UMBC Finance Ltd and Another v Giffard Development Pte Ltd and Others

• Jurisdiction: Singapore
• Judge: Lim Teong Qwee JC
• Judgment Date: 19 May 1993
• Neutral Citation: [1993] SGHC 110
• Docket Number: Originating Summons No 915 of 1992
• Date: 19 May 1993
• Year: 1993
• Published date: 19 September 2003
• Plaintiff Counsel: Devinder Rai (Harry Elias & Partners)
• Citation: [1993] SGHC 110
• Defendant Counsel: John Ng (Tan Lee & Partners),Jeffrey Beh (YM Jumabhoy & Co),Yeo Piah Chuan and Felicia Ng (Piah Tan & Partners),Peter Low (Peter Low Seong Tang & Partners),Quek Yee Sian (Richard Kong & Partners),George Lim (Wee Tay & Lim),Angela Lee (WK Tan & Co),Serene Chan (Tan Lee & Choo),Goh Yew Hock (Goh Yew Hock & Co),Ho Nee Min (Ng Ong & Chee),Geraldine Chia (Bee See & Tay),Lee Mun Hooi (Lee Bon Leong & Co),Sim Teow Leng (Sim Teow Leng & Co),Chia Quee Khee (QK Chia & Co),Mok Ching Tee (Jing Quee Chin Joo & Teck Hui),Ng Wing Cheong (Ng & Ng),Joseph Chia (Robert KB Teo & Co)
• Court: High Court (Singapore)
• Subject Matter: Mortgagee’s rights,s 69(2)Land Titles Act (Cap 157),s 69 (1) & (2) Land Titles Act (Cap 157),Power of entry into possession under terms of mortgage,Entry into possession,Whether notices from plaintiffs to defendants complied with s 69(2),Construction of terms of mortgage,Whether notices from plaintiffs to defendants were reasonable or proper,Mortgage of real property,Interpretation of s 69(1) and (2) of the Land Titles Act (Cap 157),Whether mortgagees under common law mortgage can enter into possession without any notice as required under s 69(2) of Land Titles Act,Credit and Security

Introduction

This is an action by originating summons by mortgagees of land at Balestier Road Lot 2849 of Mk 17 (`the land`) on which a subdivided building has been erected against the mortgagor and the purchasers in possession of strata units in the building. The claim is for possession on the ground that the mortgagor has made default in the payment of moneys secured by the mortgage and the mortgagees are entitled to exercise the power of sale and to enter into possession, or alternatively on the ground that by reason of the default they are entitled to exercise their statutory powers to enter into possession. The eighteenth defendant is the purchaser of three strata units but the mortgagees are proceeding with the claim in respect of units #01-03 and #01-04 only and not unit #02-10. The mortgage was created in September 1983 and registered in the Registry of Deeds under the Registration of Deeds Act. In June 1984 the land was brought under the provisions of the Land Titles Act (`LTA`) and a qualified certificate of title (`CT`) was issued. In May 1991 subsidiary strata certificates of title (`SSCT`) were issued in respect of each of the strata units in the subdivided building. There is endorsed on the SSCTs a notification of the mortgage. The originating summons was fixed for hearing for two days and when it came before me there were no particulars in it or referred to in it to identify any cause or causes of action but no objection was taken at any time. The mortgagees claim possession and it appeared from the affidavits filed on their behalf that their case and the only case was that they had given notice under s 69(2) of the LTA. In the course of opening the case Mr Rai attempted to submit that such notice was unnecessary and I granted leave to amend the originating summons. The case on the amended originating summons is that the mortgage is a common law mortgage and in the events which have occurred the mortgagees are entitled to exercise the power of entry into possession under the mortgage without any notice under s 69(2) of the LTA or otherwise or alternatively having given the notice under s 69(2) they are entitled to exercise the powers of entry into possession under s 69(1).

At the conclusion of the hearing I dismissed the originating summons with costs and I indicated that I would deliver written grounds of decision.

Facts

The mortgagor is a housing developer licensed under the Housing Developers (Control and Licensing) Act. In 1983 it was given a development loan of $3m by the mortgagees to finance the development project involving the erection of the subdivided building on the land of which it was then seised for an estate in fee simple in possession free from encumbrances. The loan was repayable by 12 monthly instalments of $250,000 each commencing from the date of issue of the temporary occupation permit (`TOP`) and was secured by the mortgage dated 20 September 1983 (`the mortgage`) which was registered in the Registry of Deeds. In accordance with the provisions of the mortgage the mortgagor opened a project account with the second plaintiff.

