Su Emmanuel v Emmanuel Priya Ethel Anne and another

• Judge: Sundaresh Menon CJ
• Judgment Date: 19 May 2016
• Neutral Citation: [2016] SGCA 30
• Citation: [2016] SGCA 30
• Hearing Date: 18 January 2016
• Year: 2016
• Docket Number: Civil Appeal No 67 of 2015
• Published date: 21 May 2016
• Plaintiff Counsel: Harish Kumar and Jeremy Gan Eng Tong (Rajah & Tann Singapore LLP)
• Defendant Counsel: Bhargavan Sujatha and R Dilip Kumar (Gavan Law Practice LLC),The second respondent in person.
• Subject Matter: Constructive Trusts,Resulting Trusts,Presumed resulting trusts,Common intention constructive trusts,Equity,Sale in lieu of partition,Equitable Accounting,Trusts,Land,Tenancy in Common
• Court: Court of Three Judges (Singapore)

Sundaresh Menon CJ (delivering the judgment of the court): Introduction

In 1995, a married couple purchased a property and registered it in their joint names. The husband paid the purchase price and serviced the mortgage. The wife was a homemaker. In 2002, the husband lost his job and ran into financial difficulties. By then, the couple were also estranged though they had not commenced divorce proceedings and continued to live in the same house. In 2004, in an effort to help the couple, the husband’s sister bought a share of the property. Specifically, she purchased 49% of the property from the husband, who at that time held 50% of the same. At the same time, a fresh mortgage was executed over the property to redeem the original mortgage. All three of them undertook liability to repay the new loan. However, the sister almost single-handedly redeemed the fresh mortgage by paying the instalments. She now faces bankruptcy proceedings and has come to court seeking an order for the sale of the property and a declaration that she owns a beneficial interest in proportion to her actual contributions towards the purchase of the property.

Two issues arise in this appeal: (a) whether the court should order a sale of the property; and (b) the extent of the sister’s beneficial interest in the property. On the first issue, the High Court judge (“the Judge”) ordered that the property be sold in the open market pursuant to s 18(2) read with the First Schedule of the Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed) (“the SCJA”). On the second issue, the Judge held that the sister was beneficially entitled to 70% of the property as compared to the 49% interest that she held as legal owner: see Emmanuel Priya Ethel Anne v Su Emmanuel and Another [2015] SGHC 172 (“the GD”). On appeal, the wife contends that the Judge erred on both counts.

For reasons which we will shortly detail, we allow the appeal in part. We uphold the Judge’s orders in respect of the sale of the property. In our judgment, however, the sister is not beneficially entitled to 70% of the property. Her absolute interest in the property stands at 49%. We therefore allow this part of the appeal. Nonetheless, we hold that the sister is entitled, by virtue of the doctrine of equitable accounting, to recover from the couple a portion of the mortgage repayments that she has made in respect of the property.

Facts Parties to the dispute

The parties are part of an extended family. The first respondent (“Priya”) is the younger sister of the second respondent (“Philip”). Philip is married to the appellant (“Su”). Although they remained married, Philip and Su have been estranged since 2001.

Priya is 60 years old, unemployed and lives in a rented flat. She and Su have not been on speaking terms for more than a decade. Priya currently faces bankruptcy proceedings commenced by Hong Kong and Shanghai Banking Corporation (“HSBC”). The bankruptcy proceedings have been stayed pending the resolution of this dispute.

Subject matter of the dispute

The dispute centres on a property situated at Block 10D Braddell Hill (“the Property”). As it currently stands, the Property is held by all three parties as tenants in common. Su holds 50% of the Property while Priya and Philip hold 49% and 1%, respectively. Su, Philip and their four children (who were aged 28, 26, 20 and 16, respectively, when the matter was heard before the Judge) currently occupy the Property.

Purchase of the Property by Su and Philip

On 28 April 1995, about ten years into their marriage, Su and Philip jointly purchased the Property for a sum of $628,000. They held the Property as joint tenants.

To finance the purchase, the Property was mortgaged to Oversea-Chinese Banking Corporation Limited (“OCBC”) (“the 1995 mortgage”). Su and Philip were both liable to repay the loan. Although the evidence in relation to the making of mortgage payments is not complete, Su has confirmed that she did not make any payments towards the initial acquisition of the Property or the servicing of the 1995 mortgage.

Philip runs into financial difficulty

In April or May 2002, Philip lost his job and as a result started falling behind on mortgage repayments. This exposed the couple to the possibility of losing their home should OCBC decide to foreclose on the 1995 mortgage. Philip then raised with Su the prospect of selling the Property to unlock its value.

