Chia Sook Lan Maria v Bank of China

• Judge: Lord Fraser of Tullybelton
• Judgment Date: 08 December 1975
• Neutral Citation: [1975] SGPC 2
• Citation: [1975] SGPC 2
• Defendant Counsel: Michael Mustill QC, AP Godwin and RJL Thomas (Parker, Garrett & Co)
• Published date: 19 September 2003
• Plaintiff Counsel: JG Le Quesne QC, AJ Balcombe QC and KE Hilborne (Charles Russell & Co)
• Date: 08 December 1975
• Docket Number: Appeals Nos 4 and 5 of 1974
• Court: Privy Council
• Subject Matter: Whether consent order obtained by misrepresentation,Contract,Whether consent order obtained while parties laboured under common mistake,Whether guarantee obtained by misrepresentation,Guarantor,Mistake,Misrepresentation,Guarantees and indemnities,Credit and Security,Common mistake,Whether guarantee obtained by duress

Cur Adv Vult

These appeals from the Court of Appeal in Singapore stem from two actions. In one of them the respondent Bank of China (the bank) sued the appellant (Chia) upon two written guarantees signed by Chia guaranteeing payment to the bank of moneys due to the bank by Chia`s husband (Yo) trading as Dwidaya Trading Co: one such guarantee, dated 12 January 1962, was for an amount of M$200,000 and interest, and is referred to as P2; the other such guarantee was dated 27 January 1965, was for an amount of M$600,000 and interest, and is referred to as P3. Chia had previously on 2 October 1961 signed a similar guarantee for an amount of M$100,000, referred to as P1, and ultimately did not dispute liability thereunder.

In the other action Chia as plaintiff sought to have set aside a consent order dated 12 September 1966 made on an Originating Summons No 185 of 1966 issued by the bank. That order recited that it appeared that the title deeds of a property (Cuscaden which was owned by Chia and was the home at which she lived with Yo and their children) had been deposited with the bank to secure an overdraft on account current in favour of Dwidaya Trading Co: declared that the bank was entitled to be considered as a mortgagee of Cuscaden to secure the sum of $1,218,009.49 and interest thereon from 30 June 1966 at 8% per annum: ordered and adjudged the same accordingly: and further gave liberty to the bank to sell Cuscaden and to execute as mortgagee a proper conveyance to the purchaser.

The sum of $1,218,009.49 was the sum standing in the bank`s books to the debit of Yo (in his trading name, which for brevity will not be used hereafter) on 30 June 1966. It is convenient here to point out that if that consent order cannot be successful attacked, and having regard to the ultimate value of Cuscaden, it is not necessary for the bank to rely upon P2 or P3, save to the extent that the figure in the consent order does not in fact include a further sum of $231,429 due from Yo to the bank under two trust receipt documents (hereinafter referred to), which further sum had not for some reason at the time of the consent order been debited to Yo`s general account.

Their Lordships first consider the attempt by Chia in her action to set aside the consent order. It is rightly contended on her behalf that a consent order is open to attack on grounds upon which a contract is so open. On this appeal three grounds were advanced: others had fallen by the wayside in the course of a compendious rejection of Chia and Yo as untruthful witnesses: of the three certainly one was, as such a ground, advanced for the first time at the hearing of this appeal. Each of the three grounds was rooted in alleged mistake.

The first ground

It was contended that fundamental to the consent order was the mistaken assumption, common to both the bank and Chia, that the bank had an effective charge on Cuscaden for moneys owing by Yo to the bank, whereas there was no such effective charge. This allegation that there was no such effective charge requires reference to a document of confirmation of deposit of title deeds dated 2 October 1961 signed by Chia, referred to as P4. P4 was a printed form, and so far as material reads as follows:

To

Bank of China

(Incorporated in China with Limited Liability)

Singapore

Confirmation of Deposit of Title Deeds

I/We, the undersigned Maria Chia Sook Lan alias Tjhia Sioek Lan, of No 28 Cuscaden Road, Singapore, hereby confirm the terms of my/our verbal agreement previously made with you under which it was arranged that the title deeds relating to the undermentioned properties which were in your possession were to be held by you as security for the payment to you on demand of all moneys then owing or which should at any time thereafter be owing from Dwidaya Trading Co of 12, Boat Quay, Singapore, either solely or jointly with any other person or persons to you whether on balance of account or by the discount or otherwith [sic] in respect of bills of exchange promissory notes cheques or other negotiable instruments or in any manner whatsoever including interest with monthly rests at the rate of 8% pa commission and other banking charges and costs incurred in connection with the account.

