Ong CJ:

The issue raised in this appeal and cross-appeal is a simple one. The appellants contracted to carry out certain civil engineering works for the respondents who are property developers. Payments therefore were to be made within 14 days from the delivery of certificates issued from time to time by the engineers appointed by the respondents. Between February 1969 and November 1970 a total sum of $1,190,165.17 was certified as due and payable pursuant to the agreements between the parties. Part payment only to the extent of $330,000 had been made, and judgment in this action was duly entered against the respondents for the balance of $860,165.17. Leave to defend was granted as to the claim for interest - at the rate of 10.8% per annum - which the respondents disputed. The trial Judge allowed the claim, at the rate of 5% simple interest on all sums certified due but not paid within 14 days thereafter.

In this appeal the appellants contend that interest at 10.8% should have been awarded, or some other reasonable rate above 5%. The respondents' contention is that, upon his finding of fact that no definite rate of interest had been agreed upon, the learned trial Judge was in error by awarding interest at 5% by virtue of illustration (n) of s. 74 of the Contracts (Malay States) Ordinance 1950, whereby the appellants were not entitled to any interest whatsoever.

With respect, I think there was evidence on the record to justify the inference that the respondents' managing director did agree to reimburse the appellants the interest payments they had to make on their bank overdraft and their loan from the Finance Company. The specific rate certainly appears to have been agreed - and in writing by the letters of 22 April 1969 and 31 December 1969. The debit notes claiming interest at such stated rate were never challenged or disputed. In the circumstances, I am of opinion that the learned Judge ought not to have substituted for the agreed rate of interest another rate based simply on what the unpaid moneys would have earned as income - upon which no evidence at all was offered as to prevailing rates of interest payable by banks or finance companies on fixed deposits. Since the intent of the parties was to indemnify the appellants at the agreed rate of 0.9% per month or 10.80 per annum, then it seems to me that no other rate can be substituted in the exercise of the Court's discretion.

I would therefore allow the appeal, and dismiss the cross-appeal, with costs. The order of the Court below will be varied by substituting for 5% the higher rate of 10.8% per annum, but, in the circumstances, without monthly rests, to be determined (failing agreement between the parties) on enquiry by the Senior Assistant Registrar, following the directions given by the trial Judge that each payment to account be considered as payment towards the certificates in successive order of time and the interest calculated on each certificate from the date due for payment thereof. For saving time and costs, it is hoped that the parties will be able to agree on a reasonable figure by way of an amicable settlement.