In the meantime, Priya came to learn of her brother’s financial plight. She had some funds in her Central Provident Fund (“CPF”) account and was prepared to assist her brother. With the assistance of solicitors, the siblings began exploring the ways in which Priya could assist.

Discussions for Priya to buy an interest in the Property

According to Priya, between October 2002 and March 2003, the following possibilities were explored: Priya to buy 60% of the Property with Philip owning the remaining 40%. Priya to buy 50% of the Property from Philip and 1% from Su. Priya to buy 50% of the Property from Su and 1% from Philip. Priya to buy 50% of the Property from Philip with Su retaining the remaining 50%. None of these proposals were approved by the CPF Board.

Su has a slightly different account of the various proposals that were discussed. While she acknowledges that she was not involved in the discussions between Priya and Philip, she claims to have had sight of four draft agreements arising out of those discussions. The essence of the four draft agreements may be summarised as follows: The first draft agreement: Philip and Priya were each to hold a 50% share in the Property. This agreement was to be between all three parties. Su did not produce a copy of this draft in the proceedings. The second draft agreement: Priya would buy Philip’s half-share of the Property as well as 1% from Su. This corresponds to proposal (b) outlined in the previous paragraph. Again all three parties were to sign this agreement. Su, however, refused to sign it unless certain changes were made. She produced a marked-up copy of the agreement in her affidavit. One of the proposed changes was the inclusion of a new clause which in essence provided that Su and her children would not be evicted from the Property by Priya. The third draft agreement: Priya would buy Philip’s entire half-share of the Property. This corresponds to proposal (d) in the previous paragraph. Unlike the first two draft agreements, the third draft agreement only named Priya and Philip as parties. This draft also included a clause providing that Su and her children would not be evicted from the Property by Priya. Su claims that this clause was included at her insistence. The fourth draft agreement: This agreement eventually became the sale and purchase agreement between Philip and Priya (“the SPA”). We discuss its terms in greater detail below.

Priya purchases 49% of the Property The SPA and the transfer

On 24 April 2003, the parties applied to the CPF Board for approval for Priya to purchase 49% of the Property from Philip, leaving him with 1% and Su with 50% of the Property. This was approved by the CPF Board subsequently. At that time, the Property was valued at $530,000, an amount significantly less than what Su and Philip had paid for it in 1995. The SPA between Priya and Philip, executed on 27 May 2003, provided that Philip would sell Priya the bulk of his interest, specifically a 49% share in the Property, for $259,700.

The clause that had first been inserted by Su into the second draft agreement (see [12(b)] above) found its way into the SPA. Clauses 10 and 11 of the SPA read as follows: 10. Su Emmanuel and her children will not be removed or evacuated by any means (legally and forcefully) by the Purchaser or by the direction of the Purchaser as the house is the place of dwelling of Su Emmanuel and her children. 11. Other than Clause 10, a person who is not a party to this Agreement has no rights under the Contracts (Rights of Third Parties) Act 2001 to enforce any term of this Agreement. Clause 10 was the subject of much attention at the hearing before us. We will return to it later, since it is relevant to the issue of whether the court should order a sale of the Property.

On 20 April 2004, 49% of the Property was transferred from Philip to Priya for $259,700. The transfer was subsequently registered on 28 June 2004.

The outstanding loan, CPF charge and refinancing arrangements

For the purchase of her 49% share, Priya paid $25,970 (10% of the purchase price) in cash and used the monies in her CPF account to settle the remaining $233,730.

At the time the SPA was executed, the outstanding amount due on the 1995 mortgage was $345,726.03. The purchase price of $259,700 paid by Priya was insufficient to fully redeem this mortgage. The money paid by Priya from her CPF account (amounting to $233,730) was applied to redeem part of the 1995 mortgage, leaving a sum of $111,996.03 outstanding. OCBC then offered to refinance the property by extending a new loan to the parties secured by a fresh mortgage over the Property (referred to hereinafter as “the new loan” or “the second mortgage”). The following is a brief summary of the terms of the new loan as set out in OCBC’s Letter of Offer dated 14 August 2003: All three parties were named as the mortgagors. The purpose of the loan was stated as being to redeem the 1995 mortgage and to finance Priya’s purchase of the 49% share of the Property from Philip. For this purchase, Priya had to withdraw $233,730 from her CPF Account. The loan amount was limited to $165,000 and its duration was a term of ten years. The monthly instalment payable was $1,481.56. The bank also agreed to allow payments to be made from the mortgagors’ CPF accounts.

A surplus of $53,003.97 remained after the outstanding amount under the 1995 mortgage ($111,996.03) was deducted from the...