A TRAP FOR THE UNWARY: ENFORCING WRITS OF SEIZURE AND SALE AGAINST JOINT TENANCIES

• Author: TANG Hang Wu1 LLB (National University of Singapore), PhD, LLM (Cambridge); Advocate and Solicitor (Singapore), Solicitor (England and Wales); Professor of Law, Yong Pung How School of Law, Singapore Management University.
• Publication year: 2022
• Published date: 01 March 2022
• Date: 01 March 2022

I. Introduction

1 A judgment creditor is entitled to reap the fruits of his or her successful litigation by enforcing the judgment against the debtor's properties. For money judgments, a judgment creditor may enforce the judgment by applying for a garnishee order, writ of seizure and sale (“WSS”) or filing for the debtor's bankruptcy. If a debtor owns real estate, then the obvious mode of enforcement is to obtain a WSS which allows the Sheriff to seize the property in execution of the judgment. Once seized, the property will be sold at a later stage to satisfy the costs of execution and judgment debt. However, various legal and practical difficulties may

arise in relation to enforcing a WSS against the judgment debtor's real estate. First, the property may not be owned solely by the debtor but rather it is owned as a joint tenancy with another. In Singapore, there are conflicting authorities on whether the debtor's interest in the joint tenancy is exigible to a WSS. Second, the property may be subject to a prior registered mortgage. If there is a prior mortgage, then this poses two complications in relation to the enforcement of the judgment debt. As a matter of practicality, the mortgaged sum may be quite substantial and there may not be any equity left in the property after paying off the mortgagee and costs of sale. Hence, it may not be worthwhile for the judgment creditor to pursue a WSS in this situation. Third, even if there is sufficient equity in the property, the mortgagee may not consent to the sale of the property especially if the judgment debtor is a valued client and servicing the mortgage debt every month.2 In this situation, the judgment creditor is put in an extremely frustrating situation of seeking to effect a sale of the property without the mortgagee's consent. In this article, the author reviews and unpacks the legal controversy behind the enforcement of a WSS against a debtor who owns jointly tenanted property with another.

2 In light of these formidable difficulties, one might ask whether it is even worth applying for a WSS? Would a bankruptcy application against the debtor be a more effective mode of enforcement? Under the Insolvency, Restructuring and Dissolution Act 20183 (“IRDA”), a method a judgment creditor may enforce a judgment debt is by taking out a winding up application (if the judgment debtor is a company),4 or by making a creditor's bankruptcy application (if the judgment debtor is an individual).5 A bankruptcy application would overcome the difficulty with the issue of whether a debtor's interest under a joint tenancy is exigible to a WSS. It is settled law that when a joint tenant is made bankrupt, his or her property which includes property owned as a joint tenant vests in the Official Assignee.6 Hence, the joint tenancy would be severed when a joint tenant is adjudicated a bankrupt. However, there is a major drawback to enforcing a judgment debt via bankruptcy as compared to a WSS. In the bankruptcy process, should the property be insufficient to meet all debts, the judgment creditors and other unsecured creditors share the debtor's assets pari passu amongst themselves (assuming that the secured creditors

have already been fully paid and the debtor still has surplus property for the unsecured creditors).7 The danger for the judgment creditor is that in filing for bankruptcy, this may cause other unsecured creditors to surface and file a proof of debt with the Official Assignee. Due to the pari passu principle, the judgment debt may not be fully paid. In contrast, if a judgment creditor successfully enforces a judgment debt via a WSS and the property is sold, that judgment creditor is entitled to the surplus of the sale proceeds after paying off the costs of the sale and mortgage over the property.8 Thus, enforcing a judgment through the bankruptcy process may actually yield a lesser sum as compared to a WSS. It is for this reason that the WSS remains an important and effective mode of enforcing a judgment.

3 Unfortunately, the simple question of whether a creditor may enforce a judgment by way of a WSS against a judgment debtor who owns a jointly tenanted property with another has been fraught with uncertainty for more than 20 years. In fact, even the threshold issue of whether a WSS may attach to jointly tenanted property has been subject to controversy, with numerous conflicting cases at the High Court level.

4 Besides this controversy, the procedure in relation to executing a WSS is mystifying to say the least. The principal statute governing land registration, the Land Titles Act9 (“LTA”), and Rules of Court10 (“ROC”) are not harmoniously drafted and use different terms resulting in the law in this area to be bewildering. It is not an exaggeration to say that the current state of law and procedure is nothing short of a disgrace and may be likened to a treacherous maze for unwary judgment creditors and their advisors.

