Landlord-tenant disputes are surprisingly common. Most of the time, the dispute begins with a tenant who defaults on rent, and the landlord is then put in a position of deciding whether to take formal steps to recover the rent, or perhaps even to terminate the lease.

In this article we will set out various types of solutions available to landlords, and the circumstances in which each one is most suitable.

Solution 1: Writ of Possession

As its name suggests, a Writ of Possession allows a landlord to recover vacant possession of the rental premises. A Court-appointed bailiff will attend at the premises and require the tenants to leave the premises.

This solution is most suitable for a landlord who has already decided to terminate the lease, and wishes to cut its losses by having the tenant vacate the premises as soon as possible. While changing the locks seems like an easier and cheaper solution, this is not advisable if the tenant is still occupying the premises, or if the tenant’s belongings are still in the premises. Doing so can expose the landlord to civil liability for false imprisonment or for damage to the tenant’s items.

Where a tenant refuses to vacate the premises, or where the landlord is unsure if the tenant has abandoned the premises, the Writ of Possession is most effective in enabling the landlord to regain access to the premises via legal means.

If a landlord only wishes to recover unpaid rent, but is willing to let the tenancy continue, a Writ of Possession will not be applicable. This brings us to the next solution.

Solution 2: Writ of Seizure and Sale

A Writ of Seizure and Sale is useful where a landlord wishes to recover unpaid rent.

In this instance, a Court-appointed bailiff will attend at the premises, seize items of value, and sell these items at an auction. The auction proceeds can then be used to repay the landlord. Depending on the value of the items and the amount of rent outstanding, the landlord may or may not recover a substantial amount of unpaid rent.

Often, a Writ of Possession is applied for together with a Writ of Seizure and Sale in order to allow a landlord to recover vacant possession of the premises as well as to recover unpaid rent.

If a landlord is willing to let the lease continue, and simply wishes to recover unpaid rent, the landlord can apply for a Writ of Seizure and Sale alone. Alternatively, the landlord can consider the next solution below.

Solution 3: Writ of Distress

Like a Writ of Seizure and Sale, a Writ of Distress allows a Court-appointed bailiff to attend at the premises and seize items of value. If the tenant does not pay the outstanding rent and all other fees associated with the Writ of Distress within 5 days, the bailiff will sell the items at an auction. The auction proceeds can then be used to repay the landlord.

This option is only applicable to a landlord who does not intend to terminate the lease, but wants to recover unpaid rent.

Pre-solution Steps

Before taking any of the steps above, a landlord should obtain a Court judgment stating what reliefs the landlord is entitled to. These reliefs include payment of the unpaid rent, or recovery of vacant possession of the premises.

Depending on which steps the landlord chooses to take, the landlord may also need to seek leave from the Court before applying for any or the above Writs.

As the application for the various Writs can be rather technical, we suggest that a landlord seek legal advice in order to ensure that all procedural requirements are met and that recovery can take place smoothly.

Other Considerations

In asking the question of which solution to employ, one of the landlord’s considerations would be the remaining duration of the lease.

If a tenant defaults on his rent early in the lease, a landlord may wish to take steps to recover unpaid rent early, but may be willing to let the tenancy continue. In this instance, a Writ of Distress may be most appropriate.

If the landlord wants to cut its losses and avoid future problems by terminating the tenancy, a Writ of Possession is often most helpful, especially when coupled with a Writ of Seizure and Sale.

If only a few months are left of the tenancy, a landlord who prefers not to incur costs on legal proceedings may wish to wait it out rather than applying for a Writ of Possession, in the hope that the tenant will automatically leave the premises at the end of the tenancy. However, if the amount of unpaid rent is significant and exceeds the security deposit sum, the landlord may want to apply for a Writ of Distress to recover the unpaid rent in the meantime.

Where a Tenant Pays

At times, when faced with formal Court proceedings and the prospect of eviction, a tenant may decide to make payment of all unpaid rent and other costs incurred by the landlord, in order to avoid further proceedings. This can happen as late as after the landlord obtains a judgment stating that the landlord is entitled to vacant possession and repayment of rental arrears, or just before eviction.

