v. Goh & Sons Enterprise Sdn Bhd 835

A construction procedure. We have to get CF first before applying

for commissioning of the lift. This letter is dated 4.10.95. As early
as 4.10.95 the lift was in a position to be commissioned. The lift
is not in operation till today. It was not so as we need
maintenance for the operation of the lift.
B
[30] The learned trial judge failed to appreciate that on the oral
evidence of PW1 and DW2, as well as the documentary evidence
before the court, the plaintiff had irrefutably established that the
defendant had totally failed to commission the lift and make it
operational by 1 April 1994 or, at any time, during the currency
C
of the plaintiff’s tenancy of the premises. If the lift was not
commissioned, it could not be operational. The plaintiff’s obligation
to pay a sum of RM200 per month as contribution for the
maintenance and service of the lift from 1 April 1994 takes effect
under special condition 10 of the agreement only if the lift is in
D
operation. Special condition 10 is explicit and there is no room
for any doubt as to when plaintiff’s obligation there under to pay
the said sum of RM200 commences. Special condition 10 reads
as follows:
E 10. Maintenance And General Repair Of Lift

The Tenant shall pay RM200-00 per month in advance as

contribution for the maintain and service of the lift. Payment shall
commence from 1st April, 1994, subject to the lift being in
operation. The Tenant shall keep the lift clean at all times. The
F Landlord will try its best to commission the lift by 1st April,
1994.

[31] The learned trial judge has, therefore, seriously misdirected

himself in holding that he was satisfied that the defendant had
G taken all necessary steps to operate the lift and that the plaintiff
had failed to pay RM200 per month for the maintenance and
service of the lift. In his grounds of judgment the learned judge
stated:
Saya berpuashati bahawa Defendan telah mengambil semua
H langkah yang perlu untuk menguruskan lif tersebut. Plaintiff tidak
menunjukkan bahawa Defendan gagal berusaha sedaya upaya.
Selanjutnya, mengenai isu ini Plaintiff tidak membayar pendahuluan
RM200.00 sebulan untuk penyelenggaraan dan servis lif tersebut.
Defendant adalah terikat untuk mematuhi syarat ini hanya jikalau
I terma-terma yang diletakkan oleh Plaintif dipenuhkan terlebih
dahulu oleh Plaintif sendiri. Plaintif telah tidak memenuhinya.
836 Current Law Journal [2008] 3 CLJ

[32] The learned trial judge’s finding is totally against the weight A
of the evidence. He failed to appreciate and evaluate the oral
testimony and contemporaneous documentary evidence. It
warrants appellate intervention to scrutinize the record and arrive
at findings of fact consistent with the evidence adduced to prevent
any miscarriage of justice. B

Withholding Rent Because The Defendant In Breach/Validity

Of Notice To Quit And Sufficiency Of Notice To Deliver
Vacant Possession
C
[33] PW1 testified under examination-in-chief:
The plaintiff stopped payment of rental to the Defendant
from January 1995. The Plaintiff had made numerous complaints
to the Defendant about the various breaches but we found that
they were not complying with the terms of the tenancy agreement D
and did not remedy the breaches accordingly even though they
had been collecting rental from the commencement of the tenancy.
We felt we were taken for a ride. The Plaintiff gave written notice
to the Defendant before stopping rent on 26/8/1994. It is at page
38 of A. The Defendant in October 1994 attended to the
sewerage problem and provided us the dustbin. The other E
breaches were not rectified at that time.

The Defendants did not rectify the breach with regard to the lift
and the upgrading of the power supply till to-day [20/5/97]. With
regard to the other breaches the Defendant sealed the sewerage
F
tank to prevent the obnoxious smell in October 1994. As for the
flooding they attended to it at the end of 1996. As for the
termites they treated the ground floor around September/October
1994. Rubbish bins were provided in September 1994.

