Arab Bank Ltd v Ng Soo Jin Others (Bank of Montreal third party)

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JC
• Judgment Date: 27 July 1988
• Neutral Citation: [1988] SGHC 58
• Date: 27 July 1988
• Subject Matter: Judgments and orders,O 49, O 50 rr 1(4) & l (6) Rules of the Supreme Court 1970,Whether inequitable to make order absolute,Charging order,Whether order nisi required to be served on any other party who may have interest in property,Civil Procedure,Credit and Security,Charging orders,Mere issue and service of bankruptcy notice does not bring Bankruptcy Act into operation,Setting aside of charging order obtained by judgment creditors,Whether act of bankruptcy committed before order made absolute,Whether full and frank disclosure made,Remedies,Property mortgaged to appellant bank,Whether necessary for court to hear appellant as mortgagee,s 49 Bankruptcy Act (Cap 20)
• Docket Number: Suit No 1134 of 1985
• Published date: 19 September 2003
• Defendant Counsel: Koh Kok Wah (Arthur Loke & Partners)
• Court: High Court (Singapore)
• Plaintiff Counsel: G Pereira (Foo & Quek),Chan Kok Chye (Chu Chan Gan & Ooi)

Cur Adv Vult

On 29 April 1985, the plaintiffs obtained a judgment in these proceedings against the second defendant for $3,184,070.81 with interest. They then applied for a charging order in respect of the property known as Blk 119, Sunset Way, 06-01, Singapore 2159 (the property). In the affidavit of one Lai Mun Kwan filed on 24 July 1985 in support of the application, it was stated that the second defendant was the registered co-owner of the property and that the same was mortgaged to the Development Bank of Singapore and DBS Finance Ltd It is not disputed that the reference to `registered co-owner` was not correct because the second defendant was actually the purchaser of the property under an agreement. Similarly the name of the mortgagee was wrongly stated. It should have been Singapore Finance Ltd.

After the making of the order nisi on 25 July 1985, but before it was made absolute, the third party, who was a creditor of the second defendant, intervened. In an affidavit filed on 8 August 1985 by one Lim Lai Wah on behalf of the third party, the latter informed the court that it had obtained a judgment against the second defendant on 5 August 1985 in Suit No 2089/85 for $2m, plus interest and costs. The third party pointed out that as the total amount which the second defendant owed the plaintiffs and the third party exceeded $5m, the third party believed the second defendant was probably insolvent. The third party objected to the making of the order absolute. Alternatively, it asked for the charging order to be made absolute in favour of both the plaintiffs and the third party. An order absolute was accordingly made on 30 August 1985 in favour of both the plaintiffs and the third party. In the meantime, on 23 August 1985, the plaintiffs served a bankruptcy notice on the second defendant. As no payment was made pursuant to the notice, the second defendant committed an act of bankruptcy on 31 August 1985, a day after the making of the order absolute.

At the time of the making of the order absolute, a caveat had already been lodged at the Land Titles Registry by the mortgagee, Singapore Finance Ltd, the applicant/appellant in these proceedings (hereinafter called `the appellant`). The caveat was lodged on 3 April 1981. On 10 October 1985 and 20 November 1985, the plaintiffs and the third party, respectively, lodged their caveats pursuant to the charging order. Due to an oversight, the appellant allowed its caveat to lapse. However, it filed a fresh caveat on 3 September 1986. On 29 December 1986, the appellant applied, by way of summons-in-chambers, to be added as a party and to set aside or vary the charging order obtained by the plaintiffs and the third party. The application to set aside or vary the charging order was refused by the assistant registrar.

This is an appeal by the appellant against the refusal of the assistant registrar to set aside or vary the charging order. Extensive arguments, both oral and written, have been submitted to me by the parties.

The main grounds advanced by the appellant before me to set aside or vary the charging order are these. First, that the interest of the appellant in the property was not brought to the attention of the court hearing the application for a charging order. Second, that there was no full and frank disclosure by the plaintiffs. Third, that the appellant was not heard by the court before the order nisi was made absolute. Fourth, that the court should not have made the order absolute, having regard to the fact that the third party had stated in its affidavit that it believed the second defendant was `probably insolvent`. Fifth, as the second defendant had only an equity of redemption, that he could not and the court should not charge more than what he had. Sixth, that the plaintiffs and the third party failed to specify the precise interest of the second defendant which they intended to charge as required under O 50 r 1(4).

