United Overseas Bank Ltd v Giok Bie Jao and others

• Jurisdiction: Singapore
• Judge: Belinda Ang Saw Ean J
• Judgment Date: 16 March 2012
• Neutral Citation: [2012] SGHC 56
• Court: High Court (Singapore)
• Docket Number: Originating Summons No 514 of 2010
• Published date: 22 March 2012
• Year: 2012
• Hearing Date: 28 September 2011,30 September 2011,26 September 2011,29 September 2011
• Plaintiff Counsel: Tan Hee Joek (Tan See Swan & Co)
• Defendant Counsel: Wong Soo Chih (Ho, Wong & Partners)
• Subject Matter: Trusts,Resulting Trusts,Presumed Resulting Trusts
• Citation: [2012] SGHC 56

Belinda Ang Saw Ean J: Introduction Interlocutory and Joinder applications

United Overseas Bank (“UOB”) was the mortgagee of a property known as 530 East Coast Road, #18-04 Ocean Park, Singapore (“Ocean Park”). On 5 June 2009, UOB exercised its power of sale over the property following a default on the repayment of the loan secured by the mortgage. The property was sold for the price of $1,650,000. After the sale proceeds were used to settle all outstanding sums due and owing to UOB, the sum of $1,092,086.70 remained as balance sale proceeds. UOB tried to return the balance sale proceeds to the registered proprietors, Giok Bie Jao (“Madam Giok”) and Jaury Jacob (“Jaury”). In the ordinary course of things, this would have happened. After a lengthy discourse, UOB found itself faced with conflicting views: Jaury agreed to the release of the balance sale proceeds to the registered proprietors but Madam Giok wanted the balance sale proceeds to be divided equally amongst five people: the registered proprietors, Jimmy Jonathan (“Jimmy”), Arifin Jacob, and Antonius Jao. In those circumstances, UOB interpleaded and filed Originating Summons No 514 of 2010 against Madam Giok as the first defendant, and Jaury as the second defendant. I need only note that pending the determination of the rival contentions in the present case, UOB was ordered to pay into Court the balance sale proceeds and its solicitor’s attendance at all future hearings was dispensed with.

On 4 March 2011, Jimmy was joined as a party to the proceedings. He was the named third defendant.

By an Order made by the Senior Assistant Registrar, the interpleader issues to be tried were as follows: Whether [Jaury or Jimmy] is the beneficial owner of the property ... which was purchased under the names of [Madam Giok and Jaury] [and] who is therefore entitled to the balance sale proceeds from [UOB’s] mortgagee sale of the property; and Whether [Jaury] was aware of and executed the UOB Mortgage for the property in Surabaya, Indonesia in 2004.

It was also directed that the interpleader issues be tried with Jaury in the position of plaintiff.

I hasten to mention at the outset that I declined to rule on the second interpleader issue as it was concerned with the circumstances surrounding the procurement of the mortgage which had no relevance at all to the substance of the interpleader relief sought by UOB in the light of the competing claims to the balance sale proceeds paid into Court. The purpose of interpleader relief is observed in Australia and New Zealand Banking Group Ltd v Ding Pei Chai and others [2004] 3 SLR(R) 489 at [3]:

an interpleader issue directed under O 17 of the Rules of Court (Cap 322, R 5 [2006] Rev Ed), is a means for the court to decide the claims as between the persons present at the proceedings in order that the person interpleading may get the relief to which he is entitled (see De La Rue v Hernu, Peron & Stockwell, Limited [1936] 2 KB 164 at 173).

Background Facts

The parties in the present proceedings are siblings from an Indonesian family. As is common with fairly well to do Indonesians, they bought properties in Singapore and their children spent their growing up years in Singapore.

In the 1980s, Jaury sent his children to be educated in Singapore. In 1983, he purchased an apartment at 20 Amber Road, #14-02 King’s Mansion, Singapore (“King’s Mansion”) to accommodate his children. Madam Giok, Jaury’s sister, took care of his children in Singapore. King’s Mansion was subsequently sold in 1989. In 1985, Jaury purchased an apartment at Shelford Road, which he later sold on 4 May 1992.

On 26 November 1986, a property known as 7 Siglap Road, #20-65 Mandarin Gardens, Singapore (“Mandarin Gardens”) was purchased in the sole name of Jimmy. On 16 January 1988, Jimmy transferred one-half share of Mandarin Gardens to Jaury. Stamp duty was duly paid but no consideration passed in respect of this transfer. Consequently, Jimmy and Jaury became registered proprietors holding as tenants in common in equal shares. Ocean Park was acquired in June 1990 and it was at all times registered in the names of Madam Giok and Jaury as tenants in common in equal shares.

