Tay Yok Swee v United Overseas Bank and Others

• Judge: Goh Joon Seng J
• Judgment Date: 15 April 1994
• Neutral Citation: [1994] SGCA 58
• Citation: [1994] SGCA 58
• Defendant Counsel: CB Yeow (CB Yeow & Co),Choi Yoke Hung and Tan Cheng Yew (Bih Li & Lee),Dennis Lim and Gan Kam Yuin (Shook Lin & Bok)
• Published date: 19 September 2003
• Plaintiff Counsel: Michael Khoo and Goh Kok Yeow (De Souza Tay & Pnrs)
• Date: 15 April 1994
• Docket Number: Civil Appeal No 37 of 1993
• Court: Court of Appeal (Singapore)
• Subject Matter: Unliquidated claim for breach of contract,Interpleader,1990 O 17 r 1(1) Rules of the Supreme Court,Trusts,Resulting trusts,Application,Presumption rebutted by express declarations of interest in property,Presumed resulting trusts,Civil Procedure,Whether there existed adverse claims upon the fund,s 18(2) Supreme Court of Judiciature Act (Cap 322) & s 4(a) First Schedule,Preconditions,Rebuttal of presumption

Cur Adv Vult

The facts

On 30 June 1981, the appellant entered into a joint venture agreement with the second and third respondents. In the agreement, the three second respondents were termed `party A`, the three third respondents were termed `party B` and the appellant was termed `party C`. The agreement provided for the purchase of the property known as lot 38-1 of TS25 situate at Dalvey Road/Stevens Road (`the property`) and construction thereon of nine units of walkup flats (`the project`). It provided that parties A, B and C would contribute equally to the purchase price of $2,376,100 as well as the cost of construction of the project, and the property was to be held by the parties as tenants-in-common with party A, party B and party C each holding an undivided one-third share. Upon completion of the project, each participant would receive one flat while the appellant would receive three. The agreement also stipulated that if the agreement terminated upon refusal of planning permission for the development of the project the parties, ie parties A, B and C, would then continue to hold the property in equal shares as tenants-in-common.

On the same date, 30 June 1981, a sale and purchase agreement was entered into between (i) one Tay Chong San and (ii) parties A, B and C, whereby the latter purchased the property for the consideration of $2,376,100. Subsequently, on completion, the property was conveyed to parties A, B and C as tenants-in-common in the following undivided shares:

Tay Yok Swee - 3 shares

Goh Seong Pek - 1 share

Goh Seh Kiat - 1 share

Goh Seh Leong - 1 share

Lee Han Tiong - 1 share

Lim Tian Chong - 1 share

Wee Chwee Beng - 1 share

By an indenture of mortgage dated 17 July 1982, the property was mortgaged to the first respondents (`the bank`) as security for a loan of $1.5m which would cover part of the costs of development of the project. The indenture of mortgage expressly stated that the property was owned by the joint venture parties as tenants-in-common with the appellant as proprietor of an undivided three-ninth share and the others as owners of an undivided one-ninth share each.

The property was subsequently brought under the Land Titles Act (Cap 276, 1970 Ed) on 30 January 1984 as lots 992, 993 and 994 of TS 25, and was registered in Vol 264, Folios 164, 165 and 166 of the land register, and also under the Land Titles (Strata) Act (Cap 277, 1970 Ed) on 30 January 1984 as lots 992/U1-U9, TS 25, and was registered in Vol 143, Folios 27-35 of the subsidiary land register. The land register and subsidiary land register state that the property is held by the joint venture parties each with a one-ninth share with the exception of the appellant, who is stated to be owner of a three-ninth share.

The parties failed to service the loan owing to the bank. In exercise of their powers of sale, the bank sold the property and the sale was completed on 11 December 1991. After payment of the costs and expenses of the sale and the moneys owing to the bank, there remained in the hands of the bank a surplus of the proceeds of sale in the sum of $2,170,821.43.

