Lord Templeman:

[1] On September 30, 1980, the respondent co-operative society issued a writ in the High Court of Malaya at Seremban against the appellant company, City Investment, claiming specific performance, damages and other relief in respect of two contracts, both dated November 24, 1976. Since the issue of the writ, the appellants have persisted in complicated and unmeritorious defences, all of which were rejected by the trial judge Peh Swee Chin J. and on appeal by the Federal Court of Malaysia (Lee Hun Hoe CJ (Borneo), Mohamed Azmi and Abdoolcader FJJ) in clear and comprehensive judgments. Their Lordships agree with the orders which have been made in favour of the co-operative society.

[2] By the first contract, the appellants agreed to sell to the co-operative society 60 specified building lots for a land purchase price of $300,000, calculated at $5,000 for each lot, and to clear and level the lots for a development price of $420,000, calculated at the rate of $7,000 for each lot, and then to nominate a licensed housing developer who would build a terrace house on each lot in conformity with the plans and specifications annexed to the first contract for a construction price of $840,000 calculated at the rate of $14,000 for each house. The co-operative society agreed to enter into the requisite building contract with the developer nominated by the appellants. Following the first contract, the co-operative society entered into individiual contracts with members of the society whereby each member became entitled and bound to acquire one of the lots and the terrace house to be erected thereon in accordance with the terms of the first contract.

[3] On April 12, 1978, the appellants nominated themselves as the licensed housing developer for the first contract and submitted a draft building contract which was rejected by the co-operative society. The appellants' first argument is that the co-operative society wrongly rejected the draft building contract and is therefore not entitled to the relief which they claim in respect of the first contract. The co-operative society argued that they were entitled to reject the draft building contract because it did not conform with the provisions of the first contract or the provisions of the Housing Developers (Control and Licensing) Act 1966 ("the Act of 1966") and the rules made thereunder.

[4] By s 5(1) of the Act of 1966, "no housing development shall be engaged in, carried on or undertaken except by a housing developer in possession of a licence issued under this Act." By s 3 of the Act of 1966:

"'Housing development' means the business of developing or providing monies for developing or purchasing... more than four units of housing accommodation which will be or are erected by such development; and for the purposes of this definition 'develop' means to construct or cause to be constructed, and includes the carrying on of any building operations for the purpose of constructing housing accommodation in, on, over or under any land with the view of selling the same or the land which would be appurtenant to such housing accommodation;"

[5] The first contract recognized that the construction of 60 terrace houses was a "housing development" because by cl 2 the appellants agreed to:

"... appoint a licensed housing developer... for the construction of the proposed building in accordance with the provisions and requirements of the Housing Developers (Control and Licensing) Act 1966 and the rules thereunder..."

in consideration for the construction price. But by cls 1 and 2 of the draft building contract submitted by the appellants to the co-operative society, the parties purported to agree and declare that:

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"(1)... as the said plots have already been sold to the owner, the construction by the contractor of the said buildings does not bear the meaning of 'the business of development... with a view to selling the same...' within the definition of the phrase 'housing development' in s 3 of