Land Law

Published date01 December 2001
AuthorTEO KEANG SOOD LLB, LLM (Mal), LLM (Harv), Advocate & Solicitor (Malaya), Associate Professor, National University of Singapore
Citation(2001) 2 SAL Ann Rev 317
Date01 December 2001

17.1 The cases under review dealt with areas ranging from specific interests in land to more general matters affecting land. In particular, these cases dealt with leases, licences, mortgages, easements, strata title, the role of equity in the Singapore Torrens system, adverse possession, land acquisition and conveyancing. They have further clarified the law in the respective areas, providing a firmer foundation for future developments.

Lease: whether agreement to lease must be in approved form where term exceeds 7 years

17.2 Under s 87(1) of the Land Titles Act (Cap 157, 1994 Ed) (“LTA”), registered land “may be leased for any term of years exceeding 7 years by an instrument of lease in the approved form”. The question which arises is whether this is a mandatory provision. In Golden Village Multiplex Pte Ltd v Marina Centre Holdings Pte Ltd[2001] 3 SLR 452, the plaintiffs (Golden Village) had entered into an agreement to lease, for 15 years, various levels of a building (Leisureplex) from the defendants (Marina Centre) for use as a cinema complex. Under cl 9.2 of the agreement, the plaintiffs covenanted that it shall not register the lease for the duration of the term. Although negotiations took place between the parties on whether the lease of the premises in favour of the plaintiffs must be registrable under the LTA, by the time the plaintiffs signed the formal agreement, it knew that the defendants were not going to grant it a registrable lease. The parties had eventually agreed that cl 9.2 would remain without any amendment and it was on this basis that the plaintiffs had entered into the agreement. The plaintiffs took possession of the premises but subsequently refused to pay rent. They commenced action for a declaration that the agreement was void and unenforceable as it was, inter alia, not in an approved form. The High Court was of the view that the provision mentioned above was not mandatory but merely an enabling provision. It was not couched in mandatory terms. Woo Bih Li JC, accordingly, held (at 461) that “there is no requirement in the 1994 LTA that [such] a lease … which would meet the other requirements of s 87(2), must be in an approved form or must be registered”. Notwithstanding non-registration, the agreement was still effective as a contract as provided in s 45(2) of the LTA.

17.3 Under s 53(1) of the Conveyancing and Law of Property Act (Cap 61, 1994 Ed) (“CLPA”), the agreement was void at law as it was not by deed. Nevertheless, it was not devoid of any legal consequence or incapable of creating any rights. At common law, it would be construed as a tenancy at will and if the tenant had taken possession and was paying rent, this would give rise to a periodic tenancy, its nature (whether weekly, monthly or yearly) depending on how the rent was paid and calculated. In equity, the tenant would be regarded as having an equitable lease for the duration of the term on the authority of Walsh v Lonsdale(1882) 21 Ch D 9 and equity would grant specific performance of the agreement unless it was not appropriate to do so in the circumstances.

17.4 In the circumstances of the case, the availability of specific performance was not dependent on whether the agreement was in the approved form but what the parties had agreed to. Woo JC found on the evidence that the parties had negotiated on the basis that the plaintiffs were not to be granted a registrable lease. Accordingly, the case before him did not fit into the cases where specific performance was ordered and in which the intention between the parties was otherwise, namely, for the tenant to be granted a lease in registrable form. Woo JC also dismissed the plaintiffs” contention that there was a failure of consideration as it would not be getting a registrable lease. He noted that the plaintiffs still had the use of the premises, the very benefit they had contracted for.

17.5 On whether the lease, which was not in the approved form, was in breach of s 2(2) of the Planning Act (Cap 232, 1990 Ed), Woo JC held that the provision applied only to instruments in an approved form. The plaintiffs had earlier contended that the lease constituted a subdivision of Leisureplex without the written permission of the competent authority contrary to s 10(3) read with s 2(2) of the Planning Act. Having regard to the language of s 2(2), Woo JC was of the view (at 478) that “an instrument … not in an approved form is not one that is ‘capable of’ being included in a separate folio” of the land-register. There was, accordingly, no breach of s 10(3) read with s 2(2) of the said Act.

17.6 The decision in Golden Village enables parties to a lease transaction to craft the transaction to suit their needs. As s 87(1) of the LTA is not mandatory, the parties are given the flexibility to work out an arrangement which will best give effect to their intention and commercial needs. The autonomy of the will of the parties is thus respected and, where necessary, will be given effect to by the courts.

