Lee Nyet Khiong v Lee Nyet Yun Janet

JudgeKarthigesu JA
Judgment Date03 June 1997
Neutral Citation[1997] SGCA 25
CourtCourt of Three Judges (Singapore)
Published date19 September 2003
Subject MatterWhether a mortgagee in possession and occupation is obliged to pay rent,Duties of a mortgagee in possession,Whether mortgagee had acted reasonably,s 75 Land Titles Act (Cap 157),Mortgage of real property,Credit and Security,Mortgagee in possession,Obligation to put the property to beneficial use,Mortgagor’s rights,Duty to exercise due diligence in obtaining the best price,Mortgagee’s power of sale,Whether mortgagee was in possession when there was no default on the mortgage
Citation[1997] SGCA 25
Plaintiff CounselTPB Menon (Wee Swee Teow & Co) and Sim Eu Jin ( Peter Yap & Co)
Year1997
Defendant CounselLok Vi Ming and Tan Joo Thye ( Rodyk & Davidson)

The appellant and the respondent are brother and sister respectively, the latter being older. In the proceedings below, the respondent made two claims against the appellant. First, she claimed that the appellant, who was the mortgagee of her property at No 3 Woollerton Park, Singapore (the property), in exercising his power of sale as a mortgagee, had breached his duty to act in good faith and to take reasonable care to obtain the best price available at the time of the sale, as a result of which she suffered a loss of $250,000. Secondly, she claimed for an account of the rent for the period in which the appellant was the mortgagee in possession of the property. At the conclusion of the trial, the learned judge found in favour of the respondent on both the claims and ordered the appellant to pay the respondent the sum of $250,000 with costs as well as such sum as 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 facts



In January 1986, the respondent purchased the property with the assistance of a loan of $3,389,965 from the appellant. After the purchase was completed, the respondent did not move in and stay there. At the suggestion of the appellant, the respondent decided to renovate the property. The contract for renovation was awarded to Kumagai Zenecon Construction Pte Ltd as the contractors and Design Mode Co-ordination as the design consultant. The total cost of the renovation inclusive of furnishings amounted to approximately $2.7m. The renovation works began sometime in May 1987.

Initially, while the renovation was in progress, the respondent would visit the site and the contractor would seek her approval in respect of the plans and other marrers. Subsequently, from 1988 onwards, the contractor stopped consulting her and dealt with the appellant on the renovation works. The respondent did not have any objection, as she was assured by her brother that he would attend to the renovation and would inform her when all the renovation works were completed.

To pay for the costs of the renovation, the respondent took a second loan of $2,610,035 from the appellant. The two loans were subsequently evidenced by an agreement in writing made between them dated 15 May 1987. To secure the repayment of the two loans aggregating approximately $6m, the respondent executed in favour of the appellant a legal mortgage of the property dated 27 November 1987.

The renovation works were eventually completed sometime in September 1988, but the appellant did not inform the respondent. For some time the appellant, for reasons which were not apparent, had been avoiding the respondent, and as a result there had been no contact between the two of them since November 1987. Wondering what had happened to the renovation, the respondent visited the property at or near the end of 1988, and found that it was locked. In early 1989, when she went to see the property one evening she saw that the lights were on and the house appeared to be occupied with a security guard at the gate.

It appeared from the evidence that, after the completion of the renovation, the appellant took possession of the keys to the house from the contractor and handed or caused to be handed the keys to his mother and allowed his mother and siblings to move in and stay there. The respondent, however, was not notified of this. Nor was her consent or approval sought. The appellant installed a telephone line in the house in his name. The telephone was listed under his name in the directory for 1990 and 1991 and his address as listed there was the address of the property. The appellant owned two cars, a Mercedes Benz and a Ferrari, and both cars were normally parked there. The registered address of the appellant in respect of the two cars was that of the property also.

The appellant maintained that he had not at any time stayed at the property and that it was occupied by his mother and siblings. His business was in East Malaysia and he resided there; he only visited Singapore occasionally, and on those occasions, he would stay in hotels. The property tax, the public utility bills and the telephone bills were paid by his mother and siblings who resided there.

