PS Gill FCJ:

[1] (delivering judgment of the court). The Federal court on 18 January 2005 granted the appellant leave to appeal in respect of the following questions:

(i) whether the conduct of the contracting parties could be relied upon to ascertain the terms of the written contract; and

(ii) whether the court of Appeal was correct in relying upon the conduct of the contracting parties to construe the terms of a written contract when the outcome of such construction goes against the established canons of interpretation of a written contract.

[2] Hence we do not propose to dwell at length with the facts of the case, save to state some pertinent aspects for the sake of clarity.

[3] The primary facts of the present case are as follows.

[4] The appellant manufactures cement in Pulau Langkawi. It had to transport its cement from its factory onto ships that docked at the jetty at Telok Ewa for onward carriage. In 1984, the appellant engaged the respondent to transport the cement. It began as an informal arrangement but was eventually formalized in 1985.

[5] Thereafter, there were three subsequent agreements between the said parties on basically the same terms, save for the issue of costs.

[6] Although not provided for in the written contracts, the practice had been that each time a shipment was due to arrive, the appellant would issue to the respondent a notice informing the respondent of the time, place of arrival of the ship and the number of bags of cement to be transported.

[7] The respondent worked on these terms until August 1986. To interject, prior to August 1986, there were sporadic complaints by the appellant of the quality of services provided for by the respondent. But nothing came of these complaints, (the last complaint being made on 26 January 1986). The appellant entered into three subsequent agreements with the respondent, the last dated 9 January 1986.

[8] Matters came to a head in September 1986, when the appellant unilaterally terminated the contractual relationship between the parties by way of a letter. The respondent predictably reacted to this act of the appellant, and through its solicitors, contended that the termination was unlawful.

[9] The appellant then withdrew the said letter of termination and instead invited the respondent to participate in a tender exercise held for the purpose of appointing contractors to do similar works as being done by the respondent.

[10] Needless to say, the respondent took umbrage to this offer, for reasons that will be apparent later and did not participate in the tender exercise. Consequently, the appellant identified two other companies to carry out the works done by the respondent.

[11] Before we go any further, it is pertinent to note that we have scanned the terms of the contracts entered into by the respondent and appellant and find as a fact, that the contracts do not expressly provide for their termination. Flowing from this omission, there was equally no provision in the contracts for termination.

[12] Our main concern for the present, is whether it was proper for the court of Appeal to have implied a term in the contracts that the respondent had the exclusive rights to perform the services in question.

[13] The learned trial judge was invited to consider this point in the court below and his reply was as follows:

I agree with Cik Maidzuara that the parties in the present case do not have the 'special relationship' as stipulated by the court of Appeal in Datuk Yap Pak Leong, and, hence, the contracts executed fall within Category II as defined in that case. Therefore, the question which this court should direct its mind to now is whether there is a need to imply terms to give the contracts efficacy. Based on the authorities cited and the facts of this case, the answer must be in the negative. Although witnesses from both parties did give evidence regarding the terms of the plaintiff's appointment, yet neither party raised complaints about the business efficacy of the con