The appellate court can award pre-judgment and post-judgment interest on judgment sums classified as debts under the Civil Law Act, affirming that interest serves as compensation for the deprivation of money owed.

[1] On 29 February 2012, this court granted leave to the appellant to appeal against the decision of the court of Appeal given on 2 August 2010.

[2] The leave questions allowed are:

(1) Is the appellate court entitled to award pre-judgment interest on monies ordered by the trial court to be paid by the defendant to the plaintiff and which monies was neither a debt nor damages sought to be recovered by the plaintiff in the suit?

(2) Where monies are ordered by the trial court to be paid by one party to another only on the happening of an event after judgment, can the appellate court order interest to be paid on the said monies from a date preceding the happening of the event.

[3] For convenience, the parties are referred to by their designations as in the High court. Thus, the appellant herein will be referred to as the defendant and the respondent as the plaintiff.

Background Facts

[4] By a written agreement dated 12 December 1991 ("the agreement") the plaintiff agreed to sell and the defendant agreed to purchase the land identified as QT(R) 9, Lot No: LOCH 235/62 Mukim Tanah Rata, Pahang ("the land") for the purchase price of RM1,000,00.00 of which, a sum of RM250,000.00 was paid by way of deposit and part-payment on the execution of the agreement. It was also agreed that the balance of the purchase price of RM750,000.00 was deemed to be paid by the defendant issuing 20% of the total paid up share capital in the defendant ("the said shares"). The land was transferred and registered in the name of the defendant on 14 April 1992. The plaintiff was appointed a director of the defendant sometime in 1992 and he in fact signed a directors' resolution dated 8 December 1992 wherein the defendant was authorised to apply for the conversion of land use from "residential" to "commercial" in respect of the land.

[5] By letter dated 5 May 1994 the plaintiff's former solicitors informed the defendant that:

"(the plaintiff) instructs us that he is no longer interested in the total performance of the agreement and therefore considers the agreement terminated with the consequence as follows:

(a) That you do pay our client the balance sum of RM750,000.00 in lieu of the shares mentioned above;

OR

(b) That you return the title deed to our client, with no further claims wherein our client forfeits the RM250,000.00 as damages".

[6] On 19 October 1994, the plaintiff entered a private caveat on the land resulting in the defendant's bankers not disbursing an approved loan. There was also evidence that other caveats had been lodged in respect of the land by a third party namely, Ramasamy and Suppiah s/o AN Periasamy, who claimed to have interest in the land pursuant to agreements with the plaintiff. Ramasamy's caveat was on the basis that the plaintiff had leased the land to him.

High court

[7] On 6 March 1996 the plaintiff commenced the suit against the defendant and prayed for:

(a) an order that the agreement was terminated by virtue of the defendant's breach;

(b) the sum of RM250,000.00 received as deposit to be retained to account of general damages;

(c) an order that the Registrar of Titles to rectify the register by entering the name of the plaintiff as the registered owner;

(d) general damages for breach of the agreement;

(e) interest at 8% per annum from date of writ to date of full satisfaction;

(f) costs;

(g) further or other relief.

[8] In its defence, the defendant alleged that the parties had agreed to vary the agreement aft