Ho Soo Fong and Another v Standard Chartered Bank

JurisdictionSingapore
CourtCourt of Three Judges (Singapore)
JudgeChan Sek Keong CJ
Judgment Date29 January 2007
Neutral Citation[2007] SGCA 4
Citation[2007] SGCA 4
Defendant CounselLoo Ngan Chor, Gan Theng Chong and Jiang Ke Yue (Lee & Lee)
Plaintiff CounselChristopher Chong Chi Chuin (Legal Solutions LLC)
Docket NumberCivil Appeal No 16 of 2006
Date29 January 2007
Publication Date30 January 2007
Subject"Without reasonable cause",Compensation payable,Principles for awarding damages for wrongful refusal to withdraw caveat against registered land,Caveats,Land,Wrongful lodgment,"Wrongfully",Section 128(1) Land Titles Act (Cap 157, 2004 Rev Ed),Words and Phrases,"Vexatiously"

29 January 2007

Judgment reserved.

Chan Sek Keong CJ (delivering the judgment of the court):

Background

1 The appellants are the joint owners of a property at 26F Poh Huat Road (“26F Poh Huat Road”). They are appealing against the dismissal by the High Court of their appeal against the decision of the assistant registrar (“the AR”) not to award them damages pursuant to s 128(1) of the Land Titles Act (Cap 157, 2004 Rev Ed) (“the LTA”) arising from the sale by the mortgagee of a property at 179 Syed Alwi Road (“179 Syed Alwi Road”) owned by them. The decision of the High Court is reported at [2006] 3 SLR 263.

Refinancing with the respondent

2 This appeal marks the conclusion of a series of events which began in March 2001, when the first appellant, Ho Soo Fong (“HSF”), met the respondent’s branch manager, Diana Tan, at his office at 179 Syed Alwi Road to discuss the possibility of refinancing various properties that were mortgaged to other banks. On 11 May 2001, Diana Tan sent HSF a letter offering a loan facility in respect of a property at 150 Braddell Road (“150 Braddell Road”). HSF and another brother, Ho Soo Kheng (“HSK”), met with Diana Tan on 18 May 2001 when they accepted the offer. HSF has also alleged that at this meeting he informed Diana Tan that he wished to refinance a loan of about $700,000 from Oversea-Chinese Banking Corporation Ltd for a property at 77 Syed Alwi Road (“77 Syed Alwi Road”) and overdraft facilities of about $7m from The Bank of East Asia Ltd (“BEA”) secured by 179 Syed Alwi Road. HSF further alleged that Diana Tan informed him that refinancing the 77 Syed Alwi Road loan would not be a problem but that there would be a problem with the 179 Syed Alwi Road overdraft as the respondent’s loan policy did not permit loans exceeding $5m to individual borrowers. Although Diana Tan later denied under cross-examination that HSF had asked her whether the respondent would refinance 179 Syed Alwi Road, the undisputed evidence is that Diana Tan was, at the very least, informed in March 2001 that HSF and HSK had a very large overdraft secured by 179 Syed Alwi Road and that she had informed HSF that the respondent could not refinance it for the reason mentioned earlier. At a subsequent meeting in July 2001, HSF informed Diana Tan that he had another property at 26F Poh Huat Road which he would consider refinancing with the respondent.

3 Following these meetings, the respondent sent a loan facility letter on 1 August 2001 to HSF and HSK offering to refinance 77 Syed Alwi Road. This offer was accepted on 3 August 2001. Subsequently, the respondent offered, by way of another loan facility letter, to refinance 26F Poh Huat Road. This offer was accepted by the appellants on 1 September 2001. Subsequently, the respondent lodged caveats against all three properties, ie, 150 Braddell Road, 77 Syed Alwi Road and 26F Poh Huat Road, the caveat against the last-mentioned property being lodged on 10 December 2001 even though at that point of time the loan facilities had not been activated.

4 The reason for the non-activation of the loan facilities was that under the terms of the loan facility letters, the appellants and HSK had to fully settle pending court actions against Ho Pak Kim Realty Co Pte Ltd (of which HSF and HSK were directors) as a pre-condition for the disbursement of the loans. There were other conditions, such as that the respondent would bear the legal costs for the mortgage of the properties if the transactions were completed but not otherwise, and that the appellants and HSK would have to pay a cancellation fee of 1% of the loan facilities if they were cancelled.

Non-disbursement of loans by respondent

5 As it turned out, none of the three loans were disbursed even after a year as the respondent was not satisfied that the appellants and HSK had fulfilled their obligation in settling all the pending court actions. After it became clear to the appellants and HSK that the respondent would not disburse the loans, they wrote to the respondent on 7 October 2002 and cancelled the three loan facilities.

Respondent’s refusal to withdraw caveats

6 Following this, the appellants and HSK wrote to the respondent on 21 October 2002 and requested that the caveats lodged against the three properties be withdrawn. Similar requests were subsequently made on numerous other occasions, the last being made on 22 July 2003.

