Equity and Trusts

Citation(2021) 22 SAL Ann Rev 459
Publication year2021
Date01 December 2021
I. Express trust

16.1 OOPA Pte Ltd v Bui Sy Phong1 dealt with the complex interplay between equity and company law. The plaintiff company, OOPA Pte Ltd (“OOPA”), was a Singapore company set up for the purpose of holding a Vietnamese operating company, OnOnPay Vietnamese Mobile Services JSC (“OnOnPay”). This was a start-up venture to provide Vietnamese mobile subscribers the opportunity to top up mobile airtime and an e-wallet application for small retailers in Vietnam. Bui Sy Phong, the defendant, was the prime mover who set up this structure and secured investors for this venture. Bui was a major shareholder of OOPA and OnOnPay and director of OOPA. The other directors of OOPA represented the other investors of this start-up business. Unfortunately, the start-up business was unsuccessful. However, another business venture appeared to be viable, that is, a procurement and supply business for small retailers in Vietnam which was known as the Central Supply Business (“CSB”). Bui then set up a Singapore company, Telio Pte Ltd (“Telio”), as a holding company for a Vietnamese company, Telio Vietnam Co Ltd, to pursue this business opportunity. Bui was the sole shareholder of Telio at the time of incorporation. The other directors of OOPA found out about Telio when Telio obtained funding from a major venture capital firm and discussions ensued in relation to transferring Telio's shareholding to OOPA. When this failed to happen, OOPA sued Bui, asserting Bui held Telio's shares “as agent and/or nominee and/ or constructive trustee” for OOPA. The term “nominee” was meant to convey that Bui held the shares of Telio as an express trustee for OOPA. OOPA further claimed that Bui had wrongfully diverted the CSB to Telio in breach of fiduciary duty. In response, Bui contended that OnOnPay,

not OOPA, was the proper plaintiff. Bui also averred that CSB was his idea and belonged to him personally.

16.2 This part of the review will focus on express trust principles articulated in the judgment. In determining the express trust argument, Philip Jeyaretnam JC considered whether three certainties were present. The learned judge found that the company secretary of OOPA had incorporated Telio and the common intention was that Bui incorporated Telio on behalf of OOPA for the purposes of pursuing the CSB. Bui understood that he would have to transfer his shares in Telio to OOPA in due course. Jeyaretnam JC held that certainty of intention, subject matter and objects were present in this case. Hence, the learned judge found that Bui held the shares in Telio on an express trust for OOPA.

II. Resulting trust

16.3 Koh Lian Chye v Koh Ai Leng2 is yet another family property dispute. In this case, a Housing and Development Board (“HDB”) shophouse was registered jointly in the names of brothers, Koh Lian Chye and Koh Ah Leng, and their late father, Koh Cheng Kang (“the patriarch”). The HDB shophouse was purchased with a bank loan where all three parties were joint borrowers and mortgagors. Lian Chye also used some of his Central Provident Fund (“CPF”) moneys towards the purchase price. When the patriarch passed away, Lian Chye asserted that he had sole beneficial interest over the property by way of a resulting trust. Lian Chye's case was that there was a common intention constructive trust founded upon the parties' agreement that he was the sole beneficial owner. In contrast, Ah Leng asserted that the sole beneficial interest belonged to a partnership, Koh Seng Hin, in which Ah Leng and the patriarch were partners running a provision shop. Belinda Ang Saw Ean JAD rejected both Lian Chye's and Ah Leng's respective cases that they were the sole beneficial owner. The learned judge held that the joint tenants, the patriarch, Lian Chye and Ah Leng, held the property on a purchase price resulting trust for the patriarch (85.7%) and Lian Chye (14.3%) according to their financial contributions. In relation to the late patriarch's share, Ang JAD found there was a presumption of advancement that the patriarch had intended to give his shares to his two sons. But since there was no evidence as to the proportion in which the patriarch intended to apportion his beneficial interest, it would be fair to apply the maxim “equality is equity”. Thus, the resultant interest of property was Lian Chye at 57.15% and Ah Leng at 42.85%.

