Tan Chui Lian v Neo Liew Eng

• Jurisdiction: Singapore
• Judge: Sundaresh Menon JC
• Judgment Date: 15 November 2006
• Neutral Citation: [2006] SGHC 203
• Docket Number: Originating Summons No 961 of 2006
• Date: 15 November 2006
• Year: 2006
• Published date: 17 November 2006
• Plaintiff Counsel: Edwin Loo (Leonard Loo & Co)
• Citation: [2006] SGHC 203
• Defendant Counsel: Chai Ming Kheong (Kweh Lee & Partners)
• Court: High Court (Singapore)
• Subject Matter: Constructive and resulting trusts,Whether renovation expenses incurred long after purchase of flat should be factored into determining equities of parties in flat,Plaintiff applying to have flat sold and for proceeds to be divided between parties according to ratio of parties' contributions,HDB flat bought and held in joint tenancy later severed and held by plaintiff and defendant as tenants-in-common,Trusts,Section 51(6) Housing and Development Act (Cap 129, 2004 Rev Ed),Moneys expended on renovation at time of purchase of flat and much later,Plaintiff and defendant contributing to various expenses incurred in purchasing and renovating flat,Whether resulting trust adjusting parties equities in flat arising,Scope of statutory bar under s 51 (6) Housing and Development Act against interest in HDB flat arising from constructive or resulting trust

15 November 2006

Sundaresh Menon JC:

1 These proceedings concern a number of issues of practical importance to many in this country. The proceedings were commenced by the plaintiff seeking an order that the Housing and Development Board (“HDB”) flat, located at Block 18, Hougang Avenue 3 #11-159, Singapore (“the property”) and owned by the two parties before me as tenants-in-common, be sold on the open market, with the net sale proceeds to be divided in the ratio of the contribution of the parties towards the purchase of the flat. At the conclusion of the arguments, I granted the plaintiff’s application and I ordered that the proceeds from the sale of the property be apportioned with 53.4% going to the plaintiff and 46.6% to the defendant. In view of the wider relevance of these issues arising, I thought it appropriate to set out, at least briefly, my grounds for that decision.

The factual background

2 At the outset, I should say that although there was a considerable amount of material filed in these proceedings, much of it in the final analysis proved unnecessary and was also unhelpful. The undisputed facts are these. The property was purchased on or about 30 July 1979 by the plaintiff and his father (who is now deceased) as joint tenants. Sometime in 1997, the father unilaterally severed the joint tenancy and the property was then held by the parties as tenants-in-common in equal shares. In his last will and testament dated 10 December 1997, the father bequeathed his share in the property to the defendant who was the father’s wife and is the plaintiff’s stepmother. The defendant became the joint owner of the property upon the father’s death on 18 December 2000.

3 A sum of $29,088.59 was paid for the acquisition of the flat. In addition, a sum of $10,395 was paid for renovations at the time the property was purchased. Further amounts of $5,300 and $3,553.45 were paid for some renovations and upgrading work, respectively, in 1997. This was some 18 years after the flat had been purchased. It was agreed that the latter sum (ie, $3,553.45) was expended in respect of charges imposed by the HDB for the upgrading of the estate. There were also various other amounts expended for soft furnishings which I have regarded as irrelevant for the present purposes.

4 In respect of these various amounts, the following payments were not disputed as having been made by the father or by the defendant:

(a) the sum of $8,000 towards the purchase price of the property;

(b) the sum of $10,395 towards the renovations undertaken at the time the property was purchased;

(c) the sum of $5,300 towards the renovations undertaken in 1997; and

(d) the sum of $3,553.45 being the estate upgrading costs imposed by the HDB since 1997.

5 The plaintiff claimed that he had made the rest of the payments for the cost of acquiring the property. This amounted to $21,088.59. This was initially disputed by the defendant on various grounds including, in particular, the suggestion that the plaintiff’s income would have made it impossible for him to afford the mortgage payments. In the light of the tax returns that were filed by the plaintiff, this suggestion seemed untenable. In the end, it was resolved by consent that I should treat the facts I have just recited as agreed.

6 I accordingly proceeded on that basis.

Ownership in the property

7 The starting point of the analysis is s 51(6) of the Housing and Development Act (Cap 129, 2004 Rev Ed) (“the Act”) which was recently enacted in September 2005 and which provides that:

No person shall become entitled to any such flat, house or other building under any resulting trust or constructive trust, whensoever created.

