Case Studies

Verify Ownership
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Lawyer Did Not Verify Ownership of Property
(The Straits Times 18 April 1997)
 
A Lawyer who acted for the would-be buyers in a bungled property sale was mostly to blame, said the Court of Appeal.
 
It ruled in favour of the would-be buyers, property developer Soh Seng Hoo, 46, who had intended to buy a bungalow in Ewart park for $12.8 million through Ms Fong Maun Yee, 36, his former secretary.
 
The lawyer should bear 75 per cent of the blame, the court said, as he should have verified if the bungalow was really up for sale.
 
But Mr Soh was also to blame, it said. He and Ms Fong had sued lawyer Robert Yoong Weng Ho, 49 for neglegence and misrepresentation in handling the deal which was resulted in their losing $806,000.
 
They will get back $604,500 with 6 per cent interest plus 75 per cent of the cost at High Court and Court of Appeal hearings.
The $806,000 was released to property broker Foo Peng Boon, a long time acquaintance of Mr Yoong.
 
Mr Foo had agreed to assign an option purportedly from Fontana Pte Ltd, the owners, to Mr Soh for $11million in August 1994.
 
Mr Foo also showed a forged resolution by Fontna authorising the property to be sold for not less than $12.8 million, and appointing Mr Yoong's firm to act in the sale. A photocopy of a cheque for $256,000 payable to Fontana was also produced. The reverse of the cheque bore the purported signature of the company's managing director.
 
Apprehensive about the deal, Mr Soh had asked Mr Yoong whether Fontana really wanted to sell the property. The lawyer showed him the Aug 10, 1994 resolution, and also made a search confirming that all the signatoreies were Fontana directors.
 
Last year, the High court dismissed the couple's suit with costs. But on Wednesday, Justice M Karthigesu, who delivered the Court of Appeal's judgment, said Mr Yoong ought to have cheacked with Fontana if it had appointed him to act instead of merely relying on the resolution and the option.
 
Admittedly, practice would vary from jurisdiction to jurisdiction, said the judge, but a common sense would easily sift good practice from doubtful or bad practice.
 
Justice Karthigesu said becasue Mr Yoong failed to verify his instructions, he acted without authority and the appealants suffered loss. "Therefore, in our judgment, yoong did not meet up to the standard required by him of a reasonably competent conveyancing solicitor in Singapore and he should be held to have been in breach of his duty of care and skill to the appellants." he said.
 
if he had contacted Fontana, the fraudulent scheme would have been unravelled and the money would not have been released.
"In our judgment it is quite unarguable that the loss suffered by the appellants was not a foreseeable consequence of Yoong's negligence," said Justice Kartigesu.
 
Mr Soh thought there must be some "trick" in the deal as the price was "cheap" but he did not tell the lawyer and this contributed to his loss, the court said. Mr Tan Cheng Han and Mr Lim Chuen Ren represented the appelants and Senior Counsel V K Rajah and Mr Steven Lim acted for Mr Yoong.
 
(Mr Foo Peng Boon, a freelance property agent who was to receive $1.1million as a fee is wanted by the police)
 
 

Man forged ex-wife's signature to sell flat (ST 19/3/97)
 
A man forged his ex-wife signatures in two forms relating to the sale of their HDB flat at $155,000. He had to call off the deal 10 nonths later when he could not get her consent to sell.
 
The buyers eventually had to buy another flat in the neighbourhood which cost them $133,000 more. They sued the seller for that amount  and won their case.
 
Mr Hamsan had to pay 70 per cent of the $133,000 as well as 6 per cent interest from the date of the writ, Sept 8, 1994 and cost.
 
The housing agent  Abdul Halim Mohamed Huzir must pay 20 per cent, and Mr Hamsan's present wife, Madam Seri Bulan, 10 per cent. Madam Seri Bulan is not the joint owner of the flat but was the woman the buyers had met at the flat after agreeing to buy it.

Lessons To Be Learnt
 
1) Always verify with the legal owner(s) personally and in
     writing.
 

Crooked lawyer made brothers' lives a mess

OWNERS DUPED, BANK ALSO DUPED

Judge rules there was nothing to show that bank was at fault for approving loan

By Crystal Chan

October 09, 2007

THEIR former lawyer forged their signatures and made herself a co-owner of their $1 million property in Senang Crescent.

Using forged documents, she then got a bank to lend her $700,000 by mortgaging the property.