With all the breaches and problems the Plaintiff did not move out G
of the premises was that we did not want our reputation to be
tarnished in that being a college we had to have some degree of
permanency of location. Also we had notified the Ministry of
Education that we would be at these premises for the duration of
3 years. Also it is part of the condition of the 2nd tenancy
agreement (Schedule 15(2)) where we have agreed that the H
tenancy shall be a fixed term tenancy and that in the event of the
Plaintiff terminating the tenancy before the expiry date the tenant
shall have to pay the full balance rental due to the Defendant as
compensation. …
I
 JR Lincks Educational Consultants Sdn Bhd
[2008] 3 CLJ v. Goh & Sons Enterprise Sdn Bhd 837

A [34] The letter dated 26 August 1994 written by the plaintiff to

the defendant is as follows:
We refer to the tenancy agreement dated 11 April 1994 ...

Please be informed that the lift to the premise which you

B promised to commission by 1st of April 1994 has still not been
commissioned although four months have passed. The lift is an
inherent part of the premises and we executed the tenancy
contract on the assurance given by yourselves that the lift would
be commissioned by the said date. As a result of your failure to
C comply with this condition, the building has been rendered unfit
causing great inconvenience to us and our students in that we are
forced to walk up the 4 1/2 storey building daily. Further, this
situation has also caused us to suffer business losses as numerous
prospective students have shied away from the enrolling at the
college thinking that the building is incomplete.
D
In addition to the problem of the lift, leakages in the façade of
the building has also led to the flooding of the premises whenever
it rains. Even though numerous verbal complaints have been made
no action has been taken.
E Apart from this, the sewerage tanks located on the ground floor
of the premises are emitting obnoxious smell making the ground
floor uninhabitable. The ground floor is also infested with termites
which have attacked our books in the library causing damages to
a tune of over one thousand ringgit. Verbal complaints about this
F matter to your office too has fallen on deaf ears.

Besides, our written complaint to your solicitors dated 21st March

1994 stating that the incoming power (60 amps) to the premises
is insufficient to support our central air-conditioning system has
also not been attended to nor remedied rendering our 20 h.p.
G central air-conditioning unit to be inoperable.

As landlord, you have also failed to provide rubbish bins for

refuse disposal neither in front nor the rear of the building.

Please bear in mind we agreed to forego our earlier claims for

H losses which runs into millions of ringgit due to your failure to
honour the initial agreement dated 22 July 1993; on the express
understanding that you would cause us to suffer any further
inconvenience nor losses. However your continous breach in not
commissioning the lift and in not attending to the other complaints
has put us into great distress and financial losses.
I
838 Current Law Journal [2008] 3 CLJ

Please take note that in view of the seriousness of the situation, A

we are forced to stop the rental payment effective August
until all the problems have been resolved to our satisfaction.

Further take notice that if you as landlord fail to perform your

obligations as covenanted and compensate us adequately for the
losses already suffered as a result of the various breaches within B
7 days; you give us no alternative but to seek legal redress
through court action.

[35] There is no dispute that the plaintiff had faithfully observed

its obligations under the tenancy agreement dated 11 April 1994 C
by paying the required rental and utility deposits on 28 March
1994 and thereafter, continued to promptly and dutifully pay
rental for the next four months although the defendant was in
continuous breach of the various special conditions. In order to
safeguard the plaintiff’s interest and rights and to compel the D
defendant to comply with its obligations, the plaintiff wrote the
letter dated 26 August 1994 (quoted above) so as to bring the
serious state of affairs and the defendant’s breaches to its
attention. The plaintiff made it clear, and in no uncertain terms,
that the plaintiff was forced to stop (or withhold) rent effective E
August 1994 until all the problems and the breaches have been
resolved by the defendant.

[36] It cannot be disputed that apart from attending to the septic

tank and the termite problems, the defendant failed to remedy the
F
breaches under the special conditions, in particular, the
commissioning of the lift and the supply of three phase electricity.
The water leakage and flooding problem was also not attended to
until very much later. Naturally, the breaches and problems caused
hardship and business losses to the plaintiff. The condition of the
G
premises (lack of air-conditioning and non-operation of lift) would
discourage many prospective students from enrolling. Erosion in
the confidence and reputation of the college would be an
inevitable consequence.

