Chong Sze Pak v Chong Ser Yoong

• Jurisdiction: Singapore
• Judge: Woo Bih Li J
• Judgment Date: 23 February 2011
• Neutral Citation: [2011] SGHC 42
• Plaintiff Counsel: Gurdaib Singh (Gurdaib, Cheong & Partners)
• Docket Number: Suit No 539 of 2010
• Date: 23 February 2011
• Hearing Date: 28 January 2011,21 January 2011,20 January 2011
• Subject Matter: Trusts
• Published date: 28 June 2011
• Citation: [2011] SGHC 42
• Defendant Counsel: James Joseph (Prestige Legal LLP)
• Court: High Court (Singapore)
• Year: 2011

Woo Bih Li J: Introduction

The plaintiff Chong Sze Pak (“the Plaintiff”) and the defendant Chong Ser Yoong (“the Defendant”) are brothers. The Plaintiff is 18 years older than the Defendant. The Plaintiff claims the net sale proceeds of about $300,000 from the sale by the Defendant of a Housing and Development Board (“HDB”) flat at Block 108C McNair Road #25-216 Singapore 324108 (“the McNair Road property”) which was registered in the name of the Defendant.

Background

In or about 1996 or 1997, the Plaintiff’s property at 44B Starlight Road, Singapore was acquired by the relevant authority and the Plaintiff received about $400,000 as compensation.

In or about 1997, the Defendant sold his HDB flat at Block 77 Commonwealth Drive #04-537, Singapore (“the Defendant’s Commonwealth Drive property”) for $137,000 and received about $100,000 from the sale.

By an agreement dated 6 June 1997, the Defendant agreed to buy an HDB flat at Block 8 Tronoh Road #02-15, Singapore (“the Tronoh Road property”) for $286,000 from third parties. The sale and purchase was completed on 9 October 1997. The circumstances leading to the purchase and the beneficial ownership of the Tronoh Road property were disputed.

Subsequently, in August 1999, the Tronoh Road property was acquired by the relevant authority as part of a Selective En Bloc Redevelopment Scheme. The Defendant was offered and he accepted a replacement flat, ie, the McNair Road property as part of the overall compensation for the acquisition. The McNair Road property was transferred to the Defendant in or about 2004.

On 25 November 2009, the Plaintiff lodged a caveat in respect of the McNair Road property. It is not clear whether this was before or after the Defendant had entered into an agreement to sell it to a third party. In any event, upon learning about the caveat, the Defendant agreed that his solicitors would hold the net sale proceeds of the McNair Road property pending the outcome of this action in exchange for the removal of the caveat so that the sale and purchase of the McNair Road property could be completed. The completion was in 2010.

The Plaintiff claimed that when the Defendant acquired the Tronoh Road property in 1997, the parties agreed that if the Plaintiff paid for all the outgoings of that property, including the instalment payments to repay an HDB loan and conservancy charges, the Defendant would hold that property in trust for the Plaintiff. This was evidenced by a Deed of Trust dated 23 June 1997 (“the Trust Deed”) executed by the Defendant and also a Power of Attorney (“the PA”) dated 14 July 1997 executed by the Defendant in favour of the Plaintiff. In reliance on the agreement, the Plaintiff paid various outgoings for that property which I shall elaborate on later. The Plaintiff also claimed that when the Defendant acquired the McNair Road property, the Defendant again orally assured the Plaintiff that if he continued to pay the outgoings for the McNair Road property, the Defendant would hold that property in trust for the Plaintiff and that when that property was sold, the net sale proceeds would be paid to the Plaintiff.

The Plaintiff’s pleaded claim to the net sale proceeds was based on an express trust or a resulting or a constructive trust.

The Defendant alleged that both the Tronoh Road property and the McNair Road property belonged to him. He also asserted that if there was a trust of these two properties in favour of the Plaintiff, it was void under the Housing and Development Act (Cap 129, 1997 Rev Ed) (“HDA”).

The issues

There are two main issues: firstly, whether the Defendant held the Tronoh Road property and the McNair Road property in trust for the Plaintiff; and secondly, even if he did, whether the Plaintiff was entitled to the net sale proceeds of the McNair Road property in view of s 51(4) and (5) of the HDA.

The witnesses

The Plaintiff and the Defendant were the two material witnesses. A housing agent, Lim Chin Seng, was a witness for the Defendant but his evidence was immaterial. The solicitor, Mr Ng Cher Yeow (“Mr Ng”) who had apparently prepared the Trust Deed and the PA and witnessed the Defendant’s execution of both the documents, had passed away.