In the meanwhile, differences had arisen between the appellant and other parties to the joint venture. These parties took issue with the manner in which the appellant had handled the project accounts. Apparently, the appellant managed the project and oversaw the day-to-day running of it. Two sets of accounts were drawn up by the appellant for the period ending 30 April 1985. The second and third respondents did not find these satisfactory. Another set was drawn up for the period ending 31 December 1985. Again this was found insufficient. In late 1991, the other joint venture parties instructed KPMG Peat Marwick to conduct a review of project costs for the period ending 31 December 1985. Discrepancies were alleged to be found between the appellant`s accounts and the supporting vouchers and documents. Ultimately, on 6 February 1992, the second and third respondents, except Lim Tian Chong, commenced an action in Suit No 239 of 1992 against the appellant claiming an account of profits and damages for breach of the joint venture agreement on the part of the appellant in under-contributing to the account of the joint venture.

In April 1992, all the parties to the joint venture agreed to deposit the surplus of the proceeds of sale in an interest bearing fixed deposit account for six months pending their attempt to settle their differences amicably. The deposit was made on 29 April 1992 and matured on 29 October 1992. As at 29 October 1992, the surplus stood at $2,207,858.26. However, the parties were still unable to resolve their differences. Essentially, the second and third respondents disputed that the appellant`s share should be three-ninths owing to their claims against him in Suit No 239 of 1992 which is still pending. The appellant, on the other hand, refused to allow any payment out of the surplus unless he was also simultaneously given his three-ninth share. It was common ground, however, that the second and third respondents were entitled to two-thirds of the surplus.

In consequence, the bank took out Originating Summons No 1027 of 1992 seeking interpleader relief against the appellant and the second and third respondents in respect of the surplus of the proceeds of sale of the property. The application was heard before Justice Sinnathuray on 26 February 1993 and the learned judge ordered, inter alia, the following:

(i) that the appellant and second and third respondents appear and state the nature and particulars of their respective claims to the surplus of the proceeds of sale of the property;

(ii) that the bank pay $1,479,699.74 representing two-thirds of the surplus proceeds to the second and third respondents;

(iii) that the bank pay the sum of $739,834.88 being one-third of the surplus proceeds (`the remaining one-third surplus`) into court pending the outcome of the originating summons;

(iv) the appellant pay the costs of all the other parties to be taxed; and

(v) the originating summons be adjourned to a date to be fixed.

Against this order, this appeal has been brought.

Whether interpleader relief is appropriate

The main issue before us is whether interpleader relief is appropriate and available to the bank. The power of the court to grant interpleader relief is governed by s 18(2) read with s 4(a) of the First Schedule of the Supreme Court of Judicature Act (Cap 322) and O 17 r 1(1) of the Rules of the Supreme Court 1990. These set out three pre-conditions, namely: (i) the person seeking such relief is under a liability for any debt, money, goods or chattels, (ii) there is an expectation that he would be sued by at least two persons, and (iii) adverse claims for the debt, moneys, goods or chattels have been made by those persons.

The first condition has clearly been satisfied: the bank was under a liability for payment of the surplus of the proceeds of sale. However, counsel for the appellant submitted that the second and third conditions have not been met. He contended that the bank had no real expectation of being sued by two or more parties. In our view, in the light of the correspondence passing between the parties, the second condition also has been satisfied. It is clear that the second and third respondents objected to the appellant being paid his one-third share of the surplus of the proceeds of sale and the appellant is pressing for payment of his entitlement. On the facts, the bank had a real expectation of being sued.

We now turn to the third condition: whether the second and third respondents have any adverse claims to the remaining one-third surplus which the appellant claims should be paid to him. The crux of the appellant`s contention is that the adverse claims must relate specifically to the fund held by the bank; in other words, the second and third respondents` claim must be a proprietary claim. Counsel relied on the case of Ingham v Walker . There, the defendant sold a horse for the plaintiff at an auction...