Ho Soo Fong and Another v Standard Chartered Bank

• Jurisdiction: Singapore
• Judge: Andrew Ang J
• Judgment Date: 30 May 2006
• Neutral Citation: [2006] SGHC 90
• Date: 30 May 2006
• Subject Matter: Withdrawal,Respondent bank having first legal mortgage over appellants' first property and lodging caveat over it,Section 129(1) Land Titles Act (Cap 157, 2004 Rev Ed),Land,Respondent wrongfully refusing to withdraw caveat on mortgaged property,Principles for awarding damages for wrongful refusal to withdraw caveat against registered land,Caveats,Whether respondent liable for difference between rate of interest being paid and rate of interest that might have been paid by appellants had respondent withdrawn caveat on first property,Whether foreclosure on second property by another bank caused by respondent's refusal to withdraw caveat lodged on first property
• Docket Number: Originating Summons No 259 of 2004
• Published date: 01 June 2006
• Defendant Counsel: Loo Ngan Chor and Gan Theng Chong (Lee & Lee)
• Court: High Court (Singapore)
• Plaintiff Counsel: Chong Chi Chuin Christopher and Loy Sye Ling (Kenneth Tan Partnership)

30 May 2006

Andrew Ang J:

1 There were three appeals before me. The appellants in Registrar’s Appeals Nos 356 and 357 of 2005, Ho Soo Fong (“HSF”) and Ho Soo Kheng, are brothers and the joint owners of two properties known as 77 Syed Alwi Road, Singapore 207656 and 150 Braddell Road, Singapore 359933. The appellants in Registrar’s Appeal No 355 of 2005 are HSF and his wife, Lin Siew Khim (“LSK”) who jointly own 26F Poh Huat Road, Singapore 545074.

2 By three separate loan facility letters in similar terms, the respondent, Standard Chartered Bank, offered to make available to the appellants overdraft and other banking facilities on the security of first legal mortgages of their respective properties abovementioned. Upon the respective appellants’ acceptance of the respondent’s offers, the latter lodged caveats against their said properties. None of the facilities was drawn down even after a lapse of more than a year after acceptance. This was because of a disagreement between the respondent and the appellants as to whether certain conditions precedent to drawdown had been satisfied.

3 The appellants finally terminated the three facility agreements on 7 October 2002. Despite the appellants’ repeated demands, the respondent refused to withdraw the caveats it had lodged against the properties. It took the position that it was not obliged to do so until it had been paid certain cancellation and legal fees provided for under the facility letters. Meanwhile, because of the caveats, the appellants could not take up offers of refinancing from certain financial institutions at rates of interest lower than those then charged by its lenders.

4 By Originating Summonses Nos 257, 258 and 259 of 2004, the appellants applied to the High Court for orders, inter alia, that the respondent withdraw the caveats and that there be an inquiry as to the damages to be paid by the respondent to the appellants attributable to the respondent’s wrongful refusal to withdraw the caveats.

5 The respondent withdrew the caveats on 30 June 2004 without prejudice to its contention that it was entitled to lodge them as it did. Subsequently, when the summonses came on for hearing, Belinda Ang Saw Ean J held that the respondent had no security interest in the properties and that the caveats had been lodged without reasonable cause. She further ordered that an inquiry be conducted as to the damages and compensation to be paid by the respondent to the appellants.

6 The inquiry in respect of all three originating summonses was heard by Assistant Registrar David Lee. There were two main heads of claim. One was for compensation for the difference between the higher rate of interest that the appellants continued to pay to their lenders and the lower rates of interest which, but for the caveats, they would have enjoyed under the terms of the offers of refinancing from certain financial institutions. (Included in this claim was the legal costs in the abortive refinancing.)

7 The learned assistant registrar (“AR”) disallowed the appellants’ 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 such claim by the appellants in respect of 150 Braddell Road (as to 40% of the claim) and 26F Poh Huat Road (as to 60%).

8 I increased the award in respect of 150 Braddell Road to 80% of the amount claimed and in respect of 26F Poh Huat Road to 100% of the claim. The appellants dropped their appeal against the learned AR’s disallowance of their claim in respect of 77 Syed Alwi Road.

9 The other main head of claim was in respect of losses suffered by the appellants, HSF and LSK, arising from the forced sale by The Bank of East Asia (“BEA”) of a property which HSF and LSK jointly owned at 179 Syed Alwi Road, Singapore 207715. This property was not among the three properties earlier mentioned against which the respondent lodged caveats. It was mortgaged to BEA to secure overdraft facilities which BEA had extended to HSF and LSK. HSF asserted that the respondent had been informed that the refinancing of 26F Poh Huat Road was in part to obtain funds with which to reduce the overdraft owing to BEA. The respondent’s refusal to withdraw the caveats prevented HSF and LSK from refinancing with Hong Leong Singapore Finance Ltd (“Hong Leong”) as a result of which BEA, as mortgagee of 179 Syed Alwi Road, disposed of the same by a forced sale at a price allegedly $1.2m lower than the property could have fetched in the open market between willing seller and buyer. Included in this claim were certain expenses in connection with the foreclosure (amounting to $163,054.50) as well as the legal costs incurred by the appellants in defending BEA’s foreclosure proceedings (in the amount of $7,482.50). The learned AR disallowed this head of claim and I upheld his decision on appeal.