5 In terms of the law and procedure of executing a WSS, the following are issues to be resolved:

(a) What is the correct form to register under the LTA and ROC?

(b) How long does registration under the LTA last?

(c) How does a judgment debtor extend the registration?

(d) How does a debtor compel a sale if there is a pre-existing mortgagee who does not consent to the sale?

(e) Whether a sale pursuant to a WSS is merely a sale of the judgment debtor's aliquot share in the jointly tenanted property or the entire property?

(f) How are priorities in relation to the surplus sale proceeds determined?

6 A failure to comply with the proper procedure in connection with the registration of the WSS and effect a sale before the registration lapses may lead to the dire consequence of loss of priority. This article seeks to offer solutions to the theoretical and practical difficulties of registering a WSS, compelling a sale in the face of a mortgagee's objection and the issue of priorities in relation to the surplus of the sale proceeds.

II. Is the interest of a joint tenant exigible to a Writ of Seizure and Sale?

A. What is a Writ of Seizure and Sale?

7 A WSS is the principal way a judgment creditor may enforce a money judgment in Singapore against a judgment debtor's property.11 Section 13 of the Supreme Court of Judicature Act (“SCJA”) provides:12

A judgment for the payment of money to any person … may be enforced by a writ, to be called a writ of seizure and sale, under which all property, movable or immovable, of whatever description, of a judgment debtor may be seized … [emphasis added]

8 Thus, this section provides that amongst other things, a WSS may be used against immovable property.13 In other words, the WSS allows for the Sheriff to seize a judgment debtor's interest in land. If the judgment debt is not paid, the interest in land may then be sold and the proceeds used to pay the judgment creditor.14 The governing provision for selling land pursuant to a WSS is s 135(1) of the LTA, which reads:15

The interest in registered land which may be sold in execution under a writ shall be the interest which belongs to the judgment debtor at the date of the registration of the writ.

9 If the type of co-ownership concerned is a tenancy in common, little difficulty arises given that tenants in common have clearly demarcated interest in the property. For example, if A and B are tenants in common each owning 50% interest in land, then A's judgment creditors may seize A's 50 % interest in land. In fact, the land registry would spell out the exact interests of each tenant in common in the property. Therefore, a WSS would attach over the interest of the debtor in a tenancy in common which is expressed in the land register

10 The difficulty arises when the interest of the debtor is in the form of a joint tenancy owned with another. The controversy surrounding recent conflicting Singapore case law tackled this vexed question: What is the interest, if any, of a joint tenant which is subject to a WSS? In a joint tenancy, it is often said that co-owners together own the whole interest rather than a part.16 Joint tenants have rights between themselves; however, against the world, they are viewed as one.17 According to Bracton, a joint tenancy is expressed in the classic Latin maxim totum tenet et nihil tenet (“each holds everything but yet holds nothing”).18 The First Part of the Institutes of the Laws of England; or, A Commentary upon Littleton, not the Name of a Lawyer Only, but of the Law Itself (“Coke on Littleton”) highlighted that the main difference between a joint tenant and a tenant in common is that “joint-tenants have the lands by one joint title and in one right, and tenants in common by several titles, or by one title and by several rights”.19 This expression of a joint tenancy has been recognised in Singapore. Chao Hick Tin JA in Goh Teh Lee v Lim Li Pheng Maria described the joint tenancy as follows:20

In a joint-tenancy, each joint tenant holds the whole jointly and nothing severally: quilibet totum tenet et nihil tenet; scilicet, totum in communi, et nihil separatism per se [each holds the entirety and yet holds nothing; that is, the entirety in common, and nothing separately by itself]. Joint tenants have rights inter se, but against the world they are seen as one single owner. Thus, no one joint tenant holds any specific or distinct share of the co-owned interest himself.

11 Given the idea that each joint tenant holds the whole jointly and nothing severally, is a joint tenant's interest in the property an “interest which belongs to the judgment debtor” for the purposes of s 135(1) of the LTA?

12 There have been several conflicting decisions from the Singapore High Court about the issue of whether a judgment creditor can apply for a WSS against jointly tenanted property. The table below shows a summary of the conflicting decisions.

Property Held in Joint Tenancy is Subject to Writ of Seizure and...