04:16 PM Alvin See (Assistant Professor, Singapore Management University)

    Identifying an Interest in Land Sufficient to Support a Caveat: Salbiah Bte Adnan v Micro Credit Pte Ltd [2014] SGHC 249



    The difficult issue of what constitutes an interest in land sufficient to support a caveat (“caveatable interest”) recently presented itself before the High Court in the case of Salbiah Bte Adnan v Micro Credit Pte Ltd, which concerned a caveat lodged to protect an alleged security interest. The decision deserves the attention of property lawyers for it helpfully addressed various principles of property law relating, directly and indirectly, to the lodgment of caveats.

    The function of a caveat is to allow a person who has an interest in land to protect the interest by preventing dealings in the property. The relevant statutory provision that governs the lodgment of a caveat is s 115 of the Land Titles Act (Cap 157, 2004 Rev Ed) (“LTA”), subsection (1) of which states: ‘[a]ny person claiming an interest in land … may lodge with the Registrar a caveat in the approved form …’ The LTA, however, does not provide any clear and comprehensive definition of what amounts to an interest in land for the purposes of s 115. Section 4 merely states that ‘“interest”, in relation to land, means any interest in land recognised as such by law … (emphasis added)’ As such, the task of determining whether a certain interest should be admitted to the list of caveatable interests is left mainly to the courts. 


    The Plaintiff (“Salbiah”) and her ex-husband (“Zam”) were joint tenants of a Housing Development Board (“HDB”) flat (the “Property”). In September 2009, Zam approached the Defendant (“Micro Credit”), a licensed moneylender, to borrow $1,000 (the “first loan”). Upon approval of the loan application, Zam and Salbiah visited Micro Credit’s premises to sign two loan documents. First, Zam signed a loan agreement, paragraph 6 of which entitled Micro Credit to lodge a caveat over the Property upon default of repayment. Second, both Zam and Salbiah signed a document authorising and consenting to the lodgment of caveat over the Property by Micro Credit (the “caveat document”), the purpose of which is “to secure [Micro Credit’s] interest in the sale proceeds of the Property to fully repay all loans granted or to be granted by [Micro Credit] to [Zam] from time to time”. 

    In October 2009, Zam approached Micro Credit to borrow another $1,000 (the “second loan”). As Zam had been making prompt repayments of the first loan, his loan application was approved. The second loan was advanced on the same terms as the first loan, save that the caveat document for the second loan bore only Zam’s signature. While the first loan was duly repaid, Zam fell into arrears in the repayment of the second loan after he was imprisoned for drug offences. In November 2009, Micro Credit lodged a caveat over the Property pursuant to a right granted by the loan documents. 

    In December 2012, Salbiah and Zam obtained a divorce. The Syariah Court issued an order to the effect that Salbiah shall be fully entitled to the Property and that no compensation was to be made to Zam. Salbiah applied to the HDB to have the order enforced but was informed that the caveat prevented her from doing so. Salbiah then applied to court to have the caveat removed.

    Decision and commentary

    While Salbiah based her application to remove the caveat on four grounds, the High Court, presided by Edmund Leow JC, focused mainly on one issue: whether the loan documents pertaining to the second loan conferred on Micro Credit a caveatable interest. The Court held that they did not; but even if they did, the interest has been subsequently extinguished by the Syariah Court’s order. The reasons for the decision shall be explained below, accompanied by brief commentaries.

    Micro Credit argued that the loan documents granted it an interest in the proceeds of sale of the Property. As a matter of fact, however, the Property was all along in the joint ownership of Salbiah and Zam; it was never sold. The unconventional argument clearly represents an attempt by Micro Credit to bring the alleged interest within the ambit of s 115(3)(a), which states: ‘… a reference to a person claiming an interest in land shall include a reference to … any person who has an interest in the proceeds of sale of land …’ To determine the correctness of this approach, it is helpful to consider the cases that are accepted as coming within the ambit of s 115(3)(a), as the Court did in this case. A classic example is a trust for sale of land, where the beneficiary’s interest in the property is notionally converted into an interest in the future proceeds of sale by virtue of the equitable doctrine of conversion. What s 115(3)(a) does is to reconvert the interest in the proceeds into an interest in the property to allow the beneficiary to protect the property by a caveat (John Baalman, The Singapore Torrens System, Government Printing Office, 1961, p 196). Another example is where a foreign person inherits by will or by the law of intestate succession a residential property in Singapore (Tang and Low, Tan Sook Yee’s Principles of Singapore Land Law, LexisNexis, 2011, p 328). Section 3 of the Residential Property Act (Cap 274, 2009 Rev Ed) prohibits the transfer of interest in the property to the foreign person but instead requires the personal representative of the deceased’s estate to sell the property and distribute the proceeds to the foreign person. Pending sale, the foreign person is allowed to lodge a caveat over the property by virtue of s 115(3)(a). 

