MORTGAGES

1. TYPES OF SECURITY
- You are owed a debt how do you ensure that the debtor (D) will pay? Two types of security:

SECURITY
(1) Personal security (2) Real security
Contract of guarantee A promises C to pay off Ds debts due C. (eg. Property to which the creditor (C) is entitled to upon Ds default.
suretyship) Advantage: (1) C will be paid even if D goes insolvent and (2) C has
Problem: depends on the continued solvency of the guarantor priority over other creditors.
REAL SECURITY
Real security may be through real property or personal property/ chattel. Generally, three types of real security:
(1) Possession passes to C (2) D conveys title of property to C (3) Purely contractual
D hands possession of the property to C C A Mortgage. It can be imposed on chattels or real Agreement btw C and D tt in event
retains possession in the goods until the debt is property of default, certain identified
repaid. Eg: At common law, D conveys title of the prop to C, property of Ds will be subj. to Cs
(a) Common law lien Freight forwarder retains but with the provisio tt C will reconvey the right to sell it to repay the debt.
possession of the goods you asked him to title back to C upon payment of sum + interest. This is called a charge.
forward until you have paid up the freight C = has title to property; D = has right to redeem. May be imposed voluntarily, by
fee. No right to sell the goods away. A mortgage can sometimes look a lot like a sale, statute or in equity.
(b) Pledge a pawnshop differs from lien in but the diff is probably is that D has a right to Note tt charges usually require some
that C has a right to sell the chattel (under redeem. formality (eg . in Coy law, a charge
certain circumstances). Note tt a common law mortgage and a mortgage must be registered in the Cos
Security by possession applies only to under the Torrens system differs significantly Register of Charges in order to be
chattels. under the latter, there is no actual conveyance of valid).
title to C.
Looking closer at (2): Types of Mortgages
(A) A legal mortgage (B) Torrens (C) Creation of Equitable Mortgage
Mortgage
 Must be done by No conveyance (i) D only has an equitable interest.
deed in English of title from D In tt case, D can only grant an equitable mortgage. In order for an equitable interest to be
language to satisfy to C (s. 68 disposed, s. 7(2) of Civil Law Act must complied D must have it in writing and signed.
s.53(1) of CLPA LTA). Remedies under s. 24(1) of CLPA not available.
Deed must convey Instead, D (ii) D has a legal estate.
the title to C + grants C a Then a mortgage is recognized so long as the parties agreed that there would be a mortgage. The
provisio tt D has charge over touchstone is binding intention on the part of the parties.
(a) Memorandum signed and in writing s. 6(d) of Civ Law Act
right to redeem. the estate.
(b) Part performance
Rights created by Both C and D
(c) Deposit of title deeds/ duplicate Cert of Title (COT)
such a mortgage is become o There is Aus authority to suggest tt if D deposit title deeds with C, with an intention
prescribed in s. registered (evinced either from writing, parol evidence or circumstances)to create a mortgage, then an
24(1) CLPA. proprietors. equitable mortgage would arise.
(D) Statutory Mortgage o Not sure where it fits some says deposit is a form of part perf, others say it is just equity.
A 4th and minor class of mortgage is the o Is it accepted in Sgp? Maybe not, since it is a derogation from s.6(d) but arguable tt equity
statutory mortgage under s. 31 CLPA in shd not be rigid otherwise statute would be used to perpetuate fraud (look at analogous
accordance with form in Part I of the reasoning in Ho Hong Bank Ltd; p.525 of TSY Prop Law)
Schedule. Basis for law creating an equitable mortgage? bec. reqd of specific performance satisfied
For convenience - a short form equity deems done tt which ought to be done.
mortgage implying a standard set of
reciprocal obligations btw the two
parties.

2. MORTGAGORS RIGHTS
o The main right tt a mortgager (M) must have is that he/she must be able to redeem the property from the mortgagee (L) when the debt is
repaid or the time for redemption has come.
Note on terminology: mortgagor is the person granting the mortgage (ie. the borrower) and mortgagee is the party who receives the
mortgage (ie. the creditor).

