United Overseas Bank Ltd v Bebe bte Mohammad

• Judgment Date: 23 October 2006
• Docket Number: Civil Appeal No 81 of 2005
• Date: 23 October 2006
• Court: Court of Three Judges (Singapore)

United Overseas Bank Ltd

Plaintiff

and

Bebe bte Mohammad

Defendant

[2006] SGCA 30

Chan Sek Keong CJ

,

Andrew Phang Boon Leong JA

and

Woo Bih Li J

Civil Appeal No 81 of 2005

Court of Appeal

Land–Registration of title–Land Titles Act–Mortgagee's indefeasible title–Circumstances amounting to wilful blindness akin to fraud as exception to indefeasibility of title under s 46 (2) Land Titles Act–Whether grounds for rectification of land-register under s 160 (1) for fraud, omission or mistake existing–Whether action in personam against registered proprietor sustainable in absence of fraud–Sections 46, 160 Land Titles Act (Cap 157, 1994 Rev Ed)

The respondent mortgagor (“Bebe”) executed a mortgage (“the Mortgage”) of her property (“the property”) on 19 October 2000 in favour of the appellant (“UOB”) to secure credit facilities to be granted to a business of which Bebe's daughter, Suzanah, and her husband were partners. The Mortgage was executed in the presence of one Junaini, their solicitor. Later, Junaini, through an agent, delivered the original duplicate Certificate of Title (“CT”) to UOB's solicitors who subsequently used it to procure the registration of the Mortgage. More than two years later, when UOB sought to recover the outstanding loans from Bebe and to enforce the Mortgage against her, she alleged that she was mentally unfit to execute the Mortgage. She also alleged that the original CT used by UOB's solicitors to register the Mortgage was an invalid instrument as it had been cancelled and replaced by a replacement CT. She sought to have the Mortgage declared null and void on various grounds.

The trial judge set aside the Mortgage on the following grounds: (a) UOB's solicitors were aware that the original CT had been cancelled and in unlawfully using it to register the Mortgage, they had displayed a wilful blindness akin to fraud under s 46 (2) (a) of the Land Titles Act (Cap 157, 1994 Rev Ed) (“LTA”); (b) there was a mistake or omission under s 160 (1) of the LTA arising from UOB's use of the cancelled original CT to register the Mortgage; and (c) Bebe had a personal equity to set aside the Mortgage arising from UOB's solicitors' unlawful use of the cancelled original CT to register the Mortgage. UOB appealed against the trial judge's decision.

Held, allowing the appeal:

(1) There was no evidence to support the finding that UOB's solicitors had been wilfully blind to the existence of a fraud against Bebe by Suzanah and her husband. On the evidence, the conduct of UOB's solicitors amounted to, if anything, no more than negligence or lack of due diligence in finding out the true state of affairs. Accordingly the Mortgage could not be set aside on the ground of fraud under s 46 (2) (a)of the LTA: at [22], [24] to [27].

(2) The registration of the Mortgage using the cancelled original CT was not a mistake or omission by UOB's solicitors since they intended to register the Mortgage. The mistake or omission, if any, was made by the Registry, and that did not come within the terms of s 160 (1) of the LTA: at [54], [55] and [57].

(3) Bebe had no personal equity against UOB to set aside the Mortgage as there was no pre-existing relationship between UOB and Bebe that could have given rise to any obligation or responsibility on the part of UOB with respect to the custody or use of the original CT, and UOB's solicitors did not unlawfully facilitate the registration of the Mortgage by using the original CT with the knowledge that it had been cancelled: at [64].

[Observation: The doctrine of indefeasibility of title was central to land registration and dealings under the LTA. The courts had to exercise caution as well as vigilance in scrutinising allegations of fraud in land dealings, especially with respect to security transactions in the commercial sector. The LTA conferred an indefeasible title on the mortgagee, subject only to certain overriding interests, which included the powers of the Registrar and the court to rectify the land-register under ss 159 and 160 respectively, and the exceptions specified in s 46 (2) of the LTA. Fraud to which the registered proprietor was a party defeated his title, but even then it did not defeat the title of the bona fide purchaser without notice of fraud who then registered his title: at [28].

Central to the Torrens system was the idea of paramountcy of the registered title or the indefeasibility of the registered title. The land register mirrored what a purchaser was or was not subjected to, save for the overriding and express exceptions. While the LTA might not be exhaustive of all claims that could be made against a registered proprietor, having regard to the policy objectives of the LTA to reduce uncertainty and to give finality in land dealings, our courts had to be slow to engraft onto the LTA personal equities that were not referable directly or indirectly to the exceptions in s 46 (2) of the LTA. It was necessary to caution against undue reliance on the concept of unconscionability to erode the principle of indefeasibility under the LTA. A strict approach to the encroachment of personal equities under the LTA might not necessarily be unfair to persons holding unregistered interests in registered land as such persons were free to protect their interests by lodging caveats against the registered title: at [90], [91] and [96].]

