[1] This is an appeal against the decision of the learned High Court Judge who had allowed the respondent's claim for damages arising from an alleged unlawful termination of contract. After hearing the respective counsel and upon careful consideration of the law and the facts as set out in the Record of Appeal, we unanimously allowed the appeal in part. Having then given our broad reasons for our decision, these are our reasons in full.

Factual Background

[2] The appellant appointed the respondent to carry out earth works and site preparation in relation to a housing project at Lot PT 2403, Mukim Mahang West, Daerah Kok Lanas, Jajahan Kota Bahru, Kelantan. The terms and conditions of the contract are as specified in Contract No PMBK (KL) 2005-K1 dated 2 February 2005 based on a PWD Standard Form 203A (Rev 10/83). The appellant appointed a company known as