Koh Lau Keow v AG

• Jurisdiction: Singapore
• Judgment Date: 17 March 2014
• Date: 17 March 2014
• Docket Number: Civil Appeal No 79 of 2013
• Court: Court of Appeal (Singapore)

Koh Lau Keow and others

Plaintiff

and

Attorney-General

Defendant

[2014] SGCA 18

Sundaresh Menon CJ

,

Chao Hick Tin JA

and

Andrew Phang Boon Leong JA

Civil Appeal No 79 of 2013

Court of Appeal

Charities—Charitable trusts—Settlor declaring trust over property—Trust deed allowing trustees to use property as home or sanctuary for Buddhist Chinese female vegetarians selected in their sole discretion—Whether trust charitable for advancing religion—Whether trust charitable for relieving poverty—

Whether extrinsic evidence of settlor's intent relevant

In 1948, the first appellant (‘Koh’) purchased a property (‘the Property’) to serve as a home for herself and three other women (‘the Aunts’). Part of the building was used as a Buddhist temple for religious worship while part of it was used as living quarters.

Between 1948 and 1960, Koh and the Aunts corresponded with the tax authorities on the possibility of being exempted from the payment of rates on the basis that the Property was being used as a temple. On 27 September 1960, the Assessment Appeals Committee informed Koh's lawyers that the Property was exempted from the payment of rates so long as it was used for religious purposes.

Koh was then advised by her lawyers that it would be helpful for evidential purposes to sign a document declaring that the Property was being and would continue to be used for religious purposes. Accordingly, Koh and the Aunts declared a trust over the Property on 27 September 1960 (‘the Trust’) purportedly dedicating it to charity. Clause 1 of the trust deed (‘the Trust Deed’) stated that the trustees shall permit the Property to be used in perpetuity for ‘all or any’ of a list of three purposes, including ‘ [a] s and for a home or sanctuary for such Chinese women vegetarians of the Buddhist faith as may from time to time be chosen by the trustees of this deed’ (‘Purpose B’).

In 2012, the appellants filed an application for a declaration that the trust was void and that Koh was the sole beneficial owner of the Property, on the basis that Purpose B was not a valid charitable purpose. The High Court judge (‘the Judge’) dismissed their application. He found that the phrase ‘home or sanctuary’ connotes ‘a religious institution where the defined class of persons (of that religion) is looked after and finds refuge or sanctuary’. In his judgment, the use of the Property for this purpose directly advanced religion, as the persons residing in the Property would have benefited from ‘passive advancement and personal spiritual contemplation’. The Judge further found that Purpose B also had the effect of relieving poverty, given that those who chose to reside in the Property (with the approval of the trustees) were likely to be compelled by special circumstances such as orphanhood, poverty or dysfunctional family situations. The appellants appealed.

Held, allowing the appeal:

(1) The Judge's interpretation of Purpose B was inconsistent with the express terms of the Trust Deed as well as the circumstances prevailing at the time the Trust Deed was executed. First, it was contradicted by cl 4, which conferred on the trustees the ‘absolute and uncontrolled discretion’ to select the persons who could reside in the Property. Second, it was inconsistent with the circumstances surrounding the execution of the Trust Deed. The Property was at all times used as a private residence rather than as an institution or place of refuge for needy individuals, thereby indicating that Koh had never meant to restrict the class of persons who could reside on the Property to needy Buddhist Chinese female vegetarians:at [24] .

(2) The respondent's argument that the actual use of the Property as a private residence by Koh and the trustees should be regarded as a breach of trust instead of causing the trust to fail was plainly circular, as whether or not there had been a breach of trust depended on how Purpose B ought to be construed. Further, the proposition that extrinsic evidence ought to be ignored when interpreting a trust deed was rejected. While purely subjective and uncorroborated evidence by a settlor as to his intentions at the time the trust deed was drafted was inadmissible, objective evidence of the settlor's intent was highly relevant in construing a trust deed, especially in cases where its language was ambiguous:at [25] .

(3) Reading Purpose B in context, the word ‘sanctuary’ was probably used for its religious connotations. It was clear from the Trust Deed as a whole and the surrounding circumstances that Koh had meant to use the Property as a place to conduct Buddhist worship. Consequently, the phrase ‘home or sanctuary’ was more likely to mean a residence for religious individuals who would practise their faith in the course of their stay. Thus, Purpose B did not require the trustees to allow only homeless or needy people to stay on the Property, and could not be said to be charitable on the basis that it relieved poverty:at [28] and [29] .

