A notice of termination under a contract must specify reasons if the contract provides for a review process before termination is valid.

[1] Leave for the appeal before us was unanimously granted on 11 April 2013 on the question of law of "whether a notice to terminate a concession/ privatisation agreement which is vague, unspecific and uncertain is defective and bad in law".

The Facts

[2] Kerajaan Negeri Selangor ("the respondent") and SPM Membrane Switch Sdn Bhd ("the appellant"), entered into an agreement ("the agreement") on 27 September 2001 in which the respondent appointed the appellant to assist them in collecting outstanding annual quit rent in Selangor (particularly in the districts of Petaling, Kuala Langat, Hulu Langat, Sepang and Hulu Selangor).

[3] A supplemental agreement was entered into on 9 July 2003.

[4] Pursuant to the agreement, the appellant was responsible for the collection of arrears of quit rent. There were a number of obligations the appellant had agreed to, which amongst others, included the setting-up of a computer system, acquisition of data, preparation and service of notices of demand; maintaining sufficient manpower and conducting a public information campaign with regard to the collection of quit rent.

[5] The agreement also provided the parties with a review procedure should the respondent determine that the appellants performance of its services under the agreement was unsatisfactory. "Services" were defined as the preparation, execution and service of necessary documents to assist the respondent with the collection of arrears within the districts in Selangor. Should the performance remain unsatisfactory after the period of 30 days given to remedy the deficiencies, the respondent could terminate the agreement unilaterally.

[6] It was also open to the respondent and appellant to terminate the agreement by agreement; whereas it was open to the respondent to terminate unilaterally should one of eight grounds listed, including where an inability of the appellant to perform its services were to happen, under the agreement.

[7] The respondent alleged multiple breaches of contract on the appellants part, inter alia, that the computer system was not set up, insufficient manpower was provided, various forms and notices had failed to be served and that the public information campaign was conducted unsatisfactorily. Therefore, in purported exercise of its right under cl 8.1(b) of the agreement, the respondent issued a letter of a notice of termination on 22 November 2004 giving 30 days notice.

[8] On 27 December 2004 the termination was effected by way of subsequent letter. The respondents letters did not, however, specify any reason for the termination.

[9] For ease of reference, the relevant clauses are hereby reproduced.

Clause 8 Termination

8.1 Termination by the State Government

The State Government shall be entitled to terminate this agreement by giving 30 days notice to the company if:

(a) the equity structure and/or the structure of the board of directors of the company is modified without the State Governments written consent within one year of the date of this agreement;

(b) the company is unable to perform its services as provided under the agreement;

(c) the company shall cease to or threatened to cease to carry out its operation or if in the opinion of the State Government, the company is not carrying on its operation with sound financial and commercial standards;

(d) if a Receiver and/or Manager shall be appointed in respect of the companys assets or any part thereof;

(e) a petition shall be presented or any order be made or a resolution be passed for the winding- up of the company or if the company enters into liquidation whether voluntarily or compulsorily;

(f) at the time it becomes unlawful for the company to perform its obligations un