Assets Company, Limited v Mere Roihi [1905] AC 176 (refd)

Bahr v Nicolay (No 2) (1988) 164 CLR 604 (refd)

Barry v Heider (1914) 19 CLR 197 (refd)

Boyd v Mayor, Etc, of Wellington [1924] NZLR 1174 (refd)

Breskvar v Wall (1971) 126 CLR 376 (refd)

Caldwell v Rural Bank of New South Wales (1951) 53 SR 415 (refd)

Ferguson v Registrar of Land Titles (Saskatchewan) [1953] 1 DLR 36 (refd)

Frazer v Walker [1967] 1 AC 569 (refd)

Gibbs v Messer [1891] AC 248 (refd)

Grgic v Australian and New Zealand Banking Group Ltd (1994) 33 NSWLR 202 (refd)

Haji Abdul Rahman v Mahomed Hassan [1917] AC 209 (refd)

Ho Kon Kim v Lim Gek Kim Betsy [2001] 3 SLR (R) 220; [2001] 4 SLR 340 (refd)

Latec Investments Ltd v Hotel Terrigal Pty Ltd (In liq) (1965) 113 CLR 265 (refd)

Loke Yew v Port Swettenham Rubber Co Ltd [1913] AC 491 (refd)

Macquarie Bank Ltd v Sixty-Fourth Throne Pty Ltd [1998] 3 VR 133 (refd)

Mercantile Mutual Life Insurance Co Ltd v Gosper (1991) 25 NSWLR 32 (distd)

Oh Hiam v Tham Kong [1980] 2 MLJ 159 (refd)

Pyramid Building Society (In liquidation) v Scorpion Hotels Pty Ltd [1998] 1 VR 188 (refd)

Russo v Bendigo Bank and Reichman [1999] VSCA 108 (folld)

Sixty-Fourth Throne Pty Ltd v Macquarie Bank Ltd (1996) 130 FLR 411 (refd)

Story v Advance Bank Australia Ltd (1993) 31 NSWLR 722 (refd)

Stuart v Kingston (1923) 32 CLR 309 (refd)

Tataurangi Tairuakena v Mua Carr [1927] NZLR 688 (refd)

Teo Siew Peng v Neo Hock Pheng [1998] 3 SLR (R) 472; [1999] 1 SLR 293 (refd)

United Overseas Finance Ltd v Victor Sakayamary [1996] 2 SLR (R) 20; [1997] 3 SLR 211 (refd)

United Overseas Finance Ltd v Yew Siew Kien [1993] 2 SLR (R) 236; [1993] 3 SLR 207 (refd)

Vassos v State Bank of South Australia [1993] 2 VR 316 (refd)

Waimiha Sawmilling Co Ltd v Waione Timber Co Ltd [1923] NZLR 1137 (refd)

Waimiha Sawmilling Co Ltd v Waione Timber Co Ltd [1926] AC 101 (refd)

Conveyancing and Law of Property Act (Cap 61, 1994 Rev Ed) s 35 (2)

Land Titles Act (Cap 157, 1994 Rev Ed) ss 46, 46 (2), 160, 160 (1) (consd);ss 42 (1), 47, 151, 157, 159

Land Titles Ordinance 1956 ss 28 (2) (b), 29, 131

Registration of Titles Regulation 1891 (Selangor) ss 7, 86

Specific Relief Enactment 1903 (Selangor) s 3

Transfer of Land Act 1893 (WA) ss 68, 134

Transfer of Land Act 1958 (WA) s 44 (1)

Sim Bock Eng and Sannie Sng (Wong Partnership) for the appellant

George Pereira and Tee Lee Lian (Pereira & Tan LLC) for the respondent.

Judgment reserved.

Chan Sek Keong CJ

(delivering the judgment of the court):

1 This is an appeal by the appellant, United Overseas Bank Limited (“UOB”), as registered mortgagee against the decision of the trial judge (“the Judge”), inter alia, declaring null and void and setting aside the mortgage dated 3 November 2000 (“the Mortgage”) registered against the respondent's property comprised in Certificate of Title (“CT”) Volume 495 Folio 160 (“the property”) and ordering the Registrar of Titles (“the Registrar”) to rectify the land register by cancelling the Mortgage. The Judge's grounds of decision (“GD”) are reported in [2005] 3 SLR (R) 501.

Background

2 The salient facts may be summarised as follows:

(a) The respondent had two adopted daughters, Suzanah bte Hassan (“Suzanah”) and Hajjah Aisah bte Haji (“Hajjah”). In October 1999, the respondent executed a hibah (an Islamic instrument of gift) where she vowed to give the property to Hajjah upon death. She executed a nazar (the vow) on 20 March 2000 giving the property to Hajjah upon death. On 21 March 2000, she executed a will appointing Hajjah the executrix, and in which she declared that she had made a nazar on 20 March 2000.

(b) In early 2000, after the original CT of the property (“the original CT”) was found missing, Hajjah, on behalf of the respondent, obtained a replacement CT dated 6 July 2000 (“the replacement CT”).

(c) On 19 July 2000, Suzanah lodged a caveat against the property claiming an interest under an agreement dated 18 July 2000 between the respondent and herself whereby the respondent agreed to transfer the property to her in consideration of love and affection. On 11 August 2000, Hajjah lodged a caveat against the property claiming an interest in the property by virtue of the will and nazar made by the respondent. On 29 August 2000, Suzanah withdrew her caveat.

(d) By a letter dated 29 September 2000, UOB offered JSN Enterprises, whose partners (“the borrowers”) were Suzanah and her husband, Junaidi, credit facilities of $1m to be secured by a legal mortgage of the...