The mortgagor proceeded with the development and sold all the strata units. Sales were effected in each case by giving to the purchaser an option in consideration of payment of 10% of the price and the exercise of the option by the purchaser by signing a sale and purchase agreement and returning it to the mortgagor (or its solicitors) with another 10% of the price. The option and the agreement are both required to be in the prescribed form under the Housing Developers Rules which allow 10% of the price to be paid for the option. In para 1 of the option in the prescribed form the vendor undertakes to deliver the draft agreement within 2 weeks. The option given by the mortgagor is not before me but there is no evidence to suggest that any purchaser was aware of the terms of the agreement at the time he paid for the option. Part of the amount paid for the option is refunded if the option is not exercised. The agreement in the prescribed form provides for payment of the price by instalments in stages. The agreement entered into by the mortgagor and each of the purchasers in this case (`the agreement`) is in fact not in the prescribed form but presumably the amendments have been approved by the Controller of Housing. More important is that under cl 12(e) of the mortgage the mortgagor should have submitted to the mortgagees a specimen of the agreement for their approval.

Clause 3(3) of the agreement provides:

The instalments referred to in para (1)(a) to (i) of this clause shall be paid to the [mortgagor] by way of cheques crossed `account payee only` drawn in favour of the [project account].

The instalment under para (a) is the balance after deducting 10% paid for the option. The instalment under para (i) is paid on taking possession when the TOP has been issued by the building authority. TOP was issued in November 1990. With this instalment the purchaser will have paid 90% of the price, 10% to the mortgagor for the option and 80% to the project account. In the prescribed form the purchaser would have paid only 85% of the price. Under the agreement the remaining 10% is paid on completion but to the mortgagor and not to the project account. Under cl 12(e) of the mortgage the agreement should provide for payment of the price to the project account and not just 80% of it. Under cl 20 of the agreement the purchaser is entitled to recover certain expenses from the mortgagor for making good defects and under cl 3(1) para (j) these expenses may be deducted from part of the last 10% of the price. More significantly under cl 15 the mortgagor is liable for liquidated damages for delay in completion and the liquidated damages may be deducted from any instalment due to the mortgagor. The last day for giving notice to complete was 31 December 1990. It has still not been given yet. The liquidated damages are payable at 10% pa of the aggregate amount of instalments already paid to the mortgagor calculated from day to day until the sale is completed. The defendant purchasers are in possession and will have paid 90% of the price. For each year of delay they are entitled to deduct 9% of the price. The evidence is not all before me but unless there is an extension of time there may well be not only nothing more for the purchasers to pay under the agreement in each case but they may have a claim against the mortgagor.

Clause 12(d) of the mortgage provides:

... the [mortgagor] shall irrevocably authorize and direct the solicitors acting for the [mortgagor] in such sale to pay the entire proceeds of sale of each area of the development directly into the [project account].

As has been noted above the agreement does not provide that the 10% payable for the option and the last 10% payable on completion are to be paid to the project account. Only 80% is payable to the project account and there is no evidence that the mortgagees have not approved a specimen of the agreement as they are entitled to under cl 12(e) of the mortgage.

Rule 11 of the Housing Developers (Project Account) Rules provides that upon payment of the instalment upon the issue of the TOP and taking possession of the strata unit the mortgagor shall redeem the mortgage in respect of the strata unit. In the prescribed form a purchaser will have paid in the aggregate 85% of the price, up to 10% to the vendor such as the mortgagor and the remainder to the project account. There is no provision imposing a corresponding obligation on the part of the mortgagees to allow partial redemption. However, there is a letter from the mortgagees to the mortgagor dated 25 March 1987 which is at exhibit FAK-12 and it says:

Mortgage of Lot 2849 Mukim 17 Balestier Road Singapore

We refer to the above matter and wish to inform that we will execute partial discharge of mortgage in respect of the [land] upon receipt of 90% of the purchase price of any flat, shop unit and office unit.

I pause here to observe that the mortgagees require receipt of 90% of the price to execute a partial discharge of mortgage while the Housing Developers (Project Account) Rules require the mortgagor having sold under the terms of the agreement to redeem the mortgage in respect of the strata unit upon payment of 90% of the price of the strata unit of which 10% is paid to the mortgagor for the option and 80% to the project account opened with the second plaintiff.

Although the letter at FAK-12 is addressed to the mortgagor it is not in dispute that it was intended that the mortgagor might show it to every purchaser. I do not have the evidence before me as to whether it was in fact seen by any of the purchasers (or their solicitors) and if so when and whether they relied on it. On the facts before me and in view of the decision I have arrived at it is not necessary to consider this. The letter requires `receipt` of 90% of the price and it is not in dispute that 90% of the price in respect of the strata units sold to the purchasers has not been received by the mortgagees in the form of cheques payable to the project account and the mortgagor has made default in payment of moneys secured by the mortgage.

Mortgagees` power of entry into possession under the mortgage

Clause 5 of the mortgage provides:

For the consideration aforesaid [ie the development loan] the [mortgagor] hereby conveys unto the [mortgagees] all and singular the [land] to hold the same unto the [mortgagees] their successors and

...