Howes J:

This is an application under s. 237(iii) of the Land Code (Cap. 138) against the decision of the Collector of Land Revenue, Lower Perak, by which he ordered the sale of certain land's subject to a charge for the recovery of $2,040 and costs. The respondent-chargor has not appeared, so presumably does not oppose the application.

The facts are as follows:

The chargor borrowed $3,000 from the chargees, and on 30 May 1932, executed a statutory charge in their favour by which she undertook to repay the sum of $3,000 on 30 May 1933, and in the meantime to pay interest at 12%. per annum by equal monthly payments of $30. The chargor made default in repaying the principal on 30 May 1933 but continued to pay interest until 29 January 1936. The amount paid as interest up to that date was $1,320.

These payments were made by the chargor voluntarily, as interest, at the rate mentioned in the charge, and were appropriated by the chargees-applicants towards interest.

On 28 February 1936, the applicants applied to the Collector of Land Revenue for an order for sale under the provisions of the Land Code.

The charge contained no agreement to pay interest after the date fixed for repayment of the principal, viz., 30 May 1933.

The Collector, in view of the decision of the Court of Appeal in Arumugam v. Leonard, ch decided that in the absence of a stipulation in a charge to the contrary, interest thereunder ceased on the day on which the principal was repayable) was of opinion that the sum of $960 paid by the chargor as interest after the date for repayment of the principal, viz., 30 May 1933, should be treated as repayment of the principal and should not be regarded as a payment of interest. Consequently, he reduced the amount of the principal sum (in respect of which the sale of the lands was ordered) to $3,000 less $960 i.e. $2,040 and costs.

The Collector had been informed of the result of the decision of the Court of Appeal by SC Circular No. 1 in RSC 16/36 dated 15 January 1936, but had not had the advantage of reading the judgment of that Court. He was evidently of opinion that that decision justified him in reducing the principal sum by the amounts paid as interest after 30 May 1933.

Whilst, following the above decision, the obligation to pay interest ceased on 30 May 1933, since the chargor, (possibly under a mistake of law) voluntarily continued to pay interest, these payments were in fact payments of interest, and not repayment of the principal sum. Credit has been given by the chargees in their accounts for these sums as interest, and any subsequent claim for interest would necessarily be reduced by these amounts. Money paid under a mistake of law cannot be recovered by the payer, and the chargees were entitled to appropriate the sums paid towards the reduction of their claim to interest.

For this reason, I hold that the Collector was wrong in reducing the principal sum by the amounts paid as interest after the date fixed for repayment of the principal. That sum remains unchanged and is still owing. Consequently, the Collector's order for sale must be varied by deleting the words "less $960" and will therefore be, "Order for the sale of the lands for the recovery of $3,000 and costs.

With regard to the costs of this application, it appears that the chargor was in no way to blame. Mr. Seenivasagam does not press for costs and I accordingly make no order as to costs.

Application allowed.