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Definition: “Lease”
A conveyance by which the proprietor of land (lessor) grants to another person (lessee) an interest in the land less than a freehold and less than that to which the lessor himself is entitled.
LESSOR LESSEELEASE
Section 5 NLC: “Lease”: registered lease or sublease
of an alienated land Therefore, excludes a lease
agreement an equitable lease and a TER.
Characteristics of a lease1. Lessee enjoys a right of exclusive
possession2. Duration is specific and certain3. Lessor has an intention to create a
lease and not a license Intention can be construed from written
agreement or by conduct
Note: distinguish between a lease and a mere license.
Woo Yew Chee V Yong Yong Hoo [1979]
There was a written agreement allowing the respondent to occupy the premises for 10 years with a monthly rent of $170.
Respondent was to share with the appellant landlord the kitchen, bathroom and toilet. The landlord held the key.
Court: the agreement was in the nature of a lease and not a licence.
Court further held: The ultimate test is “the nature and
quality of the occupancy: Whether it was intended that the
occupier should have a stake in the premises sublet, or
Whether he should have only a personal privilege”
--Lord Denning in Marchant v Charters [1977]
In other words, the court would look at the intention of the parties as evidenced in the lease agreement.
Marchant v Charters [1977]
Lord Denning MR considered the difference between a tenant and a licensee: ‘What is the test to see whether the occupier of one room in a house is a tenant or a licensee? It does not depend on whether he or she has exclusive possession or not. It does not depend on whether the room is furnished or not. It does not depend on whether the occupation is permanent or temporary. It does not depend on the label which the parties put upon it. All these are factors which may influence the decision but none of them is conclusive. All the circumstances have to be worked out. Eventually the answer depends on the nature and quality of the occupancy. Was it intended that the occupier should have a stake in the room or did he have only permission for himself personally to occupy the room, whether under a contract or not? In which case he is a licensee.’
Power to grant lease Section 221 What can be leased? The whole of alienated land Part of alienated land
Who can create a lease? The lessor, lessee or sub lessee
Effect of unregistered lease Section 5 NLC: “Lease”: registered lease or sublease
of an alienated land
Margaret Chua [1961] MLJ 173 Although the agreement for a lease for
25 years was void for lack of registration, but it was valid as an agreement for a lease enforceable in equity.
Effect of uncertain duration Effect of a tenancy “for as long as the
tenant likes”?
Siew Soon Wah v Yong Tong Hong [1971] Duration of the tenancy was expressed
to be for as long as the respondent wished to occupy.
The agreement is good as a lease agreement. Section 206(3)
Duration of lease
Section 221 Must exceed three years Maximum term:
99 years (for whole of land) 30 years (for part of land)
If does not exceed 3 years Tenancy Exempt from Registration
(TER)
Differences between leases & TERs
LEASE Section 221, 222 Duration: exceeding 3
years Proprietor, lessee, sub
lessee can create lease. Form 15A (lease) or
Form 15B (sublease), and attach a plan and description (if lease of part of land)
TENANCY Section 223 Duration: not exceeding 3
years Proprietor, lessee, sub-
lessee, tenant can create TER
Created by word of mouth or written instrument in whatever form.
Exempted from registration but may make endorsement to protect the TER Section 213(3).
Power to grant tenancies S 223 Who can grant a tenancy?
Proprietor Lessee or sublessee Tenant
How is it granted? By word of mouth By a written instrument in any form
whatsoever.
Calculation of terms S 224 “If the term is for a fixed period, no account
shall be taken of the fact that it is capable of renewal in pursuance of an option…”
Luggage Distributors Sdn Bhd v Tan Hor Heng
Court of Appeal: S 224(b) prohibits any option for renewal from being taken into account when determining the length of a tenancy for a fixed period.
Tenancy exempt from registration S 213
TER means any tenancy or sub-tenancy not exceeding 3 years.
Not capable of registration. S 213(2)(b)
No TER shall be binding on a subsequent purchaser unless prior to the date on which the dealing takes effect, the tenancy has become protected by an endorsement on the RDT. S 213(3)
Applcation for Endorsement Section 316: “Any person claiming to be entitled to a TER
may, for the purpose of protecting his rights thereunder against subsequent dealings, as mentioned in S 213, apply…for the endorsement of his claim on the RDT…
Than Kok Leong v Low Kim Hai A TER that had not been endorsed on the
register was not binding on a subsequent purchaser.
Tenancy coupled with equity Encouragement, expectation,
expenditure Landlord is estopped from terminating
the tenancy until he has satisfied the tenant’s equity.
How? Give more time for the tenant to be in
possession Pay compensation
Mok Deng Chee v Yap See Hoi Federal Court assumed that the
original house had been built with the encouragement and approval of the previous landowner and the expenditure involved.
There was a tenancy coupled with equity.
Example of a question Borhan is the registered proprietor of a
commercial building in Setapak. In 2009, he leased out the second level of the building to Mesra Sdn. Bhd. (‘Mesra’) for 5 years. They signed a lease agreement and the lease is registered. Borhan also rents out an office on the 3rd level of the building to Haris for 2 years with an option to renew for another year.
Advise Borhan on the difference, if any, between his dealing with Mesra and his dealing with Haris. (5 marks)
