Lim Kieuh Huat and another v Lim Teck Leng and another

• Judge: Andre Maniam JC
• Judgment Date: 01 September 2020
• Neutral Citation: [2020] SGHC 181
• Citation: [2020] SGHC 181
• Court: High Court (Singapore)
• Published date: 11 April 2021
• Docket Number: Originating Summons No 1329 of 2019
• Plaintiff Counsel: Abdul Rahman bin Mohd Hanipah, Mohammad Shafiq bin Haja Maideen and Syafiqah binte Ahmad Fu'ad (Abdul Rahman Law Corporation)
• Defendant Counsel: Lai Ying Ling Jenny (Jenny Lai & Co),Ang Yu Wen Amelia and Lee Kai Lin Kelyn (Lee & Lee)
• Subject Matter: Land,Interest in land,Trusts,Constructive trusts,Common intention,Resulting trusts,Unlawful trusts
• Hearing Date: 24 June 2020

Andre Maniam JC: Introduction

The Housing and Development Board (“HDB”) promotes home ownership by selling flats on a subsidised basis. When purchasers resell their flats after satisfying the Minimum Occupation Period, they can thus expect to make a profit, with some resale transactions even breaching the $1 million mark (partly due to a rising property market).

The HDB does not however allow purchasers to buy a series of flats as if they were first-time owners. A resale levy is imposed to maintain a fair allocation of public housing subsidies between first-time purchasers and repeat purchasers by reducing the subsidy enjoyed on the second (or subsequent) subsidised HDB flat. Can that resale levy be evaded by using a nominee to purchase the subsequent flats, without jeopardising one’s ability to be recognised as the real owner?

In the present case, Mr and Mrs Lim (the plaintiffs) claimed to have done so. They contended that the HDB flat in the sole name of their son, Teck Leng (the first defendant), was beneficially owned by them, and that Teck Leng had no beneficial interest in it whatsoever. Mr and Mrs Lim said (and Teck Leng agreed) that one reason for this alleged arrangement was to avoid paying a $40,000 resale levy to the HDB. They contended that the law nevertheless allowed them to be recognised as the real owners of the flat.

This judgment examines the legal consequences of such an arrangement, which prospective HDB flat owners would do well to bear in mind.

The HDB flat in question was located along Kim Tian Road (the “Kim Tian Flat”). Teck Leng had paid for the Kim Tian Flat using: proceeds from an earlier flat that was also in his sole name (the “Silat Flat”); money from his Central Provident Fund (“CPF”) account; and an HDB housing loan that was serviced from his CPF account. It was however alleged that Teck Leng was a mere nominee, and that this arrangement was intended to have the dual purpose of (a) allowing the parents to evade payment of a resale levy to the HDB, and (b) allowing for a housing loan to be obtained from the HDB (which Teck Leng, but not his parents, was eligible for). The parents alleged that this was their common understanding with Teck Leng. They also argued that they should be regarded as having paid for the Kim Tian Flat, because they had given Teck Leng more than enough money to pay for it. Teck Leng’s position, however, was that the bulk of that money had been lost by him in failed investments or spent by him.¹

Curiously, in these proceedings, Teck Leng agreed with his parents that he had no beneficial interest in the Kim Tian Flat. This was despite his having taken the opposite position in earlier matrimonial proceedings – there, he asserted that the Kim Tian Flat was his, that it was a matrimonial asset, and that all financial contributions towards it should be regarded as having been made by him.

On 25 August 2017, the Family Justice Courts (“FJC”) made an ancillary order (the “Ancillary Order”) under which Teck Leng was to pay his ex-wife, Honghong (the second defendant), $175,000 in relation to the division of matrimonial assets.² This was to be paid within six months from the date of the Ancillary Order. An order for the sale of the Kim Tian Flat was not made at that time, but it was later made on 10 May 2019 after Honghong had applied to enforce the Ancillary Order. Teck Leng was ordered to sell the Kim Tian Flat if he did not pay Honghong $175,000 by 10 August 2019 (the “Sale Order”).

The plaintiffs commenced this action on 21 October 2019, more than five months after the Sale Order had been made.

I find that Teck Leng was the beneficial owner of the Kim Tian Flat, not his parents. The Housing and Development Act (Cap 129, 2004 Rev Ed) (“HDA”) did not allow the parents to become entitled to the Kim Tian Flat (or any interest in it) under the nominee arrangement that they alleged.

Even if the nominee arrangement survived the HDA, the parents would still not be the beneficial owners of the Kim Tian Flat. The facts did not support either a resulting trust or a common intention constructive trust in favour of the parents. What Teck Leng received from his parents was more in the nature of a loan, rather than money he had been entrusted with for the purpose of purchasing the Silat Flat and the Kim Tian Flat. In any event, only some 9.1% of the cost of acquiring the Kim Tian Flat could be traced back to money Teck Leng had received from his parents, and any interest that his parents had would not exceed that proportion. Teck Leng admitted that he had “depleted” the rest of the money from his parents.³

Procedural history

Teck Leng married Honghong on 7 September 2010. In the course of their short marriage, two children were born (in 2011 and 2012). On 18 July 2015, Honghong filed for divorce in FC/D 3244/2015, and interim judgment was granted on 8 March 2016.

