Payna Chettiar v Low Meng Seng and Others

• Judge: Karthigesu JA
• Judgment Date: 06 March 1998
• Neutral Citation: [1998] SGCA 18
• Citation: [1998] SGCA 18
• Defendant Counsel: Foo Soon Yien and Benjamin Goh (Bernard, Rada,Barkar & Pauline Chen)
• Published date: 19 September 2003
• Plaintiff Counsel: Low Chai Chong and James Wong (Rodyk & Davidson)
• Date: 06 March 1998
• Docket Number: Civil Appeal No 132 of 1997
• Court: Court of Appeal (Singapore)
• Subject Matter: Whether the term 'order' in the context of s 75 of Conveyancing and Law of Property Act (Cap 61, 1994 Ed) includes 'judgment',Judgments and orders,Fraud,Whether respondents' interests can be impeached on ground of fraud of which the respondents have no notice,Whether judgment in default of defence can be invalidated on basis that proceedings have been improperly served on appellant,Enforcement,Equity,Whether judgment valid at time of purchase,Whether respondents bona fide purchasers for value without notice,Whether judgment can be set aside on ground of fraud,Respondents relying on judgment to purchase interests in property,s 75 Conveyancing and Law of Property Act (Cap 61, 1994 Ed),Civil Procedure,Whether alleged fraud apparent on judgment -Whether alleged fraud is apparent on mere inspection of property or through reasonable inquiries,Judgment registered with Registry of Deeds

Judgment:

LP THEAN JA

Cur Adv Vult

(delivering the judgment of the court): The background

1.This appeal arises from an action by the appellant for a declaration that he is the owner of Lots 1825 and 1827 of Mukim 23 (the property) and that certain transactions of the property are null and void. The seven respondents are the third to the ninth defendants in the action; the first and second defendants in the action, who are not parties to the present appeal, are one Maimoon bte Ismail (Maimoon) and a company known as Chung Sin Realty Pte Ltd (Chung Sin) respectively. The action was disposed of by Chao Hick Tin J on an application brought by the respondents pursuant to O 14 r 12 of the Rules of Court 1996. The learned judge determined a question of law in favour of the respondents and dismissed the appellant`s action against Chung Sin and the respondents with costs (see [1997] 3 SLR 387). The appellant has now appealed against this decision.

2. The facts

In 1949, the appellant purchased from his father the property and by an indenture of conveyance dated 13 June 1949, the father conveyed the property to him. At that time there was only an attap house standing on the land known as No 38 Jalan Kechot which was occupied by Maimoon`s father. After the death of Maimoon`s father, Maimoon continued to remain in occupation of the property.

3.In 1987, Maimoon instituted an action against the appellant in Suit No 2448/87, in which she sought a declaration that all the rights and title of the appellant in the property had been extinguished by virtue of the Limitation Act (Cap 163). In support of her claim, Maimoon asserted that her father was the tenant of the property even before it belonged to the appellant. After her father`s death in 1960, she continued to occupy the property and pay the rent to the appellant. However, in 1969, a different person came to collect the rent and she refused to pay it, unless the person showed his authority and no such authority had ever been shown. Since then, she had not paid any rent for occupying the property. Furthermore, since 1970, she had been paying the property tax levied on the property.

4.On 22 January 1988, judgment in default of defence (the judgment) was entered against the appellant in which it was declared that Maimoon was entitled to the legal, beneficial and possessory interest of the property and that the appellant`s rights and title therein had been extinguished by virtue of the provision of the Limitation Act (Cap 163). It was ordered that the Registrar of Deeds and/or the Registrar of Titles do register the declarations and order made therein. The judgment was duly registered with the Registry of Deeds.

5.In August 1988, Maimoon sold the property to Chung Sin and the sale was completed on 2 March 1989. The property then comprising Lots 1825 and 1827 was subsequently amalgamated with the adjoining Lot 1829 and the three lots were allotted a new resurvey number, Lot 4289. This combined lot was then subdivided into four separate lots: Lots 4290-4293, on which Chung Sin built four separate dwelling houses known as 36, 38, 38A and 38B Jalan Kechot respectively. Three of these houses were sold as follows: No 36 to the first, second and third respondents as tenants in common in equal shares; No 38 to the fourth and fifth respondents as joint tenants; and No 38A to the sixth and seventh respondents as joint tenants. The remaining house, No 38B Jalan Kechot, was retained by Chung Sin and is still held by them. A qualified title in respect of each lot was issued under the Land Titles Act (Cap 157). Thus by 1991, Chung Sin and the respondents became the registered proprietors of the four lots respectively.

