Judgment

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

                                                                                                                                                             Judgment reserved.

LP Thean JA (delivering the judgment of the court):

1       This appeal concerns a dispute between siblings as to the ownership of a flat, known as Block 23, Outram Park, #10-129, Singapore 162023 (“the flat”). The first and second appellants are the sisters and the third appellant the younger brother of the respondent. In the High Court the appellants’ claim for a certain declaration relating to the flat was dismissed, and they have now appealed against that decision.

The background

2       The flat was purchased from the Housing and Development Board (“HDB”) on or about 23 April 1983 in the joint names of the siblings’ mother, Poon Ah Ngoi (“the mother”) and the respondent. It was the respondent who made the down payment of the purchase price for the flat and also the subsequent monthly payments to HDB. In addition, he paid all the outgoings of the flat, namely, the conservancy charges, utilities bills and property tax. The reason why the flat was registered in the joint names of the mother and the respondent was that, at that time, it could not be registered in the sole name of the respondent.

3       Prior to the purchase of the flat, since about 1970, the respondent and his family rented the flat from the HDB. Staying with the respondent and his family at that time were the mother and the first and third appellants. At that time or thereabouts, the second appellant was married and had moved out. The first appellant was married in 1975 and moved out of the flat in 1977. Thereafter, only the mother and the third appellant stayed at the flat with the respondent and his family.

4       In 1986, the respondent was allocated a new HDB flat at Serangoon North Avenue and he eventually moved out of the flat with his family in 1987. According to the respondent, the mother wished to continue to live in the flat, but under the “regulations” of the HDB no purchaser or lessee could own more than one flat at any one time. Accordingly, the respondent had to divest his interest in the flat and he transferred his interest in the flat to his mother, who thereby became the sole owner of the flat. He paid all the costs and expenses relating to the transfer, and the transfer was effected in June 1986. He asserted that he merely wanted to provide a place for his mother to live during her lifetime and that it was not his intention that the flat would be transferred to his mother as a gift. After the respondent had moved out of the flat, he continued to pay all the outgoings of the flat while his mother was staying there.

5       The mother passed away intestate on 19 August 1995. The respondent petitioned for the letters of administration to his mother’s estate which was eventually granted on 30 October 1995. The only asset in her name was the flat. Sometime in October 1997, the respondent wanted to sell the flat but could not do so because the third appellant was still staying at the flat at that time. In order to facilitate the sale of the flat, the respondent rented a room at his own expense to accommodate the third appellant. Despite his mother’s demise, the respondent continued to pay all the outgoings of the flat until March 1998 when the present dispute as to the ownership of the flat arose between him and his siblings. By the Originating Summons No 694 of 1998 filed on 9 June 1998 the appellants sought the following reliefs against the respondent:

1a     declaration as to the beneficial interest of the parties in [the flat];

2       an order that [the flat] be sold at a price not below the market value or at such price as the court deems fit; and

3       an order that the [respondent] do execute all necessary documents and take such steps as may be necessary to bring the sale of [the flat] into effect.

Decision below

6       As a preliminary point, the learned judge noted that the appellants had oddly chosen to ground their action under s 18(2) of the Supreme Court of Judicature Act (Cap 322) (“SCJA”). She held that there is no provision in the First Schedule of the SCJA which empowers the court to grant the orders which the appellants sought.

7       Leaving aside the procedural irregularity, the learned judge declined to make the declaration, as she was of the view that the appellants’ claim for a share in the flat was untenable at law and was wholly unsubstantiated. Notwithstanding the fact that the respondent had transferred his legal interest in the flat, she held that he continued to retain a beneficial interest in the flat by virtue of his having paid the entire purchase price and the outgoings of the flat. Despite her earlier reservations over the ‘procedural irregularities’, the learned judge ordered the respondent to take the necessary steps to effect a sale of the flat at a price not below the market value.

