Chan Yuen Lan v See Fong Mun

JurisdictionSingapore
Judgment Date24 June 2014
Date24 June 2014
Docket NumberCivil Appeal No 64 of 2013
CourtCourt of Appeal (Singapore)
Chan Yuen Lan
Plaintiff
and
See Fong Mun
Defendant

Sundaresh Menon CJ

,

Andrew Phang Boon Leong JA

and

V K Rajah JA

Civil Appeal No 64 of 2013

Court of Appeal

Trusts—Constructive trusts—Common intention constructive trusts—Whether common intention constructive trust should be primary device for resolving domestic property disputes

Trusts—Resulting trusts—Presumed resulting trusts—Domestic property being purchased in wife's sole name—Purchase price deriving from various sources—Husband claiming amount contributed by wife was given as loan to him—Husband claiming he contributed entire purchase price—Husband claiming parties agreed that he was true owner of property—Wife claiming that she made financial contributions towards purchase price of property—Wife claiming parties agreed that she was true owner of property—Wife claiming presumption of advancement applied in her favour—Whether wife held entire beneficial interest in property on resulting trust for husband

In 2012, the husband sought a declaration that his wife held the entire beneficial interest in a property for him on resulting trust. The wife counterclaimed for a declaration that she was the true owner of the property.

The parties were married in 1957 and the wife quit her job soon after. Although the husband subsequently had an affair and now lived with his mistress, the parties did not divorce.

In 1983, the property was purchased in the wife's sole name. The property's purchase price of around $1.83 m was funded from six sources: (a) the wife's life savings of $290,000; (b) $400,000 from an overdraft in the name of TMPL (a company incorporated by husband and of which he owned all but one of the 50,002 shares); (c) $400,000 from a bank loan in the wife's name; (d) $8,000 from a joint account in the name of the husband and the parties' eldest son; (e) $10,000 from the parties' eldest son; and (f) $720,000 from the husband's savings and his Central Provident Fund monies.

The husband maintained that he had agreed to put the property in the wife's sole name so that she could brag to her friends but only on the condition that she acknowledged him as the true owner. According to him, she acknowledged him as the true owner by executing a power of attorney shortly before completion of the purchase appointing the husband and their eldest son to take charge of the property. The husband also asserted that the wife agreed to provide her life savings as a loan to him to fund part of the purchase price and that he had fully repaid her shortly after completion with the sale proceeds of another piece of property owned by him.

The wife conceded that she did not provide the entire purchase price for the property. Instead, she contended that the parties agreed that she would own the property absolutely and this was evidenced by her willingness to: (a) apply her life savings towards the purchase price; and (b) allow future income which she would derive from the husband's companies to be applied towards the repayment of the bank loan. In the alternative, she resisted the husband's claim on the basis that the presumption of advancement applied in her favour.

The trial judge agreed with the husband that he had contributed the entire purchase price and that the property was held on resulting trust for him. Crucially, the trial judge found that the wife had loaned the husband her life savings of $290,000 and this amount had been repaid by the husband in full. In coming to this conclusion, the trial judge emphasised that wife did not adduce any evidence refuting the husband's claim that the $290,000 had been repaid in full and also did not allude to any requests for repayment over the years which were ignored by the husband.

Held, allowing the appeal in part:

(1) The wife's life savings of $290,000 should be attributed as her contribution towards the purchase price. The wife never said that she asked for repayment of the $290,000 which she contributed. In fact, her case rested on the premise that that sum was not lent to the husband. Her failure to request for repayment was therefore at best equivocal. Since the $290,000 initially belonged to the wife, the burden was on the husband to show that this sum was properly characterised as a loan. This burden was not discharged as there was no documentary evidence that the $290,000 was a loan or that it had been repaid. Much came down to the self-serving statements of the husband and their eldest son whose credibility was in doubt: at [75] to [77] .

