Chee Yoh Chuang and another v Ooi Chhooi Ngoh

• Jurisdiction: Singapore
• Judge: Chan Seng Onn J
• Judgment Date: 19 February 2020
• Neutral Citation: [2020] SGHC 35
• Date: 19 February 2020
• Docket Number: Originating Summons No 1017 of 2019
• Published date: 22 February 2020
• Plaintiff Counsel: Chang Man Phing Jenny, Lim Xian Yong Alvin and Joel Tieh Wenjun (WongPartnership LLP)
• Defendant Counsel: Seah Zhen Wei Paul and Kang Weisheng Geraint Edward (Tan Kok Quan Partnership)
• Court: High Court (Singapore)
• Hearing Date: 05 November 2019,20 November 2019
• Subject Matter: Sale of land,Sale under court order,Land,Effect of bankruptcy

Chan Seng Onn J:

What are the considerations that a court should take into account when ordering the sale of a co-owned family home upon the application of the Official Assignee or the trustee in bankruptcy? How is the court to balance the rights of the creditors of a bankrupt co-owner as against those of the non-bankrupt co-owner(s), bearing in mind that the whole family stands to be evicted should the sale of their family home be ordered? These are the issues in the present dispute involving the property located at 79 Neram Road, Singapore 807774 (“the Property”).

Background Facts

The Property was originally owned by Koh Sin Chong Freddie (“the Bankrupt”) and his wife, the respondent, as joint tenants. A bankruptcy order (“the Bankruptcy Order”) was made on 4 August 2016 and the Official Assignee (“the OA”) was appointed as the trustee of the Bankrupt’s estate.¹ The first and second applicants were appointed as the Private Trustees in Bankruptcy of the Bankrupt (“the PTIBs”) in place of the OA on 21 May 2019.²

The Bankrupt’s two creditors and the debts owed to each of them are as tabulated:³

Creditor	Nature of Debt	Amount of Debt (S$)
DBS Bank Ltd (“DBS”)	Secured on the Property	1,408,724.834
Singapore Swimming Club (“SSC”)	Unsecured	1,832,653.055
Total Debt (S$):	3,241,377.88

The Bankrupt’s main asset is his interest in the Property. While there is no official valuation of the Property, the Bankrupt valued it at $5.7 million in his Statement of Affairs in 2016.⁶ It was also listed for sale on a property listing site, propertyguru.com.sg, in 2013 for $7.8 million.⁷

As with his other assets, the Bankrupt’s interest in the Property vested automatically in the OA upon the making of the Bankruptcy Order by virtue of s 76(1)(a)(i) of the Bankruptcy Act (Cap 20, 2009 Rev Ed) (“Bankruptcy Act”). This in turn severed the joint tenancy by operation of law (see Peter Low LLC v Higgins, Danial Patrick [2018] 4 SLR 1003 at [137] and Malayan Banking Bhd v Focal Finance Ltd [1998] 3 SLR(R) 1008 at [16]). Therefore, the OA and the respondent each took a half share in the Property as tenants in common. ⁸ When the applicants were appointed as the PTIBs in place of the OA, they own the half share in the Property by virtue of s 36(2) of the Bankruptcy Act.

Since 2018, the OA and the PTIBs have contacted the Bankrupt and/or the respondent on various occasions to provide the Bankrupt with options to discharge his debts, namely by (1) selling the Property, (2) getting one or more of the Bankrupt’s family members to buy over his half share in the Property, or (3) by settling his debts in full. This was done by: sending letters to the Bankrupt on 25 July 2018⁹ and 15 March 2019;¹⁰ arranging a meeting between the PTIBs and the Bankrupt on 17 June 2019 to discuss the options for the sale of the Property;¹¹ and sending a letter to the respondent on 24 June 2019 to obtain her confirmation as to whether she or her adult children were prepared to buy over the Bankrupt’s share of the Property or, in the alternative, whether she would be prepared to put the Property out for sale jointly.¹²

The PTIBs have also informed the Bankrupt that a sale of the Property would leave him and the respondent with sufficient funds to purchase a HDB flat, settle his debts in full and annul the Bankruptcy Order against him.¹³

As the respondent and the Bankrupt have refused to take up any of the three options, the PTIBs filed an application in Originating Summons No 1017 of 2019 for the sale of the Property.

After hearing both parties, I ordered that the Property be sold in the open market and the sale proceeds, after deducting the expenses connected with the sale and the repayment of the outstanding mortgage, be remitted to the Bankrupt and the respondent in equal shares.

Dissatisfied with my decision, the respondent has filed an appeal. I now set out the reasons behind my decision.

The sole issue to be determined

The sole issue that arose for my consideration was whether to order a sale of the Property.

