JUDGMENT

Edgar Joseph Jr FCJ:

The Background Facts

The essential facts on which this appeal turns may be stated briefly thus:

The Respondent to this appeal Syarikat Bekerjasama-sama Sungei Gelugor Dengan Tanggungan Berhad ("the Society") is a Co-operative Society registered under the Co-operative Societies Act, 1948. The Society was the registered proprietor of certain land comprised in Lot 006099 Mk. 13 D.T.L. Sungei Gelugor, Pulau Pinang ("the Land"), in area 1.9 acres, with road frontage along Jalan Helen Brown, George Town, Penang.

On 22 March 1987, at the Annual General Meeting ("the A.G.M.") of the Society, it was resolved by its members that low-cost flats should be built on the Land and the flats thus built be sold to members or their dependants. For this purpose, an architect Mr. Lawrence Loh ("the Architect") was employed to design, prepare and submit all necessary documentation and plans for a proposed single storey block of 10-storey flats, each with a built-up area of 700 sq. ft., to include 183 units of flats and 7 units of shops ("the Project"), with a view to obtaining planning approval from the Appellant, the Majlis Perbandaran Pulau Pinang ("the Council").

Pursuant to the resolution aforesaid, on 21 April 1990, the Society entered into a Joint-Venture Agreement ("the Agreement") with a licensed housing developer known as Rethico Sendirian Berhad ("Rethico"). The portions of the Agreement, so far as material to this case, were these:

First of all, the preamble provided that:

(1) Rethico had a license to develop the Project under the relevant legislation.

(2) The Society had applied for planning permission to construct 190 units, being 183 units of flats and 7 units of shops, and would endeavour to obtain the maximum density of 100 units per acre; and

(3) Rethico would pay the Society RM900,000 if and when planning approval was obtained for construction of the 190 units.

The other material provisions of the Agreement were these:

(1) the Society appointed Rethico to develop and manage the Project;

(2) the premium of RM900,000 would be paid by Rethico to the Society in instalments;

(3) the Society undertook to find purchasers for all the 190 units;

(4) the selling price of a two-bedroom flat, measuring an average of 500 sq. ft., shall not exceed RM32,000 and, a three-bedroom flat, measuring an average of 650 sq. ft., shall not exceed RM45,000 (Italics supplied);

(5) 100 units were to be two-bedroom flats, 74 units to be three-bedroom flats, 5 units to be shop-houses and 12 units would be shop lots outside the block of flats;

(6) the Society would be a party to all contracts of sale of the individual units;

(7) the Society and Rethico undertook to comply with the relevant requirements of the Housing Developers (Control and Licensing) Act, 1966; more particularly, Regulations 5(5)(a), 10 and 11 of the Housing Developers (Control and Licensing) Regulations, 1989:,

(8) Rethico undertook not to charge the Land but to use its own financial resources to complete the Project.

The Society's application for planning permission having been lodged, the Council responded by letter dated 18 June 1991, requiring the Society to amend its plans within two months to comply with the requirements of the Town and Country Planning Department and certain other Government Departments. A copy of this letter was extended to the Architect.

The requirements of the Town and Country Planning Department aforesaid were enumerated in a separate enclosure entitled "Kehendak-kehendak Perancangan Bandar". Item 5 of these requirements specified that the permitted density was 60 units per acre. The Society's proposed density, however, was 99.06. Item 6 expressed the hope that Rethico would comply with the Council's Garispanduan-garispanduan mengenai rumah pangsa murah Majlis ("Guidelines for Low Cost Flats"). Item 8 of the Guidelines specified that a Co-operative Society was entitled to a density of 100 units per acre. In the contex