(2) There was no reason to interfere with the trial judge's finding that the $400,000 from the overdraft in TMPL's name should be attributed to the husband. Neither was there any reason to interfere with his finding that the $400,000 bank loan should be attributed to the husband notwithstanding that the bank loan taken out in the wife's name. In relation to the $400,000 bank loan, there was no reason to disturb the trial judge's finding that it was the husband who repaid it. It was also inconceivable that the wife, a homemaker who had just contributed her entire life savings towards the purchase price of the property, would have undertaken the risk of being personally exposed to the bank without at least some form of tacit assurance from the husband that he would be responsible for the bank loan's repayment. Even if there was no prior agreement that the husband would repay the bank loan, given that he had repaid the entire loan by himself, the remedy of equitable accounting could have be considered as a means of adjusting the parties' respective shares of the beneficial interest in the property so as to attribute the bank loan to the husband: at [80] , [83] , [85] and [86] .

(3) Since the parties' eldest son was content for the monies contributed by him to be attributed to the husband, the starting point was the presumption that the wife held 84.17% of the beneficial interest in the property on a resulting trust for the husband. The wife failed to rebut this presumption. Although the power of attorney executed by the wife was ineffective in showing the existence of any agreement between the parties that the husband was to be the true beneficial owner the property, the circumstances at the time of purchase showed that the husband had no intention of benefitting the wife by his contributions to the purchase price. Any presumption of advancement (which would have been weak in view of the state of the relationship between the parties at the time of the purchase) would have been negated by the same circumstances: at [91] to [93] .

[Observation: A ‘lack-of-intention’ analysis may potentially provide a more sensible basis for the principled yet pragmatic development of the resulting trust going forward. That said, the courts should tread carefully in this area because an unduly wide doctrine of resulting trusts and the potential blurring of the distinction between claims based on unjust enrichment and claims based on resulting trusts might have unsettling effects on the rights of third parties and the security of commercial transactions: at [44] and [48] .

The best method of preventing property disputes of this nature from even arising is for lawyers advising parties on the acquisition of a property to ask the latter to seriously consider at the outset how the property ought to be divided in the event of a breakdown in their relationship: at [153] .

As to whether the Singapore courts ought to use the common intention constructive trust (or, alternatively, either the Canadian approach or the Australian approach) as the primary device for resolving domestic property disputes, the approach which our courts should take must provide proper guidance to the parties, who will most probably seek legal advice on their property rights once their relationship breaks down. Lord Neuberger's minority approach in Stack v Dowden[2007] 2 AC 432 has much to commend it. First, it provides pragmatic and clear guidance on when a resulting trust and when a common intention constructive trust, each of which is a distinct concept, applies in this complex and difficult area of the law. This facilitates informed negotiations after a relationship has broken down, and prevents unnecessary and costly litigation. Second, it removes the unclear distinction that has emerged in England between the domestic and the commercial contexts, thus ensuring better consistency of results. Third, this approach prevents the court from imputing to the parties an intention which they never had vis-à-vis the quantification of their respective shares of the beneficial interest in the property concerned; it prevents the court from foisting upon the parties an intention which they never had in order to achieve a ‘fair’ result. This ensures that the common intention constructive trust, if successfully invoked, is not used as a smokescreen for the courts to effect ‘palm tree’ justice in an unprincipled and arbitrary manner. Fourth, it would mean that the common intention constructive trust would also be applicable in the commercial context; there is no policy reason why the presumption of resulting trust in a commercial context cannot be rebutted by the common intention of the parties (although principle would suggest that it would be easier to rebut this presumption in the domestic context). Fifth, the use of the resulting trust as the default analytical tool in the absence of any evidence of a common intention between the parties as to how the beneficial interest in the property concerned is to be held is also consistent with the lack-of-intention analysis of the resulting trust: at [153] to [158] .

It may be that the approach advocated by Lord Neuberger would lead to outcomes which some people might perceive as ‘unfair’ in certain cases. However, subjective fairness may not be the most appropriate yardstick to apply in resolving property disputes, and each party's share of...

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