[37] In the above circumstances, has the plaintiff the right to H

withhold rent, especially when the plaintiff contends that its losses
as a result of the breaches far exceeds the rent due and, that the
defendant has refused or neglected to compensate the plaintiff’s
for its losses? In British Anzani (Felixstowe) Ltd v. International
Marine Management (UK) Ltd [1979] 2 All ER 1063, it was held: I
 JR Lincks Educational Consultants Sdn Bhd
[2008] 3 CLJ v. Goh & Sons Enterprise Sdn Bhd 839

A (iii) The existence of the common law right amounting to set-off

against rent did not, however, preclude the defendants from
relying on the doctrine of equitable set-off, since, except in
case of distress or replevin, equity had never refused to interfere
to protect a tenant whose landlord was bringing proceedings based
on non-payment of rent if the tenant had a bona fide cross-claim
B
for unliquidated damages against the landlord, provided the
tenant had no common law remedy and fulfilled the
preconditions for the application of the equitable doctrine.
(iv) In order to rely on the doctrine of equitable set-off the
defendant had to show, inter alia, that their counterclaim was
C
so directly or closely connected with the plaintiff’s claim as
to go to the foundation of that claim.
(v) However, it was not essential for the application of the
doctrine for the claim and counterclaim to arise out of the
same contract: it was sufficient if the defendants’
D
counterclaim arose out of a transaction so closely connected
with the lease that it would be manifestly unjust not to allow
a set-off. Since the defendants counterclaim arose out of
alleged breaches of the agreement of 7th June 1973 which
had rendered the warehouses unfit in part for the purposes
E for which they were leased, and because it would be manifestly
unjust to allow the plaintiffs to recover rent without taking into
account damages caused by the plaintiffs’ failure to perform their
part of the agreement, the defendants had established a
sufficiently close connection between the transactions for
them to raise their counterclaim as a set-off against the
F
plaintiffs’ claim.

[38] We are of the view the ratios quoted above support and
establish the plaintiff’s right to withhold rent based on the doctrine
of equitable set-off of the plaintiff’s unliquidated cross-claim against
G the defendant’s claim for arrears of rent. Consequently, the
plaintiff cannot be said to be in breach of the tenancy agreement
with regard to the payment of the reserved rent within the time
and manner stipulated therein. The defendant cannot equate the
equitable withholding of the rent with willful non-payment. In the
H circumstances of this case, the fixed term tenancy cannot be
terminated before its expiration on 28 February 1997, grounded
on an alleged default in payment of the monthly rental. The notice
of termination of tenancy dated 26 June 1995 is invalid. When
there is a cross-claim by the tenant arising from the breaches of
I the landlord, then, the landlord does not have an automatic right
to terminate the tenancy by issuing a notice to quit. It would be
grossly inequitable for a party in breach to take advantage of its
own breach.
840 Current Law Journal [2008] 3 CLJ

[39] The plaintiff was at all material times operating a college at A

the demised premises where third party interests (primarily that of
the students) are directly affected by any interruption to the use
of the premises by a sudden and unexpected termination of the
tenancy. Any notice to quit business premises must give adequate
and sufficient time for the tenant to find new premises to relocate B
and continue its business from there. The notice dated 26 May
1995, giving 35 days to give vacant possession, is unreasonable.
In our view, any valid notice to terminate a fixed term tenancy of
business premises, in order to be sufficient and reasonable in the
absence of any express and unambiguous term in the agreement, C
shall be not less than three months.