7 The respondent ignored all these requests because the appellants and HSK had refused to pay the cancellation fees on the three loan facilities amounting to a total of $21,380 being the 1% cancellation fees and $4,476.05 being the abortive legal fees. Out of the $21,380 claimed for cancellation fees, only $2,630 was due on the 26F Poh Huat Road loan facility. The appellants and HSK denied liability for any cancellation fees. This stand-off, which lasted for about 16 months, eventually led to the present proceedings.

8 During this period, the respondent was fully aware that the appellants and HSK needed to refinance their outstanding loans in order to reduce the monthly interest charges on these loans. However, to do that successfully, they also needed the respondent to withdraw the three caveats lodged against the properties, but the respondent was adamant that it would not withdraw them except upon full payment of the cancellation fees. The appellants and HSK made several proposals to pay the cancellation fees even though they considered that no such fee was payable. On 30 December 2002, HSF offered to pay $1,136.05 as cancellation fees and $1,493.95 for legal fees. On 8 May 2003, HSF again offered to deduct $20,000 from the new loans from other banks to be held by his solicitors as stakeholders pending the determination of the dispute. Finally, on 5 June 2003, HSF offered to pay $5,000 as cancellation fees and $2,500 for legal fees. The respondent rejected all these offers. It should be noted that the cancellation fee in relation to the loan facility for 26F Poh Huat Road was only $2,630, but the respondent was not prepared to withdraw any caveat except upon payment of the total cancellation fees.

Proceedings to compel withdrawal of caveats

9 The stand-off on this small claim continued until early 2004. By this time, BEA, as mortgagee, had taken action on 16 October 2003 to sell 179 Syed Alwi Road by way of a mortgagee’s sale. On 27 February 2004, the appellants and HSK applied to the High Court by Originating Summonses Nos 257, 258 and 259 of 2004 for orders, inter alia, directing the respondent to withdraw the caveats and for an inquiry as to the damages payable by the respondent to the appellants attributable to the respondent’s refusal or failure to withdraw the caveats. On 30 June 2004, the respondent withdrew the caveats without admission of liability.

10 The applications were heard by Belinda Ang J. She held that the caveats had been lodged wrongfully or without reasonable cause as the respondent did not have any caveatable interest in the three properties and ordered an inquiry to determine the compensation payable to the appellants and HSK: see Ho Soo Fong v Standard Chartered Bank [2005] 1 SLR 316. In her decision at [30], Belinda Ang J criticised the respondent’s conduct in these words:

The court was dealing with caveats that were left on the land register for an appreciable period of time. The bank let the caveats remain on the land register despite calls to remove them since 21 October 2002. The caveats were withdrawn on 30 June 2004. In addition, no proceedings for outstanding fees were instituted. In that way the bank obtained a considerable advantage, and an unfair advantage as well, given the conclusions reached. By sitting tight the bank was securing for itself all the advantages that it might have gained by bringing an action were the claims good ones.

Inquiry as to compensation

The claim for difference in interest rates

11 The inquiry for damageswas held before the AR. The appellants and HSK sought compensation on two main heads of claims. The first was for the difference between the higher rates of interest that the appellants and HSK had continued to pay to the former lenders and the lower rates of interest which, but for the caveats on the three properties, they would have enjoyed under the new refinancing offers from financial institutions. This claim also included legal costs incurred in the abortive refinancing. The AR disallowed the claim for the interest differential in respect of 77 Syed Alwi Road for lack of evidence that the appellants had approached other lenders for refinancing. However, he allowed in part the claims in respect of 150 Braddell Road (at 40% of the claim) and 26F Poh Huat Road (at 60% of the claim). On appeal to the High Court, the judge increased the awards to 80% and 100% respectively. The AR’s decision in respect of the 77 Syed Alwi Road claim was not appealed against. The judge’s decision in respect of this first head of claim is also not being appealed against in the present appeal.

The claim for loss arising from sale of 179 Syed Alwi Road

12 This appeal concerns the second head of claim. Under this head, the appellants have claimed compensation for pecuniary loss arising from the mortgagee sale of 179 Syed Alwi Road at the price of $9.3m. The appellants’ case is that but for the respondent’s obstruction of the refinancing of 26F Poh Huat Road by its refusal or failure to withdraw its caveat, the property could have been sold at its open market value of $10.5m, and as a result the appellants have suffered a loss of $1.2m. The appellants have produced evidence showing that Hong Leong Singapore Finance Ltd (“HLF”) had on 26 August 2002 offered them a loan facility of up to $400,000 on the security of 26F Poh Huat Road, and that HLF cancelled the offer only on 23 February 2004. Additionally, the appellants also claimed sale expenses of $163,054.50 and legal costs of $7,482.50 in contesting the mortgagee sale by BEA.

13 The AR...

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