THE EQUITY OF REDEMPTION

 The traditional common law view is tt a Ms right to redeem the property must be unfettered once a mortgage always a mortgage.
o Cts used to strike down clauses if they deemed it an clog on the equity of redemption.
However, the law has to balance that paternalistic impulse to protect the M against the freedom of parties to contract. Over time, the judicial
stance has shifted more toward upholding the bargain tt the parties had entered into.
o Today, Cts tend only to strike it down when it (1) is unconscionable, (2) amounts to a penalty, or (3) is repugnant to the contractual right to
redeem. 1
o Judicial progress the sentiment in contract law tt must look away from substantive unfairness and only intervene when there is procedural
unfairness.
Generally, the cases that arise are of three types:
(1) Collateral advantages Option to Purchase cases (2) Delayed right to redeem cases (3) Restraint of trade
cases

1 Per Kreglinger v. New Patagonia Meat and Cold Storage Co Ltd, Viscount Haldane LC.
 Collateral advantages are terms in the mortgage that In a mortgage, the earliest point of redemption is L may mandate tt M only
confer a benefit on L but do not form part of the security determined by stipulating the no. of instalments and purchases Ls goods or
(ie. it does nothing to make Ls debt more secure) 2. when the last instalment falls due since prop can only retail Ls goods
Most common is your option to purchase clauses. An only be redeemed after last instalment is repaid. (solus agreements).
option to purchase clause granting the L the right to L may fetter Ms right to redeem by (1) setting These are a restraint of
purchase the prop if he wishes to, effectively destroys the the redemption date so late (for a lease) tt the trade and per contractual
right to purchase and will be struck down if it is in the reversion is extremely short or (2) imposing principles, will be struck
mortgage agreement. some penalty for early redemption. down if the period and
* Samuel v Jarrah Timber mortgage of stock in a Co. General rule: Parties are free to stipulate date for scope of restraint is
right to purchase stock Ct struck it down even though it redemption, but if date is such tt it renders the unreasonable.
was freely entered into HELD tt so long as the option is a property effectively irredeemable, it will not be Esso Petroleum Ltd v
term of the loan, it will not be upheld. enforced. Harper's Garage garage
* Kreglinger v New Patagonia Meat (HL) K lent money Fairclough v Swan Brewery (HL) M mortgaged a a owner mortgaged his
to to NPM agreement stated tt K would have a 5-year prop w a lease of 20 years to L date of redemption garage to Esso M could
right to purchase the sheepskins produced by NPM (this was such tt there was only 6 wks of lease left HELD not redeem property for
effectively creates a floating charge) NPM had 5 years to tt although technically M could redeem, for all 21 years and during tt
repay the loan but could pay it all off earlier if it wished practical purposes, the mortgage is irredeemable time M must retail only
loan repaid bef. 5yrs was up; K continued to demand right L cannot create an illusory right to redeem. Ls products ECA held tt
to purchase sheepskins. Contrast this with Knightsbridge Estates Ltd v Byrne solus agreement was
o HL HELD tt the cl. could subsist even though loan (ECA) mortgage was to be repaid over 40 years unreasonable restraint of
had been repaid. Viscount Haldane found tt option HELD instead tt Ct has no business looking at whether trade tt both the solus
was a collateral agreement and did not form the duration of repayment was reasonable instead and the no-redemption
part of the mortgage (even though it was in the shd only intervene when there is unconscionability terms were bad HL
same loan document). Further, tt bec. it was a none in this case bec. parties were companies who affirmed the decision and
floating charge, it was easier to find tt this was a were dealing at arms length. reiterated tt usual
collateral agreement. Also, laid down the three grds Disdain for reasonableness test was affirmed in
contractual principles wrt
on which cts would strike claims down (see fn1) Multiservice Bookbinding Ltd v Marden right to restraint of trade applied.
The difficulty in this line of cases is how courts decide redeem postponed by 10 yrs + index mechanism to
(rather arbitrarily) when option clauses are part of the peg debt in to value of Swiss franc L profited by A What happens when
mortgage and when they are a collateral agreement. LOT (33.3% return on the loan) but Ct enforced it mortgage comes to an end?

