Equity and Trusts

• Publication year: 2019
• Date: 01 December 2019
• Published date: 01 December 2019
• Author: TANG Hang Wu PhD, LLM (Cambridge), LLB (National University of Singapore); Advocate and Solicitor (Singapore); Professor, School of Law, Singapore Management University. TAY Yong Seng MA, BCL (Oxford); Advocate and Solicitor (Singapore); Partner, Allen & Gledhill LLP, Singapore.

I. Express trust

15.1 Jocelyn Rita d/o Lawrence Stanley v Tan Gark Chong1 (“Jocelyn Rita v Tan Gark Chong”) is an example of an attempt to set aside a trust deed in the wake of BOM v BOK.2 This case takes place in the context of a husband and wife relationship. As the wife was not a Singaporean citizen at the time of purchase of two properties, the two properties were registered in the husband's name. Years later, the husband signed a trust deed to state that he held them on trust for his wife, and that the rental income would go into their joint bank account. When the parties divorced, the husband tried to set aside the trust deed on the grounds of duress and illegality. Audrey Lim JC (as her Honour then was) refused to set the trust aside, distinguishing it from BOM v BOK as BOM v BOK was not a duress case, and continued to uphold the high threshold for setting aside trust deeds. On the facts, Lim JC found that there was no duress. The learned judge considered the following factors: (a) that the husband had the presence of mind to claim he registered an objection about the terms of the trust deed, but he still signed it anyway; (b) that the husband had refused to sign a previous version of the trust deed before but signed the version that was litigated in court; (c) that the husband had not taken any steps to set aside the trust deed after having signed it; and (d) that the husband would have been able to obtain independent legal advice if he wanted to as his son was a practising lawyer and he also had a close friendship with a senior lawyer at a distinguished law firm.3 The trust deed was also not set aside on the ground of illegality. Lim JC held that the trust deed created a fresh trust at the time it was signed and did not evidence a trust created from the time of purchase of the properties. Although the wife was not a Singaporean at the time of purchase of the

properties, by the time the trust deed was signed, the wife had become a Singaporean citizen.4

15.2 Jocelyn Rita v Tan Gark Chong also discusses the duties of an express trustee who holds land on trust for an absolute beneficiary. Under the trust deed (which was found to be valid and binding), the husband stated that he held the properties on trust for his wife and agreed that the rental income would go into their joint bank account. When the husband and wife divorced, the husband refused to let the trust property out, and the wife wished to compel her ex-husband to rent out the property for rental income. Lim JC held that an express trustee who holds land on trust for an absolute beneficiary owed a duty at general law to let the trust property out to derive income for the beneficiary. Such a duty arises even if the trust deed does not provide for such a duty, unless the facts and circumstances otherwise indicate that the parties intended the trustee to be a mere repository for the trust property.5 In doing so, the court upheld the High Court of Australia's decision6 of Byrnes v Kendle,7 which is also the position in English law.8 Lim JC reasoned:9

The High Court of Australia held that the respondent was under a duty to let the property and collect rent. The rationale was that absent such a duty, the beneficiary would derive no benefit from the interest conferred upon her under the trust, and the trustee with the legal title was the only one who had the power to grant a lease of the property to another and thus derive income for the beneficiary (at [22]). The High Court held at [67] and [119] that ‘[a]s a general proposition, where the trust estate includes land, it is the duty of the trustee to render the land productive by leasing it, and this is so even if the trust instrument does not expressly so provide’ and ‘[e]ven if there is no direction in the trust instrument that the trust property be invested’.

15.3 Thus, as a trustee, the husband had a duty to let out the property. Lim JC also held that even if it was not a general duty, such a duty arose on the facts.10 The relevant factors to determine this duty were (a) the terms of the trust deed; (b) whether the parties had consistently treated the properties as either a matrimonial home or letting to generate income; and (c) the admission of the parties themselves.11