On 15 September 1989, the respondent was adjudicated a bankrupt by the High Court for a debt she owed to Fulton Prebon Futures (S) Pte Ltd. The respondent decided to sell the property to clear all her debts, thus enabling her to be discharged from her bankruptcy. Before the sale could proceed, the property had to be valued. The respondent had to seek the appellant`s permission for the valuers to gain access to the property for the purpose of carrying out the valuation. A valuation report dated April 1991 was prepared, as a result, by Jones Lang Wootton. Again, in 1993, the respondent wanted another valuation of the property to be carried out for the purpose of the sale. On 14 April 1993, the respondent`s solicitors wrote to the appellant`s solicitors, stating that the respondent was desirous of redeeming the mortgage, and requested that a valuer be permitted to enter the premises to value the property. Arrangements were then made for a valuer from Bradco Property Services to have access to the property and value the property. The property was valued at $7.3m.

On 8 June 1993, the appellant`s solicitors wrote to the respondent`s solicitors to enquire whether the appellant was proceeding with the redemption and the letter further stated as follows:

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 1993, the appellant`s solicitors sent to the respondent`s solicitors a demand for the repayment of the loan, which stated that should the respondent fail to make such repayment within fourteen days, the appellant would proceed to enforce his right to dispose of the property. The respondent failed to comply with the notice and the appellant instructed his solicitors to proceed with the sale of the property by way of a public tender.

The sale by tender was advertised in The Straits Times on 13 July 1993 with the closing date of the tender being 31 July 1993, at noon. The advertisement described only the location and the land area and stated that it was a freehold property, without giving any other particulars of the property. The appellant`s solicitors informed the respondent`s solicitors of the said advertisement, and sent a copy of the advertisement and the conditions of tender to the Official Assignee, who was then representing the estate of the respondent. A valuation of the property was obtained by the appellant from Knight Frank Cheong Hock Chye and Baillieu (Knight Frank) dated 27 July 1993. The property was valued at $7m if sold in open market and at $5.95m on a forced sale.

At the close of the tender, only one tender was received. It came from Mr Lim Kwang Joo and his wife, Madam Ngow Sing Fong. They tendered for the purchase of the property at the price of $6.85m. (In this judgment, we shall refer to this as a tender submitted by Mr Lim). On 31 July 1993, after the close of the tender, the respondent`s solicitors wrote to the appellant`s solicitors, stating that the respondent had received a `firm offer` of $7.1m from `a genuine purchaser`. On 2 August 1993, the appellant`s solicitors replied to the respondent`s solicitors requesting the respondent`s prospective purchaser to submit a tender `in compliance with and subject to the Conditions of Tender` to reach the appellant`s solicitors not later than noon the following day.

On 3 August 1993, the respondent`s solicitors wrote to the appellant`s solicitors, informing them that the respondent had received a genuine offer from Mr Roderick Edward Martin and Madam Chua Aik Hoon [commat] Chua It Hoon to purchase the property for $7.1m and enclosing a copy of the letter dated 26 July 1993 from M/s Martin, Lim & Partners, the solicitors for the purchasers which stated that their clients offered, subject to contract, to purchase the property for $7.1m and that they wanted an option for a period of one month and in consideration thereof their clients would pay a sum of $100,000. (In this judgment, we shall refer to this as an offer by Mr Martin). Following that, a telephone conversation took place between Mr Peter Yap, the solicitor for the appellant, and Mr Martin, in which the latter indicated that he was not prepared to offer to purchase the property in compliance with and subject to the terms and conditions of the tender.

On 5 August 1993, the appellant`s solicitors informed the Official Assignee that the highest tender obtained for the property was one for $6.85m. On the same day, the respondent`s solicitors wrote to the appellant`s solicitors reminding them that the respondent had received a genuine offer of $7.1m and therefore they should not accept an amount lower than that sum. Despite the reminder, the appellant on the same day accepted the tender submitted by Mr Lim and the sale was completed on 30 September 1993.

On 7 May 1994 the respondent instituted proceedings against the appellant, claiming that, in exercising the power of sale, he had breached his duty to act in good faith and to obtain the best price available for the property at the time of the sale. She also claimed an account of the rent for the period in which the appellant had been in possession of the property. The action was heard before Lai Siu Chiu J who gave judgment in favour of the respondent. Her judgment was reported in [1997] 1 SLR 517.

Decision below



The learned judge found that the appellant was a mortgagee in possession of the...

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