Liew Kum Chong v SVM International Trading Pte Ltd and others [2020] SGHCR 02

Summons No 6105 of 2019 (“SUM 6105”) was the Plaintiff’s application under O 47 r 4 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“Rules of Court”) to attach the 2nd Defendant’s interest in a commercial property located at 1 Jalan Dusun #01-26, One Dusun Residences, Singapore (the “Jalan Dusun Property”). The 2nd Defendant was not the registered proprietor of the Jalan Dusun Property. Instead, it claimed, via a caveat (the “Caveat”), an interest as purchaser of the same. What was the nature of the 2nd Defendant’s interest in the Jalan Dusun Property? And could that interest be attached under O 47 r 4 of the Rules of Court? After hearing from parties, I allowed the application. These are the grounds of my decision.

Background

The Plaintiff commenced Suit No 980 of 2016 on 14 September 2016. On 22 March 2019, the High Court gave judgment for the Plaintiff against the 1st to 4th Defendants. The grounds of the Court’s decision are set out in Liew Kum Chong v SVM International Trading Pte Ltd and others [2019] SGHC 163. The extracted judgment, HC/JUD 185/2019, indicated that the 2nd Defendant was to pay the Plaintiff:

(a) the judgment sum of $100,000;

(b) interest at a rate of 5.33% per annum on the judgment sum from the date of writ to the date of judgment;

(c) costs in the sum of $90,000 (to be paid collectively by the 1st to 3rd Defendants); and

(d) disbursements to be fixed if not agreed.

On 6 December 2019, the Plaintiff took out SUM 6105. Being originally an ex parte application, SUM 6105 came to me as a paper hearing in my capacity as Duty Registrar on 9 December 2019. The orders sought were as follows:

According to the Plaintiff, the 2nd Defendant had lodged the Caveat claiming the interest of a purchaser of the Jalan Dusun Property. To support this claim, the Plaintiff exhibited a title search conducted on the Jalan Dusun Property on 6 December 2019 (the “Title Search”). The Plaintiff further stated that, to the best of his knowledge, information and belief, the Jalan Dusun Property belonged to the 2nd Defendant.

The Title Search showed that the registered proprietor of the Jalan Dusun Property was a company by the name of LVND Homes Pte Ltd (“LVND”). The Caveat was lodged on 29 January 2013, and reflected the following information:

Upon my directions, the Plaintiff’s solicitors wrote in on 23 December 2019 and clarified that the Jalan Dusun Property was an uncompleted commercial property that was purchased by the 2nd Defendant from LVND (the developer) pursuant to a Sale and Purchase Agreement dated 19 September 2012 (the “SPA”). Further, the Plaintiff’s solicitors also highlighted that in examination of judgment debtor proceedings in Summons No 4083 of 2019, the 4th Defendant, who allegedly assisted in arranging the 2nd Defendant’s affairs, had stated that the 2nd Defendant had paid “$750,000+” out of the total purchase price of $1,291,200. Accordingly, as there were still outstanding instalment payments to be paid and legal completion had yet to take place, legal title to the Jalan Dusun Property still vested in LVND.

Having some doubt as to whether the 2nd Defendant’s interest in the Jalan Dusun Property could be attached under O 47 r 4 of the Rules of Court, I fixed SUM 6105 for an oral hearing. This was originally scheduled for 9 January 2020, but was rescheduled at the Plaintiff’s solicitors’ request. The first hearing on 28 January 2020 was an ex parte hearing (as SUM 6105 was filed as an ex parte application). At this hearing, I indicated to Mr Gavin Neo, who appeared for the Plaintiff, that I was considering fixing SUM 6105 for an inter partes hearing. Mr Neo accepted that the issue of whether the 2nd Defendant’s interest in the Jalan Dusun Property could be the subject of an application under O 47 r 4 of the Rules of Court was quite a novel point. However, he submitted that it was for the 2nd Defendant to apply to set aside any order that was made on SUM 6105, and that it was not for the 2nd Defendant to “block” SUM 6105 at this stage. He also suggested that the 2nd Defendant might seek to sell the Jalan Dusun Property and dissipate the sale proceeds. Alternatively, if the SPA became annulled for the 2nd Defendant’s failure to keep up with the instalment payments, the 2nd Defendant might dissipate any refund paid by LVND. While I appreciated these concerns, I was of the view that the risk of dissipation was somewhat remote. Accordingly, I fixed SUM 6105 for an inter partes hearing and gave directions for the filing of reply affidavits.

