Ho Kon Kim v Lim Gek Kim Betsy and Others and Another Appeal

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 26 September 2001
• Neutral Citation: [2001] SGCA 62
• Docket Number: Civil Appeals Nos 164 and
• Date: 26 September 2001
• Published date: 19 September 2003
• Year: 2001
• Plaintiff Counsel: Michael Khoo SC and Josephine Low (Michael Khoo & Partners)
• Citation: [2001] SGCA 62
• Defendant Counsel: CR Rajah SC and Chew Kei-Jin (Tan Rajah & Cheah),Tan Kok Quan SC and Chia Boon Teck (Tan Kok Quan Partnership),Leslie Chew SC, Lionel Tay and Esther Ling (Khattar Wong & Partners),M Amaladass, Sivakolunthu and Gn Chiang Soon (M Dass & Co)
• Court: Court of Appeal (Singapore)
• Subject Matter: Whether registration gived purchaser absolute title free from vendor's unregistered interest,Mortgagee recognising and acknowledging that interest,Trusts,Land,Re-mortgage of land for purchaser,s own purposes and benefit to detriment of vendor,Indefeasibility,'Fraud',Mortgagee taking with knowledge of third party's unregistered equitable interest,Breach of trust,Failure to advise client to seek independent legal advice,Exceptions to indefeasibility,Unconscionable or inequitable conduct not amounting to l fraud,Whether wasted costs order justifiable,O 59 r 8(1) Rules of Court,Purchaser's agreement with mortgagee that latter would discharge one of three units free of payment to vendor upon allotment of private lot,Same firm of solicitors acting for client in conveyance and litigation arising out of conveyance,Stipulation that purchaser to transfer one of three houses to vendor,Legal Profession,Constructive trusts,Wasted costs order,Costs,ss 38, 46(1), 46(2) & 47(1) Land Titles Act (Cap 157, 1994 Ed),Civil Procedure,Liability of purchaser for breach of trust,Personal liability of solicitors for costs,ss 46(2) & 47(1) Land Titles Act (Cap 157, 1994 Ed),Registration of title,Words and Phrases,ss 46(1), 46(2) & 47(1) Land Titles Act (Cap 157, 1994 Ed),ss 46(1) & 46(2) Land Titles Act (Cap 157, 1994 Ed),Want of probity on purchaser's part,Whether vendor could be said to have retained beneficial or equitable interest in one-third of land despite sale,Professional conduct,Whether action in personam against registered proprietor sustainable in absence of fraud,Whether solicitors acting improperly, unreasonably or negligently,Sale and mortgage of registered land,Mortgagee repudiating that interest and insisting on strict legal rights,Vendor having equitable interest in part of land which purchaser holds in trust for her,Whether registration give mortgagee absolute title free from vendor's unregistered interest

(delivering the judgment of the court):

Introduction

There are two appeals before us. The first is CA 164/2000, which is an appeal by Mdm Ho Kon Kim (`Mdm Ho`) against the decision of the High Court dismissing her claim against the three defendants, Ms Betsy Lim Gek Kim (`Ms Lim`), the law firm of William Lai & Alan Wong (`WLAW`) and RHB Bank Bhd (`RHB`). In this appeal, Mdm Ho appeals against the High Court`s decision in so far as it relates to the dismissal of her claim against Ms Lim and RHB only. Although WLAW were named as the second respondents, Mdm Ho in fact did not appeal against the dismissal of her claim against them. The second appeal is CA 167/2000, which is an appeal by the two advocates and solicitors, Mr James Leslie Ponniah (`Mr Ponniah`) and Mr Wong Ann Pang (`Mr Wong`), against the decision of the High Court in which they were ordered to bear the costs payable by Mdm Ho to WLAW and RHB on the ground that in acting for Mdm Ho, they had acted improperly and unreasonably in joining these parties in the action instituted by Mdm Ho. Mr Wong acted for Mdm Ho in the transaction that gave rise to the present litigation and Mr Ponniah was her counsel in the proceedings below.

