Caveats Flashcards
What is a caveat?
It is best seen as a procedure which stops dealings in land which are contrary to the rights of the caveator (TSY)
Analysis: Can (caveatee) challenge the caveat for a defect/mistake in form?
The courts will not strike down a caveat for a minor mistake/defect in form unless the mistake/defect is substantial i.e is positively misleading and may prejudice the interests of others (Alrich)
On the facts, …
(This situation is similar to Ong Chay Tong, where the defect was substantial because it was based on the original pre-emptive clause which was substantially different from the varied pre-emptive clause)
(This situation is similar to Alrich Development, where the defect was very minor (it was an incorrect date of the exercise of an option of sale) because it did not result in any harm or confusion.
Analysis: Can (caveatee) challenge the caveat despite having purchased the land subject to the caveat?
As (plaintiff) is the registered proprietor of the land, (plaintiff) is regarded as a caveatee under s 4 LTA. He would be interested to know if he can challenge the caveat filed by (defendant)
(PRE, HAS THE CAVEAT LAPSED?)
(5 years have passed since the caveat has been lodged)
Since the caveat was lodged more than 5 years ago and there was no extension made, (caveator’s) caveat would be regarded as having lapsed and ceased to affect the land (s 121(1)(b) LTA)
(FIRST, S 127)
Firstly, (plaintiff) would want to apply to the Registrar to remove the caveat for being lodged vexatiously / frivolously / not in good faith under s 127(2) LTA. (defendant) would then have to obtain an order from the court to maintain the caveat within 30 days, or the caveat will be removed.
Alternatively, per s 127(1) LTA. (plaintiff) would want to summon (defendant) in court to show cause why the caveat should not be removed
While the dispute is ongoing, (plaintiff caveatee) may want to ask the court to remove the caveat in a manner “as seems just”, per s 127(1) LTA. In this situation, the onus is on the (defendant caveator) to show that the caveat should be maintained as kind of interlocutory injunction (Tan Yow Kon).
As a starting point, the plaintiff must show that there is a prima facie case to be tried (Tan Yow Kon). On the facts, …
Since there is a prima facie case to be tried, the court will proceed to weigh the balance of convenience (Tan Yow Kon). First, the court will evaluate if damages would be an adequate remedy for the defendant caveator in the event that the caveat is removed when it should not have been. (On the facts, damages are unlikely to be an adequate remedy since land is unique and for the personal enjoyment of the defendant caveator)
(On the facts, damages are likely to be an adequate remedy since the defendant caveator is only interested in the land for investment purposes)
(Next, if damages is an adequate remedy for the caveator, the court will proceed to weigh the financial means of both parties, and only remove the caveat if the plaintiff caveatee is in a financial position to pay damages to the defendant caveator should it turn out that the caveat should have been maintained)
(Next, even if damages is not an adequate remedy for the (defendant caveator), the court may still decide to remove the caveat if, upon weighing the financial means of both parties, the defendant caveator is not in a financial position to pay potential damages to the plaintiff caveatee in the event that the caveat is maintained when it should have been removed)
Assuming the court believes that the caveat should be maintained, the court may order the caveator to provide security per s 124(a) LTA to cover damages should the caveator ultimately lose the case
(SECOND, WHETHER THERE IS AN INTEREST IN LAND THAT CAN SUPPORT THE CAVEAT)
Secondly, (plaintiff) would have to challenge the caveat on the grounds that it is not an interest that can support the caveat.
As a starting point, even though the (plaintiff) had agreed to purchase the property subject to (defendant’s caveat), (plaintiff) is still free to challenge in court the validity of the interests claimed under the caveats (Cathay Theatres)
(Equity)
1. Setting aside the sale for duress, UI, unconscionability
- Inchoate equity (s 95(2), s 115(3)(b))
(Equitable interests)
1. An equity of redemption can be protected by a caveat as it is an interest in land (s 115(1) LTA, Societe Generale)
- An equitable mortgage can be protected by a caveat as it is an equitable interest in land (s 115(1) LTA).
