Lord Oliver of Aylmerton:

This is an appeal from an order dated 4 August 1983 of the Federal Court of Malaysia (Salleh Abas CJ, Mohd Azmi FJ and Syed Agil FJ) dismissing with costs the appellant's appeal from the refusal of the High Court on 25 August 1982 of an order for the sale of certain land of which the appellant was the chargee.

The first respondent was at all material times the registered proprietor of certain land in the Mukim of Ulu Kinta which had been divided into 59 lots upon each of which it was proposed to construct a dwelling-house. On 14 October 1978 the first respondent applied to the appellant for credit facilities to finance the continuation of the development. At that time the majority of the plots had been sold to purchasers under agreements for sale each of which provided for an initial deposit and stage payments as the building erected on the plot progressed and which contained the following two Clauses:

3. Subject to the provisions of Clause 4 hereof, the purchaser agrees that the vendor may subject the land sold to the purchaser to encumbrances at any time after the signing this agreement.

4. The land sold to the purchaser shall be free from any encumbrance immediately prior to the handing over of vacant possession of the building to the purchaser.

After the initial application, further correspondence ensued between the appellant and the first respondent and the appellant was furnished with a list of the purchasers. On 25 November 1978 the appellant wrote to the first respondent a facility letter expressing its willingness to advance a total sum of RM600,000, as to RM200,000 on presentation of a legal charge on the land and as to the balance in stages against architect's certificates. Interest was to be at the rate of 11% with monthly rests and was to be settled monthly. The loan was to be secured by a legal charge on the 59 lots and repayment was to be made "From the proceeds of sale of the houses built but not exceeding a period of two years from date of first release of loan. Amount required for the release of each title is RM10,200". These terms were accepted and on 27 January 1979 the first respondent charged the land to the appellant as security for the repayment of the sum to be advanced with interest at the agreed rate. The charge, which was duly registered on 8 February 1979, contained a covenant to pay interest at the prescribed rate on the last day of each month and a provision that in case of default the chargee should be entitled to give notice demanding immediate payment of the principal sum and accrued interest. Section 253(1) of the National Land Code provides:.

The provisions of this chapter shall have effect for the purpose of enabling any chargee to obtain the sale of the land or lease to which his charge relates in the event of a breach by the chargor of any of the agreements on his part expressed or implied therein.

Section 254 enables the chargee, where a breach has occurred of any agreement by the chargor and is continued for one month, to give a statutory notice requiring it to be remedied within one month. On default, the monies secured (if not already due) become due and payable and the chargee may apply to the Court for an order for sale. Section 256(3. provides that:

On any such application, the Court shall order the sale of the land or lease to which the charge relates unless it is satisfied of the existence of cause to the contrary.

Between January 1979 and August 1980 some monies were advanced under the charge amounting to RM511,390.50 in the aggregate, but the first respondent, although it appears to have received stage payments from some at least of the purchasers of the individual lots, was persistently in arrears with payments of interest under the charge. The appellant (not, in their Lordships' view, unreasonably) was reluctant to make further advances while the first respondent persisted in making default in making the interest payments due. The arrears w