6.The appellant took no action with reference to the property until 4 August 1993, when he entered a caveat against all the four lots. He then waited for about 10 months before he commenced the present proceedings, and that was only on 30 June 1994. In the statement of claim, the appellant said that he is an Indian citizen and a permanent resident of India. The property was managed by his agents. His agents had collected rent from Maimoon until 5 August 1982 and had paid the property tax levied on the property until 2 October 1992. The appellant averred that Maimoon had made false and untrue statements in Suit No 2448/87 in order to obtain the judgment. Furthermore, in those proceedings the service of process on him by way of substituted service in Singapore was bad, as he was out of the jurisdiction at the relevant time. Thus, the judgment was irregular and was wrongly entered. In the circumstances, Maimoon did not obtain any legal, beneficial or possessory interest in the property and was incapable of passing any legal, beneficial or possessory interest to anyone. However, it was not alleged by the appellant that Chung Sin and the respondents knew or ought to have known of the false or untrue statements made by Maimoon, and there was no allegation that Chung Sin was not a bona fide purchaser of the property from Maimoon or that the respondents were not bona fide purchasers of their respective premises from Chung Sin.

7.On 22 September 1993, the appellant applied in Suit No 2448/87 to set aside the judgment obtained by Maimoon, but no notice of such application was served on Chung Sin and the respondents, all of whom were not represented at the hearing of the application. As of that date, the appellant was fully aware that Chung Sin and the respondents were registered proprietors of their respective plots of land which substantially constitute the property. On 24 October 1994, the court set aside the judgment.

8.Subsequently, the respondents took out an application under O 14 r 12 for determination of a question of law by the court so as to dispose of finally the action without a trial. The ground of the application was that even accepting what the appellant averred in the statement of claim to be true and that Maimoon was not entitled to the property on the ground of adverse possession, the rights of the respondents as bona fide purchasers for value who relied upon a judgment cannot be affected by the wrongdoing of Maimoon and as against them, the judgment should not have been set aside. The respondents` titles to the property could not be impeached. Chung Sin associated itself with the respondents` application.

9. The decision below

In his judgment, reported in [1997] 3 SLR 387, Chao Hick Tin J began with the basic proposition that a judgment by default is no less a judgment and is good and enforceable unless and until it is set aside: Issac v Robertson [1984] 3 All ER 140 and Pembinaan KSY Sdn Bhd v Lian Seng Properties Sdn Bhd [1991] 1 MLJ 100 . He also stated that a judgment in rem is a judgment of a competent court in respect of a res within the jurisdiction of the court and the judgment determines the right to, or disposition of, such res in the control of the court: Carr v Francis Times & Co [1902] AC 176. Such a judgment in rem settles the right and title to the res against all the world.

10.In general, fraud will vitiate a judgment obtained. Nevertheless, the learned judge found that there is an exception in favour of a purchaser who has acquired title to property in good faith and for value upon the faith of a judgment in rem. In so holding, the learned judge relied on the cases of Louis Castrique v William Imrie & Anor [1869] LR 4 HL 414, Pilcher v Rawlins [1872] LR Ch App 259, Harley v Samson [1914] TLR 450, Re Eyton [1890] 45 Ch D 458 and Latec Investment Ltd v Hotel Terrigal Pty Ltd (in liquidation) [1965] 113 CLR 265. Such an exception in the opinion of the learned judge was also consistent with s 29 of the Limitation Act (Cap 163, 1996 Ed) which provides that while fraud would stop time from running, it would not apply to set aside any transaction affecting any property which has been purchased for valuable consideration by a person who was not a party to the fraud and did not at the time of the purchase know or have reasons to believe that any fraud had been committed. The learned judge also considered the case of Duchess of Kingston`s Case [1776] All ER Rep 623, and distinguished the case before him from the cases of Marpohah & Ors v Chiew Mah Boo & Ors [1962] 3 MC 305 and Ajar v Ahamad bin Jusoh & Anor [1928] SSLR 30 in which s 54 of the Conveyancing and Law of Property Act (Cap 61, 1994 Ed) (CLPA) was relied upon and applied.

11.The learned judge found that Chung Sin and the respondents were bona fide purchasers for value of the property without notice who had relied on the judgment. He said in [para ] 27 of his judgment:

Reverting to our instant case, even assuming that Maimoon was not wholly truthful in asserting her rights to the property and that the writ in Suit No 2448/87 should not have been served by substitute service and that the default judgment obtained as a result could be set aside, in the light of the authorities above, I have no doubt that equity would lean in favour of a bona fide purchaser without notice. On his own pleadings, Payna has stated that his agents had not collected rent from Maimoon from 5 August 1982 and the neglect of his agents must be attributable to him. For so many years he did nothing until 4 August 1993 when he entered the caveat. In the meantime development had taken place on the property with new dwellings being erected thereon. As between the defendants and Payna the equities are clear: the former are wholly innocent as they were entitled to rely upon a judgment in rem of a competent court, while the latter was clearly guilty of neglect which brought about this state of affairs.

12.In addition, the learned judge held that there was another reason why the appellant`s claim must fail, and that was because of s 75 of the CLPA, and in that connection he relied on the case of Hewson v Shelley [1914] 2 Ch 13. In his view, even if the judgment was an irregular judgment obtained without proper...