BOM v BOK and another appeal

• Jurisdiction: Singapore
• Judge: Andrew Phang Boon Leong JA
• Judgment Date: 29 November 2018
• Neutral Citation: [2018] SGCA 83
• Date: 29 November 2018
• Docket Number: Civil Appeals Nos 3 and 5 of 2018
• Published date: 04 December 2018
• Plaintiff Counsel: Suresh s/o Damodara, Ong Ziying Clement and Khoo Shufen Joni (Damodara Hazra LLP),Tan Wee Kheng Kenneth SC (Kenneth Tan Partnership)
• Defendant Counsel: Michael Hwang SC and Rachel Ong Yue Qing (Michael Hwang Chambers LLC) (instructed), Lee Hwee Khiam Anthony, Loh Wai Mooi and Wang Liansheng (Bih Li & Lee LLP)
• Court: Court of Appeal (Singapore)
• Hearing Date: 10 September 2018
• Subject Matter: Mistake of law,Deeds and other instruments,Mistake,Deeds,Actual,Unconscionable transactions,Presumed,Misrepresentation,Undue influence,Equity

Andrew Phang Boon Leong JA (delivering the judgment of the court): Introduction

A week after his mother’s death, a wealthy 29-year-old man (“the Husband”) falls into an argument with his wife (“the Wife”) the evening after reading his late mother’s will. Their clash ends with the Husband signing a declaration of trust (“the DOT”) which effectively renders him a pauper and their infant son (“the Son”) a millionaire. Soon after, the marriage collapses, and the Husband now seeks to set aside the trust. He claims that he executed the trust while grieving over his mother’s death and while being misled by the Wife’s representations that he could use his assets freely until his death. However, the Wife and the Son resist his attempt to reclaim beneficial entitlement to his assets, arguing that the DOT is a valid and untainted transaction, entered into by the Husband’s free will.

Under what circumstances should a court set aside a deed of trust? That is the principal question that the above facts pose to us. In BOK v BOL and another [2017] SGHC 316 (“the Judgment”), the trial judge (“the Judge”) found in favour of the Husband and set aside the DOT on the basis of misrepresentation, mistake, undue influence and unconscionability. Dissatisfied with the result, the Wife and the Son (collectively referred to as “the Appellants”) have appealed against the entirety of the Judge’s decision.

Background facts

The background to the dispute is set out comprehensively in the Judgment. It suffices for us to set out the facts that are material to these appeals.

The Husband works as a managing director in an energy company. At the age of 34, he is a man of substantial means due to his father’s inheritance. He shared a close relationship with his late mother. The Wife, who is 38 years old, has been unemployed since 2012, prior to which she was a practising lawyer for a number of years. The Husband and the Wife began their romantic relationship in November 2011, and the Wife became pregnant with the Son soon after in April 2012. Notwithstanding the strong disapproval of the Husband’s mother, the Husband and the Wife married in August 2012. The Son was born shortly after, in December 2012.

After the couple married, the Husband lived mostly with his mother in one of her properties, which we shall refer to as “the Holland Road Property”. This was save for a short period from October to November 2012, during which time the Husband stayed with the Wife and her parents in their family home, which we shall refer to as “the Stevens Road Property”. The period between December 2012 and January 2014 was a difficult one for the couple because of the Husband’s work and travels, but by January 2014, they had begun to discuss setting up their own home. They found an apartment that would be their family home, which we shall call “the Scotts Road Apartment”.

Soon after, tragedy befell the Husband’s mother in March 2014. She was killed at the Holland Road Property, and her funeral was held on 23 March 2014. Because the Holland Road Property had been cordoned off by the police, the Husband moved into the Stevens Road Property to live with the Wife and her family.

Three days after the funeral of the Husband’s mother, on 26 March 2014, the Husband and his sister met with their mother’s lawyers to read her will. Their mother had created a testamentary trust over her assets, which were valued at about $54m. Her assets comprised, among other things, the Holland Road Property and another landed property (“the Bukit Timah Property”). A lawyer (“the Solicitor”) was appointed to assist in the administration of their mother’s estate, while the Husband and his sister were appointed the executors of their mother’s will and the trustees of her testamentary trust. The testamentary trust stipulated that they could sell the properties only after the 25th anniversary of their mother’s death. Until then, they were each only permitted to withdraw a sum not exceeding $10,000 per month from the estate.

Thereafter, the Husband and his sister went to the Stevens Road Property to have lunch with the Wife and her mother. The siblings agreed not to reveal the contents of the will to the Wife. But the Wife knew that they had gone to read their mother’s will, and thus asked about it. Upon being questioned, the Husband lied that his mother had willed all her property to charity, and they discussed the idea of converting the Bukit Timah Property into an art gallery in remembrance of her.