Sivakolunthu Thirunavukarasu then disappeared with the money.

As if that was not enough, the court recently ruled that Maybank has the right to sell the property and get the money owed to it.

The three brothers have appealed against the ruling.

One brother, Mr Sim Chiang Lee, a businessman in his 50s, said: 'We're in this mess because of that crooked lawyer.

'But she has fled and there's nothing we can do.'

Another brother, Mr Sim Sien Tiong, who is in his 50s, told The New Paper: 'The lawyer has run away so she won't have to face the music.

'What's important now is to see if there's any way to stop the bank from selling the property.'

If they don't pay up more than $750,000 owed (including interest), they risk having the property auctioned off by the bank.

Mr Chiang Lee said: 'The worst thing was that the property had been 'sold' to that lawyer and I didn't know about it until March 2004.

'We confronted the lawyer, but she merely apologised without explaining, so we went to the police.

'My brothers and I wrote to Maybank to state that we own the property and we don't recognise the mortgage, which was taken out behind our backs.'

They told The New Paper that their main beef is that they will not get the full profit if Maybank sells the property, as the bank will first deduct the amount owed to it.

SYMPATHY

The case even elicited sympathy from the High Court judge who heard the matter.

In his written judgment late last month, Justice Kan Ting Chiu said: 'This is yet another case where a fraud is committed, the prime suspect flees, and the victims are left to dispute over who is to bear the loss.'

In this case, he noted that although the brothers were duped by their lawyer, there was nothing to show that the bank was at fault for approving the loan, which was an ordinary banking transaction.

Therefore he upheld the mortgage as valid.

The ruling means that in the event of a sale, the owners - brothers Sim Sien Tiong, Sim Ah Ban and Sim Chiang Lee - will get only what is left after the loan amount has been deducted.

The brothers' woes began in March 2004, when the Singapore Land Authority informed Mr Sim Chiang Lee that a Maybank mortgage had been taken on the property, a tenanted warehouse at 23, Senang Crescent.

The brothers suspected Sivakolunthu of fraud and made a police report.

Investigations showed that she had forged her clients' signatures to transfer the property to herself.

She had earlier acted for the three brothers in another case.

CONFRONTED LAWYER

Little did they expect that the lawyer would later use the documents to get herself that bank loan.

In addition, she used more than $13,000, supposedly stamp fees for the transfer of the properties in the agreement, to pay for expenses unrelated to the brothers.

After the brothers found out about the loan, they confronted the lawyer who supposedly confessed to the deed and apologised for her action.

The brothers later made a police report but before she could be taken to task, she absconded.

In her absence, the Law Society moved to have her struck off the rolls on 29 Mar last year.

In 2005, Maybank began legal proceedings against Sivakolunthu and the brothers - it wanted the High Court to declare the mortgage valid and that it is entitled to any profits from the property.

In their defence, the brothers claimed they too, were victims of Sivakolunthu's fraud and that they had no knowledge of the mortgage.

Their lawyer, Mr Philip Fong of Harry Elias Partnership, argued that the mortgage should be declared invalid as it was obtained through fraud, wilful blindness and voluntary ignorance.

However, Maybank, represented by Mr Ng Yeow Khoon of Shook Lin & Bok, argued that the mortgage had been obtained fairly.

The bank had disbursed the money to Sivakolunthu in the belief that the mortgage was honest.

Justice Kan agreed that the brothers had not proven their case, and awarded judgment to Maybank.
 

He referred to an earlier precedent on a banking fraud case that was handed down by Chief Justice Chan Sek Keong last year.

Then, CJ Chan noted that in ordinary banking transactions, there is no reason for the bank to act dishonestly or to seek to defraud the customer of his property that has been put up as security.

Unless it can be shown that bank's own employees or agents have acted fraudulently or dishonestly against the bank's customers, he ruled that 'court actions against lending banks on the ground of fraud have little chance of success'.

The Sim siblings' case is expected to be heard in the Court of Appeal next January.

I refere to the above case about lawyer made brothers' lives a mess. OWNERS DUPED, BANK ALSO DUPED

                                                

Their former lawyer forged their signatures and made herself a co-owner of their $1 million property in Senang Crescent. The court ruled that the bank has the right to sell the property and get the money owed to it. The learned Jude even agreed that ”This is yet another case where a fraud is committed, the prime suspect flees, and the victims are left to dispute over who is to bear the loss… there was nothing to show that the bank was at fault for approving the loan, which was an ordinary banking transaction.

