How Seen Ghee v Development Bank of Singapore Ltd

• Jurisdiction: Singapore
• Judge: Karthigesu JA
• Judgment Date: 29 November 1993
• Neutral Citation: [1993] SGCA 88
• Docket Number: Civil Appeal No 112 of 1991
• Date: 29 November 1993
• Year: 1993
• Published date: 19 September 2003
• Plaintiff Counsel: Woo Bih Li and Goh Aik Chew (Goh Aik Chew & Co)
• Citation: [1993] SGCA 88
• Defendant Counsel: Michelle Rasanayagam (Ramdas & Wong)
• Court: Court of Appeal (Singapore)
• Subject Matter: Bank not allowing sale of property by mortgagee by treaty sale,Credit and Security,Whether mortgagee breached duty,Bank refusing to hand over title deeds till repayment of debt discussed,Mortgagee’s power of sale,Subsequent sale by auction fetching lower price,Mortgage of real property,Mortgagee's duty to exercise reasonable care to obtain proper price

Cur Adv Vult

This appeal raises the question whether the respondents (`the bank`) committed a breach of their duty as mortgagees when exercising their power of sale of certain mortgaged property.

The appellant was given overdraft facilities by the bank secured by mortgages on two properties, one at Pebble Lane and the other in Park Chong Building at Playfair Road. The mortgage on the Pebble Lane property was dated 28 August 1981, and the mortgage on the Park Chong property was dated 20 December 1983. The original limit of the overdraft facilities was $1.3m. This was reduced to $1.2m in March 1985.

As of 14 August 1985, the amount shown as owing to the bank was more than $1.45m. Interest was mounting. The bank decided to recall the loan. By letter dated 15 August 1985, the bank gave the appellant up to 29 August 1985 to pay up. On the appellant`s failure to comply, the bank gave notice on 28 September 1985 of their intention to exercise their power of sale, and to sell the properties by public auction. The auction was held on 28 November 1985. The Pebble Lane property was sold but the Park Chong property could not be sold. Attempts followed to have this property sold. It was eventually sold at another auction on 7 January 1988 for $670,000. The dispute between the parties is in relation to this sale. The facts in the paragraphs following are taken largely from the judgment of the learned judge below.

The bank`s officer in charge of the matter at the time was Miss Roslina Saad, the assistant manager of the bank`s Goldhill branch. She took charge of the matter in February 1987. On 2 April 1987, she and two colleagues met the appellant to find out how the appellant proposed to pay the outstanding balance in his account. As at 31 March 1987, it stood at $1,125,497.42. At the appellant`s request, Roslina agreed to give the appellant time to sell the Park Chong property. However, the bank at the same time continued with their own efforts at selling it, through a subsidiary company in the DBS group, Property Management Pte Ltd (`PMPL`), whose business was to sell properties mortgaged to the bank and its subsidiaries, as well as for third parties. On or about 4 June 1987, Mr Yang Tuck Yung, the marketing officer of PMPL, received an offer of $95 psf for the property. It was from Mr Sidhu of Knight Frank Cheong Hock Chye & Baillieu (`Knight Frank`), one of the agents on PMPL`s list of agents. Mr Yang told Roslina about this, and she told the appellant. She also instructed Colliers Goh & Tan to value the property in order to ensure that the offer of $95 was not below valuation. The valuers put the open market value at $650,000 and a forced sale value at $560,000. The floor area, as shown in the valuation report, being 635 sq m, or 6846 sq ft, the open market valuation works out to a unit price of roughly $95 psf, just about what had been offered.

The appellant, however, told Roslina that he had an offer of $100 psf. Roslina, in turn, told Yang of the offer of $100 psf and asked him to see if his prospective purchaser was willing to offer a higher price. Yang relayed this query to Mr Sidhu. However, without having received any response from Yang, Roslina told the appellant on 12 June 1987 that it was unlikely that the buyer who had made the offer to PMPL would offer more than $95 psf. She told him that he could proceed with the sale at $100 psf. The appellant, however, told her that there was another interested buyer, and asked for a week to come back to her.

It is to be noted in this connection that, on 10 June, Mr Yang, after a telephone conversation with Roslina, had written a minute to her `confirming` that approval had been given by the bank to proceed with the sale of the property to Deo Silver Pte Ltd (`Deo`) at $95 psf subject to no objection being received from the appellant. He also asked for a form of option for the sale to be sent to him. On 16 June, however, Roslina replied, saying that no such approval had been given. Roslina further stated in her minute:

`As you are aware through our various telephone conversations, our client [meaning the appellant] has already received an offer of $100 psf for the same property. You were advised to check with your prospective client if he is willing to counter the offer at an amount higher than $100 psf.

In evidence before the learned judge, Mr Yang said that he had written his minute of 10 June as a result of a misunderstanding.

On 23 June 1987, the appellant told Roslina that he had found a buyer. On the next day, 24 June, a man who identified himself as `Mr Daniel` phoned Roslina. According to Roslina, the man said that he was going to buy the property from the appellant and asked if it was to be a mortgagee or mortgagor sale. Roslina told him that it was the latter. According to Roslina, the man did not identify himself as from Deo.

On the same day, Roslina received a telex from the appellant`s solicitors M/s Goh Aik Chew & Co protesting that the appellant had received an offer of $800,000 from Deo, and he was in the process of negotiating for a higher price of $900,000; that despite Roslina`s agreement on 16 June 1987 to give the appellant a week to negotiate for a higher price, the bank`s agents, at the bank`s request, had offered the same buyer to sell at $96 psf (sic); and that, because of the bank`s intervention, Deo had now reduced their offer from $800,000 to $725,000.

In a letter to the appellant`s solicitors on the same day, and in her evidence, Roslina strongly denied the allegations of interference. She maintained that, before she got the telex, she had not been aware that the two prospective buyers, ie the party who had been in contact with the bank`s agents, Knight Frank, and the party who had been in contact with the appellant direct, were one and the same person; she learned that fact only from the telex itself. She also denied the bank had offered to sell the property at $96 psf, as alleged by the appellant`s solicitors.

On 24 June 1987, Deo`s solicitors wrote formally to the appellant`s solicitors seeking confirmation that the parties had agreed on the sale and purchase of the property, subject to contract, at the price of $725,000, and asking for the title deeds and the draft sale and purchase agreement.

On 1 July, the appellant`s solicitors transmitted Deo`s offer to the bank, saying that the appellant was obliged in the circumstances to sell to Deo at $725,000 and asking the bank for the title deeds for transmission to Deo`s solicitors. The appellant`s solicitors followed with three reminders on various dates in July. It was not until 1 August that the bank`s solicitors replied, but they said that before the bank could give their consent to the sale, they wished to discuss a schedule for the repayment of the shortfall, ie the difference between the then current outstanding balance on the overdraft facilities and the sale...