On 25 August 2017, the District Judge made the Ancillary Order in which Teck Leng was ordered to pay Honghong $175,000 within six months from the date of the order, in relation to the division of matrimonial assets. Teck Leng was also ordered to pay Honghong a sum of $300 per month as spousal maintenance for a period of one year, starting from 1 September 2017; and $1,500 per month as maintenance for the two children (who were in their joint custody, with Honghong having care and control of them).

Teck Leng paid nothing towards Honghong’s share of the matrimonial assets. He was also in arrears of maintenance. On 10 May 2019, the District Judge made the Sale Order requiring that the Kim Tian Flat be sold to satisfy his overdue payment of $175,000 to Honghong, unless he could make such payment by 10 August 2019.⁴ 10 August 2019 came and went, but Honghong still did not receive her share of the matrimonial assets, nor indeed any payment from Teck Leng.

The parents filed this Originating Summons on 21 October 2019 seeking a declaration that they were the beneficial owners of the Kim Tian Flat, and alternatively, a determination of the beneficial and legal interests of all parties in the Kim Tian Flat. The same day, the parents also filed an application as interveners in the matrimonial proceedings, asking to set aside the Ancillary Order.

Teck Leng did not appeal against the Ancillary Order or the Sale Order, but on 1 November 2019 he applied to vary the Ancillary Order as regards division of matrimonial assets, such that payment of the sum of $175,000 would instead be by way of transfer from his CPF account to Honghong’s.

These two applications by Teck Leng and his parents are still pending in the FJC.

Issues to be determined

It was common ground that Teck Leng had received some money from his parents, but (a) the amount he had received, (b) the basis on which he received it, and (c) what he did with it, were all in dispute.

The parents contended that they were entitled to the Kim Tian Flat because they had an understanding with Teck Leng that he was merely their nominee. They claimed to be entitled to the whole Kim Tian Flat on the basis of a resulting trust or a common intention constructive trust. Teck Leng supported his parents’ claim in these proceedings, although he had taken the opposite position in the FJC proceedings.

Honghong resisted the parents’ claim. She argued that the parents’ claim was precluded by the HDA, in particular, s 51(10) of the HDA.⁵ She also disputed the parents’ claim to have paid for the Kim Tian Flat, and their alleged understanding with Teck Leng.

The evidence was messy, not least because of the contradictory positions taken by Teck Leng and his parents – not only was Teck Leng’s position here diametrically opposed to his position in the FJC proceedings, the evidence of Teck Leng and his parents in this action was also internally inconsistent.

I will first set out the facts and then address the following questions: Is the parents’ claim precluded by the HDA? Did the parents contribute to the acquisition of the Kim Tian Flat, such that a resulting trust could arise in their favour? Did Teck Leng and his parents have an understanding that the parents owned the Kim Tian Flat, such that a common intention constructive trust could arise in the parents’ favour? Should any equitable accounting be ordered in favour of the parents?

A tale of three flats The Choa Chu Kang flat (the “CCK Flat”)

On 1 August 1994, the parents purchased the CCK Flat for $106,900. Their eldest son, Teck Leng, was then 17 years old. Teck Leng lived with his parents, as did his younger brother and sister.

The parents took a housing loan and used money from their CPF accounts towards the purchase. Mr Lim worked with PSA Singapore until February 2003, when he was 60 years old.⁶ Mrs Lim was a housewife who had at some point done part-time work to contribute to the family’s finances. By 2004, they had paid up the housing loan and discharged the mortgage.⁷

The CCK Flat was sold in 2007.⁸ By then, Mr Lim had stopped working (he would work again later on, this time as a gardener, from 2014 till December 2017).

The parents said that sometime in 2007, Teck Leng had persuaded them to sell the CCK Flat; Teck Leng suggested that a flat be bought in Silat Walk as the flats in Silat Walk would be undergoing the Selective En bloc Redevelopment Scheme (“SERS”) and a replacement flat at Kim Tian Road would be offered.⁹ The documents show that the Silat Flat had been notified for compulsory acquisition on 15 February 2007 and gazetted accordingly on 23 February 2007.¹⁰ On, 26 September 2007, Teck Leng obtained the HDB’s approval for him to purchase the Silat Flat.¹¹

The discussion between Teck Leng and his parents about selling the CCK Flat and buying the Silat Flat would thus have taken place sometime between 15 February 2007 and 26 September 2007.

The HDB’s completion account of 13 November 2007 shows that the declared resale...