 

Poor brothers! Even if the whole world and the Court know that they are innocent, still justice cannot be done!

 

A case of Ordinary people verses lawyer, verses financial institution backed by professional legal advisors who are considered experts in the "lending" business, verses a sympathetic judge!

 

If the Court ruled that the property has been “legally transferred” to the lawyer, then there is nothing for the Bank to answer in Court. The Bank is in no obligation to return any money to the brothers even if it could make a huge profit from selling the “gained” property, right?

 

Because, if the property is deemed "legally" or technically transferred to the Lawyer, the Bank can only (legally and technically) return any balance to the Lawyer and, if the lawyer is dead, to her family! There is no legal basis for the Bank to return any money to the two brothers, who are "legally" no longer the rightful owners!

 

The brothers' property should not be forcibly sacrificed in the Banks financial interest or for the Bank's oversight in legal searches. In business, you either make profit or loss money. Business is subject to all kind of risks. No business should profit through wrongful gain. The Banks are expected to take all the necessary precaution to prevent such losses.

 

In this case, the Bank should conduct due deligent checks in that transaction because the lawyer had taken the mortgage only as a co-owner. Common sense will tell anyone to check if the other owners are aware of the mortgage and to get them to sign as guarantors, especially the beneficiary is the lawyer herself!

 

It's frightening! A fraudulent TKO (Technical Knock Out) in Singapore can obtain fortune!  Wonder if anybody in authority (or not in authority) would copy this same method of operation to legally and technically transfer a business empire to another institution that could also claim to believe that there was nothing to show that they were at fault for approving the deal. What if another lawyer had transferred properties belonging to the Bank or to the Judge to another financial institution?  How would they rectify the case?

 

The ruling is dangerous as it might send the wrong message that financial institutions can recover any debt owed to them so long as debtors can obtain (even if by fraud) somebody else property as mortgage because it is deemed not necessary for financial institution to check, verify and ensure actual ownership of a property!

 

Indirectly, the Court rules that Banks are not only "immune" to such fraudulent transaction so long as the legal title appeared to be “technically” and legally executed or even if the property is obtained by fraud, Banks can also profit through wrongful gain! The Court had failed to protect innocent people yet discriminate property owners against financial institution!

 

In fact, under the CONVEYANCING AND LAW OF PROPERTY ACT (CHAPTER 61) 54, any fraudulent transfer of property is null and void.

 

No conveyance to operate tortiously.
54. —(1) No conveyance of any kind shall operate to destroy, impair or affect any estate or interest which the conveying party has no right to destroy, impair or affect or beyond the extent to which he may impair or affect it.

 

This is again reinforced under REGISTRATION OF DEEDS ACT (CHAPTER 269) (3):

 

Priority of instruments.

 

(3) All priorities given by this Act shall have full effect in all courts except in cases of actual fraud, to which the person by or on whose behalf the registration is made is a party, and all persons claiming thereunder any legal or equitable interests are entitled to corresponding priorities, and no such person shall lose any such priority merely in consequence of his having been affected with actual or constructive notice except in cases of actual fraud to which he is a party.

 

Hence, the Law does not recognize fraud or wrongful gain! It is an offence to do so knowingly under (27)

 

Offences and penalties.
27. Any person who —

 

g) abets the commission of an offence under this Act, shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5,000 or to imprisonment for a term not exceeding 3 years or to both.

 

Here, the Court and the Bank are fully aware of the “fraud” and had accepted beyond reasonable doubt, that the property was fraudulently transferred. They know that the brothers are innocent victims. The Court errs on the premise that the Bank is not a party to the fraud and is therefore allowed to "gain" the property even when is wrongful! The question here is not whether the Bank is innocent. They are not charging the Bank for fraud. The question is whether the Bank can profit by wrongful gain.

 

The Bank may not be aware of the "fraud" and had accepted beyond reasonable doubt, that the property was fraudulently transferred. They know that the brothers are innocent victims. The Court errs on the premise that the Bank is not a party to the fraud and is therefore allowed to "gain" the property even when is wrongful!  The question here is not whether the Bank is innocent. They are not charging the Bank for fraud. The question is whether the Bank can profit by wrongful gain.