The competing claimants

The dispute was squarely between Jimmy and Jaury. Although Madam Giok was the registered owner of one-half share in the Ocean Park property, she did not assert any beneficial interest in the same.

Jimmy’s pleaded case was tolerably straightforward − Jimmy had purchased the Ocean Park property which was registered in the names of Madam Giok and Jaury. He argued that there was a resulting trust in his favour in respect of the property, with the result that he held beneficial ownership. As such, he was entitled to the balance sale proceeds in Court. On the other hand, Jaury said he provided the purchase money arguing that Jimmy’s claim of beneficial ownership must fail. In short, Jimmy and Jaury were contending for a purchase money resulting trust. I had to decide where the beneficial interest in the Ocean Park property lay. The main factual issue in dispute was the provenance of the purchase money.

Presumption of resulting trust The legal principles

The type of resulting trust relied upon in these proceedings is what is commonly known as a purchase money resulting trust, and the classic statement of the law on this subject is to be found in the judgment of Eyre CB in Dyer v Dyer (1788) 30 ER 42 at 43. The passage below was cited with approval and followed in Peh Eng Leng v Pek Eng Leong [1996] 1 SLR(R) 939 at [16]:

The clear result of all the cases, without a single exception, is, that the trust of a legal estate ... whether taken in the names of the purchasers and others jointly, or in the name of others without that of the purchaser; whether in one name or several; whether jointly or successive, results to the man who advances the purchase-money. This is a general proposition supported by all the cases, and there is nothing to contradict it; ... .

It was also noted in Dyer v Dyer that such a resulting trust may be rebutted by circumstances in evidence.

The modern day authority on this species of resulting trust is by Lord Browne-Wilkinson’s observations in Westdeutsche Landesbank Girozentrale v Islington Borough Council [1996] AC 669 at 708, cited with approval by the Court of Appeal in Lau Siew Kim v Yeo Guan Chye Terence [2008] 2 SLR(R) 108 (“Lau Siew Kim”) at [34]: Under existing law a resulting trust arises in two sets of circumstances: (A) where A makes a voluntary payment to B or pays (wholly or in part) for the purchase of property which is vested either in B alone or in the joint names of A and B, there is a presumption that A did not intend to make a gift to B: the money or property is held on trust for A (if he is the sole provider of the money) or in the case of a joint purchase by A and B in shares proportionate to their contributions. It is important to stress that this is only a presumption, which presumption is easily rebutted either by the counter-presumption of advancement or by direct evidence of A’s intention to make an outright transfer ... (B) Where A transfers property to B on express trusts, but the trusts declared do not exhaust the whole beneficial interest ... Both types of resulting trust are traditionally regarded as examples of trusts giving effect to the common intention of the parties. A resulting trust is not imposed by law against the intentions of the trustee (as is a constructive trust) but gives effect to his presumed intention. [emphasis in original] For present purposes, it is sufficient to refer to the first circumstance above where A pays for the purchase of property in the name of B alone, or in the joint names of A and B.

The Court of Appeal in Lau Siew Kim explained that where a transfer of property to another takes place for which the recipient does not provide the whole of the consideration, the lack of intention to benefit the recipient on the part of the purchaser is the fact that is being inferred when the presumption of resulting trust is applied. The presumption is based on a traditional commonsense presumption that, outside of certain relationships (that is, relationships giving rise to the presumption of advancement), an owner of property never intends to make a gift, and, by extension, that a person who provides the money required to purchase a property intends to obtain an equivalent equitable interest in the property acquired (see Lau Siew Kim at [35] to [36]).

From the passages quoted, for the presumption of resulting trust to apply, the money must be provided by the person claiming beneficial interest in the property in his capacity as purchaser, or that his contributions of money were to the purchase price. This means that his beneficial interest under a resulting trust will be determined (a) in the proportion of his direct financial contribution to the purchase price and (b) assessed as at the time when the property was purchased and the trust created.

A presumption of resulting trust can be rebutted by contrary evidence (see [12] above and Lau Siew Kim at [52] to [55]). Intention may also be found or inferred from conduct (see generally Hohol v Hohol [1981] VR 221 at p 226). For a guide to the type of evidence admissible to rebut a presumption of resulting trust, I refer to the case of Shephard v Cartwright [1955] 1 AC 431. In that case, the House of Lords approved of a passage from the 24th Edition of Snell’s Equity which stated that the acts and declarations of the parties before or at the time of the purchase, or so immediately after it as to constitute a part of the transaction, are admissible in evidence either for or against the party who did the act or made the declaration. As for subsequent declarations, they are admissible as evidence only against the party who made them, and not in his favour. However, in the latest edition...