Wan Lai Cheng v Quek Seow Kee

• Jurisdiction: Singapore
• Judge: Kan Ting Chiu J
• Judgment Date: 14 January 2011
• Neutral Citation: [2011] SGHC 9
• Court: High Court (Singapore)
• Docket Number: DT No 3449 of 2007
• Year: 2011
• Published date: 09 April 2013
• Hearing Date: 04 February 2010,05 February 2010
• Plaintiff Counsel: Luna Yap (Luna Yap & Co)
• Defendant Counsel: Randolph Khoo and Chew Ching Li (Drew & Napier LLC)
• Subject Matter: Family law,Matrimonial assets,gifts,Maintenance,Statutory Interpretation
• Citation: [2011] SGHC 9

Kan Ting Chiu J:

This is the concluding chapter of a long marriage which ended in an acrimonious divorce with the division of matrimonial assets and the maintenance for the plaintiff/wife to be dealt with.

The parties are 62 years old and have been married for 36 years. The defendant/husband came from a wealthy family and was self-employed. The plaintiff was a teacher until she retired. They have two sons, Darren and Daniel, both in their 30s, for whom no provisions have to be made in the divorce.

On the division of matrimonial assets, there was a sub-issue whether shares registered in the plaintiff’s name in three companies, Hawick Property Investment Pte Ltd (‘Hawick”), Kelso Property Investment Ptd Ltd (“Kelso”) and Skeve Investment Pte Ltd (“Skeve”) belonged to her beneficially, or were held by her on trust for the defendant. This was a significant issue because the plaintiff is the registered owner of the 40% of the shares in Hawick and Kelso, and 10% of the shares of Skeve, and each of these companies owned a unit of valuable residential property.

On the division of the matrimonial assets, the parties agreed that the division of the matrimonial home at No. 2 Draycott Park #03-01 Hampton Court, Singapore was to be dealt with separately from the division of the rest of the matrimonial assets.

The shares in Hawick, Kelso and Skeve

These three companies are family companies of the parties and were under the control of the defendant. The plaintiff became a shareholder and director of Kelso and Hawick in 1992 and of Skeve in 1983.¹ The defendant deposed that that was done on the advice of consultants,² but he was reticent about the advice he received. He did not disclose the content of the advice or the person who rendered it. Indirectly, there was some information on this because an affidavit was deposed by Wong Cecil Vivian Richard (“Cecil Wong”) who was a partner of the accountancy firm Ernst & Young (“E&Y”) till his retirement in 1985 stating that: 7. ... The Defendant approached E&Y for corporate structuring and financial planning advice. I was personally involved in providing such advice along with a Mr Graham Clark, who was the tax principal at the material time. 8. It was decided amongst the Defendant and his family members that a number of apartments to be built at Hampton Court were to be shared out between the Defendant and his 2 younger brothers. The remaining units were to be held by the holding company, Hampton Property Investment Pte Ltd. 9. One specific aspect of the corporate structuring and financial planning advice sought by the Defendant concerned estate duty planning for him and his brothers. The Defendant and his brothers were advised to set up individual companies to hold each of their allotted units in Hampton Court.

[emphasis added]

As the Kelso and Hawick shares were issued to the plaintiff in 1992, and Cecil Wong retired from E&Y in 1985, the extent of his input and knowledge of the advice was not clear, but this was the best evidence of the advice there was. He only deposed that the defendant and his brothers were advised to set up individual companies to hold each of their allotted units in Hampton Court. While there was no reference to any advice about issuing shares in the company to the wives as part of the corporate structuring, financial planning advice and estate duty planning advice, there was no issue that such advice would come within that ambit. The plaintiff also recalled that shares were issued to her under professional advice, although she remembered it as solicitors’ advice. She may have made the mistake as the advice was rendered to the defendant and not to her directly and she may also have confused this with the subsequent wealth plan proposed by solicitors, which will be dealt with in a later part of this judgment.

Accepting that the defendant issued the shares to the plaintiff on the basis that the shares were issued on E&Y’s advice for estate duty planning purposes, the question still remained whether those shares were to be held by the plaintiff beneficially, or as a trustee for the defendant as he contended. I raised this with counsel during the hearing. I pointed out that the court should be slow to find that Cecil Wong or E&Y had advised the defendant to evade estate duty by arranging for shares to appear as the plaintiff’s shares when he was the beneficial owner, under a secret trust. I made the point because if the advice was the disputed shares in the family companies were to fully held by the plaintiff, that would result in a legitimate reduction in the estate duty payable on the defendant’s estate. However, if the advice was to issue the shares to the plaintiff without transferring the beneficial ownership of the shares a question arises over the probity of the advice.

