Goh Chin Soon and Another v Vickers Capital Ltd (fka St. Capital Ltd)

• Jurisdiction: Singapore
• Judge: MPH Rubin J
• Judgment Date: 30 December 2000
• Neutral Citation: [2000] SGHC 281
• Docket Number: Originating Summons No 111 of 2000
• Date: 30 December 2000
• Published date: 19 September 2003
• Year: 2000
• Plaintiff Counsel: Anthony Netto and Ramesh Appoo (Netto & Netto)
• Citation: [2000] SGHC 281
• Defendant Counsel: Kenneth Tan SC (as counsel) and Julian Chang (Ang Tan & Chang)
• Court: High Court (Singapore)
• Subject Matter: Duty of care owed by mortgagee to mortgagor and guarantors,Whether duty breached,Whether agent required to sell property,Duty to obtain best possible price,Insolvency Law,Application to set aside,Bankruptcy,Statutory demand,Credit and Security,Mortage placing substantial advertisement for sale of property and accepting only offer at hand,Mortgagee’s power of sale,Bankruptcy Rules r 98(2)(a),Mortgage of real property,Cross-demand alleged,Amount of cross-demand less than debt claimed in statutory demand,No grounds for setting aside statutory demand

: An application was filed by the plaintiffs, Goh Chin Soon and Goh Teck Beng on 22 September 2000, seeking to set aside the statutory demands dated 28 August 2000 issued against them by the defendants, Vickers Capital Ltd. The statutory demands were in respect of an outstanding sum due and owing to the defendants by the plaintiffs following a judgment entered against the plaintiffs and one other party on 6 October 1998. The plaintiffs` application was based on a perceived cross-claim for negligence against the defendants. The deputy registrar who heard the application on 30 October 2000 refused it. The plaintiffs appealed against the decision and on 14 November 2000 after hearing arguments, I dismissed the appeal. Later, the plaintiffs wrote to me for further arguments which were heard by me on 29 November 2000. In the event, the plaintiffs` appeal remained dismissed with costs. The facts surrounding the events follow.

Background facts

The defendants, admittedly an institution authorised to extend loan and credit facilities to their customers in the course of their business, extended a loan facility of S$25m to one of their customers, Micasa Development Pte Ltd (Micasa). The loan facility was secured by the mortgage of a property belonging to Micasa (known as 61, 63, 65 and 67 Lorong G Telok Kurau, Singapore, containing a site area of about 4,332.3 sq m). The plaintiffs who were the directors of Micasa provided in this connection a joint and several guarantee to the defendants to underpin Micasa`s several obligations.

Following Micasa`s default, the defendants instituted proceedings against Micasa as well as the plaintiffs on 6 August 1998 in Suit 1333/98. Although at that stage, Micasa and the plaintiffs were legally represented by the same set of solicitors, Haridass Ho & Partners, they had, nonetheless, allowed judgment in default to be entered against them for a sum of $25,973,917.84 with interest thereon at 18% per annum from 6 August 1998 until full payment and costs on an indemnity basis.

The judgment debt, not having been satisfied, the defendants next moved to obtain vacant possession of the said property and in this connection commenced OS 1268/99. After an initial adjournment on 15 September 1999, the court finally ordered delivery of vacant possession of the property but with a stay until 6 October 1999. Later, Micasa applied for and was granted an extension of the stay until 4 December 1999. This was the final stay. Thereafter, upon failure by Micasa to deliver vacant possession of the property by the stipulated deadline, a writ of possession was taken out by the defendants on 7 December 1999 and vacant possession of the property was then delivered to the defendants by the bailiff, Supreme Court on 21 December 1999.

All this while and for that matter even before the defendants obtained vacant possession of the property, there were attempts by Micasa to sell the property. In this regard, there was a tender exercise conducted through a well-known firm of real estate agents, Jones Lang Wooton in September 1998. The result was dismal. Jones Lang Wooton reported to Micasa in their letter dated 30 September 1998 that although they had reached out to more than 800 prospective buyers, and mounted an extensive advertising campaign, no bid was received. The feedback they obtained was that the value of the property was perceived to be only between $6.5 and $9m.

