Official Assignee of the Property of Lim Chiak Kim (a bankrupt) v United Overseas Bank Ltd

JurisdictionSingapore
CourtCourt of Three Judges (Singapore)
JudgeSinnathuray J
Judgment Date25 August 1988
Neutral Citation[1988] SGCA 6
Citation[1988] SGCA 6
Subject Matters 49 Bankruptcy Act (Cap 20),ss 63 & 68 Land Titles Act (Cap 157),s 18(2) Supreme Court of Judicature Act (Cap 322),Whether execution completed before creditor receives notice of act of bankruptcy of debtor,Whether creditor entitled to retain benefit of execution as against Official Assignee,Whether charging order under O 50 r 1 Rules of the Supreme Court constitutes a charge on property or creates security interest in immovable property,Insolvency Law,Charging order made under O 50 r 1 of Rules of the Supreme Court 1970,Credit and Security,Effect of bankruptcy order on execution of charging orders,Bankruptcy effects,O 50 r 1 Rules of the Supreme Court 1970,Whether expression 'charge' in s 68 (1) Land Titles Act (Cap 157) includes charging order absolute made under O 50 r 1,Charges,Bankruptcy
Published date19 September 2003
Plaintiff CounselEngeline Teh (Shook Lin & Bok)
Defendant CounselDeborah Barker (Khattar Wang & Partners)
Date25 August 1988
Docket NumberCivil Appeal No 16 of 1986

Cur Adv Vult

The facts in this appeal are not in dispute and, so far as relevant, are these. On 24 October 1984, United Overseas Bank Ltd (the bank) obtained a judgment in the High Court in Suit No 6288 of 1984 against one Lim Chiak Kim (Lim) for the sum of $24,759.93 with interest and costs (the judgment sum). Soon thereafter, on 3 November 1984, on an application made ex parte by the bank, a charging order nisi was made imposing a charge on the land and premises belonging to Lim, namely, lot 1776 of mukim X with the house thereon known as 117, Jalan Dermawan (the property). At that time, the property had already been brought under the provisions of the Land Titles Act (Cap 157) and was comprised (and is comprised) in certificate of title registered in vol 185 folio 22 which was issued on 15 February 1977 and had been mortgaged by Lim in favour of The Bank of Canton Ltd (the mortgagees). To protect the interest of the bank, a caveat claiming an interest in the property by virtue of the charging order nisi was lodged with the Registry of Titles on behalf of the bank. Before the charging order nisi was made absolute, the bank applied for and obtained an order on 24 October 1984 appointing receivers to enforce the order and subsequently on 30 November 1984 the charging order was made absolute. Again, a caveat claiming an interest in the property by virtue of the charging order absolute was lodged with the Registry of Titles on behalf of the bank. Thereafter, neither the bank nor the receivers appeared to have taken any step towards enforcing the order absolute or otherwise.

On 26 February 1985, the mortgagees exercised the power of sale and sold the property to a purchaser under a sale and purchase agreement. At or about that time, another creditor, namely, Heller Factoring (Singapore) Ltd (Heller Factoring), took action against Lim and on 15 March 1985 obtained a judgment in the High Court against Lim, and immediately thereafter took out a bankruptcy notice which was served on him on 29 March 1985. He failed to comply with the bankruptcy notice, and following that Heller Factoring presented a bankruptcy petition against Lim on 15 May 1985, and on the following day gave notice of Lim`s act of bankruptcy to the bank.

On 27 May 1985, the mortgagees completed the sale of the property and received the proceeds thereof, part of which was applied towards payment of the amount due to them and the balance was held by them or their solicitors. Subsequently, on 26 July 1985, receiving and adjudication orders were made against Lim in the bankruptcy proceedings initiated by Heller Factoring and the respondent (the Official Assignee) was thereupon constituted the receiver of Lim`s estate. The balance of the proceeds of sale then in the hands of the mortgagees or their solicitors was paid to the Official Assignee. In consequence of such payment, the bank claimed from the Official Assignee the judgment sum, which was resisted by the latter on the ground that the execution of the judgment by the bank had not been completed.