2 Historical context: Traditionally, collateral advantages were struck down bec. they were deemed as gg against usury laws. Following the repealing of usury laws, courts were willing to
consider collateral advantages but it is observable tt the judicial stance was conservative at the start and has moved more toward freedom of contract now. The cases we begin considering
come after the repeal of usury laws in 1854.
 Trad reasoning for Kreglinger is tt it is a floating charge HELD tt basis for intervention is unconscionability, Generally a term tt seeks
but not clear how tt makes any diff. and not mere unreasonableness parties had to affect the mortgage
Another noteworthy point abt Kreglinger is Lord Merseys entered into contract w eyes wide open. property even after M
disapproval of the clog on the equity view. Kreglinger is Sg equivalent is Fiscal Consultants Pte Ltd (1981) has redeemed it is
very persuasive authority and many cts have echoed his term stipulated tt if M redeemed bef date of unenforceable But note
view. But in Singapore, the clog on the equity principle redemption, he must pay the full interest due the tt Kreglinger was one
has been accepted: entire period of mortgage Ct HELD tt this was not such case where option
* Citicorp Investment Bank (Singapore) Ltd v Wee harsh and unconscionable bec. parties were of equal to purchase subsisted
Ah Kee [97, SGCA] W secured a loan from CIB by bargaining power and in fact, M only needed to pay even though debt was
mortgaging his shares in a Co. W also granted CIB an the extra interest bec. it wanted to beach the terms of repaid (but tt was
option to purchase 30% of the shares at a fixed price mortgage by redeeming early (and in this case, the probably bec. option to
option could be terminated if W paid CIB $800K they later interest probably served as a sort of liquidated purchase was not part of
disagreed on the scope of this termination provision W damages)4. the mortgage).
never paid the $800K but CIB held back some of the shares Of course, whether courts view an early-redemption If L terminates the
mortgaged W sued for return of the shares. HC held tt fee as a penalty depends on the bargaining power of mortgage, it does not
option was a clog on the equity and hence void. the parties: mean tt all rights
o SGCA found tt the option was a collateral * Hong Leong Finance Ltd v Tan Gin Huay (99, disappear courts will
agreement and not void bec. there was no SGCA) M were 2 illiterate old ladies who borrowed still find tt Ms right to
unconscionability (seeing tt W had independent $ to purchase a hawker stall L imposed a late redemption is alive.
advice)3. payment interest of 18% - SGCA held tt the late
We can see tt Citicorp follows the Kreglinger method of repayment penalty was out of all proportion
construing a collateral agreement in order to escape the with the greatest loss tt could conceivably be proved
doctrine of the clogs on the equity doctrine. to have followed from the breach Ct held it was
irrelevant tt 18% was the industry practice.
What can M do with his equity of redemption?
- After mortgaging his prop, in effect all M has is his equity of redemption. The equity of redemption is an interest in land (equitable interest or estate
depending on the nature of Ms initial interest) and hence M can deal with it.
Assignment ie. sell the equity of redemption to a Lease s. 23 CLPA Mortgage
3rd P
- M may assign his interest in effect someone - If M is in possession, he is allowed to lease - The equity of redemption may be mortgaged.
else steps into the shoe of M. the prop, provided lease does not exceed - In effect this creates a mortgage-on-a-
- But M still bound by the covenants of mortgage 3 yrs. mortgage.

3 Note tt even though option was upheld, CIB lost the appeal on other grounds. Technically, this also means tt Yong CJ.s pronouncement was not the ratio of the case, but its unequivocality
in calling for restrain in using the clog on the equity principle (while still accepting it, he felt tt is was of increasingly less relevance bec. of innovation in financing methods and how
businessmen are now more capable of protecting themelves) is very persuasive authority.

