E-briefing: Sale of Property Under a Writ of Seizure and Sale Without Mortgagee's Consent
SALE OF PROPERTY UNDER A WRIT OF SEIZURE AND SALE WITHOUT MORTGAGEE’S CONSENT
BYX v BYY  SGHC 237
1. In the recent decision of BYX v BYY  SGHC 237, the Singapore High Court ordered that the Sheriff proceed with the sale of an immovable property which was subject to a Writ of Seizure and Sale without the mortgagee’s consent.
2. In making the order, the Singapore High Court had to clarify the law concerning the interaction between certain provisions of the Supreme Court Practice Directions and the court’s power to order a sale under Section 18(2) of the Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed) (“SCJA”) read with paragraph 2 of the First Schedule.
3. The Plaintiff and Defendant were previously married and had 3 children to the marriage. Following their divorce in 2009, the Plaintiff and the children resided at the property (“Property”) which was the subject matter of this case.
4. A sum of about S$4.1 million arising from the ancillary divorce proceedings was owed by the Defendant to the Plaintiff. On 29 August 2018, the Plaintiff obtained an injunction against the Defendant to prohibit him from, amongst others, disposing of and dealing with the Property.
5. A writ of seizure and sale (“WSS”) in respect of the Property was issued on 7 March 2019, following the registration of an order dated 8 November 2018 for the Defendant’s interest in the Property to be attached and taken in execution in satisfaction of the judgment debt owed to the Plaintiff.
6. The Plaintiff’s solicitors wrote to the mortgagee bank on 13 March 2019 to seek its consent for a sale of the Property. The mortgagee replied by letter on 15 March 2019 to state that it did not consent to the WSS, and maintained in a subsequent letter dated 24 May 2019 that it was “entitled to, and does as a matter of practice, withhold consent to the sale of mortgaged properties pursuant to a Writ of Seizure and Sale by a [Judgment] Creditor”.
7. On 31 May 2019, the Plaintiff’s solicitors wrote to the mortgagee bank to invite it to participate in the present proceedings. However, the mortgagee bank elected not to participate.
8. In deciding to grant the order sought by the Plaintiff, the Court considered the following 2 issues:
- Whether an execution creditor who wishes to effect the sale of mortgaged immovable property that has been seized under a writ of seizure and sale is required to obtain consent of the mortgagee (“1st Issue”);
- The considerations the Court should take into account in an application for the sale to proceed in such circumstances (“2nd Issue”).
Decision of Singapore High Court
9. On the 1st Issue, the Court acknowledged that paragraphs 80(1) and 80(2) of the Practice Directions contain an implied requirement for the execution creditor to first seek the mortgagee’s consent for the sale of the mortgaged immovable property.
10. However, the Court found that Practice Directions are essentially administrative directions and may not subdue the Court’s judicial powers, although a Court will not normally depart from such directions unless there is good reason for doing so. In this regard, pursuant to Section 18(2) of the SCJA read with paragraph 2 of the First Schedule and Order 31 rule 1 of the Rules of Court, the Court has the power to “direct the sale of land where it appears necessary or expedient…”.
11. Hence, while an execution creditor attempting to effect the sale of mortgaged immovable property that has been seized should generally seek the mortgagee’s consent first, the execution creditor may still apply to Court to order such sale if the mortgagee’s consent is not forthcoming, on the basis that such sale is necessary or expedient.
12. In so finding, the Court recognised that its interpretation of the PD departs slightly from the High Court’s observations in Peter Low LLC v Higgins, Danial Patrick  4 SLR 1003 (“Peter Low”), where the High Court stated that a sale of immovable property under a writ of seizure and sale is not possible without the mortgagee’s consent. However, the Court noted that the relevant statements in Peter Low were made by way of obiter dicta the present issues were not before the High Court in Peter Low.
13. On the 2nd Issue, the Court found that it would be “necessary and expedient” in the present case to order a sale of the Property.
14. The Court held that it should consider “the interests of those affected in the round” when exercising its discretion to order the sale of property, and any outcome reached should be fair and just. This would involve a balancing exercise by the Court of the following non-exhaustive factors, to determine if it is “necessary or expedient” to order a sale of the property:-
- Whether the expected sale proceeds will be sufficient to redeem the mortgage;
- The potential prejudice that the mortgagee and the execution creditor might face in each of the possible scenarios i.e. if a sale is granted and if a sale is not granted; and
- The potential prejudice that any third parties (including the mortgagor) may face in each of the possible scenarios.
15. With regard to potential prejudice to third parties, the Court found that relevant considerations would be, for example, the fact that a mortgagor-judgment debtor and his family members may face substantial prejudice if they reside at the property and are at risk of being evicted, as well as the fact that the judgment debt is being enforced for the benefit of third parties. The Court also noted that any third-party interests would have to be considered in light of the object of Part XIII of the Land Titles Act (Cap. 157), which is to enable judgment creditors to obtain the fruits of their judgment against registered land.
16. Applying the above approach, the Court considered that it would be necessary and expedient to order a sale of the Property in the present case, for the following reasons:-
- The evidence showed that the proceeds of sale were likely to be sufficient to redeem the mortgage;
- The prejudice that the Plaintiff and the children would face if a sale was not ordered would be considerable, as the Defendant owed the Plaintiff a sizeable sum; and
- There was no indication that the mortgagee bank or any other third party would be prejudiced if a sale was ordered.
17. This is an important case providing clarification concerning the law on selling immovable properties under a writ of seizure and sale which are subject to mortgages, and would be of particular interest to the following:
- Applicants applying to enforce judgments by way of writs of seizure and sale of immovable properties; and
- Mortgagee banks which have mortgages over properties that have been attached by writs of seizure and sale.
18. This case now makes clear that even without a mortgagee’s consent, judgment creditors are still able to apply to the Court to exercise its powers to order the sale of properties attached under writs of seizure and sale. It also provides guidance on what would constitute “necessary or expedient” which would compel the Court to exercise its powers.
19. With regard to mortgagee banks, this case highlights that the Court may exercise its power to order sales of mortgaged properties in appropriate cases even without the consent of mortgagee banks. As such, mortgagee banks may wish to adjust their approaches in such cases, bearing in mind the following non-exhaustive considerations:-
- whether to decide to enter into possession and exercise their powers of sale;
- whether to request for more information concerning the judgment creditors’ circumstances;
- whether to highlight any prejudice to the mortgagee banks should the properties be sold; and
- whether to participate in any proceedings by Judgment Creditors for the Court to exercise its powers to order sales without the mortgagee banks’ consent.
NOTE: The content of this article is for general information only and does not constitute any form of legal advice. Please seek specific legal advice regarding your specific circumstances.
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