Sometime on or about 19 August 1999 - four months prior to the defendants obtaining vacant possession of the subject property - Micasa`s then solicitors Haridass Ho & Partners wrote to the defendants. They said in that letter that their clients were about to enter into an agreement to sell the property for S$24.5m. The sale, however, did not go through. On 31 August 1999, Haridass Ho & Partners again wrote to the defendants` solicitors, stating this time that the sale of the property for $24.5m had been aborted and their clients were actively negotiating with another party to sell the property for S$24m. The result was again cheerless.

It was around this time, the defendants commenced OS 1268/99 for delivery of vacant possession of the property. Micasa would not let the property go. They engaged a fresh set of solicitors, this time Engelin Teh & Partners and vigorously resisted the defendants` application. Their main contention in that proceedings was that the defendants were in breach of a verbal agreement with Micasa to allow the latter to develop the property, using a contractor approved by the defendants and in return Micasa would pay $100,000 per month to the defendants until such time when Micasa was in a position to repay all the outstanding loans. Micasa however, did not prevail in their arguments resulting in the final delivery of the property to the defendants on 21 December 1999. There was no appeal in this regard by Micasa.

Following delivery of vacant possession of the property, the defendants, noting that Micasa had not come up with anything concrete, proceeded to advertise the property for sale. In this connection, they inserted two large advertisements in The Straits Times of 23 December and 27 December 1999. The said advertisements stated that it was a mortgagee sale and invited tenders for a `freehold residential site of 4,332.3 square metres.` The closing date of the tender was 10 January 2000.

It would be relevant at this stage to add that a few days before the closing date of the tender, the defendants obtained a desktop valuation from a firm of international property consultants `FPD Savills` on 6 January 2000. The valuation report stated that the open market value of the property as of 6 January 2000 was S$23m and its forced sale value was S$20.5m.

The upshot was that there was only one tenderer, Deeptro Pte Ltd who made an offer to purchase the property for S$24.5m. The offer was accepted by the defendants and the sale of the property was eventually completed on 12 April 2000.

Following the sale and after taking into account the amounts realised, the defendants issued their statutory demands, pursuant to s 62 of the Bankruptcy Act, to each of the plaintiffs on 28 August 2000 and served them on 10 September 2000. Under the said statutory demands, a sum of S$6,919,544.68 was said to be outstanding.

On 22 September 2000, the plaintiffs through their present solicitors Netto & Netto applied to the court to set aside the statutory demands. In the result, the plaintiffs` application was dismissed by the learned deputy registrar. I upheld his decision on appeal for the reasons hereinafter appearing.

Plaintiffs` arguments

The thrust of the submission by the plaintiffs` counsel was that the plaintiffs had a valid cross-claim against the defendants for negligence. He argued that the defendants had been negligent in the way they caused the property to be sold. They argued that the defendants had failed in their duty to obtain the best possible price or market price for the plaintiffs. In particularizing the alleged negligence, plaintiffs` counsel stated that the defendants had (i) failed to appoint professional estate agents to undertake the sale; (ii) failed to consult those agents on how best to sell the property; (iii) failed to obtain proper valuation reports or consult professional valuers before putting the property up for sale; and (iv) finally failed to advertise and market the property professionally or properly. Reliance was based on Cuckmere Brick Co Ltd v Mutual Finance Ltd [1971] Ch 949 and Tse Kwang Lam v Wong Chit Sen [1983] 3 All ER 54[1983] 1 WLR 1349.

Plaintiffs` counsel further submitted that as at April 2000 when the sale was completed, the outstanding debt owing to the defendants was less than $28m and the property could have been sold for $28m or more at the time the property was agreed to be sold. He submitted there was a `genuine triable` issue which merited the court to set aside the statutory demands pursuant to r 98 of the Bankruptcy Rules.

To give weight to his contention, counsel for the plaintiffs invited the court`s attention to a report dated 27 October 2000 from a firm of international property consultants, Henry Butcher Appraisal Group Pte Ltd, to persuade the court that the price of $24.5m obtained by the defendants for the subject property did not reflect the actual market value of the property as of the date of the sale of the property. Some of the criticisms contained in Henry Butcher`s report were best set out in their own words and read as follows:

(a) The advertisements

The first advertisement was placed in The Straits Times on 23 December 1999 and the second, on 27 December 1999 for the Sale By Tender which closed on 10 January 2000. There was maximum of 19 days from the date of advertisement to the close of tender.

In our opinion, the time given to publicise the sale was rather short for a transaction of more than $20m. The presentation of the advertisement and the section in which the advertisement was placed were also odd. Any marketeer will want to present the product in the best

...