The law provides that when a tenant makes payment of all such sums within certain stipulated periods of time, the landlord cannot continue taking steps to evict the tenant. For instance, the Writ of Possession provides for a 4-week period to allow the tenant to pay all outstanding sums and avoid eviction.

Conclusion

In the face of a defaulting tenant, a landlord will ultimately have to take into account various considerations in deciding what steps would be most suitable. This includes timing and the lease duration, how much the landlord is willing to incur in costs, whether the landlord is keen to take out formal proceedings, and whether there is a possibility that litigation can be avoided.

If you have any uncertainties as to the options available to you, and which would be most ideal in your situation, do seek advice from a lawyer.

Introduction

In this article, I wish to share some insights about what to look for when you ask someone to hold shares in a company for you. Such an arrangement is often called a nominee shareholder arrangement.

Reason for such arrangements

The person who is named as the owner is the nominee while the person who actually paid for the shares is the beneficiary. The beneficiary often feels that there is a need to be not named on the register of members as a shareholder and hence enters into such an arrangement.

Uses

The main use is that the actual beneficial owner of the shares will not be seen to be on the public records as a shareholder of the relevant company. This can give a measure of privacy and confidentiality.  There are other methods such as setting up intermediary companies though these methods might cost more to implement than a nominee shareholder arrangement.

Pitfalls

Most of the pitfalls in such an arrangement arise from the fact that the nominee is put in a position of control of the rights that attach to the relevant shares; in addition, the company is not required by law to recognise any trustee or nominee shareholding arrangement.

Some of the common pitfalls that I have seen in my several years of practice are as follows:

• The legal owner or nominee refuses to return the shares to the beneficiary.
• The legal owner exercises the rights or enjoys the rights attached to the shares without the consent or knowledge of the beneficial owner. In particular, he uses the shares as security or sells them.
• The legal owner passes away or is deregistered and the beneficial owner is unable to get the shares transferred to himself.

Some Solutions

The solutions that I have recommended and implemented in the past aim at eliminating the possibility of the nominee exercising rights over the shares that he is not entitled to exercise and at the very least ensure that the arrangement is in written form and can be produced as evidence.

Firstly, it is essential that a nominee shareholder agreement with clear and adequate provisions for the beneficiary be prepared and stamped with the Inland Revenue Authority of Singapore or relevant tax office of the country where the shares are located. Stamping is essential in Singapore so that the nominee shareholder agreement can be produced in the Singapore courts as evidence.

However, based on experience and consideration of the risks concerned, a signed and stamped nominee shareholder agreement alone is not sufficient, even if it contains undertakings by the nominee to not exercise rights attached to the shares. As many unfortunate beneficiaries in such arrangements can attest, the nominee may choose to breach the agreement.

There are other documents and practical steps that can be prepared and taken and we have advised on and implemented such steps for beneficiaries before. Some of these involve amending the company’s constitution and taking necessary actions with the share certificates.

Conclusion

Although the nominee shareholder arrangement is straightforward conceptually, it actually involves risks for the beneficiary which should be dealt with strongly failing which the beneficiary may find himself having to commence proceedings to assert his rights and ownership.

The arrangement can be likened to a situation where someone passes physical possession of a valuable to another person. The beneficial owner must ensure that the person who has possession does not seek to enjoy rights that he is not entitled to enjoy, and that he can get the property back easily when he wants to.

Characterist LLC’s Adrian Wee, Dominic Chan, Noel Oehlers, Daniel Ng, and Nicole Chee, are representing the Ngee Ann Kongsi in their application for an urgent Court order for the Teochew Poit Ip Huay Kuan to deliver up vacant possession of the premises it occupies in the Teochew Building at 97 Tank Road, in order that redevelopment works for the Teochew Building may commence.

The Ngee Ann Kongsi had planned for the redevelopment works for the Teochew Building to start on 1 July 2018. At the end of June 2017, the Ngee Ann Kongsi had served notice on the Teochew Poit Ip Huay Kuan for it to move out by the initial deadline of 30 June 2018. What followed were negotiations between the parties on the arrangements in respect of the moving out. However, despite protracted negotiations, both parties could not reach a consensus on such arrangements. In the light of the negotiations, the redevelopment works were also postponed twice, and is currently due to commence on 2 January 2019 (with the handing over of the Teochew Building to the main contractors to take place on 17 December 2018).

