Singapore Companies
Published October 10, 2006

Court ruling expected to boost certainty in property deals

Registered land title made virtually indefeasible


LAWYERS say a recent Court of Appeal decision upholding the indefeasibility of a registered land title will improve certainty and security in property transactions.

The court overturned the decision of late trial judge Lai Kew Chai, ruling that only in very limited circumstances will it let a title registered under the Land Titles Act (LTA) be defeated by another claim.

The case involved UOB and the occupant of the house on which a $1 million loan was obtained, and which UOB attempted to seize when the occupant's daughter defaulted on payment.

Before 2000, the occupant's daughter took the original title deed to the house but the occupant discovered its absence and obtained a replacement deed in July 2000.

However, the occupant's daughter still managed to use the cancelled original deed to get a $1 million mortgage from UOB, defaulting on payments and absconding.

The occupant affixed her thumbprint to the mortgage, but the court found that she was of an unsound mind when she executed the mortgage.

Justice Lai found that her condition did not affect the validity of the mortgage. However, he set the mortgage aside, and did not allow UOB to seize the house, saying that there was 'wilful blindness akin to fraud' on the part of UOB's solicitors because their conveyancing clerk registered the mortgage using a cancelled certificate of title.

However, the Court of Appeal disagreed as there was no evidence that the conveyancing clerk knew of the cancellation.

The court also said that the LTA, in introducing the Torrens system, a system of land title where a register of land holdings maintained by the state guarantees indefeasible title to those in the register, was designed to simplify land dealings and give finality to the title of the registered proprietor.

It did not think that a 'strict approach' to the acceptance of personal equities under the LTA will be inequitable to people with unregistered interests in land. This is because the LTA provides a framework to enable such owners to protect their interests by lodging caveats against the registered title.

'If they fail to do so as a result of which their interests are overriden by that of the registered proprietor, they have only themselves to blame,' the court said.

UOB was represented by Wong Partnership while the occupant was represented by Pereira & Tan.

Lawyers say that the case is significant. It states clearly that personal equities will not be allowed to defeat registered land titles.

'This decision will definitely help commercial certainty because once your interest is registered on the title, you won't have to worry about the equities or interests of other people which do not appear on the register,' said Sim Bock Eng, a partner at Wong Partnership.

'It is not just a major consolation to banks, but anyone dealing with land such as developers and the man on the street.'

Lawyer David De Souza added: 'This decision is very significant in that it reinforces that once an interest is registered under the LTA, it is indefeasible except in very limited circumstances.'