4 You will recall from contract law tt LD clauses are generally enforceable so long as they are not disproportionate to the possible loss suffered by the L. Other types of lock in clauses
common in mortgages are those tt offer very attractive interest rates for a part of the mortgage but levy a penalty fee if M redeems early.
 due to Privity of contract; hence M usually will -
A lease for 2 years, with an option for add 2 - Technically no limit to how many mortgages
seek an indemnity from the 3rd P. years does not flout the 3 year rule (Bank of can be created; usually depends on the mkt
China v. Lee Kee Poh) value of that equity of redemption.
Other rights of M under law (ss. 19 22, s. 30 CLPA) applicable to registered mortgages under the LTA as well (by way of s.69(1) of LTA5)
s. 19 M can compel L to s. 20 M has s. 21 Restriction on consolidation s. 22 3 mths notice rule
transfer interest power to inspect of mortgages
title deeds
- When M is entitled to redeem, - During mortgage, - Consolidation = M grants mortgage - Mortgages will state the date on which prop is
M can compel L to transfer L will hold on to of 2 plots of land to the same L- M entitled to be redeemed.
the prop to the name of a title deeds. wants to redeem plot X, L wishes to - If M does not redeem on tt date but does so
3rd P tt M chooses, instead - M may at any compel M to redeem Y as well. after the date, he must serve 3 mths notice on
of L re-conveying prop back to time demand to - Law does not allow M to the L.
M. inspect the consolidate, BUT parties can - Notice =/= approval; L cannot reject Ms right
- Does NOT apply if L is in deeds provided contract out of this in their mortgage to redeem.
possession. M pays for any agreement (which they often do). - Parties can contract out of this.
- Policy: convenience + avoid - Policy: give L time to seek new investment.
cost incurred.
stamp duty
s. 30(1) apply for court sale of mortgaged property
- Once prop falls to be redeemed, M can either redeem privately or sue in a redemption action6.
- Advantage of court action is tt M can petition court to order sale in lieu of redemption.
- Proceeds will go toward paying off L and rest will go to M.
- *Palk v Mortgage Services Funding PLC [ECA] M was entitled to redeem but could not bec. he did not have the $ - L did not want to sell bec.
prop mkt was depressed M sought judicial sale even though proceeds would be insufficient to pay off L ECA held tt Ct has unfettered discretion
to order sale but it will be exercised judiciously wrt the circumstances no evidence tt property market would improve and even if it improved, still not
enough to repay the loan - Ls suggestion to wait and rent out the property in the interim was not feasible bec. rent collected would be less than the
amt of interest owed per period M would then be subj. to open-ended liability ECA found for M and ordered sale.

3. MORTGAGEES RIGHTS
The ONE right
Just like every mortgage must entitle M to redeem, at general law, the one guaranteed right of the L is that every mortgage must entitle L to
foreclose.
o Once L has foreclosed on the property, Ms right to redeem is terminated. Foreclosure does not happen automatically.

5 States tt Part IV of CLPA applies to all mortgages registered under the LTA. (What happens if mortgage is for registered land but mortgaged was not registered? Probably, then reading s.
69(2) of LTA, only s. 31 CLPA applies.)

