Sembawang Capital Pte Ltd v Ng Hock Kon

• Jurisdiction: Singapore
• Judgment Date: 23 October 2008
• Date: 23 October 2008
• Docket Number: Originating Summons No 1480 of 2007
• Court: High Court (Singapore)

Sembawang Capital Pte Ltd

Plaintiff

and

Ng Hock Kon

Defendant

[2008] SGHC 185

Kan Ting Chiu J

Originating Summons No 1480 of 2007

High Court

Contract–Contractual terms–Deed of settlement containing clause requiring mortgagee to give mortgagor two weeks' notice to rectify any default by mortgagor before terminating deed–Whether notice was communicated to mortgagor by letter–Whether mortgagee had duty to explain notice to mortgagor's agent–Equity–Relief–Against forfeiture–When courts would exercise jurisdiction to grant relief–Mortgagor defaulting on three instalment payments under deed of settlement–Whether unconscionable and unjust for mortgagee to require mortgagor to deliver vacant possession of mortgaged property and to sell it

The plaintiff and the defendant entered into a deed of settlement (“the Deed”) under which the defendant acknowledged his indebtedness to the plaintiff for the sum of $4,371,961.19 and mortgaged a house at Jalan Seaview (“the mortgaged property”) to the plaintiff as security for his liabilities. The Deed included a clause that provided for termination of the agreement if the defendant failed to pay any instalment on the due date. The plaintiff was required to give the defendant two weeks' notice in writing to rectify any default on the defendant's part before terminating the Deed.

The defendant admitted that as of 8 November 2006, he was in default under the terms of the Deed because he had not paid the instalments for September, October and November 2006. The plaintiff's Group Corporate Finance Manager (“Loh”) telephoned the defendant in October 2006 to speak to him about the arrears in payment under the Deed but he was ill and not in the office. Loh spoke to the defendant's wife (“Yu”) instead. Loh and Yu met on 9 November 2006 to discuss the arrears. The plaintiff's case was that at this meeting, a letter signed by one of its directors, informing the defendant of his default in payment and that the Deed would be terminated within 14 days from the date of the letter if the default was not rectified, was handed to Yu who signed on a copy to acknowledge receipt. Yu asserted that although she signed an acknowledgement, no letter was handed to her.

The plaintiff applied to court for orders that, inter alia, the defendant deliver vacant possession of the mortgaged property and for liberty to sell the mortgaged property. The defendant argued that the Deed was not validly terminated and even if it had been validly terminated, there should be relief against forfeiture.

Held, allowing the plaintiff's application:

(1) On a balance of probabilities, Loh had delivered a copy of the letter to Yu on 9 November 2006. There was no reason for Loh to deceive Yu into signing the acknowledgment of receipt. The plaintiff had sent another copy of the letter, addressed to the defendant, to the office of the auditors of a company for whom the defendant had stood as guarantor for facilities granted by the plaintiff. While the auditors did not forward the letter to the defendant, the sending of the letter showed that the plaintiff took steps to deliver the letter to the defendant: at [28] and [29].

(2) Since Yu attended the meeting with Loh as the defendant's agent and the letter was addressed to the defendant, the receipt by Yu of the letter constituted delivery of the notice in the letter to the defendant. The plaintiff was not under a duty to explain the notice: at [37] to [39].

(3) The scope of equitable relief against forfeiture was not closed. Since it was available against the forfeiture of deposit and instalment payments made towards the purchase of land, as well as the contractual right to buy land, it must be available where the interests involved were more (or at any rate, not less) substantial, viz, the right to continued possession of the mortgaged property and the continued legal ownership of the property: at [43].

(4) For all forms of relief against forfeiture, it was a common and essential requirement for the circumstances of the case to “reveal elements of unconscionability and injustice” (Pacific Rim Investments Pte Ltd v Lam Seng Tiong [1995] 2 SLR (R) 643 at [60]). The courts would only apply the relief in exceptional circumstances because such relief entailed departing from contractual rights and obligations: at [44].

(5) In the present case, the terms of the Deed were favourable to the defendant because he was given time to repay his debt in monthly instalments while retaining possession of the mortgaged property rent free. The plaintiff had shown forbearance by not enforcing its right to terminate the Deed until after the defendant had defaulted on three consecutive payments. At the 9 November 2006 meeting between Loh and Yu, the latter did not make any payment or acceptable proposal for a settlement. The fact that the defendant was in poor health when he defaulted, and that he paid the arrears and would continue with the monthly payments, did not render the plaintiff's exercise of its rights unconscionable or unjust: at [45] to [47].

Ho Miaw Ling v Singapore Island Country Club [1997] 1 SLR (R) 640; [1997] 3 SLR 892 (folld)

Holwell Securities Ltd v Hughes [1974] 1 WLR 155 (refd)

Pacific Rim Investments Pte Ltd v Lam Seng Tiong [1995] 2 SLR (R) 643; [1995] 3 SLR 1 (folld)

Shiloh Spinners Ltd v Harding [1973] AC 691 (refd)

Nair Suresh Sukumaran and Jonathan Tan (Allen & Gledhill LLP) for the plaintiff

Choo Han Woon Ronald, Loke Shiu Meng and Arigen Liang (Rajah & Tann LLP) for the defendant.

Judgment reserved.

Kan Ting Chiu J

1 This is an action by a mortgagee to obtain possession of a property from a mortgagor in default.

2 The plaintiff, Sembawang Capital Pte Ltd, is the mortgagee. The mortgagor is the defendant, Ng Hock Kon, and the mortgaged property is a house at 73 Jalan Seaview, Singapore.

3 The defendant was indebted to the plaintiff as a borrower and also as a guarantor for facilities granted by the plaintiff to several parties, including a company known as HSC International Investment Pte Ltd (“HSC”). The defendant had acknowledged his indebtedness in the aggregate of $4,371,961.19 in a Deed of Settlement (“the Deed”) dated 16 June 2000, and mortgaged the mortgaged property to the plaintiff as security for his liabilities.

4 A reference to the provisions of the Deed directly relevant and applicable to the disputes in these proceedings is useful at this...