[40] In the above circumstances, we are of the view that the

learned trial judge has misdirected himself on the law and the facts
when he held the said notice to quit and deliver vacant possession D
was valid. We hold that in the circumstances of this case, the
withholding of rent by the tenant is permitted in law and the
defendant cannot terminate the fixed term tenancy prematurely.
We further hold that the defendant is, therefore, not entitled to
mesne profits for the unexpired period of the fixed tenancy. E

Specific Performance/Damages

[41] The learned trial judge was correct in holding that the
question of specific performance did not arise as the tenancy had
expired by effluxion of time. However, on the question of damages, F
we are of the view that the learned trial judge had erred in
holding that PW1 and PW3 had given different figures in the
computation of the loss and, by reason thereof, the claim of the
plaintiff was not maintainable. We hold that in view of the serious
breaches of the terms of the tenancy agreement by the defendant G
already discussed above, the plaintiff is entitled to a claim in
damages. We also hold that the learned trial judge erred in his
finding that the figures given by the said two witnesses had not
taken into consideration the expenses incurred by the plaintiff in
computing the loss. He held that the loss suffered by the plaintiff, H
if any, would be the total income that is likely to be received for
the period (of the fixed term) less the total likely expenses for the
said period. He held there was absence of such evidence and,
therefore, it was impossible to determine the loss suffered by the
plaintiff. He further held that the claim by the plaintiff was without I
merit.
 JR Lincks Educational Consultants Sdn Bhd
[2008] 3 CLJ v. Goh & Sons Enterprise Sdn Bhd 841

A [42] The learned trial judge failed to appreciate the totality of the
evidence and that the evidence of PW3 (an experienced
accountant) was never challenged at all. PW1 produced a schedule
of fees for the various courses (exh. P1). The average number of
students was determined as between 40 and 50 students by
B reference to the infrastructure of the premises and the expected
student intake. Documents pertaining to student inquiries were
produced and student intake for the relevant periods was
established through the student admission records.

C [43] PW3 prepared a report on the loss suffered by the plaintiff

from 1 March 1994 to 28 February 1997 and he was never cross-
examined at all. It was marked P6 (rekod rayuan C2 p. 1409).
PW3, who is a certified public accountant, testified:
On the instructions of the Plaintiff I prepared a report on the loss
D
suffered by the Plaintiff from 1 March 1994 to 28 February 1997.
(Witness shown a report). This is the report – marked as P6.
This is a loss of income report for that period. Their estimated
loss for 3 years is $1,459.500.00. This is at appendix 1 of P6.
This figure is a comparison from the previous premises and the
E current premises and on a progressive method. At the previous
premises the income was about $802,087.07 for the 3 years. At
the present premises it $396,032.80. By “progressive basis” is
meant when a new college is started the student intake goes on a
progressive basis. Normally the intake increases from 20 - 30%
from previous intake.
F
Basically the losses on income, losses on profit and losses on
wasted expenditure. In loss of income the expenditure is normally
fixed so that the income is on a progressive scale. In such a
situation the expenditure is fixed. In loss or profit the expenditure
G
is variable to the income. In loss of wasted expenditure the
income is not certain and the expenditure is wasted. P6 is based
on the loss of income method. In preparing P6 I did not take
into account the expenditures. This is because the expenditure are
fixed. A teacher can teach a class with 1 student to the maximum.
If a class has more than 50 students the expenditure increase will
H be marginal. P6 is a fair report as the method used is the norm.
This method is normally used to make calculation for schools and
private college.

(Witness referred to P2). This was given to me. From P2 the

loss claimed is $405,775.00. According to P6 the loss is
I $1,459,500.00. The difference is because the student number used
by PW1 is very small whereas in a normal situation the number
can be between 20-30. In P6 I took into account the actual loss
842 Current Law Journal [2008] 3 CLJ

and prospective loss of income. I am qualified to prepare this loss A

of income report. I consider myself as an expert in preparing this
kind of reports. I have prepared such reports before as an expert.

[44] In appendix 4 of his report, PW3 set out a summary of

background information as follows:
B
The college was established in March 1990 at the Bastion House,
1 Jalan Kota, Melaka and operated there till September 1993.

Thereafter it operated from its present premises since March

1994.
C
The college is situated in a 5 storey building having its address
as 60-62, Jalan Kampung Hulu, Melaka.

The college is occupying the ground floor to third (3rd) floor

(including the mezzanine floor) all in five (5) floors.
D
In total it is occupying fourteen (14) shop lots.

