Zaiton bte Adom v Nafsiah bte Wagiman

• Jurisdiction: Singapore
• Judge: Vinodh Coomaraswamy J
• Judgment Date: 22 August 2022
• Docket Number: Originating Summons No 1014 of 2020
• Court: High Court (Singapore)

Zaiton bte Adom

and

Nafsiah bte Wagiman and another

[2022] SGHC 189

Vinodh Coomaraswamy J

Originating Summons No 1014 of 2020

General Division of the High Court

Credit and Security — Lien — Equitable lien — Whether equitable lien on property available where plaintiff had no proprietary interest

Restitution — Change of position — Defence to claim for unjust enrichment — Whether inequitable to order restitution even though there was change of position

Restitution — Unjust enrichment — Money received through intermediary — Recipient only discovering true source of funds subsequent to receipt — Unjust factor — Whether there was failure of basis between intermediary and person who was source of funds

Restitution — Unjust enrichment — Money received through intermediary — Recipient only discovering true source of funds subsequent to receipt — Whether there was failure of basis between recipient and person who was source of funds

Restitution — Unjust enrichment — Whether remedy of proprietary restitution appropriate where enrichment was unjust due to failure of basis

Trusts — Constructive trusts — Recipient of money only discovering true identity of source of funds subsequent to receipt — Recipient of money stating intention to return money to person who was source of funds — Recipient of money resiling from statement of intention — Whether institutional constructive trust arose over recipient's property in favour of person who was source of funds

Trusts — Constructive trusts — Remedial constructive trust — Whether remedial constructive trust should be imposed if no independent cause of action established — Whether remedial constructive trust was remedy for unjust enrichment

Trusts — Quistclose trusts — Transferor and transferee having common intention for moneys to be used by transferee to acquire property — Whether moneys were at transferee's free disposal — Whether moneys transferred were part of transferee's or downstream recipient's general assets

Trusts — Resulting trusts — Presumed resulting trusts — Whether presumption of resulting trust rebutted by evidence of intention to part with proprietary interest

Held, allowing the claim in part:

Parties' knowledge and intention

(1) The second defendant's initial plan comprised the following six steps. First, the second defendant would persuade the plaintiff to hand $205,359.80 to him. Second, he would hand the money to the first defendant and direct her to deposit it into her CPF account. Third, he would persuade the first defendant to do as he directed. Fourth, the first defendant would use part of the money to repay the HDB loan in full. Fifth, the second defendant would persuade the first defendant to transfer her interest in the Flat to him. Finally, the first defendant would apply the remainder of the $205,359.80 in her CPF account towards purchasing a new flat to house herself and the defendants' child: at [55].

(2) All six steps of the plan which the second defendant conceived and executed was the common intention of both the second defendant and the plaintiff by the time the latter handed over the first cashier's order in 2015. The plaintiff's intention in handing the two cashier's orders to the second defendant was not vitiated or defective. The second defendant did not induce the plaintiff to hand over the two cashier's orders by fraud: at [66] and [84].

(3) But the second defendant and plaintiff did not discuss what, if anything, the plaintiff was to receive from the second defendant in return for the two cashier's orders. She had acted only on her own subjective, self-engendered expectation that the second defendant would return $205,359.80 in some unspecified way and at some unspecified time. Neither person intended the second defendant to be legally obliged to repay the money to the plaintiff. This was not a loan: at [73], [76] and [86].

(4) The first defendant did not know until 2016 at the earliest that, among other things, the plaintiff was the ultimate source of the two cashier's orders and that the second defendant had conceived and was executing his six-step plan. What the first defendant did with the two cashier's orders and their proceeds did not in any way deceive the second defendant or in any way defeat the common intention of the second defendant and the plaintiff: at [81] and [88].

Institutional constructive trust

(5) No institutional constructive trust arose: at [140].

