REYAZ AHMAD S/O JAMIL AHMAD
FMT303 PROPERTY LAW
TUTOR-MARKED ASSIGNMENT 02
Kim Fook: As the registered proprietor of a terrace house (his property), Kim Fook has the enforceable right to possess and use the property. Kim Fook’s such legal interest in land (his property) is enforceable against the whole world.
Henry: Kim Fook (debtor/owner of the property/mortgagor) conveys the title of his property to Henry (creditor/mortgagee) through a legal mortgage, with a condition of Kim Fook paying back to Henry of the sum borrowed together with interest, although the certificate of title was not given to Henry yet due to temporary being misplaced by Kim Fook.
Ah Chen: Ah Chen’s legal interest on Kim Fook’s property is similar to Henry’s, but she had lodged a caveat over Kim Fook’s property as evidence of her interest as the creditor for an agreement with the debtor (Kim Fook) that, she will be subject to the right to sell Kim Fook’s property for the satisfaction of the debt if Kim Fook is unable to repay the debt.
Eric: Kim Fook’s son, Eric, sold his father house to his bookie (Louise) for his personal interest of raising some funds to solve his gambling problem, through fraud (forged transfer).
Louise: Louise sold the property to James without registering her ownership of the property, but has given the certificate of title and the forged transfer to James at settlement.
James: James cannot register the property to Singapore Land Property (SLA) because of the caveat over the property that was lodged by Ah Chen as evidence of her interest over the agreement previously.
If James is successful in registering his transfer, he will not be subject to Henry’s & Ah Chen’s mortgages because when the registrar was to issue a certificate of title to James, he shall cancel any certificate of title of a person (Kim Fook) that was previously in authority.
Therefore, through a successful registration with the Singapore Land Authority (SLA) by the Torrens system, the effect of the land/property that was once held under Kim Fook as transferor or mortgagor will not be pass to James as the transferee or mortgagee.
If Kim Fook (registered proprietor of the terrace house) is declared bankrupt, an assignee that has registered to deal with the transmission of the interest to himself is required. But if such interest in land is not registrable, it may be protected through the caveat.
Therefore, Ah Chen (creditor/mortgagee), in the absence of fraud, has real security through being the first and only, to lodge a caveat over Kim Fook’s property, will have the priority over other creditors/mortgagees/chargees of Kim Fook (debtor) for the satisfaction of debts owing to her.
The term of the mortgage is such that, Mary Rose was suppose to buy from Big Time Textiles Industries Pte Ltd, all her supplies of Harajuku T-Shirts, for a period of 10 years (during repayments of the S$2 million loan through monthly installments with interest) and to continues buying all the supplies for another 20 years. Hence, Mary Rose have to buy all her supplies from Big Time Textiles Industries Pte Ltd for almost 30 years in total.
Mary Rose have to first understand that in the mortgage deed, the conveyance by way of mortgage is a conveyance by way of security, where the date or duration as mentioned above for Mary Rose redemption of her semi-detached house will be based on the agreement (as stated above) of the party involved (Big Time Textiles Industries Pte Ltd).
Therefore, above mortgage arises out of contract where Big Time Textiles Industries Pte Ltd have inserted those terms as Mary Rose may mutually agreed on. But those terms do not form part of the security (payment of interest), instead, it gives Big Time Textiles Industries Pte Ltd (mortgagee) an additional advantages that is known as collateral advantages.
Mary Rose needs to first understand about the equity of redemption on restraint of trade that there is a stipulation in the mortgage document where during the existence of the mortgage, the mortgagor (Mary Rose) can only purchase the mortgagee’s (Big Time Textiles Industries Pte Ltd) goods.
But Mary Rose may appeal to Court as to whether the term of the mortgage that prohibit her from obtaining her supplies of Harajuku T-shirts from other companies (although its cheaper) except for Big Time Textiles Industries Pte Ltd which will be irredeemable for 30 years was enforceable. The court of appeal may hold that it is not enforceable due to unreasonable restraint of trade and unfair terms.
There are several remedies available to Big Time Textiles Industries Pte Ltd (Mortgagee) on default by Mary Rose (Mortgagor), due to the stoppage of payments for over a year under the mortgage, as her business is falling. The remedies at mortgagee disposal will be as follow:
1 – Covenant to repay: Big Time Textiles Industries Pte Ltd (mortgagee) may pursue an action against Mary Rose (mortgagor) on the covenant to repay through suing on the covenant to pay the due payments that was outstanding for more than a year or immediately repay the existing remainder of the of the loan under the mortgage.
2 – Appoint a receiver: Big Time Textiles Industries Pte Ltd (mortgagee) may appoint a receiver, with an advantages, that the receiver could run Mary Rose’s business as an agent (selling Harajuku T-Shirts) or sell her business assets. This will avoid the mortgagee from entering into possession and will not the mortgagee to a counterclaim to account where a receiver is appointed.
3 – Right of possession: Big Time Textiles Industries Pte Ltd (mortgagee) may apply for a right of possession which goes with the legal interest as soon as the mortgage is effected through default on the mortgagor’s (Mary Rose) part. This will allow the mortgagee to rent out Mary Rose’s house and obtained rent that have received to recover the due and remaining payments from the mortgagor under the mortgage.
4 – Right to resale: Big Time Textiles Industries Pte Ltd (mortgagee) may exercise a right to resale Mary Rose’s (mortgagor) house. This remedy (power of sale) is available to the mortgagee where the mortgage is by deed and its existence is for the benefit of the mortgagee, so as to entitled the mortgagee to choose the right timing and most suitable price to sell Mary Rose’s house.
5 – Foreclosure & Judicial Sale: The effect of Big Time Textiles Industries Pte Ltd (mortgagee) having foreclosure as one of the available remedies, will result in ending of Mary Rose’s (mortgagor) equity of redemption and her house/property will belong to the mortgagee (freed from the equity of redemption). But mortgagees do not usually resort to this remedy, as the law is protecting the mortgagor’s interest. Therefore, the more commonly used remedy in an action for foreclosure or redemption will be extra judicial sale. Through Judicial sale, Big Time Textiles Industries Pte Ltd (mortgagee) may apply to court for an order to sell Mary Rose’s house/property, and the court may order such sale despite any objection from any party.
FMT303 Property Law Study Guide by SUSS, 2017, Release V1.3
Principles of Singapore Land Law by Professor Tan Sook Yee, Student Edition, Third Edition, LexisNexis 2009