SG Equity and Trusts Flashcards
Overview
- In the creation of an express trust, 3 certainties have to be fulfilled (Guy Neale v Nine Square Pty Ltd [2014] (UK CA)):
A. Intention to create;
B. ID of subject matter; and
C. Object of trust. - Equitable rules were imported through 2nd Charter of Justice 1826.
a. Strong reliance on English equity during the colonial period.
b. English law remains the source of inspiration for equitable rules, but SG courts have looked to other commonwealth jurisdictions for a comparative perspective.
Trusts in Domestic Context (Resulting Trusts and Common Intention Constructive Trusts):
Recent UK Developments
- Demonstrated that strength of presumption of RT and CICT have decreased over the years.
A. Stack v Dowden: Baroness Hale stated that ‘in law, context is everything and the domestic context is very different from the commercial world. Each case will turn on its own facts’.
B. HL abolished the RT as a starting point in domestic consumer cases.
C. The default starting presumption is that the equitable interest follows the legal interest. Party asserting otherwise bears the burden to rebut the default position. - Kernott v Jones:
A. Quantification of interests. B. Imputation of intention where it is impossible to infer parties’ intentions.
Trusts in Domestic Context (Resulting Trusts and Common Intention Constructive Trusts):
SG Position
- Property disputes in domestic context: Still the continuous affirmation of the presumption of RT and advancement.
- Lau Siew Kim v Yeo Guan Chye Terence [2008] 2 SLR(R) 108: Concerned real property. Equitable intervention via presumption of RT was required to ensure fairness between the parties. CA also held that the twin pillars of presumption are so firmly entrenched in SG law that abolition would require legislative action.
- CA went on to clarify the meaning and scope of the equitable presumptions in SG. Strength of presumptions vary with changes in societal conditions and attitudes.
- 2 impt factors in measuring strength of presumption of advancement:
(a) nature of r/s (dependency / legal / moral obligation); and
(b) state of r/s (how close and caring the r/s was). - Chan Yuen Lan v See Fong Mun [2014] 3 SLR 1048: Held that where property dispute involving parties who have contributed unequal amounts towards the purchase price of a property and who have not executed a declaration of trust as to how beneficial interest in the property it to be apportioned can be broadly analysed using 6 stage test in relation to available evidence.
Trusts in Domestic Context (Resulting Trusts and Common Intention Constructive Trusts):
6-stage Test -
Chan Yuen Lan v See Fong Mun [2014] 3 SLR 1048 at [106]
- Sufficient evidence of parties’ respective financial contributions to property purchase price?
A. Yes: Presumed that parties hold beneficial interest in the property in proportion to their respective contributions to the purchase price (i.e, the presumption of resulting trust arises).
B. No: Presumed that parties hold beneficial interest in the same manner as that in which the legal interest is held. - Regardless of whether the answer to (1) is “yes” or “no”, sufficient evidence of an express or inferred common intention that parties should hold the beneficial interest in the property in a proportion which is different from that set out in (a)?
A. Yes: Parties will hold the beneficial interest in acc with that common intention and not in the manner set out in (a). Court may not impute a common intention to parties where one did not in fact exist. - If the answer to both (1) and (2) is “no”, parties will hold beneficial interest in the property in the same manner as the manner in which they hold the legal interest.
- If the answer to (1) is “yes” but to (2) is “no”, sufficient evidence that party who paid a larger part of the purchase price of the property (“X”) intended to benefit the other party (“Y”) with the entire amount which he or she paid?
A. Yes: X would be considered to have made a gift to Y of that larger sum and Y will be entitled to the entire beneficial interest in the property. - If the answer to (4) is “no”, does the presumption of advancement nevertheless operate to rebut the presumption of RT in (1)?
A. Yes:
(i) No RT on the facts where the property is registered in Y’s sole name (i.e, Y will be entitled to the property absolutely); and
(ii) Parties will hold the beneficial interest in the property jointly where the property is registered in their joint names.