6 Under the statute, M can petition for sale the moment he/ she is entitled to redeem (ie. date of redemption is over), even if M has no means to redeem (bec. M cannot raise the debt
sum).
 o This right applies to legal and equitable mortgages equally.
This right is mirrored in statute as well: s. 76 LTA imputes a right to foreclose in every mortgage of registered land.
Other rights
Statute: s.24 CLPA applies to all mortgages made by deed | s.69(1) LTA imputes Part IV CLPA rights to registered mortgages as well | ss.75, 76
LTA - for mortgages of registered land
Mortgage agreement all other rights will depend on whether they are provided for in the mortgage agreement
Rights independent of Ms Default Rights upon Ms Default
(arise once mortgage money is due -either the lump sum or default
on any instalment)
Right to Possession Right to insure property Right to appoint Receiver Exercise (extra-judicial) power of
Sale
Source of e right: Applicability s.24(1)(b) Applicability ss.24(1)(c), 29 Applicability ss.24(1)(a), 29 CLPA
Legal mortgage bec. L has title to property CLPA CLPA - Same as in right to insure property
Registered mortgage s. 75 LTA (a) Mortgages by deed - Same as in right to insure
Equitable mortgage no inherent right but i. Legal property Ls unfettered right to decide when to
can apply to Ct ii. Equitable9 sell
(b) Registered mortgages
L generally avoids possession How it is used - L may not wish to sell immediately
Extent of right
Ls right to possession is independent of - L can appoint a receiver after right arises and M cannot
L has right to procure (R) to manage the complain.
Ms default7 and can be exercised any
insurance against loss mortgaged assets in the - China and South Sea Bank Ltd v. Tan
time.
by fire only best possible way to secure Soon Gin [90, PC] mortgage of
In general, Ls avoid possession bec. equity
Premiums shall be a repayment. shares there was also a personal
imposes very onerous duties upon an L
charge on mortgaged - Adv. of this over exercising guarantee by a surety L chose not
in possession.
prop and will add to the power of sale is tt receiver to sell price dropped and
He has a duty to:
o If he does not exercise sale, he has to mortgage debt is agent of M and hence L insufficient to cover debt L sued
Max amt insured (if not would not be found to be surety instead HELD tt L owes no
rent out property in the interim
o In renting out, he has to obtain rent tt a stated in mortgage) will negligent. duty to the M as to when he
person acting reasonably diligent not exceed 2/3 of amt - After selling prop, R will pay wishes to sell M has no right to
wouldve gotten. need to restore prop in for his own commission, complain abt fall in value parties
As a matter of practice, L does not enter case of total destruction then the Ls debt and if chose to incl the surety judgement
into possession except as a prelude to Parties, however, have there is any surplus, to M. for L.
exercising the power of sale on default. freedom to vary or - c.f. Palk (above) Ct rejected Ls
extend this right in the Appointment of Receiver petition to sell later and ordered
mortgage agreement

7 But note tt for right to possession under s.75 LTA, the right is only exercisable when M defaults on payment.

9 Refers to a formal equitable mortgage ie. M initially only had an equitable interest.
Procedure to exercise possession Quare: whether parties - L can appoint whoever he judicial sale Ct justified tt it was c
If right is exercised pursuant to s. 75 LTA, M can totally exclude this wishes as receiver and the case of extreme and exceptional
must be given one-month notice right, when words used decision cannot be facts.
If M has rented prop out, L will serve notice is vary or extend challenged unless it was - But, in * Teo Siew Har v. OCBC
to tenant (T), directing T to pay rental to L done in bad faith. [99, SGCA] M approached L asking
instead of M. Right to transfer and - *Downsview Nominees L to sell, but L refused after a few
L is obliged to use rental to discharge deal v. First City Corp Ltd mths, L sued for possession instead
interest due and surplus must be returned L can transfer his [93, PC fr NZ] HELD tt M alleged tt L breached its
to M. interest to A and A will duty of a Receiver to obtain equitable duties owed to M
be the new mortgagee. fair value was based on HELD tt this case was to be
Equitable mortgagee Unless otherwise stated, equity and NOT tort. distinguished from Palk bec. tt was a
No inherent right of possession but may L can do so without Ms - If it were otherwise, then a case under s.30(2) of CLPA and
apply to court to enter into possession. consent. R will be caught btw a rock not for breach of mortgagees
In such cases, if L is exercising his right to A will take land subject and hard place he may be duty also tt Palk was an extreme
possession in accordance w the terms of the to equity of redemption negligent if he sold prop case Judgement for L.
mortgage, courts have no right to refuse and any other equities too early or too late
unless there is a reasonable prospect of M to which he has notice. There will always be Exercising the power of sale
paying off in full (as held by SGCA: *Hong expert - If power of sale is conferred by s.24,
- witnesses ready to testify then s.25 of CLPA must be
Leong Finance v. Tan Gin Huay8)
with the benefit of satisfied: (i) notice DD-ing payment
hindsight R also + 3 mths arrears after service; or (ii)
dependent on Co. for info interest under e mortgage is in
thus, duty is merely that of arrears for 1 mth; or (iii) breach of
good faith. some other mortgage covenant.

