United Overseas Finance Ltd v Victor Sakayamary and Others

• Judge: G P Selvam J
• Judgment Date: 07 May 1996
• Neutral Citation: [1996] SGHC 98
• Citation: [1996] SGHC 98
• Defendant Counsel: Christina Goh (Christina Goh & Co),A Netto (Netto & Netto),Sowaran Singh and Albert Balasubramanian (Bala Sowaran & Partners)
• Published date: 19 September 2003
• Plaintiff Counsel: Lawrence Wong (Tang & Tan)
• Date: 07 May 1996
• Docket Number: Originating Summons No 146 of 1991
• Court: High Court (Singapore)
• Subject Matter: Duties,Agency,Breach of fiduciary duties,Mortgage of real property,Whether mortgagee acquired indefeasible title,Defeasibility of mortgagee's title,Mortgage carried out without court sanction,Fraud of agent in mortgage transaction,s 35(2) Conveyancing and Law of Property Act (Cap 61, 1994 Ed),Credit and Security,s 46(2)(a) Land Titles Act (Cap 157, 1994 Ed),Fraudulent mortgage,Sale and mortgage of estate property,Administration of assets,Fraudulent agent,Probate and Administration,Administration of estate,Effect of transaction,Whether clerk acting as agent of mortgagee bank,Trusts,s 46(2) Land Titles Act (Cap 157),Failure to obtain leave of court,Trustees,Fraud on beneficiaries,Whether fraud of agent could be imputed to principal,Whether fraud could be imputed to principal,Implied authority of agent,Solicitor's clerk fraudulently mortgaging property

The proceedings

The plaintiffs, United Overseas Finance Ltd, in this case begun by Originating Summons No 146 of 1991, made their claim under a mortgage which they say was executed by the first defendant, Victor Sakayamary. They seek an order against her, her brother, Victor James (the second defendant) and her mother Dason Esther (the third defendant), for vacant possession of the mortgaged property, 3 Jalan Telang, Singapore (the property). They also claim judgment against the first defendant for $117,353.66 and interest at the rate of 10.25% p.a. The property is subject to the provisions of the Land Titles Act.

Originally the claim was only against the first defendant. The second and third defendants applied to be added as defendants and for the action to continue as if it had been begun by writ of summons. The court granted the orders sought and they were accordingly added as defendants.

By an order of court granted to the defendants dated 12 October 1992 the defendants brought in Solomon George and Edwin J D`Souza as third parties. The latter was an advocate and solicitor and the former was his clerk. The defendants claim an indemnity or contribution from the two third parties on the ground that they had fraudulently transferred the property from the second and third defendants to the first defendant and mortgaged it in her name as security for a loan of $120,000 from the plaintiffs which loan she did not apply for or receive. There is also a counterclaim by the defendants against the plaintiffs and the third parties, by which the defendants seek, inter alia, a declaration that the transfer of the property to the first defendant and the mortgage by the first defendant were fraudulent and null and void and an order to rectify the Land Register by cancelling the registration of the transfer of the property by the second and third defendants to the first defendant and the mortgage by the first defendant to the plaintiffs.

In this judgment the following words shall bear, as the context admits, the following meanings ascribed to them :

Defence:	that defence part of the amended defence and counterclaim filed by Victor Sakayamary, (the first defendant), Victor James (the second defendant) and Dason Esther (the third defendant).
Counterclaim:	counterclaim part of the above.
Defence to counterclaim:	the amended defence filed by United Overseas Finance Ltd (the plaintiffs), Solomon George and Edwin D`Souza.
Defence to third party claim:	the amended defence filed separately by Solomon George and Edwin D`Souza.
The Registrar:	the Registrar of Titles.
The Act:	the 1985 revised edition of the Land Titles Act. The equivalent provision in the 1994 revised edition is inserted in brackets.

Essential facts. The death of the husband

The facts and evidence in this case form a jagged mosaic and I shall state them in sections as they relate to each issue. First the essential facts: Dason Esther, the third defendant, was the widow of Rajamoney Victor, deceased (Rajamoney Victor) who died intestate on 17 January 1970. He left 10 beneficiaries - the widow and nine children the last of whom was born posthumously. Three of these beneficiaries died before these proceedings were commenced. The property was the principal asset of Rajamoney Victor, deceased. At all material times all three defendants were in occupation of the property. At the time of the death of Rajamoney Victor the property was mortgaged to OCBC Bank Ltd. The third defendant and her brother, Dawson David, were granted letters of administration of the estate of Rajamoney Victor, deceased. The grant of letters of administration was made in May 1970 and issued in April 1972.

Widow seeks Solomon George`s assistance

The widow was a lady of meagre means. She was poorly educated. Her knowledge of the English language was practically nil as she went to a Tamil school for some four years. She had sought and received the assistance of Solomon George in the administration of the estate of her husband as she was ignorant of the legal aspects of administering the estate of a deceased person. Solomon George was related to her and she considered him as her legal adviser. Solomon George played no part in the application for the letters of administration.