Facts

The relevant facts giving rise to these two appeals are as follows. Mdm Ho is a widow and was the registered proprietor of a property with a house thereon known as 124 Branksome Road (`the property`). The property comprises a relatively large piece of land measuring some 15,173sq[thinsp]ft in area. She had lived there for some 50 years since her late husband, Dr Foo Chee Guan, purchased it in 1947.

Prior to 1996, Mdm Ho had mortgaged the property to Keppel Finance Ltd (`Keppel`) as security for the credit facilities extended to one of her sons, Robert. Sometime in 1996, Robert informed Mdm Ho that he had defaulted on interest payments to Keppel and the latter had issued a notice recalling the loan granted to him and secured by the mortgage. Mdm Ho then sought the advice of her solicitor, Mr Wong, a conveyancing partner of the law firm of Wong & Lim. She was advised of the consequences of default in payment to Keppel and on his advice decided to sell the property in the open market in the hope of obtaining a better price for it.

In or around April or May 1996, Mdm Ho was introduced by her daughter, Jeanette, to Ms Lim and her husband, Mr Joseph Wee Woon Chuan (`Mr Wee`). Ms Lim was both a shareholder and director of a property development company known as Derby Development Pte Ltd (`Derby`), while Mr Wee, who was also a director, was its project manager. At that time, Ms Lim and Mr Wee representing Derby were interested in purchasing the property and proposed a joint development with Mdm Ho for the construction of three detached houses on the land, one of which was to be retained by Mdm Ho while the other two were to be sold to Derby. During the negotiations, Mdm Ho asked for a sum of $6m together with one of the houses to be built on the property as the price for the property. Derby, on the other hand, counter-offered the sum of $4.2m together with one completed house for the property, and required Mdm Ho to mortgage the property to a bank or financial institution to raise the necessary finance for the proposed development. On Mr Wong`s advice, Mdm Ho decided not to participate in the joint development.

Subsequently, on 15 July 1996, Derby offered to buy two-thirds of the property for the sum of $4.2m together with a fully-constructed house costing at least $700,000 to be built by Derby on the remaining one-third of the land of Mdm Ho. Mdm Ho agreed to this offer. On 17 July 1996, she accepted a sum of $88,000 from Derby `as ernest money for the redevelopment of 124 Branksome Road`. Following the payment of this amount, on 25 July 1996, Mdm Ho gave written permission to Derby to apply to the relevant authority for planning permission for the redevelopment of the property, and Mr Wong, as her solicitor, was instructed to proceed with the preparation of the agreement for the sale of two-thirds of the property as contemplated by the parties.

What Mr Wong came up with was an option to be given by Mdm Ho to Derby, which upon exercise thereof would become a contract. On 16 August 1996, he sent a copy of the draft option to WLAW, the solicitors for Derby, for their consideration.

There arose subsequently a change of parties to the proposed purchase. Ms Lim informed Mdm Ho that Derby had failed to secure a construction loan for the development of the property but that Ms Lim herself was able to obtain an overdraft facility in the amount of $6.1m from the bank, Oversea-Chinese Banking Corp Ltd (`OCBC`). Under the terms offered by OCBC, $3.7m of the facility was to be used to pay for part of the cost for the land, $2.2m was to be used to pay for the costs of construction of the three houses, and the balance of $200,000 was to be used to service the interest accruing on the amounts borrowed. The overdraft facility was to be secured by a first legal mortgage on the entire property. A copy of the offer document from OCBC was furnished to Mdm Ho, who on Mr Wong`s advice, agreed to substitute Ms Lim as the purchaser of the property in place of Derby.