On 13 January 1986, the bank applied by notice of motion to the High Court for an order directing the Official Assignee to pay to the bank the judgment sum and costs. The application was heard by Wahab Ghows J on 25 March 1986 and he allowed the application and made the order accordingly. In his grounds of decision, the learned judge said:

I cannot agree with Miss Teh`s contention that para (a) of sub-s (2) of s 49 of the Bankruptcy Act should be construed as if it reads:

`For the purposes of this Act an execution against goods or land is completed by seizure and sale, or in the case of the debtor`s equitable interest in land by the appointment of a receiver.`

In my view this is not a true construction of that paragraph. In the present case the applicants (the bank), having obtained the order absolute imposing a charge on the property at no 117, Jalan Dermawan, could have enforced it by seizure and sale or by appointment of a receiver. As the said property was already mortgaged to The Bank of Canton Ltd, the applicants applied for and obtained the appointment of receivers by way of execution.



In my opinion the appointment of such receivers put the applicants in the rank of secured creditors in respect of the property at no 117, Jalan Dermawan, subject to prior encumbrances, and they are entitled to retain the benefit of the execution against the Official Assignee.

In any event, even if Miss Teh`s interpretation of para (a) of sub-s (2) of 49 of the Bankruptcy Act were a correct statement of the law, the applicants` interest would prevail over the Official Assignee. The charging orders obtained by the applicants on the land at no 117, Dermawan Road were in fact an execution on the debtor`s equity of redemption as the said land was at that time under a legal mortgage to the Bank of Canton Ltd. By the appointment of receivers the execution against the debtor`s equitable interest in the said land was completed before the date of the receiving order.

The Official Assignee now appeals against the decision of the learned judge. Lengthy arguments have been addressed to us by counsel for the Official Assignee and the bank respectively on various points; but, in our opinion, the appeal turns on the answers to two main issues which are as follows:

(i) whether the charging order absolute obtained by the bank constituted a charge on the property, and

(ii) if the answer is in the affirmative, whether the bank was entitled to payment of the judgment sum out of the balance of proceeds of sale of the property.



On the first issue, it is necessary to examine the statutory basis on which a charging order is made. The provisions empowering the High Court to make a charging order affecting land are found in paras (c), (d) and (i) of s 18(2) of the Supreme Court of Judicature Act (Cap 322), which at the material time were respectively paras 3, 4 and 9 of the First Schedule to the Supreme Court of Judicature Act (Cap 15, 1970 Ed). Section 18(2)(c), (d) and (i) are as follows:

18(2) Without prejudice to the generality of subsection (1) the High Court shall have and shall exercise the following powers:

(c) power to direct a sale instead of partition in any action for partition of land; and in any cause or matter relating to land, where it appears necessary or expedient, to order the land or any part of it to be sold, and to give all necessary and consequential directions;

(d) power to order land to be charged or mortgaged, as the case may be, in any case in which there is it jurisdiction to order a sale;

(i) power to enforce a judgment of the court in any manner which may be prescribed by any written law or by Rules of Court made under this Act.



This Act was enacted in 1969 and came into force in January 1970. In the same year the Rules of the Supreme Court 1970 were made by the Rules Committee repealing the Rules of the Supreme Court 1934 and by O 50 introduced for the first time the device of a charging order, no doubt following the Rules of the Supreme Court in England at the time. Order 50 r 1 provides as follows:

1(1) The power to make an order under paragraph 4 of the First Schedule to the Act imposing a charge on immovable property or interest in immovable property of a judgment debtor shall be exercisable by the court in Form 102.

(2) Any such order shall in the first instance be an order to show cause, in Form 103 specifying the time and place for further consideration of the matter and imposing the charge until that time in any event.

(3) An application for an order under this Rule may be made ex parte by summons.

(4) The application must be supported by an affidavit

(a) identifying the judgment or order to be enforced, and stating the name of the judgment debtor on whose immovable property or interest is sought to impose a charge and the amount remaining unpaid under the judgment or order at the time of the application;

(b) specifying the immovable property on which, or an interest in which, it is sought to impose a charge; and

(c) stating that to the best of the information or belief of the deponent the immovable property or interest in question is the judgment debtor`s and stating the sources of the deponent`s information or the grounds for his belief.

(5) Unless the court otherwise directs, a copy of the order must, at least 7 days before the time appointed for the further consideration of the matter, be served on the judgment debtor and if the judgment debtor does not attend on such consideration proof of service must be given.

(6) On the further consideration of the matter the court shall, unless it appears (whether on the representation of the judgment debtor or otherwise) that there is...

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