(delivering the Judgment of the Court): By a lease dated September 5, 1978 pursuant to an agreement for lease dated January 6, 1970 the President of the Republic of Singapore ("the lessor") demised to Kian Chiang Granite Quarry Company (Pte.) Ltd. ("the plaintiffs") for a term of 10 years from September 1, 1969 the land known as Plot No. 10, Lot 102 pt. Mukim XXXII at Pulau Ubin, Singapore ("the quarry").

The lease (so far as is material) provided as follows:

(1) that the plaintiffs should grant to the defendants a licence to use and manage the Quarry for the purpose of quarrying granite; and

(2) that the plaintiffs should observe in working and getting the demised minerals all statutory provisions.

By the Sand and Granite Quarries Act, 1970 ("the Act") it is provided that no person shall use or manage any land for the purposes of a sand or granite quarry without a licence from the Licensing Officer authorising him so to do.

The plaintiffs and Eng Joo Lee Pte. Ltd. ("the defendants") by an Agreement in writing ("the Agreement") dated May 2, 1975 agreed (so far as material) as follows:

(1) that the plaintiffs should grant to the defendants a licence to use and manage the Quarry for the purpose of quarrying granite; and

(2) that the operation of the Quarry should be in accordance with the Act;

(3) that the defendants should quarry granite at the Quarry and the defendants to pay the plaintiffs for the granite extracted in the following rates:

(a) $1.70 per cu. yd. for 3/4 inch and 5/8 inch granite; and

(b) $1.50 per cu. yd. for granite blocks. The defendants also agreed to pay for all charges incidental to the operation by the defendants of the Quarry.

(4) that the licence should continue for the balance of the period of the 1978 lease; and

(5) that if after the determination or expiration of the terms of the licence the parties could not agree to have a new licence, then the defendants should sell to the plaintiffs all the machineries installed by the defendants ("the machineries") at 20% of the cost price purchased by the defendants.

Sometime in 1979, the plaintiffs entered into negotiations with the lessor for the extension of the 1978 Lease for a further term of five years from September 1, 1979. The licence granted by the plaintiffs to the defendants under the Agreement expires on August 31, 1979. After the expiration of the licence the defendants remained in possession of the quarry and managed and used the same for the purpose of a granite quarry and excluded the plaintiffs from possession and use of the same.

In these circumstances, this action has been brought by the plaintiffs in which they claim, inter alia:

(1) the sum of $101,459.48 being payments due by the defendants under the Agreement;

(2) a declaration that the licence granted to the defendants by the Agreement expired on August 31, 1979 and that the plaintiffs are and have been since such date entitled to possession of the Quarry;

(3) an injunction restraining the defendants by their directors, officers, servants, workmen or agents or any of them or otherwise howsoever from entering or remaining upon the quarry or removing any of the granite stone or ships therefrom and from hindering or interfering with the plaintiffs' use and enjoyment of the quarry.

The defence was that on July 10, 1979, at a meeting between the Board of Directors of the plaintiffs and Mr. Lim, the managing director of the defendants, it was orally agreed that the defendants should have a new licence for a further period of five years from September 1, 1979 upon the terms and conditions set out in a confirmatory letter dated July 12, 1979 written by the defendants' managing director to the plaintiffs. This letter reads:

"Dear Sir,

Re: Granite Quarry Lease

We refer to the discussion held among Messrs Kwek Hong Lye, Chng Gim Huat, Chua Peng Seah, Yeoh Sze Hong and the writer during the meeting on 10th July 1979 in the office of M/s. Hong Leong Co. Ltd. in respect of extension