Judgment

 [Please note that this case has not been edited in accordance with the current Singapore Law Reports house style.]

Rajendran J:

1       In 1980 the plaintiff and the defendant (who are mother and daughter respectively) applied for and were allocated a Housing and Development Board (“HDB”) flat at Ang Mo Kio. The flat was registered in their names as joint tenants. The purchase consideration for the flat was $27,100. The initial deposit for the flat ($6,231) came from the plaintiff’s late husband and the remainder was paid by the defendant through the defendant’s CPF account.

2       In recent years, the relationship between the two became strained and the plaintiff desired to move out of the Ang Mo Kio flat and reside at an HDB flat at Yishun to be jointly purchased by the plaintiff and another daughter of the plaintiff. A contract for the purchase of the Yishun flat was entered into and submitted to the HDB for approval. The HDB would not approve of the purchase unless the plaintiff and the defendant undertook to sell the Ang Mo Kio flat. The defendant refused to consent whereupon she received a letter from the plaintiff’s solicitor, dated 17 November 1998, which stated:

We act on behalf of Hajjah Sitiawah Bee bte Kader. Our instructions are as follows:

1   The above premises was the family home following resettlement scheme.

2   The deposit and renovation costs was paid by our client and mortgage payments by yourself.

3   Our client is desirous of disposing her interest, and she is in the process of purchasing another HDB flat.

4   We propose that you contact us urgently, to discuss an amicable settlement, immediately on receipt of this letter.

5   However, if we do not hear from you within seven (7) days of this letter, we hold firm instructions to commence proceedings without further notice.

Kindly contact our Mr Kuru of our office with regards to the same.

The defendant did not respond to this letter. The plaintiff therefore commenced these proceedings wherein she sought, inter alia, the following orders:

(a)    The leasehold interest in the property known as Blk 524, Ang Mo Kio Avenue 5, #08-4126, Singapore 560524 (the “flat”), may be ordered to be sold, assigned or transferred in the open market by private treaty under s 18(2) of the Supreme Court of Judicature Act (Cap 322), subject to the approval of the Housing and Development Board and in accordance with the rules and regulations of the Housing and Development Board.

(b)    The proceeds of sale, assignment or transfer of the flat, less the costs of such sale, assignment or transfer may be used to discharge the charge held by the Central Provident Fund Board and thereafter be distributed between the plaintiff and the defendant in the same proportion as the contribution which both the plaintiff and the defendant made towards the purchase of the flat or in such ratio or proportion as the court deems fit.

(c)    Any other order which may be necessary for prayers (a) and (b) herein including an order that the joint tenancy of the premises held by the plaintiff and the defendant be severed and/or a declaration that the said joint tenancy has been or be severed and that the plaintiff and the defendant hold the leasehold interest in the flat as tenants-in-common in the same proportion as the contribution which the plaintiff and the defendant have made towards the purchase of the flat or in such share or ratio as the court deems fit.

3       Although in prayer (b) above the plaintiff had sought an order that the sale proceeds of the flat be distributed between the parties in the same proportion as the contributions which each party made, the plaintiff’s case before me proceeded on the basis that as resulting trusts are prohibited by s 51(4) of the Housing and Development Act, the plaintiff and the defendant were entitled to an equal share of the sale proceeds whilst the defendant’s case was that as she had contributed all or, alternatively, the major portion of the purchase price, she should be entitled to all, or alternatively, such proportion of the sale price as was proportionate to her contribution.

4       With regard to prayer (c), although the plaintiff sought an order that the joint tenancy be severed, the plaintiff had in fact, prior to the hearing of the originating summons, unilaterally severed the tenancy by invoking the provisions of ss 53(5) and (6) of the Land Titles Act. These provisions read as follows:

(5)  Without prejudice to any rule or principle of law relating to severance of a joint tenancy, any joint tenant may sever a joint tenancy of an estate or interest in registered land by an instrument of declaration in the approved form and by serving a copy of the instrument of declaration personally or by registered post on the other joint tenants.

