Ong Beng Chong v Goh Kim Thong

Chan Seng Onn J:

[1] This was a dispute concerning the recovery of a house without a land title by the landowner.

[2] Sometime in 1959, Ng Chwee Kim was permitted to erect a single storey terrace house known as No 24 Meng Suan Road Singapore 779225 (the “house”) on part of a piece of land of 1957.1 sq m with a 999 years leasehold tenure known as Lot 550P of Mukim 13 (the “land”). The plaintiff, Ong Beng Chong, is presently the registered proprietor of the land. The house is one of the units in a row of 9 terrace houses (Nos 20 to 28 Meng Suan Road Singapore) built on the land.

[3] By way of a deed of assignment dated 16 March 1983, the defendant, Goh Kim Thong, and his wife Lee Kui Want (assignees) bought the 24 year old house (without the land) for a mere $10,000 from the then ground tenants of the land, Koh Kar Gat and Lee Yong Pow (assignors). The assignment itself stated that the house had been erected on the land owned by the plaintiff (and some predecessors in title of the plaintiff). The defendant continued with the payment of ground rent to the plaintiff as the landlord. The defendant recognised that the plaintiff is the owner of the land on which the defendant’s house sits.

[4] The defendant argued that he had not been in arrears in paying the ground rent (and any arrears was in fact due to the plaintiff’s refusal to accept his payment) and that he had not breached the agreement dated 25 July 1959 whereby (a) Lian Aik Building & Company was authorised by Ng Chwee Kim to construct the house on the land at the agreed price of $6,500; and (b) it was agreed that the “land rental of seven dollars per month is to be directly collected by the landlord from the owner of the house”. Based on this agreement, the defendant contended that so long as he paid the ground rent of $7 per month, he was entitled to squat on the land until the 999 years lease runs out in the year 2883.

[5] On 30 October 2009, the plaintiff served a Notice to Quit on the defendant, giving him a month’s notice. The plaintiff regarded the defendant as a month to month tenant paying a monthly ground rent to him. On 30 November 2009, the plaintiff determined the defendant’s ground tenancy and required the defendant to deliver up vacant possession of the house. The defendant refused the offer of compensation of $225,000 from the plaintiff and demanded instead $1.8 million to $2 million dollars before he would vacate the house. As the plaintiff considered the sum demanded to be unreasonable, the plaintiff took up this originating summons requiring the defendant to deliver up vacant possession and pay the outstanding monthly ground rent.

[6] The legal position with respect to recovery of possession in such cases is clear. In Khew Ah Bah v Hong Ah Mye [1971-1973] SLR(R) 107, the defendant purchased an attap house in 1934, which was built with the permission of the owner of the land. The defendant had ever since been paying $3 per month as ground rent to the landowner. In 1963, the landowner sold the property to the plaintiff who acquired it subject to the existing rights of the defendant. In 1968, the plaintiff landowner served a notice to quit on the defendant, contending inter alia that the tenancy at the rental of $3 per month had been determined and that he was not precluded from recovering possession of the premises. Choor Singh J allowed the landowner’s claim holding, inter alia, that the defendant had certain rights in equity which the landowner must satisfy before he could recover possession. He held that it was plain from the authorities that if the owner of land allowed another to expend money on the land under an expectation created or encouraged by the landowner that he would be able to remain there, that raised an equity in the licensee such as to enable him to stay there. The case of a tenant paying ground rent for the use of the land on which he has been allowed to erect a dwelling house is even stronger. He has a tenancy coupled with an equity. In such a case the landlord cannot recover possession of his land by merely terminating the tenancy; he must also satisfy the equity. The fundamental question in the case was how this equity was to be satisfied. Choor Singh J came to the conclusion that the person who built the house must have been led to believe that he would be allowed to remain on the land so long as he continued paying the ground rent of $3 per month for otherwise he could not have built his house on land which did not belong to him. For 34 years from 1934 to 1968, none of the defendant’s successive landlords took any step to determine the tenancy. All successive owners of the land including the plaintiff purchased it with notice of the defendant’s rights in respect of the land and they continued to receive from him $3 per month as ground rent. After much consideration, Choor Singh J concluded that the plaintiff should be allowed to recover possession of the premises on condition that he made reasonable compensation to the defendant for what was, in the words of Taylor J in Kwek Kim Hock v Ong Boon Siong [1954] 1 MLJ 253 “tantamount to expropriation”.

[7] The Court of Appeal in Lee Suat Hong v Teo Lye [1987] SLR(R) 70 had occasion to deal with a similar case. The defendant/respondent claimed to be entitled to continued possession of the premises on the ground that the plaintiff/appellant was estopped from denying the defendant’s right to remain in occupation of the premises known as No 38A, Lorong Puntong, Singapore for as long as the defendant and her family deemed fit. The Court of Appeal set out its views at [13]-[23]:

[8] On the facts of this case, apart from the fact that the original owner of the house, Ng Chwee Kim, was permitted to erect the house on part of the land, I found no evidence of representations of any kind being made by the plaintiff or his predecessors in title to the previous owners of the house or the defendant that the owner of the house would be entitled to stay permanently on the premises. As such, no expectation had been created that the defendant was permitted to stay permanently at the premises. Accordingly, the defendant had to vacate the house and surrender the premises. I did not allow him to continue to pay the ground rent and stay till the expiry of the 999 years lease.

[10] During the first hearing on 23 March 2010, I had stood down the matter for the defendant to consider the compensation offer by the plaintiff and to reach an amicable settlement if possible. When this did not materialise, I informed the defendant that I might have to order a valuation of the house to assist me in objectively assessing what would be a reasonable amount of compensation but there was a risk that the valuation by professional valuers might well fall below the plaintiff’s offer of $225,000. The defendant said he wanted the valuation done. It was a gamble that the defendant took.

[11] Accordingly, I made the following orders:

[12] The second hearing was fixed on 17 May 2010 after the parties had obtained the valuations as ordered.

[15] I noted that the two professional valuers independently selected the same valuation method and the same lifespan to arrive at their valuations.

[16] With both valuations being far below the compensation offer from the plaintiff, I gave the defendant a second opportunity to reconsider whether to accept the plaintiff’s offer or proceed with the hearing, in which case he might well end up far worse off than if he had accepted the compensation offered. The defendant chose to proceed with the hearing.