United Overseas Bank Ltd v Bebe bte Mohammad
| Jurisdiction | Singapore |
| Judge | Chan Sek Keong CJ |
| Judgment Date | 25 September 2006 |
| Neutral Citation | [2006] SGCA 30 |
| Court | Court of Appeal (Singapore) |
| Year | 2006 |
| Published date | 09 November 2006 |
| Plaintiff Counsel | Sim Bock Eng and Sannie Sng (Wong Partnership) |
| Defendant Counsel | George Pereira and Tee Lee Lian (Pereira & Tan LLC) |
| Subject Matter | 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) |
| Citation | [2006] SGCA 30 |
| 25 September 2006 |
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
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 property. UOB appointed M/s Mohan Das & Partners (“MDP”) as their solicitors to process and complete the transaction. Mr Mohan Das Naidu (“MDN”) was the solicitor in charge of the matter, but the Judge found as a fact that it was actually the conveyancing clerk, Ms Loo, who did all the work. MDP conducted the usual searches in respect of the property, in the course of which they discovered that a replacement CT had been applied for. They reported the results of their searches to UOB.
(e) The solicitors for the borrowers and the respondent were M/s Junaini and Jailani (“J&J”). The respondent executed the Mortgage on 19 October 2000 before Junaini bin Manin (“Junaini”). Hajjah withdrew her caveat on 23 October 2000 supposedly as a result of a misrepresentation by Suzanah. Hajjah had no knowledge of Suzanah’s plan to use the property as security. On 24 October 2000, one Rajan Pillay, an agent of Junaini, handed the original CT to MDP, who, on the same day, wrote to J&J seeking their confirmation that Rajan Pillay was acting with the authority of the borrowers and the respondent. No confirmation was received from J&J.
(f) The replacement CT was, at all material times, in the possession of Hajjah and was not used in the registration of the Mortgage.
(g) The Mortgage, together with the original CT, was presented by a freelance registration clerk to the Land Titles Registry for registration and was registered on 3 November 2000. On 7 November 2000, MDP advised UOB that the credit line for the borrowers could be activated.
(h) The borrowers defaulted in repaying the borrowings on 20 March 2002. UOB issued a letter of demand for payment. A similar letter was issued to the respondent on 16 August 2003. On 12 January 2004, UOB commenced legal proceedings to enforce the Mortgage.
(i) At the trial, the parties tendered the following agreed facts:
(i) the Mortgage was executed by the respondent who affixed her thumbprint to it;
(ii) at the time the Mortgage was executed, the respondent was not asleep nor was there any misrepresentation made to her;
(iii) the respondent would not be relying on the defence of non est factum;
(iv) the solicitors acting for the respondent and the borrowers were J&J;
(v) UOB was not a party to and had no actual knowledge of fraud (if any) by the borrowers;
(vi) UOB and its solicitors had no knowledge that the respondent was of unsound mind (if that were the case) when she executed the Mortgage;
(vii) The Singapore Land Registry was unable to confirm whether the replacement CT was presented for registration, and had no record as to which CT was presented with the Mortgage for registration.
The Judge’s findings
3 At the conclusion of the trial, the Judge held that the respondent was of unsound mind when she executed the Mortgage but that her condition did not affect the validity of the Mortgage. However, the Judge declared the Mortgage null and void and set it aside on three alternative grounds as follows:
(a) there was wilful blindness akin to fraud on the part of UOB’s solicitors, through Ms Loo;
(b) there was a mistake or omission in the registration of the Mortgage arising from UOB’s solicitors’ use of the original CT, which had been cancelled, to register the Mortgage; and
(c) the respondent 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.
The appeal
4 UOB has appealed against the Judge’s decision with respect to all the three grounds and also against the related findings of fact and law.
The court’s decision on finding that respondent was of unsound mind
5 UOB has appealed against the Judge’s finding that the respondent was of unsound mind when she executed the Mortgage in November 2000. The Judge made this finding after hearing several witnesses, including Hajjah, Jailani and two psychiatrists, and also taking into account a series of documents signed by the respondent after the date of execution of the Mortgage. These documents, which were relevant to her medical condition, included the following:
(a) an agreement dated 15 October 2001 between the respondent and Hajjah in which the respondent agreed to repay Hajjah a total sum of $486,716.98 for cash advances and other expenses that Hajjah had made to her or for her benefit;
(b) a letter dated 23 March 2001 from the respondent to UOB contesting the validity of the Mortgage on the ground that she had no knowledge of it;
(c) the respondent’s affidavit dated 20 June 2002 in these proceedings; and
(d) the documents mentioned earlier in [2(a)].
6 The Judge’s finding on the medical condition of the respondent at the material time is set out in [28] of his GD. It should be noted that the respondent was only certified on 23 August 2002 as being of unsound mind whereas she executed the Mortgage on 19 October 2000. However, the Judge further found that as a matter of law the respondent’s legal disability did not affect the validity of the Mortgage in terms of s 46(1), read with s 46(2)(a), of the Land Titles Act (Cap 157, 1994 Rev Ed) (“LTA”), as neither UOB nor its solicitors had knowledge of it. Given the evidence on record of the respondent’s medical condition and the fact that she executed a number of important documents after 19 October 2000 relating to her property, we have a deep sense of unease about the finding that the respondent was of unsound mind. However, given our other findings that are dispositive of the main issue in this case, ie, whether the Mortgage should be set aside, we will let the Judge’s finding remain in the record.
Preliminary observations
7 Before we consider the merits of the parties’ cases in this appeal, we should mention that the Judge appeared to have been very much troubled by what he believed was the very unconscionable conduct of UOB’s solicitors in obtaining the registration of the mortgage. The three alternative findings of law made against UOB were based essentially on the finding that UOB’s solicitors had used the original CT to register the Mortgage with full knowledge that it had been cancelled and that it was “illegal” to do so. The Judge expressed his sentiments on unconscionable conduct, on three separate occasions in the GD, as follows:
(a) that UOB “should not derive any benefit arising from the registration because of the wrongful and illegal use of the [original CT]”: see GD at [39];
(b) that “the use of the [original CT] to register the Mortgage was … unconscionable”: see GD at [42]; and
(c) that “the sanctity of the land-register under the LTA under the doctrine of indefeasibility should not be used to allow unconscionable behaviour”: see GD at [43].
8 These statements show that the Judge was fully aware that the doctrine of indefeasibility of title is central to land registration and dealings under the LTA. But the generality and open-ended nature of the Judge’s statements make it necessary for us to caution against undue reliance on the concept of unconscionability to erode the principle of indefeasibility under the LTA. This might lead to unwelcome uncertainty in land dealings under the LTA and could even undermine its primary objective. We need to emphasise this at the outset, and to reiterate the point because, even though land title registration has been with us for more than a century, its central doctrine, the indefeasibility of the registered title, appears to be still fighting a rearguard battle against the incursions of equity and conscience into the inner sanctum of the land register. As long ago as 1917, the Privy Council in Haji Abdul Rahman v Mahomed Hassan
It seems to their Lordships that the learned judge, in these observations [on the equity of redemption], have been too much swayed by the doctrines of English...
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