The appeal

8       The first issue raised in this appeal is whether the court has the power under the SCJA to make the orders sought by the appellants. We turn first to s 18 of the SCJA which provides as follows:

(1)    The High Court shall have such powers as are vested in it by any written law for the time being in force in Singapore.

(2)     Without prejudice to the generality of subsection (1), the High Court shall have the powers set out in the First Schedule.

(3)    The powers referred to in subsection (2) shall be exercised in accordance with any written law or Rules of Court relating to them.

Paragraphs 2 and 3 of the First Schedule are set out in full below:

2         Power to partition land and to direct a sale instead of partition in any action for partition of land; and in any cause or matter relating to land, where it appears necessary or expedient, to order the land or any part of it to be sold, and to give all necessary and consequential directions.

3         Power to order land to be charged or mortgaged, as the case may be, in any case in which there is jurisdiction to order a sale. [emphasis added.]

9       The appellants argue that para 2 of the First Schedule gives the court the power “in any cause or matter relating to land, where it appears necessary or expedient, to order the land or any part of it to be sold, and to give all necessary and consequential directions”. It is therefore submitted that the court has the power to make a declaration as to the beneficial ownership in the flat as para 2 allows the court to ‘give all necessary and consequential directions’. These submissions are not seriously contested by the respondent in the appeal.

10     In our opinion, the learned judge, with respect, erred in concluding that the SCJA does not confer the power on the court to make declaratory orders or to order the sale of the flat. As this is a “cause or matter relating to land”, para 2 of the First Schedule does confer a power on the court to order a sale of the flat “where it appears necessary or expedient”. Paragraph 14 of the First Schedule also empowers the court “to grant all reliefs and remedies at law and in equity” which includes the power to make a binding declaratory order (Salijah bte Ab Latef v Mohd Irwan bin Abdullah [1996] 2 SLR 201).

Ownership in the flat

11     We now come to the essence of this appeal. The appellants claim that the mother was the owner of the flat and upon her death it forms part of her estate to which they are each entitled in equal shares together with the respondent pursuant to the rules of distribution under the Intestate Succession Act (Cap 146). The respondent, however, claims that he is the beneficial owner of the flat by operation of a resulting trust, because he had paid the purchase price for the flat as well as its outgoings. When he transferred his entire interest in the flat to the mother in 1986, no consideration was paid to him by the mother, and he did not intend to make a gift of that flat to her. Thus, the beneficial ownership of the flat remained with him by operation of a resulting trust.

12     The position in equity as to the ownership of a property by a person who has contributed any money towards purchase thereof is well settled. Where a person has paid the purchase price of a property (“the purchaser”) and the property is conveyed or transferred to him jointly with others, or to one or more persons other than the purchaser, a resulting trust arises in favour of the purchaser, and he is the beneficial owner of the property: Dyer v Dyer (1788) 2 Cox Eq Cas 92. If there are more than one purchaser and they paid the purchase money in unequal shares, the beneficial interest acquired by each of them will be in proportion to their respective contributions. Such a resulting trust is based on the presumed intention of the parties and such presumption is rebuttable by evidence of an intention on the part of the purchaser to make a gift or by the presumption of advancement which arises when a voluntary conveyance or transfer is made to a person to whom the purchaser stands in loco parentis.

13     Hence, in the instant case, if the flat were not an HDB property, the position would be abundantly clear. Whatever purchase money that had been paid for the flat had been paid solely by the respondent. Thus, at the time when the flat was purchased and registered in the joint names of the mother and the respondent, a resulting trust of the property arose in favour of the respondent as he had provided the entire purchase money, and he was the beneficial owner of the flat. There was no evidence that by taking the property jointly with the mother, the respondent intended to make a gift of half or any share of the flat to the mother. Also, there was in such a case no presumption of advancement arising in favour of the mother to displace the presumption of resulting trust. At the time when the respondent transferred his entire interest in the flat to the mother, the resulting trust continued to operate in his favour and the beneficial ownership of the flat continued to vest in him despite the transfer of legal ownership to the mother. Hence, if the flat were not an HDB property, the beneficial ownership in the flat would remain with the respondent by operation of a resulting trust.

