Lee Nyet Yun Janet v Lee Nyet Khiong

JurisdictionSingapore
CourtHigh Court (Singapore)
JudgeLai Siu Chiu J
Defendant CounselPeter Yap and Sim Eu Jin (Peter Yap & Co)
Subject MatterMortgagee’s rights,Duty of mortgagee in possession to account for rents and profits -Whether duty breached,Whether factum of possession proved,Scope of s 75 Land Titles Act (Cap 157, 1994 Ed),Duty of mortgagee when selling mortgaged property,Credit and Security,Whether in possession at law,Mortgagee in possession,Mortgage of real property,Mortgagee’s power of sale,Whether duty breached
Docket NumberSuit No 746 of 1994
Plaintiff CounselLok Vi Ming and Tan Joo Thye (Rodyk & Davidson)
Published date19 September 2003
Date06 December 1996
The claim

In this action, the plaintiff brought two claims against the defendant, who is her younger brother. Firstly, it was alleged that the defendant, who was the mortgagee of the plaintiff`s property at No 3 Woollerton Park, Singapore (the property), had breached his duty as mortgagee to act in good faith and to obtain the best price possible when the property was sold, as a result of which the plaintiff had suffered a loss of $250,000. Secondly, the plaintiff claimed for an account of rent for the period that the defendant was mortgagee in possession of the property.

The plaintiff`s case

Sometime in January 1986, the plaintiff (PW5) borrowed a sum of $3,389,965 (the first loan) from the defendant to enable her to acquire a property known as No 3 Woollerton Park (the property). Completion of the property took place in the same month, but the plaintiff did not move in, as the defendant suggested that the property should be renovated.

Tenders were called and eventually the contract for renovation was awarded to Kumagai Zenecon Construction Pte Ltd (Kumagai) as the contractors and Design Mode Co-ordination (Design Mode) as the design consultant. Renovations for the property began sometime in May 1987 and was completed sometime in September 1988. The total cost of the works inclusive of furnishings amounted to approximately $2.7m.

To pay for the renovations, the plaintiff took a second loan from the defendant for a sum of $2,610,035. The first and second loans were evidenced in an agreement between the parties dated 15 May 1987 (AB1-2). In order to secure repayment of the two loans which aggregate $6m, the plaintiff executed a legal mortgage of the property dated 27 November 1987 (AB3-7) in favour of the defendant. The defendant subsequently lodged a caveat and registered the mortgage against the property.

At this point I should mention that there was some dispute as to how the mortgage agreement came about. Initially, the plaintiff claimed that the defendant had made her a gift of the $6m but later said that he had lent her the money. However, she maintained that when the money was lent to her, she was not aware that there would be a mortgage over the property to secure repayment. In fact she had signed the mortgage documents without knowing what they were, when the defendant produced them to her one evening in November 1987. Be it as it may, this point was not of great significance as there was indeed clear evidence of a mortgage which the plaintiff later admitted to.

The plaintiff explained that when the construction first commenced in 1987, she would visit the site and the contractor would show her the plans for her approval. However, the contractor stopped consulting her from 1988 onwards. She did not pursue this matter since she had merely assumed that the defendant was attending to the renovations, having been assured by him that he would do so. The defendant had also told her that he would inform her when the renovations were completed.

However, the plaintiff did not know that the renovations were completed in September 1988 as the defendant did not inform her about it. Between January and April 1988, the plaintiff was unable to gain access to the house whenever she visited it as the main gate was locked and the house was unoccupied. Later on, when she visited the property one evening, she was surprised to see the place lighted, and shadows of what seemed like occupants in the house. There was also a security guard at the main gate.

The plaintiff claimed that after the property was renovated, which was sometime in September 1988, she did not reside there, as the defendant had been in sole possession of the property to her exclusion. Although she tried to gain access to the property, the main entrance was locked. She did not have the keys, which the contractors had handed over to the defendant when the renovations were completed. The defendant refused to return the keys to her and also moved in there without notifying the plaintiff. She, on the other hand, rented various properties for occupation between March 1988 and April 1991 after selling her former matrimonial home at Mayfield Avenue.

Thus, the plaintiff claimed that from January 1988 to the time the property was sold, the defendant had been in possession to the plaintiff`s exclusion and had exercised full custody and control over the property, thus excluding her from the possession, use and enjoyment thereof. As a mortgagee in possession, the defendant had to exercise due diligence to put the property to beneficial use by renting it out. This he had failed to do and the plaintiff claimed for an account of rent for the period from 1 September 1988 or such other date which this court would ascertain as the date on which he entered into possession until the date on which the property was sold.

On 15 September 1989, the plaintiff was made a bankrupt by the High Court for a debt approximating US$164,865.30 which she owed to Fulton Prebon Futures Clearing (S) Pte Ltd (Fulton). The plaintiff wanted to sell the property to clear her debts and to enable her to be discharged from the bankruptcy. The property was valued to determine its potential sale price and was then advertised in the Straits Times on 13 July 1993, in order to receive tenders from potential purchasers. The property was subsequently sold by the defendant as legal mortgagee for a sum of $6.85m.

