United Overseas Bank Ltd v Forward Oversea Credit Ltd

• Jurisdiction: Singapore
• Judge: Grimberg
• Judgment Date: 18 January 1988
• Neutral Citation: [1988] SGHC 4
• Docket Number: Originating Summons No 900 of 1987
• Date: 18 January 1988
• Published date: 19 September 2003
• Year: 1988
• Plaintiff Counsel: Deborah Barker (Khattar Wong & Partners)
• Citation: [1988] SGHC 4
• Defendant Counsel: Prem Gurbani (Prakash Gurbani & Chong)
• Court: High Court (Singapore)
• Subject Matter: Mortgage registered in Registry of Deeds and later under Companies Act,Registered mortgages,s 131(1) Companies Act (Cap 50),s 15 Registration of Deeds Act (Cap 26),Mortgage of real property,Charge created and registered at Registry of Deeds,Credit and Security,Priorities

Cur Adv Vult

On 30 May 1985 GS Corporation (Singapore) Pte Ltd (the company) created a mortgage (the mortgage) over its immovable property known as No 399 River Valley Road (the property) in favour of the defendants. The mortgage was registered at the Registry of Deeds on 3 March 1986. By virtue of s 131(1) of the Companies Act (Cap 50), the mortgage was liable to be lodged with the Registrar of Companies for registration within 30 days after its creation. That section is in the following terms:

Subject to this Division, where a charge to which this s applies is created by a company there shall be lodged with the Registrar for registration, within 30 days after the creation of the charge, a statement of the prescribed particulars and -

(a) the instrument, if any, by which the charge is created or evidenced; or

(b) a copy thereof together with an affidavit verifying the execution of the charge and also verifying the copy as being a true copy of the instrument, and if this s is not complied with in relation to the charge the charge shall, so far as any security on the company`s property or undertaking is thereby conferred, be void against the liquidator and any creditor of the company.

In the event, the mortgage was not registered within the period stipulated by s 131(1). On 3 October 1986, that is to say well after the period for lodgment had expired, the defendants` solicitors applied by ex parte originating summons for the time for registration of the mortgage to be extended for a period of 30 days from the date of the order made on the summons. The court is empowered to extend time by virtue of s 137 of the Companies Act, which reads:

The court, on being satisfied that the omission to register a charge (whether under this or any corresponding previous written law) within the time required or that the omission or misstatement of any particular with respect to any such charge or in a memorandum of satisfaction was accidental or due to inadvertence or to some other sufficient cause or is not of a nature to prejudice the position of creditors or shareholders or that on other grounds it is just and equitable to grant relief, may on the application of the company or any person interested and on such terms and conditions as seem to the court just and expedient (including a term or condition that the extension or rectification is to be without prejudice to any liability already incurred by the company or any of its officers in respect of the default) order that the time for registration be extended or that the omission or misstatement be rectified.

The originating summons came before the learned Chief Justice, who on 13 October 1986 granted an extension of 30 days from that date. Thus the defendants had until 13 November 1986 (the first extension) within which to register the mortgage in accordance with the requirements of s 131(1).

Meanwhile, the plaintiffs had on 27 January 1986 obtained judgment against the company for $815,020.82 due on an overdraft, and $264,159.20 due under trust receipts.

On 4 November 1986, that is to say during the first extension, the plaintiffs obtained a charging order nisi against the property by which, unless sufficient cause to the contrary was shown, the property stood charged with payment of the judgment debt. On 15 November 1986 the charging order nisi was registered at the Registry of Deeds.

Before the first extension ended the defendants applied, by way of another originating summons, for a further extension of time of 30 days within which to register their mortgage.

Although not parties to the application, the plaintiffs were served and their counsel was heard, when the originating summons came before the learned Chief Justice on 5 January 1987.

In the event, he granted a further extension of time of 30 days from that date (the second extension) for the registration of the mortgage. The order was expressed to be made `without prejudice to the rights acquired by United Overseas Bank Ltd` (the plaintiffs in the originating summons which I am now called upon to determine) `or any other person prior to the time of actual registration of the said indenture of mortgage`, that is to say the mortgage. I will refer to this part of the order as `the proviso`.

On the day on which the second extension was granted, namely, 5 January 1987, the charging order nisi obtained by the plaintiffs on 4 November 1986 was made absolute.

The next, and final event, in the chronology occurred on 16 January 1987. On that day, which was within the second extension, the defendants registered their mortgage at the Registry of Companies. It was not suggested on behalf of the plaintiffs during the hearing of this originating summons that either the first or the second extension was wrongly granted; or that it was otherwise than just and equitable that the defendants should have had the extensions for which they applied.

In this originating summons the plaintiffs seek:

(i) a declaration that the mortgage was void against the plaintiffs` charge, by virtue of s 131 (1) of the Companies Act; and

(ii) a declaration that the plaintiffs are entitled to the proceeds of the sale of the property, it having been sold by the defendants as mortgagees.

Miss Barker, for the plaintiffs, argued that upon the plaintiffs obtaining their charging order nisi against the property on 4 November 1981, the plaintiffs acquired, apart from the right of an equitable chargee, the right to assert that the defendants` mortgage, which was then unregistered, was void against the UOB. That proposition, she said, flowed from the construction of s 131 (1), and from the proviso.

Miss Barker contended that the plaintiffs acquired their...