One Investment and Consultancy Ltd v Cham Poh Meng

• Jurisdiction: Singapore
• Judge: Kannan Ramesh JC
• Judgment Date: 28 September 2016
• Court: High Court (Singapore)
• Docket Number: Suit No 832 of 2015 (Registrar's Appeal No 130 of 2016)
• Date: 28 September 2016

One Investment and Consultancy Ltd and another

and

Cham Poh Meng (DBS Bank Ltd, garnishee)

[2016] SGHC 208

Kannan Ramesh JC

Suit No 832 of 2015 (Registrar's Appeal No 130 of 2016)

High Court

Banking — Garnishee orders — Assignment and attachment of money held by bank — Plaintiff obtaining summary judgment against defendant — Whether defendant's money in joint account with wife could attach to garnishee order

Facts

The second plaintiff obtained summary judgment against the Defendant and it was ordered that the Defendant pay the second plaintiff, inter alia, interest on the sum of $10,518,293 amounting to $1,472,561. Pursuant to this order, the second plaintiff took out a garnishee order against DBS Bank Ltd (‘the Garnishee’) for the Garnishee to show cause. The plaintiffs' position was that the money in the Defendant's two accounts with the Garnishee – which included an account held jointly with his wife (‘the Joint Account’) – could be attached to satisfy the judgment debt. The Garnishee took a contrary position in relation to the Joint Account, arguing for the general proposition that joint accounts could not be subject to garnishee orders. The assistant registrar held in favour of the plaintiffs, ordering that the garnishee order be made final in a sum amounting to half of that in the Joint Account. The Garnishee appealed against the assistant's registrar's decision.

Held, allowing the appeal:

(1) The Commonwealth authorities and local academics were near unanimous in their endorsement of the position set out in Macdonald v The Tacquah Gold Mines CompanyELR(1884) 13 QBD 535 – that garnishee proceedings could not be brought where a garnishee was jointly indebted to the judgment debtor and a third party. In particular, the English position was of high persuasive value given that the garnishee process under the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (‘the ROC’) could be traced to the Civil Procedure Ordinance 1878 (SS Ord No 5 of 1878), which in turn was based on English rules of procedure: at [14].

(2) The decision of Chan Shwe Ching v Leong Lai Yee[2015] 5 SLR 295 (‘Chan Shwe Ching’), which allowed a defendant's interest in immovable property as joint tenant to be attached and taken in execution to satisfy the judgment debt of the wife under a writ of seizure and sale (‘WSS’), was not relevant. Unlike the garnishee process, there would be no risk that the judgment debtor could access the assets of the innocent joint tenant given that the joint tenancy would be severed by the time of the sale of the property, which would necessarily be carried out with the notice of all owners: at [23].

(3) To allow joint accounts to be attached under garnishee orders would cause prejudice to the banks. A bank had no visibility as to the respective contributions of the joint account holders, and the determination of the parties' respective contributions was a fairly involved process that would be typically resolved by a full factual investigation at trial, something that banks were not equipped to conduct and that enforcement processes were ill-suited for. It would also impose significant financial and administrative burdens on banks, and in turn warrant an increase in the standard costs awarded to banks for garnishee proceedings, which would ultimately be borne by the judgment creditors and debtors: at [16] and [19].

(4) To allow joint accounts to be attached under garnishee orders would also cause prejudice to the other joint account holders. Under the ROC, there was no requirement that a joint account holder be notified, nor was there any mechanism for the joint holder to seek determination of the judgment debtor's interest in the joint account. The prejudice was compounded by the difficulty in determining what proportion of the joint account to freeze: at [20] and [22].

[Observation: The approach in Smith v Schaffner[2007] NSJ No 294, which required the judgment creditor to establish on a balance of probabilities the interest of the judgment debtor in the joint account in the course of its application for a provisional garnishee order, addressed many of the policy objections to some extent. However, the determination of the court as to the proportion of the joint account to attach could be based on the partisan evidence of the judgment creditor – an apparent breach of natural justice. Regardless, no such evidence of the Defendant's interest in the Joint Account was brought by the plaintiffs in the hearing below: at [21].

The view expressed in Chan Shwe Ching that the sale of the property could have the effect of severing the joint tenancy where the registration of a WSS would not glossed over the point that the interests of the parties in a joint tenancy were not distinct and identifiable and were therefore not capable of being seized. It also failed to consider the suitability of the modalities of the WSS mechanism to an assessment of interests in a jointly owned asset: at [5].]

