Whitley (SS) A-G CJ:

This is an appeal by the Plaintiff from a judgment of Kellagher J in the First Division dismissing an appeal to him from a judgment of the Acting Second Malay Judge in the Second Division.

The learned trial Judge made no finding on the facts but Kellagher J accepted the evidence of the Plaintiff Appellant as being a correct statement and I feel no doubt that he was right in so doing. It must accordingly be taken as established that on 9 April 1929, the first Defendant made two promissory notes in the favour of the Plaintiff, one being for $1,000 with interest payable on demand and the other for $1,100 repayable by monthly instalments of $110. Both promissory notes were signed by the second Defendant as surety and at the time that the two promissory notes were made a Surat Kechil Number 11208 was deposited by the first Defendant with the Plaintiff as collateral security without any memorandum. Only one payment was made on each promissory note namely on 29 May 1929.

By his plaint the Plaintiff claimed:

(a) a declaration that he was entitled to be considered as a chargee of the lands comprised in the Surat Kechil.

(b) Judgment for the sum due for principal and interest on the two promissory notes.

The trial Judge dismissed the claim on the promissory notes as being barred by Limitation and gave judgment for the Defendants with costs. He did not deal with the claim for a declaration. At the hearing of the appeal to the Court of the First Division Counsel for the appellant withdrew the appeal against the second Defendant and submitted that as against the first Defendant he was entitled to the declaration claimed in his plaint and accordingly the point which Kellagher J had to decide was whether the Plaintiff is an equitable chargee by deposit of the Surat Kechil. If he is it would follow that his claim on the promissory notes would not be barred as it would come within s. 24 of the Limitation Enactment. Kellagher, J held that the deposit of the Surat Kechil did not make him an equitable chargee and dismissed the appeal. The learned Judge gave the grounds for his decision in a clear and carefully reasoned judgment which was of great assistance at the hearing of the appeal before us as it fully set out the arguments in favour of the respondent who was not represented by Counsel. The view which he took was that the respondent merely deposited the Surat Kechil as security for the repayment of the debt and that it did not necessarily follow that he intended by the deposit to constitute the appellant an equitable chargee, the deposit being equally consistent with the intention that the respondent should thereby merely prevent himself from dealing further with the land inasmuch as he parted with possession of what was in effect his only document of title. He was further of the opinion that, when considering whether it should apply the principles of equity in force in the Colony of the Straits Settlements as provided; by s. 11 of the Courts Enactment No. 25, the Court should not apply them in any case where the result of such application would be inconsistent with the provisions of any Kedah Enactment or the aims or objects of such Enactment, and that to give the appellant the declaration asked for would be to create in him an interest entirely inconsistent with the basic principles of the Land Enactment 1332.

Section 11 of the Courts Enactment provides inter alia that the Court of Appeal shall in matters of contract apply the principles of equity in force in the Colony subject always to the provisions of Kedah Enactments. The principles of equity in force in the Colony are those in force in England so that as the point under consideration is clearly a matter of contract it is our duty to apply English principles of equity provided that in so doing we do not do violence to the provisions of any Kedah Enactment. At the date of the deposit the Enactment in force was the Land Enactment 1332, now repealed. T