17.7 In Golden Village, the court had regard to both the position under the LTA and the CLPA on the issue of the legal effect of the agreement to lease. It was not clear on the facts of the case whether the lease was in respect of registered or unregistered land. Had this been determined at the outset, it would have been clearer as to which statute applies.

Contractual licence

17.8 For a discussion of Tan Hin Leong v Lee Teck Im[2001] 2 SLR 27 pertaining to the revocability of a contractual licence, see (2000) SAL Ann Rev 266—269.

Mortgagee”s power of sale

17.9 It is trite law that a mortgagee acts not as a trustee of the mortgagor in the power of sale. He can decide in his own interest whether to sell the mortgaged property and when to do so. The mortgagee will not be liable for a decline in value of the mortgaged property unless he was personally responsible for the decline. However, once the mortgagee decides to sell, he is subject to certain duties. In Cuckmere Brick Co Ltd v Mutual Finance Ltd[1971] Ch 949, Salmon LJ laid down the principle of law that a mortgagee in exercising the power of sale must act in good faith and also that he must take reasonable care to obtain the true market value of the mortgaged property at the date on which he decides to sell it. The mortgagee must observe these two distinct duties and one without the other is insufficient.

17.10 In Sri Jaya (Sendirian) Berhad v RHB Bank Berhad[2001] 1 SLR 486, the defendants, who were the mortgagees of the property in question, had, upon breaches of the terms of the mortgage agreement committed by the plaintiff-mortgagors, sold the mortgaged property on an “as is, en-bloc” basis as they were unable to reach agreement with the occupants to obtain vacant possession. S Rajendran J held that the defendants were not under a duty to obtain a valuation on a “redevelopment” basis. He explained as follows (at 497):

“The issue here was whether RHB Bank (as mortgagees) should as reasonable mortgagees have obtained a valuation on a ‘redevelopment’ basis before proceeding to sell the property. I am of the view that they were not in this case under any such obligation. To require a mortgagee to obtain a valuation on a ‘redevelopment’ basis which requires various assumptions to be made on the variables and then to require the mortgagee to have regard to such a valuation before selling the property goes far beyond the scope of a mortgagee”s duty as set out in the existing case law and is unduly onerous on a mortgagee.”

17.11 Rajendran J, however, found that the defendants were negligent in the conduct of the sale of the mortgaged property. While he noted that there was no obligation on them to advertise the property before a sale by private treaty as laid down by the Court of Appeal in Ng Muimui v Indian Overseas Bank[1984—1985] SLR 286, they were, nevertheless, under a duty to take reasonable steps to obtain the best price possible in the circumstances. On the evidence, he found that the defendants took too passive a stance by waiting to be approached with offers and this resulted

in a small pool of buyers tendering for the property. Apart from the lack of efforts to publicise the property for sale, he also found that there was a failure on the part of the defendants to bring interested purchasers into competition with each other so as to obtain the highest price for the property. Accordingly, relying on the Court of Appeal decision in Lee Nyet Khiong v Lee Nyet Yun Janet[1997] 2 SLR 713, he re-emphasised (at 499) that “the fact that [the mortgagees] had relied on Richard Ellis”s desktop valuation of $5.85m and that the property was sold above that valuation cannot, per se, absolve them from liability”. This was especially so given “the significance of the phenomenal rise in the amounts offered for the property over the short space of time” (at 501).

17.12 In contrast, in Goh Chin Soon v Vickers Capital Ltd[2001] 1 SLR 728, the mortgagees were found not to have been negligent in the manner in which they conducted the sale of the mortgaged property. In that case, the plaintiffs had acted as guarantors of the mortgagor”s obligations under the mortgage. The defendants, who were mortgagees, subsequently issued a statutory demand against the plaintiffs in respect of an outstanding judgment sum which was not satisfied. The plaintiffs were unsuccessful in their application to set aside the statutory demand before the deputy registrar. They had contended that the defendants were in breach of their duty to obtain the best possible price or market price in the sale of the mortgaged property. On appeal, Rubin J, referring to Standard Chartered Bank v Walker[1982] 1 WLR 1410 at 1415, reiterated (at 734) the principle of law as regards the duty of care that “a mortgagee owed a duty not only to himself but also to the mortgagor as well as to the guarantors involved”. The main issue before him was whether...

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