(6)  Upon the registration of the instrument of declaration which has been duly served as required by subsection (5), the respective registered estates and interests in the registered land shall be held by the declarant and the remaining joint tenants as tenants in common in their respective shares.

The approved form of the instrument of declaration prescribes the following form of words to be used in the declaration:

… that I am the registered proprietor of the land as joint tenant together   with the other Registered Proprietor hereinafter mentioned and that I wish to sever the joint tenancy and hold the land as a tenant-in-common with the Registered Proprietor in the share proportionate to the number of joint tenants.

The plaintiff made the prescribed declaration naming the defendant as the other registered proprietor, served the declaration on the defendant as required by s 53(5) and had the instrument registered with the Registrar of Land Titles. By serving the instrument on the defendant, the plaintiff effectively severed the joint tenancy and created a tenancy-in-common with the defendant in equal shares and by registering the instrument with the Registrar of Titles, the plaintiff gave notice to third parties of that fact.

5       The affidavits filed by the defendant in these proceedings were extremely lengthy. In them the defendant delved in great detail into her personal relationship with her mother (plaintiff) and siblings. The evidence of the defendant was that from the very beginning the parties had intended that the flat should belong to the defendant and the defendant alone. She alleged that, for that reason, her late father had provided the initial deposit on her behalf and not on behalf of the plaintiff. She claimed that her father had done so because she (defendant) was the most filial and responsible of his children. The defendant claimed that in addition to paying the balance of the purchase price she had also borne the costs of all renovations, utilities and maintenance of the flat.

6       The plaintiff, on the other hand, claimed that the initial deposit paid by her late husband was on her behalf and not on behalf of the defendant. The plaintiff also claimed that she had paid about $5,000 for the initial renovation costs of the flat and borne the maintenance costs and utilities charges for the flat. The plaintiff did not, however, dispute that it was the defendant who paid the balance of the purchase price. Some of the other siblings of the defendant, who were residing or had resided at the flat, claimed that they had all contributed to the purchase and maintenance of the flat.

7       Counsel for the defendant submitted that the plaintiff, not having made any contribution towards the purchase price, held her entire interest in the joint tenancy (and, after the severance, the tenancy-in-common) in trust for the defendant. She submitted, in the alternative, that in equity each party was beneficially entitled only to such part of the tenancy as was proportionate to the contribution made.

Findings of fact

8       Given the circumstances of the family at that time and the need to have a home after they had been evicted from their premises at Changi, it seems to me more likely than not that the late father, in providing the money for the initial deposit, was motivated by a desire to provide accommodation for the plaintiff and all his children as opposed to providing for only the interests of the defendant. Consistent with this intention, it seems to me to be more likely that he paid the cash deposit on behalf of his wife. I therefore reject the defendant’s claim that the father paid the initial deposit on her behalf. I rejected the defendant’s claim that the parties had all along intended that she be the sole beneficiary of the flat. I find that the initial deposit was paid by the plaintiff through funds provided by her late husband.

9       I also find that the plaintiff had borne the initial renovation costs of about $5,000 and that the defendant had, in later years, also incurred considerable expenses in renovating the flat. As for the maintenance and utilities charges I find that the plaintiff paid these charges from moneys given to her by the defendant and other members of the family residing at the flat. I do not, however, think that it would be right for me to take all these expenses into account in ascertaining the proportionate contributions made by each party to the purchase of the flat. In the first place, it would be wrong to weigh the relative values of renovation works carried out in the early eighties (when the capital costs of the flat was $27,100) with works carried out in the mid-nineties (by which time the cost of the flat had multiplied manifold) on a purely dollar basis. That would be to ignore the spectacular way property prices and renovation costs have risen over the years. The court would therefore have to make a rough and ready assessment on the basis of some inflationary index, in relation to which there was no evidence before me. Secondly, and more crucially, the costs of renovations appear to be monies expended gratuitously after the purchase of the flat and cannot be a factor in ascertaining the equitable interests of the parties in the flat at the time of the purchase. Costs of renovation and costs of maintenance and utilities are matters of private arrangement between the joint owners of property and it would not be appropriate to take those costs into account in ascertaining the extent of each party’s interest in a property that is jointly purchased.