Section 51 of the Act

14     The point in issue is whether this position in equity is altered in any way by the provisions of the Housing and Development Act (Cap 129, 1997 Ed) (“the Act”). The relevant provisions are sub-ss (4) and (5) of s 51 of the Act, which read as follows:

(4)    No trust in respect of any such flat, house or other building [that has been sold by the HDB under the provisions of Part IV of the Act] shall be created by the owner thereof without the prior written approval of the Board [HDB].

(5)    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.

15     It is argued on behalf of the appellants that the resulting trust created in this case is prohibited by these provisions. On the other hand, it is contended on behalf of the respondent that these provisions have no application in this case as the resulting trust here was not “created” by the respondent and/or the mother, but arose by operation of law. Subsections (4) and (5) of s 51 only prevent the creation of an express trust and do not prohibit a resulting trust from arising.

16     In support, counsel for the respondent relies on the decision of the High Court in Tan Poh Soon v Phua Sin Yin [1995] 3 SLR 368. That case concerned a dispute between a husband and wife who were Singapore citizens and were married in Singapore. The husband had migrated to the Netherlands and subsequently commenced divorce proceedings there against the wife who then applied to the High Court under s 56 of the Women’s Charter (Cap 353) (now renumbered as s 59 in the 1997 edition) for a declaration that she was beneficially entitled to a share of the HDB flat which had been purchased in the sole name of the husband. GP Selvam J who heard the application relied on the decision of the House of Lords in Lloyds Bank plc v Rosset [1991] 1 AC 107 and held that on the facts there was a constructive trust operating in favour of the wife. The material facts which he found (at pp 372–373) as giving rise to the constructive trust were these. First, the property was an HDB flat and the marriage was an ingredient on which the husband relied in applying for and obtaining the flat. Second, the wife being married to the husband was precluded from acquiring another HDB flat. Third, the wife’s occupation of the flat while the husband was in the Netherlands was an important factor, because the HDB could compulsorily acquire the flat on the ground that the owner and his spouse were not in occupation of the flat under s 56(1)(a) of the Act. Fourth, the evidence of the wife was that the husband had told her that it was not necessary to include her name as the flat was for both of them till death. On these facts, the learned judge found that there was an understanding between the parties that both of them would have an interest in, and a possessory right to, the flat. Relying on this understanding, the wife had made substantial contributions to the maintenance of the flat by the payment of conservancy and other charges in respect of the flat. In these circumstances, the learned judge held that the wife was entitled to a half share in the HDB flat on the basis of a constructive trust. Section 51 of the Act was raised and the learned judge dealt with it as follows, at p 372:

It was argued for the defendant that the provisions of the Housing and Development Board [sic] Act (Cap 129) defeated the plaintiff’s claim. Section 51 of the Act provides that no trust can be created by the owner of any flat without the prior approval of the Housing and Development Board and if any trust is permitted to be so created it shall be void. In my judgment that provision does not nullify the power of the court under s 56 or s 106 of the Women’s Charter to declare an interest in an HDB flat whether in the nature of a trust or otherwise for such trust is not created by the owner. It is decreed by the court under a statutory power. It is a constructive trust under the second category mentioned by Lord Bridge in Lloyds Bank plc v Rosset.

