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    02:10 AM Alvin See (Assistant Professor, Singapore Management University)

    The Recoverability of Romantic Gifts: Kua Tee Beng v Ye Caiyan [2015] SGHC 53

        

    Introduction

    This case concerned an attempt by a man to recover from his former lover payments and gifts made to her while they were in a romantic relationship. Notwithstanding that the main battle was chiefly fought within the realm of evidence, the case raised interesting legal issues of property law that merit closer attention. 

    Facts

    Mr Kua and Mdm Ye met by coincidence in 2010. At that time both of them were respectively married, although Mdm Ye had separated from her legal spouse. Soon after Mr Kua and Mdm Ye began a romantic and sexual relationship. Mr Kua started to give money and lavish gifts to Mdm Ye (collectively ‘the Gifts’), the details of which are set out below: 

    • Between June 2011 and May 2013 Mr Kua paid monthly maintenance to Mdm Ye. Mr Kua claimed that a total of $85,000 was paid, but Mdm Ye disputed this amount.
    • Mr Kua gave Mdm Ye $40,000 by way of cheque;
    • Mr Kua gave Mdm Ye a Rolex watch worth $15,000; and
    • Between October and November 2011, Mr Kua made a series of payments amounting to $295,000, which was used to purchase a flat  (‘the Property’).  

    Mr Kua also claimed to have given Mdm Ye jewellery worth $30,000 and two other Rolex watches worth $35,000. The Court rejected these claims for Mr Kua failed to adduce any evidence to support them ([20]–[23]).

    The relationship between Mr Kua and Mdm Ye ended in mid-2013. Mr Kua then brought proceedings against Mdm Ye to recover the Gifts. The claims could be conveniently divided into two main heads. First, Mr Kua claimed the return of the monthly maintenance money, the $40,000 paid by cheque and the Rolex watch, on the basis that they were pursuant to Mdm Ye’s duress, undue influence and unconscionability. Second, Mr Kua claimed that the Property was held on trust for him either because Mdm Ye agreed to hold it on such trust or by virtue of a resulting trust because of his financial contribution to its purchase price. Alternatively, he claimed the return of the $295,000, presumably also by virtue of a resulting trust. In the further alternative, if the first trust claim were unsuccessful, Mr Kua claimed that Mdm Ye was liable to pay damages for misrepresenting that she would hold the Property on trust for him. 

    Decision and commentary

    The High Court, presided by George Wei JC, accepted Mdm Ye’s position that the Gifts were ‘love gifts’, especially considering that they were made when the parties were in a romantic relationship. Mr Kua’s attempt to paint a contrary picture was unsuccessful mainly because he failed to adduce sufficient evidence to displace the prima facie case.

    Was Mr Kua’s donative intent impaired?

    A valid gift entails two requirements: an intention to make the gift (donative intent) and handing over of the gift (delivery). In claiming that he made the gifts pursuant to Mdm Ye’s pressure, Mr Kua was essentially saying that his donative intent was impaired. He relied on three recognised vitiating factors: duress, undue influence and unconscionable conduct. 

    The Court rejected Mr Kua’s claims for reasons relating mainly to the insufficiency of evidence. Mr Kua’s allegations were mostly general and vague. The only two specific allegations were: that Mdm Ye, during the beginning of their relationship, threatened to reveal the relationship to Mr Kua’s wife and other family members (the “first allegation”); and that Mdm Ye ‘created a scene’ at Mr Kua’s office, pestering him for gifts and payments (the “second allegation”). The Court was unconvinced for two main reasons. First, there was no corroboration of Mr Kua’s bare allegations ([29]). No witnesses were called to testify, not even in support of the second allegation. Second, the first allegation was also inconsistent with the fact that the parties’ intimate relationship continued for more than two years (ibid). The Court went on to hold that both allegations were unfounded ([30]).

    The Court also noted that even if the allegations could be proved, Mr Kua had failed to submit on how the alleged conduct of Mdm Ye would amount to actionable duress, undue influence or unconscionability for purposes of setting aside the gifts ([31]).  This part of the blog entry shall examine this aspect of Mr Kua’s case, on the assumption that the allegations could be proved. 

    The three vitiating factors that were relied upon overlap to some extent in that they all impair the transferor’s decision-making process by pressure of various forms. Duress normally takes the form of illegitimate pressure that is exerted overtly. Undue influence mainly concerns pressure exerted by an abuse of position in a relationship of trust and confidence, although an act of duress may also amount to undue influence. Unconscionability, which is more limited in scope, entails the taking of advantage of a person’s vulnerability, eg poverty, ignorance, lack of bargaining power, etc. To be sure, for all three vitiating factors, there is no requirement that the exertion of pressure amounts to an unlawful act, such as a criminal conduct. 

    Mr Kua’s first allegation resonates with a classic example of lawful act duress: duress by blackmail. In Thorne v Motor Trade Association [1937] AC 797, Lord Atkin said (at 806): 

    The ordinary blackmailer normally threatens to do what he has a perfect right to do - namely, communicate some compromising conduct to a person whose knowledge is likely to affect the person threatened … What he has to justify is not the threat, but the demand of money. The gravamen of the charge is the demand without reasonable or probable cause.

    The second allegation is less certain to amount to duress or undue influence, for pressure in the form of pestering is obviously less serious than a threat amounting to blackmail.

