Equity and Trust
| Published date | 01 December 2004 |
| Citation | (2004) 5 SAL Ann Rev 260 |
| Author | TAN Sook Yee BA, LLB (Dublin); Barrister (Middle Temple), Advocate and Solicitor (Singapore); Professor, Faculty of Law, National University of Singapore. Kelvin LOW Fatt Kin LLB (Hons) (National University of Singapore), BCL (Oxford); Assistant Professor, Faculty of Law, The University of Hong Kong. |
| Date | 01 December 2004 |
12.1 The law of equity, particularly trust law, underwent significant development in 2004, though much of the developments took place outside the courts, with legislative activity superseding judicial creativity. With the passage of the Trustees (Amendment) Act 2004 (No 45 of 2004), largely though not wholly modelled after the UK Trustee Act 2000 (c 29), as well as the Business Trusts Act 2004 (No 30 of 2004), Singapore legislation on trust law has been updated and modernised. The role of the present chapter, however, is to focus on the developments to the law by the courts and not Parliament, so it is to cases that we turn.
12.2 As every student of trust knows for an express trust to exist the three certainties must be present, viz certainty of intention, certainty of subject matter and certainty of objects. The relationship between these three certainties is thrown into sharp focus in Joshua Steven v Joshua Deborah Steven[2004] 4 SLR 216.
12.3 For the purposes of this part of the review, we will focus only on the facts relevant to the issue of the alleged express trust. A group of erstwhile friends were all members of a religious group, the House of Israel. Joshua Steven, the plaintiff, was one of five registered owners of 577A Sembawang Place. This property was purchased with money which came from the five registered owners and a mortgage from OCBC Bank Ltd. After the purchase, some members of the group, including the plaintiff, lived in the property. But in the course of time the plaintiff moved out and then sought to have the property sold and the proceeds divided among the registered owners. Two of the other registered owners resisted the sale, claiming that the property was
held on trust for the purpose of housing some of the members of the House of Israel. Thus the issue was raised as to whether there was such a trust.
12.4 It was alleged that back in 1985 there was a covenant made by all the members of the group that though the property was registered in the name of five of them, it was for the purpose of ‘housing the plaintiff and all the 10 defendants as well as all the members of our respective families … and not for investment or enrichment’. However, the court was of the view that no such trust could be established as none of the three certainties were established. It was unclear, for example, who the intended beneficiaries were to be. Some of the defendants testified that it was for the benefit of the families then living in the property in 1985, though that excluded some of the defendants and contradicted the pleaded case, and in some cases, the parties” evidence was contradictory. Neither was the subject matter of the alleged trust clear as it was alleged that the original trust related both to 577A Sembawang Place and 577 Sembawang Place, but that for some inexplicable reason, the terms of this trust came to exclude 577 Sembawang Place. Nor could the defendants agree if they retained a beneficial interest in 577 Sembawang Place. Some of them felt that they did, whereas others felt that they did not. In the result, it is perhaps not surprising that, at the conclusion of the trial, the defendants conceded that their ‘covenant’ was not binding in the eyes of the secular law. In part, this was also because there were difficulties with such a trust under the Residential Property Act (Cap 274, 1985 Rev Ed) since some members of the group were not Singapore citizens and therefore could not hold any beneficial interest under a trust of residential property.
12.5 As the case amply demonstrates, the question of certainty of intention is very much affected by the other two certainties. The inability to demonstrate certainty of subject matter or objects adversely affects the case that the settler(s) intended to create a trust to begin with.
12.6 In Wong Kia Meng v Seet Siow Luan[2004] SGHC 112, the plaintiff and defendant were husband and wife, though by the time of the action, the defendant had already obtained a decree nisi to her petition for divorce. The husband was the registered sole proprietor of Smart Tuition Centre and the action was started by him against his wife for, inter alia, passing off her business, Smart Link Tuition Centre, as Smart Tuition Centre. The defendant, for her part, counterclaimed that she was the beneficial owner of Smart Tuition Centre and that Smart Tuition Centre had been registered in the
plaintiff”s name because, when it was set up, she was then employed as a teacher by the Ministry of Education and not permitted to run her own business.
