Koh Lian Chye and another v Koh Ah Leng and another

• Jurisdiction: Singapore
• Judge: Mavis Chionh Sze Chyi JC
• Judgment Date: 26 June 2020
• Neutral Citation: [2020] SGHC 131
• Court: High Court (Singapore)
• Docket Number: Suit No 173 of 2017
• Year: 2020
• Published date: 01 July 2020
• Hearing Date: 04 October 2019,15 October 2019,16 April 2020,11 October 2019,29 October 2019,17 October 2019,30 January 2020,02 October 2019,08 October 2019,01 October 2019,30 October 2019,16 October 2019,05 March 2020,31 October 2019,03 October 2019
• Plaintiff Counsel: Bernard Stanley Doray, Foo Soon Yien and Seah Kiat Hong (BR Law Corporation)
• Defendant Counsel: Chan Yew Loong Justin, Kevin Cheng and Kenji Ong Shao Qiang (Tito Isaac & Co LLP)
• Subject Matter: Trusts,Resulting trusts,Presumed resulting trusts,Constructive trusts,Partnerships,Partners inter se,Partnership property and property of separate partners
• Citation: [2020] SGHC 131

Mavis Chionh Sze Chyi JC: Introduction

This is a dispute between two brothers concerning the beneficial ownership of a two-storey Housing and Development Board (“HDB”) shophouse unit at Block 323 Bukit Batok Street 33 #01-112, Singapore 650323¹ (“the Property”).

The younger brother, Koh Lian Chye, appears as the first plaintiff (“P1”) in his personal capacity, and as the second plaintiff (“P2”) in his capacity as the administrator of the estate of his late father, Koh Cheng Kang (“Father”). P1 is also the defendant-in-counterclaim. The older brother, Koh Ah Leng, appears as the first defendant (“D1”) and first plaintiff-in-counterclaim. Koh Seng Hin, a partnership where D1 and Father were partners, appears as the second defendant (“D2”) and the second plaintiff-in-counterclaim.

Background facts

The undisputed background facts are as follows.

P1 is the natural son of Father and his wife, Tan Poh Geok (“1st Mother”). Father, 1st Mother and the children to their marriage shall be referred to collectively as the “1st Family”. D1 is adopted, and he is also the eldest son in the 1st Family. P1 is the second youngest son in the 1st Family.

Father also had a relationship and started a family with another woman, Ong Ah Kim (“2nd Mother”). Father, 2nd Mother and the children to their marriage shall be referred to collectively as the “2nd Family”.

In 1968, Father started Koh Seng Hin as a sole proprietorship. In 1975, Koh Seng Hin was converted to D2, a partnership. D1 was also made a partner of D2 in the same year.²

Originally, D2 conducted its business in an HDB shophouse at Choa Chu Kang. In or around 1986, D2 relocated its premises to the Property, which was rented from HDB to Father and D1 in their capacity as partners of D2.³

In 1996, HDB offered the Property for sale.⁴ The offer was taken up, and the sale of the Property was effected in the following manner: P1 was added as a joint lessee of the Property,⁵ before the Property was purchased in the names of P1, D1 and Father as legal joint tenants.⁶ The purchase price of the Property was $537,800,⁷ excluding interest and/or fees.

The purchase was financed by a loan of $570,800 (“Mortgage Loan”) taken out with United Overseas Financed Limited (“UOFL”), which was secured by a mortgage over the Property.⁸ Father, P1 and D1 signed the loan agreement with UOFL as joint borrowers for the Mortgage Loan.⁹

In 1998, Father prepared his last will and testament (“the 1998 Will”). However, the 1998 Will did not provide for how the Property was to be disposed of after Father’s passing.¹⁰

Between 1997 and 2001, P1 applied $76,800 of his own CPF money towards discharging the Mortgage Loan.¹¹ The remainder of the Mortgage Loan was paid for by Father.¹² The Mortgage Loan was discharged in 2005 after Father paid off the outstanding balance.¹³

In 2005, after the Mortgage Loan was discharged, Father went to the office of the law firm Irene Lim & Associates (“ILA”) with P1 and D1, to discuss the ownership of the Property. Father apparently contemplated removing both P1 and D1 as legal joint tenants of the Property, but did not eventually follow through.¹⁴

Father passed away on 1 June 2014.¹⁵ By virtue of the operation of the rule of survivorship, the Property is currently held by P1 and D1 as legal joint tenants. D1’s youngest son, Koh Chee Keong (“Chee Keong”), was added as a partner of D2 on 21 June 2014.¹⁶

The parties’ cases The plaintiffs’ case

The plaintiffs’ primary case is that P1 is the sole beneficial owner of the Property.¹⁷ They have two key arguments in support of their primary case: first, that there exists a common intention constructive trust pursuant to which P1 was to be the sole beneficial owner of the Property upon Father’s passing.¹⁸ second, that there exists a claim in proprietary estoppel on the basis that Father represented to P1 that the latter was to be the sole beneficial owner of the Property upon the former’s passing.¹⁹

The plaintiffs’ alternative case is that the Property is held on a purchase price resulting trust²⁰ in the proportion of 98.01:1.99²¹ or 59.1:40.9²² between P1 and Father. Finally, the plaintiffs have prayed in the alternative for a declaration “that [P1] (or… [P1] and the Father’s estate) and [D1] have beneficial interests in [the Property] in such proportion to be determined by [the Court]”²³. As to other reliefs, the plaintiffs have prayed for an account of the rental income collected by D1 (less the amounts paid by D1 to Father)²⁴.

