21 October, 2016
High Court held that a joint account held in the name of the judgment debtor cannot be made subject to attachment under a garnishee order
One Investment and Consultancy Limited and another v Cham Poh Meng (DBS Bank Ltd, garnishee) [2016] SGHC 208 dealt with the issue of whether a joint account held in the name of the judgment debtor and another party can be made subject to attachment under a garnishee order. Overturning the decision of the Assistant Registrar (“AR”), the High Court held that a joint account cannot generally be made subject to attachment under a garnishee order, owing to (i) the prejudice it would cause banks stemming from the difficulty in ascertaining the correct proportion for attachment and the potential liabilities banks may incur to the other joint account holder in this regard, (ii) the prejudice to the other joint account holder and (iii) the current prevailing position in the Commonwealth.
Our Comments / Analysis
This decision shows that the ability of judgment creditors to attach assets in enforcement against jointly held assets depends on the type of the asset. While monies held in a joint account cannot generally be attached by a garnishee order, jointly held immovable property may be subject to attachment via a writ of seizure and sale, as decided in the case of Chan Shew Ching v Leong Lai Yee [2015] 5 SLR 295 (“Chan Shwe Ching”).
This Update takes a look at the High Court’s decision.
Background
Plaintiffs sought to execute judgment by garnishing joint account held by Defendant and his wife
The AR agreed with the Plaintiffs that monies in jointly held accounts should also be capable of attachment
The Plaintiffs obtained judgment against the Defendant for over $10 million and commenced execution proceedings against the Defendant. The Plaintiffs sought to execute the judgment against the Defendant’s monies held in a joint account with his wife, and filed a garnishee application against the bank (“Bank”).
Before the AR, the Bank resisted the application, relying on a line of English cases which established that a joint account cannot be subject to a garnishee order. The Plaintiffs contended that there was no local judgment on this issue, and the cases of Chan Shwe Ching and Chan Yat Chun v. Sng Jin Chye and another [2016] SGHCR 4 (“Chan Yat Chun”) which held that jointly held immovable property could be attached demonstrated that monies in jointly held accounts should also be capable of attachment. Otherwise, judgment debtors can easily ring fence their assets from creditors by placing them in joint accounts. The AR agreed.
High Court
The High Court overturned the AR’s decision on grounds that to allow for a joint bank account to be garnished would be prejudicial to the bank and the joint account holder
The Bank appealed against the AR’s decision and argued that in most Commonwealth countries, joint accounts cannot be subject to garnishee orders and there were no policy imperatives to depart from that position.
From a policy standpoint, the High Court opined that allowing a joint account to be garnished would be prejudicial to banks and the other joint holder of that account:
- Prejudice to bank: as regards prejudice to the banks, the High Court took the view that a bank has no visibility as regards the contributions of each joint account holder and would be ill equipped to make such determination when such issues are typically resolved at trial. As a further point, the High Court expressed concern that should a bank be expected to make such a determination (which they are ill equipped to do), they would face potential liability in respect of claims from the other joint account holder. Finally, the High Court also opined that to allow the garnishing of a joint account would necessitate banks having to prepare written notices to inform joint account holders of the garnishing order and that would result in the imposition of additional costs to the banks which may ultimately be passed onto the judgment creditors and debtors.
- Prejudice to other account holder: to presume that the judgment debtor was entitled to an equal share of the joint account would be potentially unfair to account holders who may have contributed more than the judgment debtor’s share of the account. If such a joint account holder sought to stop his share of monies from being attached, the only recourse available to such a joint account holder is to make objections to the bank or incur costs by formally participating in the garnishee process.
The High Court found that Chan Shwe Ching is not relevant as it related to a writ of seizure and sale against immoveable property. Given the illiquid nature of immoveable property, it meant that there was no risk that the innocent joint tenant’s share in the property could be dealt with by the judgment debtor without his/her consent. Further, upon the sale of such property, the joint tenancy is severed and the sheriff can only market the judgment debtor’s share in that property.
Additionally, the Rules of Court required the sheriff to apply to Court for directions as regards realisation and for notice to be given to all parties interested in the immovable property. The High Court opined that no such safeguards existed in respect of joint accounts.
On the basis of the foregoing, the High Court allowed the appeal and held that a joint account cannot be subject to a garnishee order.
The High Court raised the appointment of receivers over the jointly held bank account as a possible alternate manner of enforcement of the judgment that a joint account cannot be subject to a garnishee order.
However, this does not mean that monies held in a joint account are completely immune to attachment. The High Court noted that a receiver may be appointed over the monies held in a joint account. Additionally, a garnishee order might be sought if there is evidence to establish on a balance of probabilities the judgment debtor’s share of the monies in the joint account or if there is evidence to show the other joint account holder has no interest over the monies in the joint account.
However, such situations are unlikely to be common. Judgment creditors are not likely to possess evidence of the
judgment debtor’s actual share of the monies in a joint account. As for the appointment of a receiver, given the costs of appointing one, the amount in the joint account has to be substantial before it is worthwhile to appoint a receiver. Further, a receiver is likely to face the same difficulties in establishing the judgment debtor’s share of the monies in the joint account.
For further information, please contact:
Alvin Chia, Partner, WongPartnership
alvin.chia@wongpartnership.com