The plaintiff alleged that the defendant had failed to act in good faith to obtain the best possible price for the property, when there was then a firm offer to purchase the property for $7.1m, this offer being known to the defendant before the property was sold. According to the plaintiff, she received an offer in writing from Martin, Lim & Partners acting for one Roderick Edward Martin and one Chua Aik Hoon [commat] Chua It Hoon (the potential purchasers) to purchase the property for $7.1m.

This offer was communicated to the Official Assignee on 27 July and then brought to the attention of the defendant`s solicitors on 31 July 1993. Three days later, the plaintiff`s solicitors reconfirmed with the defendant`s solicitors the offer which had been made. On 5 August, the defendant`s solicitors informed the Official Assignee that the highest tender for the property was $6.85m. On the same day, the plaintiff`s solicitors reminded the defendant`s solicitors of the offer in writing of $7.1m from the potential purchasers. Despite this, the defendant proceeded to sell the property for $6.85m.

One Philip Leow Poh Tat (PW4), who was then an associate director of valuation with Jones Lang Wootton, gave evidence on behalf of the plaintiff. He had done a desktop review of the property on 29 July 1993 and valued it at $6.85m if the property was sold at market value. If there was a forced sale, then it would be discounted by 10%, ie. at $6,165,000.

Philip Leow referred to the advertisement which the defendant had put up for a sale by tender of the property. In his opinion, the time period of two weeks in which the tenders had to be received, was not adequate to get the best possible price. He would normally propose to his client a time frame of at least one month unless time was of the essence to the mortgagee. Moreover, the best possible price could not be achieved without adequate publicity, especially where the property was only advertised once, as in this case. In addition, the particular advertisement lacked certain details such as the number of storeys, that it had been extensively renovated, that it would be sold with vacant possession and that it had certain facilities such as a swimming pool. In his opinion, it would have been better to advertise it once a week for a month.

The defendant`s case

The defendant, who is Malaysian, runs a family business in Sabah. He claimed that he had lent the money to the plaintiff, interest-free, to buy and renovate the house, on the understanding that when the house was ready, the family members especially his mother would be able to reside there as and when they liked. The defendant claimed that he did not reside at the property when it was ready, but it was used by his mother and sisters. He did not at any time deny the plaintiff access to the place.

On 14 April 1993 (AB80), the plaintiff`s solicitors, Messrs Shook Lin & Bok, wrote to the defendant`s solicitors, stating that the plaintiffs were desirous of redeeming the mortgage, and requested that a valuer be permitted to enter the premises to value the property. When he failed to hear from the plaintiff, the defendant`s solicitors wrote a letter of 8 June 1993, to enquire whether the plaintiff was proceeding with the redemption, and further stated that:

if within seven (7) days from the date hereof, we do not receive your client`s notice of redemption which redemption shall be completed within a reasonable time acceptable to our client, our client shall proceed to exercise his mortgagee`s rights accordingly.



On 21 June, the defendant`s solicitors sent a demand for the repayment of the loan and stated that should the plaintiff fail to make such repayment within fourteen days, the defendant would proceed to enforce his right to foreclose and dispose of the property. Subsequently the plaintiff failed to comply with the notice, and the defendant instructed his solicitors to proceed with the sale of the property by way of a mortgagee`s sale in a public tender. The defendant explained that until the plaintiff brought up the matter, he had not even thought of asking her to repay the loan.

The sale was subsequently advertised on 13 July, with the closing date of the tender being 31 July 1993 at 12.00 noon. The defendant`s solicitors had informed...

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4 cases
  • Lee Nyet Khiong v Lee Nyet Yun Janet
    • Singapore
    • Court of Three Judges (Singapore)
    • 3 Junio 1997
    ...found due by the registrar as rental of the property for the period from 1 September 1988 to the date of the sale. [See the judgment in [1997] 1 SLR 517.] Against this decision the appellant appealed. We dismissed the appeal and now give our reasons. The In January 1986, the respondent purc......
  • Sri Jaya (Sendirian) Berhad v RHB Bank Berhad
    • Singapore
    • High Court (Singapore)
    • 10 Octubre 2000
    ...... v Societe Generale [1989] SLR 229 [1989] 2 MLJ 14 and Lee Nyet Khiong v Lee Nyet Yun Janet [1997] 2 SLR 713 ). Salmon LJ in ......
  • Tai Sea Nyong v Overseas Union Bank Ltd
    • Singapore
    • High Court (Singapore)
    • 28 Febrero 2002
    ...... and has been applied in numerous local decisions (see Lee Nyet Khiong. v Lee Nyet Yun Janet [1997] 2 SLR 713 and more recently in Sri ......
  • Lee Nyet Khiong v Lee Nyet Yun Janet
    • Singapore
    • Court of Three Judges (Singapore)
    • 3 Junio 1997
    ...found due by the registrar as rental of the property for the period from 1 September 1988 to the date of the sale. [See the judgment in [1997] 1 SLR 517.] Against this decision the appellant appealed. We dismissed the appeal and now give our reasons. The In January 1986, the respondent purc......

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