George Seah SCJ:

On the application of the chargee/appellant (hereinafter called the appellant) the learned Judge ordered that the charged lands belonging to the chargor/respondent (hereinafter called the respondent) be sold by public auction under s. 257(1)(a) of the National Land Code 1965 to satisfy the sum of RM2,219,682.70 due to the appellant as at 28 November 1986 with interest thereon at the rate of 8% per annum from 29 November 1986 to the date of realisation.

This is an appeal by the appellant against that part of the Court Order directing that interest at 8% per annum be paid by the respondent to the appellant. There is a cross-appeal by the respondent against the Order for sale made by the High Court.

In ordering that only 8% per annum interest rate be paid by the respondent to the appellant the learned Judge purported to rely on O. 42 r. 12 of the Rules of the High Court 1980 and a recent decision of this Court in the case of Supreme Finance (M) Bhd. v. Koo Sin Ken [1987] CLJ (Rep) 349. At p. 351 the learned Lee Hun Hoe CJ (Borneo) in giving the judgment of this Court said:

The question is whether the debt merged in the judgment. Clearly, where a judgment is recovered in respect of a debt any other personal remedy for the same debt is extinguished or merged in the judgment. In which case under O. 42 r. 12 the interest will be at the rate of 8% per annum or such other rate not exceeding 8% per annum as the Court directs from the date of judgment until satisfaction. Order 42 r. 12 makes no distinction between debts in respect of which the parties have made an agreement in respect of interest and those where there is no such agreement ...

With respect, we accept and agree with this exposition of the law. In our opinion, Supreme Finance case is clearly distinguishable from the facts of the present case. There the only issue in the appeal concerned the rate of interest to be given after date of judgment. Here, there was no judgment debt. The claim of the appellant in the Court below was in exercise of their statutory remedy against the respondent as chargor in default under the provisions of the National Land Code 1965. The appellant's claim was not under a covenant under the registered charge. In American International Assurance Co. Ltd. V. Union Builders (malaysia) Sdn. Bhd [1971] the appellant was the chargee of certain lands on the security whereof the respondent as chargor was given a loan of RM1,250,000 bearing interest at 11% per annum. The chargor defaulted in payment of a number of instalments, as well as interest. Notice of default was given as in Form 16D under s. 254 of the National Land Code. The High Court made an order that the charged lands be sold by public auction to recover the sum of RM1,401,596.24 due to the appellant as on 31 August 1970 together with interest thereon at 11% per annum from 1 September 1970 to the date of the order and further interest thereafter at 6% per annum to the date of payment or realisation. The then Federal Court allowed the appeal and at p. 96 Ong CJ (Malaya) said:

The chargees' claim herein was not on the covenant but in exercise of their statutory remedy against a chargor in default. Hence there could not have been any merger. In this connection I might add in parenthesis that, ordinarily, a chargee hardly ever has occasion to sue on the covenant, except where the moneys realised fall short of the amount needed to satisfy his claim for principal and interest. It may also be observed that s. 268 provides for priorities in the application of the proceeds of sale, first towards land rent, secondly expenses connected with the sale and then as follows:

(c) Thirdly, in the payment to the chargee of the total amount due under the charge at the time of sale.

The words in italics, in my opinion, further indicate that interest continues to accrue at the agreed rate until sale. I would accordingly allow the chargees' appeal and direct that the order of Court dated 18 Feb