Gill J:

This action arises out of a hire-purchase agreement dated 6 May 1963 whereby the plaintiffs (the owners) let a Model K565 cable winch complete with cable to the defendant company (the hirer). The plaintiffs' claim is for certain sums of money to which they allege they became entitled on their terminating the hiring by reason of the defendants' failure to comply with the terms of the agreement. The defendants are counterclaiming for damages for wrongful termination of the hiring.

Under cl. 1 of the agreement the hire purchase price was $51,348, of which a sum of $13,593 was to be paid on the signing of the agreement and the balance by way of monthly hire-rent of $2,098 on the sixth day of each month, the first of such payments to be made on 6 June 1963.

Clause 4 of the agreement provided that

If the hirer shall not duly pay to the owners any of the sums herein provided to be paid...... then the owners shall forthwith become entitled to immediate possession of the property and may in every such case: (a) without prejudice to any claim for arrears of hire-rent or damages for breach of this agreement forthwith and without notice or demand terminate the hiring and retake possession of the property; and/or (b) by written notice either served personally on the hirer or sent by post or otherwise to the hirer or to his last known address forthwith for all purposes absolutely determine and end this agreement and the hiring hereby constituted and thereupon the hirer shall

no longer be in possession of the property with the owners' consent nor shall either party thereafter have any rights under this agreement, but such determination shall not discharge any pre-existing liability of the hirer to the owners.

The amount payable under the agreement up to and including 6 December 1963 was $28,279. Up to that date the hirer had in fact paid only a sum of $17,897.53, leaving a sum of $10,381.43 which was due and payable as on that date. This sum of $10,381.43 forms the first part of the plaintiffs' claim.

On 23 December 1963 the plaintiffs sent two of their employees named Gulam Mohamed and Oei Kim Leong to the office of the defendant company at Kuala Kubu Bahru New Village with a letter addressed to them in the following terms:

HANOMAG K565

Chassis No. 444231 Engine No. 65568 Frisch No. 17160

As you have failed to make payment against the above-mentioned tractor, we have instructed our Mr. Oei Kim Leong to repossess the tractor, charges for which will be for your account.

On arrival at Kuala Kubu Bahru, Gulam Mohamed showed the letter to one Yuen Kim Fook, a partner of the defendant company. Yuen Kim Fook, on seeing the letter, spoke on the telephone to the plaintiffs' manager requesting him not to take possession of the tractor, as he wished to find the money to pay the arrears of instalments then due, but the manager refused to accede to this request. However, the tractor was not taken away on that date as its starter was not in working order.

Gulam Mohamed went back to the defendants' sawmill a few days later (on or about 30 December 1963) together with a man called Chow Kim Wah. They saw Yuen Kim Fook again and told him that their instructions were to take back the tractor. Yuen Kim Fook took them three miles into the jungle and there gave possession of the tractor which they brought back to Petaling Jaya. The plaintiffs are claiming a sum of $500 being the cost of removal of the tractor, although they say that their actual cost was higher. Subsequently, in their letter dated 3 February 1964 the plaintiffs' solicitors wrote to the hirer: "Further to our letter dated 30 January we are instructed to give you notice for all purposes that the hire purchase agreement is at an end."

Clause 6 of the agreement provided that

If the hiring shall be determined.... after three months from the date hereof, the hirer shall pay to the owners by way of compensation for depreciation or otherwise.... (b) the amount (if any) by