A TALE OF THE TIAHS AND THE FLEXIBILITY OF EQUITY:
|(1995) 7 SAcLJ 195
|01 December 1995
|01 December 1995
Goh Swee Fang v Tiah Juah Kim †
In the beginning the Tiah family of which Goh is the mother and JK the eldest son lived in an attap squatter hut. Goh worked as a domestic help for the British servicemen who lived in the vicinity and JK was employed as a clerk in the British Forces. The whole Tiah family worked hard, the daughters worked as domestic helps and the family supplemented the family income by rearing pigs and chickens. This relatively idyllic peaceful existence was ended when developers began to develop the nearby area.
Goh thought it a good opportunity for the family to purchase one of the terrace houses that was being built. The one that she thought they could afford was priced at $24,500. She and JK each paid $500 as the booking fee. They paid for the subsequent progress payments out of their own funds. The house (in this note referred to as ‘the property’) was completed in 1969 and was conveyed to Goh and JK as tenants in common in equal shares. The property was brought under the Land Titles Act in 1970 and Goh and JK became the registered proprietors as tenants in common in equal shares.
For the first two years the property was let out. But when JK got married the newly weds and the whole Tiah family moved into the house. Not surprisingly JK’s wife and Goh did not get along and quarrels were frequent. The situation came to a head one day and JK was moved to draw his revolver. The police who came in response to the father’s call took JK into police custody for the night. The next morning Goh went to see JK in police custody and told him to transfer his share of the house to her for $20,000. JK agreed. His father then withdrew his complaint and JK was released. Then together with a family friend he went to Goh’s lawyer’s office and signed the transfer forms and a receipt. However when he was not then paid the $20,000 he took the receipt with him when he left the lawyer’s office. He and his wife moved out of the house.
JK constantly reminded Goh of the outstanding $20,000 owed to him but Goh kept on stalling. She said that she had no money but would give JK his half share when the property was sold. In 1985 the house needed some repairs and Goh asked JK to arrange for them to be done. This he did and Goh and he paid for the repairs almost equally.
In 1989 Goh informed JK that she had decided to sell the house to his brother and sister JP and MH for $315,000. JP and MH obtained loans totalling $150,000 from the Central Provident Fund Board (CPF) and the Overseas Chinese Banking Corporation (OCBC). The property was transferred to JP and MH. The $150,000 was paid to Goh. The balance of $165,000 was not paid.*
In January 1990 JK commenced proceedings against Goh, JP and MH. He claimed that the initial transfer from him to Goh of his half share for $20,000 was voidable by him on grounds of undue influence, or fraudulent representations made by Goh. Accordingly she held the half share on trust for him. By subsequently selling it to JP and MH at a low price she acted in breach of trust. Against JP and MH JK claimed that they were not bona fide purchasers without notice so that they were bound by his interest. In defence Goh denied making fraudulent representations to JK and having exerted undue influence over him vis-a-vis the transfer of his half share to her. All defendants also pleaded that the action was time barred and also barred by laches on JK’s part.
At first instance Lai JC, as she then was, gave judgement in favour of JK. She held that he had an interest under a resulting trust after he transferred his half share to Goh for no consideration. Goh continually made representations that JK still had a half share in the house or in the proceeds of sale. JP and MH had knowledge of his interest and so were bound. She ordered the consequential rectifications to the land register. On appeal the Court of Appeal held that JK was entitled to an equity which was an entitlement to half of the sale proceeds when Goh should sell the property. The Court of Appeal did not agree with the judge at first instance that after the transfer of his half share JK had an interest under a resulting trust. In the Court of Appeal’s opinion he had a vendor’s lien for $20,000. However as a result of subsequent representations from Goh that he would have a half share of the proceeds of sale when she sold the property he had refrained from suing her for the $20,000 for 16 years. He thus had acted upon her representations to his detriment and also suffered further detriment inasmuch as he had paid for half of the cost of repairs done to
the property. In the circumstances the Court of Appeal held that JK had an equity to half of the proceeds of sale viz. $157,500 which was the value of his half share in the house, with the purported sale price of $315,000 accepted as the true market value. Further to secure this sum the Court of Appeal imposed a charge on the property ranking after the CPF and OCBC.1 This decision seems to be a fair one to all parties in the circumstances.2 But the reasons for the decision deserve closer scrutiny.
