KLW Holdings Ltd v Straitsworld Advisory Ltd and another

• Jurisdiction: Singapore
• Judge: Scott Tan AR
• Judgment Date: 14 August 2017
• Neutral Citation: [2017] SGHCR 11
• Court: High Court (Singapore)
• Hearing Date: 12 July 2017
• Docket Number: Suit No 1199 of 2015
• Plaintiff Counsel: Amy Tan (Drew & Napier LLC)
• Subject Matter: Civil Procedure,Judgments and orders,Enforcement
• Published date: 19 August 2017

Scott Tan AR: Introduction

This is the Plaintiff’s request for a writ of seizure and sale to be issued in respect of the 2nd Defendant’s membership at the Singapore Island Country Club (“the Membership”). The question before me is whether the Membership is property of a sort which is exigible to a writ of seizure and sale. For the reasons which follow, I answer that question in the negative, and I therefore refuse the Plaintiff’s request.

Background

The facts which are relevant to this application lie within a narrow compass. The Plaintiff, KLW Holdings Limited, is a Singapore company which is in the business of property development. It sued the Defendants – who are, respectively, Straitsworld Advisory Ltd, a company incorporated in the British Virgin Islands, and its sole director and shareholder, Mr Michael Chan (“Mr Chan”) – for the return of a refundable commitment fee of $7m paid under a term sheet signed in May 2015. The Plaintiff successfully obtained summary judgment on 18 October 2016 and the Defendants were ordered to pay the Plaintiff the sum of $7m plus interest and costs. The Defendants’ appeal was dismissed by Hoo Sheau Peng JC on 17 November 2016 (see KLW Holdings Ltd v Straitsworld Advisory Ltd and another [2017] SGHC 35).

Subsequently, the Plaintiff applied to examine Mr Chan to ascertain whether he had the means to satisfy the judgment debt. In the course of the examination, the Plaintiff discovered that Mr Chan was an “Ordinary Member (Transferable)” of the Singapore Island Country Club (“SICC”). The Plaintiff then requested that the Membership be seized and sold in satisfaction of the judgment debt.

The Plaintiff’s case

Ms Amy Tan, counsel for the Plaintiff, candidly admitted that she was unable to find any reported case, whether in Singapore or in the Commonwealth, in which a writ of seizure and sale had been issued in respect of a club membership (which she admitted was “somewhat troubling”). Nevertheless, she submitted that it was clear, from a plain reading of the relevant provisions, that this could be done. She first pointed me to s 13 of the Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed) (“SCJA”), which provides: 13. A judgment of the High Court for the payment of money to any person or into court may be enforced by a writ, to be called a writ of seizure and sale, under which all the property, movable or immovable, of whatever description, of a judgment debtor may be seized, except — (a) the wearing apparel and bedding of the judgment debtor or his family, and the tools and implements of his trade, when the value of such apparel, bedding, tools and implements does not exceed $1,000; (b) tools of artisans, and, where the judgment debtor is an agriculturist, his implements of husbandry and such animals and seed-grain or produce as may in the opinion of the court be necessary to enable him to earn his livelihood as such; (c) the wages or salary of the judgment debtor; (d) any pension, gratuity or allowance granted by the Government; and (e) the share of the judgment debtor in a partnership, as to which the judgment creditor is entitled to proceed to obtain a charge under any provision of any written law relating to partnership.

[emphasis added in italics and bold italics]

Next, Ms Tan pointed me to O 45 r 1 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“the Rules”), which provides that a judgment for the payment of money may be enforced in four different ways, one of which is through the issuance of a writ of seizure and sale. Ms Tan argued, citing the decision of the Singapore High Court in ABD Pte Ltd v Comptroller of Income Tax [2010] 3 SLR 609 (“ABD”), that a transferable club membership (such as the Membership) is a chose in action and is therefore a form of movable property which can be seized under a writ of seizure and sale in Form 82, which is the standard form used for the seizure of movable property (see O 45 r 12).

In support of this submission, she also pointed out that club memberships have been recognised as being property that is capable of: (a) forming part of the pool of matrimonial assets that is available for division between husband and wife in divorce proceedings (see, eg, the decision of the Singapore High Court in Tan Hwee Lee v Tan Cheng Guan and another appeal and another matter [2012] 4 SLR 785); and (b) being the subject matter of a worldwide Mareva injunction (see, eg, the decision of the Singapore High Court in Wallace Kevin James v Merill Lynch International Bank Ltd [1998] 1 SLR(R) 61). That being the case, she submitted, the Membership ought to be capable of being seized under a writ of seizure and sale. That this is possible, she further contended, is also suggested by the fact that question 19 of the standard questionnaire used in examination of judgment debtor proceedings (see Form 11A of the Supreme Court Practice Directions) requires an examinee to state whether he/she is “a member (whether in Singapore or overseas) of any country clubs, timeshare holiday clubs” and to provide details of the same.

