8 November, 2017
INTRODUCTION
In a previous article in the Apr-June 2016 issue of RHTrospect, we examined the then state of the law in Singapore on whether a writ of seizure and sale (“WSS”) amounts to a severance of a joint tenancy.
Since 1998, the well-established position in Malayan Banking Bhd v Focal Finance Ltd1 (“Malayan Banking”) was that a joint tenant’s interest in land was not sufficiently distinct to be subject to a WSS.
However, in 2015, the High Court in Chan Shwe Ching v Leong Lai Yee2 (“Leong Lai Yee”) took a different view on the basis that a joint tenant had the right to alienate and demarcate his undivided share of the land.
Recently, the High Court in Chan Lung Kien v Chan Shwe Ching3 (“Chan Lung Kien”) had the opportunity to reconsider this issue in litigation related to Leong Lai Yee. In Chan Lung Kien, the High Court disagreed with the position taken in Leong Lai Yee, holding that “as a matter of legal principle, a joint tenant’s interest cannot be taken in execution under a WSS”.4
This article examines the reasons for the High Court’s decision.
BRIEF FACTS
Chan Lung Kien concerned a dispute between competing judgment creditors (the Plaintiff and the Defendant) over the enforceability of a WSS obtained by one of the creditors, the Defendant. In 2015, both the Plaintiff and the Defendant had obtained summary judgment against the debtor for the payment of money in different proceedings.
The debtor and her husband held an interest in a property at 9 Jalan Tanah Rata (“ the Property”) as joint tenants. On 10 July 2015, as reported in Leong Lai Yee, the Defendant obtained an order (“the Order”) for the debtor’s interest in the Property for the purpose of attaching and subjecting it to a WSS to satisfy the Defendant’s judgment debt. The Defendant’s WSS was subsequently registered.
On 4 August 2015, the debtor’s husband provided notice of his intention to sever the joint tenancy, and hold the Property as a tenant in common with the debtor.
Thereafter, the Plaintiff also separately obtained and registered a WSS against the debtor’s interest in the Property.
In early 2016, the mortgagee of the Property, Overseas-Chinese Banking Corporation, exercised its rights under the mortgagee and sold the Property. The debtor’s half share of the proceeds was held by the Defendant’s solicitors as stakeholders until the dispute between the parties was resolved. The debtor was made a bankrupt on 21 April 2016.
As the Order in Leong Lai Yee was made ex parte, the Plaintiff applied to Court to set aside the Order on the ground that the Defendant’s WSS was void and/or unenforceable.
ISSUE
The primary issue before the High Court in Chan Lung Kien was whether a judgment for the payment of money can be enforced through a WSS against the debtor’s interest in the Property which was held under a joint tenancy between the debtor and her husband. In this regard, the High Court had to consider whether the WSS obtained by the Plaintiff and Defendant respectively was effective in attaching the debtor’s interest in the Property.
DECISION
The High Court held that the WSS obtained by the Plaintiff and Defendant respectively was ineffective to attach the debtor’s interest as a joint tenant in the Property. Hence, the High Court ordered the debtor’s half of the proceeds to be paid to the trustee in bankruptcy.
A) PRELIMINARY ISSUE
The High Court had to first address whether the Plaintiff had the necessary standing to set aside the Order, as she was not a party to the proceedings in Leong Lai Yee . The High Court held that the Plaintiff had the necessary standing, as she, being a competing creditor with a legitimate interest to protect, was affected by the Order.
B) WHETHER THE DEFENDANT’S WSS SHOULD BE SET ASIDE
Before considering the conflicting authorities in Malayan Banking and Leong Lai Yee, the High Court usefully set out the legal principles on the nature of a joint tenant’s interest. The salient principles are summarised as follows:
- In a joint tenancy, all the joint tenants together own the whole property. Each joint tenant’s interest is identical and lies in the whole of the property and no one joint tenant holds any specific or distinct share of the property;
- As each joint’s interest in the property is indistinguishable, a joint tenant cannot sell the property without the agreement of all the oint tenants; and
However, a joint tenant can sever the joint tenancy during his lifetime because of the right of survivorship. Such severance is
usually effected by an act of a joint tenant operating on his own share, mutual agreement or a sufficient course of dealing.
In light of the above principles, the High Court took the view that the position in Malayan Banking that a WSS cannot itself seize a joint tenant’s interest was conceptually correct. A joint tenant’s interest in a property could only be seized if the joint tenancy was severed, but it was well established that the issuance of a WSS did not sever the joint tenancy.
Turning to the contrary view in Leong Lai Yee, the High Court disagreed that a joint tenant’s interest could be seized under a WSS. The High Court noted that the reasoning in Leong Lai Yee was based on the fact that a joint tenant’s interest would be converted into an undivided share when the joint tenancy was subsequently severed. However, this premise failed to recognise three problems:
- The WSS cannot seize a joint tenant’s interest until after the joint tenancy is converted into a tenancy in common;
- The court cannot make an order for a WSS unless it is satisfied that the interest that is sought to be seized under the WSS is capable of being so seized; and
- Seizing a joint tenant’s interest under a WSS is not the same as seizing the property, which requires the consent of all the joint tenants. Without such consent, the sheriff or the judgment creditor was not empowered to sell the property and no statutory provisions permitted either of them to do so.
Accordingly, the High Court held that Malayan Banking remained good law, and set aside the Order and the Defendant’s WSS.
C) WHETHER THE PLAINTIFF’S WSS SHOULD BE SET ASIDE
As with the Defendant’s WSS, the Plaintiff’s WSS was also ineffective in attaching the debtor’s interest in the Property unless the joint tenancy had been severed before the Plaintiff’s WSS was issued.
The High Court held that the joint tenancy had not been so severed because the debtor’s husband had only served his instrument of declaration by way of advertisement but had not registered it in accordance with the Land Titles Act (“LTA”). The Plaintiff’s contention that service of the instrument of declaration sufficed for severance was rejected, given that at best, such service would only operate to sever the joint tenancy between the parties, but would not affect third parties until the instrument of declaration was registered.
Also, the High Court rejected the Plaintiff’s alternative argument that severance might be effected in equity by service of a unilateral declaration. It was settled law in Singapore that a unilateral declaration of intention to sever a joint tenancy was ineffective, where the requirement to register the instrument of declaration under the LTA was not satisfied.
The High Court concluded that the Plaintiff’s WSS was ineffective in attaching the debtor’s interest in the Property.
CONCLUSION
Chan Lung Kien represents a significant development on the fluctuating position in Singapore as to whether a joint tenant’s interest can be seized by a WSS. The High Court’s affirmation of Malayan Banking as good law in Singapore will assure joint tenants that their interest in immovable property cannot be seized without their consent.
Even though the outcome of Chan Lung Kien may appear unfair to both judgment creditors as they were unable to enforce their judgment debts, the High Court noted that the proper forum for change should lie in legislative reform.
1 [1998] 3 SLR(R) 1008.
2 [2015] 5 SLR 295.
3 [2017] SGHC 136.
4 Ibid, at [64].
For more information, please contact:
Sandra Han, Partner, RHT Taylor Wessing
sandra.han@rhtlawtaylorwessing.com
