Equity and Trusts

Published date01 December 2006
AuthorTANG Hang Wu LLB (Hons) (National University of Singapore), LLM, PhD (Cambridge); Advocate and Solicitor (Singapore), Solicitor (England and Wales); Associate Professor, Faculty of Law, National University of Singapore.
Date01 December 2006
Express trusts

13.1 The case of Sheares Betty Hang Kiu v Chow Kwok Chi[2006] 2 SLR 285 involved a dispute on whether a valid trust was properly constituted. It was argued that the document which purported to constitute the trust was invalid because of uncertainty of the subject matter and objects of the trust. V K Rajah J (as he then was) rejected this contention as he found that as a matter of construction of the document, the subject matter of the trust was sufficiently clear, ie, the assets listed in the relevant schedule and the objects of the trust were clearly defined. The learned judge opined that the argument premised on uncertainty was ‘strained, tortuous and tantamount to legal nitpicking’ (at [22]). Rajah J also saw no difficulty in holding that the subject matter of the trust consisted of assets inherited by the settlor from her late husband”s estate which had not been fully administered. Some clauses in the trust document were also attacked on the ground that it was a testamentary disposition which did not comply with the formalities of the Wills Act (Cap 352, 1999 Rev Ed). The learned judge rejected this argument. He held that the ‘acid test as to whether an instrument possesses a testamentary character is whether the instrument is revocable’ (at [28]). On the present facts, the arrangement was a valid declaration of a trust and not a testamentary disposition because it was clear that the settlor did not regard the document as revocable at the time of execution.

13.2 Abdul Jalil bin Ahmad bin Talib v A Formation Construction Pte Ltd [2006] 4 SLR 778 is a case where the extent of the powers of a sole trustee was considered by the court. Clause 19 of the will of the testator which constituted the trust provided for at least two trustees. This clause also stated that if there was only one trustee left, the single trustee ‘shall only have [the] power to appoint new trustees and to carry on all necessary business of the trust until new trustees or trustee are appointed’. In this case, the single trustee purportedly entered into a contract of compromise with the defendant in relation to two properties owned by the trust. The trust”s position was that the single trustee did not

have the power to do so. Judith Prakash J disagreed with the trust”s position and held that the sole trustee had the power to conduct the ‘necessary business of the trust’ which included managing the trust property and entering into a compromise regarding matters of rent.

Resulting trusts

13.3 The rationale of the presumption of advancement was considered in two cases before the High Court. Both these cases involved the application of the presumption of advancement between a parent vis-à-vis an adult child. The first case is the High Court”s decision of Low Geok Khim v Low Geok Bian[2006] 2 SLR 444 (‘Low Geok Khim’). In Low Geok Khim, a father opened six bank accounts in joint names with his youngest son. When the father died, an action was brought alleging that the youngest son held the moneys in the bank accounts on resulting trust for the father”s estate. The youngest son relied on the presumption of advancement to rebut the plea of a resulting trust. Kan Ting Chiu J thought that the presumption of advancement between a father and his child did not have to be explained on the basis that there was a need for the father to financially support his child. Kan J highlighted that it was important to take into account the context in which the presumption of advancement worked, ie, the presumption operated as an exception to the presumption of a resulting trust for apparent gifts. Where there was a parent-child relationship, the reasonable inference would be that the parent would have intended the child to have the benefit of the property. As such, there was ‘no necessity to restrict the operation of the presumption of advancement to a child in need of financial support. There [was] no reason to suppose that a parent could have intended the child to have the benefit if the latter was financially dependent, but not if he was financially sound’ (at [47]). On the facts, Kan J did not find that the presumption of advancement had been rebutted. This judgment is significant because Kan J declined to follow the approach of Judith Prakash J in Ang Toon Teck v Ang Poon Sin[1998] SGHC 67 where Prakash J expressed the view that the presumption of advancement ought not to apply between a father and an adult financially self-supporting son.

13.4 Chew Tong Seng v Chew Cheng Quee [2006] SGHC 149 was another case which considered the presumption of advancement in favour of a person”s offspring. In this case, Tan Lee Meng J noted that this presumption was largely an out-of-date creature of the 19th century that

would be readily rebutted by comparatively slight evidence. On the facts of this case, the presumption was rebutted because there was evidence that the registered owner had acknowledged that his parents were the beneficial owners of the property.

13.5 In contrast, Judith Prakash J in Shih Shin Wang-Liu v Tsai Pei Lun Betty[2006] SGHC 196 (‘Shih’) did not find Kan Ting Chiu”s judgment persuasive and re-iterated her earlier view in Ang Toon Teck v Ang Poon Sin that the presumption of an advancement did not apply in the context of a parent and an adult financially self-supporting child. Prakash J relied on para 23-02 of Snell”s Equity (Sweet & Maxwell, 31st Ed, 2005) to support the proposition that the presumption of advancement is found where the transferor is under an equitable obligation to maintain the transferee. Prakash J reasoned that where there was no such equitable obligation, ie, in a situation of a parent vis-à-vis an adult and financially independent offspring, the presumption of advancement did not apply. Instead, there was a presumption of a resulting trust and it was up to the transferee to show evidence that the transferor intended to make a gift. In Shih, the learned judge held that the transfer of money to a bank account from the biological parents of the deceased who was an adult did create a resulting trust in favour of the deceased”s parents.

13.6 It was in this state of uncertainty that an appeal of Kan Ting Chiu J”s judgment in Low Geok Khim was heard before the Court of Appeal (see Low Gim Siah v Low Geok Khim[2007] 1 SLR 795 (noted in Kelvin Low, ‘Presumption of Advancement: A Renaissance?’(2007) 123 LQR 347)). Chan Sek Keong CJ endorsed para 23-02 of Snell”s Equity (Sweet & Maxwell, 31st Ed, 2005) and said at [33] that:

Some transfers of property from father to son or from husband to wife are more readily inferable as gifts from one party to the other, thereby raising the presumption of advancement.

He said that presumption of advancement was ‘justified on the basis of a moral or equitable obligation on the part of one to care for the other’ [emphasis in original] (at [44]). The Chief Justice also noted that while the presumption of advancement had lost its robustness or had diminished in importance in cases involving joint contribution by married couples acquiring the matrimonial home, these cases did not affect ‘the traditional and well-established categories of father-and-child and husband-and-wife relationship where the wife was economically dependent on the husband’ (at [43]). As such, the presumption will

continue to apply with regard to father and infant child, and to husband and economically...

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