    In any case, Mr Kua still needed to establish a second ingredient of duress, namely that the illegitimate pressure had induced him into making the gifts. This is, in essence, a requirement of causation. The Court’s findings were, however, to the contrary. The Court found it ‘highly implausible’ that Mdm Ye managed to invoke such fear in Mr Kua so as to make him part with expensive gifts and large amount of money for more than two years, especially considering that Mr Kua is an independent and successful businessman ([29]). 

    Had Mr Kua succeeded in establishing any of the vitiating factors, he would be entitled to rescind (ie to set aside) the gifts and recover them in specie, provided that the gifts themselves remained identifiable. If the gifts were exchanged for something else, eg the Rolex watch was sold for money, Mr Kua could claim the substitute item (the money), which is known as the traceable substitute. However, if the gifts or their traceable substitutes have been dissipated (for example, money has been spent on food or on a holiday), Mr Kua would then be confined to claiming the monetary value of the gifts. 

    Was the Property held on trust for Mr Kua?

    Mr Kua claimed that Mdm Ye agreed to hold the Property on trust for him. His case was that the Property was bought for investment purposes and he was persuaded by Mdm Ye to register the Property in her name to avoid the possibility of his children fighting over the Property. Mr Kua claimed that Mdm Ye promised to hold the Property on trust for him and to execute a power of attorney over the Property in his favour. The Court was unconvinced for several reasons ([38], [48]–[49]). During cross-examination, Mr Kua was unable to provide a consistent account of his actual intentions in relation to the Property. Although he claimed to have told a number of people about his plans to purchase the Property for investment, no witnesses were called to testify. Moreover, it was found that he did not participate in the purchase of the Property, which suggests that he did not intendto purchase it for himself. For the same reasons, Mr Kua’s misrepresentation claim was bound to fail ([53]). 

    Mr Kua’s alternative claim was that the Property was held on a resulting trust for him by virtue of his contribution to its purchase price. The basic idea was explained by the Court of Appeal in Lau Siew Kim v Yeo Guan Chye Terence [2008] 2 SLR(R) 108. If A transfers something, say money, to B for nothing in exchange, the law presumes that A did not intend to benefit B with the money. The legal consequence is that B holds the money on a resulting trust for A. Suppose that B then uses the money to partly pay for the purchase of a property. The property would similarly be held on a resulting trust for A. The extent of A’s interest in the property is determined by the proportion of his contribution to the total purchase price. On the facts, of the total purchase price of $829,840, Mr Kua paid $295,000 while Mdm Ye paid $50,000. The remainder was paid by way of a mortgage loan taken in Mdm Ye’s sole name. In the absence of any evidence that Mr Kua repaid the loan, the remaining contribution is to be regarded as Mdm Ye’s. The presumption, therefore, was that Mdm Ye held roughly 35.55% of the Property on trust for Mr Kua. 

    The presumption of resulting trust, however, could be rebutted by a counter-presumption (where applicable) or by proof of any intention to the contrary. This multi-stage inquiry was endorsed by the Court of Appeal in Lau Siew Kim v Yeo Guan Chye Terence [2008] 2 SLR(R) 108 and more recently elaborated upon as well as refined in Chan Yuen Lan v See Fong Mun [2014] 3 SLR 1048. It was at this subsequent stage of the inquiry where the real battle was fought. To be sure, there was no evidence of any express or implied common intention that the Property was to be held for the parties in certain proportions and accordingly, no issue of common intention constructive trust arose ([51]). The main contention was whether Mr Kua’s contribution was intended to be a gift to Mdm Ye. If it were, the presumption of resulting trust would be rebutted. In this case the presumption of advancement did not apply since the parties were not husband and wife (see Lau Siew Kim v Yeo Guan Chye Terence [2008] 2 SLR(R) 108, [73]–[74]). But the Court was convinced on the available evidence that Mr Kua intended the $295,000 to be a gift to Mdm Ye. The Court explained that this intention was not extraordinary or implausible, and in fact perfectly understandable, given that the parties were in an intimate relationship at the material time ([49]). It was a ‘love gift’ (ibid). The presumption of resulting trust was therefore rebutted ([50]). The Property belonged entirely to Mdm Ye. For the same reason Mr Kua could not claim the return of the $295,000.

    Conclusion

    As the prior discussion has shown, the existing legal regime is against allowing the recovery of gifts for trivial reasons or change of mind. As a matter of legal principle, one should not be allowed to recover something that is no longer his or hers, unless of course the transfer is defective in some material ways. As a matter of policy, the present approach would avoid opening the floodgates of litigation, especially considering the frequency of gifts being made and the fickleness of the human mind. 

    Finally, a practical lesson can be drawn from the present case. Where the transferor and transferee are in a close social or domestic relationship, the likely inference is that the transfer is intended to be a gift (see also Mak Saw Ching v Yam Hui Min, Barbara Rebecca [2014] SGHC 212). In such a case, if the transferor does not intend the transfer to be a gift but to serve a different purpose, he or she should make it clear, preferably in writing. Failing to do so, the transferor runs the risks of being embroiled in litigation and losing on evidential grounds.

    * This blog entry may be cited as Alvin See, "The Recoverability of Romantic Gifts: Kua Tee Beng v Ye Caiyan [2015] SGHC 53", Singapore Law Blog (25 March 2015) (http://www.singaporelawblog.sg/blog/article/100)

    ** A PDF version of this entry may be downloaded here

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