Parties’ submissions

In broad terms, the Plaintiff’s submissions were as follows:

(a) The 2nd Defendant owned an equitable interest in the Jalan Dusun Property. Specifically, the 2nd Defendant’s equitable interest in the Jalan Dusun Property had accrued in line with its instalment payments set out in the SPA and, accordingly, the 2nd Defendant held an equitable interest in the Jalan Dusun Property amounting to approximately $750,000. Further, the 2nd Defendant also had an equitable interest in the paid up instalments of the Jalan Dusun Property should the SPA be annulled: under the SPA, LVND, after making certain deductions, had to refund the balance of the instalments previously paid by the 2nd Defendant if the SPA was annulled.

(b) The phrase “immovable property or any interest therein” in O 47 r 4 of the Rules of Court included the 2nd Defendant’s interest in the Jalan Dusun Property.

As it turned out, the Defendant did not file any reply affidavit. At the second hearing on 10 March 2020, Mr Chua Cheng Yew, who appeared for the 2nd Defendant, cited his inability to obtain instructions as the reason for this. Among other things, Mr Chua emphasised that, notwithstanding his efforts, he had no instructions on how much of the purchase price the 2nd Defendant had paid LVND. Without this information, Mr Chua was unable to express any view on SUM 6105. In short, I understood Mr Chua to have taken no position on SUM 6105.

Issues arising from SUM 6105

Arising from the above, SUM 6105 turned on the answers to two issues:

(a) First, what was the nature of the 2nd Defendant’s interest in the Jalan Dusun Property?

(b) Second, could the 2nd Defendant’s interest in the Jalan Dusun Property be attached under O 47 r 4 of the Rules of Court?

It is to these two issues that I now turn.

What was the nature of the 2nd Defendant’s interest in the Jalan Dusun Property?

I start with the first issue: what was the nature of the 2nd Defendant’s interest in the Jalan Dusun Property?

Orthodoxy provides a straightforward answer to this. As observed in Tang Hang Wu and Kelvin FK Low, Tan Sook Yee’s Principles of Singapore Land Law (LexisNexis, 4th Ed, 2019) (“Tan Sook Yee”) (at para 16.84), “a purchaser under a valid contract for sale has the equitable interest in the land, while the vendor holds the legal title for him as constructive trustee” [emphasis added]. This flows from the English High Court’s decision in Lysaght v Edwards (1876) 2 Ch D 499 (“Lysaght”), where it was held (at 506) that:

The basis for this is said to be “the confluence of two equitable rules” (Tan Sook Yee at para 16.84):

The above passages from Lysaght and Tan Sook Yee appear to imply that a purchaser of land comes to own the entire equitable interest in the land upon the conclusion of a contract for sale. However, in Jerome v Kelly (Inspector of Taxes) [2004] 1 WLR 1409 (“Jerome”), the House of Lords espoused a seemingly more nuanced approach, holding (at [32]) that:

It was, in fact, on the basis of Jerome that the Plaintiff submitted that the 2nd Defendant held: (a) an equitable interest in the Jalan Dusun Property amounting to approximately $750,000; and (b) an equitable interest in the paid up instalments of the Jalan Dusun Property should the SPA be annulled (see [9(a)] above).

The issue of the extent of the 2nd Defendant’s equitable interest in the Jalan Dusun Property was an interesting one. Interesting as it was, however, it did not have to be answered at this stage. The High Court’s decision in Peter Low LLC v Higgins, Danial Patrick [2018] 4 SLR 1003 (“Peter Low”) makes clear (at [117]–[119]) that in an application under O 47 r 4 of the Rules of Court, the Court only needs to be satisfied that there is an interest in immovable property that can be attached; issues relating to the extent of the judgment debtor’s interest do not arise at this stage. Accordingly, it was sufficient to conclude, in answer to the first issue, that the 2nd Defendant’s interest in the Jalan Dusun Property was an equitable interest that arose from a contract of sale.

Could the 2nd Defendant’s interest in the Jalan Dusun Property be attached under O 47 r 4 of the Rules of Court?