10     In the light of the above findings, the contributions of the plaintiff and the defendant towards the purchase of the flat were $6,231 and $20,780 respectively which means that the plaintiff contributed approximately 23% of the cost of the flat whilst the defendant contributed the balance 77%.

The equities

11     The position in equity where joint tenants contribute unequally towards the purchase is considered in Megarry & Wade: The Law of Real Property (5th Ed, 1984) at p 427, where the learned authors state:

Purchase-money provided in unequal shares.

         If two or more persons together purchased property and provided the money in unequal shares, the purchasers were presumed to take beneficially as tenants in common in shares proportionate to the sums advanced; thus if A found one-third and B two-thirds of the price, they were presumed to be equitable tenants in common as to one-third and two-thirds respectively. If, on the other hand, the purchasers provided the money in equal shares, they were presumed joint tenants.

This passage sets out the principle that where two or more co-owners at law contribute different amounts to the purchase price of a property, equity recognises a presumed intention that the parties intended to hold the property in proportion to their relative contributions, and raises a resulting trust which adjusts the equities accordingly. This is, of course, subject to the presumption of advancement, or evidence that the funds were intended to have been a gift.

12     If I were to apply equitable considerations in this case, I would hold that an equitable tenancy-in-common existed in this case and that the plaintiff held a 23% share in the flat whilst the defendant held the remaining 77%.

The Housing and Development Act

13     In respect of HDB flats, however, statutory restrictions have been placed on the creation of trusts. Section 51(4) of the Housing and Development Act (Cap 129, 1985 Ed), provides:

(a)         No trust in respect of any such flat, house or other building shall be created by the owner thereof without the prior written approval of the Board.

(b)         Every trust which purports to be created in respect of any such flat, house or other building without the prior written approval of the Board shall be void.

The question that has to be asked therefore is: Does the resulting trust postulated as a result of the unequal contributions to the purchase price survive the application of s 51(4)?

14     The parties, when they purchased this flat, had purchased it as joint tenants. There was no express intention at that time of creating any trust. On one view, as the resulting trust in this case was not “created by the owner” of the flat, but rather arose by presumption of law (referred to in para 11 above), it was a matter outside the scope of s 51(4). The plaintiff and the defendant in this case under the said presumption of law held the property in equity as tenants-in-common in the proportion of 23% and 77% respectively. As a matter of policy, I can see no objection to this result; the parties if they so desired could have themselves arranged for it at law by, in the first place, purchasing the flat as tenants-in-common in these percentages, or for that matter, in whatever percentages they desired. The plaintiff and the defendant, being acceptable to the HDB as joint tenants would have been equally acceptable as tenants-in-common of the flat.

15     Would the position be any different, vis-à-vis the HDB, if the parties were tenants-in-common, not in law, but in equity? I cannot see why it should. Such a tenancy would not be a breach of the Housing and Development Act since the underlying intent of s 51(4) was to prevent ineligible persons (as opposed to eligible persons like the plaintiff and the defendant in this case) from using such trusts to acquire interests in HDB flats, and thereby circumvent the intention of Parliament to confer the privileges of HDB housing only on persons fulfilling certain eligibility criteria. This latter proposition is evident from what the Minister for National Development said in Parliament in moving the Housing and Development (Amendment) Bill 1984 which introduced s 51(4) in its present form:

As the Act now stands, no trust in any form can be created in respect of an HDB dwelling or property. The original intention of this provision was to prevent abuse by persons not eligible for HDB flats from purchasing a flat in the name of nominees. Over the years, however, there has been increasing need for the HDB to permit the creation of trusts for legitimate reasons. For example, it is necessary to empower trustees to hold flats in trust for minor children who are citizens in the event of death of the lessee parent, and where the surviving parent is neither a citizen nor a permanent resident and therefore not eligible to assume ownership of the flat. Similarly, in some cases of legal separation or divorce, flats have to be held in trust for minor children until they reach the age of 21 years. Clause 3 of this Amendment Bill, therefore, seeks to allow a trust to be created in respect of an HDB dwelling provided such trust is approved by the Board. [emphasis added]

The parties in this case did not at any stage have any intention of flouting any HDB requirements.