Duties of L when exercising power of sale

*Cuckmere Brick Co Ltd v Mutual Finance Ltd [1971, ECA] 2 duties of L:
(i) Duty to act in good faith and (ii) Duty to take reasonable steps to obtain true market value
* Hon Seen Ghee v. DBS Ltd [94, SGCA] accepts Cuckmere, Tse Kwong Lam, pronounced on general principles (i) L not trustee of M; (ii) not required
to wait until best time for sale; (iii) L can prefer his own interest provided he does not disregard Ms interest unless Ls interests are at risk, Ms interests
must not be prejudiced; (iv) parties shd cooperate w each other.
(1) Duty to act in good faith (2) Duty to take reasonable steps to obtain true market value
Subjective criterion of good faith while L is not a trustee of M, he Objective criterion to take reasonable steps.

8 SGCA did sth quite strange in this case they entered judgement in favour of L, but stayed the possession order provided M continued to pay the monthly instalments. This discretion was
simply a courts discretion to allow stay of execution prob bec. Dfs were old ladies in this case.
must act in a way tt does not prejudice Ms interest. - Cuckmere Brick - Advert did not mention the correct no. of homes for which
- Generally, M and Ls interest shd be aligned both want the planning permission had been obtained Duty to take reasonable steps not
highest possible value on prop. But in some cases, L may actually satisfied L liable ECA used language like neighbour and proximity to
be the party buying the prop and hence there is an interest to base Ls liability gave rise to some confusion on the basis of Ls duty to M
dispose the prop cheaply. (see below).
- *Tse Kwong Lam v Wong Chit Sen [83, PC] L sold prop by - The duty is really not about getting the best price or true market value, the
public auction sole bidder was wife of L, bidding on behalf of Co. court wants to see reasonable steps taken (ie. L could be bothered) to get
owned by L conflict of interest PC HELD tt it was permissible the best price available at that time.
but burden was on L to show it was done in good faith Ls - Hon Seen Ghee both L and M were selling prop M found buyer but L was
advertisement had insufficient info + wife knew the reserve price dissatisfied bec. price would not repay entire debt in the end, L held public
of bid good faith not found. auction but fetched even lower offer than Ms Ct found L liable (prob
- *Kian Choon Investments (Pte) Ltd v Societe Generale [90, bec. L was uncooperative see (iv) above box)
SGHC] L sought private buyer for sale L had agreement with - *Lee Nyet Khiong v Lee Nyet Yun Janet [97, SGCA] L only advertised
prospective buyer tt L will be allowed to repurchase several floors once info on advert was scant tender period was too short even though
at a fixed price HELD tt L had not proven good faith although price fetched was reasonable, CA HELD tt duty not discharged.
price was above mkt valuation, there was clear conflict and the - How to ensure reasonable steps taken?
o Auction? Not always the best, as seen in Hon Seen Ghee (prob. the way
haste in which L went into the transaction (without waiting to
see if thr could be a higher price fetched) does not discharge e and advert for auction is impt)
o Advertisement? Again, not a necessary condition, but in tdys mkt, difficult
burden of proving good faith L lost (note this was not a proper
to discern true mkt value w/o advert.
trial but application for interlocutory injunction to stay the
transaction).
Juridical basis for Ls duty Diff in remedy for the two duties
For a while, Cts struggled with what the abovementioned duties were based upon the tort of negligence *Beckkett Pte Ltd v Deutsche
or equity? Bank AG [09. SGCA] A failure to
Parker-Tweedale v Dunbar Bank plc (No 1) [90, ECA] Husband had beneficial interest in prop but Wife take reasonable steps (duty (2)) will
was mortgagor H sought to argue that L owed him a duty too by latching upon the word neighbours in usually lead to damages being
the Cuckmere decision However, ECA HELD tt duty owed by L to M (and Ms surety as well) arose out of awarded.
equity and not tort The transaction will only be set aside