12.7 Tay Yong Kwang J preferred the evidence of the defendant and held that Smart Tuition Centre (or to be more precise, the assets held by the plaintiff in connection with the business and its goodwill) was held on trust for the defendant. The court (at [78]) rejected the challenge by the plaintiff to the defendant”s claim in trust on the basis of illegality because:
[W]hile it was true that she was withholding the fact that she was going into business from her then employers, … that did not mean she committed a crime. At the worst, she was in breach of her contract of employment but a breach of contract made with a government body does not by itself amount to an offence against the law.
12.8 With respect, by equating the doctrine of illegality to criminal offences, this passage reflects too narrow a view of the doctrine. Thus, in Gascoigne v Gascoigne[1918] 1 KB 223, a husband who took a lease of land in his wife”s name to evade his creditors was not allowed to rely on his fraudulent objective to rebut the presumption of advancement. In Chettiar v Chettiar[1962] AC 294, a father who transferred 40 out of 139 acres of rubber land to his son so that the permissible production of holdings would be assessed by the local district officer rather than an assessment committee was likewise disallowed from relying on his fraudulent objective to rebut the presumption of advancement. In some of these cases of illegality, there would no doubt be an element of criminality involved but it is important to observe that the courts never relied on the criminality of an objective to establish its illegality, much less emphasised it in the way the High Court did in Wong Kia Meng v Seet Siow Luan. What seems tolerably clear is that if the objective of setting up a trust is to deceive another party, whether or not it is a governmental body (as the cases on deception of creditors show), the fraudulent intent is sufficient to establish illegality.
12.9 On the facts of Wong Kia Meng v Seet Siow Luan, it is possible to detect two possible deceptions. First, the Ministry of Education was deceived into continuing to employ the defendant as a teacher in spite of her breach of contract — it is here important to note that it is not the breach per se that is offensive but rather the deception. Second, as the setting up of a tuition centre required the approval of the Ministry of Education, such approval would likely not have been forthcoming if the defendant had applied for approval in her own name. Hence, the setting up of the tuition centre itself
would not have been possible had it not been for the fraud on the approving authorities.
12.10 When Lai Min Tet v Lai Min Kin[2004] 1 SLR 499 was decided, one could be forgiven for thinking that it sounded the death knell for the presumption of advancement in Singapore. The demise of the presumption, if the case be correctly regarded as such, cannot be considered unexpected, having been foreshadowed four years ago by the Court of Appeal in Teo Siew Har v Lee Kuan Yew[1999] 4 SLR 560. In that case, the Singapore Court of Appeal, adopting the English trend to marginalise the role of the presumption of advancement first observed in 1969 in the House of Lords decision of Pettitt v Pettitt[1970] AC 777, held that the presumption was to be regarded merely as an evidential instrument of last resort which could be easily rebutted by comparatively slight evidence.
12.11 Lai Min Tet v Lai Min Kin itself was concerned with a tussle over a property, 3 Jalan Kembang Melati, by the children (and one grandchild) of Lai Kah Joo, the patriarch of the family. The property was first purchased in 1967 by Lai Kah Joo for $81,500 in the joint names of his wife, Chung Sook Yow, and one of his four sons, Lai Min Kin. Subsequently, in 1973, Chung Sook Yow was substituted by another son, Ernest Lai Min Enn, as joint tenant. In 1984, Lai Kah Joo himself was added as joint tenant. Upon his death in 1994, his interest vested in Lai Min Kin and Ernest by way of survivorship and they held the property as joint tenants until they effected severance in 1996. In 1999, Ernest, prompted by his deteriorating health, transferred his interest to his son, Robert. The legal action was prompted by the discovery of this transfer by Ernest”s remaining two brothers, Lai Min Tet and Lai Min Fee, who asserted that the beneficial interest to the property all along remained with their father, Lai Kah Joo, and should devolve according to his will equally to the four brothers.
12.12 The case itself appears to have been fought over at least two grounds. First, that a valid express trust had been declared over the property. Second, that a presumed resulting trust arose in favour of the father, Lai Kah Joo. The two arguments, however, do not appear to have been kept neatly separated as the judgment segues from one to the other without any clear demarcation, making it impossible to be confident about the ratio decidendi of the case.
12.13 At one point of the judgment (at [45]), it appears as if the court was content to accept that a valid express trust was declared as the learned judge
accepted counsel”s submission that s 7(1) of the Civil Law Act (Cap 43, 1999 Rev Ed) did not require a declaration of trust of land to be made in writing but merely...
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