The Court of Appeal was quite emphatic that at the point of the transfer on sale by Goh to JP and MH, JK did not have any interest in the property.3 He did not have an interest under resulting trust after the transfer to Goh since the transfer was pursuant to a sale. As he was not paid he did have a vendor’s lien.4 However it would seem that the Court of Appeal took the view that he gave up his vendor’s lien on Goh’s representations whereupon JK had an equity against Goh. This equity was an entitlement to half of the proceeds of sale. The view of the Court of Appeal was that Goh’s representations were as to the proceeds of sale when she sold the property and were not as to JK’s rights to the property itself, the Court of Appeal referred to the authorities ranging from 5, 6, 7, DC8 to 9 and 10. The Court of Appeal then said “JK clearly had the expectation to receive half of the proceeds of sale if and when she sold the property…the respondent (Goh) engendered this expectation and encouraged it at all material times…it would be inequitable and unjust if effect is not given to that expectation”.11 The Court of Appeal then went on to say that the equity would be satisfied with JK being paid half of what should have been the real sale price. To ensure that JK would be paid the Court of Appeal imposed a charge on the property. Against the purchasers now the registered proprietors of the property, JP and MH, the Court of Appeal held that they knowingly assisted in Goh’s dishonest design and so were affected by the equity of JK and had to account to JK for his loss. This was $157,500 representing half of the proceeds of sale at the stated price.
The decision in JK’s favour was based on an equity in his favour, this rested on Goh’s representations to JK made from time to time that he would be given half of the proceeds when she sold the property. “The respondent had relied and acted on the representation that when she sold the property he would receive his half share of the proceeds of sale. He had refrained from exercising his legal right to claim the sum of $20,000 for over 16 years…he clearly had the expectation to receive half share of the proceeds when she sold the property…it would be inequitable and unjust if effect is not given to that expectation.”12
What is the basis of this equity? From the judgment the equity rests on estoppel. The representations were as to the conferment on JK rights in Goh’s yet to be acquired property viz. the proceeds of sale of the house. As found by the Court of Appeal the representations were not as to rights that JK might be given over existing property viz. the house itself. On the facts as accepted by the Court of Appeal JK had no rights, equity or equitable interest in the house when Goh transferred it to JP and MH. The judge at first instance had found that JK had been led to believe by Goh that he still had his half share in the house and that he would get it either in the form of half the proceeds if she sold it or on her death. However the Court of Appeal disagreed with the first instance judge on this finding. “The only error in that finding, with respect, was that the respondent, (JK) still had a ‘half share in the property’. In our view, the representation was that he would get a half share in the proceeds of sale when she sold the property.”13
In the authorities relied upon by the Court of Appeal, commonly labelled as “proprietary estoppel” cases, the representation relate to the representor’s existing property, land, although it may be a conferment of a right over it in the future.14 It is difficult to see how JK could have an equity in his favour based on these authorities when the representations made by Goh were not as to any rights, present or future, in the property itself. Further even if the doctrine of proprietary estoppel were to be stretched to include
representations as to personal property,15 on the facts the personal property concerned viz. the proceeds of sale are not specific chattels or goods but an unspecified sum of money.16 Moreover it had not come into existence as yet. Thus the representations were intended to give JK rights in future property of a kind that is in effect a future debt. It is gratuitous promise to give an uncertain sum of money sometime in the future.17 It is not a simple case of an imperfect gift of existing property.18
If one accepts the position of the bifurcation of equitable estoppel into proprietary and promissory, it would seem that the facts of the instant case fall more comfortably under promissory estoppel. On the other hand under an emergent school of...
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