(6) Unconscionability in the general sense of conduct which was either not right or reasonable or which was contrary to good conscience was a necessary but not sufficient condition for a constructive trust to arise. A recipient of property (“T”) held her rights in property on constructive trust for the beneficiary (“B”) only if a set of circumstances had transpired in relation to those rights which equity recognised by accretion of judicial decision was sufficient to render it unconscionable for T to exercise those rights as she saw fit, disregarding B. Equity developed each category and added categories to this list incrementally: at [104], [105] and [108].

(7) The first defendant's conduct at any time, including in May 2019, did not come within any of the categories of unconscionability which equity had recognised as giving rise to an institutional constructive trust. Further, none of these categories could be developed incrementally or by analogy to encompass the first defendant's conduct in a way which was consistent with the policy imperative for rights in property to be stable and for the law to allocate and alter those rights only in a manner which was transparent, consistent and predictable: at [120].

(8) In any case, the first defendant did not behave in any way which was unconscionable in the general sense: at [122].

(9) For one, it could not be unconscionable in a general sense for T to act contrary to a statement of intent which was not made fraudulently, and which did not rise to the level of a promise: at [127].

(10) In so far as the first defendant made statements acknowledging in some way that she was obliged to return the $205,359.80 to the plaintiff and resiled from these statements, it was not alleged that any of the statements was made fraudulently: at [126].

(11) Further, the first defendant had not promised to repay the money to the plaintiff. A promise was a bilateral statement of intention as to future conduct expressed by a promisor to a promisee. None of the statements made by the first defendant was: (a) an express or implied representation that the first defendant's intention would never change; or (b) an express or implied undertaking to carry out that intention in the future: at [127].

(12) Even if the first defendant promised to return the $205,359.80 to the plaintiff, there was no unconscionability in the general sense. First, the plaintiff did not rely on these presumed promises to her detriment when she parted with the cashier's orders in 2015. These presumed promises were only made in 2019. Nor did the plaintiff give any consideration in 2019 for these presumed promises. A breach of a promise made by T which was unsupported by consideration, or at the very least which did not induce detrimental reliance, could not be sufficient unconscionability to constitute T a constructive trustee for B: at [128].

(13) In any case, the first defendant deposited the money into her CPF account in 2015 in accordance with the common intention of the plaintiff and second defendant. There was no unconscionability in the general sense in the first defendant claiming to be entitled to return only part of the money in May 2019 even if she promised to return $205,359.80 in full to the plaintiff at some time before that: at [129].

(14) Separately, no unconscionability arose after the first defendant learned that the plaintiff was the source of the two cashier's orders. The plaintiff did not make any payment to the first defendant. She made a payment to the second defendant. The latter, acting as principal (and not agent for the plaintiff) made the payment to the first defendant. The plaintiff had not been labouring under any mistake that would make it unconscionable for the first defendant to retain the money when the plaintiff handed the cashier's orders to the second defendant: at [131], [134] and [135].

Remedial constructive trust

(15) Even assuming that the remedial constructive trust formed part of Singapore law, it was not imposed on any property of the first defendant in favour of the plaintiff: at [149].

(16) A remedial constructive trust was a remedy and not a cause of action. The plaintiff had to first establish a cause of action against a defendant, ie, a confluence of facts recognised by law as capable of yielding a remedy. Only then could the court even begin to consider whether a remedial constructive trust was the appropriate remedy on the facts of a particular case: at [150].

(17) The plaintiff failed to establish any cause of action against the first defendant: at [152].

(18) Even if the plaintiff had a cause of action against the first defendant, merely resiling in 2021 from a gratuitous promise which the first defendant made in 2019 did not taint her conscience to an extent that warranted imposing a remedial constructive trust: at [153].

(19) Although the second defendant would be held personally liable to restore $205,359.80 to the plaintiff in unjust enrichment, even if the remedial constructive trust was an available remedy for unjust enrichment, it was not imposed on the second defendant. That was because the second defendant no longer had any economic interest in the Flat. That was the result of the Appeal Board's order. Awarding the plaintiff a remedial constructive trust would prejudice the first defendant's ultimate economic interests, even if the trust was confined to any notional share which the second defendant continued to own in the Flat: at [154] and [155].

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