I now turn to the second issue: could the 2nd Defendant’s interest in the Jalan Dusun Property be attached under O 47 r 4 of the Rules of Court? Having considered the relevant authorities and arguments, I was satisfied that an equitable interest in immovable property that arises from a contract of sale can be attached under O 47 r 4 of the Rules of Court. It therefore followed that the 2nd Defendant’s interest in the Jalan Dusun Property could be attached under O 47 r 4 of the Rules of Court.

Relevant statutory provisions

First, this conclusion is supported by the relevant statutory provisions in the Rules of Court, the Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed) (“SCJA”) and the Land Titles Act (Cap 157, 2004 Rev Ed) (“LTA”).

I start with the Rules of Court. In this regard, O 47 r 4(1) of the Rules of Court opens as follows:

The meaning of words “or any interest therein” is plain: O 47 r 4 of the Rules of Court covers the seizure of any interest in immovable property. Significantly, there is no limitation placed on the type of such interest. Similarly broad language is also found in O 47 r 4(1)(a) of the Rules of Court, which explains how such seizure is effected:

Again, there is no limitation placed on the type of the interest capable of being seized. The wording of O 47 r 4 of the Rules of Court therefore suggests that an equitable interest in immovable property that arises from a contract of sale can be attached under O 47 r 4 of the Rules of Court.

Turning to the SCJA, s 13 of the SCJA, in dealing with writs of execution, provides as follows:

In Peter Low, the Court noted (at [132]–[133]) that because the Rules of Court provided for different modes of execution, there was no requirement to interpret any particular provision on execution in the Rules of Court as coinciding in scope with the full ambit of s 13 of the SCJA. Notwithstanding this, the Court concluded that the provisions in the Rules of Court on execution by writ of seizure and sale (“WSS”) against immovable property were intended to cover all possible interests in immovable property which came within the ambit of s 13 of the SCJA:

There can be no doubt that s 13 of the SCJA includes equitable interests. Accordingly, this provision, when read alongside Peter Low, also suggests that an equitable interest in immovable property that arises from a contract of sale can be attached under O 47 r 4 of the Rules of Court.

Such an interpretation is also consistent with the LTA. Section 115(1) of the LTA, in dealing with the lodging of caveats, provides as follows:

It has been observed that all equitable interests in land would come within s 115(1) of the LTA (Tan Sook Yee at para 15.10). What this means is that the reference to “an interest in land” in s 115(1) includes an equitable interest in immovable property that arises from a contract of sale. In my view, there is no reason why the references to the “interest” in immovable property in O 47 r 4 of the Rules of Court should not be consistently interpreted, so as to also include an equitable interest in immovable property that arises from a contract of sale.

Two factors in Peter Low

Second, the conclusion at [19] above is also supported by two passages in Peter Low which the Plaintiff relied on. The issue in Peter Low was whether a judgment for the payment of money could be enforced by way of a WSS against the judgment debtor’s interest in immovable property which was held under a joint tenancy (Peter Low at [10]). Although the Court in Peter Low was concerned with the attachability of another type of interest in immovable property (ie, that belonging to a joint tenant), the pronouncements therein are relevant to the present analysis because they shed light on the factors that a Court may look to in determining whether a given type of interest in immovable property can be attached under O 47 r 4 of the Rules of Court.

Whether the interest is capable of being seized by a WSS

The first factor is whether the interest in question is even capable of being seized by a WSS. In Peter Low, the Court, in discussing the issue of whether the nature of a joint tenancy meant that a joint tenant’s interest was not exigible to a WSS, held (at [70]–[71]) that:

This passage indicates that the question of whether the interest in question is capable of being seized by a WSS is relevant (albeit not conclusive) in determining whether the interest can be attached under O 47 r 4 of the Rules of Court. This must be correct. If, at a threshold level, the interest is incapable of being seized by a WSS, then it necessarily follows that it cannot be attached under O 47 r 4 of the Rules of Court, and the analysis ends there. It is only if the interest is capable of being seized by a WSS that one goes on to consider the subsequent question of whether it can be attached under O 47 r 4 of the Rules of Court.

