Equity and Trusts

• Published date: 01 December 2010
• Author: TANG Hang Wu LLB (National University of Singapore), LLM, PhD (Cambridge); Advocate and Solicitor (Singapore), Solicitor (England and Wales); Associate Professor, Faculty of Law, National University of Singapore.
• Date: 01 December 2010

Express trust

14.1 Tay Jui Chuan v Koh Joo Ann [2010] 4 SLR 1069 concerned a dispute over an apartment unit in Stevens Road which was registered in the name of Koh Joo Ann (‘Koh’). First Grade Agency Pte Ltd (‘First Grade’) claimed that Koh was merely the trustee of the property. In response to the claim, Koh“s defence was that the property was a gift from the Sambu group of companies which was the ultimate holding company of First Grade. On appeal, the Court of Appeal upheld Koh“s assertion that the property was transferred to him as a gift. Chan Sek Keong CJ, who delivered the decision of the Court of Appeal, said ‘[a]ll … [the plaintiffs“] claims and arguments were shots in the dark.’ The Court of Appeal also pointed out that Koh did not have the burden to prove that he was the beneficial owner because Koh was the registered proprietor of the apartment. As the registered proprietor, Koh had indefeasible title to the apartment by virtue of s 46 of the Land Titles Act (Cap 157, 2004 Rev Ed) and the burden was on the plaintiff to rebut this. This holding is consistent with the Court of Appeal“s judgment in Loo Chay Sit v Estate of Loo Chay Loo, deceased [2010] 1 SLR 286 which states that the registered proprietor is entitled to rely on the presumption of indefeasibility by reason of s 46 of the Land Titles Act (Cap 157, 2004 Rev Ed) and the legal burden of proving a resulting trust is on the person who asserts it.

14.2 The defence of illegality featured prominently in several Singapore cases. In Guillaume Levy-Lambert v Goh See Yuen Pierre [2010] SGDC 482, the defendant raised the startling defence of illegality premised on s 377A of the Penal Code (Cap 224, 2008 Rev Ed) to an express and/or resulting trust claim. The plaintiff and defendant were in a brief homosexual relationship between June 2008 and August 2008. During the time of the relationship, the plaintiff deposited $180,000 in a DBS bank account which was in the joint names of the plaintiff and the defendant. The plaintiff alleged that the defendant made unauthorised withdrawals from the account on 5 and 18 August 2008 amounting to $86,909.54 leaving the account with a balance of $646.46. It was the plaintiff “s case that the joint account contained ‘trust monies’ impressed with an express trust and/or resulting trust and he therefore sued the defendant for unauthorised withdrawals. One of the main

planks of the defence was that the joint bank account was tainted by an illegal contract in that the parties“ relationship involved an offence of unnatural sex prohibited by s 377A of the Penal Code. In other words, the bank account was the basis for an agreement to cohabit together and engage in a sexual relationship which was prohibited by the Penal Code. District Judge Loo Ngan Chor heard this illegality defence as a preliminary issue before the trial. Applying Tinsley v Milligan [1994] 1 AC 340, District Judge Loo found that the plaintiff did not need to rely on the relationship to prove his claim for a resulting trust. The resulting trust claim may be established simply by the fact that the plaintiff “s money had gone into the joint bank account. As such, the learned judge held that there was no operative illegality.

14.3 The second case which explored the issue of trust and the defence of illegality is Chee Jok Heng Stephanie v Chang Yue Shoon [2010] 3 SLR 1131 (‘Chee Jok Heng Stephanie’). In this case, the plaintiff sold her property and handed part of the proceeds amounting to $682,000 to the defendant to be held on trust for her. The plaintiff did so because she was afraid the money would be seized by the Commercial Affairs Department in connection with criminal investigations against her. Subsequently, it turned out that her fears were unfounded and the plaintiff asked for her money back from the defendant. In response, the defendant raised the defence of illegality against the plaintiff “s claim. Woo Bih Li J rightly applied Tinsley v Milligan [1994] 1 AC 340 and held that the plaintiff did not need to rely on the illegal trust agreement to sustain her claim. The plaintiff “s ‘claim is based on an equitable property right that she obtained (or rather retained) after settling the sum of $682,000 with Mr Chang [the defendant] on an express trust for her benefit’: Chee Jok Heng Stephanie at [43]. This part of the judgment is undoubtedly correct. What is more controversial and significant about this decision is that Woo J postulated an exception to the doctrine of in pari delicto which was based on the Australian case of Weston v Beaufils (1994) 122 ALR 240 (‘Weston’). Woo J described this exception as a situation ‘where the tainted transfer of property was induced by a breach of fiduciary duty by the defendant’: Chee Jok Heng Stephanie at [38]. In these circumstances, Woo J said that the plaintiff would not be in pari delicto with the defendant. With respect to the learned judge, it is hard to follow this part of the reasoning because it conflates fiduciary duties with the question of whether the plaintiff was in pari delicto. It is easy to envisage a situation where there was a breach of fiduciary duty on the defendant“s part and the plaintiff was fully aware of the illegality of the transaction. For this exception to work, more work must be done to explain how the breach of fiduciary duty renders the plaintiff to be not in pari delicto. Until a convincing case is made out, it is suggested that the Singapore courts should refrain from applying this exception. After all, the Court of Appeal in Public Prosecutor v Intra

Group (Holdings) Co Inc [1999] 1 SLR(R) 154 had expressed reservations about Weston and said that this was a point not accepted in Singapore.

Charitable trust

14.4 Civil litigation involving charities is rare and this year“s review only covers a single decision. Life Bible-Presbyterian Church v Khoo Eng Teck Jeffrey [2010] SGHC 187 was a case where the Life Bible-Presbyterian Church (‘the Church’) sued the directors of the Far Eastern Bible College (‘2004 College’) which was registered in 2004 under the Charities Act (Cap 37, 1995 Rev Ed) for a declaration that the 2004 College was different from a bible school with the same name which was started in 1962 (‘1962 College)’. In addition to the declaration, the Church also asked the 2004 College to deliver vacant possession of the Church“s property. Judith Prakash J found that there had been various appeals for funds made in the names of the Church and the 1962 College. These funds were impressed with a charitable purpose trust for the purpose of the Church and the 1962 College specifically for ‘the training of consecrated men and women in accordance with the original constitution produced or to be produced by the three-man committee’. The 2004 College was a different entity and could not assert a right to benefit from the funds. For these reasons, Judith Prakash J held that the Church was entitled to the reliefs claimed.

Resulting trusts

14.5 The purchase price resulting trusts continue to be an issue of contention in Singapore. Ang Hai San Henry v Ang Bee Lin Elizabeth [2010] SGHC 353 was a case dealing with a purchase price resulting trust of real estate. The plaintiff asserted that he paid the purchase price for 65 Jalan Naung which was registered in the name of his late mother. When the plaintiff “s mother died, the plaintiff sued his mother“s administrators for a declaration that he was the sole beneficial owner. Philip Pillai J held that the evidence demonstrated that the plaintiff had indeed paid for the purchase price of the house. As such, there was a presumption of a resulting trust which arose in the plaintiff “s favour. The countervailing presumption of advancement did not arise since equity does not readily presume children intend to make gifts to their parents. Since the presumption of the resulting trust was not rebutted, Pillai J held that the...