China & South Sea Bank [90, PC] affirmed tt duty arose in equity opined that an L cannot be liable for if there is a breach of duty to act in
decline in prop value unless L was personally responsible for the decline. good faith (duty (1)).
o Note tt Cts have used terms like gross negligence, wilful misconduct (which shades into bad o Further, M must prove tt the
faith) to describe the degree of negligence necessary in order to find an L liable. buyer is not a bona fide
*Downsview leading case tt confirms the duty is based on equity tt std of reasonable care is not tt purchaser ie. show tt 3rd P
as in ordinary negligence (although this was a case on receivers duty, it is highly relevant bec. it had notice of bad faith or
carefully considered the scope of Cuckmere) impropriety.
Other rights/ duties of mortgagees
Foreclosure Apply for judicial sale Duty of L wrt proceeds of any Action on the debt
s.30(2) CLPA sale s 26(3 )CLPA
As mentioned, every L has a right of Available when: there is an L is not trustee wrt mortgaged L has cumulative remedies
 foreclosure bec. L has title to the estate action in Ct (L suing for
(regardless legal or equitable). foreclosure or M suing for
This is the most severe remedy and is redemption)
not favoured by equity, hence Petition court to order sale.
mortgagees generally avoid it bec. Cts will Request may be made by
not easily allow M to be foreclosed: mortgagee, mortgagor or
(i) Foreclose must be by action in Ct10 anyone interested in
(ii) Ct will give M 6 mths to pay up bef mortgage $.
making foreclosure absolute Court will not lightly
(iii) If M cannot pay, he can ask for order a sale against Ls
extension and Ct is quite easily wishes if a substantial
persuaded to grant this extension part of the $ is
outstanding.
Only exception was the
Palk case.
prop, but L is trustee in regard
to PROCEEDS of sale
He shall use proceeds to pay (i)
costs incurred in sale, then (ii)
sum due to him and then (iii)
encumbrancer ranking next after
him.
s. 74 LTA After paying off (i)
(iii) above, L must pass $ to
whoever appears on the land
register as entitled to prop
includes 3rd P purchaser who has
lodged a caveat (Chip Thye v
DBS)
hence even after L has
foreclosed or sold the prop,
he can sue for an action on
the debt
But if he does so after
foreclosure, the action on
debt would reopen the
foreclosure and Ct may
stay the foreclosure if M is
able to repay the debt.
If L is unable to restore the
prop to M, his action on the
debt will fail.

4. POSITION OF AN EQUITABLE MORTGAGEE / CHARGEE

An equitable mortgagee has title hence he has an inherent right to foreclose.
o Furthermore, if equitable mortgage was deeded Part IV CLPA remedies are available ie. power to appt receiver + extra-
judicial sale.
o If no deed, he can only apply to Ct for judicial sale.
But if the informal contract/ agreement provide a right for sale, TAN SOOK YEE [18.131] argues tt no reason why he
should not be allowed to exercise extra-judicial sale.
A chargee (legal or equitable) cannot foreclose bec. NO title is transferred.
o But CLPA remedies are available if charge was deeded.

5. PRIORITIES OF MORTGAGES
For registered land, general rule is that priority is according to date of registration.
But note two special cases:

5.1 Mortgage vs. Writ of seizure and sale

*UOB Ltd v. Chia Kin Tuck [06, SGHC] UOB was the L in this case M defaulted L exercised power of sale sale was aborted bec. C
challenged L with a Writ of Seizure and Sale (WSS, which had obtained as judgment creditor of M in a separate suit) C argued tt he shd be

10 Rules of Court, O 83
 allowed to conduct e sale instead bec. he had registered (at Land Registry) WSS before Ls right to sell accrued HELD tt L could
carry on the sale even after registration, a judgment creditor merely steps into the shoes of the mortgagor and gets no better interest than
that of the original M thus, even when C registered the WSS, the prop was already subject to a mortgage Reading s.73(2)(d) LTA, L
has right to sell a prop free from any interest registered subsequent to the mortgage (and Cs WSS was after Ms granting of the mortgage
hence, judgment for the L.

