(delivering the Judgment of the Court): The only question to be determined in this appeal is whether on the construction of memoranda of charges, the appellant bank is entitled to charge interest as soon as money in an overdraft facility is drawn, as contended by the chargee appellant (the bank), or from the date of demand as contended by the chargor (the respondent) and accepted by the learned trial Judge.

On April 17, 1970 in consideration of the bank granting the Sarawak Vanguard Limited, now known as the Sarawak Vanguard Sendirian Berhad, Kuching (the Company), overdraft facilities up to $45,000.00, the respondent executed a memorandum of charge over his ½ undivided share and interest in a piece of land and building at Padungan, Kuching, Sarawak, Parcel 138 section 50 Kuching Town Land District held under Kuching Lease of Crown Land No. 4572 of 1956. On December 31, 1970 by a memorandum of increase of amount owing under the charge the amount to be secured was increased to $60,000.00. On July 30, 1973 a second memorandum of charge was executed over the same title granting a further overdraft facility of $250,000. On September 28, 1979 the bank wrote to the respondent drawing his attention to the overdraft facility of $85,000.00 to the Company, demanding full payment of $163,176.83 owing under the charges as at April 30, 1979 together with further interest thereon at 12% per annum, and informing him that if he failed to comply with the notice a court order would be sought to sell the security. On December 18, 1979 an application by way of originating summons was made to the court for sale of the respondent's ½ undivided share and interest in the land and for payment from the proceeds of sale in the sum claimed together with interest at 12% per annum from May 1, 1979 to the date of sale of the land. The respondent objected to the application, stating in effect that his right of redemption under section 145 (1) of the Land Code extended only to paying $85,000.00 plus interest from the date of demand till date of full settlement as indicated in his advocate's letter of August 21, 1980. It does not appear to be disputed that neither the Company nor the respondent has paid anything to the bank.

We shall deal first with the contention on behalf of the respondent that as he is merely the guarantor for the Company, the court in construing a contract of guarantee should give it a lighter construction. Reference is made to Oriental Bank of Malaya Ltd v N Subramanian [1958] MLJ 35, 38 where Whyatt C.J. (Singapore) relying on a statement by Fry J. in Lloyd's v Harper 16 Ch D 290 said:

"A guarantee, like every other contract, must be construed reasonably; it must be construed by the words used but also with regard to the surrounding circumstances".

This statement does not bear out the proposition that a contract of guarantee is to be construed favourably to the guarantor. It is now settled law that guarantees are not to be construed in any different way from any other contract. See Esheby v Federated European Bank Ltd [1932] 1 KB 254, Nicholson v Paget (1832) 1 C & M 48; 2 LJ (Ex) 18; 149 ER 309 and Blest v Brown (1862) 4 De GF & J 367, 376; 45 ER 1225.

In any event, we do not see the present case as a contract of guarantee. A contract of guarantee is a contract to perform the promise, or discharge the liability, of a third person in case of his default. See section 79 of the Contracts (Malay States) Ordinance, 1980. The respondent by the charges is not in the position of surety or guarantor who engages with the bank to be answerable in the second degree for the default of the Company. The promise to pay is made by the respondent in consideration of the bank granting accommodation to the Company. All the indications are that the respondent is related to the Company. The address of the respondent is the same as that of the Company.

As to the effect of the charges, in argument in the trial court and before us, both sides hav