A party's failure to fulfill contractual obligations justifies termination by the other party, despite claims of non-essence of time in delivery. Damages for lateness cannot be sustained without performance or fulfillment of terms.

1. In this case the Plaintiff had claimed against the Defendant for losses that it had allegedly suffered as a direct result of the Defendant's 'premature and unlawful termination' of the agreement between them. It had claimed special damages amounting to RM 34,992,329.66, general damages, specially for RM 10,000,000.00 as exemplary damages for the Defendant's flagrant attitude towards the directives of MTEN and other mala fide suits perpetrated against the Plaintiff. It had also asked for interest at 8% p.a on the RM 10,000,000.00 from 27.6.2001 until full settlement (see paragraph 37 of the Statement of Claim).

2. The Defendant had denied any liability and had urged that the claim was misconceived and that it ought to be dismissed with costs.

3. After all was said and done, the issue that needed to be decided was whether the Defendant had wrongly terminated the contract, which according to the Plaintiff had caused it to suffer losses in the form of special damages. The 2 parties had agreed to enter into a Charterparties ['the Charterparties'], which both parties had pledged they would use their best endeavour to execute as soon as possible. Pending the execution by both of them of the Charterparties, both of them had agreed to be bound by the terms and conditions contained in the Letter of Award ['the LOA'] dated 15.12.1997. This LOA was admitted as agreed document, as exhibit P1 in this trial [At pages 1-4 in Bundle B3]. Now, it was not disputed that via the LOA the Plaintiff had agreed to supply to the Defendant 2 tugboats, namely the SHEMA and the SHETA with daily rate of RM 5,200.00 for each tug. The SHEMA was to be delivered first, and the date 17th December 1998 was agreed upon as its date of delivery to the Defendant by the Plaintiff. In respect of the SHETA, it was scheduled to be delivered on 17th January 1999. The Charterparties in respect of these 2 tug boats would be for a period of 15 years. As in most contracts of this nature, the Plaintiff as supplier of the service, had to furnish the Defendant with a Bank Guarantee for RM 379,000.00 within 2 weeks of receipt of the LOA [Exh P1] which the Plaintiff duly complied with in this case. In the event of failure to so supply by the Plaintiff, it was under an obligation to provide the Defendant with a substitute tugboat of similar specifications or alternatively, the Defendant had the option of procuring the substitute tug itself from other sources if there was a delay in delivering the tugboats by the Plaintiff. All these were contained in the said LOA signed and issued on the 15.12.1997 which also contained a provision that required both parties to sign the Charterparties with respect to the use of the 2 tugboats at an agreed hire rate between them for a period of 15 years.

4. As things had turned out, the Plaintiff had failed to deliver the 2 tug boats on time. In respect of the SHEMA, the Plaintiff had informed the Defendant during a meeting of both parties that it was not able to deliver the said tug a month before its due date which was set for the 17.12.1998. That meeting had taken place on 18.11.1998. The record of the meeting had shown at item 4 of the minutes of meeting that the Plaintiff was unable to perform the said delivery of the SHEMA. The said minutes appear as exhibit P37 at pages 20-22, Bundle B1. It was also recorded in the minutes of meeting marked as exhibit D40 that in July 1999, the Plaintiff was just launching the SHEMA. That, it must be noted was about 7 months after the due date for its delivery had come and passed. In fact, that was not the end of th