Contributed by Henry Kang Fang Hawe
Tuesday, 31 July 2007 09:49AM
Click Here For Chinese Version
When the Housing Development (Control and Licensing) (Amendment) Act 2002 introduced section 22C, I wrote an
article which was published in the March, 2004, INFO Johore Bar.
Since then, the Housing Development (Control and Licensing) (Amendment) Act 2007 introduced another amendment to s 22C which in essence states that – a homebuyer who had absolutely assigned his rights under the sale and purchase agreement (SPA) to his financier shall be entitled to sue the developer, notwithstanding the said assignment, provided that he (the homebuyer) shall notify his financier before or within 14 days after the action has been filed.
Nothing much has changed between the earlier section and the amended section; the crux of the amendment is to do
away with the question “whether the consent of the financier is required before the homebuyer may commence action in his own name” which was substituted with the provision that “the homebuyer must notify the financier either before or within fourteen days after the suit against the housing developer has been filed”.
Back in my 2004 article, I have commented that the issue is one of the substantive law and not one of procedure. The
issue on whether or not, the homebuyer (after an absolute assignment of his right under the SPA) may then sue the
developer under the SPA is not a question of mere technicality or of form; it is of substance, relating to the protection of the developer and placing him in an assured position. What s 22C is doing is to prescribe a procedural remedy to what is an issue of substantive law.
In the enforcement of a chose in action (vis-a-vis the SPA), all interested parties must be before the court so that there may be a final adjudication binding on them all. Where the chose in action of the SPA has been absolutely assigned to the assignee (which necessary assigned the entire chose in action); the assignee is allowed to sue in his own name, without joining the assignor, but not the other way around.
The rule is otherwise if the assignment leaves some interest outstanding, i.e. not an absolute assignment, whereby both assignor and assignee must be made a party to the action. In such cases, neither the assignee nor the assignor can sue for the chose without joining the other, as plaintiff if he consents and as defendant if he does not. What is the difficulty in doing so? To reiterate, the requirement of all parties to be before the court is for the protection of the developer, without which the assignor or the assignee may separately sue the developer under the SPA.
A large number of our high court judgments have failed to understand the law and this has caused much confusion.
Some of these high court judgments state that where the assignment was by way of security for a loan, it must be by way of a charge, hence not an absolute assignment and therefore the assignor may initiate action in his own name. This is not correct. One should only have to read our apex court’s judgments in Nouvau Mont Dor, Hipparrion, Chuah Eng Kong and Bupinder Singh to appreciate the actual position of the law.
The difficulty seems to stems from the understanding or misunderstanding of the phrase “absolute assignment” vis-à-vis “an assignment by way of charge”.
For a better understanding of the phrase absolute assignment, we must bear in mind that the word “absolute” and “charge” are used in a qualitative and quantitative sense. To assign absolutely is to assign the whole chose in action. To assign by way of charge is to assign less than the whole chose in action or sometimes the whole chose in action until the happening of some future event, i.e the repayment of the debt etc. I shall refer to this as “the manner” in which the assignment was done as oppose to “the purpose” of the assignment.
The purpose of the assignment is not a factor to be considered when determining whether or not the assignment is
absolute or by way of charge. The purpose of the assignment may be as a security for a loan which it often is; but that
does not mean that the assignment is by way of charge. It has been held since 1889 that an assignment by way of a
mortgage whereby the whole debt (chose in action) was assigned to the mortgagee with a proviso for the reassignment on repayment is absolute, Tancred v Delagoa Bay and East Africa Railway [1889] 23 QBD 239.
By contrast, where the right is assigned “until the money with added interest be repaid to you” is a conditional assignment and made by way of charge, Hughes v Pump House Co. [1902] 2 KB 190.
Nevertheless, whether the assignment is absolute or otherwise, all interested parties ought to be before the court. Where the assignment is absolute, the homebuyer does not have any locus standi to sue on his own or where the assignment is by way of charge, there would be a question of non-joinder if he sue alone.
In conclusion, s 22C does not fix the problem. Where the homebuyer sues the developer without the assignee, the
developer’s answer is that the assignor does not have any right on which he can sue on, the rights have been assigned to the assignee. Quick fix or no fix?