To this end, it seems that an equitable interest in immovable property that arises from a contract of sale is capable of being seized by a WSS. The three points highlighted by the Court in Peter Low, as emphasised in italics and bold italics in the quoted passage at [30] above, apply with equal force to such an interest. In particular, such an interest can be sub-sold pending completion. An equitable interest in immovable property that arises from a contract of sale is, therefore, to use the language of Peter Low, a real and present interest that can be alienated without the consent or participation of another, and the law of execution of judgments can empower the Sheriff to sell the interest on the judgment debtor’s behalf. Accordingly, this first factor suggests that an equitable interest in immovable property that arises from a contract of sale can be attached under O 47 r 4 of the Rules of Court.

Whether a WSS against the interest confers a real benefit to the judgment creditor

The second factor is whether a WSS against the interest in question confers a real benefit to the judgment creditor. In Peter Low, the Court, in discussing the utility of issuing a WSS against a joint tenant’s interest in land, held (at [114]–[115]) that:

This passage indicates that in determining whether an interest can be attached under O 47 r 4 of the Rules of Court, it is relevant (but again, not conclusive) to consider whether a WSS against the interest in question confers a real benefit to the judgment creditor.

In Peter Low, the Court noted (at [114]) that an undivided share in immovable property was difficult to market to third parties and not likely to fetch a good price. It was in this context that the Court examined the other benefits that might accrue to a judgment creditor who issued a WSS against a joint tenant’s interest in land. However, these concerns over marketability and profitability do not even arise in the case of an equitable interest in immovable property that arises from a contract of sale. As noted earlier, such an interest can be sub-sold pending completion (see [32] above). A WSS against it confers on a judgment creditor a real benefit that is immediately apparent.

In the course of oral submissions, Mr Neo highlighted several other benefits that would accrue to the Plaintiff on the specific facts of SUM 6105. I understood these to include the following:

(a) First, the Plaintiff would, apart from having the option of sub-selling the Jalan Dusun Property, also have the option of making instalment payments under the SPA and would, upon completion, become the registered proprietor of the Jalan Dusun Property.

(b) Second, the 2nd Defendant would not be able to unilaterally sell the Jalan Dusun Property and dissipate the sale proceeds. This point was elaborated on in the Plaintiff’s written submissions as follows. If an order were made under SUM 6105, the order would be registered under the LTA pursuant to s 132 of the LTA and O 47 r 4(1)(a) of the Rules of Court. Upon such registration, the 2nd Defendant’s interest in the Jalan Dusun Property would be deemed to be seized by the Sheriff (O 47 r 4(1)(a) of the Rules of Court) and any dealings by the 2nd Defendant in the Jalan Dusun Property would not be registered unless the registration of the order were cancelled (s 133 of the LTA).

(c) Third, if instalment payments were not made and the SPA was annulled (see [9(a)] above), any refund would be paid to the Plaintiff instead of the 2nd Defendant. The 2nd Defendant would therefore not be able to dissipate or use any such refund.

I was in broad agreement with these points. Accordingly, this second factor also suggests that an equitable interest in immovable property that arises from a contract of sale can be attached under O 47 r 4 of the Rules of Court.

Policy considerations

Finally, the conclusion at [19] above is also supported by policy considerations. Leaving aside the legal technicalities, an equitable interest in immovable property that arises from a contract of sale is, by virtue of its sub-saleability (see [32] above), of clear value to its owner. If such an interest cannot be attached under O 47 r 4 of the Rules of Court, this would be tantamount to a ring-fencing of the interest from judgment creditors. This, in my view, would be wholly unjust: the owner of the interest would get to enjoy the benefits of ownership, but judgment creditors would not be entitled to the same. This difference in treatment is difficult to justify, and is yet another factor suggesting that an equitable interest in immovable property that arises from a contract of sale can be attached under O 47 r 4 of the Rules of Court.

Conclusion on the second issue

Having regard to the relevant statutory provisions (see [20]–[28] above), the two factors in Peter Low (see [29]–[37] above) and policy considerations (see [38] above), I was satisfied that an equitable interest in immovable property that arises from a contract of sale can be attached under O 47 r 4 of the Rules of Court. Accordingly, and in answer to the second issue, the 2nd Defendant’s interest in the Jalan Dusun Property could be attached under O 47 r 4 of the Rules of Court.

Conclusion