Chee Yin Meh v Ong Kian Guan and others

• Jurisdiction: Singapore
• Judge: Kannan Ramesh JAD
• Judgment Date: 27 October 2023
• Neutral Citation: [2023] SGHC(A) 34
• Court: High Court Appellate Division (Singapore)
• Docket Number: Civil Appeal No 113 of 2022
• Hearing Date: 12 July 2023
• Citation: [2023] SGHC(A) 34
• Year: 2023
• Plaintiff Counsel: Goh Kok Leong, Fu Xiangming Max and Navin Kumar s/o Tamil Selvan (Ang & Partners)
• Defendant Counsel: Chan Chee Yin Andrew, Tay Yu Xi, Yeo Alexander Lawrence Han Tiong, Chew Jing Wei, Lee Suet Yean Cherlyn and Edwin Teong Ying Keat (Allen & Gledhill LLP)
• Subject Matter: Trust,Constructive trusts,Common intention constructive trusts,Equity,Estoppel,Proprietary estoppel,Land,Residential Property Act
• Published date: 27 October 2023

Andre Maniam J (delivering the grounds of decision of the court): Introduction

Under the Residential Property Act (Cap 274, 2009 Rev Ed) (“RPA”), can a foreign person acquire an estate or interest in residential property by way of a common intention constructive trust or proprietary estoppel? In AD/CA 113/2022 (“AD 113”), we upheld the decision of the trial judge (“the Judge”) that this was not permissible under the RPA.

Background

The appellant, Mdm Chee Yin Meh (“Mdm Chee”), is married to Mr Fan Kow Hin (“Mr Fan”) (now a bankrupt). Their residence at Sunrise Drive (the “Sunrise Drive property”) was acquired in the sole name of Mr Fan. In May 2017, Mr Fan’s trustees in bankruptcy sold the Sunrise Drive property (the respondents are his present trustees). Mdm Chee filed HC/OS 906/2018 (“OS 906”) seeking a declaration that Mr Fan held half of the beneficial interest in the property on trust for her, and an order that the trustees transfer 50% of the net proceeds to her. OS 906 was converted to HC/S 350/2019 (“Suit 350”) and proceeded to trial.

When the Sunrise Drive property was transferred to Mr Fan on 11 August 2011, Mdm Chee was not a Singapore citizen, although she had applied for citizenship two months prior on 10 June 2011.¹ It is common ground that as at 11 August 2011: she was a “foreign person” within s 2 of the RPA; the Sunrise Drive property was “residential property” under s 2 of the RPA; and she had not obtained the Minister’s approval “to purchase, acquire or retain any estate or interest in any residential property” under s 25 of the RPA.

Mdm Chee knew about such approvals under the RPA – she had previously obtained approval under the RPA to purchase and acquire an interest as a joint tenant with Mr Fan for their previous matrimonial home at Sunrise Terrace (the “Sunrise Terrace property”).²

For the Sunrise Drive property, however, Mdm Chee did not apply for and obtain the Minister’s approval under the RPA. In Mdm Chee’s affidavit of evidence-in-chief (“AEIC”), she said that the lawyer who handled her husband’s purchase of the Sunrise Drive property had advised that it would be difficult for her to buy the Sunrise Drive property as she was not a Singapore citizen and she was already an owner of the Sunrise Terrace property. Mdm Chee says the lawyer advised that: Mdm Chee should apply for Singapore citizenship (which she did on 10 June 2011); and pending approval of her citizenship application, Mdm Chee should ask Mr Fan to hold 50% of the Sunrise Drive property on trust for her.³ The lawyer denied giving such advice – she said that she would not have given such advice as it would have been in contravention of the RPA.⁴

Mdm Chee said that after she shared the lawyer’s advice with Mr Fan, Mr Fan agreed that he would acquire the Sunrise Drive property in his name “and to hold 50% of the property for [her] until [she] acquired Singapore citizenship”.⁵

Mdm Chee also said that payments for the purchase of the Sunrise Drive property came from joint bank accounts (of her and Mr Fan), a housing loan which Mr Fan took, and a term loan which they jointly took. Further, Mdm Chee said that payments for furniture and fittings were made from a joint bank account and that she had made payments towards property tax.⁶

Mdm Chee became a Singapore citizen on 23 December 2011, but the Sunrise Drive property remained in the sole name of Mr Fan. Thus, in Suit 350, Mdm Chee claimed that Mr Fan held 50% of the beneficial interest of the Sunrise Drive property on trust for her.

Mdm Chee’s claim was based on: “a common intention constructive trust (the “CICT”) under which Fan had agreed to hold half of the [Sunrise Drive property] for the Plaintiff”, which “arose at some time in the latter part of May 2011”; and further or alternatively, proprietary estoppel.⁷

The Judge held in Chee Yin Meh v Sim Guan Seng and others [2023] 3 SLR 1380 (the “Judgment”) that even if what Mdm Chee said was true, the RPA operated to defeat her claim. We upheld that decision, for the reasons set out below.

