Execution: The Joint Ownership Predicament

The law on execution is an area that appears to be an area that is relatively straightforward given its limited number of options available to the party that succeeds in obtaining a judgment. Naturally one can assume that the reason for this is that, the Judgment Creditor has already obtained a Judgment or Order and as such all that is left to do is to merely enforce the same. In simpler terms, the war has concluded, now merely for the victor to reap the fruits of its labour. 

This article seeks to speak a little about an area that I personally came across which appeared to create a little more of an uphill task to enforce the judgment. That being enforcement by Writ of Seizure and Sale of a Property; more pertinently the sale of a Jointly Owned Property where the other owner(s) of the Property is not in debt to the Judgment Creditor. 

At the end of this article, the conclusion sought to be achieved is highlighting the ambiguity when dealing with such a scenario and how the need for a clear decision by the Courts (be it in Malaysia or in Singapore) is crucial. 

The Law

Cutting straight to the governing provision on the area brings us to the Rules of Court, 2012 and specifically Order 47. The steps in Order 47 can be summarized in two clear stages. 

i. 1st Stage – The Prohibitory Order

Order 47 rule 6 expressly stipulates for the requirement of a Prohibitory Order to be entered on the Property prior to be there being any proceeding to commence the sale of the Property. The rationale behind such a rule is clear. It prevents the Judgment Debtor from selling/transferring/charging/leasing the Property whilst the Judgment Creditor seeks to sell the same. 

The relevant excerpt of rule 6 reads as follows: 

“Immovable property (O. 47, r. 6)

6. Where the property to be seized consists of immovable property or any registered interest therein, the following provisions shall apply:

(a) a seizure shall be made by an order by the Court or a Judge prohibiting the judgment debtor from transferring, charging or leasing such property or interest; and for the purpose of this rule, “charging” includes the creation of a lien by deposit of a document of title; 

This application is made Ex Parte by way of a notice of application supported by affidavit. A Prohibitory Order once obtained lasts for 6 months before it automatically lapses and can be extended at the discretion of the Court.  

ii. 2nd Stage – The Sale of the Property. 

Having satisfied the above, the Judgment Creditor can now proceed to sell the Property. This stage is governed by Order 47 Rule 7 of the Rules of Court, 2012 which is rather extensive and complete. 

 The Joint Ownership Predicament

The rules, as alluded to above, only govern situations where the Judgment Debtor owns the property solely. The problem then arises when it is a joint ownership (commonly husband and wife) and only one party is a judgment debtor.

How does the Judgment Creditor then execute that property? The line of authorities below will show that this is a question that has yet to have been answered definitively by the Courts locally or abroad.

Malayan Banking Bhd v Focal Finance Ltd [1999] 3 SLR 229, 

[18]  Bearing in mind that any of the above contingencies could happen, it would be creating a fine mess to hold that a WSS when registered severs a joint tenancy. What would be the position of the co-owners in relation to each other should the WSS subsequently be withdrawn or its registration lapse? Do they revert to being joint tenants again? If the WSS is renewed or a second or subsequent one issued, do the rights of the co-owners change once again? A further argument against severance is that registration of the WSS (if it were possible to do so) merely prevents transfers of interest by the joint tenant, such that there is no severance of the joint tenancy until the Sheriff transfers the judgment debtor’s interest to another person. In favour of this is the fact that on the register, the judgment debtor remains a joint owner of the property, and in terms of form, maintains the same interest as his co-owner. For these reasons, I hold that registration of the WSS does not sever a joint tenancy.

…

[24]  In summary, a WSS against immovable property cannot be used to enforce a judgment against a debtor who is one of two or more joint tenants of that immovable property. The WSS taken out and registered by Focal was therefore invalid and must be set aside. Accordingly, MBB is entitled to the entire sum of the surplus proceeds of sale after deducting OCBC’s costs of $1,500.

Chan Lung Kien v Chan Shwe Ching [2018] 4 SLR 208

“[21]  Because each joint tenant’s interest in the property is indistinguishable, joint tenants have to act jointly to effectively bind the estate which they hold jointly. Every joint tenant must partake in any dealings with the whole legal estate before such dealings may effectively bind the entire estate since the whole estate does not reside in a single joint tenant. Therefore, although a joint tenant is entitled to the whole of the interest in the property, he cannot sell the property without the agreement of all the joint tenants

[33]  … In other words, if the nature of a joint tenant’s interest is such that it cannot be seized under a WSS, it cannot be an answer to say that upon a subsequent severance, the joint tenant’s interest will be converted into that of a tenant in common which can be seized under a WSS.

