Lord Wilberforce (delivering the judgement of the Board):

These are two appeals from the judgement of the Federal Court of Malaysia (Thomson LP, Barakbah CJ (Malaya) and Tan Ah Tah FJ) which allowed the appeal of AE Schmidt from a judgement of the High Court at Kuala Lumpur (Hashim J). The Federal Court ordered that judgement should be entered in favour of AE Schmidt against the appellant company for a sum equal to one per cent of the selling price of all iron ore sold from certain mines in Johore which sum has been certified to amount to $251,529.50. It was further ordered that the appellant company should be indemnified by the third parties appellants against their liability to AE Schmidt. Since the hearing in the Federal Court, AE Schmidt has died and his widow Marjorie Schmidt has been substituted as respondent. References in this judgement to Schmidt are to AE Schmidt.

The matters arise out of prospecting permits over certain State land in Johore. The first step in relation to this land was taken in 1953 when Tan Chew Seah (hereinafter called "Tan") applied to the Government of the State of Johore for a prospecting permit for iron ore. He was assisted in the negotiat