JUDGMENT

Gopal Sri Ram JCA:

[1] This case has some history. Here it is. The plaintiff in the court below is a company called Emtex Properties. Emtex had entered into an agreement with Hampstead Corporation to purchase certain properties. It had paid a deposit. Later, it wanted to recover the deposit. It brought an action against Eastern Properties and Hampstead. That is because Eastern and Hampstead had entered into a joint venture in respect of the properties in question. Eastern and Hampstead delivered a counterclaim against each other. The trial judge found for Emtex in the original action and entered judgment against Hampstead. He then went on to find for Hampstead on its counterclaim against Eastern. There is no appeal against the orders made in favour of Emtex. The present appeal has been brought by Eastern against the judgment entered in Hampstead's favour.

[2] Now for the facts. On 28 February 1981, Eastern and Hampstead entered into a joint venture agreement to develop five parcels of land owned by the former. Hampstead was to develop the lands. The lands were charged to a bank (I will call it UMBC) to whom Eastern owed RM1.2 million. Hampstead, in performance of its obligations under the joint venture agreement paid off UMBC and redeemed the lands. It did this by getting the lands transferred to it and then charging them to UMBC to borrow RM1.2 million from it. It then used the RM1.2 million to pay off Eastern's debt to UMBC. About two years later the parties decided to call off the joint venture. On 17 February 1983, they entered into a Rescission Agreement under the terms of which:

(i) Hampstead was to pay Eastern RM75,000;

(ii) Eastern was to pay Hampstead RM 1.2 million less the RM75,000 not later than 15 May 1983;

(iii) on Eastern making payment, Hampstead was to deliver valid and registrable memoranda of transfers of the lands in question to Eastern.

[3] There is no doubt that Eastern paid off Hampstead. What became an issue - and remains an issue before us - is whether Eastern paid Hampstead in accordance with cl. 2 of the Rescission agreement. That clause reads:

2. The owner hereby covenant that the owner shall as soon as possible but in any event not later than 15 May 1983 arrange to repay to the company the sum of M$1.2 million but less the sum of $75,000.00 payable hereunder to the owner by the company where upon the company shall execute and deliver to the owner a valid and registrable Memorandum of Transfer of the said land to the owner together with the relevant documents of titles' - For clarification the term 'owner' refers to Eastern Properties and 'company' refers to Hampstead.

[4] The learned judge held that Eastern had not paid Hampstead by 15 May 1983. He held that payment was made only on 24 April 1990. He therefore entered judgment for Hampstead on its claim against Eastern for interest during the period of delay in payment. In doing so the judge relied on Eastern's own letter of 9 October 1986 in which Eastern had (among other things) said this:

While it is regretted that we have to date failed to observe the provision of the Rescission Agreement, we shall use our best endeavour to arrange for the repayment of the United Malayan Banking Corporation Berhad ('UMBC') loan referred to in the Rescission Agreement no later than 29th day of November, 1987.

[5] Before us learned counsel for Eastern said that his client ought not to be held liable for the interest over the whole period of delay in payment. He accepted that Eastern was liable to pay Hampstead interest for the period 17 February 1983 (the date of the Rescission Agreement) and 15 May 1983 (the date on which payment ought to have been made). He argues, however, that his client is not liable to pay interest until 28 August 1985 which is the date of Hampstead's letter. The essential part of that letter reads as follows:

We confirm our verbal agreement that the abovementioned term loan together with interest thereon are to be settled as follows:

1. The en