United Malayan Banking Corp Bhd v Masagoes

• Jurisdiction: Singapore
• Judge: Goh Joon Seng J
• Judgment Date: 19 February 1994
• Neutral Citation: [1994] SGCA 21
• Date: 19 February 1994
• Subject Matter: Contract,Action to recover moneys secured by mortgage or charge on land,ss 6 & 21(1) Limitation Act (Cap 163),Variation,Particular causes of action,Court not to make material findings on matters not pleaded,Civil Procedure,Express terms,s 94 Evidence Act (Cap 97, 1990 Ed),Contractual terms,Limitation of Actions,Court's finding of facts,Evidence varying or contradicting terms not admissible,Judgments and orders
• Docket Number: Civil Appeal No 135 of 1992
• Published date: 19 September 2003
• Defendant Counsel: Simon Yuen and Kuah Boon Theng (Khattar Wong & Pnrs)
• Court: Court of Appeal (Singapore)
• Plaintiff Counsel: Robert Reid QC and KS Chung (Harry Elias & Pnrs)

Cur Adv Vult

The appellants are a bank carrying on business in Singapore and elsewhere. The respondent is the owner of the property, lot 200-30 of mukim IV with a house thereon known as 19 Holland Rise, Singapore (`the property`). On or about 7 March 1970, the respondent through his attorney, Sng Siak Hwee (`Siak Hwee`), deposited with the appellants the title deeds relating to the property and executed an instrument headed `confirmation of deposit of title deeds` (`the first confirmation`) confirming that the title deeds were to be held by the appellants as security for the payment of all moneys then owing or which should at any time thereafter be owing from Straits Hongkong Realty Private Ltd (which subsequently changed its name to Straits Hongkong Enterprises (Pte) Ltd)(`Straits Hongkong`). On 25 January 1972, the respondent himself signed a confirmation of deposit of title deeds (`the second confirmation`) in terms identical with those contained in the earlier instrument signed by his attorney.

On 15 August 1985, the appellants instituted proceedings by way of an Originating Summons No 880 of 1985 against the respondent claiming, among other things: (i) a declaration that, by virtue of the two confirmations of deposit of title deeds dated 7 March 1970 and 25 January 1972 respectively (`the two confirmations`), the appellants are entitled to be considered as being legal mortgagees of the property, and (ii) a declaration that the sum of $6,998,010.98 with interest at 8% pa from 14 July 1985 until payment and costs be secured by the legal mortgage. In support of the originating summons, an affidavit deposed to by one Anthony Pang Ah Tong, an officer of the appellants, was filed, and it alleged as follows. On or about 7 March 1970, the respondent through his attorney, Siak Hwee, deposited the title deeds relating to the property with the appellants by way of an equitable mortgage to secure the payment to the appellants on demand of all moneys then owing or which should at any time thereafter be owing from Straits Hongkong. On that day, Siak Hwee, as the attorney of the respondent, signed the first confirmation. On 25 January 1972, the respondent himself signed the second confirmation to the same effect, ie that the title deeds relating to the property, which were then in the appellants` possession, were to be held by them as security for payment to them on demand of all moneys then owing or which should at any time thereafter be owing from Straits Hongkong. On 1 July 1985, the appellants instituted an action, Suit No 6331 of 1985, in the High Court of Singapore against Straits Hongkong claiming the sum of $6,922,615.60, being the amount owing to the appellants from Straits Hongkong as at 10 June 1985. Judgment in default of appearance was entered against Straits Hongkong on 13 July 1985 for the sum of $6,998,010.98 together with interest and costs. The appellants then demanded payment of the amount from the respondent but no payment was made. Hence, proceedings were initiated against the respondent.

