Landlords Beware: Automatic Tenancy Termination and Binding Consent Orders Can Bar Rent and Trespass Recovery Amid Government Acquisitions

In the case of Right Base Trading Sdn Bhd v Premium Park Development Sdn Bhd [2025] CLJU 2854, the Court of Appeal addressed cross-appeals arising from a tenancy dispute involving compulsorily acquired land, where the landowner sought unpaid rent or damages for trespass against the tenant over an access road and an unidentified 3-acre portion. The court upheld the termination of the tenancy agreement due to the acquisition process and a consent order allowing continued access, ultimately dismissing the landowner’s claims entirely while emphasizing the importance of proper vesting of title under the Land Acquisition Act 1960.

A sobering reminder that unvested or imperfectly consolidated proprietary rights may deprive a landowner of substantive remedies. Proprietors must maintain rigorous oversight of all existing and antecedent transactions affecting their land in order to mitigate the risk of unforeseen disputes. In particular, a successor proprietor should expedite registration of the transfer of ownership on the register document of title immediately upon execution of the sale and purchase agreement, thereby securing indefeasible title and preventing the prolongation of uncertainty—as occurred here, where the interval between the sale and purchase agreement of 15 October 2013 and presentation for registration on 12 March 2014 materially extended the period of limbo during the compulsory acquisition process.

Although the tenant’s right of occupation had lawfully ceased upon the automatic termination of the tenancy agreement pursuant to Clause 6 (Acquisition clause) upon commencement of acquisition by gazettal of Form D (and was further reinforced by mutual termination in February–March 2014), the tenant astutely exploited the procedural delay by obtaining a consent order, which clothed continued access with judicial sanction until completion of formal acquisition through endorsement of Form K on the register document of title in accordance with Sections 23 and 66 of the Land Acquisition Act 1960. As there is a delay in vesting Form K into the title, it is emphasised by the Court that vesting occurs only upon such endorsement (and not upon mere issuance of Form K). This ruling drives home the lesson that administrative delays and procedural oversights may extinguish a proprietor’s ability to recover rent or trespass damages, however strong the underlying merits may appear.

Background of Facts

The Landlord became the owner of two adjacent lots (Lot 567 and Lot 568) in Johor after purchasing them from the previous owner (KHH) in October 2013. Prior to this, KHH had entered into a tenancy agreement with the Tenant on 4 July 2010, renting out an access road crossing both lots and an unidentified 3-acre portion (collectively, the “Rented Lots”) for RM10,000 monthly, later increased to RM15,000 upon verbal extensions until 30 June 2014. The agreement lacked clear demarcation of boundaries, apportionment of rent, or appended plans, and included Clause 6 (Acquisition clause), which automatically terminated the tenancy upon commencement of government acquisition.

In August 2013, the government gazetted its intent to acquire the lots via Form D, formally starting the process, and by October 2013, it was publicized via Form E. The Tenant issued a termination notice in February 2014, accepted by KHH, but later attempted retractions, which were rejected. Despite this, the Tenant continued using the Rented Lots.

In March 2014, the Landlord as the owner demanded vacant possession, leading to digging works on the access road to block access. The Tenant obtained an ex parte interim injunction and, in June 2014, a consent order was recorded, substituting the Landlord as party, setting aside the injunction, and allowing the Tenant access until “formal acquisition” by the Land Administrator.

In September 2014, the Land Administrator issued Form K, but it was not endorsed on the title register. After years of silence, the Landlord demanded possession and arrears in September 2017, leading to the suit for unpaid rent (from March 2014 to September 2017) or trespass damages.

• Landlord’s Arguments: The Landlord argued the tenancy did not terminate automatically under Clause 6 as acquisition was incomplete without title endorsement under Sections 23 and 66 of the Land Acquisition Act 1960. They claimed proprietary interest persisted, entitling them to rent or trespass damages for the full period, relying on cases like United Allied Empire Sdn Bhd v Pengarah Tanah dan Galian Selangor [2018] 1 MLJ 661. They contended the consent order did not legitimize indefinite access and that evidence of plans and witnesses proved occupation of the unidentified land.
• Tenant’s Arguments: The Tenant asserted the tenancy terminated upon Form D issuance (commencement of acquisition) per Clause 6, reinforced by mutual termination notices. They argued no proprietary interest remained for the Landlord after Form K (formal possession) on 25 September 2014, citing Amitabha Guha v Pentadbir Tanah Daerah Hulu Langat [2021] 4 MLJ 1 and Ishmael Lim bin Abdullah v Pesuruhjaya Tanah Persekutuan [2015] 2 MLJ 126. The consent order provided legal justification for continued access until full vesting, negating trespass, and the Landlord failed to prove boundaries or occupation of the unidentified land.

Court Rulings

High Court Decision

The court dismissed the Landlord’s claim for overdue rent, finding the tenancy terminated automatically under Clause 6 upon Form D and mutually agreed upon. It allowed trespass damages only for the access road from 12 March 2014 (failure to deliver possession) to 25 September 2014 (Form K issuance, deemed “formal possession”), but dismissed trespass for the unidentified land due to insufficient evidence as there is no survey plan to prove boundaries or occupation.

Court of Appeal Decision

The appellate court dismissed the Landlord’s appeal, upholding no entitlement to rent due to termination and estoppel from inconsistent stance on termination. It allowed the Tenant’s appeal, setting aside the trespass award for the access road, finding proprietary rights vest only upon Form K endorsement on the title register (per Sections 23 and 66, following United Allied Empire and distinguishing Amitabha Guha as irrelevant to vesting). However, the consent order legitimized the Tenant’s access until full vesting, negating trespass. The unidentified land claim was dismissed as moot under the consent order and for evidential failures. No costs were awarded, criticizing both parties’ inaction on acquisition delays.

Key Takeaways

1. Tenancy Termination in Acquisitions: Acquisition clauses can automatically end tenancies upon acquisition commencement (Form D), and mutual terminations create estoppel against later enforcement—highlighting the need for clear drafting and consistent positions in disputes.
2. Vesting of Title: Proprietary rights in an acquired land divest only upon Form K endorsement on the register document of title (Sections 23 and 66 of the Land Acquisition Act 1960), not mere issuance—parties should monitor and prompt Land Offices to avoid “limbo” periods that enable prolonged disputes.
3. Consent Orders’ Binding Effect: Even irregular court orders must be obeyed until set aside; they can provide legal justification against trespass claims, underscoring the importance of seeking variations promptly.
4. Evidential Burden in Land Disputes: Claims involving unidentified land require cogent evidence like survey plans; failure to provide can doom trespass actions.
5. Practical Advice: In compulsory acquisitions, tenants and landlords should engage authorities early for clarity on possession and vesting to prevent extended litigation, as delays benefit neither party and undermine finality.