JUDGMENT

Gopal Sri Ram JCA:

This is an appeal by the Sandakan Turf Club ('the Club') against the decision of the High Court at Kota Kinabalu granting Sababumi (Sandakan) Sdn. Bhd. (the respondent) the following declaratory and other relief:

1. that the Licence dated January 1995 bearing the reference KK/BP(J)/8.00/4/ 23/3-1 JD.1 (4) issued by the Federal Minister of Finance of the Government of Malaysia to the Kelab Lumba Kuda Sandakan (Sandakan Turf Club) underthe Pool Betting Act, 1967 and any renewals thereof is within the scope of the Agreement between the Kelab Lumba Kuda Sandakan (Sandakan Turf

Club) and Sababumi (Sandakan) Sdn. Bhd. dated 26 November 1987;

2. that the Kelab Lumba Kuda Sandakan (Sandakan Turf Club) was and still is in bre ach of the provisions of the said Agreement which confer exclusive right to Sababumi (Sandakan) Sdn. Bhd. to conduct and manage all 3-Digit (3-D) and 4-Digit (4-D) operations in and throughout the State of Sabah;

3. that the Kelab Lumba Kuda Sandakan (Sandakan Turf Club) do pay Sababumi (Sandakan) Sdn Bhd damages to be assessed by the High Court, Kota Kinabalu in respect of the said breach; and

4. that the Kelab Lumba Kuda Sandakan (Sandakan Turf Club) do pay Sababumi (Sandakan) Sdn Bhd costs of this action to be taxed.

We heard this appeal on 21 and 22 May 1996. At the conclusion of the submissions of Counsel, we allowed the appeal and made the necessary consequential orders. The reasons for our decision now follow.

Facts and background

The facts relevant to this appeal are as follows.

The Club is a society registered under the Societies Act, 1966. It obtained its certificate of registration on 25 November 1983. As its name suggests, it was formed for the purpose of carrying on gaming activity in Sandakan. At the time the Club obtained registration, gaming in the State of Sabah was regulated by a State law then in force. It was theGaming Ordinance (Cap. 50). For convenience, we will, throughout this judgment, refer to it as "the Ordinance". There were provisions in the Ordinance requiring the licensing of gaming activity in the State of Sabah. The Ordinance also contained provisions that proscribed altogether the carrying on of certain types of gaming activity within Sabah. However, the Ordinance empowered the relevant authority to exempt any person from these provisions.

On 14 February 1984, the Club received such an exemption. This meant that the Club could organise such gaming activities as pari-mutuel and totalisator betting both of which would be carried out on the premises of a turf club. It is called "on-course" betting.

On the same date, the Club also received a licence from the relevant authority to organise and conduct other forms of public lotteries, including 3-Digit and 4Digit draws. This is known in the trade as "off-course" betting.

On 26 November 1987, the Club entered into a written agreement ('the agreement') with the respondent. It is a very important document. It lies at the very heart of this case. Indeed, this case is all about the meaning of certain words appearing in it. The Judge interpreted them in a particular way. It was as a result of his interpretation that he made the orders that the club has appealed against. It is best that we reproduce the whole document, rather than paraphrase it.

This is what it says:

"THIS AGREEMENT is made this 26 November 1987 BETWEEN KELAB LUMBA KUDA SANDAKAN (SANDAKAN TURF CLUB) P.O. Box 519, 90007 Sandakan in the State of Sabah, Malaysia, a society duly registered under the Societies Act (hereinafter called 'the Club' which expression shall include its successors and assigns) of the one part, AND SABABUMI (SANDAKAN) SDN. BHD. of Lot 8 1st Floor, Towering Industrial Centre, 7 Km, Jalan Penampang, P.O. Box 13803, 88844 Kota Kinabalu, in the State of Sabah, Malaysia, a limited company incorporated underthe Companies Act (hereinafter called 'the Company' which expression shall include its successors and assigns) of the