Land Law

• Author: TEO Keang Sood LLM (Harvard), LLM (Malaya); Advocate and Solicitor (Singapore and Malaya); Professor, Faculty of Law, National University of Singapore.
• Citation: (2018) 19 SAL Ann Rev 645
• Publication year: 2018
• Published date: 01 December 2018
• Date: 01 December 2018

Interests in land

Mere equity

20.1 In land law, a mere equity ranks the lowest in the hierarchy of interests. A legal or registered interest ranks the highest, followed by an equitable or unregistered interest. Next comes a mere equity, which confers only a personal right or interest that does not, as a general rule, run with the land to bind third parties.

20.2 The effect of a mere equity was illustrated in UJT v UJR.1 The plaintiff, who was the grandson, had applied for a number of orders in relation to a property belonging to his late grandfather's estate. This was to enable him as executor of the estate to sell the property despite the three defendants' continued occupation of it, one of whom was the second defendant, his grandmother. The second defendant had in a suit contended that she had a beneficial interest in the property or otherwise a right to remain in the property until her death.

20.3 In dismissing the second defendant's claim and allowing the plaintiff's application, the High Court held that the second defendant had failed to show on the balance of probabilities that she had contributed to the purchase price of the property. She also failed to prove the existence of any common intention between her and the grandfather as to the beneficial ownership of the property. In the result, there was no purchase price resulting trust or the existence of a common intention constructive trust to give rise to a beneficial interest in the property in her favour.2

20.4 The court was of the view that the question whether a widow had a right to occupy property which used to be the matrimonial home did not appear to be a question that the Singapore courts had addressed before. However, the House of Lords' decision in National Provincial Bank Ltd v Ainsworth3

(“Ainsworth”) would appear to represent the position at common law in Singapore.4 Ainsworth had held that a spouse's right to occupy the matrimonial home was a “mere equity” and not an equitable interest, and that it was determinable at the discretion of the court. It was held to be an equity which was enforceable only against the other spouse, not against third parties. It therefore had no proprietary effect.

20.5 The court noted that Ainsworth had observed that a spouse's equity would not survive a divorce.5 In the case where the other spouse had died, the court reasoned that the marriage would by that spouse's death have also terminated and there would no longer remain any juridical basis for the common law to recognise the claimant spouse's right to occupy what used to be the matrimonial home. Accordingly, in the present case, the second defendant could rely on no such equity as the grandfather had passed away.6 In this regard, given the somewhat inequitable outcome where the marriage was dissolved by death, the court opined that a legislative response similar to that in the UK7 may be apt in Singapore so as to confer on a claimant spouse a judicially protected right of occupation.8

Equitable interest

20.6 In Carpe Diem Holdings Pte Ltd v Carpe Diem Playskool Pte Ltd,9 the plaintiff and the first defendant entered into a franchise agreement under which the first defendant was granted franchise rights to operate a childcare and child development centre under the name “Carpe Diem”. The first defendant obtained a lease from the Housing and Development Board (“HDB”) to operate a preschool centre at the premises. The first defendant subsequently assigned the lease to the fourth defendant pursuant to a sale and purchase agreement (“S & P Agreement”). Shortly after, the first defendant was placed in liquidation and the second defendant was appointed as liquidator. The plaintiff commenced proceedings against, inter alia, the second defendant to reverse his decision to complete the assignment of the lease to the fourth defendant on the ground that the assignment was wrongful. The plaintiff asserted that it enjoyed rights superior to the fourth defendant's

over the lease as it had acquired an equitable interest therein on the basis of the exercise of an option in its favour under the franchise agreement.