15.4 Lilyana Alwi v John Arifin12 is a significant case in relation to joint bank accounts and trust. This involved a dispute between Lilyana Alwi, who was the plaintiff, and her eldest son, the defendant, over moneys held in a joint bank account in both their names. The plaintiff alleged that there was an oral agreement between her and the son constituting an express trust in favour of the plaintiff over a Citibank joint bank account. Her case was that the son had acted in breach of trust and/or fiduciary duty in relation to six disputed payments and an alleged unaccounted sum of the money. In analysing the claim, Woo Bih Li J affirmed the requirement that the three certainties must be present for the creation of an express trust — (a) certainty of intention; (b) certainty of subject matter; and (c) certainty of the objects of the trust.13 On the facts, the plaintiff was unable to prove the existence of the alleged oral agreement on a balance of probabilities. A particularly damaging piece of evidence was that that during cross examination, the plaintiff did not understand the concept of a trustee. Furthermore, the fact that the defendant was managing the joint account did not necessarily mean there was an express trust as the defendant's e-mails did not demonstrate any legally enforceable duties of a trustee, an important requirement of an express trust according to Snell's Equity.14 Woo J described the e-mail exchanges as follows:15

The available evidence suggested that dealings between the defendant on one hand and the plaintiff and Mr Arifin on the other were often conducted informally. The defendant incurred expenses on behalf of the plaintiff and Mr Arifin and allowed Mr Arifin to draw on his overdraft facility over the years, all without any written agreement or promise of being paid back.

15.5 Instead, Woo J suggested in passing that their legal relationship could have been one of agency (which was not pleaded). As the express trust was not established, the plaintiff's claim against the defendant for breach of fiduciary duties failed. Nevertheless, Woo J found that even if the express trust had been made out, the son did not breach his fiduciary duties towards the plaintiff as the plaintiff had authorised the disputed payments in question.

15.6 Woo J's holding that there was no express trust between mother and son because their affairs were often conducted informally is potentially significant in the context of familial relationships. This holding demonstrates that the court may not be willing to find an express trust relationship in these familial relationships and impose onerous fiduciary obligations on the parties. However, the unanswered question

here is that if the son was not an express trustee for the plaintiff, how does one characterise his relationship vis-à-vis his mother in relation to the joint bank account? A possible unexplored characterisation is that the son was a bare trustee over the bank account. Hence, the son's duties were limited only to not making unauthorised withdrawals and a duty to transfer the money to the mother when demanded.16 Woo J's passing observation about the son being an agent also needs some unpacking. Usually, an agent would owe his or her principal fiduciary obligations. Perhaps, Woo J meant that the son was his mother's agent in a “loose sense” without necessarily owing her the gamut of fiduciary duties associated with a more formal agency relationship. Such an interpretation is supported by the well-known case of Kennedy v De Trafford,17 where Lord Herschell said:18

No word is more commonly and constantly abused than the word ‘agent’. A person may be spoken of as an ‘agent’, and no doubt in the proper sense of the word may properly be said to be an ‘agent’, although when it is attempted to suggest that he is an agent under such circumstances as create the legal obligations attaching to agency that use of the word is only misleading.

II. Resulting trust

15.7 Lilyana Alwi v John Arifin19 also considered the issue of a resulting trust over a joint bank account between the mother and son. The disputed funds in the joint account were proceeds from a sale of a property in Simprug, Indonesia (“the Simprug Property”) owned by the plaintiff's late husband. The plaintiff was allowed to withdraw half of the moneys by virtue of her joint ownership and the issue was whether the plaintiff was also entitled to the other half of the moneys in the account. Relying on Lim Chen Yeow Kelvin v Goh Chin Peng,20 Woo J reasoned that if there was a clear intention on the part of the late husband to benefit the plaintiff when he sold the Simprug Property and paid the money into the joint account, the presumption of resulting trust in favour of the late husband would not arise. However, if the court was unable to discern a clear intention on the part of the plaintiff's husband, then the presumption of resulting trust or the presumption of advancement would be applied. In ascertaining the husband's intentions, little weight was placed on his wills, which purportedly bequeathed the Simprug Property to the plaintiff as there was serious concerns with the reliability of the wills. Nevertheless, the savvy businessman husband's act of causing the proceeds from the

sale to be paid into the joint account instead of one of his personal bank accounts, combined with clear evidence suggesting that the defendant himself never believed that he had any beneficial interest in the moneys despite being a joint owner of the account, led the court to conclude that on a balance of probabilities, the husband had intended the moneys to solely benefit his wife and not the defendant. As the...