On the first ground, the appellant pointed out that in the said affidavit of Lai Mun Kwan filed herein on 24 July 1985, it was stated that the plaintiffs believed that the second defendant was a registered co-owner of the property and that the same was mortgaged to the Development Bank of Singapore Ltd and DBS Finance Ltd As stated above, it is admitted that these allegations were not correct. Lai Mun Kwan did, however, state that this belief was based on a search which his solicitor caused to be carried out at the Registry of Land Titles and he did exhibit to that affidavit a copy of the subsidiary strata certificate of title (`the SSCT`) which showed that there were two caveats lodged in respect of the property, one by the second defendant and the other by Singapore Finance Ltd, the appellant.

The application of the plaintiffs for a charging order was made pursuant to O 50 r 1(4) of the Rules of the Supreme Court 1970 (`the RSC`). Under r 1(4) it is provided that the application must be supported by an affidavit:

(a) identifying the judgment or order to be enforced, and stating the name of the judgment debtor on whose immovable property or interest it is sought to impose a charge and the amount remaining unpaid under the judgment or order at the time of the application;

(b) specifying the immovable property on which, or an interest in which, it is sought to impose a charge; and

(c) stating that to the best of the information or belief of the deponent the immovable property or interest in question is the judgment debtor`s and stating the sources of the deponent`s information or the grounds for his belief.

Nothing in the foregoing requires that the particulars of any other party who may have an interest in the property should be disclosed. English cases decided after 1979 should be approached bearing in mind that changes were made in England on this matter by the Charging Orders Act 1979 and the consequential amendment to O 50 of the English RSC. The old forms of precedent included no reference to other creditors of the judgment-debtor or the personal circumstances of the judgment debtor. In any event the present case was not a case of non-dislosure. The intention to disclose was clearly there when the plaintiffs exhibited the SSCT relating to the property. However, due to some inexplicable reasons, the mortgagee was wrongly described as Development Bank of Singapore Ltd and DBS Finance when it should have been Singapore Finance Ltd But as the name of the mortgagee need not be specified, I am of the view that the misdescription of the mortgagee is immaterial.

As regards the second error - the misdescription of the interest of the second defendant - it may be useful to refer to the charging order absolute made on 30 August 1987 which is in these terms:

The interest of the second defendant in the property at 06-01, Sunset Way, Block 119, Singapore 2159 (Lot 4129/U) 97 Mukim 5, Pandan) comprised in the Subsidiary Strata Certificate of Title Volume 176 Folio 94 stand charged in favour of the plaintiffs and the Bank of Montreal (third party) ...

The reference to `the interest` of the second defendant in the property and the reference to the SSCT in the charging order absolute are particularly significant. In my view they go to show that the assistant registrar`s attention was drawn to the SSCT, where the true position of the parties was set out. It therefore seems to me that the misdescription of the interest of the second defendant was also of no consequence. Except for these inconsequential errors, the affidavit filed in support of the application for a charging order had complied with O 50 r 1(4). In any event no prejudice had been caused thereby to any party. At the time when the charging order was made absolute, that order clearly ranked after the prior interest of the appellant, vide its caveat lodged on 3 April 1981.

I turn now to the second ground: no full and frank disclosure. To some extent, part of this ground overlaps with that of the first ground. The appellant contended that as there was a wrong reference to Development Bank of Singapore and DBS Finance as mortgagees and a wrong description. of the second defendant`s interest in the property, there was therefore no fun and frank disclosure. For the reasons which I have alluded to under the first ground, I do not think there was any lack of full and frank disclosure. The SSCT was exhibited and all the material facts were there. In my view, the errors do not amount to `an important misstatement` referred to by Kay J in Republic of Peru v Dreyfus Brothers (1886) 55 LT 802 at p 803.

Also under this ground the appellant contended that the plaintiffs should have informed the court at the time of the hearing to make the order absolute that a bankruptcy notice had been served by the plaintiffs on the second defendant. In this regard I think the following points should be noted. First, there was no allegation that at the time when the order nisi was made on 25 July 1985 there was any non-disclosure as the bankruptcy notice had not yet been served. Second, the hearing to make the order absolute was not ex parte, but inter partes. The fact that the second defendant chose not to attend the hearing should not be held against the plaintiffs. Third, the court was informed by the third party that the second defendant was probably insolvent. The rule requiring full and frank disclosure of material facts applies in ex parte applications and an applicant who fails to do so will be deprived of the benefits of the order without going into the merits - see R v Kensington Income Tax Commissioners, ex parte Princess Polignac [1917] 1 KB 486 - of course, this does not mean that just because a notice has been served on the other party who does not appear, the first party can with impugnity mislead the court. As Romilly MR stated in Maclaren v Stainton 51 ER 786 at p 790, `But if the respondent does not appear and the plaintiff, taking advantage of the absence,...