However, as still no consensus could be reached between the parties, and with the deadline for the handing over and commencement of the redevelopment works drawing near, the Ngee Ann Kongsi had to take out an urgent application to the Supreme Court of Singapore for the Teochew Poit Ip Huay Kuan to deliver up vacant possession of its premises to the Ngee Ann Kongsi.

The complete online version of the article may be found at the following link: https://www.zaobao.com.sg/znews/singapore/story20181208-914036

Persons who act as nominees in Voluntary Arrangements have a duty to act in utmost good faith. Where the nominee’s conduct of the creditors’ meeting is in bad faith, such that the nominee’s conduct is deficient, leading to a material irregularity at or in relation to the creditors meeting, the nominee may, in appropriate cases, be personally liable to pay the legal costs of affected creditors.

Individuals facing imminent bankruptcy proceedings have the option of attempting a Voluntary Arrangement (VA) pursuant to Section 45 of the Bankruptcy Act. The VA entails the debtor making a proposal to his/her creditors, usually involving a deferral of payment and a reduction in the total amount owed. The proposal is then voted on by creditors. If the proposal is approved by a special majority of creditors, the VA is then binding on all creditors. In this respect, the VA is not dissimilar to the Scheme of Arrangement regime for companies.

Key to the VA scheme is the role of the nominee. The nominee is a qualified insolvency practitioner who is appointed to oversee the VA process and to adjudicate creditors’ claims for the purpose of voting. However, as the nominee is usually proposed and paid for by the debtor (who has, in turn, already satisfied him/herself of the nominee’s sympathies to the cause), obvious questions often arise as to the impartiality of the nominee.

In the case of Balbeer Singh Mangat and Sirjit Gill,^[1], both Debtors applied for a joint voluntary arrangement (JVA). The Nominee appointed is a Senior Partner in the largest audit, tax and consulting firm outside the Big Four in Singapore. Having supported the Debtors’ JVA proposal, the Nominee convened a creditors’ meeting.

At the creditors’ meeting, the Nominee made 2 key decisions:

1. The votes of creditors whose claims were marked “objected to” were not to be counted for the purposes of voting; and
2. The result of the creditors’ vote could not be determined until the court had ruled on the correctness of the Nominee’s decision to mark certain creditors’ votes “objected to”.

The effect of the Nominee’s decisions was to shift the task of adjudication of claims from the Nominee to the Court.

Several major creditors applied for a review of the Nominee’s decisions and conduct.

In determining that the proposal had not been passed at the creditors’ meeting, the Court made the following observations:

1. The Nominee had acted improperly in marking the creditors’ votes “objected to”;
2. It was clear from Rule 84(6) of the Bankruptcy Rules that any creditor whose claim was marked “objected to” should nonetheless be allowed to vote and such vote should be counted for the purposes of determining whether the proposal had passed unless it was subsequently declared invalid by the Court. In this respect, the Nominee had acted improperly in excluding votes marked “objected to” and was in breach of his duty and responsibility. The Nominee’s actions defied logic;
3. In leaving the decision as to whether the proposal had been passed to the Court, the Nominee was trying to evade his responsibility by “fudging the issues and his decision”.

For the above reasons the Court held that there were material irregularities in the conduct of the creditors’ meeting. The Nominee was ordered to pay personally half of the costs of the creditors’ applications.

It should be noted that, in certain circumstances, nominees are protected from being made personally liable for costs. For example, Rule 84(10) of the Bankruptcy Rules provides that a nominee cannot be liable for costs even if his/her decision as to whether a creditor’s claim should be accepted or rejected for the purposes of entitlement to vote at a creditors’ meeting is wrong and reversed on appeal.

However, the protection under Rule 84(10) does not extend to conduct of the nominee which results in material irregularity in respect of the creditors’ meeting itself. This includes conduct which is in bad faith and/or a breach of the nominee’s duties in relation to the meeting.