Given that this is the first case in which the High Court is being called upon to exercise its powers of sale in relation to co-owned property under the Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed) (“SCJA”) upon the application of the OA or a trustee in bankruptcy as opposed to a fellow co-owner, I find it necessary to deal with the preliminary, albeit undisputed, question of whether the court has the power to order the sale.

A preliminary point: the court’s power to order the sale

The court’s power of sale is derived from s 18(2) of the SCJA, which provides that the High Court shall have the powers set out in the First Schedule. Paragraph 2 of the First Schedule reads as follows:

Partition and sale in lieu of partition

2. Power to partition land and to direct a sale instead of partition in any action for partition of land; and in any cause or matter relating to land, where it appears necessary or expedient, to order the land or any part of it to be sold, and to give all necessary and consequential directions.

By way of background, the High Court’s power of sale under the SCJA has been exercised in numerous cases involving non-bankrupt co-owner(s) where the court considered whether the property should be sold upon the application of a fellow co-owner: see, eg, Abu Bakar v Jawahir and others [1993] 1 SLR(R) 865 (“Abu Bakar”); Su Emmanuel v Emmanuel Priya Ethel Anne and another [2016] 3 SLR 1222 (“Su Emmanuel”). The main difference in the present application lies in the fact that it was brought by the PTIBs in order to realise the assets of the Bankrupt as part of their general administration of his estate, which includes the Bankrupt’s share in the Property as a tenant in common with the respondent.

For the purposes of invoking the power of sale, I saw no difference between an application by a non-bankrupt co-owner and that by the OA or trustees in bankruptcy who represent the interests of a bankrupt co-owner’s creditors. It is clear that the OA is empowered to sell a bankrupt’s property and to institute legal proceedings in relation to the same under s 111(a) and s 112(b) of the Bankruptcy Act, and the trustee in bankruptcy is empowered to do the same under s 36(1)(b) of the Bankruptcy Act. The PTIBs were entitled to apply to the court for an order to sell the Property because the Bankrupt’s interest in the Property has vested in them.

The present scenario was also considered by the Court of Appeal in Su Emmanuel. The case involved a house owned by three individuals as tenants in common: the appellant (“Su”), the first respondent (“Priya”) and the second respondent (“Philip”) in respective shares of 50%, 49% and 1%. The house was originally owned by Phillip and Su as joint tenants but the joint tenancy was severed in 2004 when Priya bought over a 49% share in the house. She signed a sale and purchase agreement which included a particular clause 10 (“cl 10”). This clause, in essence, provided that Priya would not evict Su and her children from the house as it was their place of dwelling (Su Emmanuel at [14]). Priya subsequently ran into financial difficulties and thus applied for an order that the house be sold in order for her to use the sale proceeds to stave off impending bankruptcy proceedings. The Court of Appeal upheld the order of sale and further noted, in obiter at [74], that:

… if no order for sale was made and Priya were to be adjudged a bankrupt, it would likely be the Official Assignee who would be seeking an order for the sale of the Property in order to meet the claims of Priya’s creditors. In that situation, we fail to see how cl 10, even on the basis of Su’s interpretation, could possibly have stood in the way of the Official Assignee.

[emphasis in original in italics; emphasis added in bold italics]

Thus, the possibility of the OA applying to court for the sale of property to meet the claims of the creditors of a bankrupt co-owner has been judicially approved.

Having decided that the court has the power under s 18(2) read with para 2 of the First Schedule to the SCJA on the application of the OA or the PTIBs to order a sale of the Property co-owned by the Bankrupt, I now turn to explain the considerations behind my decision to so order.

Considerations in ordering the sale of the Property

The High Court can order the sale of land if it would be “necessary or expedient” to do so per para 2 of the First Schedule to the SCJA. In Su Emmanuel, the Court of Appeal provided guidance on the factors to be considered in deciding whether a sale should be ordered (at [57]) (“the Su Emmanuel factors”): … (a) In deciding whether it is necessary or expedient for a sale to be ordered in lieu of partition, the court conducts a balancing exercise of various factors, including (i) the state of the relationship between the parties (which would be indicative of whether they are likely to be able to co-operate in the future); (ii) the state of the property; and (iii) the prospect of the relationship between the parties deteriorating if a sale was not granted such that a ‘clean-break’ would be preferable. (b) Regard should be had to the potential prejudice that the various co-owners might face in each of the possible scenarios, namely, if a sale is granted and if it is not granted. (c) A sale would not generally be ordered if to do so would violate a prior agreement between the co-owners concerning the manner in which the land may be disposed of.

The respondent submitted that the court should consider all the Su Emmanuel factors, including those that specifically pertained to the relationship between the respondent and the Bankrupt.¹⁴

I did not think that all the Su Emmanuel factors were applicable to the present case. In particular, it was not necessary to consider (1) the state...