JUDGMENT

Richard Malanjum CJ (Sabah & Sarawak):

(1) On 26 January 2011, leave was granted to appeal against the decision of the Court of Appeal given on 29 October 2009. Six questions were posed for our consideration. We heard the appeal on 14 June 2011. We reserved our decision to consider the points raised by the parties. We now give our judgment.

(2) For convenience, in this judgment the appellant is referred to as the plaintiff and the respondents collectively as the defendants. Where necessary the defendants will respectively be referred to as either the first defendant or the second defendant.

(3) In coming to its decision, the Court of Appeal by majority upheld the judgment of the High Court given on 22 June 2009 dismissing the action of the plaintiff.

(4) For the reasons given below, we dismiss this appeal with costs. We uphold the decision of the learned High Court Judge as affirmed by the majority in the Court of Appeal that the defendants were justified in terminating the contract.

Brief Background Facts

(5) The courts below have thoroughly dealt with the facts in this case. (See: (2009) 9 CLJ 317 HC and (2011) 4 CLJ 16 CA). Hence, we need only to highlight the relevant and pertinent facts for the purposes of this appeal.

(6) An agreement termed as the Property Development Agreement ("PDA") was entered into by the parties concerning 15.5 acres of land ("the Development Property") located in Damansara Heights. It is not in doubt that the Development Property belongs to the first defendant. Under the said PDA, the plaintiff was given development rights over the Development Property for fifteen (15) years, commencing from 4 July 1994. It is common ground that the plaintiff does not have any interest in the land, be it legal or equitable. All the plaintiff had over the property was development rights.

(7) Upon the execution of the PDA, the plaintiff did not make any effort to commence development on the Development Property. It is not in doubt that the plaintiff failed to take any proactive measure to develop the said land. In consequence, by letter dated 25 October 2007, the defendants issued a termination notice to the plaintiff, citing the latters failure to develop the Development Property as a material breach under the PDA and/or a repudiation of the same. As such, it was declared that the PDA would effectively terminate on 25 November 2007. It is not in doubt that the termination notice was issued some thirteen and a half (13 ½) years into the subsistence of the PDA.

(8) The gist of the dispute between the parties is this - whether the plaintiff was required to continuously develop the Development Property over the span of fifteen years or whether the plaintiff was at liberty to commence development as and when it felt the time was right so long as it had commenced work within the 15 years period. It is to be noted that only upon service of the termination notice did the plaintiff take some steps towards initiating the development works. However, these efforts did not eventually materialize.

(9) The plaintiff commenced an action against the defendants for wrongful repudiation. The High Court dismissed the action. The learned High Court Judge, having carefully scrutinized the PDA, found, inter alia, that as the PDA was a commercial contract, it ought to be construed in a commercially sensible manner which the parties all along intended for time to be of the essence. As such, in his view, it was reasonable to assume that the parties intended to have the whole Development Property land developed within the time period of fifteen years. The learned High Court judge did not think that the PDA intended to give the plaintiff the liberty to commence development at the tail end of the fifteen year period.

(10) The learned High Court Judge also made a finding of fact that efforts to develop the Development Property were only made upon the issuance of the termination notice by the defendants and nothing of that