Monetary Judgment cannot be enforced by WSS on Jointly Owned Property

The Singapore High Court in Chan Lung Kien v Chan Shwe Ching [2017] SGHC 136* recently affirmed the decision in Malayan Banking as good law, and held that a judgment for the payment of money cannot be enforced by way of a writ of seizure and sale (“WSS”) against the judgment debtor’s interest in immovable property which is held under a joint tenancy with one or more joint tenants.

A. SALIENT FACTS

On 10 June 2015, Chan Shwe Ching (“CSC”) obtained summary judgment in Suit No. 342 of 2015 (“Suit 342/2015”) against Leong Lai Yee (“the Debtor”) for around S$1.43 million plus interest and costs. On 18 June 2015, Chan Lung Kien (“CLK”) entered judgment in default of appearance against the Debtor in a separate suit, Suit No. 494 of 2015 (“Suit 494/2015”) for the sum of around S$8.47 million plus interest and costs. The Debtor and her husband, Lim Eng Soon (“Lim”) were joint tenants in a property (“the Property”).

On 10 July 2015, CSC obtained an order (“the Order”) for the Debtor’s interest in the Property to be attached and taken in execution under a writ of seizure and sale (“CSC’s WSS”) to satisfy CSC’s judgment debt in Suit 342/2015. The High Court’s grounds of decision are reported as Chan Shwe Ching v Leong Lai Yee [2015] 5 SLR 295 (“CSC v LLY”).

By way of advertisement in the Straits Times on 4 August 2015, Lim gave notice of his intention to sever the joint tenancy and hold the Property as a tenant in common with the Debtor. However, this was not registered as required under the Land Titles Act (Cap. 157, 2004 Rev Ed) (“LTA”).

Subsequently, on 16 September 2015, CLK also obtained a WSS (“CLK’s WSS”) against the Debtor’s interest in the Property.

The Property was later sold by the mortgagee, and the Debtor’s half share amounting to S$623,341.50 was held by CSC’s solicitors as stakeholders pending the resolution of the dispute between CLK and CSC on who was entitled to this sum of money.

On 21 April 2016, a bankruptcy order was made against the Debtor.

As the Order was made ex parte, CLK filed the present application to, amongst other things, set aside the Order on the ground that CSC’s WSS was void and/or unenforceable.

B. MAIN ISSUES

There were 3 main issues for the Court’s consideration:

(1) First, whether CLK has the necessary standing to set aside the Order;

(2) Second, whether the Order and CSC’s WSS should be set aside;

(3) Third, whether the joint tenancy had been severed before CLK’s WSS was issued (which will determine the status of CLK’s WSS).

C. COURT’S DECISION

C.1 First Issue – Standing of CLK to set aside the Order and CSC’s WSS

CLK was not a party to the proceedings in which the Order was made. After referring to O.32, r.6 of the Rules of Court (“ROC”) (which provides that the Court “may set aside an order made ex parte”), and referring to various cases, the Court held that O.32, r.6 is available to a non-party, provided he can also show that he is affected by the ex parte order. The Court held that it was clear that as a competing creditor, CLK is affected by the Order, and took the view in conclusion that CLK has locus standi under O.32, r.6 to make this present application. See [11]-[17].

The Court emphasized that this application to set aside the Order was not an appeal. In permitting ex parte orders to be set aside, O.32, r.6 recognizes that an ex parte order is provisional in nature and is made upon hearing one party only (applying Karaha Bodas). See [18].

C.2 Second Issue – Whether the Order and CSC’s WSS should be Set Aside

In making the Order, Edmund Leow JC (with his grounds of decision set out in CSC v LLY) had decided that a joint tenant’s interest can be attached and taken in execution under a WSS, and had thus departed from the High Court decision (by Tay Yong Kwang JC, as he then was) in Malayan Banking Bhd v Focal Finance Ltd [1998] 3 SLR(R) 1008 (“Malayan Banking”), which had decided otherwise. Kannan Ramesh JC (as he then was) in One Investment [2016] 5 SLR 923 had expressed agreement with Malayan Banking. See [19]-[28].

The Court asked: how does a WSS seize a joint tenant’s interest unless the issuance of the WSS itself amounts to a severance? However, as the Court held, it is well established that the issuance of a WSS does not sever the joint tenancy. See [29].

Leow JC’s conclusion in CSC v LLY (which had relied on the views of Professor Tan Sook Yee in her 2000 Sing JLS 52 article) was that a joint tenant’s interest can be attached under a WSS because the joint tenancy will be severed when the sheriff subsequently sells the land pursuant to the WSS. In other words, the proposition is that although a joint tenant does not have an undivided share, his interest can be seized under a WSS because it will be converted into an undivided share when the joint tenancy is subsequently severed. See [30]-[31].

The Court disagreed with this proposition for three reasons, namely: (1) there is nothing for the WSS to bite onto until the joint tenancy is converted into a tenancy in common (see [32]); (2) if the interest is not capable of being seized, the Court cannot make the order, and it cannot be an answer to say that the interest will subsequently be converted into one which would be capable of being seized (see [33]); (3) absent statutory powers, the sheriff cannot sell property held under a joint tenancy without the agreement of all the joint tenants, and neither the judgment creditor nor the sheriff is entitled to seek either partition of the property seized under a WSS or sale in lieu of partition. Neither O.47, r.5(g) of the ROC nor Section 18(2) of the Supreme Court of Judicature Act (“SCJA”) assists CSC in this regard. See ([34]-[40]).

