JUDGMENT

Linton Albert JC:

The plaintiffs were granted a licence (the Timber Licence) to fell and extract timber in a forest reserve in the Keningau Region comprising an area of 5,665.59 hectares. The Timber Licence was valid from 13 March 1993 to 13 March 1998. The plaintiffs were aggrieved by the defendants'refusal to renew or extend the validity of the Timber Licence. Instead of the renewal or extension sought by the plaintiffs the defendants had issued a new licence confining the plaintiffs to a substantially reduced area of 2204.41 hectares, and the rest of the area under the Timber Licence measuring 3461.18 hectares was distributed to three other companies under separate licenses. The plaintiffs commenced proceedings claiming damages and various declaratory reliefs.

The plaintiffs'case rested on Condition 21 of the Timber Licence which is as follows:

If the Licensee shall be prevented by Act of God, war, acts of the enemies of Malaysia, civil commotion, or by any industrial dispute or other cause beyond the Licensee's control, from carrying out his obligations under Condition 6(i) and (ii), the Government shall grant to the Licensee such extension of time or other modifications in the Licensee's obligations under these conditions, as may be reasonable and necessary, having regard to all the circumstances.

The plaintiffs had reckoned that they could not complete the extraction of the timber within the period giver in the Timber Licence and on or about 22 July 1997, some eight months before it was due to expire, applied to the Setiausaha Hasil Bumi (SHB) one, Datuk William Shim, for extension of the Timber Licence beyond 13 March 1998. By a letter dated 25 November 1997 (The Approval Letter) the SHB approved the application and in that letter instructed the Director of Forests to renew the Timber Licence. The relevant portions of the approval letter were as follows:

JABATAN KETUA MENTERI

(CHIEF MINISTER'S DEPARTMENT)

KOTA KINABALU

25 November 1997

Pengarah Perhutanan

Jabatan Perhutanan

Beg Berkunci No. 68

90009 Sandakan

PERMOHONAN PEMBAHARUAN LESEN HUTAN NO: JP(NNN)042/93(SP) SELUAS 5,665.59 HEKTAR DI SG. TALANGKAI OLEH SUWIRI SDN BHD Bil. JP(P&P)00/02/01/3/142/26 bertarikh 29 Ogos 1997

2. ...

3. ...

4. Setelah permohonan ini dikaji dan diatas penjelasan seperti surat Bil: SWR/KPPW/97/11/1-001 bertarikh 13 November 1997 yang dialamatkan kepada Ketua Pegawai Perhutanan Wilayah, Keningau dan latar belakang aktiviti pembalakan yang dijalankan dalam kup 1993 (JP(NNN)042/93(SP) dan kup 1994 (JP(NNN)042/92(SP), permohonan syarikat untuk memperbaharui keseluruhan kawasan seluas 5,665.59 hektar adalah dipersetujui tertakluk kepada kajian lapangan oleh pihak tuan dan tertakluk kepada peruntukan-peruntukan Enakmen Hutan 1968. Lesen hutan yang akan dikeluarkan adalah bagi tempoh sehingga 31.12.1999.

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(DATUK WILLIAM SHIM)

Setiausaha Hasil Bumi).

Learned counsel for the plaintiffs, Datin Marina Tiu contended that upon SHB communicating the approval letter to the plaintiffs there was a binding contract to renew the Timber Licence. Learned counsel for the defendants disagreed, and contended that the defendants could not be contractually bound to renew or extend the Timber Licence because under Condition 6(vi) a coupe which had been logged and closed ceased to be part of the area under the Timber Licence and therefore, the plaintiffs could not require the defendants to renew or extend the Timber Licence as this would have been contrary to the very provisions of the Timber Licence. With respect, this argument may well find favour within the realm of semantics but is otherwise untenable because there is nothing technical or magical about a coupe; it simply refers to a defined portion within the area under the Timber Licence. The area under the Timber Licence is divided into several portions each of which is called a coupe. This is done so that timber extraction is carried out progressively and this is illustrated by and provided under