Abacus Realty Pte Ltd and Others v Indian Overseas Bank

• Jurisdiction: Singapore
• Judge: Karthigesu JA
• Judgment Date: 23 October 1998
• Neutral Citation: [1998] SGCA 66
• Docket Number: Civil Appeal No 25 of 1998
• Date: 23 October 1998
• Published date: 19 September 2003
• Year: 1998
• Plaintiff Counsel: Susheela Joseph and Chellapan Joseph (Low Yeap Toh & Goon)
• Citation: [1998] SGCA 66
• Defendant Counsel: B Vijayan Peter and Julia Eng (Ramdas & Wong)
• Court: Court of Appeal (Singapore)
• Subject Matter: Whether issue before court in related action but orally withdrawn by solicitor may be subsequently litigated,Whether solicitor's representations are binding on clients,Implied authority of agent,Whether solicitor had implied authority to consent on behalf of clients with third party,Res Judicata,Agency

Judgment:

LP THEAN JA

Cur Adv Vult

(delivering the judgment of the court): The dispute between the parties in this appeal has a long history. It originated in 1978 or thereabouts, when the respondents (`the Bank`) instituted proceedings in Suit No 417 of 1978 in the High Court against the second appellant (`Motorcycle`) as the principal debtor, and against Yeo Kian Peng, Yeo Kia Lip, Yeo Kian Doo, Foo Hee Yong, Nah Whee Yang and Yeo Hong Lian as guarantors, in respect of a certain debt due to the Bank. The parties then came to a settlement, and the defendants, with the exception of Foo Hee Yong, signed a settlement agreement dated 9 March 1978 whereby they agreed, inter alia, to admit the debt owed to the Bank and to provide securities in the form of mortgages of certain properties owned by one or more of them or by other parties. Following the settlement agreement, two judgments were entered against them in that suit as follows: the first judgment on 27 March 1978 against all of them, except Foo Hee Yong, for the sum of $4,629,770.84 with accrued interest of $135,808.16, and interest on the sum of $2,922,637.52 at 12.25% per annum from 28 March 1978 and $350 costs; and the second judgment on 16 August 1978 against Foo Hee Yong alone for the sum of 3,631,771.36 with accrued interest of $274,112.97 and interest on the sum of $2,922,637.52 at 12.25% per annum from 16 August 1978 and $329 costs. Both the judgments related to the same debt (`the judgment debt`).

2.The first appellant (`Abacus`) was not one of the debtors at the time but was the owner of the land and premises Nos 27, 29, 31 and 33 Birch Road (`the property`). Under the settlement agreement, among other properties, the property was to be mortgaged to the respondents. Accordingly, on or about 7 November 1978 a mortgage of the property was executed in favour of the respondents. The mortgagor was Abacus, and strictly speaking only the mortgagor needs to execute the mortgage. However, the mortgage was so drawn up that all the judgment debtors were joined as parties in the instrument and all of them expressly covenanted to pay the judgment debt and to observe and perform other covenants provided therein. For reasons which we shall discuss in a moment, the mortgage was executed by Abacus and five of the judgment debtors, excluding Foo Hee Yong and Nah Whee Yang. The principal payment obligations of the parties under the mortgage are as follows:

Firstly to pay to the Bank on demand all such sums of money which are now or shall hereafter remain due or owing to the Bank by the mortgagor and/or the judgment debtors or any of them under the judgment including all interests and costs payable thereunder, in such manner as agreed by the Bank at its sole discretion.

Secondly to perform and observe:

(a) the covenants and conditions implied by law in mortgages of registered land;

(b) the covenants and conditions hereinafter set out.

And for the better securing of payment of the judgment and of all other moneys hereby convenanted to be paid the mortgagor hereby mortgages for the benefit of the Bank all his estate and interest as such proprietor of the mortgaged property but subject to all existing encumbrances registered or notified in the land-register.

3.As the parties before us are not the exactly the same as those below, we shall refer to them as follows. We shall refer to Abacus and the seven judgment debtors, all of whom were the defendants in the proceedings below, as `the eight defendants`, the first to the fifth and the eighth defendants as the `six defendants`, the sixth defendant as `Foo` and the seventh defendant as `Nah`. The eighth defendant is now dead and is represented by his estate.

4.The dispute between the eight defendants and the Bank in the proceedings below centred on the validity of the mortgage of the property. When the mortgage of the property was prepared, it was in the form of a deed and all the eight defendants executed the instrument; however, one of them, Foo, executed it by his attorney acting under a power of attorney. Unfortunately, unknown to the solicitors acting for the parties the property had been brought under the Land Titles Act and thus the form of mortgage, not being in the prescribed form, was not acceptable for registration with the Registry of Land Titles.