16     Mr Kurubalan, counsel for the plaintiff, however relies on the recent decision of the Court of Appeal in Cheong Yoke Kuen v Cheong Kwok Kiong [1999] 2 SLR 476 to support his submission that, in view of the provisions of s 51(4), a resulting trust cannot arise. He submits that, since there is no resulting trust, the plaintiff would be entitled to a 50% interest in the property even if the plaintiff had contributed less than 50% of the purchase price.

17     In the case of Cheong Yoke Kuen, an HDB flat (“the first flat”) had been purchased in 1983 by the respondent and his mother as joint tenants. Although it was a joint tenancy, the entire consideration was met by the respondent. In 1986 the respondent applied for a new HDB flat (“the second flat”). Section 47 of the Housing and Development Act, however, provided that:

(1)         No person shall be entitled to purchase any flat … if such person, his spouse, or any authorised occupier —

(a)   is the owner of any other flat … or has an estate or interest therein …

To overcome this constraint the respondent transferred his interest in the first flat to his mother thereby making her the sole owner of the flat. The transfer was not by way of gift. The respondent did not intend to give away his interest in the flat to his mother. His objective was limited to only removing his name as an owner of the first flat in order to qualify for the second flat. The understanding he had with his mother was that after the transfer she would hold the property in trust for him as his nominee. Having thus “divested” himself of his legal interest in the first flat the respondent declared (falsely) to the HDB that he was not the owner and had no estate or interest in any other property and his application to purchase the second flat was approved. The mother passed away intestate in 1995.

18     Upon the mother’s demise the question arose for determination whether her interest in the flat would pass to her estate to be shared amongst all the beneficiaries or whether the respondent, who had provided the entire purchase capital, was the sole beneficiary of the flat. After recognising the equitable principles relating to resulting trusts set out in  10 above, the Court of Appeal considered the effect of ss 51(4) and (5) of the Housing and Development Act on the operation of a resulting trust. L P Thean JA, delivering judgment on behalf of the court, stated:

         17         .… (a resulting trust) arises from a certain transaction carried out intentionally by the parties concerned and the court infers an intention to create a trust in favour of a party …

         18         Thus, the question of whether a resulting trust can be considered as being ‘created’ for the purposes of sub-ss (4) and (5) of s 51 of the Act remains …

         19         Despite the relaxation of the prohibition to permit creation of trusts with the prior written approval of HDB, the underlying purpose of the prohibition remains unchanged. In our view, the respondent’s contention that resulting trusts over HDB properties are not prohibited by s 51(4) of the Act would give rise to a highly unsatisfactory result and would open the way to abuse by persons who would and could easily purchase HDB properties through nominees. For instance, if a purchaser pays the purchase money for the property and the property is registered in the name of a nominee but he takes a declaration of trust executed by the nominee in his favour without HDB’s prior written approval, such a trust will be prohibited by s 51(4) and becomes void under s 51(5) of the Act. On the other hand, if no such declaration is executed, the trust which arises by operation of law is not caught by s 51(4). Such a construction is untenable and would frustrate the policy of the Act and could not have been intended by Parliament.

         20         In any event, the circumstances in which the respondent transferred his entire interest in the flat to this mother showed that by that transfer he intended that his mother would hold the flat in trust for him. He said that he did not intend to make a gift of the flat to his mother … Thus when he transferred his entire interest in the flat to the mother, he intended to remain the beneficial owner of the flat. By such transfer he in effect ‘created’ a trust of the flat in his favour. Even on the construction contended on behalf of the respondent, the resulting trust which arose in this case was ‘created’ by the respondent. This trust, in our opinion, fell within the prohibition of sub-s (4) and is void under sub-s (5) of s 51 of the Act.