Execution of the DOT

After lunch, the Husband and his sister left the Stevens Road Property. That afternoon, the Wife drafted the DOT at issue in these appeals by hand. When the Husband returned in the evening, the Wife asked him into her bedroom to sign the DOT. In sum, the DOT provided that the Husband and Wife would hold all of the Husband’s assets on trust for the Son. It read as follows:

TRUST DEED

DATE: 26 MARCH 2014

By this Trust Deed, I, [the Husband], NRIC No. [xxx] of [xxx] hereby unconditionally and irrevocably declare that all assets, both personal and immoveable, owned by me, whether legally or beneficially, shall be held in trust by me and [the Wife], NRIC no. [xxx] of [xxx], as joint trustees for the sole benefit of [the Son], Birth Certificate number [xxx].

It is also hereby declared that either I or [the Wife] shall be authorised to take any and all steps to protect and safeguard the beneficial interest of the Beneficiary [the Son], Birth Certificate number [xxx].

The parties dispute the precise events that took place in the Wife’s bedroom that evening. In essence, the Husband claims, on the one hand, that the Wife’s request for him to sign the DOT took him by surprise, and that she represented to him that the trust would only take effect upon his death. He further avers that she threatened to kick him out of the Stevens Road Property if he did not sign the DOT. On the other hand, the Wife claims that she drew up the DOT at the Husband’s request, and that he signed the DOT of his own accord. This is a crucial point of contention which we will return to later. At this juncture, it suffices to note that it is undisputed that the Husband initially refused to sign the DOT, which led to an argument between the couple. It is also undisputed that the Husband eventually signed the DOT that evening, following which the Wife stored the DOT in her safe.

Execution of the Scotts Road Trust

Not long after the DOT was executed, the Husband informed the Wife in April 2014 that a second will by his mother had been discovered, and that he and his sister had inherited their mother’s assets under this second will. It is undisputed that this was a lie. Subsequently, the Husband and his sister decided to exercise their right as beneficiaries under their mother’s will to call in the assets under the will and apportion them between themselves.

On 9 May 2014, the Husband exercised the option to purchase the Scotts Road Apartment. In this connection, the Solicitor who assisted in the administration of the Husband’s mother’s estate also assisted the couple in their purchase of the Scotts Road Apartment. On the same day, the Husband executed a second trust deed (“the Scotts Road Trust”), in which he declared that he held the Scotts Road Apartment on trust for the Son. The Scotts Road Trust stated that the apartment was purchased “out of natural love and affection for the Son”. It also provided that the Husband would be entitled to receive and use the rental income for his own benefit until the Son turned 21 years old.

In the same month, the Husband and the Wife went on a holiday to France as part of their attempt to reset their relationship. Around this time, the couple also started planning for a second child.

Events following the execution of the trusts

Approximately a month after the Scotts Road Trust was executed, the Wife sent an e-mail to the Solicitor on 14 June 2014 without copying the Husband. In this e-mail, the Wife enclosed a copy of the DOT and sought to bring it to the Solicitor’s attention. She said:

Before the property from the will vests in [the Husband] and his sister in name I thought you needed to know of [the DOT]. I dont [sic] know if [the Husband] told you about its existence but his sister is not involved in this. So he may not have mentioned in front of her. Pls do the necessary and give me a call if you need any further info.

Just three days later, on 17 June 2014, the Wife sent another e-mail to the Solicitor. Again, the Husband was not copied. This e-mail similarly enclosed a copy of the DOT and asked the Solicitor to take note of it when acting for the Husband’s mother’s estate:

Please find attached the document [the Husband] signed previously. It is a private matter so I am not sure his sister knows about it in detail but I thought I should bring it to your attention. Something to note I guess re any property that will vest in [the Husband’s] name? I am not sure of procedure. The document is in the bank so please let me know if you need a hard copy. It was done before I think even this will was found. Ok let me know if you need further information.

Deterioration of the parties’ relationship

On 9 July 2014, the Husband and his sister entered into a deed of family arrangement, under which they agreed to exercise their rights as beneficiaries to terminate their mother’s testamentary trust and to apportion their mother’s assets between them. On 27 November 2014, the High Court allowed their application to do so.

About two weeks after the testamentary trust was terminated, the Wife re-sent her e-mail dated 14 June 2014 to the Solicitor. And on 17 December 2014, she sent yet another e-mail to him. In this latest e-mail, the Wife requested to be kept updated about the vesting of property and funds belonging to the Husband’s mother’s estate. She also asked if it would be necessary for them to have a...