JUDGMENT

Denys Roberts CJ:

This action, which is in many respects an unfortunate one, arise from the plaintiffs' agreement that part of the land registered in their names at Kampong Kianggeh, would be developed by the defendants. I should make it clear from the outset that, although I heard much oral evidence as to what the parties believed and what they did, my findings are to a large degree based upon documents and letters.

The Statement of Claim

The plaintiffs, who are brothers, are the registered legal owners of undivided shares in Lot 16575 at Kampong Kianggeh, Bandar Seri Begawan. This lot comprises about 45 acres in all.

The plaintiffs (the owners) entered an agreement (the first agreement) on 30 April 1984, for the development of part of this land, amounting to about 45 acres, by the defendants, who carry on business under the name of the Magnificent One Engineering Company.

The first agreement, to which I will refer later in more detail, provided, among other matters, for the defendants (the developers) to build 48 flats on this land at their expense. The developers were to retain 60% of the flats in consideration of their part in the development of the land.

Approval from the Municipal Board (MB) was obtained only on 16 October 1988, for the building of 36 flats on the site. The permit was to expire after one year in certain events which were set out on the back of the permit.

The second agreement between the parties was entered on 29 November 1988. This provided for 36 flats (instead of 48). There was to be a power of attorney, which would enable the developers to convey the freehold in their flats to purchasers and not only a 99 year lease, as had been permitted by the first agreement. The developers were to pay B$880,000 for the land on which their flats were to be built.

By a third agreement, dated 9 March 1989, the developers were to pay B$850,000 by 14 instalments to the owners for the land. Construction was to begin on or before 1 May 1989.

Construction began about 1 May 1989, and the developers paid the first instalment for the land of B$60,000 about 15 June 1989.

The developers, so the owners alleged, failed to carry out construction works diligently, as a result of which failure the owners warned the developers in writing, about 2 October 1989, that they would end their agreements with them unless "concrete works" were carried out forthwith.

By October 1989, the developers had carried out soil excavation, earth removal, part of the slope protection and a retaining wall. They had not begun work on the construction of the flats themselves.

On 13 October 1989, the developers' architect sought an extension of the approval given by MB on 16 October 1988. On 22 November 1988, the MB replied saying that the application was still under consideration and that "You are therefore instructed not to commence any work until our written approval is obtained."

The developers did not furnish the banker's guarantee, which is referred to in Clause 9 of the first agreement and Clause 8 of the third agreement. Nor did they pay further instalments of the amount due in respect of the land.

As a result of the various failures of the developers, the owners terminated the agreements on 12 May 1990, on the ground that the developers had repudiated them or were unable to perform them.

The owners assert that they have lost the rental which they would have received from the agreements, at B$1,500 per month per flat until completion, or the market value of the flats plus the value of the land. The owners also sought other forms of relief.

The Defence

By their amended defence and counterclaim, the developers alleged that it was the duty of the owners to obtain all the necessary approvals to the plans for the development of the owners' land. The owners appointed as architects, on 21 July 1984, ESC whose plans were not approved by MB apparently because these plans were not prepared by a qualified architect.

About 2 October 1986, the developers employed anothe