Can you stop paying rent if your business premises are sealed?

A raid or closure can leave a business unable to operate as planned. Rent, however, does not necessarily stop simply because trading has stopped. The reason for the closure, the tenancy terms and the tenant’s continued access can make a substantial difference.

In LDP Promotion Fair Sdn Bhd v Cloupor Technology Sdn Bhd & Anor [2026] MLRHU 3030, the High Court in Shah Alam considered a tenant’s attempt to escape its obligations after enforcement action at its rented premises. The decision was delivered on 3 September 2026.

What happened?

The tenant rented a factory and warehouse for three years at RM97,000 a month. The agreement described the permitted use as electronic manufacturing.

Following a raid, the authorities found unlicensed manufacturing of excisable tobacco products. Part of the premises was sealed.

The tenant sought to undo the tenancy, alleging that it had been misled about the premises and the necessary approvals. The landlord pursued rent and other losses. The tenant also sought refunds and compensation for renovation, relocation and allegedly seized assets.

Why did the landlord succeed in its claim for rent?

The Court found that the disruption resulted from the tenant’s own unlicensed operations. The tenant failed to establish the alleged misrepresentations, and its account of being completely locked out was contradicted by evidence of continued access and removal of goods.

Those findings undermined the argument that the tenancy had become impossible to perform or that the tenant had received no benefit from it. The landlord’s claim succeeded and the defendants’ counterclaims were dismissed.

The individual who signed the guarantee and indemnity was also held liable. The Court treated the document as creating an independent obligation which was not extinguished simply by termination of the tenancy.

What should landlords and tenants take note of?

Before committing to commercial premises, describe the intended business accurately. A general description such as manufacturing may not identify the particular activity for which regulatory approval is needed. Obtain the relevant approval documents and settle in writing who must secure each licence, and what happens if approval is refused.

If enforcement action occurs, keep the notice, inspection records and correspondence. Establish what was prohibited, which areas were affected and whether access remained available. A statement that the whole premises was unusable may be difficult to sustain if the records show otherwise.

Do not assume that sending a termination letter settles the rent account or releases a guarantor. Review the termination provisions, outstanding sums, handover arrangements and guarantee together before deciding the next step.

This case turned on the tenant’s unlicensed activities and the evidence of continued occupation. It should not be read as deciding that every closure leaves every tenant liable on identical terms.

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