(4) For a trust that purported to advance religion to be considered charitable, there had to be a sufficient element of public benefit. Gifts in favour of individuals conducting private religious worship did not satisfy the public benefit requirement. Therefore, even if Purpose B could be said to advance religion in the sense that the women selected to live on the Property would benefit from ‘passive advancement’, it did not benefit the public:at [32] , [33] and [38] .

(5) The fact that Purpose B was restricted to Buddhist Chinese female vegetarians did not ipso facto strip it of public benefit. The real reason why the Trust failed the public benefit requirement was that Purpose B only benefited the handful of Buddhist Chinese vegetarian women, who need not be poor, chosen in the absolute discretion of the trustees to live on the Property. Those women were, in fact, simply Koh's close friends and relatives:at [39] .

(6) Purpose B could not be said to be merely ancillary to the overriding charitable intention of the Trust to advance religion. Unlike the trusts in the authorities cited by the respondent, the Trust in the present case was not a trust in favour of an established religious entity whose primary purpose was the advancement of religion. Instead, it was a trust allowing the trustees to use the Property for all or any of three listed purposes, including Purpose B. The trustees were hence free to use the Property only for Purpose B, viz, as a residence for Buddhist Chinese female vegetarians selected in their sole discretion:at [43] .

(7) Even if it could be said that the main object of the Trust was the settlors' overriding charitable intention to advance religion, the language of Purpose B conferred wide powers on the trustees to decide who could reside on the Property without any qualification that the individuals selected had to be destitute or had to contribute in some way to the running of the temple or otherwise do anything to advance religion. Purpose B therefore had to be construed as an independent object of the Trust, and, because it was not a charitable purpose, it rendered the Trust void:at [46] .

Chionh Ke Hu, deceased, Re [1964] MLJ 270 (folld)

Cocks v Manners (1871) LR 12 Eq 574 (folld)

Commissioners for Special Purposes of the Income Tax, The v John Frederick Pemsel [1891] AC 531 (folld)

Gilmour v Coats [1949] AC 426 (folld)

IRC v Baddeley [1955] AC 572 (distd)

Isabel Joanna James, Re [1932] 2 Ch 25 (distd)

Neville Estates Ltd v Madden [1962] Ch 832 (distd)

Oxford Group v IRC [1949] 2 All ER 537 (folld)

Presbyterian Church (New South Wales) Property Trust v Ryde Municipal Council [1978] 2 NSWLR 387 (distd)

Sanders' Will Trusts, Re [1954] Ch 265 (folld)

Warre's Will Trusts, Re [1953] 1 WLR 725 (folld)

White, Re [1893] 2 Ch 41 (folld)

Property Tax Act (Cap 254, 2005 Rev Ed) ss 6 (6) (c) , 6 (13) , 6 (14) , 21 (7)

Property Tax Ordinance 1960 (No 72 of 1960)

Trustees Act (Cap 337, 2005 Rev Ed) s 64 (1)

Suresh Damodara (Damodara Hazra LLP) for the appellants

Lim Wei Shin, Leon Michael Ryan and Russell Low (Attorney-General's Chambers) for the respondent.

Judgment reserved.

Chao Hick Tin JA

(delivering the judgment of the court):

Introduction

1 This appeal concerns a trust (‘the Trust’) declared in a deed on 12 October 1960 (‘the Trust Deed’) by the first appellant, the plaintiff in the action below, over a property at 10 Rangoon Lane (formerly 156 ERangoon Road) (‘the Property’). The action below, ie,Originating Summons No 1021 of 2012 (‘OS 1021/2012’), was instituted by the appellants for a declaration that the Trust is void and that the first appellant (‘Koh’) is the sole beneficial owner of the Property. The application was opposed by the respondent in his capacity as the protector of charities, and it was dismissed by the High Court judge (‘the Judge’):see the report of the decision in Koh Lau Keow v AG[2013] 4 SLR 491. The sole issue at the hearing before the High Court and in this appeal is whether the Trust created in the Trust Deed is a valid charitable trust.

Facts

2 Koh, presently aged 96, was born in China and came to Singapore in 1936. Sometime in 1948, she decided to purchase the Property to serve as a home for herself and three other women (whom she refers to as her ‘Aunts’ although they were unrelated by blood). She paid the entire purchase price of $3,500. However, in the conveyance of the Property to Koh, she added the Aunts, in addition to herself, as registered owners of the Property because she did not want them to become homeless should she pre-decease them.

3 Initially Koh built on the Property a small wooden structure, with a hall in the front portion and two rooms in the back portion. The hall was used as a Buddhist temple for religious worship while the two rooms were used as living quarters by Koh and her Aunts. Later, in 1957, as the wooden structure had become badly in...