I/We further confirm having agreed to execute in your favour on demand a legal mortgage of such properties in such form and containing such powers and provisions as you may require.

The undermentioned property was Cuscaden. Well prior to that date the title deeds had been delivered to the bank by solicitors for Chia in circumstances left in some obscurity by the evidence. The argument against the effectiveness of any charge on Cuscaden was based upon the propositions:

(a) that P4 is a memorandum of charge and therefore an assurance by which land within Singapore is affected, and not having been registered under the Registration of Deeds Act was by s 4 there of `not ... admissible in any court as evidence of title to such land`;

(b) that the very existence of P4 precluded evidence of a charge by deposit of title deeds with the orally expressed purpose of securing Yo`s over draft by force of s 91 of the Evidence Act; or alternatively that any such charge that may have existed prior to its execution was wholly superseded by P4, notwithstanding the language of P4, and notwithstanding the disabilities said to be inflicted on P4 by want of registration.

In their Lordships` opinion it is not necessary to embark upon a discussion of these arguments and the answers thereto offered for the bank: nor is it necessary to embark upon a discussion whether, if there were this alleged common mistake, it would be of the relevant character, whether one of law, private right or fact. The reason is this. It was conceded that P4 contains an enforceable agreement by Chia to execute a legal mortgage of Cuscaden to secure Yo`s overdraft, and that the Registration of Deeds Act would not have stood in the way of such enforcement. Accordingly if the contentions for Chia were sound, on which their Lordships must not be taken to rule, the mistake was one of machinery and not of substance, and on that ground was not in any event such a mistake as would justify setting aside the consent order. The substance of the matter was that in any event the bank was in a position to insist upon an effective charge on Cuscaden for Yo`s indebtedness.

The second ground of attack on the consent order

Under this head it was asserted that the parties laboured under the common mistake that Cuscaden was effectively charged to secure Yo`s overdraft, whereas it was not, because Chia`s signature to P4 was procured by a misrepresentation by Djeng on behalf of the bank that P4 charged Cuscaden with Yo`s over draft to a maximum of $100,000. It will be recalled that the guarantee P1 for $100,000 was signed contemporaneously with P4. Entries in the bank`s records indicate that Yo was being granted at that time overdraft facilities of $200,000, of which $100,000 was secured by guarantee and $100,000 was secured on Cuscaden. This alleged misrepresentation never found a place in Chia`s original pleading nor in the copious amendments which followed from time to time. Chia gave no evidence of any such misrepresentation: indeed her evidence about P4 was that it was nothing at all to do with Yo`s overdraft. Counsel for Chia sought to establish the making of such representation from the evidence of Loke (another employee of the Bank) as to what Djeng explained to Chia about P4: but Loke`s evidence, which their Lordships do not propose to set out in detail, was uncertain: it was never suggested to Djeng in cross-examination that he had made such a representation: had the matter been pursued it might well have emerged that Djeng simply referred to $100,000 as being the initial charge on Cuscaden, with an indication that if overdraft facilities to Yo were extended so would be the scope of the charge, as was plainly so under P4 which Djeng said (and the judge accepted) he explained to Chia. In their Lordships` opinion the evidence is wholly insufficient to establish the suggested misrepresentation as to P4. On this point also their Lordships refrain from expressing any opinion whether the mistake alleged under this head is of a character such as can found an attack on a consent order.

It was alternatively submitted that there was in all the circumstances a relationship of confidentiality, involving reliance by China upon the bank through its servants Loke and Djeng, which required the bank to establish affirmatively by evidence that Chia fully understood the transaction, involving proof that there was no such misrepresentation. Their Lordships are quite unable to find from the...