5.2 Tacking
Tacking = allowing a subsequent mortgagee to gain priority by attaching itself to any mortgage with a higher priority
o Eg. Prop is mortgaged to L1, L2 and L3 under mortgages X1, X2 and X3 respectively. One year later, L1 wants to grant M additional
credit, but he does not want to rank after L3 in priority. What can he do? He has to attach his new loan to X1.
S.80(1) LTA
L1 can tack if:
(i) The prior mortgage (ie. X1) expressly authorises:
Making of further advances, or
Giving of credit in instalments; OR
(ii) Subsequent mortgagees (L2, L3) consent to L1s extension of the further advance.
*Note: (i) is automatic tacking (bec. subsequent Ls consent not needed) but (ii).

6. RELATIONSHIP BTW GENERAL LAW AND LAND TITLES ACT

Firstly, title does not pass to the L.
Secondly, it is pointless to speak of legal or equitable mortgage for registered land.
o Instead, the mortgage is either registered mortgage or an unregistered mortgage.

6.1 Rights under a registered mortgagee

Right of redemption (for M) s 76(1)(a) LTA
Right to possession and foreclosure (for L) ss. 75, 76 LTA
CLPA rights by way of s 69(1) LTA (incl power to exercise extra-judicial sale)
Other equity rules should probably apply, unless they are inconsistent with provisions of the act (per s 3(1) LTA)

6.2 Unregistered mortgage of registered land

* Societe Generale v. Good Property Land Development Pte Ltd [89, SGHC]
L sought to exercise power of sale M claimed tt as mortgage was not registered at the time, L did not have the power of sale
conferred by s 69(1) LTA
Chan J. rejected this HELD tt provisions of the CLPA can apply to mortgages of land under LTA (even without registration) provided
they are not incompatible with the LTA provisions even though s. 69(1) specifically incorporates Part IV CLPA to registered
mortgages, it does not mean tt the provisions of CLPA cannot apply to unregistered mortgages of registered land.
 6.3 Cases tt emphasise the diff btw LTA and common law mortgage
*Rimmon Watch Pte. Ltd. v. Great Pacific Finance Ltd [89, SGCA]
Mortgage contained a clause tt M cannot lease without Ls express consent M sought Ls consent to grant a 3 year lease L
consented, not knowing tt there was an option to renew clause for another 3 yrs M defaulted and L exercised his right of
possession M sought to make L bound by the lease L argued he was not bound.
M argued tt since L had the legal estate, the reversion would revert to L and since an option to renew clause touches and
concerns land, it flows with the reversionary estate to bind L as well.
SGCA rejected this HELD tt an L under the LTA does not have title to the property and hence cannot be the reversioner11.
o Ls right to possession is a statutory power (derived solely from the force of s75 LTA)

*Singapore Finance Ltd v. Matterhorn (Pte) Ltd [89, SGHC]

L entered into possession sought to evict Ts of the lease granted by M without the prior consent of L T resisted eviction arguing tt
since L did not have title to the estate (relying on Rimmon Watch, his statutory right of possession did not go so far as to
grant a right to evict.
Thean J. rejected this firstly, Ms right to grant lease under s23 of CLPA was subject to express prohibitions in a mortgage secondly,
L does not need to step into the shoes of M and have equal title as M in order to evict; L is not exercising a power of eviction but
merely asserting that L is not bound.
Impt point: Ms power to grant lease is not unfettered or as owner of title he is allowed to grant lease subj to provisions in s.23 and
express covenants of mortgage.

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