B. No: Parties will hold beneficial interest in proportion to their respective contributions to the purchase price. - Notwithstanding the situation at the time of property acquisition, sufficient and compelling evidence of a subsequent express or inferred common intention that parties should hold beneficial interest in a proportion which is different from beneficial interest held at property acquisition?
A. Yes: Parties will hold beneficial interest in acc with the subsequent altered proportion.
B. No: Parties will hold beneficial interest in one of the modes set out at (2)–(5) above, whichever is applicable.
Trusts in Domestic Context (Resulting Trusts and Common Intention Constructive Trusts):
Low Gim Siah v Low Geok Khim [2007] 1 SLR(R) 795
CA endorsed the application of presumption of advancement in tradl r/s between father and child or between H and W where only one party is under a moral or equitable obligation to provide for the other.
Confined modern English cases (which indicated the declining importance of the presumption of advancement) to situations concerning joint contributions by married couples in acquiring the matrimonial home or properties acquired using joint savings.
Explained that traditional categories of r/s are unaffected by social change and the obligations of fathers and Hs have not changed so radically in modern SG to justify not applying the presumption of advancement.
Trusts in Commercial Context (Quistclose Trust):
Overview - When do they operate?
When money is advanced with a mutual intention to use the money for a specific purpose (per Barclays Bank Ltd v Quistclose Investments Ltd).
Trusts in Commercial Context (Quistclose Trust):
Pacific Rim Palm Oil Ltd v PT Asiatic Persada and others [2003] 4 SLR(R) 731
PR bought shares in PT and acquired 51% shareholding. Another agreement where PR to provide PT with $28m loan for the sole purpose of refinancing debts owed by PT. Money paid into account specifically opened for that purpose. When $5m intended for that purpose was not used, PR sued.
Held (HC): RT arose.
Noted that while a separate account is a factor tending to suggest existence of quistclose trust, this is not a requirement.
Trusts in Commercial Context (Quistclose Trust):
AG v Aljunied-Hougang-Punggol East Town Council [2015] 4 SLR 474 -
Dual Trust v Twinsectra models?
- HC rejected Lord Wilberforce’s dual trust analysis in quistclose trusts, and rejected his analysis.
a. Dual trust model: 2 trusts (primary and secondary). Secondary trust in favour of donor only if primary trust fails.
b. Twinsectra model: Single trust throughout. Donor retains beneficial interest on RT throughout, subject to power for donee to apply the trust money in acc to donor’s instructions. - The models are different in theory and practice.
a. Twinsectra model: Allows donor (who retains beneficial interest over the money) to revoke the trust at any time, and thus gives precedence to the donor’s interest.
b. Dual trust model: Only renders the donor a beneficiary in the secondary trust after the primary trust has failed. This model strikes a better balance b/w interests of the donor and donee.
Trusts in Commercial Context (Quistclose Trust):
AG v Aljunied-Hougang-Punggol East Town Council [2015] 4 SLR 474 -
Guiding principles on Twinsectra?
HC (Quentin Loh J): Endorsed Twinsectra model and laid down the following guiding principles:
1. Whenever donor transfers money to donee for a specific purpose, quistclose trust may arise. Donor has beneficial interest in the money, subject to a power or duty on donee’s part to use the money for a specified purpose. If donee unwilling or unable to use the money for the specified purpose, the money is to be returned to the donor. Such a trust may be either express or resulting.
- For quistclose trust: Twin certainties of subj matter and objects must be present. In particular, the purpose must be stated with sufficient clarity for a court to determine if it is still capable of being carried out or if the money has been misapplied.
3a. For express quistclose trust: Settlor-donor must intend to constitute the donee as trustee, and confer a power or duty on the donee/trustee to apply the money exclusively in acc with the stated purpose.
3b. For resulting quistclose trust: Donor must have a lack of intention to part with all beneficial interest in the transferred money. Donee must not have free disposal of the money, and must be under a power or duty to apply the money exclusively in acc with the stated purpose.
Trusts in Commercial Context (Quistclose Trust):
Singapore Tourism Board v Children’s Media Pte Ltd [2008] 3 SLR 981
P advanced money to D to sponsor an event. D failed to stage the event.
