Salbiah bte Adnan v Micro Credit Pte Ltd

• Jurisdiction: Singapore
• Judgment Date: 26 November 2014
• Date: 26 November 2014
• Docket Number: Originating Summons No 238 of 2014
• Court: High Court (Singapore)

Salbiah bte Adnan

Plaintiff

and

Micro Credit Pte Ltd

Defendant

[2014] SGHC 249

Edmund Leow JC

Originating Summons No 238 of 2014

High Court

Land—Caveats—Husband obtaining loan from moneylender and authorising moneylender to lodge caveat on property jointly owned with wife if loan not repaid on time—Moneylender lodging caveat on property when loan not repaid—Wife divorcing husband and obtaining court order transferring husband's share in property to her—Wife applying to remove caveat—Whether moneylender acquired interest in sale proceeds of property to sustain caveat—Section 115 Land Titles Act (Cap 157, 2004 Rev Ed)

The Plaintiff and her ex-husband (‘Zam’) were joint tenants of their matrimonial home (‘the Property’). While they were still married, Zam took out two loans of $1,000 each from the Defendant. He repaid the first loan fully but failed to repay the second loan (‘the 2nd Loan’). The Defendant thereupon lodged a caveat (‘the Caveat’) on the Property on the basis that Zam had agreed to repay the 2nd Loan out of the proceeds of sale of the Property and had signed a document authorising and consenting to the lodgement of a caveat by the Defendant (‘the 2nd ACLC’). The 2nd ACLC was not signed by the Plaintiff.

Subsequently, the Plaintiff and Zam were divorced in the Syariah Court. The Syariah Court ordered, inter alia, that the Property be transferred to the Plaintiff, with no refunds to be made to the Defendant's Central Provident Fund account (‘the Syariah Court Order’). However, when the Plaintiff attempted to register the transfer, she was informed by the Housing Development Board that the Property could not be transferred until the Caveat was removed. She therefore filed the present application seeking the removal of the Caveat, arguing that (a) the Caveat was defective because it failed to identify the particulars of the estate or interest claimed by the Defendant, as required by s 115 (1) (c) of the Land Titles Act (Cap 157, 2004 Rev Ed) (‘the LTA’); (b) neither she nor the Plaintiff consented to the lodgement of the Caveat; (c) even if they did, the loan documents and the 2nd ACLC (collectively, the ‘Loan Documents’) did not create an ‘interest in land’ within the meaning of s 115 (1) of the LTA entitling the Defendant to lodge the Caveat; and (d) in any event, any agreement to use the Property or its sale proceeds as security or collateral for Zam's debt was void pursuant to s 51 (1) of the Housing and Development Act (Cap 129, 2004 Rev Ed) (‘the HDA’).

Held, allowing the application:

(1) The Loan Documents did not confer on the Defendant any legal, equitable or contractual interest in the sale proceeds. Paragraph 6 of the notes to the contract simply stated that a caveat would be lodged on the Property if payment was not prompt and removed upon completion of the loan payment. It did not say that the interest in the sale proceeds of the Property were assigned to the Defendant or to be held on trust for it, nor was there mention of any agreement to repay the 2nd Loan out of the sale proceeds. Although the 2nd ACLC authorised the Defendant to secure its interest in the sale proceeds of the Property by lodging a caveat, this presupposed that the Defendant had an interest in the sale proceeds in the first place. Since there was nothing else in the Loan Documents which conferred on the Defendant such an interest, there was nothing for a caveat to secure: at [47] .

(2) Even if the Loan Documents were effective in conferring on the Defendant a caveatable interest in the Property, the Defendant's interest in the sale proceeds had been extinguished by the Syariah Court Order. The Loan Documents could only have given the Defendant an interest in Zam's share of the sale proceeds, since the Plaintiff did not sign the Loan Documents. But under the Syariah Court Order, Zam was ordered to transfer his interest in the Property to the Plaintiff for no consideration. Thus, a sale of the Property by Zam was no longer possible, and even if the Plaintiff decided to sell it, Zam would have no entitlement to the sale proceeds: at [49] and [50] .

(3) There was no agreement between the Defendant and the registered proprietors of the Property that Zam's debt would be paid from the sale proceeds of the Property, nor did the Defendant acquire any equitable interest in the sale proceeds. It therefore followed that the Caveat's description was erroneous and it did not satisfy the formal requirements of s 115 (1) of the LTA: at [52] .

(4) Section 51 of the HDA was enacted precisely to address cases like the present where a homeowner used the sale proceeds of his HDB flat as security or collateral for a loan. However, it was inapplicable here because it only came into force after the agreement for the 2nd Loan was concluded: at [55] .

[Observation: As the 2nd ACLC was not signed by the Plaintiff, an issue arose as to whether the Plaintiff's consent was required for the 2nd ACLC. On one hand, it was trite that joint tenants had to act jointly to effectively bind the estate. On the other hand, it might be argued that a joint tenant's assignment of his legal or equitable interest in the sale proceeds of a property was an act operating upon his own share that severed the joint tenancy and converted it into a tenancy in common. This was a vexed issue that need not be decided in the present case: at [20] to [24] .