8 On the face of it, the provision has retroactive effect. At first blush, the section might appear to render it impossible for a party to acquire any interest in an HDB flat through a resulting or constructive trust. Section 51(4) read with s 51(5) of the Act already prohibits the creation of express trusts and in Sitiawah Bee bte Kader v Rosiyah bte Abdullah [2000] 1 SLR 612 (“Sitiawah”), it was clarified by Rajendran J that this applied to any trust that could in some way be said to have been “created” through a connivance between the parties even if the form of the transaction was such that it might have given rise to a resulting trust. Rajendran J noted as follows in Sitiawah at [20]:

If a party sets about creating a situation where a resulting trust will arise in his favour in order to circumvent the provisions of the HDB flat (as was the situation in [Cheong Yoke Kuen v Cheong Kwok Kiong [1999] 2 SLR 476]) the resulting trust so created would be prohibited under s 51(4).

(See also Sitiawah at [13]–[19].)

9 Section 51(6) of the Act was enacted subsequent to Sitiawah and the Ministerial Statement that was read at the second reading of the Bill is helpful in clarifying the legislative intent. The statement reads as follows (see Singapore Parliamentary Debates, Official Report (15 August 2005) vol 80 at col 1252 (Mah Bow Tan, Minister for National Development)):

Clause 6 of the Bill amends section 51 to make it clear that, in addition to prohibiting the voluntary creation of trusts over an HDB flat, the Act also prohibits any person from becoming entitled to a [sic] HDB flat under a resulting trust or a constructive trust. This will help to prevent a situation where a person who is ineligible to own an HDB flat may become entitled to own one, for example, by paying the purchase price of the flat on behalf of the owner. [emphasis added]

10 It becomes clear when one has regard to that statement that Parliament’s intention was not to prevent any interest in an HDB flat arising under a resulting trust or a constructive trust regardless of the circumstances, but rather to prevent any entitlement to own an HDB flat arising in favour of a person by virtue of the law implying a resulting or constructive trust, where that person would otherwise have been ineligible to acquire such an interest. In my judgment, having regard to the mischief underlying the section, the provision was not intended to have any application where the parties concerned were already entitled to some interest in the property and therefore no issue could arise as to their eligibility to such entitlement. In such circumstances, the parties concerned would not be claiming to become entitled to own an interest in the flat by virtue of the implied trust and there would be no concern of their bypassing the eligibility criteria set by the HDB from time to time.

11 This appeared to me to be the purpose of the statutory provision and it is borne out by two further points. First, the statutory enactment provides that no person shall “become entitled” to any flat under any resulting or constructive trust. This may be contrasted with a much plainer and simpler formulation such as that no person shall “be entitled to any interest in” or shall “acquire any interest in” such a flat by virtue of a constructive or resulting trust. The Ministerial Statement which used precisely the same language as is found in the statute, ie, “become entitled”, and which then explained this by reference to the case of an ineligible person becoming entitled to own a flat through an implied trust, provides strong support for my view.

12 Secondly, the provision was enacted with retrospective effect and in my judgment this also points towards the provision being construed in the way that I have suggested it should be. On that basis, it would mean that the enactment was going no further than the decision of the Court of Appeal in Cheong Yoke Kuen v Cheong Kwok Kiong [1999] 2 SLR 476 (“Cheong Yoke Kuen”). In that case, there was a dispute between siblings over the ownership of an HDB flat after their mother’s death. The appellants claimed that their mother was the owner of the HDB flat and that it formed a part of her estate upon her death. As against this, the respondent asserted that since he had paid the purchase price and all outgoings even after their mother’s death, he was the beneficial owner of the flat by operation of a resulting trust even though he had transferred his legal interest in the flat to his mother after buying another HDB flat with his family. The respondent further argued that resulting trusts over HDB properties were not prohibited by s 51(4) of the Act.

13 It was held by the Court of Appeal in Cheong Yoke Kuen that the resulting trust of the flat in the respondent’s favour was prohibited by s 51(4) and was void under s 51(5) of the Act. The court found that as the respondent had intended to remain the beneficial owner of the flat when he transferred his legal interest in the flat to his mother, he had, in effect, “created” a trust of the flat in his favour. The resulting trust which the respondent contended had arose in his favour thus fell foul of the statutory restriction. Furthermore, the court also held that the resulting trust was contrary to the policy considerations inherent in s 47 of the Act in that upon acquiring a new HDB flat, the respondent was not eligible to hold any interest in the previous flat.

14 The effect of Cheong Yoke Kuen was therefore that a person could not acquire an interest in an HDB flat through a constructive or resulting trust if he was ineligible to do so under the provisions of the Act and the HDB’s eligibility criteria. I note that this was how the case was construed and applied by Judith Prakash J in Neo Boh Tan v Ng Kim Whatt [2000] SGHC 31 (“Neo Boh Tan”) where she stated as follows at [17]–[18]:

The obvious difference between Cheong’s case and the present is that the parties here had no intention of circumventing any HDB regulation or policy....