If your tenancy says "auto renewal," does that mean the next term starts by itself, no matter what? A Johor Bahru High Court judgment delivered in June 2026 addresses exactly that, and the answer matters to every business owner who leases commercial premises.

𝐁𝐚𝐜𝐤𝐠𝐫𝐨𝐮𝐧𝐝 𝐨𝐟 𝐭𝐡𝐞 𝐜𝐚𝐬𝐞 Seven Stars Food Garden Sdn Bhd operated a food court in Bandar Seri Alam, Johor under a tenancy agreement signed in September 2018 with Seri Alam Management Sdn Bhd. The agreement covered a first term from September 2018 to August 2021, with Clause 61 labelled "Further Terms (Auto Renewal)" providing for two additional terms thereafter. When the first term ended, Seven Stars walked away. Seri Alam insisted that Clause 61 automatically bound Seven Stars to continue. The central question was whether the auto renewal clause could operate on its own, or whether it depended on other conditions in the same agreement being met first.

𝐏𝐨𝐬𝐢𝐭𝐢𝐨𝐧 𝐨𝐟 𝐭𝐡𝐞 𝐀𝐩𝐩𝐞𝐥𝐥𝐚𝐧𝐭 Seven Stars Food Garden argued that the first term expired on 31 August 2021 and the subsequent terms never came into force. No revised deposit was paid, no new stamping was done, and the landlord had itself issued a forfeiture notice, cut electricity, and re-let the premises to a third party. Seven Stars sought declarations that the second and third terms were void and claimed back deposits totalling RM239,207.

𝐏𝐨𝐬𝐢𝐭𝐢𝐨𝐧 𝐨𝐟 𝐭𝐡𝐞 𝐑𝐞𝐬𝐩𝐨𝐧𝐝𝐞𝐧𝐭 Seri Alam Management maintained that "Auto Renewal" in Clause 61 was clear and unambiguous. Once the first term expired, the next terms began automatically and Seven Stars had no right to walk away. Seri Alam counterclaimed for deposit forfeiture, unexpired term rental of approximately RM2.9 million, double rent, utility charges, promotional fees, renovation costs exceeding RM714,000, and contractual legal fees of RM130,000.

𝐃𝐞𝐜𝐢𝐬𝐢𝐨𝐧 𝐨𝐟 𝐭𝐡𝐞 𝐂𝐨𝐮𝐫𝐭 The Court ruled in favour of Seven Stars. Clause 61 could not be read in isolation. The same clause required a revised deposit to be paid before each new term could begin, and no such payment had ever been made. The absence of stamping and the landlord's own post-dispute conduct, cutting electricity and re-letting the premises, further confirmed that the second and third terms never came into force. Seven Stars was awarded deposits totalling RM233,807. The meter deposit of RM5,400 was not recoverable as the agreement described it as a one-off non-refundable sum. The entire counterclaim was dismissed and Seri Alam was ordered to pay costs of RM50,000.