DBS Finance Ltd v Prime Realty Pte Ltd and Another

• Jurisdiction: Singapore
• Judge: Karthigesu J
• Judgment Date: 20 December 1990
• Neutral Citation: [1990] SGHC 113
• Date: 20 December 1990
• Subject Matter: Promissory and proprietary estoppel, acquiescence and specific performance,Application by mortgagee bank that intending purchasers of properties from mortgagor withdraw caveats lodged against mortgaged properties,Credit and Security,Position of mortgagee vis-a-vis intending purchasers of property from mortgagor,Caveats,Mortgage of real property,Withdrawal,Land
• Docket Number: Originating Summonses Nos 1167 of 1989, 1231 of 1989 and 1232 of 1989
• Published date: 19 September 2003
• Defendant Counsel: Tan Bar Tien (BT Tan & Co)
• Court: High Court (Singapore)
• Plaintiff Counsel: Peter B Vijayan (Ramdas & Wong)

Cur Adv Vult

These three originating summonses were heard together. DBS Finance Ltd are the plaintiffs in the three originating summonses to whom Prime Realty Pte Ltd, the first defendants in all three, mortgaged five properties, namely, 97A (the subject matter in OS No 1167 of 1989), 99A (the subject matter in OS No 1231 of 1989), 101A (the subject matter in OS No 1232 of 1989), 97B and 99B Toh Yi Court (the mortgaged properties). The other defendants in each of the three originating summonses are the intending purchasers from the first defendants of the mortgaged property, the subject matter of the particular originating summons, with whom the first defendants had entered into contracts of sale. The other two mortgaged properties are not the subject matter of any proceedings since the first defendants had not contracted to sell them.

The first defendants did not enter an appearance and were unrepresented at the hearing. All the other defendants were represented by the same counsel, Mr Tan Bar Tien.

The facts common to all three originating summonses

On 31 May 1984, the first defendants entered into five sale and purchase agreements to purchase each of the five mortgaged properties from Prime Developments Pte Ltd (Prime Developments) in a condominium development known as Toh Yi Court Condominium which Prime Developments were then in the course of developing. Prime Developments are or were a wholly owned subsidiary of the first defendants.

On 1 November 1984, by a deed of assignment and a mortgage-in-escrow executed contemporaneously therewith and pending the completion of the sale of the mortgaged properties by Prime Developments to the first defendants, and in consideration of the plaintiffs agreeing to lend to or advance for the benefit of the first defendants sums of money not exceeding $2.23m, the first defendants mortgaged the mortgaged properties and assigned to the plaintiffs all their rights, title, interest, etc which the first defendants had under their sale and purchase agreements with Prime Developments as well as all the estate, rights, title and interest of the first defendants in the mortgaged properties.

The plaintiffs lodged a caveat, CV/09162A, in protection of their interest as mortgagees against all five mortgaged properties on 2 November 1984 and an ` extension caveat` was lodged on 26 October 1989 bearing the same number.

It is not disputed that the combined effect of the deed of assignment, the mortgage-in-escrow and the memorandum of mortgage referred to in the mortgage-in-escrow (the mortgage documents) is that all unpaid balances become immediately payable by the first defendants upon default of any monthly instalment; that the statutory power of sale is exercisable without any restriction imposed by s 25 of the Conveyancing and Law of Property Act (Cap 61); that no sale of any one of the mortgaged properties may be effected by the first defendants without the prior written consent of the plaintiffs; and that any delay or indulgence on the part of the plaintiffs in exercising their rights shall not amount to condonation or acquiescence or a waiver of the plaintiffs` rights of action.

In December 1984, the first defendants defaulted in the payment of the monthly instalments of the principal sum advanced and interest and accordingly the plaintiffs became entitled to enforce their rights under the mortgage and to sell the mortgaged properties as mortgagees. The plaintiffs did not, however, commence legal proceedings against the first defendants until 10 July 1986 and not until 2 March 1987 did they enter judgment against the first defendants, inter alia, for $1,919,471.83; for interest on the sum of $1,844,504.93 at the rate of 7.75% pa from 12 June 1986 until judgment; for delivery of vacant possession of the mortgaged properties;and for the sale of the mortgaged properties (Suit No 4082 of 1986).