Finally, Leow JC had also relied on the practice in other Commonwealth jurisdictions. However, these cases proceeded on the assumption that a WSS can be executed against a joint tenant’s interest in land, without any discussion. As such, these cases do not assist in the analysis of the issues discussed above. See [41].

The Court concluded that the decision in Malayan Banking, which has been understood to be the law in Singapore since 1998, “remains [as] good law”, and went on to set aside the Order and CSC’s WSS which was issued pursuant to the Order (see [42]-[43]).

C.3 Third Issue – Whether the Joint Tenancy had been Severed before CLK’s WSS was Issued

The Court held that because Lim did not register his instrument of declaration of severance (despite serving it by way of advertisement) as required under the LTA, there was no severance under Section 53 of the LTA (i.e. no statutory severance) (see [47]).

CLK then made two further submissions.

First, CLK relied on the Singapore Court of Appeal decision in Diaz Priscilla v Diaz Angela [1997] 3 SLR(R) 759 (“Diaz”) to submit that the service of Lim’s instrument of declaration was sufficient to sever the joint tenancy. However, the Court held that Diaz did not assist CLK because (as argued by Professor Barry Crown in his 2003 article ([2003] Sing JLS 116)), Section 53(8) of the LTA (which was introduced in 2001) removed the basis of the decision in Diaz, and the doctrine of severance acting only inter partes is no longer part of Singapore law. See [49]-[55].

Second, CLK also submitted that severance may be effected in equity by service of a unilateral declaration of intention to sever (in this case, by way of Lim’s advertisement in the Straits Times). This is one of the ways of severing a joint tenancy, i.e. by an act of a joint tenant operating on his own share (with the other methods being mutual agreement or a sufficient course of dealing). In this regard, CLK relied on several English cases and submitted that the law in England, before 1925 (when England’s statute was amended to explicitly allow for severance by inter alia service of a unilateral declaration of intention to sever), was that severance in equity may be effected by service of a unilateral declaration of intention to sever. See [23], [56]-[59].

However, the Court held that it was not settled law in England before 1925 that a joint tenant could sever by unilateral action (other than by way of sale). The Court also held that in any event the Singapore Court of Appeal in Sivakolunthu [1987] SLR(R) 702 (which was decided before Section 53 of the LTA was amended in 1993 to allow for statutory severance by way of unilateral declaration) had settled this point at [14] of that decision, i.e. that “it is not the law in Singapore that a unilateral declaration of intention to sever a joint tenancy, when communicated to the other joint tenants, has the effect of severing it into a tenancy in common”. See [60].

Accordingly, CLK’s WSS was also ineffective in attaching the Debtor’s interest in the Property (see [61]). The Debtor’s half share in the Property in the sum of S$623,341.50 therefore formed part of the Debtor’s estate in bankruptcy, and was to be paid to the trustee in bankruptcy ([63]). Given that CLK succeeded in setting aside the Order and CSC’s WSS, he was awarded costs ([65]).

D. CONCLUSION

In summary, a WSS does not effect severance of a jointly owned property, whether at the point of issuance, or subsequently at the point of sale (since there is no power of sale or partition, at least not without the consent of all the joint owners). The Court had some sympathy for the view that it may be unfair to a judgment creditor that he cannot enforce the judgment against a joint tenant’s interest in immovable property, but felt that legislative intervention is necessary if this is to be changed ([64]).

The practical consequence of this decision is that it is now clear that monetary judgments may not be enforced against a judgment debtor by way of a WSS over the judgment debtor’s jointly owned immovable property. There is therefore no fear that the occupants of a jointly owned property (other than the judgment debtor) may be left without a home due to a forced sale of the entire property pursuant to a WSS over only the debtor’s undivided interest in that property.

Finally, it still remains to be seen if the other methods of severance in equity (i.e. apart from statutory severance) may be effective to sever a joint tenancy. In this regard, Professor Barry Crown in his 2003 article (pp.121-122) had argued (and Professor Tan Sook Yee had, at para 15.69 of Principles of Singapore Land Law (2010), subsequently agreed with him) that there would have been severance in equity in the Diaz situation (i.e. service of an instrument of declaration under Section 53 of the LTA, but without registration). These academic opinions were cited in the course of CLK’s arguments, but it is unclear how far these opinions would have gone, given that they were not referred to or dealt with in the Judgment.

The usual disclaimer: All opinions expressed on www.singaporelitigationlawyer.com are entirely my own. Importantly, my opinions do not constitute legal advice and you should definitely formally engage a lawyer to confirm, vary or refute my views.

To Sue or Not to SueDemystifying Litigation in Singapore@www.singaporelitigationlawyer.com © Dominic Chan, a Singapore litigation lawyer. All rights reserved.

* Dominic Chan and Daniel Ng from Characterist LLC (together with assistance from Eddy Hirono and Nigel Sim) successfully acted for CLK in setting aside the Order and CSC’s WSS.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s