- The purchaser of land in a contract for sale and purchase can protect her equitable interest in land as constructive trustee (s 115(1) LTA). However, there any such interest is extinguished if the purchaser repudiates the contract (Virginia Developments)
- The vendor (or beneficiaries if the vendor is a trustee) of a contract for purchase and sale of land has an equitable interest in the proceeds of sale pursuant to the equitable doctrine of conversion. This can be protected by a caveat under s 115(3)(a) LTA.
- The grantee of an option to purchase has an equitable interest in land as long as the option has not expired and can protect it with a caveat under s 115(1) LTA (Eng Bee Properties). However, there is no equitable interest after the expiry of the option (Eng Bee Properties) (Note: There is an equitable interest even if the option is not exercised)
- Since there was an unequal contribution to the purchase price, a resulting trust would arise…
- Since there was a common intention constructive trust…
- A licensee who has an equitable interest pursuant to a constructive trust imposed on a 3rd party purchaser who had notice of the license and paid a lower price for the land or expressly undertook to recognise the license (Ashburn Anstalt, endorsed in Guy Neale)
- A license coupled with equity will be regarded as an interest in land pursuant to s 95(2) LTA
(Contractual)
1. The holder of a right of first refusal or right of pre-emption, without more, has an interest in land which can be protected by a caveat (s 115(1) LTA, Ong Chay Tong).
(Note: The interest in land arises even if the grantor of the right has not decided to sell)
- An interest in the sale proceeds can be protected by a caveat (s 115(3)(a)). However, the law on whether a purely contractual interest in the sale proceeds can be protected by a caveat is murky. While the SGHC in Novel Ho has held that a contractual right in the sale proceeds arising from a loan agreement can constitute be caveatable under s 115(3)(a), the SGHC in Salbiah bte Adnan, as obiter, has favoured an opposing view. On my view, Salbiah is the better approach because the proposition that a personal right to a repayment of debt, where the interest is purely monetary in nature, sits uneasily with the purpose of s 115, which primarily aims to protect interests in land.
On the facts…
(This situation is similar to Novel Ho, where a contractual right to the sale proceeds if the land was sold to 3Ps was held by Phang J to be a caveatable interest under s 115(3)(a))
(This situation is similar to Abdul Hamid, where an express assignment of the sale proceeds of a flat was held by SGDC to be a cavetable interest under s 115(3)(a))
- Mortgagor’s interest in sale proceeds (check with Ying)
(Matrimonial division of assets)
(Per s 112(10) of the Women’s Charter, (property) would be considered a matrimonial asset because even though it was acquired before marriage, it was used by both spouses or substantially improved during the marriage.)
(Per s 112(10) of the Women’s Charter, (property) would not be considered a matrimonial asset because even though it was acquired during the marriage, it was acquired by gift or inheritance. In any case, if I am wrong about this and assuming that it is matrimonial property…)
The case-law is divided on whether a spouse may obtain a caveat over matrimonial property before a final division of matrimonial assets has been ordered. On one hand, the SGHC in Lim Kaling has held that prior to a decree nisi or even a final order, a spouse would not have any caveatable interest in the property because any such expectation was only inchoate. This can be contrasted with Tan Huat Soon, where the SGHC held that after a decree nisi had been obtained, pending the court’s final division of property, the non-registered owner of the property would have an equitable interest in the property. In my view, the decision in Tan Huat Soon is the better approach. Though the non-registered spouse owner of the property does not strictly speaking have any legal interest in the property, equity should not always follow the law. It would follow the conscience of reasonable persons in today;s society to recognise that pending a decree absolute, either spouse should have an equitable share in the property which should support a caveat under s 115(1) LTA.
On the facts…
(On the facts, since no decree nisi has been obtained, neither approaches would make a difference. The (joint tenant) would not be able to lodge a caveat unless she had contributed unequally to the purchase price of the property. I would advise her to obtain an injunction over the property and then lodge a caveat under s 115(3)(b))
(Security deposit / Shares / Others)
The obligation of a landlord to repay a security deposit paid by the tenant is purely personal, and the tenant does not have an interest capable of supporting a caveat (United Malayan Banking Corporation).
Pursuant to the separate legal personality principle, a shareholder does not have a caveatable interest in land owned by a company he holds shares in (Jhaveri Darsan).