Findings The RPA bars foreign persons from purchasing or acquiring an interest in residential property by way of a trust

We concluded, as did the Judge, that the RPA bars foreign persons from acquiring an interest in residential property under a common intention constructive trust.

Section 25(2) of the RPA provides that “any foreign person who desires to purchase, acquire or retain any estate or interest in any residential property other than non-restricted residential property must apply to the Minister through the Controller for the grant of the Minister’s approval to acquire or to retain residential property”. That is subject to a saving provision for the retention of any estate or interest vested immediately before 11 September 1973, which does not apply in the present case.

Mdm Chee desired to purchase or acquire an interest in the Sunrise Drive property – she said in her AEIC that she and Mr Fan had intended to buy the Sunrise Drive property as joint tenants in the same way as they had bought the Sunrise Terrace property, and the option to purchase the Sunrise Drive property was thus made out in both their names.⁸ As a foreign person who desired to purchase or acquire an interest in the Sunrise Drive property (which was residential property), Mdm Chee was obliged under section 25(2) of the RPA to apply for the Minister’s approval to do so, but she did not make the requisite application.

Instead, Mdm Chee sought to acquire an interest in the Sunrise Drive property by relying on an agreement with Mr Fan whereby he would acquire the property in his name, but “hold 50% of the property for [her] until [she] acquired Singapore citizenship”.⁹

Mdm Chee thus claimed that her name was struck out from the option. Mr Fan exercised the option in his sole name on 2 June 2011, and the purchase was completed on 11 August 2011.¹⁰

In AD 113, Mdm Chee’s case was that she had a 50% beneficial interest in the Sunrise Drive property under a common intention constructive trust. Section 23 of the RPA, however, prohibits foreign persons from purchasing or acquiring any estate or interest in any residential property, by way of a trust. Section 23 provides as follows:

Residential property not to be purchased or acquired by citizen or approved purchaser as nominee of foreign person

23.—(1) A — (a) citizen or approved purchaser must not purchase or acquire any estate or interest in any residential property that is not non-restricted residential property as a nominee of any foreign person with the intention that the citizen or approved purchaser is to hold it in trust for that foreign person; and (b) foreign person must not authorise or appoint as the foreign person’s nominee any citizen or approved purchaser to purchase or acquire any estate or interest in any residential property that is not non-restricted residential property with the intention that that citizen or approved purchaser is to hold it in trust for that foreign person. (2) Any trust created in whatever manner or form pursuant to subsection (1) is void and there is no resulting trust in favour of the foreign person; and any contract or covenant between such citizen or approved purchaser and the foreign person in respect of such residential property or any estate or interest therein is void.

…

(4) Any person who contravenes subsection (1)(a) or (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $100,000 or to imprisonment for a term not exceeding 3 years or to both.

…

[emphasis added in bold italics]

Section 23(1)(a) of the RPA prohibits citizens from purchasing or acquiring an interest in residential property with the intention of holding it on trust for any foreign person. Section 23(1)(b) prohibits foreign persons from authorising or appointing any citizen as a nominee to acquire an interest in residential property with the intention that the citizen is to holds the interest on trust for the foreign person. Section 23(1)(a) and s 23(1)(b) work in tandem, placing prohibitions on both parties in such a trust arrangement: the foreign person (as beneficiary), and the Singapore citizen (as trustee).

Section 23(2) is the corresponding “voiding” provision for s 23(1), providing that any trust created in favour of the foreign person is void and that there is no resulting trust in favour of the foreign person. Section 23(4) then provides for criminal liability for any person who contravenes ss 23(1)(a) and 23(1)(b) of the RPA.

Thus, even on Mdm Chee’s case, ss 23(1)(a) and (b) were contravened by Mr Fan and Mdm Chee respectively: Mr Fan purchased or acquired the Sunrise Drive property with the intention that he holds a 50% beneficial interest in it on trust for Mdm Fan; and Mdm Fan authorised or appointed Mr Fan as her nominee to purchase or acquire the Sunrise Drive property with the intention that he holds a 50% beneficial interest in it on trust for Mdm Chee.

It followed that the trust was void under s 23(2) of the RPA.

Mdm Chee relied on the case of Public Prosecutor v Intra Group (Holdings) Co Inc [1999] SGHC 11 (“Intra Group”) to argue that there was nothing in the RPA to prohibit a common intention constructive trust. In that case, Yong Pung How CJ (as he then was) held at [36] and [37] that: 36 These provisions all refer to, and prohibit the creation of, express trusts. Section 14(2) prohibits a resulting trust from arising upon the failure of the express trust. This is an important provision to which I will return later. There is, however, nothing in the statute which prohibits a constructive trust from arising by operation of law. A constructive trust (at least one arising in the manner I have stated) falls into none of the prohibitions: it is neither a trust for sale nor an acquisition by...