The plaintiff’s solicitors had captured the issue and stated the plaintiff’s position when it submitted that:

The question is whether the Defendant acted on such advice by creating a sham shareholding in favour of the Plaintiff, to maintain his hold on assets during his lifetime, or that he truly intended to effect a gift to the Plaintiff of the Disputed Shares. The Defendant respectfully submits that the former position was the true situation.³

[emphasis added]

(The sham shareholding-or-gift analysis is apt and relevant to the question whether these shares are matrimonial assets).

It was plain that the critical issue was not over the creation of the shareholding, but the shareholding created was a sham shareholding. When Cecil Wong was asked to depose on the advice given to the defendant and his brothers, that would be an important point of his evidence, but Cecil Wong made no mention of that, and the defendant did not follow up on that with him or Graham Clark who was also involved in giving the advice, or E&Y to confirm or comment on the sham shareholding.

There is more on this issue. The ownership of the shares was the subject of serious discussion again. In March 2007, the defendant wanted to create a wealth plan for the family to save on estate duty. His lawyer, Tan Hin Tat, proposed a plan which involved the setting up of the Wen-Ping Trust and for all shares in Hawick, Kelso and Skeve to be owned by a new company, Great Hampton Pte Ltd. At that time, the marriage between the parties was already strained. The plaintiff believed that the defendant was having an extra-marital affair, and was suspicious of his motives. When Tan Hin Tat and his colleagues explained the wealth plan to the plaintiff, she declined to put her shares in the companies into the proposed trust.

Tan Hin Tat confirmed in an affidavit that when he explained the wealth plan to the plaintiff, he was not aware that she was holding the shares on trust for the defendant; neither the defendant nor the plaintiff had informed him of that. It would have been reasonable for the defendant to have informed Tan Hin Tat of the circumstances and manner under which the plaintiff came to own the shares, and of the alleged advice of E&Y on the “sham shareholding” when he instructed Tan Hin Tat on the wealth plan.

When the defendant came to know that the plaintiff and their sons had reservations over the wealth plan, he did not take it kindly. His anger and frustration was luminous in his email to them of 16 April 2007 –

I Do Not Know, What to Do any more???.

DARREN AND DANIEL

Your Trust is at Stake, I may go my Way and Do Nothing!!

My Last Warning to Those ARE Against Me,, WatchOUT!!

I Am NO FOOL!!

SO NO MORE NONSENSE OR MOVE ON !!

THAT IS FINAL !!!

THAT INCLUDES YOU, ... AND ALL THE WANS,

DO YOU THINK YOU CAN ... AROUND MY DOORSTEPS

But while he was unhappy with the plaintiff he did not remind her that she was only holding the shares in trust for him, and that she should do at his bidding. Although he gave notice that there will be changes, he did not follow that up by revoking the trusts and having the shares returned to him.

Subsequently, he cooled down and the parties were able to communicate over the wealth plan more calmly. On 9 July 2007, the plaintiff wrote to the defendant:

I refer to your lawyers’ letters dated 13 June 2007 which I received from Darren on 18 June 2007 after I returned from China.

Early this year you arranged for me to meet your lawyer, Mr Tan Hin Tat (“Mr Tan”) at his office. During the meeting at Mr Tan’s office which you also attended, Mr Tan informed me that his plan was for us to transfer each of our respective shares to a New Zealand trustee.

I had informed you previously that I was not satisfied with Mr Tan Hin Tat’s explanation of the wealth plan.

There were not enough details. I do not understand why you want both of us to transfer each of our shares to a trust or 3rd party.

Mr Tan then sent me an email telling me to meet his other colleagues who would explain the wealth plan again. After meeting with his colleagues, I was still not satisfied with the explanation of the wealth plan and I told Mr Tan’s colleagues that I would not want to sign away my shares.

You subsequently informed Darren that you were extremely angry at my refusal to sign away my shares. You also told Darren that I was no match for you and that you would issue more shares in the Companies to dilute my stake in each of the Companies.

I am saddened by your actions. You may recall that these shares were given to me in 1992. You told me then that the shares were mine and that “you owned 40% of my companies”. You had assured me that Darren, Daniel & myself were precious to you and that we were a family.

Until today, I have not been provided good reason why I should transfer my shares. Why do you hate me so much? I will hold on to what is mine.

I have asked Jamie, the Companies’ auditor for the bank statements of the Companies as well as other documents. Jamie has however informed me that you have instructed her that such documents may...