16.4 With respect, it is suggested that while the result of the case is correct, the analysis should have proceeded as follows. First, Lian Chye had paid 14.3 % of the purchase price and did not intend for that part of the purchase price to benefit the patriarch and Ah Leng; a resulting trust in that proportion arose in Lian Chye's favour. Second, the remainder of the 85.7 % was held on a joint tenancy in equity between the patriarch, Lian Chye and Ah Leng. A pictorial representation of the position is found below:

16.5 Since the patriarch was presumed to have intended to give his shares to his two sons, there was no resulting trust in his favour and the joint tenancy remained intact even though the patriarch paid for the purchase price in relation to the 85.7%. When the patriarch passed away, his share disappeared, leaving Lian Chye and Ah Leng the remaining joint tenants of the 85.7% of the share of the property. While the quantum of shares of Ah Leng and Lian Chye in the property remain the same under this analysis, it is suggested that this reasoning process resolves the thorny question that both the High Court and Court of Appeal had to grapple with, that is, what was the proportion of shares the patriarch intended to give his sons? Further, this proposed analysis obviates the need to rely on the maxim “equality is equity”.

16.6 A possible objection to the alternative analysis proposed here is that a joint tenancy may not exist in equity. There is a line in the judgment where Ang JAD stated: “In the case of a joint tenancy over property, it should be noted that the right of survivorship operates only on the legal interest and not the beneficial interest” [emphasis in original].3 This seems to suggest that, conceptually, it is not possible to have a joint tenancy in equity.4 However, this point has not been seriously

argued in depth in Singapore especially with reference to authorities5 and textbooks6 from England, which suggests that a joint tenancy in equity is uncontroversial. In fact, the structure of co-ownership law in England via the Trusts of Land and Appointment of Trustees Act 19967 (“TOLATA 1996”) envisages that the concept of joint tenancy may exist in equity. Under the TOLATA 1996, all forms of co-ownership must exist as a joint tenancy at law with a maximum of four joint tenants on the basis of a statutorily imposed trust. However, the joint tenants may be holding the property for themselves as tenants in common or joint tenancy in equity. It should be noted that it is possible for four joint tenants in law to hold the property on a joint tenancy in equity for more than four people. Martin Dixon explains in Modern Land Law:8

The number of co-owners in equity is not limited, be they joint tenants or tenants in common. If the land is purported to be conveyed to more than four people, it is the first four named in the conveyance who become the joint tenant trustees of the land, with all five or six, and so on, owning in equity as either joint tenants or tenants in common as the case may be.

16.7 Lim Choo Hin v Lim Sai Ing Peggy9 (“Lim Choo Hin”) involved the questions of, inter alia, (a) when a resulting trust may arise independently of a presumption of resulting trust; and (b) the interpretation of ss 51(8)–51(10) of the Housing and Development Act10 (“HDA”) (in pari materia with ss 58(9)–58(11) of the prevailing Housing and Development Act 1959),11 which regulate trusts over HDB properties.

16.8 In this case, an application was filed by appellant Lim Choo Hin (“LCH”) seeking a declaration that a property held by her father Lim Guan Heong (“LGH”) and her respondent sister Lim Sai Ing Peggy (“LSI”) as joint tenants at the time of LGH's passing was subsequently held on trust by LSI for the estate of LGH. LGH was the sole registered proprietor of the property at the time of purchase in 1976. In 1981, LSI became registered as a joint tenant of the property. LCH also became registered as a joint tenant of the property in 2001 but subsequently removed her name from the property of her own accord because she wanted to become eligible to

acquire a HDB flat of her own.12 Upon LGH's death on 4 September 2015, legal title to the property devolved to LSI under the right of survivorship and notwithstanding a will which LGH had executed on 27 April 2015.13

16.9 At first instance, the High Court in Lim Choo Hin v Lim Sai Ing Peggy14 dismissed LCH's application on the basis that the documentary evidence — in particular, a stamp on the title deed to the property stating “BY GIFT” — unequivocally showed the LGH had intended to confer his beneficial interest to himself and LSI by way of inter vivos gift, and there was therefore no need for the court to engage in any analysis relating to the presumption of resulting trust or the presumption of advancement.15

16.10 On appeal, the High Court's decision was overturned by the Appellate Division of the High Court (“High Court (Appellate Division)”). The appellate court emphasised that whilst a gratuitous transfer of property would normally give rise to a presumption of resulting trust in the transferor's favour, the court was not obliged to rely on such a presumption if there was direct evidence that might adequately reveal the intention of the transferor. Therefore, “a resulting trust may arise independently of the presumption of resulting trust as long as it can be shown that the transfer was not intended to benefit the transferee”.16 In a sense, this was a resulting trust which arose from the actual intention of the transferor that he did not intend to...

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