5.A fresh form of mortgage was therefore prepared and was expressed to be signed by all the eight defendants. However, only six of them signed it, and the two who did not sign the mortgage were Foo and Nah. Nah was then overseas, and as for Foo, although his attorney signed it, it was perceived that there would be a serious question raised on the adequacy of the power of attorney. It was therefore agreed between the solicitor acting for the eight defendants and the solicitors for the Bank to delete from the instrument of mortgage the names of Nah and Foo and also that part thereof which bore the execution by Foo`s attorney. The mortgage was thus amended and was duly registered (`the mortgage`).

6.Five other properties owned by different parties were also mortgaged to the Bank to secure the payment of the judgment debt. However, no dispute appeared to have arisen in respect of those mortgages.

7.The eight defendants defaulted in their obligations under the settlement agreement. On 2 July 1981, the Bank in exercise of their statutory power of sale, entered into a contract to sell the property to one Cheng Lai Geok, and also took possession of the property. Cheng, however, repudiated the contract the next day and stopped payment of the cheque for $650,000 which he had given the previous day as deposit. The Bank on 7 October 1981 brought an action in Suit No 3734 of 1981 against Cheng for specific performance and damages. There was considerable delay on the part of the Bank in pursuing the action against Cheng so much so that it did not come on for trial until June/July 1991. In the meanwhile, having taken possession of the property the Bank did nothing in terms of renting it out. Nor did they accept the repudiation of Cheng and attempt to re-sell the property. Since 1984 Abacus and Motorcycle had been asking the Bank for accounts and making enquiry as to why the property had not been rented out. They had also been asking the Bank repeatedly to put up the property again for sale. Apparently these requests were either ignored or not taken seriously.

8.After almost ten years since taking possession of the property, the Bank decided to accept the repudiation by Cheng and re-sell the property. The property was eventually sold on 11 April 1991 to Lim Choo Kuan and Lim Chor Pian for $2.33m. The proceeds of sale together with those of the other mortgaged properties which were also sold were sufficient to discharge the judgment debt, leaving a surplus of $1,206,796.64. However, this sum was applied towards payment of the interest on the judgment debt which had accrued and which amounted to $1,724,342.09 as at 27 July 1991, being the date of completion of the sale of the property. There was therefore still a balance sum of $517,545.45 remaining unpaid with interest thereon. The Bank instituted these proceedings against the eight defendants claiming this amount with interest and also all outgoings incurred in respect of the property and interest thereon.

9.The eight defendants resisted the claim and their defence is this. First, they said that they were not bound by the terms of the mortgage, as it was not signed by Foo and Nah and that the six defendants signed it in the belief that Foo and Nah would also sign it and that their solicitor had no authority to consent to the exclusion of these two signatories. Secondly, they averred that they were not liable for any interest accruing prior to 21 August 1984 on the ground that the claim was time barred, the present action having been commenced only on 21 August 1990. Finally, they said that in all the circumstances it was inequitable to allow the Bank`s claim.

10.The action was tried before Chao Hick Tin J. The learned judge found that the solicitor for the eight defendants did inform the Bank`s solicitors that on behalf of her clients she consented to the exclusion of Foo and Nah as the parties to the mortgage, but that she did not personally obtain the consent from the six defendants for such exclusions. However, the learned judge held that in the circumstances the defendants` solicitor had the ostensible authority to represent to the Bank`s solicitors that her clients had consented to the exclusion of Foo and Nah as the parties to the mortgage and the Bank had relied on such consent as conveyed to their solicitors. Accordingly, the mortgage was valid and binding.

11.As against the third, fourth, fifth and eighth defendants the learned judge held that the Bank`s claim for interest accrued prior to 21 August 1984 was time barred by virtue of s 21(6) of the Limitation Act (Cap 163), and he further held that the Bank was not entitled to any interest on the principal for the entire period of ten years, namely, between 2 July 1981 to 27 June 1991. He considered that it was inequitable to allow the Bank any interest for this period, as by reason of the Bank`s contract with Cheng Lai Geok, the mortgagor was precluded from redeeming the property and further the Bank did nothing with reference to the property during this period.

12.Turning to Abacus and Motorcycle, the learned judge held that they were liable for the interest on the grounds that they were estopped by reason of res judicata from arguing that the interest was not payable by them. The basis for this estoppel was that Abacus and Motorcycle on 13 September 1989, commenced Originating Summons No 889 of 1989 (`OS No 889`) against the Bank seeking an account to be taken of the amounts due under the mortgage and other reliefs. One of the reliefs sought was an order that they should not be liable to pay any interest accruing after 7 October 1981. However,...