Malayan Banking Berhad v Sivakolunthu Thirunavukarasu and Others
| Judge | Kan Ting Chiu J |
| Judgment Date | 28 September 2007 |
| Neutral Citation | [2007] SGHC 161 |
| Subject Matter | Land titles act,Section 160(1)(b) Land Titles Act (Cap 157, 2004 Rev Ed),Whether mortgagee guilty of wilful blindness akin to fraud so as to defeat principle of indefeasibility,Presumption of undue influence by solicitor,Transfer and mortgage of property procured by fraud,Registration of title,Indefeasibility of title,Land |
| Year | 2007 |
| Defendant Counsel | Philip Fong and Navin Lobo (Harry Elias Partnership) |
| Citation | [2007] SGHC 161 |
| Plaintiff Counsel | Ng Yeow Khoon and Seah Yi Lein (Shook Lin & Bok) |
| Published date | 16 October 2007 |
| Court | High Court (Singapore) |
| 28 September 2007 |
|
Kan Ting Chiu J:
Background
1 This is yet another case where a fraud is committed, the prime suspect flees, and the victims are left to dispute over who is to bear the loss.
2 The prime suspect in this case is the first defendant, Sivakolunthu Thirunavukarasu, an advocate and solicitor who practised as a consultant in the firm of M/s M Dass & Co. She has absconded after this matter came to light.
3 The second, third and fourth defendants are siblings. The three of them and a fourth sibling, Sim Thiam Oh (“STO”) were involved in litigation which was eventually settled between them.
4 The terms of the settlement are only relevant to the present action where they affect the property known as No 23 Senang Crescent (“the property”). Under the terms of settlement, STO was to transfer his 25% share in the property to the second, third and fourth defendants. This transaction will be referred to as Transaction 1. Transaction 1 took place simultaneously on 17 March 2004 with two other transactions, Transaction 2 and Transaction 3. All these transactions related to the property.
5 In Transaction 2, the second, third and fourth defendants transferred their interests in the property to the first and second defendants to be held by them as tenants-in-common, with the first defendant holding a 75% share and the second defendant holding a 25% share.
6 In Transaction 3, the first and second defendants mortgaged their respective interests in the property to the plaintiff, Malayan Banking Berhad, to secure a loan of $700,000 (“the loan”) from the plaintiff to the first defendant alone.
7 As the property came under the Land Titles Act (Cap 157, 2004 Rev Ed) (“LTA”), the transfers in Transaction 1 and Transaction 2 and the mortgage in Transaction 3 were registered in the Registry of Land Titles.
The solicitors involved
8 In Transaction 1, M/s Lee Bon Leong & Co acted for STO as vendor and Mr M Dass (“Mr Dass”) of M/s M Dass & Co, the husband of the first defendant (they are now estranged), appeared on the record to have acted for the second, third and fourth defendants as purchasers.
9 On the record, Mr Dass also acted for the second, third and fourth defendants as the transferors and the second defendant as transferee, and Mr Chua Soo Kok (“Mr Chua”) of M/s S K Chua & Co acted as the solicitor for the first defendant as transferee in Transaction 2.
10 In Transaction 3, Mr Norman Ho (“Mr Ho”) of M/s Rodyk & Davidson, acted for the plaintiff, and on the record, Mr Chua acted for the first defendant, and Mr Dass acted for the second defendant. In the earlier stages leading up to the three transactions, the first defendant was represented by M/s M Dass & Co. However, M/s S K Chua & Co appeared on the record to act for her by the time of the completion of the transactions, probably to avoid the manifest conflict of interest of M/s M Dass & Co acting for the vendors when a member of the firm was the purchaser.
11 I have used the term “on the record” in the foregoing paragraphs because Mr Dass and Mr Chua did not actually act in the transactions, and the evidence points to that being part of the fraud perpetrated by the first defendant.