 

 

The Bank may not be aware of the fraud and is not a party in comitting the offence. In so far as the theft is concerned the Court finds the Bnak innocent. However, this is not fraud where the owners is a party or privy to the fraud or had committed legal mistakes or had been tricked to sign and transfer their property legally. The owners had played no part in it. It is about theft! The Bank is dealing with stolen goods!

 

In the first place, the transaction is totally void. Both Residential Property Act Chapter 274 (24) and Chapter 269 of Registration of Deeds Act do not recognise fraudulent registration of property. As such the property cannot be transferred to the Bank at all because in the first place the Lawyer had no ownership to that property!

 

If in the ordinary business of the bank is just accepting legal documents and does not engage or rely on legal experts to help them do the job, we can excuse the Bank for its mistake or failure to take extra precaution to do diligent checks on ownership But, the Bank cannot plead ignorance because it must engage and rely on legal expert to check and verify ownership of property. Such searches must be more thorough than merely verifying documents.

 

Even in tenancy matter, a 60-year-old woman who is really illiterate cannot claim ignorant if she is found to have accepted illegal immigrant as her tenants. Both agents and Landlord cannot even claim that the documents produced by her tenant appeared genuine and that they really have no reason to suspect forgery. Even if they had called to check with the Immigration Authority verbally, both Agents and Landlord may still face the heavy penalty and/or jail term! Why? They have to show written proof of minimum three due diligent checks!  It is that onerous!

 

What’s more when this is about ownership of property and matters that involve legal experts! Why or how it had failed to discover the theft is of no fault of the property owner, really. It is the failure of the Bank in general and the oversight of its solicitor in particular! Must they check with the co-owners?

 

If the Bank asserts its right to “confiscate” the stolen property, it will only reflect a total disregard for justice and a smack of integrity. To put the blame on the misfortune of innocent party is to risk parading its own un-professionalism and audacity in public! In doing so it will have knowingly committed an offence under CONVEYANCING AND LAW OF PROPERTY ACT (CHAPTER 61)

(27) Offences and penalties. Any person who —g) abets the commission of an offence under this Act, shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5,000 or to imprisonment for a term not exceeding 3 years or to both

 

Isn't it an offence to knowingly keep or retain stolen property? The lawyer stole the property yet the Bank is allowed to keep, retain and sell the stolen property? This is like somebody had stolen a child and then “legally” transfers and sells the baby to a buyer. Will the Court recognize the transfer of ownership? Will the Court return the baby to the parents or just say  “Sorry the baby has been properly and legally sold!

 

Recently the Law has also just been tightened to ensure that second hand dealers do not claim ignorant to purchase of stolen scrap maters.  All transactions have to be carefully “screened” and properly recorded. Money to be paid by cheque even if it is just for a dollar! Can the second hand dealer keep the stolen goods and be allowed to sell the stolen property to compensate himself for his wrongful gain by claiming that there was nothing to show that he was at fault for approving the deal now?  This is already so onerous regarding waste material that has little value and no legal title to ownership!

 

The Bank is in business, not the property owner. The onus of responsibility lies with the Bank. The Sim brothers had already been robed by the lawyer, how can we help the Bank "robe" the brothers a second time! How can JUSTICE be blinded by the superficial appearance of the transaction and not recover the stolen goods and return it to the rightful owners?  The Bank has to bear the business risk for accepting such transaction - not the innocent owners!

 

In my opinion, the Court and the Bank should just go after the real culprit - the lawyer. What about the assets of the lawyer and her family? Untouchable? The lawyer, her business, her family and the Bank should be asked to pay for the losses and damages suffered by the brothers too.  

 

Technically the Court is right only as to the innocent of the Bank to the criminal act! But if the Bank now knowingly continues to keep and possess the stolen goods, it becomes "involved" and in “abetting” the theft. It is no longer innocent in the cause of damages and/or sufferance to the owners. What illegal business, scam, swindling case and fraud are not “technically” or legally carried through legal lope holes? Where can you get justice done then?

  

On the other hand, I think this is a good opportunity for the Bank to prove its honesty and integrity. Honesty and Integrity verses $750,000! Come on, do what is right!  However, if after knowing that a theft has been committed and the Bank continues to play a part, the Bank would be committing a crime under Chapter 269, the Registration of Deeds Acts: So, how can the Court allow this to happen? Who would want to deal with a financial institution that does not hesitate to profit through injustice but go all out to wrestle ill-gotten goods just to recover losses!  

