Spenser Wilkinson J:

The dispute in this case concerned two houses in Butterworth and it was common ground that the houses are of a type which by the custom of this country are movable and not unmovable property, and my decision it, this case proceeds upon this basis.

The plaintiff, who was the owner of these two houses, by a document dated 26 May 1952 purported to sell them in consideration of the sum of $1,000 to the first defendant free from encumbrances.It is contended, however, by the plaintiff that although this document is in form an out-and-out sale of the property the actual bargain between the parties was a loan transaction, whereby the first defendant lent to the plaintiff a sum of $750 and that upon repayment by the plaintiff to the first defendant of the sum of $1,000 being the principal of $750 with $250 agreed interest the first defendant would reconvey the property to the plaintiff.The $1,000 was to be repaid by ten instalments of $100 each.

In my opinion it is now well settled law that the Court can go behind the express terms of a document of this kind in order to ascertain whether or not the document is a bill of sale, and on this point I follow the decision of Storr J in Wok binte Hussain v. Harchand Singh [1953] 1 MLRH 737, [1953] MLJ 176, and the English cases referred to in the report of that case.

Having heard the evidence in regard to the transaction I saw no reason to disbelieve the plaintiff and his witnesses and I was unable to believe the evidence of the first defendant, who was obviously lying on several occasions during the course of his testimony.The evidence of the plaintiff with regard to the transaction with the first defendant is corroborated by the witness Karuppiah, who appeared to me to be a witness of truth. I was therefore satisfied on the evidence that the transaction in the present case was, as alleged by the plaintiff, a loan transaction, and I find as a fact that the plaintiff received the sum of $725 from the first defendant ($25 having been deducted in respect of the petition writer's costs); that he had agreed to repay a total of $1,000 and that he repaid $200 by two instalments of $100 each.

The result of this finding is that the document of 26 May 1952, although on the face of it an out-and-out sale, was in fact a bill of sale given by way of security and is, therefore, void for want of registration under s. 4(1)(a) and also because it is not in the form called for by para. (b) of section of the Bills of Sale Ordinance.

On 5 January 1953 the first defendant by a document very similar to the one above referred to purported to transfer the same houses in consideration of the sum of $1,350 to the second defendant free from all encumbrances.The plaintiff contends that this document is void under s. 5(2) of the Bills of Sale Ordinance because at the time when it was made the grantor was not the true owner of the property, and he also contends that the document was not effective to pass any title in the property to the second defendant because the first defendant had no title to pass, and he relies on the maxim nemo dat quod non habet.

The plaintiff goes further than this moreover and alleges that the transfer from the first defendant to the second defendant was made in fraud of the plaintiff and that the second defendant had actual notice of the position.

I am quite satisfied that the first defendant was well aware that he had no right to sell this property but with regard to the position of the second defendant, some rather difficult questions arise.Mr. Hume on behalf of the second defendant argued that by executing a document which in form was an outand-out assignment and allowing the first defendant to be in possession of this document as between him and third parties the plaintiff was estopped from denying that the sale was other than what the document made it appear to be. In support of this proposition Mr. Hume relied upon s. 115 of the Evidence Ordinance and a passage