[emphasis added]

19     It is clear from the statements in para 20 of the judgment emphasised above, that the trust which attracted the operation of s 51(4) of the Housing and Development Act was the resulting trust that the respondent tried to “create” when he divested his legal interest in the flat to his mother. It was that trust “created” by the respondent in order to make it appear that he had no interest in the first flat which violated s 51(4) of the Act. The facts giving rise to the trust in Cheong Yoke Kuen’s case are therefore very different from the facts that gave rise to the trust in the present case. There was, in this case, no intention on the part of any party to “create” a resulting trust to defeat the objectives of the Act. The conduct of the parties in this case was within the parameters set by the HDB and they at all times remained the registered owners of the flat.

20     The part of the judgment in Cheong Yoke Kuen’s case relied on by the plaintiff in support of his submission that resulting trusts are prohibited by s 51(4) is para 19. Counsel drew particular attention to the following statement in para 19:

In our view, the respondent’s contention that resulting trusts over HDB properties are not prohibited by s 51(4) of the Act would give rise to a highly unsatisfactory result and would open the way to abuse by persons who would and could easily purchase HDB properties through nominees.

A closer scrutiny of this statement shows, however, that L P Thean JA was not, in this paragraph, making a blanket statement that all resulting trusts would be void under s 51(4). All that L P Thean JA was doing was rejecting the somewhat wide claim of the respondent in that case that (all) resulting trusts are not prohibited by s 51(4). That clearly could not be so. 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) the resulting trust so created would be prohibited under s 51(4). The example that L P Thean JA gives in that paragraph that it cannot be right that a person who buys an HDB property in the name of a nominee and obtains a declaration of trust in his favour executed by the nominee would be caught by the provisions of s 51(4) but a person who does the same thing but without such declaration would not be caught as his interest would be that of a beneficiary under a resulting trust, was, in my view intended to do no more than illustrate the absurdity that would result if the submission that all resulting trusts are not within the prohibition envisaged in s 51(4) is upheld. In my view, para 19 of the judgment of the Court of Appeal must be interpreted in the negative to mean simply that not all resulting trusts are outside the scope of the section. What L P Thean JA stated in the following sentences of the judgment (at para 20) confirm this.

21     I would add that I am fortified in adopting the above view by the fact that the Court of Appeal in Cheong Yoke Kuen’s case recognised that constructive trusts were not prohibited by s 51(4), as illustrated by the case of Tan Poh Soon v Phua Sin Yin [1995] 3 SLR 368. In that case GP Selvam J relied on the English case of Lloyds Bank plc v Rosset [1991] 1 AC 107, in finding that a constructive trust had arisen in favour of a wife who was claiming beneficial ownership in an HDB flat from her husband, in whose sole name the flat was registered. The learned judge relied on certain implications of fact, inter alia, an understanding between the parties that the flat was to be for the benefit of both of them till death. In my view, it makes no difference, in policy terms, whether the implication of joint beneficial ownership was explicit, as in Tan Poh Soon’s case, or implicit, as in this case. If anything, the policy considerations for recognising the plaintiff’s equitable interest in this case are stronger than those requiring the recognising of the wife’s share in Tan Poh Soon.

Decision

22     On the facts of this case, I am satisfied that it would be appropriate for me to order that the flat in question be sold in the open market and the proceeds of sale be divided between the plaintiff and the defendant in the ratio 23:77. I therefore so order. If any amount is still due to the CPF, such amount is to be deducted from the defendant’s share of the sale price. The parties are given liberty to apply in the event of any difficulties they may encounter in respect of the sale.

23     As for costs, as this was a family dispute which really ought to have been settled within the family and which proceeded to trial only because of the extreme positions each party took, I think it would be fair to make no order so that each party bears its own costs.

Order accordingly.

Reported by Emily Teo Sze-Yin