20.7 The High Court, in dismissing the plaintiff's claims against the defendants, held that the S & P Agreement conferred on the fourth defendant an equitable interest in the lease pending completion of the assignment based on the rule in Lysaght v Edwards.10 While it was true that prior to approval for the assignment being granted by the HDB, the S & P Agreement was still in the process of completion, upon approval being granted, the S & P Agreement became enforceable and the fourth defendant thereby was deemed to have acquired an equitable interest in the lease from the date of the S & P Agreement.11

20.8 The court rejected the plaintiff's submission that it had an earlier equitable interest that took priority over the fourth defendant's equitable interest. The court found that the plaintiff did not exercise the option in the franchise agreement but instead offered the first defendant the choice of either extending the franchise agreement or transferring the lease to the plaintiff. Even if the plaintiff did, it could not have had an equitable interest earlier in time to the fourth defendant since the HDB never gave its approval for the transfer of the lease to the plaintiff.12 This was in line with the legal principle that where there is a condition precedent to the completion of a contract of sale, the purchaser does not have an equitable interest in the property until such condition is fulfilled.13

20.9 In the result, the fourth defendant acquired an equitable interest in the lease as at the date of execution of the S & P Agreement which was first in time to any interest that the plaintiff might have. Consequently, the second defendant, acting as the liquidator for the first defendant, was bound to complete the assignment of the lease in accordance with the S & P Agreement. The assignment of the lease to the fourth defendant was thus not wrongful.

Co-ownership

Severance of joint tenancy

20.10 In Peter Low LLC v Higgins, Danial Patrick14 (“Peter Low LLC”), the plaintiff had obtained an order attaching the defendant's interest as a joint tenant in a property co-owned with the defendant's wife to satisfy a judgment obtained against the defendant. The plaintiff applied for a writ of seizure and sale (“WSS”) in respect of the same interest. The assistant registrar below dismissed the application on the authorities of the High Court decisions in Malayan Banking Bhd v Focal Finance Ltd15 (“Malayan Banking”) and Chan Lung Kien v Chan Shwe Ching16 which held that a joint tenant's interest in immovable property could not be attached by a WSS.

20.11 In allowing the appeal, the High Court in Peter Low LLC departed from Malayan Banking and Chan Lung Kien v Chan Shwe Ching. The court was of the view that the ability of a joint tenant to sever the joint tenancy and alienate his share without the consent of the other joint tenants rendered the joint tenant's interest sufficiently distinct and identifiable to be seized by a WSS.17 This would not involve the seizure of the other joint tenant's interest, who remains free to deal with his own share.18

20.12 Severance of a joint tenancy occurred when the joint tenant's interest was seized, and this seizure occurred when the WSS was registered as provided in O 47 r 4(1)(a) of the Rules of Court.19 Thereafter, in the absence of evidence to the contrary, the court, the sheriff and judgment creditor should be entitled to proceed on the basis that the joint tenants held the property in equal shares both at law and in equity. As interested joint tenants can prove that their beneficial interests are not held in equal shares, no injustice would be caused to any joint tenant.20

20.13 The court recognised that a WSS against a joint tenant's interest in land conferred real, and not merely illusory, value to a judgment creditor notwithstanding that an undivided share in immovable property was difficult to market to third parties and not likely to fetch a

good price. A WSS would prevent dealings in the land by the other joint tenant and would afford the judgment creditor priority in the distribution of any residual proceeds from a mortgagee's sale of the property.21

20.14 The court found that other Commonwealth jurisdictions adopted a principled uniform position in allowing a joint tenant's interest in land to be taken in execution of money judgments.22 It was desirable to harmonise the development of the common law on this issue and there were no local circumstances which warranted a different position.23

20.15 The issue of severance of a joint tenancy by a WSS did not come before the Court of Appeal in Chan Lung Kien v Chan Shwe Ching24 (“Chan Lung Kien”) which, accordingly, did not consider the conflicting decisions of the High Court on the matter, which will have to await further clarification in the future. Instead, it dealt with the issue of severance of a joint tenancy by unilateral declaration at common law and under the Land Titles Act25 (“LTA”).

20.16 In Chan Lung Kien, the property in question was owned by the judgment debtor and her husband as joint tenants. In 2015, both the appellant and respondent had each obtained separate judgments against the judgment debtor. Subsequently, on 9 July 2015, the husband of the judgment debtor took steps in an attempt to sever the joint tenancy over the property. He appeared before a notary public in Melbourne, Australia, and executed an instrument of declaration in the form approved pursuant to s 53(5) of the LTA whereby he declared that he wished to sever the joint tenancy and hold the property as a tenant in common with the judgment debtor. On 10 July 2015, the respondent obtained an order for the judgment debtor's interest in the property to be attached and taken in execution under a WSS to satisfy her judgment. The WSS was also registered with the...