An appellate court may reverse a trial court's finding of fact if it was based on inferences from documents rather than witness demeanor. A charge is subject to cancellation if the consideration—such as an agreement to discharge a prior debt—fails.

Lord Chancellor.:-

This is an appeal from an order of the Court of Appeal of the Federated Malay States, reversing a decision of the trial Judge which ordered the defendant to deliver up for cancellation a charge on certain rubber lands and property of the respondents. It appears that in the year 1921, the respondents bought the land now in question for a sum of 8,000 dollars, paying 1,000 dollars in cash and giving a mortgage to secure the balance. At the beginning of 1923 the mortgagee insisted on the interest being increased, the respondents then being in default. On 13th January 1923 the respondents gave a fresh charge for 8,200 dollars bearing interest at 24 per cent. per annum and in addition they gave a second charge for 4,000 dollars to another creditor. According to the uncontradicted evidence called for the respondents the property was worth some 10,000 dollars in 1922, and was valued at about 12,000 dollars two years later. In the month of February 1923, the transaction took place which gives rise to the present action. On 13th February of that year the respondents executed a charge in favour of the appellant for the sum of 8,000 dollars at 18 per cent., and that charge was registered in the Land Titles Office in the Federated Malay States, ranking after the two charges to which reference has been already made. The circumstances under which that charge was given are the subject of acute dispute and give rise to the present controversy.

The appellant's story is that the respondents borrowed an additional sum of 8,000 dollars on the security of this land; that he went with the first respondent to the Land Titles Office; that outside the Land Titles Office before they went in he counted out 8,000 dollars in cash to the respondent 1; that they then went into the Office and executed the charge, and that respondent 1 and appellant then went to see the first chargee and gave him the third charge in favour of the appellant in order that he might get the charge registered, he having in his possession the certificates of title in the land. The appellant says he arranged to get the charge handed over to him by one Sathia Moorthi, the agent of the first chargee, after registration had taken place. He says that this was duly done and that he obtained the document at the end of February or the beginning of March. He then says that being on the eve of going to India, on 21st March 1923, he made an arrangement with one Bhagai, of which respondent 1 was informed, under which Bhagai was to collect the interest payable under the charge and to deduct a commission of 20 per cent. for so collecting it, and to remit the balance to him, the appellant, in India. The appellant says that in September 1925, respondent 1 got the charge from Bhagai by telling him that he was intending to sell the property and wished to produce the charge to the intending purchaser; and he claims for the whole of the principal and interest payable as stated in the document.

Respondent 1's story on the contrary is that having this charge of 8,200 dollars owing in the beginning of 1923 at 24 per cent., he arranged with the appellant in the following month to lend him the sum of 8,000 dollars in order to pay off the first charge at 18 per cent. He says that the appellant and respondent 1 after the execution of the document went with the document in their possession to the first chargee, and handed the document to the first chargee on the terms that he should retain it in his own possession until the appellant paid him the 8,000 dollars and that he should then discharge his own first charge and hand over the charge in favour of the appellant to the latter duly registered in the Land Titles Office. He goes on to say that the appellant never paid the 8,000 dollars to the first chargee and accordingly the first chargee returned the charge to him respondent 1, two or three months after its execution. He claims accordingly that the charge has been given for a consideration w