17     Relying on this decision, counsel for the respondent submits that s 51 of the Act similarly does not prevent a resulting trust in an HDB flat from arising, for such a trust is not created by anyone but is decreed by the court. In our view, Tan Poh Soon v Phua Sin Yin does not assist the respondent’s case. That decision does not deal with the question of whether a resulting trust falls within the prohibition of s 51(4). What was decided there was that the prohibition in s 51(4) of the Act does not prevent a constructive trust from arising. The nature of a constructive trust is such that it could not be said to be “created” by the parties. It is a trust which is imposed by equity in respect of an interest in a property in a variety of circumstances which would render it inequitable for the owner of the property or any interest therein to hold it for his benefit. It arises independently of the intention of the parties. A resulting trust, however, is different. It 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. The nature of this trust is summarised succinctly in Parker and Mellows The Modern Law of Trusts (1998, 7th Ed) at p 36:

Implied or resulting trusts arise where a settlor or testator carries out some intentional act other than the creation of a relationship of trustee and beneficiary from which the court infers a relationship of trustee and beneficiary. They consequently arise from the unexpressed but presumed intention of the settlor or testator. [emphasis added.]

19     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. The predecessor to sub-ss (4) and (5) of s 51 was sub-s (4) of the then s 44 which contained a blanket prohibition against the creation of any trusts over HDB properties. The then s 44(4) was in these terms:

Every trust or alleged trust, whether the trust is express, implied or constructive, which purports to be created in respect of any such flat, house or other building by the owner thereof shall be null and void and shall be incapable of being enforced by any court.

By the Housing and Development (Amendment) Act 1984, which came into effect on 11 September 1994, this provision was deleted and was substituted by the two subsections, which are now sub-ss (4) and (5) of s 51. In moving the second reading for the Housing and Development (Amendment) Bill which, inter alia, introduced the existing sub-ss (4) and (5) of s 51, the Minister for National Development said in Parliament:

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.]

20     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.

21     In any event, the circumstances in which the respondent transferred his entire interest in the flat to his 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. On this point it is sufficient to set out verbatim his version of the events that transpired at the time. He said in his affidavit the following:

8         Some time in early 1986, HDB informed me that I have been allotted my new flat at Blk 144 Serangoon North Avenue 1 #04-369 Singapore 550144.

9         Under HDB’s regulations, I understand that I was not allowed to retain two flats in my name.

10       As my mother wished to carry on living at the HDB flat and my intention was to allow her to do so in her life time, after due consideration, we decided that we could resolve the matter by transferring the legal ownership of the HDB flat to her sole name so that the records at HDB would not indicate myself as the owner.

11       Some time on or about June 1985, the HDB flat was legally transferred to my mother. I was not told by HDB that the transfer of the HDB Flat was to be by way of a gift. All legal costs and expenses of the transfer was borne by me.

12       The understanding was that the HDB flat was not to be a gift to my mother as I have always been paying for the HDB flat and the arrangement was that I will carry on doing so even after the transfer of the HDB flat to her name. Neither was it intended that the moneys I spent on the HDB flat be a gift to my mother. I merely wanted to provide her with a place of residence during her life time.

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.

22     It is not the case of the respondent that he had obtained the prior written approval from HDB for the mother to hold the flat or any interest therein in trust for him either at the time when the flat was purchased in their joint names or at the time when he transferred his entire interest in the flat to the mother. Although he claimed that at the time he transferred his interest in the flat to the mother, he did it on the “advice of HDB”, there was no independent evidence of such advice to corroborate or support his evidence. We are therefore unable to accept this bare assertion as evidence that HDB had approved his mother holding the flat in trust for him. There was really no evidence of any “prior written approval” of HDB for such a trust in his favour.

Section 47 of the Act

23     It is submitted on behalf of the respondent that the policy consideration behind sub-ss (4) and (5) of s 51 is that HDB should not be deceived into selling HDB properties to persons who would not be entitled to purchase the properties. Such policy consideration has no application on the facts of the present case. The flat was purchased and held jointly in the names of the mother and respondent and there should not be any objection to a trust over the flat or any interest therein being created in favour of the respondent, as the respondent himself was eligible to own and hold the flat. Assuming that this is a true policy consideration of HDB, there is still a difficulty in the way of this submission. It arises from s 47 of the Act which sets out certain restrictions on dual ownership of HDB properties. The relevant parts of s 47 read:

(1)     No person shall be entitled to purchase any flat, house or other living accommodation sold subject to the provisions of this Part if such person, his spouse or any authorised occupier —

(a)   is the owner of any other flat, house, building or land or has an estate or interest therein … [emphasis added.]

