Zheng Hongfan v Singaravelu Murugan [2019] SGHC 184

The present case concerned an application by Zheng Hongfan (“the plaintiff”) for a mandatory injunction against Singaravelu Murugan (“the defendant”).

Facts

The plaintiff is the finance director of Xingang Investment Pte Ltd (“Xingang”), an excluded moneylender under s 2(e)(iii) of the Moneylenders Act (Cap 188, 2010 Rev Ed). Xingang carries on the business of lending money to corporations. The defendant is the husband of Chandran Meenakumari (“Meenakumari”), and is the owner of a property at 95 Park Villas Rise (“the Property”). Meenakumari is a director and sole shareholder of the company, Emson Systems (S) Pte Ltd (“Emson Systems”).

By way of a written agreement made between Xingang, Emson Systems, Meenakumari and the defendant, Xingang loaned Emson Systems S$350,000 on the terms of the same agreement (“the Loan Agreement”). At the same time, both Meenakumari and the defendant executed a Deed of Guarantee (“the Guarantee”) in which each of them agreed to guarantee, upon demand being made in writing, the payment to Xingang of the sums of money payable under the Loan Agreement. Pursuant to the Loan Agreement, the defendant executed a Power of Attorney in favour of the plaintiff. The defendant did not dispute that Xingang lent Emson Systems the S$350,000 and that he stood as guarantor together with his wife, Meenakumari.

The plaintiff is the donee under the Power of Attorney, which granted him certain powers to deal with the Property. At some point, Emson Systems defaulted on its obligations under the Loan Agreement. The plaintiff then sought to enforce the Guarantee and exercise its powers under the Power of Attorney.

The Power of Attorney contains, inter alia, the following terms:

On 15 March 2019, the plaintiff’s solicitors wrote to the defendant’s then solicitors, Grays LLC, to inform the defendant that the plaintiff intended to exercise the rights and powers under the Power of Attorney, and that it was going to sell the Property to recover the loaned sum. The defendant was also informed that a valuation was to take place on 19 March 2019.

The plaintiff was unable to carry out the valuation. There were two further attempts by the plaintiff’s appointee, Ms Yek Pei Ling (“Ms Yek”), to carry out valuation of the Property. Those attempts were also unsuccessful. This led the plaintiff to take out this application for a mandatory injunction against the defendant. The plaintiff sought the following orders:

The plaintiff relied on cl 2 of the Power of Attorney (see above at [5]) to appoint Ms Yek to carry out valuation of the Property.

My decision

During the hearing on 21 May 2019, the defendant raised three main arguments against the plaintiff’s application.

The defendant first argued that the Power of Attorney did not grant the plaintiff the power to access the Property, and therefore the access orders sought (see above at [7]) should be refused. This submission was misconceived as it betrayed a misunderstanding of how cl 2 of the Power of Attorney was meant to operate. That clause reads:

The defendant also suggested that because cl 2 stated that the valuer was to act on the Land Owner’s behalf – in this case, the defendant – it cannot include a power which was exercised contrary to his wishes, such as by forcing him to yield access and/or vacant possession.

A plain reading of cl 2 shows that the donee is empowered to appoint various agents to act on the donor’s behalf “in all matters arising out of or in connection with” the sale of the property. A valuer duly appointed by the donee will have those powers under the Power of Attorney. The phrase “all matters arising out of or in connection with” is, in my view, sufficiently broad to permit the valuer to gain access to the Property in order to perform the valuation exercise. Having granted the donee the power to appoint the valuer to act on his behalf in connection with the sale of the Property, it does not lie in the mouth of the donor to deny the valuer access to the Property to frustrate the sale.

The defendant also argued that the Power of Attorney was to be read together with the Loan Agreement, and that the Power of Attorney was so wide in nature that it did not mirror the terms of the Loan Agreement. Although this argument was not easy to follow, I understood the defendant to be saying that the plaintiff was not entitled to carry out a valuation exercise because of the effect produced when cll 5.6 and 5.7 of the Loan Agreement are read together, ie, that the plaintiff was obliged to purchase the Property at the “Agreed Property Price” of S$2,040,000 and therefore could not elect to sell it on the open market to a third party at some other price other than the Agreed Property Price. Clauses 5.6 and 5.7 read as follows:

The defendant’s submission was easily refuted by cl 7.5(ii) of the Loan Agreement. The clause reads:

The effect of the above clause was clearly to provide the Lender, Xingang, with a choice: it could either elect to exercise the OTP and purchase the Property from the defendant at the Agreed Property Price of S$2,040,000, or the plaintiff could exercise his powers under the Power of Attorney to sell the Property to a third party at market price.

The defendant’s final substantive argument was that the Loan Agreement and the Power of Attorney contained no specific term stipulating what would happen to the rest of the sale proceeds once the Property was sold. For this reason, the Power of Attorney was suggested to be too “vague and wide” and should therefore not be enforced. I failed to see the merit to this argument as cl 7.5(ii) plainly stated that the sale proceeds that was received by a third party buyer was only to “repay the Loan …that is outstanding” and to “pay all monies due and/or payable to the Lender”. The donee does not have the power to deal with the remaining sums of money after the loaned sums have been recovered and would therefore have to render an account of the balance to the defendant.