In 1983, the legal firm Mohan Das Naidu & Associates, which then employed Solomon George as a clerk, wrote to OCBC on behalf of the widow stating that arrangements were being made with the Central Provident Fund to release her savings to discharge the mortgage. This plan did not materialize. In 1985 when the widow was retrenched she acquired sufficient funds to redeem the property. She went with the money to pay OCBC which advised her to seek legal assistance. She went to Solomon George.

At this time Solomon George was working as a clerk in the legal firm of S Kunalan & Associates. Solomon George transferred the widow`s file to Kunalan & Associates. With a letter of 18 September 1985 from S Kunalan & Associates she personally went to OCBC Bank and paid the outstanding amount on the mortgage. The mortgage could not be discharged as the property was in the name of Rajamoney Victor, deceased. As a prelude to regularize the position S Kunalen & Associates asked for and received the title deeds of the property from the lawyers of OCBC. This was in September 1985. They notified the widow of the fact. Before S Kunalen & Associates could do anything further Solomon George was re-employed by Mohan Das Naidu & Associates at the end of 1985. He had transferred the widow`s file to his new employer. Nothing much, if anything, was done by Mohan Das Naidu & Associates to make progress in the matter.

Son substituted as co-administrator

In 1986 Solomon George moved with the widow`s file to another legal firm, M/s Retnam & Co. M/s Retnam & Co, before doing anything further towards discharging the OCBC mortgage, applied to the court to have the second defendant, Victor James (a son of Rajamoney Victor) substituted as co-administrator in the stead of the widow`s brother. The proceedings relating to the substitution would have entailed the signatures of the widow and the second defendant on several documents. It would also have entailed the attendance of the widow and the son at the office of solicitors and a commissioner of oaths. This happened around August 1986. In October 1986 the order for the substitution was obtained. But nothing was done in that year to discharge the OCBC mortgage even though all moneys due on it had been paid in September 1985.

Solomon George and Edwin D`Souza are retained by the widow

In January 1987 Solomon George moved to Edwin J D`Souza, a one-man legal practice of an advocate and solicitor by that name. Solomon George had transferred the file relating to the estate of Rajamoney Victor, deceased to Edwin J D`Souza. An application for the discharge of the mortgage was submitted to the Registry of Titles by Edwin J D`Souza. The Registrar of Titles on 7 January 1987 rejected the application because the discharge of mortgage by OCBC did not reflect the substitution of the co-administrator and no application for transmission of title to the personal representatives of Rajamoney Victor, deceased had been lodged. This reflects the incompetence of both Solomon George and Edwin D`Souza. The widow, of course, was not aware of what was happening.

Discharge of OCBC mortgage

Solomon/Edwin D`Souza accordingly requested OCBC Bank to amend the discharge of the mortgage to reflect the substitution of the co-administrator. At the same time Solomon George advised the widow to apply for the transmission of title which advice she accepted. Accordingly an application for transmission was prepared. Edwin D`Souza`s statutory certificate of correctness of the transmission application was dated 18 March 1987. The application for transmission of course entailed the signatures of the widow and her son as administrators. On 19 and 23 May 1987 both documents were rejected by the Registrar for reasons which are not apparent from the documents before me. Eventually the discharge of the mortgage to OCBC and the transmission on death were registered on 15 June 1987. Thus some 20 months elapsed between the time the amount due to OCBC was paid by the widow in September 1985 and the registration of the discharge of mortgage. Neither Solomon nor Edwin D`Souza informed the widow in writing that the discharge of mortgage and transmission had been registered. Edwin D`Souza retained the unencumbered certificate of title and all other documents relating to the matter. Why he retained the documents became a hotly disputed matter.

Registration of transfer and mortgage

As far as the Registry of Titles was concerned the next important event was the lodgement for registration of two important instruments both dated 1 December 1988 and stamped on the same day. One was an instrument of transfer of title to the property by the administrators to the first defendant. The consideration for the transfer was stated as $190,000. The instrument of transfer stated that the transferors acknowledged the receipt of the consideration of $190,000. It was stamped for $5,300 on 1 December 1987. Upon inspection of the original instrument of transfer I observed that five different typewriters were used to fill its contents. It later came to light that the office of Edwin D`Souza had only two typewriters. The inference I drew from the observation was that the transfer document was filled in on five different occasions and at different places. The witness to the transferor`s execution was Edwin D`Souza. The address of the transferee, the first defendant, which is required by s 55 (now s 60) of the Act, was that of Solomon and not the transferee. The consequence of it was that any notice sent by the Registrar to the stated address would be deemed to be duly served on the transferee two days after it was sent to that address. The...