JUDGMENTBY: THOMSON CJ, SMITH J, ONG J

THOMSON CJ This appeal arises from an action brought by the Malaya Borneo Building Society, Ltd. (which I shall call the Society) against a Mr. Ramachandran arising from an agreement between the parties dated 8th November, 1956, relating to the occupation of a plot of land by Mr. Ramachandran in the Township of Petaling Jaya.

Apart from originally entering appearance Mr. Ramachandran has taken no part in the proceedings. As, however, the case was clearly one of difficulty and as we were informed that the questions which it raised were of some public importance we invited Mr. R. R. Chelliah to assist us as amicus curiae and before proceeding further I would wish to express our appreciation of the assistance we have derived from the learned and penetrating argument which Mr. Chelliah addressed to us.

Some time ago the Government decided to set up a new town on State Land at Petaling Jaya in the State of Selangor. The simplest way of doing this would have been to alienate plots of land within the area in question to persons who wished to reside or carry on business there. Such a course was, however, not considered desirable and other arrangements were made with the Local Authority which had been set up for the new town and the Building Society which is what is loosely known as a Government-sponsored organisation and is financed by the Colonial Development Fund and which is registered as a limited liability company in Singapore.

In very bare outline the nature of these arrangements was as follows. The Administrator of the new town was appointed a Collector of Land Revenue. Any prospective inhabitant approached the Building Society who thereupon applied to the Collector to be allowed to go into occupation of a plot of land in expectation of registration of title under section 17 of the Land Code. On the application being approved the Society paid the necessary premium and fees and were placed on the "Roll of Approved Applicants" under rule 7 of the Land Rules and entered into occupation. They then paid for the erection of premises as required by the prospective inhabitant and in due course allowed him into occupation of the premises.

Now, all this involved the expenditure of a considerable sum of money by the Society and where the prospective inhabitant wished to pay this by instalments over a considerable period it will be clear to anyone with knowledge of the local land laws that it was a matter of very great difficulty to devise a form of agreement covering the transaction which on the one hand the prospective inhabitant would be prepared to accept and which on the other hand would give the Society adequate security for the money it had spent. This was sought to be done by treating the money spent by the Society as a loan and by the use of a form of agreement which, if I may use the expression without offence, can best be described as a parody of an English building society mortgage. Whether this form of agreement altogether attains the ends it has in view is a matter which cannot be finally settled in the present proceedings but it certainly says much for the ingenuity of the Societys legal advisers.

It was an agreement in this form that was executed by Mr. Ramachandran on 8th Novembet, 1956. It recited that the Society was entered on the Roll of Approved Applications for the State of Selangor as approved applicant for the plot of land in question and that the Society had agreed to sell and Mr. Ramachandran had agreed to purchase "the said lot and the buildings thereon" at a price of $ 5,000 of which $ 500 had been paid. It was then agreed (Clause 1) that the Society should sell and Mr. Ramachandran should purchase "all the Societys rights title and interest in the said lot" for $ 5,000. Mr. Ramachandran became entitled to "enter into possession" of the land (Clause 2) and undertook to pay the balance of the purchase price with interest by monthly instalments of $ 40 (Clauses 3 an