The fraud perpetrated
12 There was no sale of any interest in the property to the first defendant, and the second defendant did not mortgage his interest in the property to secure any loan to the first defendant. The second, third and fourth defendants accepted that Mr Dass and Mr Chua did not perpetrate or participate in the fraud and they were not involved in these proceedings as parties or witnesses. [note: 1] The evidence suggested that the first defendant was the person responsible for the fraud.
13 The second, third and fourth defendants never had the intention to enter into Transaction 2 and Transaction 3, and their signatures on the documents recording those transactions were forged, apparently by or with the knowledge of the first defendant.
The plaintiff’s claim
14 The plaintiff filed the present action after the fraud was uncovered and the first defendant had absconded. At that stage, the plaintiff knew that the second, third and fourth defendants denied the validity of Transaction 2 and Transaction 3.
15 The plaintiff was not a party to Transaction 1 where STO sold his share in the property to the second, third and fourth defendants. Its interest was as the mortgagee in Transaction 3. In this action it sought:
(a) a declaration that the mortgage is valid and the plaintiff’s title under the mortgage is indefeasible;
(b) a declaration that the plaintiff is entitled to enter into possession of the property, to receive rents and profits thereof and to exercise their mortgagee’s power of sale over the property; and
(c) judgment against the first defendant for $752,637.60 and interest in respect of the loan.
The counter-claim
16 The first defendant whose present whereabouts are unknown did not defend the claim after the cause papers were served on her by substituted service. The second, third and fourth defendants resisted the plaintiff’s claim and counter-claimed for:
(a) a declaration that the transfer in Transaction 2 was invalid as it had been obtained by fraud and/or forgery and that the true owners of the property are the second, third and fourth defendants; and
(b) a declaration that Transaction 3 was invalid as it had been obtained by fraud and/or omission and/or wilful blindness and/or voluntary ignorance; and for consequential orders thereto.
17 As the documents in Transaction 2 and Transaction 3 were registered in the Registry of Land Titles, the issue before me was whether the registered instruments should be valid and effective despite the forgery of the signatures of the second, third and fourth defendants. (These three defendants shall be referred to henceforth collectively as “the defendants”).
18 The defendants contended that the plaintiff’s registered title is not indefeasible because “the conduct of the Plaintiff or their agent (i.e. Mr Ho) in this matter was so willfully blind or voluntarily ignorant that it amounted conduct (sic) akin to fraud”, and they set out three “major factors” which they relied on:
(a) The Plaintiff’s knowledge and notice of the undue influence between [the first defendant] and [the second defendant] that renders Transaction 2 and 3 (sic) voidable;
(b) The Plaintiff’s knowledge and notice that the terms set by Mr Ho for Completion were not met;
(c) The Plaintiff’s knowledge and notice that the Completion Accounts did not tally. [note: 2]
19 The defendants identified the legal bases on which the mortgage should be declared invalid, i.e.:
(a) Under Section 46(2)(a) of the Land Titles Act (Cap 157) (“LTA”);
(b) Under Section 46(2)(b) of the LTA; and/or
(c) That at least the 2nd Defendant has an enforceable personal equity against the Plaintiff which would defeat its title under the Mortgage. [note: 3]
and they also relied on s 160(1)(b) read with s 46(1)(v) of the LTA for the right to rectify the land register. [note: 4]
20 It is useful to set out relevant provisions of the LTA. The most important provision is s 46(1), which confers indefeasibility on a registered title:
46.–(1) Notwithstanding —
(a) the existence in any other person of any estate or interest, whether derived by grant from the State or otherwise, which but for this Act might be held to be paramount or to have priority;
(b) any failure to observe the procedural requirements of this Act; and
(c) any lack of good faith on the part of the person through whom he claims,
any person who becomes the proprietor of registered land, whether or not he dealt with a proprietor, shall hold that land free from all encumbrances, liens, estates and interests except such as may be registered or notified in the land-register, …
21 Section 46(2)(a) and (b) on which the defendants relied read:
46. –...
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