 

Unless the brothers are party or privy to the omission, fraud or mistake in consequence of which the rectification is sought, or has caused that omission, fraud or mistake or substantially contributed thereto by their act, neglect or default, under the LAND TITLES ACT (CHAPTER 157) Rectification of land-register by court, the court can order under Section 160 (1) rectification of the land-register by directing that the registration and fraudulent transfer be cancelled or amended under the following subsections:

 

(b) where the court is satisfied that any registration or notification of an instrument has been obtained through fraud, omission or mistake; or

 

(c) where the court has declared that any instrument which purports to pass any estate or interest in any residential property within the meaning of the Residential Property Act (Cap. 274) is also void under section 24 of that Act.

 

Even in the Fortuna case (ST 18 April 1997) where the lawyer had made a search confirming that all the signatories were Fontana directors, the Court of Appeal ruled that the Lawyer still ought to have checked with Fontana if it had appointed him to act instead of merely (same as in this case) relying on (documental evident) the resolution and the option. Justice Karthigesu ruled that “the lawyer did not meet up to the standard required by him of a reasonably competent conveyancing solicitor in Singapore and he should be held to have been in breach of his duty or care and skill to the appellants.” If the lawyer had contacted Fontana, the fraudulent scheme would have been unraveled and the money would not have been released.

 

View all these in their proper prospective, how can the title of the property be transferred by fraud to the lawyer and then wrongfully gained by the Bank?  Now, who is the real victim? Who the Court is helping? An irony if the Court still cannot help. How will the Court of Appeal rule in this sympathetic case then? Will the brothers be made to suffer more and asked to pay for all the legal fees?

   

As an ordinary citizen I can only shout out my passing thought! It is unfair to the Sim brothers! Justice has not been done! Do you agree? OMG! Before you sleep, please check if any lawyer had by mistake mortgaged or transferred your property to the Bank!

 

 Arhlim

 

In any case, the indefeasibilty of registered title should not benefit the forger nor the Bank. It is in the interest of the Bank in business to verify and ensure that it is dealing with the right party before parting its money. It is its own negligence. The Bank is cheated by the forger not the victims!  How heartless it is to recover your own mistake and misfortune on innocent victims! Try doing it on Lee Kuan Yew lah! The judgement will be different!

 

Yes, we can not penalise a buyer if he had purchased a fraudulently obtained property on good faith but the Bank is not a lay purchaser. It is an expert in money lending with a team of expert legal advisers ! How on earth could they be cheated!

 

On hindsight, we still can forgive lawyer Sivakolunthu Thirunavukarasu. At least she knew that she was wrong and she had appologised. Probably she was driven by desperation to commit the crime.

 

On the other hand, the Bank and the Court knew that they were causing more harm and sufferings to the innocent brothers, which they should not be doing, yet they chose to do what is against conscience and what GOD would otherwise expect of good people! 

 

The Bank claimed losses, went to Court, "CRIED" for JUSTICE, and has no qualm to recover its losses from some innocent victims! The Court has no courage to render true JUSTICE only to make the innocent Victims bleed more!

 

This is Singapore Justice!  The Government should reverse the judement! A Law should also be enacted to make it compulsory for one more requisition. Banks and Purchaser's solicitor must verify in writing with the last known owner(s) that they are no longer the legal proprietors and that the property is to be mortgaged or sold. Also, if any purchaser or beneficiry is a lawyer, a solicitor from the Law Society be appointed as the conveyancing lawyer for the property. The Lawyer-Purchaser cannot act alone to transfer such property.

 

 

The case is opening a flood gate! Do we want to encourage mass illegal land transfer and identity theft like in Malaysia? Just from 2001 to 2007, there were at least 253 cases!  This same legal lope hole is being exploited here! Illegal transfer once registered becomes indefeasible! This Bank had benefitted again!  (see another Maybank experience in Malaysia! http://www.cljlaw.com/public/cotw-090918.htm. PA was "false and forged

 

REMARK;

 

How to prevend your property from similar identity theft and illegal transfer?

Malaysia had too many such cases and they had come up with some very good ideas!

 

1) Besides putting your signatures on your title deed, they also suggest adding your thumb print to make it difficult for fogery.

 

2) Check your property at the registry every 3 months. This is a bit tedious, time consuming and expensive.

 

3) Lodge a 6 year caveat using your parents or children as the interesteded parties and beneficiaries.

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