10 The appellants, HSF and LSK, having appealed against my decision in Registrar’s Appeal No 355 of 2005 (with regard only to this head of claim), I set out below my grounds of decision.

11 The starting point is s 128(1) of the Land Titles Act (Cap 157, 2004 Rev Ed) (“the Act”) which provides:

Any person who wrongfully, vexatiously or without reasonable cause —

(a) lodges a caveat with the Registrar;

(b) procures the lapsing of such a caveat; or

(c) being the caveator, refuses or fails to withdraw such a caveat after being requested to do so,

shall be liable to pay compensation to any person who sustains pecuniary loss that is attributable to an act, a refusal or a failure referred to in paragraph (a), (b) or (c).

[emphasis added]

The question therefore was whether the losses suffered by the appellants from the forced sale of 179 Syed Alwi Road (together with the expenses and legal costs earlier mentioned) were attributable to the wrongful refusal by the respondent to remove its caveat against 26F Poh Huat Road.

12 The ambit of the statutory remedy in s 128(1) was considered by the Court of Appeal in Khushvinder Singh Chopra v Mookka Pillai Rajagopal [1999] 1 SLR 589. The facts of the case were as follows. The appellant was an advocate and solicitor. He obtained an option to purchase a certain property at Jalan Seaview (“the property”) from his clients for whom he had earlier acted in respect of certain abortive transactions in relation to the same property. The option was signed by only two out of three co-owners. Despite objections from the third owner, he exercised the option and lodged a caveat against the property to protect his interest as purchaser. (This was in addition to another caveat he had lodged ten days earlier on the strength of the option.)

13 Meanwhile, the three co-owners entered into another agreement to sell the property to two purchasers jointly (“the purchasers”). Subsequent to the agreement with the purchasers, the appellant prepared an agreement expressed to be supplemental to the option and this was signed by all three co-owners. This supplemental agreement provided for the sale of the property to the appellant. The co-owners (respondents) subsequently refused to proceed further with the sale and the appellant sued them for specific performance. The respondents alleged undue influence and counterclaimed damages for the loss caused by the appellant’s refusal to withdraw his caveats. The Court of Appeal in Mookka Pillai Rajagopal v Khushvinder Singh Chopra [1996] 3 SLR 457 ordered, inter alia, that the appellant withdraw his caveats and directed that an inquiry be held as to the compensation, if any, pursuant to s 128 of the Act.

14 At the inquiry (reported at [1998] 1 SLR 186), the respondents claimed compensation for, inter alia, the following:

(a) Additional interest that the respondents had to pay in respect of two judgment debts. (The property was attached by writs of seizure and sale after the appellant lodged his caveats.) The respondents contended that the extra interest paid on the judgment debts could have been saved had the completion of the sale to the purchasers not been blocked by the appellant’s caveats.

(b) Additional interest paid on a term loan secured by a mortgage on the property. Here again the respondents contended that but for the appellant’s caveats, the sale of the property would have been completed timeously and they would then have been able to redeem the mortgage, thereby saving the additional interest.

15 Chao Hick Tin J (as he then was) held (inferentially) that foreseeability was the test for determining whether the pecuniary losses claimed were attributable to the wrongful refusal or failure to remove the caveats. His Honour reasoned (at [9]) as follows:

Section 128(1) does not elaborate what is ‘pecuniary loss attributable to (the caveat)’. No case had been cited to me which touched on these words of the section. The ordinary literal meaning of the word ‘attribute’, as a verb, is ‘caused or brought about by’. While I can understand the argument that had the caveats been removed, the sale would have been completed, the defendants would have the funds to enable the second and third defendants to pay up the debt and the additional interest would not have arisen, I do not think this loss was caused by or could be attributed to the caveats. The legislature could not have intended to make a caveatee liable for all consequences that may be said to flow from a caveat, no matter how remote or unforeseen those consequences may be.

Accordingly, he decided that compensation for the interest on the judgment debts was irrecoverable as the loss was “wholly unforeseen”, the property not having been attached by the writs of seizure and sale when the appellant lodged his caveats.

16 However, the learned judge allowed compensation for the additional interest in respect of the outstanding mortgage on the property. He reasoned that in acting for the respondents in the abortive transactions, the appellant would have known about the...