Can A Tenancy Agreement Be Terminated Early Without Proving Default?

In UEM Land Bhd v Mohd Khalid bin Mohd Noor [2026] 3 MLJ 296, the Court of Appeal considered whether the early termination of a three-year tenancy agreement was valid where the landlord had served a three-month termination notice pursuant to an express early termination clause.

The dispute arose from a tenancy arrangement involving the use of UEM Land’s land for the operation of a turf farm. The respondent intended to plant cow grass on the land and supply the same to UEM Land and/or UEM Sunrise Berhad for use in a development project.

The Court of Appeal held that the early termination was valid. In doing so, the Court emphasised that where the wording of a contract is clear and unambiguous, the Court should give effect to the plain and ordinary meaning of the words used by the parties.

Background of the Case

The Appellant, UEM Land Bhd, was the owner of a parcel of land at Serene Heights, Bangi. The Respondent, Mohd Khalid bin Mohd Noor trading under the name and style of Emkay Enterprise, was allowed to use the land to operate a turf farm and plant cow grass for supply to UEM Land and/or UEM Sunrise Berhad for the Serene Heights development project.

On 12 January 2017, the parties entered into a tenancy agreement for the Respondent’s use of the land. The agreement contained, among others, Clause 6 which dealt with termination in the event of default, and Clause 15 which allowed early termination by either party upon giving three months’ prior written notice.

Before the tenancy agreement was executed, the Respondent had also signed a vendor declaration stating that it had not offered any bribe or improper advantage to anyone in UEM Land in connection with the transaction. Subsequently, there were investigations by the Malaysian Anti-Corruption Commission involving UEM Land’s Deputy General Manager and the Respondent’s employee.

Following this, UEM Land informed the Respondent that, in light of its zero-tolerance policy on corruption, the tenancy would be terminated. On 23 May 2018, UEM Land served a three-month notice of termination on the Respondent, who later commenced an action alleging that the early termination of the tenancy agreement was wrongful and amounted to a breach of contract.

The Court of Appeal’s Decision

The High Court had initially found in favour of the Respondent, holding that Clause 15 could not be read independently from Clause 6. The High Court took the view that the tenancy agreement could only be terminated where there was default by the Respondent, and that UEM Land’s termination was therefore invalid.

On appeal, the Court of Appeal disagreed and held that the High Court had proceeded on a wrong premise of law. The Court held that Clause 6 and Clause 15 provided two separate modes of termination: Clause 6 dealt with termination arising from default, while Clause 15 dealt with early termination by notice.

The Court of Appeal further held that Clause 15 was clear and unambiguous. It did not require UEM Land to prove default, obtain the Respondent’s consent, or provide reasons for the termination. Once UEM Land had given three months’ prior written notice in accordance with Clause 15, the early termination was valid.

The Court also rejected the Respondent’s reliance on the doctrine of legitimate expectation, holding that it applies to matters of public law and not to a private contractual dispute. Accordingly, the Court of Appeal allowed UEM Land’s appeal with costs.

Key Takeaways

1. A tenancy agreement may be terminated early if the agreement contains a clear early termination clause allowing termination by notice.
2. A party relying on an early termination clause does not necessarily need to prove default, unless the clause itself expressly requires default to be shown.
3. A default termination clause and an early termination clause may operate as two separate and independent modes of termination.
4. Where the wording of a tenancy agreement is clear and unambiguous, the Court will generally give effect to the plain and ordinary meaning of the words used.
5. A party exercising an early termination clause may not be required to provide reasons for termination if the agreement does not expressly require reasons to be given.
6. Commercial parties should ensure that tenancy agreements clearly state the circumstances, notice period and consequences of early termination, especially where termination without compensation is intended.

This case is an important reminder that in property transactions, substance may prevail over form. Where the parties have already agreed on the essential terms, the absence of formal execution may not necessarily prevent the Court from finding that a binding contract exists.

For further information, please contact Dato’ George Miranda at george@mirandasamuel.com.

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