JUDGMENT

Lord Upjohn:

The judgment of their Lordships was delivered by, This is an appeal from the Order dated 18 February 1965 of the Federal Court of Malaysia whereby the appellant was ordered to pay compensation to the respondent under and by virtue of the provisions of s. 71 of the Contracts (Malay States) Ordinance.

It raises some difficult though short questions of general importance on the true construction of s. 71.

The facts are rather complicated but for the purposes of this appeal can be fairly briefly stated. Parts of Johore are rich in minerals which are owned by the State. The appellant (to whom their Lordships will refer as Mr. Siow) had the good fortune to make some discoveries in relation to a few hundreds of acre of land in the Susur Rotan district which gave promise of bearing iron ore. Their Lordships will refer to this land as the mineral lands. On 10 April 1957 he applied to the relevant government authorities for a prospectors licence to prospect for minerals thereon. A licence was granted to him on 21 November 1959 and by statute this gave him, in effect, the right to a first refusal of a lease to mine the mineral lands. To jump ahead chronologically issue