The claim by the appellants was resisted by the respondent. His attorney, Siak Hwee, filed an affidavit on 24 February 1986 and deposed to the following. In 1969 or thereabouts, the respondent and Siak Hwee started Polon Enterprise Pte Ltd (`Polon`) and the appellants were one of Polon`s banks, and one Chang Ming Thien (`Chang`) was the executive director and chairman of the executive committee of the appellant bank. Chang through his personal investment company was also a principal shareholder of Straits Hongkong. In late 1969 or early 1970, Chang, Siak Hwee and the respondent decided to embark on a joint venture involving the importation and assembly of `knocked down` motor vehicles in Indonesia, using one of the respondent`s companies, NV Indonesia Republic Motor Company (`Republic Motor`), for the purpose. In connection with such business, letter of credit facilities were granted to Straits Hongkong by the appellants, and Chang suggested that during the period when Straits Hongkong was financially exposed to the appellants, Siak Hwee and the respondent should, as a sign of good faith, provide some form of security to the bank in respect of the facilities granted to Straits Hongkong. Because Siak Hwee and his wife had already provided security to the appellants in respect of facilities granted to Polon, Siak Hwee was in no position to provide any security. The respondent being the owner of the property agreed to the deposit of title deeds thereto with the appellants `as a form of good faith for such period as Straits Hongkong was financially exposed to the appellants on behalf of the Republic Motor`. Siak Hwee acting under the power of attorney previously given to him by the respondent effected the deposit of the title deeds with the appellants. Siak Hwee personally handed the title deeds to Chang on or about 7 March 1970. As for the first confirmation, Siak Hwee said that he could not remember having signed it, although the signature thereon appeared to be his. If he had signed it, he had never read the contents of the document as he had implicit trust in Chang. He was never given a copy of the document. The joint venture ended in 1974 and the accounts of Republic Motors with Straits Hongkong were settled. Subsequent to 1974, there were various discussions between the respondent and Chang on other possible joint venture projects but nothing materialized, and the respondent `did not arrange for the return of the title deeds to his property`. On 5 July 1979, the respondent wrote to Straits Hongkong to arrange for the return of the title deeds but there was no reply from that company. From the balance sheet and profit and loss account for the year ended 1974, it was clear that Straits Hongkong at that time was a solvent company and would have had no problem in meeting its obligation to its bankers. Thereafter, Straits Hongkong appeared to have suffered losses every year. On 27 March 1982 Chang passed away. Thus far, Siak Hwee in the affidavit by implication raised, if at all, the defence that the security on the property was created for the purpose of the joint venture and as the accounts between the partners to the joint venture had been settled the security was intended to be discharged and Straits Hongkong had failed to arrange for such discharge.

The affidavit then went on to raise specifically the following defences. First, it said that the appellants` claim against Straits Hongkong, the principal debtor, had become time-barred under the Limitation Act (Cap 163) and hence the claim against the respondent as surety was unenforceable. Secondly, by virtue of the fact that the appellants had given time to Straits Hongkong, the respondent as surety was discharged from all liability. Thirdly, the appellants` claim against the respondent had also been irreparably prejudiced by laches on the part of the appellants in the following respects. In the first place, if the appellants had attempted to realize the security on the termination of the joint venture, the respondent would have been in a position to call upon Straits Hongkong to exonerate the respondent as surety by payment to the appellants. By reason of the delay on the part of the appellants, the respondent had been deprived of any possibility of being so exonerated as, by 1984, Straits Hongkong had accumulated huge losses. In the second place, the appellants` claim being equitable, they (the appellants) had not come before the court with `clean hands` to seek relief. Finally, by reason of the delay in claiming against Straits Hongkong or the respondent, the court should not in equity grant any relief. The last defence raised by Siak Hwee in the affidavit was that as all the facilities granted by the appellants to Straits Hongkong were unsecured, the equitable mortgage over the property was never intended by the appellants to be a form of security and it would be inequitable for the appellants so to allege.

By an order made by the assistant registrar on 7 September 1988 (which was subsequently affirmed on appeal by the judge-in-chambers), the proceedings were ordered to continue as if they had begun by the issue of a writ of summons and the affidavit of Anthony Pang Ah Tong together with exhibits therein referred to was to stand as statement of claim and the affidavit of Siak Hwee together with the exhibits therein referred to was to stand as defence and counterclaim and the deponents to the affidavits were ordered to attend at the trial for cross-examination upon their respective affidavits, and liberty was given to both parties to supplement their evidence and adduce further evidence at the trial. Unfortunately, Siak Hwee passed away on 25 February 1992, which was before the trial. Subsequently, the suit came on for trial before the High Court. At the conclusion, the court adjudged and ordered, inter alia, that the respondent pay the appellants the sum of $250,000, and that, upon such payment, the appellants release and return to the respondent the title deeds to the property. Further, the respondent was ordered to pay the appellants 20% of the costs of the proceedings. Against the decision of the High Court, this appeal has been brought, and a respondent`s notice was also filed in respect of that part of the decision directing payment of the sum of $250,000 to the respondent.

From the affidavit filed by Siak Hwee, there was really no dispute that the two confirmations were executed and delivered to the appellants. Siak Hwee only alleged that he could not remember having signed the first confirmation, although the signature appeared to be his, and that, if he had signed it he had never read the contents of the document as he had implicit trust in Chang. Such an allegation does not raise any defence at all. It certainly does not raise the defence of non est factum if that is the defence it purported to raise. No countervailing allegation was...