27 February 2018
Jhaveri Darsan Jitendra & Ors v Salgaocar Anil Vassudeva & Ors  SGHC 24
In Jhaveri Darsan Jitendra & Ors v Salgaocar Anil Vassudeva & Ors, the Singapore High Court held that a claim to sole beneficial ownership of shares in a company does not give rise to a caveatable interest over properties registered in the name of the company.
In 2015, Mr Anil Salgaocar (“Salgaocar“) lodged caveats with the Singapore Land Registry over 39 residential and commercial properties located across Singapore. Some of these properties were registered in the name of Mr Darsan (“Darsan”) and his wife; others were registered in the name of companies whose shares were directly and/or indirectly held by Darsan.
Salgaocar claimed that there was an oral agreement, concluded in 2003, whereby Salgaocar would establish companies to acquire investments and assets and that Darsan would hold the shares of these companies on trust for Salgaocar.
Salgaocar further claimed that Darsan had committed a breach of trust by transferring some properties from those companies to his wife and himself, and also by refusing to procure the transfer of the other properties to Salgaocar upon his demand.
This, Salgaocar claimed, entitled him to lodge caveats over the properties pending the final determination of his breach of trust claim against Darsan.
In response, Darsan and the other registered proprietors of the properties applied under section 127(1) of the Land Titles Act to procure the removal of the caveats. Amongst other reasons, Darsan and the other registered proprietors contended that the caveats ought to be removed because Salgaocar’s claims, even if true, did not give rise to an interest in the properties which could be protected by the lodgment of a caveat.
The Singapore High Court agreed with Darsan and the other registered proprietors, and held that Salgaocar’s claim that he was the beneficial owner of the shares in the companies which owned (or previously owned) the properties by virtue of the alleged oral trust agreement, even if true, did not give rise to an interest in the companies’ properties which could be protected by a caveat.
In doing do, the High Court gave effect to the principle that a company is a separate legal person from its shareholders. In other words, even if one owns or claims to own all the shares in a company, that is not the same as a proprietary interest in the assets of the company.
The Singapore High Court therefore agreed with Darsan and the other registered proprietors that Salgaocar was unable to establish a viable case in support of his alleged interest in the properties. On that basis, the application to remove the caveats was allowed.
Lodging a caveat with the Singapore Land Registry over registered land is a quick and inexpensive process. Once lodged, a caveat has the potential to cause grave prejudice to a registered proprietor by hampering his ability to deal with his property for a significant period of time.
That being the case, the procedure under the Land Titles Act for lodging caveats over registered land may be open to abuse in commercial disputes if not subject to proper judicial scrutiny.
This case illustrates that the Singapore courts are alive to such concerns. It demonstrates that, in an application by registered proprietors under section 127(1) of the Land Titles Act to remove caveats lodged over registered land, the Singapore courts will carefully scrutinise the claims by persons who lodge caveats, and will - if appropriate - order the removal of caveats lodged without proper basis.
Allen & Gledhill’s Partners Ang Cheng Hock, SC, Ramesh Kumar and Benjamin Koh acted for the successful applicants.