    As the Court astutely pointed out, the present case differs from the abovementioned examples in a few crucial respects. First, as Salbiah and Zam were under no duty to sell the Property, Micro Credit’s interest in the proceeds was not definite ([34]). It was contingent upon the owners’ decision to sell the property, which was a matter that was entirely within the owners’ discretion. Second, Micro Credit merely claimed to have an interest in the proceeds of sale, if any, and not in the Property itself. To allow the lodgment of a caveat to protect a pure monetary interest would go beyond the purpose of the caveat system ([41]). It would, in effect, make the Property a quasi-security for the loan, giving Micro Credit more than what it had bargained for ([41]). Having stated these concerns, the Court nevertheless refrained from expressing any conclusive opinion on the matter as it found that the dispute could be resolved on other grounds.

    The Court then focused its attention on the loan documents to determine what kind of interest, if any, was granted to Micro Credit. The Court concluded, based on reading of the loan documents, that they confer on Micro Credit neither an interest in the Property nor an interest in the sale proceeds (if any) ([47]). Certainly, the loan documents said nothing about using the Property as a security of the loan. But the Court’s finding about using the sale proceeds (if any) as security for the loan is debatable. The Court was of course right to point out that Micro Credit’s contractual entitlement to lodge a caveat did not by itself create an interest in the sale proceeds (if any) ([44]–[47], following the Court of Appeal’s decision in The Asiatic Enterprises (Pte) Ltd v United Overseas Bank Ltd [1993] 3 SLR(R) 976). However, the statement of purpose set out in the caveat document (see Background above), which was to be read together with the loan agreement, clearly suggests that the sale proceeds (if any) were intended to be security for the loan. If this interpretation of the loan documents is correct, it reopens the issue of whether s 115(3)(a) should apply to such a case. It also raises a side issue of whether the absence of Salbiah’s signature in the second caveat document was fatal to Micro Credit’s case, especially in light of the Court’s finding that the two loans were to be treated as separate transactions ([19]). While the general rule is that joint tenants must act collectively to bind the whole of a jointly owned property ([21]; see also Goh Teh Lee v Lim Li Pheng Maria [2010] 3 SLR 364, [17]–[20]), there are certain exceptional instances where a joint tenant is regarded as having operated on his ‘own share’, thus severing the joint tenancy ([22]). Associate Professor Barry Crown has warned against being overly astute in extending the exception, taking into account the existence of a simple method of severance provided under the LTA (s 53), as well the need to ensure that a co-owner should not be allowed to sever the joint tenancy behind the back of his fellow co-owner(s) to the unfair prejudice of the latter (Crown, ‘Partial Alienation by One Co-owner of Land’ [2000] SJLS 92). While the Court had taken note of this caution, it refrained from delivering a definitive opinion on the matter due to its finding that the loan documents granted no interest in the sale proceeds (if any).

    The Court also considered another basis for holding against Micro Credit in case the prior issues were incorrectly decided. Even assuming that Micro Credit had an interest in Zam’s share of the sale proceeds (if any) and that such interest falls within the scope of s 115(3)(a), it was extinguished by the Syariah Court’s order that the Property shall vest entirely in Salbiah ([49]–[51]). More specifically, the court order extinguished the possibility of Zam selling the Property, which is the event upon which Micro Credit’s interest was contingent. Since the interest that the caveat sought to protect ceased to exist, it follows that the caveat should be removed. 

    Finally, the Court also took the opportunity to bring our attention to the recently amended s 51 of the Housing Development Act (Cap 129, Rev Ed 2004). Originally, s 51 only prohibits the use of a HDB flat as security for a debt, rendering any agreement to this effect null and void. In 2010, the prohibition was extended to include the use of sale proceeds of a HDB flat for the same purpose. However, as the amendment only came into force on 11 August 2010, it did not apply to the second loan in the present case, which was concluded in October 2009. For future cases of the same kind involving HDB flats, s 51 provides a ready answer. On the other hand, for non-HDB properties, the legal issues raised in the present case remain relevant.


    The difficult issue of whether a certain interest is caveatable will continue to present itself before the courts in different forms. Outside the established categories of caveatable interests, legal principles often offer little guidance. The courts will most likely have to resort to policy considerations in deciding whether a particular interest is worthy of protection (see the Court’s reasoning at [41]; see also Ho Seek Yeung Novel v J & V Development Pte Ltd [2006] 2 SLR 742, where the High Court relied on policy considerations to decide that a contractual right of pre-emption is a caveatable interest). Having said this, first principle would demand that the interest in question must at least be an interest in land in a meaningful sense and not an interest that is only remotely related to a property.

    * This entry may be cited as Alvin See, "Identifying an Interest in Land Sufficient to Support a Caveat: Salbiah Bte Adnan v Micro Credit Pte Ltd [2014] SGHC 249", Singapore Law Blog (15 January 2015) (

    ** A PDF version of this entry may be downloaded here

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