Section 13 of the SCJA

The distinction between immovable and movable property maps roughly onto the distinction between real property (that is, proprietary interests relating to land) and personal property (proprietary interests which do not relate to land): see Tan Yock Lin, Personal Property Law (Academy Publishing, 2014) (“Personal Property Law”) at para 1.003). Mr Chan’s interest in the Membership is clearly not a form of immovable property; so the question is whether it is a form of movable property. Given the intractable debate over the nature of “property” (see, generally, Personal Property Law at paras 1.025–1.043), I propose to approach this doctrinally – by considering whether a person’s interest in a club membership has traditionally been recognised in the cases as being proprietary in character – rather than theoretically.

It is well settled that the relationship between a club and its members is one that is governed by contract, the terms of which can usually be found in the constitution, rules, and bye-laws of the club (see the decision of the Singapore Court of Appeal in Kay Swee Pin v Singapore Island Country Club [2008] 2 SLR 802 at [2] (“Kay Swee Pin”)). Under the Rules of the Singapore Island Country Club (“SICC Rules”), an Ordinary Member (Transferable), such as Mr Chan, is conferred a range of rights, including the right to use the facilities of the SICC and vote at its general meetings. An ordinary member’s right to use the SICC’s facilities in accordance with the bye-laws (and I put aside for now the issue of new members, for whom slightly different rules apply) appear to be unrestricted, and may only be taken away if membership is suspended pursuant to the successful initiation of disciplinary proceedings.

On the subject of the transferability of the Membership, rule 17A of the SICC Rules provides, in material part, as follows: 17A Transfer (a) Save as otherwise provided in this Rule 17A, no member may transfer his membership. (b) (i) an Ordinary Member (Transferable) may transfer his membership to any person subject to the approval of the General Committee and subject to and in accordance with the provisions in the Bye-Laws. …

The Membership & Transfer Bye-Laws of The Singapore Island Country provide, in material part, as follows: 3 TRANSFER FEES 3.1 The fees payable to the Club for the transfer of membership shall be determined by the General committee from time to time.

…

3.3 All applications for transfer of membership shall be subject to the approval of the General Committee. No transfer shall take effect except upon payment of the prescribed transfer fees.

…

5 MONTHLY SUBSCRIPTIONS 5.1 The subscription payable to the Club monthly by each member of the Club shall be due and payable in advance on the 1st day of each month. 5.2 The full monthly subscription is payable for the month in which a person ceases to be a member of the Club. Similarly, the full subscription for the month is payable for a person who becomes a member of the Club in that month.

In essence, an ordinary (transferable) member of the SICC has a restrictively assignable licence to use the facilities of the SICC and participate in its activities. The transferability of this interest is critical, for it means that membership is more than just a mere personal right, but a chose in action – that is, it is a form of personal property the rights to which cannot be asserted by possession or use, but must instead be vindicated by legal action (see ABD at [34], citing the decision of the Income Tax Board of Review in HU v Comptroller of Income Tax [1999] SGITBR 1 at [65]).

If this were the end of the matter, I would readily agree that a writ of seizure and sale can and should be issued in respect of the Membership. However, there is one wrinkle which complicates this seemingly straightforward picture of events. This arises from the decision of the Singapore High Court in American Express Bank Ltd v Abdul Manaff bin Ahmad and another and two other appeals [2003] 4 SLR(R) 780 (“Abdul Manaff”), where it was held that the expression “writ of seizure and sale” in s 13 of the SCJA carries a wider meaning than the equivalent expression in the Rules.

The writ of seizure and sale in the Rules

The question in Abdul Manaff was whether the wages and salaries of judgment debtors could be garnished. This turned on whether s 13(c) of the Supreme Court of Judicature Act (Cap 322, 1999 Rev Ed) (“SCJA 1999”), which was in pari materia with s 13(c) of the present day SCJA and ostensibly applied only to “writ[s] of seizure and sale”, also covered garnishee proceedings. After a review of the legislative history of the relevant provisions, Lai Kew Chai J held that it did. He explained that the phrase “writ of seizure and sale” in s...