Parties in a contract must fulfill their obligations as per specified terms, and failure to act with due diligence can be deemed a breach, justifying termination by the other party.

The Facts

[1] The plaintiff is a company incorporated in Malaysia under the Companies Act 1965 . The defendant is a statutory body constituted under the Housing and Town Development Authority Enactment 1981.

[2] On 24 April 1998 the plaintiff and the defendant entered into a Privatisation Agreement ("the agreement") for a joint venture to construct 162 units of two double storey shopbuildings at Pekan Baru Kinarut South in the District of Papar, Sabah. The return from sales was projected to be RM44,224,400.

[3] Under the agreement the plaintiff was the sole and exclusive party to undertake the design, finance, construct, manage, market and sell the said project which was to be carried out on a parcel of land under Country Lease 025341940 which the defendant had applied for under Land Application No. 88020262. By letter dated 1 February 2005 the defendant terminated the agreement. The reason for termination was because the plaintiff failed to obtain from the relevant authorities the necessary approvals for the relevant plans. This has resulted in the stalling of the project.

Plaintiff's Case

[4] The plaintiff claims that the termination was unlawful as all the relevant plans had been approved by Majlis Daerah Papar and that all that the defendant needed to do was to surrender the issue title deed of CL025341940 to the plaintiff to be mortgaged for obtaining the bridging finance. It was claimed that the defendant neglected, refused and failed to do the same. It is the plaintiff's case that the refusal of the defendant to surrender the issue title deed of the said land to the plaintiff was the reason why the project could not proceed and not because it failed to obtain the plan approvals.

Defendant's Case

[5] The defendant on the other hand contended that the agreement was properly and lawfully terminated because the plaintiff had repudiated the agreement by failing to obtain the necessary approval for the relevant plans with all due diligence and within the stipulated time as covenanted in cl. 2(a) read with cl. 8(a) and (b) of the agreement. The two clauses are reproduced below.

[6] Clause 2(a)

The Developer hereby covenants with the Authority as follows:

(a) To prepare and submit the relevant plans to the Relevant Authorities for approval and to obtain such approval with all due diligence and for such purposes to engage and appoint at its own cost and expenses consultants which shall include architects, engineers, quantity surveyors and valuers and other professionals;

[7] Clause 8(a) And (b)

8 (a) The Authority shall grant possession of the site of the said Project to the Developer within one (1) month from the date of signing of this Agreement and the Developer shall submit the relevant plans to the Relevant Authorities for approval within one (1) month of the date of the signing of this Agreement and the Developer shall be deemed to commence work on site within three (30 months from the date of approval of all the relevant plans.

(b) Any re-submission(s) of the relevant plans required by the Relevant Authorities shall be re-submitted by the Developer within one (1) month from the date of the relevant letter from the relevant authority requiring so.

Whether Agreement Legally Terminated

[8] The question before the court simply is whether the agreement had been properly and legally terminated by the defendant and if so whether the defendant is entitled to the counterclaim. In essence the plaintiff's case is that it could not be faulted for failing to complete the project because its failure to obtain the approvals for the relevant plans was due to the defendant's fault.

[9] The plaintiff's covenants and obligations under the agreement are clear and unambiguous. It has been said often enough that when words of a written instrument are plain and unambiguous, it must be construed according to the plain and unambiguous language of the instrument: North Eastern Railway Co v. Lord Hastings [1900] AC 260.

[10] Where the langua