Held: Resulting quistclose trust had arisen with regards to the sponsorship sum.
“Quistclose trust is created where money is advanced by A to B with the mutual intention that it should be applied exclusively for a specific purpose. If that purpose fails, and unless a contrary intention appears, the law implied a stipulation that the money will be repaid to A. So long as the moneys went into a special account…and it was meant for a specific purpose that subsequently failed, the sum should be returned to the plaintiff”.
Trusts in Commercial Context (Quistclose Trust):
Tee Yok Kiat v Pang Min Seng [2013] SGCA 9
P suspect that H was having an affair, and was advised by fortune teller to liquidate her assets and hide them, which P did. P then transferred the money to D for the purposes of investment (where D had informed P about an investment opp). However, D used the money for another investment. P argued that a trust had been created, and the money was held on trust by D for her.
Held (CA): Express trust had been created, but did not decide the case by directly applying the quistclose trust analysis.
Trusts in Commercial Context (Quistclose Trust):
Remedies -
Remedial constructive trust
- Note that English law does not recognise remedial constructive trust.
- 2 types of CTs:
a. Institutional CT: Arises when all facts required for its creation are in existence. Court merely performs a declaratory role in imposing the CT.
b. Remedial CT: Judicial discretion in deciding whether CT is to be imposed in the first place. If imposed, the remedial CT will only take effect from the date of judgment.
Trusts in Commercial Context (Quistclose Trust):
Remedies -
Remedial constructive trust -
Donatio mortis causa (gift by someone who is expecting to die) -
Koh Cheong Heng v Ho Yee Fong [2011] 3 SLR 125
H fell ill and decided to transfer the name of the flat (in his sole name) to him and W (joint tenancy). W suffered serious head injuries and lacked testamentary capacity. H was concerned that if he died first, the flat would go to W through survivorship, and afterward to W’s relatives on W’s death, instead of his own relatives, through inter-state succession. H applied to the court to revoke the gift.
Held (HC): Allowed application. Upon H’s revocation, a remedial CT arose over the property such that W held the property on trust for him.
In a revocation of a donatio mortis causa where legal interest has been passed to donee, remedial CT over the property arises such that the donee holds the property on trust for the donor (institutional CT).
Trusts in Commercial Context (Quistclose Trust):
Remedies -
Remedial constructive trust -
Donatio mortis causa (gift by someone who is expecting to die) -
Wee Chiaw Sek Anna v Ng Li-Ann Genevieve [2013] 3 SLR 801
In divorce proceedings, W agreed to forgo asset division based on H’s representation to her as to wealth and assets. After divorce, W found out that H had secretly earned some monies which he had settled on trust. H passed away and W sued (his estate?) for fraudulent misrep, claimed remedial CT over 2 of the trusts on the basis that the trust had received the monies on her expense, and sought remedy for unjust enrichment. W failed on both claims.
Held (CA): Claim for unjust enrichment failed on 2 grounds: (1) failing to establish a recognised unjust factor; and (2) failing to prove that the enrichment was received at W’s expense. CA stressed that remedial CT will not be awarded merely from a proof of claim of unjust enrichment.
- Remedial CT arises in response to fault (on the part of D) and not on an event of unjust enrichment.
- Further restricted application of remedial CT in Koh Cheong Heng v Ho Yee Fong to only apply in cases of donatio mortis causa.
Equitable Compensation:
Quality Assurance Management Asia Pte Ltd v Zhang Qing [2013] 3 SLR 631
Company successfully claimed equitable compensation against employee for, inter alia, loss caused by employee’s wrongful diversion of business opps in breach of fiduciary duties.
Introduced the Brickenden rule: An errant fiduciary would be liable for loss in some way connected to his breach, even if the breach merely set the occasion for the loss and regardless of whether the loss would have occurred in any event.
Rule applies to a fiduciary who is in one of the well-established categories of fiduciary r/s and where the fiduciary has committed a culpable breach.