The defendants’ case

The defendants’ primary case is that D2 is the sole beneficial owner of the Property.²⁵ Their alternative case is that the Property is held on a purchase price resulting trust in the proportion of 85.7:14.3 in favour of “the Defendants”.²⁶ As another alternative, they claim that D1 is “the sole beneficial owner” of the Property by virtue of “the operation of the presumption of advancement”²⁷.

On whether there was a dissolution of D2 upon Father’s death

Before addressing the defendants’ case, I will deal with a preliminary issue raised by the plaintiffs. The plaintiffs have argued that D2 no longer exists after Father – one of D2’s partners – passed away on 1 June 2014.²⁸

Section 33(1) of the Partnership Act (Cap 391, 1994 Rev Ed) states that a partnership is dissolved upon the death of any partner unless otherwise agreed between the partners. Therefore, D2 would have dissolved upon Father’s death unless otherwise agreed between the partners of D2 (Father and D1) prior to Father’s death.

The defendants claim that there was such an agreement as Father and D1 had agreed for Chee Keong to take over Father as a partner of D2.²⁹ I do not accept the defendants’ claim. My reasons are as follows.

The evidence given by D1 was internally inconsistent. In cross-examination, D1 initially claimed that Father’s intention for Chee Keong to be made a partner of D2 was only communicated to the second oldest son of the 1st Family, Koh Lian Thye (“Lian Thye”), and that Lian Thye only told D1 of Father’s intention after Chee Keong was added as a partner of D2.³⁰ However, D1 subsequently changed his position and asserted, without any corroborating evidence, that Father had told him of the intention to make Chee Keong a partner on two occasions in 1999 and 2013.³¹

The evidence from Lian Thye contradicted both versions of events put forward by D1. In cross-examination, Lian Thye claimed that he had told D1 about Father’s intention before Chee Keong was added as a partner of D2.³²

Beyond these inconsistencies, if Father had in fact intended to make Chee Keong a partner of D2 as early as 1999 (per D1’s second version of events), he could easily have done so when he was alive. However, this was not done.

I find therefore that the defendants have not discharged their burden of showing that Father and D1 had agreed for Chee Keong to become a partner of D2. It follows that D2 was dissolved in 2014 when Father passed away.

In the interests of completeness, I should make it clear that this dissolution of D2 was not a “technical dissolution” in which (per Chiam Heng Hsien v Chiam Heng Chow [2015] 4 SLR 180 (“Chiam Heng Hsien”) at [57]:

[A] change in the composition of a partnership results in a dissolution of the existing firm and the creation of a new firm … [and] the new firm will usually take on the assets and liabilities of the old, without any break in the continuity of the business.

In the present case, as I have found that there was no agreement for Chee Keong to become a partner of D2 prior to Father’s death, D1 was the sole remaining partner of D2 following Father’s death. There can be no partnership of one. In the circumstances, the dissolution of D2 upon Father’s death was a general (as opposed to technical) dissolution. It should be added that the dissolution of D2 upon Father’s death carries certain implications for the defendants’ claims about D2’s interest in the Property, which I will come to.

Observations on the defendant’s presentation of their primary case

Turning back to the defendants’ primary case, this is described in their pleadings and submissions as follows: In their Defence and Counterclaim (Amendment No 5) (“DC”), the defendants pleaded that “[D2] is the sole beneficial owner of the [Property] and [P1] holds his share in the [Property] on constructive trust for [D2].”³³ In the Defendants’ Closing Submissions (“DCS”), it was submitted that the constructive trust in question was a “common intention constructive trust”.³⁴ This common intention constructive trust was said to be premised on a common intention between Father and P1 for D2 to have sole beneficial ownership of the Property.³⁵ In their DC, the defendants also pleaded that the Property was purchased as D2’s partnership asset, with D2 as the sole beneficial owner.³⁶ Father was said to have used D2’s money to pay for the acquisition of the Property.³⁷ It was alleged that there was a “common intention between the parties that the [Property] was acquired as [D2]’s partnership asset”.³⁸ The defendants have prayed for an order that the Property be sold in the open market, with the net sale proceeds to be divided in the ratio of the parties’ beneficial interests in the Property³⁹. The defendants have also prayed for an account to be taken of the rental income collected by P1⁴⁰.

I make the following observations: With respect, there appeared first of all to be a considerable amount of confusion in the defendants’ pleadings. The best understanding I could glean from these pleadings was that insofar as it was asserted that D2 had sole beneficial ownership of the Property on a “common intention constructive trust”, this was also a proposition that the Property was a partnership asset. In other words, insofar as D2 was concerned, the claim advanced on its behalf was that the Property was a partnership asset, either because it was...