24     By virtue of this provision, the respondent was prohibited from purchasing the new flat at Serangoon North Avenue so long as he retained a beneficial interest in the old flat. The words “estate or interest” in s 47(1)(a) are broad enough to encompass the respondent’s beneficial interest in the flat. It is apparent to us that in order to comply with s 47 the respondent transferred his entire interest in the flat to his mother. But having acquired the new flat he is not eligible to hold any interest in the old flat, and therefore the resulting trust arising in his favour would be against the policy consideration contended by counsel.

25     Counsel for the respondent relies on the landmark decision in England in Tinsley v Milligan [1994] 1 AC 340. In that case, T and M jointly purchased a house and registered it in the sole name of T so as to make false claims to the Department of Social Security for certain housing benefits. Subsequently, disagreement arose between the parties and T moved out of the house with M remaining in occupation. T then brought an action claiming possession of the house. M counterclaimed for an order for sale and sought a declaration that the property was held on trust for both of them in equal shares. By a majority, the House of Lords granted the declaration. Lord Browne-Wilkinson, delivering the leading speech of the House for the majority, held that where property rights are acquired as a result of an illegal transaction, a party to an illegality can recover the legal or equitable property interest if, but only if, he can establish his title without relying on his own illegality. In this case, a resulting trust arose in favour of M because of her contribution to the purchase price. No presumption of advancement arose on those facts. Thus, there was no need for M to rely on the illegal purpose of the transfer to establish her equitable title to the house.

26     This principle has been applied in a number of local decisions like Shi Fang v Koh Pee Huat [1996] 2 SLR 221; Overseas Union Bank Ltd v Chua Kok Kay [1993] 1 SLR 686; Eng Bee Properties Pte Ltd v Lee Foong Fatt [1993] 3 SLR 837 as well as the very recent case of PP v Intra Group (Holdings) Co Inc [1999] 1 SLR 803.

27     In our judgment, the case of Tinsley v Milligan is clearly distinguishable from the case at hand. There, the defendant succeeded in claiming her interest in the property by relying only on the resulting trust without any reference to the illegal purpose and the resulting trust was not prohibited by any law. In this case, in order to establish his claim the respondent has to rely on a resulting trust which, in our view, is prohibited by s 51 (4) of the Act. Therefore Tinsley v Milligan does not assist the respondent.

Conclusion

28     In our judgment, the resulting trust of the flat in favour of the respondent is prohibited by s 51(4) and is void under s 51(5) of the Act. It follows that the property remained vested in the mother and upon her death forms part of her estate. The court below has ordered a sale; that order will remain undisturbed. We allow the appeal against the refusal by the court to make a declaration in respect of the ownership of the flat. We make a declaration that the flat forms part of the estate of the mother, and the proceeds of sale, subject to payment of debts and liabilities of the estate, is available for distribution under the Intestate Succession Act. Of course, in this connection the respondent is entitled to be reimbursed of all moneys paid or advanced by him for or in respect of the flat since the death of the mother, as part of the expenses incurred in the administration of the estate.

Costs

29     We now come to the question of costs. This is a family dispute. The respondent had done a lot for the family, eg providing a home for the mother, and at one time for the first and third appellants, and the flat was acquired solely by his own effort. None of the appellants had made any contribution towards the acquisition; but, they would soon be getting a piece of the windfall. Having regard to the exceptional circumstances in this case including the conduct of the parties, we make no order as to costs of the appeal. We note that the court below also made no order as to costs. That order remains undisturbed. The deposit in court as security for costs is to be refunded to the appellants.

Appeal allowed in part.

Reported by Chong Chin Chin