On 12 September 1996, Ms Jennifer Leong (`Ms Leong`), the solicitor in charge of this matter at WLAW, returned the draft option to Mr Wong with various amendments. There ensued some lengthy correspondence in exchange between the two firms of solicitors on the terms of the draft option. Whatever difficulties there were confronting the parties in arriving at a mutually satisfactory draft were probably compounded by the fact that, as the property on completion of the purchase was to be mortgaged to OCBC, the interests of the bank would have to be taken into account and incorporated therein. At that time, Ms Leong was also acting for OCBC in the mortgage of the property. In one of her letters to Mr Wong, she wrote that her client`s financiers (ie OCBC) required the land area of Mdm Ho`s plot to be capped at 5,030sq[thinsp]ft, and the relevant clause in the option should be amended to reflect this requirement. This was agreed to by Mdm Ho.

Eventually all the terms of the option were settled and agreed. The salient terms were as follows:

3 The Cash Sale Price of the property is SINGAPORE DOLLARS FOUR MILLION AND TWO HUNDRED THOUSAND ONLY (S$4,200,000), subject to special conditions enumerated below.

...

17. The Purchaser is entitled to create a paramount mortgage over the property.

The Law Society`s Conditions of Sale 1994 were incorporated in the terms of the sale, in so far as they were not inconsistent with those terms and were not varied thereby. The general terms and conditions of sale are not contentious. In addition, there are special conditions to the sale and the material terms thereof are the following:

SPECIAL CONDITIONS

18(a) In addition to the payment of S$4.2 million by the Purchaser, the Purchaser shall deliver a completed detached bungalow unit to the Vendor free from encumbrances. The Vendor shall be at liberty to choose any one of the three units approved by the relevant authority ("the Vendor`s Unit") within 1 month from the date full details of the approved drawings by the Architect appointed by the Purchaser ("the said Architect") have been presented to the Vendor ...

18(b) Pursuant to clause 18(a) the Purchaser shall ensure that the approved plan shall not comprise any individual unit with a land area exceeding 5,030 square feet or 5% more than each of the other units. Should any unit exceed the land area stated above which compels the Vendor to choose a unit of less than 5,030 square feet the Vendor shall be entitled to a monetary compensation calculated at $503.00 per square foot for every square foot of the Vendor`s Unit less than 5,030 square feet.

19 The Purchaser shall obtain consent from the paramount mortgagee to allow the Vendor to lodge a caveat over the Vendor`s Unit as soon as the private lot is allotted.

...

22 In addition to the cash payment of S$4.2 million and the delivery of one completed unit to the Vendor the Purchaser shall account to the Vendor as one-half of the consideration in excess of S$3.8 million for each of the remaining 2 units after deduction of the costs incurred in the sale thereof ...

...

25 Notwithstanding completion of sale and purchase herein the terms and conditions of this Agreement shall remain in full force and effect between the Vendor and the Purchaser in so far as the same are not fulfilled and shall not merge in the assurance of the said property on completion of the sale and purchase herein or upon registration of such assurance ...

The option was signed by Mdm Ho on 26 September 1996 and was issued soon thereafter to Ms Lim. On 14 October 1996, Ms Lim paid Mdm Ho the sum of $332,000 and exercised the option and thereupon a binding sale and purchase agreement was made between the parties. For convenience, we shall hereafter refer to this document as `the sale agreement`. Before that date, in early October 1996, the layout plan for the development of the proposed three units of detached houses had been drawn up and settled by Ms Lim`s architects, Atelier Group Architect, and Mdm Ho had selected the plot she wanted, namely, the plot marked as `Plot 3` on the plan. This was evident from the letter dated 2 October 1996 written by Derby to WLAW as the solicitors for OCBC, indicating the particular plot selected by Mdm Ho. The letter said:

RE: 124 BRANKSOME ROAD

We refer to the above subject matter and as requested by Mrs Ong Lee Foong from OCBC on the Plot as selected by Madam Ho Kon Kim, we enclose herewith a Plan from M/s Atelier group Architect as " Marked Plot 3" as selected for your kind attention and transmission.

Kindly also be informed that Notice of Provisional Permission has been

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