Case(s) referred to

Anumati v Punjab National Bank LNIND (2004) 8 SCC 498; 2004 SC 1877 (refd)

Belfast Telegraph Newspapers Ltd v BlundenDNI [1995] NI 351 (refd)

Catlin v Cyprus Finance Corp (London) LtdELR [1983] QB 759 (refd)

Chan Shwe Ching v Leong Lai Yee [2015] 5 SLR 295 (distd)

Chan Yat Chun v Sng Jin Chye [2016] SGHCR 4 (refd)

Chan Yuen Lan v See Fong Mun [2014] 3 SLR 1048 (refd)

D J Colburt & Sons Pty Ltd v Ansen; Commercial Banking Co of Sydney Ltd (Garnishee) [1996] 2 NSWR 289 (refd)

Deputy Commissioner of Taxation (NSW) v Westpac Savings Bank LtdUNK (1987) 72 ALR 634 (refd)

Gail Stevenson v The Chartered Bank [1977] HKLR 566 (refd)

Hirschhorn v EvansUNK [1938] 3 All ER 491 (folld)

Macdonald v The Tacquah Gold Mines CoELR (1884) 13 QBD 535 (folld)

Malayan Banking Bhd v Focal Finance Ltd [1998] 3 SLR(R) 1008; [1999] 3 SLR 229 (refd)

Smith v Schaffner [2007] NSJ No 294 (refd)

Legislation referred to

Civil Procedure Ordinance 1878 (SS Ord No 5 of 1878)

Rules of Court (Cap 322, R 5, 2014 Rev Ed) O 47 r 5(g), O 49, O 49 r 3(1)

Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed) s 80(3)

Civil Procedure Rules 1998 (SI 1998 No 3132) (UK)

Nova Scotia Civil Procedure Rules (Can) rr 79.09, 79.10

Nicholas Seng Soon Meng (WongPartnership LLP) for the plaintiffs;

Tham Hsu Hsien and Hoh Jian Yong (Allen & Gledhill LLP) for the garnishee;

Defendant absent.

28 September 2016

Kannan Ramesh JC:

1 The appeal involved the sum of $117.34 in a joint account held in the name of the defendant (‘the Defendant’) and his wife (‘the Joint Account’). While the amount at stake was small, the appeal involved a vital question of law which carried far-reaching implications for the banking industry as well as joint bank account holders – can a joint account in the name of the judgment debtor and others be subject to attachment under a garnishee order? The assistant registrar (‘the AR’) held, against the weight of Commonwealth authority, that it could. I allowed the appeal against the AR's decision, and these are the grounds of my decision.

Background facts

2 The facts were straightforward and uncontroversial, and I set them out only to the extent they were relevant to the appeal.

3 The second plaintiff (‘the 2nd Plaintiff’) was a director of the first plaintiff, a company incorporated in the British Virgin Islands. Suit No 832 of 2015 concerned a claim by the plaintiffs (‘the Plaintiffs’) against the Defendant for sums due under a written agreement between them. On 8 January 2016, the 2nd Plaintiff obtained summary judgment against the Defendant and it was ordered that the Defendant pay the 2nd Plaintiff, inter alia, interest on the sum of $10,518,293 amounting to $1,472,561. Pursuant to this order, the 2nd Plaintiff took out on 19 January 2016 a garnishee order against DBS Bank Ltd (‘the Garnishee’) for the Garnishee to show cause. The Plaintiffs' position was that the money in the Defendant's two accounts with the Garnishee – one in the name of Newbreed Capital Limited, which bore no relevance to this appeal, and the other being the Joint Account – could be attached to satisfy the judgment debt. The Garnishee took a contrary position in relation to the Joint Account, arguing for the general proposition that joint accounts cannot be subject to garnishee orders.

The hearing below

4 In the hearing before the AR, the Garnishee's counsel argued that the position under Singapore law was that as set out in Singapore Civil Procedure 2016 vol I (Foo Chee Hock JC gen ed) (Sweet & Maxwell, 2016) at paras 49/1/5 and 49/1/40 – where a garnishee is indebted to the judgment debtor and another person jointly, the debt cannot be attached. However, counsel for the Plaintiffs argued that even if that had been the case, it was no longer the law as it stood given the decisions of Chan Shwe Ching v Leong Lai Yee[2015] 5 SLR 295 (‘Chan Shwe Ching’) and Chan Yat Chun v Sng Jin Chye[2016] SGHCR 4 (‘Chan Yat Chun’). The Plaintiffs' argument found favour with the AR.

5 Chan Shwe Ching...