Azmel Maamor FCJ:

[1] The Federal Court granted leave to the appellant to appeal to the Federal Court based on the following questions namely:-

1. Whether the Setiausaha Hasil Bumi for and on behalf of the Sabah State Government has the authority to approve the granting of any rights in or over a forest reserve or state land in Sabah;

2. Whether a letter of approval signed by the Setiausaha Hasil Bumi and communicated to the appellant created a binding contract to renew or extend the timber licence; and

3. Whether it is open to the Court of Appeal to reopen the finding of the trial Judge on quantum of damages when the figure and evidence presented were not even disputed or challenged by the respondent at the Court of first instance and even at the Court of Appeal.

[2] The appellant (the plaintiff in the Court of first instance) was granted a licence to fell and extract timber in a forest reserve in Keningau in the State of Sabah comprising an area of 5,665.59 hectares. The said licence was valid for a period of five years from 13 March 1993 to 13 March 1998. Because the appellant was unable to extract the timber in the said area within the period stated in the licence an application for extension of time was made to the Setiausaha Hasil Bumi, Datuk William Shim. The reason given for not being able to complete the extraction was due to rainy weather and poor road condition.

[3] The Setiausaha Hasil Bumi, in his letter dated 25 November 1997 to the Director of Forestry, stated that he agreed to have the said licence renewed for the whole of the concession area of 5,665.59 hectares for a period until 31 December 1999 but subject to a survey being carried out by the Director of Forestry and also to the provision of the Sabah Forest Enactment 1968.

[4] Contrary to what had been indicated by the Setiausaha Hasil Bumi, the respondent instead of renewing the extension, decided to issue a new licence to the appellant reducing the concession area to 2,204.41 hectares. The remaining area of 3,461.18 hectares was distributed to three other companies under separate licences. Being dissatisfied with the decision of the respondent the appellant initiated a proceeding in the High Court at Kota Kinabalu against the respondent claiming damages for breach of contract and other declaratory reliefs.

[5] At the High Court, the learned trial Judge allowed the appellant's claim with costs and awarded damages in the sum of RM21,890,133.75 with interest thereon at the rate of 8% per annum from the date of Judgment until full settlement.

[6] On an appeal by the respondent, the Court of Appeal by a majority decision reversed the decision of the High Court and ordered that the appellant's claims be dismissed with costs. Hence the appeal to this Court.

The 1st Question

3. Contract On Behalf Of A State Government

(1) All contracts made in Malaysia on behalf of a State Government shall, if reduced in writing, be made in the name of the State Government of the State, or by any public officer duly authorized in writing by the Chief Minister, either specially in any particular case, or generally for all contracts below a certain value in his department or otherwise as may be specified in the authorization.

(2) In the application of this section to Sabah and Sarawak "Chief Minister" includes any State Minister (emphasis added).

[8] The timber licence in Sabah is issued under s 15 of the Sabah Forest Enactment 1968 (the Enactment). It states:-

(1) Save as otherwise provided in this Enactment and notwithstanding the provisions of any other State law, no right of any description in or over a Forest Reserve or any part thereof shall be acquired except by virtue, and in accordance with the terms of,