Whether the Defendant held the Tronoh Road property and the McNair Road property in trust for the Plaintiff The different versions

According to the Plaintiff, it was the Defendant who approached him in June 1997 and told him that he wanted to purchase the Tronoh Road property. The Defendant requested the Plaintiff’s financial assistance. The Plaintiff and the Defendant agreed that if the Plaintiff paid for the outgoings of the Tronoh Road property, the Defendant would hold the Tronoh Road property on behalf of the Plaintiff. By “outgoings”, the Plaintiff meant, for example, the monthly payments to repay a loan taken from the HDB to purchase the Tronoh Road property and the conservancy charges.

The Plaintiff alleged that to assure him that he was the beneficial owner of the Tronoh Road property, the Defendant engaged a solicitor Mr Ng to prepare the Trust Deed which the Defendant executed on 23 June 1997. To further assure the Plaintiff, the Defendant also instructed Mr Ng to prepare the PA from the Defendant to the Plaintiff which allowed the Plaintiff to purchase and manage the Tronoh Road property in the name of the Defendant. The PA was executed by the Defendant on 14 July 1997.

The Plaintiff alleged that he paid the following: (a) the initial downpayment of $5,000 for the purchase; (b) housing agent’s commission of $2,945.80; (c) annual fire insurance premium; (d) monthly payments to repay the HDB loan; (e) the power supply which was applied for in the Plaintiff’s name; (f) the monthly conservancy charges. (g) $11,200 on completion of the purchase; (h) $5,138.90 as HDB’s conveyancing fee ($630) and a stamp or registration fee ($4,490) and also another $110 as a caveat fee for the Defendant’s purchase.

The Plaintiff alleged that subsequently, at the Defendant’s request, he also paid the outgoings like the monthly payments on the HDB loan and the monthly conservancy charges on the McNair Road property after it was registered in the name of the Defendant. He denied that he used the rent from each of these two properties to pay for outgoings like the monthly payments on the HDB loan and the monthly conservancy charges. He said that he handed the rent to the Defendant through a man whom he referred to as “uncle” but he did not know the actual name of this man who was the Defendant’s representative.

I should also mention that under the Trust Deed, the Defendant was to transfer the Tronoh Road property to the Plaintiff’s son Chong Chin Hock when he attained the age of 35. This was in two years’ time (from the date of execution of the Trust Deed), ie, 1999. I will set out the terms of the Trust Deed later. The Plaintiff alleged that over the years, the Defendant avoided his obligation many times to transfer the Tronoh Road property to his son but, nevertheless, the Plaintiff expected to recoup what he had spent in respect of the two properties when the Defendant eventually decided to sell the McNair Road property.

The Defendant’s version was that it was the Plaintiff who approached him in 1997 to buy the Tronoh Road property to house foreign workers employed by the Plaintiff’s business which was a garment factory at Kallang Bahru in Singapore. As the Defendant had sold his Commonwealth Drive property, “he needed to buy another flat” (see Defence at para 5). He was given a grant of $40,000 pursuant to a housing scheme because the Tronoh Road property was within a certain distance from his mother’s residence. With this money and the $100,000 from the sale of the Defendant’s Commonwealth Drive property, he did not need financial assistance from the Plaintiff to buy the Tronoh Road property.

He said that the $40,000 grant was paid into his account with the Central Provident Fund (“CPF”) and used to pay the vendor of the Tronoh Road property. Another $3,000 was used from his CPF account to pay the vendor. That was why when the McNair Road property was sold, about $57,000 from the sale proceeds thereof was refunded to his CPF account. This was for the principal used and interest.

The Defendant did not deny his signature on the Trust Deed. He said that Mr Ng was not engaged by him but by the Plaintiff. He was asked to sign the document and he did so in the presence of Mr Ng without understanding the nature of the document as he did not understand many of the words therein. He said he was educated in Chinese and that his English was not good. No one explained the document to him in Chinese. The first time that he came to learn about the Trust Deed was after the Plaintiff had lodged a caveat in respect of the McNair Road property in November 2009 to prevent him from completing a sale thereof.

The Defendant said that in 1997 he was busy in China trying to do business there. He was in Singapore in that year for half the time. From 1998 to 2003, he was in China for 70% to 80% of the time. That was why he gave the PA to the Plaintiff. He accepted that he had signed the PA and understood the nature of that document. In 2003, he visited his son in the United States of America and stayed there for five years, returning to Singapore in about October 2007.

In 2004, the Defendant acquired the McNair Road property in exchange for the Tronoh Road property as mentioned above. The Defendant also received $30,000 cash of which he said he used $10,000 for renovations.

The Defendant alleged that some of the payments made by the Plaintiff like those stated in [14(a), (b), (g) and (h)] above were actually funded from cash which he had handed over to the Plaintiff to make payments on his behalf. As for outgoings like the monthly payments to repay the HDB loan and the monthly conservancy charges, he...