JUDGMENT

Lee Hun Hoe CJ (Borneo):

Both appellants/plaintiffs and respondents/defendants are private limited companies. They are associate companies. Appellants hold about 400f the total issued share capital in respondent company. Datuk GS Sundang, the major shareholder of appellant company, also holds shares in respondent company. His shareholding is next to Helen Chung Foh, the managing director of respondent company. Appellants were granted a special licence by the State Government of Sabah on 1 February 1964 to extract timber in an area in Lamag, Sandakan extending over 33 square miles. The licence was deemed to come into force on 1 January 1963 and expired on 31 December 1972. Certain conditions were attached to the licence. 23 On January 1963 the parties entered into an agreement prior to the issue of the licence. On 26 March 1964 they entered into what was purported to be an irrevocable agency agreement to replace the earlier agreement for the extraction and sale of timber under the licence. On the same day appellants gave respondents a power of attorney irrevocable for a period of ten years to operate and manage appellants' business. All the working capital came from respond