As at the date of the judgment, the sale of the mortgaged properties by Prime Developments to the first defendants had not been completed. There was still 20% of the purchase price payable by the first defendants to Prime Developments on each of the mortgaged properties. Furthermore, no strata certificates of title had been issued. The strata certificates of title in respect of the three mortgaged properties, the subject matter of these proceedings, were issued on 7 May 1987 and the subsidiary proprietor named in each of them was Prime Developments who were still the registered subsidiary proprietors of the mortgaged properties when the plaintiffs commenced Originating Summons No 1167 of 1989 on 6 December 1989 and Originating Summons Nos 1231 of 1989 and 1232 of 1989 on 30 December 1989.

I shall now set out the facts with special reference to Originating Summons No 1167 of 1989 and later deal with such of the facts applicable to the other two originating summonses as are different.

Originating Summons No 1167 of 1989

On 29 October 1986, after the commencement of Suit No 4082 of 1986 but before judgment, the first defendants without the knowledge and prior written consent of the plaintiffs granted an option to the second and third defendants exercisable by 4pm on 12 November 1986 to purchase the mortgaged property No 97A at the price of $330,000. The purchase, by the terms of the option was to be completed within twelve weeks of the date of the option. The option money of $3,000 which was paid was liable to forfeiture if the option was not exercised within the stipulated time.

On 13 November 1986, that is to say one day after the option had expired, it not having been exercised within the stipulated time, the then solicitors for the second and third defendants inquired of the first defendants` solicitors whether the prior written consent of the plaintiffs had been obtained and expressed their view that if no consent had been obtained the option was bad in law and required the immediate return of the $3,000 unless the first defendants` solicitors could get the plaintiffs to ratify the option. Also, on the same day, the solicitors for the second and third defendants addressed the plaintiffs` solicitors sending a copy of the option above referred to and inquired whether the plaintiffs will consent to the proposed sale.

On 20 November 1986, the first defendants` solicitors informed the plaintiffs` solicitors that the first defendants had granted an option to a purchaser to sell the mortgaged property No 97A for $330,000 and requested for the plaintiffs` immediate written consent.

The plaintiffs` solicitors replied to the first defendants` solicitors on 24 November 1986 which letter they copied to the second and third defendants` solicitors. Their reply was not with reference to the mortgaged property No 97A but with reference to all five mortgaged properties, and after observing that the plaintiffs` written consent was not obtained before the first defendants purported to sell the mortgaged properties, continued as follows:

As the combined sale prices of the said mortgaged properties (it must be observed that similar requests for written consent in respect of the mortgaged properties 99A and 101A had also been received by then) are insufficient to redeem the mortgage, our clients cannot be expected to consider whether or not to give their said consent or to discharge the said mortgage unless your clients are able to meet the shortfall as well. If your clients are able to do so, please let us have detailed particulars as to how they will fully redeem the said mortgage.

However, strictly without prejudice to any of our clients` rights as mortgagee, we shall shortly be forwarding to you our clients` redemption statement for the said mortgage.

The redemption statement as at 13 February 1987 was duly sent to the first defendants` solicitors on 18 December 1986.

Following a telex message from the first defendants` solicitors to the plaintiffs` solicitors on 22 December 1986 requesting for the plaintiffs` consent to the sale of all five mortgaged properties and for the title deeds relating to the mortgaged properties for onward transmission to the first defendants` purchasers` solicitors and a complaint that some of the purchasers had indicated that they did not wish to proceed with the purchase in view of the delay, the plaintiffs` solicitors having already forwarded the title deeds as requested addressed the first defendants` solicitors on 27 December 1986, inter alia, as follows:

Please note that, as stated in our facsimile letter of 24 November 1986, our clients` written consent to any of the sales of the said properties was not sought, nor was it obtained, by your clients before they purported to sell the same.

Notwithstanding this, our clients are prepared to give a full discharge for each of the said properties upon payment of the following respective sums on or before 13 February 1987.

Unit Amount

(97) A $ 406,132.26

(97) B $ 406,132.26

(99) A $ 406,132.26

(99) B $ 406,132.27

(101) A $ 406,132.27

$2,030,661.32

There appears to have been no response from the first defendants` solicitors to the plaintiffs` solicitors` proposal as stated above. Accordingly as previously noted, the plaintiffs proceeded to judgment in Suit No 4082 of 1986 on 2 March 1987 and on the same day addressed the first defendants` solicitors in the suit (different from the solicitors acting in the sale of the mortgaged properties) that they were amenable to the first defendants proceeding with the sale of the mortgaged properties Nos 97A, 99A and 101A, the only ones contracted to be sold, provided that:

(A) all moneys paid in respect of each property be paid to our clients immediately, this includes option fees and deposits, and

(B) your clients give a satisfactory scheme for meeting the shortfall.

In the same communication the first defendants were advised that no further options or contracts should be entered into without the prior written...