The college has the following facilities available:

1. Eight (8) Lecture rooms

E
2. Four (4) Tutorial rooms
3. One (1) Computer Laboratory
4. One (1) Student Lounge
5. One (1) Typographical Laboratory F
6. The library can accommodate 100 students

There are fourteen (14) lecturers full time and part time teaching
various courses.

[45] In appendix 2 of his report, PW3 set out the “Income that G
can be derived in conducting professional courses.” He detailed as
follows:
The following professional courses were offered:
H
1. The Charted Association of Certified Accountants (Level)

2. The Institute of Charted Secretaries and Administration (Pre

- Professional levels)

3. Charted Institute of Marketing

I
4. Private Secretarial Course

5. Bachelor of Laws (LLB)-University of London

 JR Lincks Educational Consultants Sdn Bhd
[2008] 3 CLJ v. Goh & Sons Enterprise Sdn Bhd 843

A (Apart from these courses the college also conducts the B.A. in
English of the University of London, the LCCI Diploma, GCE
A Level and, IBBM Diploma courses)

The fees for the professional courses is between RM2,725 to

RM3,225.
B
From previous record of attendance for each popular professional
course the student number can be at least about ten (10)
students. Taking five (5) popular professional courses from above,
the student number can be fifty (50) students per intake and
minimum course fee is RM2,725 per student.
C
The maximum number for the English Language Proficiency
Course can be about fifty (50) students per intake and the course
fee is RM625 per student.

D
[46] There were three intakes of students at the college every
year, that is, in January, April and September. In appendix 3 of
his report, PW3 worked out the losses for the period September
1993 till January 1997, that is, from intake No. 10 till intake No.
20. His detailed computation is based on the ideal number of
E
students set at 50 throughout the period in question for the
professional courses and the English Language Proficiency course
and the actual number of students. In appendix 3, PW3 has
computed the losses at RM1,459,500.

[47] We find the basis of computation by PW3 of the plaintiff’s

F
loss of income fair and reasonable.

[48] In the above circumstances, based upon the unchallenged

report P6 prepared by PW3, we assess general damages for the
plaintiff as follows:
G
Loss for the period January 1994
till March 1994: 167,000.00
(inability to take students for the
January 1994 intake, ie, intake No. 11)

H Loss for the period April 1994 till February

1997, ie expiry of tenancy on 28/2/97: 1,124,500.00
(loss vide intake No. 12 till intake No. 20) ---------------
1,291,500.00

I
844 Current Law Journal [2008] 3 CLJ

Less A
Arrears of rental for 31 months at RM6,000.00
per month (ie, from August 1994 till February
1997, covering the period the plaintiff began
with-holding rent in August 1994 till the expiry
of tenancy on 28th February 1997): 186,000.00
B
Less
Deposit 24,000.00
162,000.00 162,000.00
___________
1,129,500.00 C

Add
RM30,000.00 deposited in Court
by plaintiff and paid out to the
defendant: 30,000.00
D
______________
Total: RM1,159,500.00

[49] We are unanimous that this appeal be allowed. The decision

of the learned trial judge vide Melaka High Court Civil Suit
E
No. 22-6-1995 and Melaka Sessions Court Summons No. 52-211
1995 is set aside. The appellant’s claim in High Court Melaka
Civil Suit No. 22-6-1995 is allowed and general damages is
assessed at RM1,159,500, with interest at 8% per annum from
date hereof (19 November 2007).
F
[50] The respondent shall be entitled to vacant possession of the
premises at the expiration of the tenancy on 28 February 1997,
in the absence of any renewal of the said tenancy and in such
event, the appellant shall pay the respondent double rent at the
rate of RM12,000 per month from March, 1997 till date of G
delivery of vacant possession with interest thereon at 8% per
annum.

[51] The appellant shall be entitled to its costs here and the court
below. Deposit to be refunded to the appellant. H