At least two cases have held that a right to be paid out of the sale proceeds of land was a caveatable interest, even where the owner was under no duty of sale. However, the purpose of s 115 (3) (a) of the LTA was to allow individuals who had a definite entitlement to the sale proceeds of land (but no interest in the land itself) to lodge caveats to protect their interest. An example would be the interest of a beneficiary under a trust for sale, which imposed a duty on the trustee to sell the land. It was questionable whether s 115 (3) (a) was intended to allow a person with a mere right to have his loan repaid out of the sale proceeds of land to lodge a caveat. In such a case, the caveator's interest appeared too far removed from the type of interest that s 115 (3) (a) of the LTA was originally meant to protect: at [33] to [35] .

Further, the proposition that a personal right to the repayment of a debt could create a caveatable interest within the meaning of s 115 (3) (a) sat uneasily with the original object and purpose of that section. Where a person was claiming an interest in the sale proceeds of land, his interest was purely monetary in nature and there was no reason why the requirement of a proprietary interest should not apply strictly in such a case. To hold that a person with a mere contractual right to be paid from the sale proceeds of a property could lodge a caveat on that property would effectively allow such agreements to function as a form of quasi-security, which was not a purpose of the caveat mechanism. This was another area of law raising difficult issues that might merit re-examination in the future: at [39] , [41] and [42] .]

Abdul Hamid Bin Mohamed Ismail v Shaik Raheem s/o Abdul Shaik Shaik Dawood [2005] SGDC 28 (refd)

ACS Computer Pte Ltd v Rubina Watch Co (Pte) Ltd [1997] 1 SLR (R) 1006; [1998] 1 SLR 72 (refd)

Alrich Development Pte Ltd v Rafiq Jumabhoy [1993] 1 SLR (R) 598; [1993] 2 SLR 446 (refd)

Bellissimo v JCL Investments Pty Ltd [2009] NSWSC 1260 (refd)

Dykstra v Dysktra (1991) 22 NSWLR 556 (refd)

Epple v Wilson [1972] VR 440 (refd)

Ho Seek Yueng Novel v J & V Development Pte Ltd [2006] 2 SLR (R) 742; [2006] 2 SLR 742 (refd)

Irani Finance Ltd v Singh [1971] Ch 59 (refd)

Kua Hui Li v Prosper Credit Pte Ltd [2014] 3 SLR 1007 (refd)

Ong Chay Tong & Sons (Pte) Ltd v Ong Hoo Eng [2009] 1 SLR (R) 305; [2009] 1 SLR 305 (refd)

Asiatic Enterprises (Pte) Ltd, The v United Overseas Bank Ltd [1999] 3 SLR (R) 976; [2000] 1 SLR 300 (folld)

Troncone v Aliperti (1994) 6 BPR 13,291 (refd)

Williams v Hensman (1861) 1 J & H 546; 70 ER 862 (refd)

Housing and Development Act (Cap 129, 2004 Rev Ed) ss 51, 51 (1)

Land Titles Act (Cap 157, 2004 Rev Ed) ss 115 (1) , 115 (3) (a) (consd) ;ss 4, 115, 115 (1) (c) , 115 (3) , 117

Land Titles Ordinance 1956 (No 21 of 1956) s 93 (1) (3)

Moneylenders Act (Cap 188, 2010 Rev Ed) ss 23, 23 (3) (b)

Residential Property Act (Cap 274, 2009 Rev Ed) ss 3 (3) , 3 (4)

Administration of Justice Act 1956 (c 46) (UK) s 35

Real Property Act 1900 (NSW) s 74 B (1)

Transfer of Land Act 1958 (Vic) s 89 (1)

Mohamed Hashim bin Abdul Rasheed (A Mohamed Hashim) for the plaintiff

SR Shanmugam (Shan & Co) for the defendant.

Judgment reserved.

Edmund Leow JC

Introduction

1 This case concerns a caveat (‘the Caveat’) lodged by the defendant (‘the Defendant’) moneylender on a property (‘the Property’) held by the plaintiff (‘the Plaintiff’) and her ex-husband (‘Zam’) as joint tenants. The Caveat was lodged to secure the Defendant's interest in the sale proceeds of the Property to repay a loan that Zam obtained from the Defendant. The Plaintiff claims that she did not consent to the lodgement of the Caveat on the Property and is applying for it to be removed. As will be seen, this case raises some interesting and difficult issues of land law, in particular, the law in relation to caveats.

Facts

2 The Plaintiff and Zam were married on 24 November 1995 and divorced on 6 December 2012.

3 The Defendant is a licensed moneylender under the Moneylenders Act (Cap 188, 2010 Rev Ed) (‘the MLA’).

4 The rest of the facts are disputed. I will therefore present both the Plaintiff's and the Defendant's accounts separately.

The Defendant's account

5 On 24 September 2009, Zam approached the Defendant to borrow $2,000 for the Hari Raya festive season. He filled up the loan application form and submitted copies of the supporting documents required, such as his identification card and recent payslips. The...