[34]  Third, in any event, the proposition seems to be premised on an ability to sell the property following a seizure of the debtor’s interest. However, the seizure of the debtor’s interest does not allow the sheriff to sell the property in respect of which the debtor is a joint tenant. Seizure of a joint tenant’s interest under a WSS is not the same thing as a seizure of the property itself. Further, it is clear from the earlier discussions (at [21] above) that even assuming that a joint tenant’s interest can be taken in execution under a WSS, the sheriff cannot sell the property without the agreement of all the joint tenants.

The Courts in both decisions above not only examined the legal principles but also the practical aspects of the same in determining that no Writ of Seizure and Sale can be obtained against a jointly owned property. Notwithstanding, the Singaporean Courts have also taken a contradicting approach when determining this matter in deciding that one can sell a jointly owned property. 

Peter Low Llc v Higgins, Danial Patrick [2018] 4 SLR 1003

[141]  … As the discussion at [78]–[82] above demonstrates, unlike a tenancy by entireties which cannot be severed, a joint tenancy is severable. This severability of the joint tenancy is that which renders the interest of a joint tenant sufficiently distinct and identifiable to be seized by a WSS in a meaningful way. The seizure, which is effected at the time of registration of the WSS, will effect a severance of the joint tenancy which in turn enables the sheriff to sell the joint tenant’s interest. The fact that a joint tenant’s interest in land is of limited marketability does not constitute sufficient reason to disallow execution against a joint tenant’s interest in land. As discussed at [114] above, despite this limited marketability, the ability to execute against a joint tenant’s interest in land remains of real value to judgment creditors.

[142]  I appreciate that allowing execution against a joint tenant’s interest in land may lead to some initial uncertainty and perhaps an initial increase in litigation over issues such as the timing of severance and whether such severance is temporary or permanent. However, in my view, as with any other area of law, the uncertainties and difficulties can be clarified and ironed out through the incremental development of case law.

[143]  Finally, I also appreciate that allowing execution against the interest of a joint tenant in land may give rise to satellite litigation over the relative shares which each joint tenant is entitled to after the joint tenancy is severed by registration of the WSS. While the possible risks and possible costs arising from such satellite litigation is something which a judgment creditor would take into account before deciding whether to issue a WSS against a joint tenant’s interest in land, I do not think the prospect of satellite litigation is sufficient to outweigh the other factors discussed in this judgment in favour of allowing execution against a joint tenant’s interest in land.

[144]  For the reasons I have given above, I hold that a WSS may be issued under O 47 r 4 of the ROC against the interest of a joint tenant’s in land. I also hold that, when a WSS is issued against a joint tenant’s in land, the joint tenancy is severed when the WSS is registered pursuant to O 47 r 4(1)(a) of the ROC. While I find the doctrine of temporary severance proffered by Dr Tang to be both sensible and attractive, I make no pronouncement on the point and would leave this to be further explored in a future case. On the issue of whether the sheriff can sell the entire property (as opposed to merely the debtor-joint tenant’s interest) without the consent of the other joint tenant, I tend to agree with Chan Lung Kien ([2] supra) that this cannot be done, but I decline to make a definitive ruling on this point as the issue did not arise on the facts before me.

The above decision muddies the waters in the area. This decision allows for the sale but did not go so far into the practicality of the sale, namely in failing to appreciate the rights of the other joint owner who owes no obligations to the Judgment Creditor. 

CONCLUSION

It is clear from the above that the law needs clarity.

Ultimately, it comes down to a balancing act between the innocent owner and the owner who owes an obligation to the Judgment Creditor. In determining the above, the Court ought to ensure that Judgment Debtors do not hide behind the cloak of joint ownership to avoid execution proceedings. 

The decision in Peter Low (supra) seems to be heading in the right track but falls just short of being the leading authority on the area as it did not have to deal with certain pertinent issues, namely the practicality of the sale of a jointly owned property. 

 In moving forward, the hope is that the Courts finally put to rest this issue and clearly elucidate the position when dealing with a Writ of Seizure and Sale of a joint property, both legally and practically.