Unsecured creditors do not have a caveatable interest in the company’s property (Power Knight)
Beneficiaries of a will have no caveatable interest over the estate’s property as long as the will remains unadministered (Shaan Taseer)
(THIRD, COMPENSATION UNDER S 128 STATUTORY TORT)
Finally, given that the (defendant) does not have a valid interest in land that can support the caveat, (plaintiff) may want to sue the (defendant) under the s 128 LTA statutory tort for lodging a caveat / failing to withdraw the caveat wrongfully, vexatiously, or without reasonable cause.
(Plaintiff) has standing to sue as s 128 allows “any person” who sustains pecuniary loss under the tort to sue.
(Firstly, did the caveator lodge the caveat wrongfully, vexatiously, or without reasonable cause?)
On the facts, (Caveator) may be liable for vexatiously (lodging / refusing to withdraw the caveat) if there is absolutely no grounds for the caveat, and the caveator had filed the caveat with an improper motive of annoying the caveatee (Ho Soo Fong). This is because…
On the facts, (Caveator) may be liable for (lodging / refusing to withdraw the caveat) without reasonable cause because s/he had no honest belief that s/he had an interest that would support a caveat (Ho Soo Fong). This is evident from…
(Caveator) may be liable for (lodging / refusing to withdraw the caveat) wrongfully. There are two approaches to what “wrongfully” means. On the wide approach, a caveator have “wrongfully” lodged a caveat as long as he had no legal right to lodge the caveat (Tan Soo Leng). On the narrow approach, a caveator would only have “wrongfully” lodged a caveat if he had the improper motive to intentionally infringe the rights of the caveaetee (Ho So Fong). In my view, the narrow approach is to be preferred a wide construction of “wrongfully” could deter a person who honestly believes that he has reasonable grounds for lodging a caveat from doing so. This view finds support from learned academic Tan Sook Yee. On the facts, ….
(Secondly, is the caveatee’s losses attributable to the caveator’s conduct?)
Next, (plaintiff’s loss) is “attributable” to the (defendant’s conduct) if there is a causal connection between the two, and the loss is reasonably foreseeable, and the loss is not too remote (Ho Soo Fong).
First, there must be a causal connection. The connection need not be the sole or dominant cause, and a “contributory” cause is sufficient (Ho Soo Feng). On the facts, (Caveatee’s losses) is likely attributable to (caveator’s conduct) because…
Second, the loss must be reasonably foreseeable. The test is whether a reasonable caveator, with the requisite knowledge, would have reasonably foreseen the loss (Ho Soo Feng). On the facts, …
Third, the loss must not be too remote. The test is whether the damage is of a kind that a reasonable man would have foreseen (Ho Soo Feng).
On the facts, …
(Given that the tort here was done with an improper motive, there is also an open question of whether the principles of remoteness and foreseeability would still apply. The SGCA in Ho Soo Fong suggested in obiter that it would not, given the need for deterrence. However, this was not make a difference here since the losses here are reasonably foreseeable / not too remote)
In conclusion, it is likely / unlikely that (client’s loss) will be seen as being attributable to the caveator’s conduct.
(Thirdly, did the caveatee mitigate his losses?)
Finally, (plaintiff) also has a duty to mitigate her losses. The content of the duty to mitigate will depend on what is reasonable in the circumstances (Ho Soo Fong).
On the facts,
(This situation is similar to Ho Soo Fong, where the court held that the plaintiff had sufficiently mitigated his losses by offering to pay part of the cancellation fees).
(In Ho Soo Feng, the court suggested that a caveatee who contends that a caveat has been lodged vexatiously may have a duty to apply with the Registrar to simply cancel the caveat under s 127 LTA)
Analysis: Can (caveator) protect his interest in land with a caveat?
Per s 115(1) LTA, (client) should lodge a caveat to protect his interest. (Client) does not need to prove his interest, he only needs to claim an interest in land. Under s 117(5) LTA, the Registrar need not be concerned whether the caveator’s claim is justified.
(Placeholder: Copy-paste the whole caveatable interest analysis from above when it is done)
S 58 HDB Act
A contract to directly or indirecctly use property (or the proceeds of sale) as security or collateral for any debt, obligation or claim is void.
