Ng Wei Teck Michael and Another v Oversea-Chinese Banking Corp Ltd

• Jurisdiction: Singapore
• Judge: Goh Joon Seng J
• Judgment Date: 21 June 1997
• Neutral Citation: [1997] SGHC 170
• Date: 21 June 1997
• Subject Matter: Whether unsecured creditor had locus standi to intervene under s 131 of the Companies Act (Cap 50, 1994 Ed),Unsecured creditor,Mortgage of real property,Whether registrable charge under s 131(3)(e) of Companies Act (Cap 50, 1994 Ed),Equitable mortgage,Whether unregistered charge enforceable against mortgagor before winding up order was made,s 131 Companies Act (Cap 50, 1994 Ed),Parties,Whether unregistered charge void against liquidator,Civil Procedure,Credit and Security,Deposit of title deeds with mortgagee as security,Locus standi
• Docket Number: Originating Summons No 17 of 1997
• Published date: 19 September 2003
• Defendant Counsel: K Shanmugam and Maria Ho (Allen & Gledhill)
• Court: High Court (Singapore)
• Plaintiff Counsel: Leslie Chew and Lionel Tay (Khattar & Wong)

Judgment:

1.GOH JOON SENG J

The facts

The defendant, Oversea-Chinese Banking Corporation Ltd (OCBC) granted Thye Nam Loong (S) Pte Ltd (the company) banking facilities. As of 2 August 1993, the sums of S$16,682.69 and US$4,057,580.80 were owing to OCBC under its overdraft and trust receipt facility respectively to the company.

2.By letter of 2 August 1993, OCBC terminated the said facilities and demanded payment of the amounts owing plus interest within 14 days therefrom. The demand was not complied with.

3.On 17 August 1993, in consideration of the indulgence by way of time to pay the sum owing on the trust receipt facility, the company agreed to deposit the title deeds in respect of its property at 16 Carpenter Street, Singapore (the said property) by way of security. Pursuant thereto, the company deposited the title deeds with OCBC on 11 November 1993 accompanied by a memorandum confirming same, thereby creating an equitable mortgage of the said property in favour of OCBC (the equitable mortgage).

4.On 25 March 1994, OCBC lodged a caveat in the Registry of Titles and Deeds under the Land Titles Act claiming interest as `equitable mortgagees`.

5.In the meantime on 12 March 1994 the second plaintiff (BBL), another banker of the company, obtained judgment against the company for the amount owing to it by the company.

6.On 25 April 1994, OCBC obtained an order of court (the enforcement order) that the equitable mortgage be enforced by way of sale and that the company do deliver up vacant possession of the said property to OCBC. A copy of the enforcement order was served on the company on 6 May 1994.

7.As the judgment obtained by BBL against the company on 12 March 1994 remained unsatisfied, BBL on 6 May 1994 presented Winding Up Petition No 105 of 1994 against the company.

8.On 12 May 1994, the first plaintiffs were appointed receivers and managers over the assets of the company. In the course of the receivership, the first plaintiffs came to know of the equitable mortgage. Upon discovering that the equitable mortgage had not been registered as required under s 131(1) of the Companies Act (Cap 50, 1994 Ed) (the Act), Khattar Wong & Partners on 1 June 1994 on behalf of BBL and the first plaintiffs as receivers and managers wrote to Allen & Gledhill, solicitors for OCBC stating:

We note that you act for OCBC who claim to be equitable mortgagees of the above property owned by the Company. We now understand that your clients have purported to exercise their rights as equitable mortgagees to sell the property and the auction sale of the property is scheduled to take place today at 2.30pm.

On behalf of our clients, we hereby put your clients on notice that both our clients take the position that the equitable mortgage upon which your clients purport to exercise their rights to sell the property is void for want of registration against creditors of the Company pursuant to s 131 of the Company`s [sic] Act.

9.Notwithstanding the position taken by BBL and the first plaintiffs as receivers and managers, OCBC proceeded with the sale and transfer of the said property on 4 October 1994 to one Ng Gim Bee for $1,975,000. The transfer was registered on 13 April 1995.

10.On 5 May 1995, a winding up order was made against the company and the first plaintiffs were appointed liquidators of the company.

11.On 7 January 1997, the first plaintiffs as liquidators and BBL as creditor of the company commenced these proceedings against OCBC for inter alia a declaration that the equitable mortgage creating a charge over the said property was void by virtue of s 131(1) of the Act for want of registration and for an order that OCBC pay over to the first plaintiffs the proceeds of sale of the said property.

12. The law

Section 131(1) of the Act reads:

Subject to this Division, where a charge to which this section applies is created by a company there shall be lodged with the Registrar for registration, within 30 days after the creation of the charge, a statement of the prescribed particulars and an affidavit verifying the execution of the charge and also verifying the correctness of the statement, and if this section is not complied with in relation to the charge the charge shall, so far as any security on the company`s property or undertaking is thereby conferred, be void against the liquidator and any creditor of the company.

13.Thus for s 131(1) to apply, there must be a charge conferring security interest over a company`s assets, such a charge has not been registered and there is a liquidator against whom the unregistered charge shall be void. By sub-s (3)(e) the provisions of s 131(1) are made applicable to `a charge on land wherever situate or any interest therein`.

14.An equitable mortgage on land created by deposit of the title deeds is a charge within s 131(3)(e). See Re Molton Finance Ltd [1967] 3 All ER 843. There Lord Denning MR in giving the judgment of the Court of Appeal on the English Companies Act 1948 s 95(2)(d) stated at p 844:

As long ago as November 1963, a company called Molton Finance Ltd, lent to a Mr Winfield a sum of 8,000; and Mr Winfield charged certain property, a boating lake at St. Osyth, with the repayment of that sum. In December, 1963, Molton Finance Ltd., lent to a Mr Hennessy 9,000; and Mr Hennessy charged two properties, one in Willesden and the other in Kensington, with the repayment of that sum. A year or two later Molton Finance Ltd itself wanted money. In 1965 it borrowed 15,000 from the stockbrokers. In order to secure repayment Molton Finance Ltd gave sub-charges; it deposited with

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