03:04 PM Yip Man (Assistant Professor, Singapore Management University)

    The Presumption of Resulting Trust: A New Era?


    This entry is written in anticipation of the forthcoming appeal against the recent High Court judgment in Mak Saw Ching v Yam Hui Min, Barbara Rebecca [2014] SGHC 212.  The appeal shall provide a further opportunity for the Court of Appeal to clarify and refine the law on the presumption of resulting trust after the important decision of Chan Yuen Lan v See Fong Mun [2014] 3 SLR 1048 released earlier this year.  However, the High Court judgment is not to be missed as well.  The decision highlights interesting issues for the appellate bench’s consideration, and could be the forerunner of a new era for the presumption of resulting trust under Singapore law.  

    Facts and Decision 

    The dispute arose between a paternal grandmother and her granddaughter concerning the beneficial ownership of a Housing and Development Board (“HDB”) flat (“the property”) for which they were registered as legal owners.  The case belied acrimonious family relations that ensued from a bitter divorce between the granddaughter’s parents.  Prior to the divorce, and pursuant to the grandfather’s demise, the grandmother conveyed the property into the joint names of the granddaughter and herself as joint tenants, for “natural love and affection” as stated in the transfer document.  However, after the irretrievable breakdown of the granddaughter’s parents’ marriage and the granddaughter moving out of the property with her mother, the grandmother severed the joint tenancy, making them tenants in common in equal shares.   

    The grandmother then applied to court for a declaration that the granddaughter held her half-share on trust for the grandmother.  The grandmother asserted that she had no intention to make a gift of the property to the granddaughter; instead, the transfer into their joint names was executed as part of her succession plan for her son, the granddaughter’s father.  She claimed the granddaughter had made no financial contributions to the purchase or maintenance of the property, nor did she stay in it.  Upset with the granddaughter siding with the mother in the divorce, the grandmother therefore no longer trusted her and wanted to remove her name from the title to the property.   The grandmother’s primary case was that she intended to create an express trust appointing the granddaughter as the trustee to hold her interest in the property for her father.  As this trust would be void by reason of section 51(8) of the HDB Act, an automatic resulting trust arose in favour of the grandmother.  Her alternative case was that there was an unrebutted presumption of resulting trust, which arose in favour of the grandmother; but this resulting trust, which arose by operation of law, did not offend section 51(8) of the HDB Act.   Her further alternative submission was that the voluntary conveyance could be set aside for mistake of law as she was mistaken that the transaction to benefit the father was illegal.   

    In defence, the granddaughter contended that the grandmother had intended a gift as they had a close relationship, claiming that the presumption of resulting trust could be rebutted by the presumption of advancement. She further submitted that the grandmother’s case based on express trust or a resulting trust would fail because these trusts would be void under section 51 of the HDB Act.  Notwithstanding the dispute concerned issues of factual dispute, owing to costs concern, both sides agreed to proceed without cross-examination of the material witnesses.    

    On the grandmother’s primary case, the High Court found that the grandmother had failed to prove that she created an express trust based on the unchallenged evidence, in particular, when taken against the undisputed documentary evidence that the transfer of the property was for “natural love and affection”.   

    As for her alternative case based on the presumption of resulting trust, The Court, following See Fong Mun, said that the presumption of resulting trust ought not be invoked in the present case because “both parties had ample opportunity to, and did in fact, adduce evidence of the [grandmother’s] actual intentions when making the transfer” (at [45]). Moreover, the Court noted that the presumption of resulting trust argument would be inconsistent with her primary case. Even if the presumption had applied, the Court would have found that the presumption had been rebutted, taking heed from the Court of Appeal’s observations in Lau Siew Kim v Yeo Guan Chye Terence [2008] 2 SLR 108 that the strength of the presumption would vary with the facts of each case.  In fact, the High Court went as far as to observe that local courts should apply the presumption of resulting trust “with circumspect in cases of gratuitous transfers” (at [49]) as it must accord with “modern societal values and expectations” (at [48]).   In its view, the modern societal expectations of a gratuitous transfer would be that it was indeed intended to be a gift.  The weight to be ascribed to the presumption was further depreciated by the fact of a close relationship between the parties at the time of the transfer.  The strength of the presumption of resulting trust, even if it arose on the facts of the case, was thus a weak one. 

    Finally, on setting aside the transfer on the basis of mistake, the Court observed that this claim was not included in the application but was raised belatedly.  In any event, given its conclusion that the grandmother had failed to prove the express trust, the mistake argument – which depended on the express trust claim – would be “wholly untenable” (at [56]).  The Court further noted that the grandmother had failed to explain how the setting aside of the transfer for mistake would defeat the granddaughter’s title to the property.  

    As the appeal is pending, the decision need not detain us for long, save for two general points to highlight what the interesting issues that the Court of Appeal might take up.  

    Modern application of the presumption of resulting transfer

    Mak Saw Chin has expressly endorsed that the modern societal expectation is that a gratuitous transfer is intended as a gift.  However, as the judicial abolition of the presumption of resulting trust has been deemed inappropriate, the High Court encapsulates this modern social experience within the presumption of resulting trust by way of diminishing the strength of the presumption in such a context.  If this position is affirmed by the Court of Appeal, it would mean that in practice, parties effecting gratuitous transfers but not intending a gift must take steps to ensure that their intentions are clear.  

    That being the case, one should not take this to mean that a sharp distinction is drawn between a gratuitous transfer and a non-gratuitous transfer, and that the strength of the presumption is only significantly diminished in respect of its operation in the former case.  After all, the factual distinction might be minimal if a case of non-gratuitous transfer involves a 90:10 ratio of contributions by the parties.   That the presumption is preserved in the context of gratuitous transfers should serve to remind this.  The decision should thus be read as part of the evidence of the general decline of the presumption of resulting trust under Singapore law, instead of evidence of its decline in a specific context.  It also follows that Chan Yuen Lan v See Fong Mun [2014] 3 SLR 1048 should be viewed as a decision that refused to adopt the framework of analysis laid down by the majority in Stack v Dowden [2007] 2 AC 432 in respect of domestic consumer cases for fear of uncertainty, instead of one that stressed the modern importance of the presumption of resulting trust. 

    Moreover, in Mak Saw Chin, the Court took into account the parties’ closeness of relationship as another factor in determining the strength of the presumption.  But one wonders, on further reflection, whether this factor ought to be part of the evidence taken to rebut the presumption of resulting trust, as opposed to a factor to determine the strength of the presumption.   The distinction has important practical implications.  In a case where the presumption of advancement also arises, pursuant to Lau Siew Kim (at [78]), the state of the relationship is one of the two key factors (the other being nature of the relationship) in determining the strength of the presumption of advancement.  Analytically, the same factor would be considered at both stages, somewhat redundantly and unnecessarily.  Even in a case where the presumption of advancement does not arise, the party asserting a gift might have no other evidence to support his/her case save for the evidence on the state of the relationship which would suggest that a gift is more probable.  Scant evidence is not unusual in the familial setting where parties do not ordinarily document their intentions as commercial parties do.  If this factor is taken into account in determining the strength of the presumption of resulting trust, the presumption, although weak, remains unrebutted.  On the other hand, taken as part of the evidence to rebut the presumption of resulting trust, the party asserting a gift has a chance at rebutting it in an appropriate case. 

    Setting aside a voluntary transfer on the ground of mistake 

    It is not clear if the mistake argument will be seriously pursued before the Court of Appeal.   It is not improbable that the Court of Appeal might find this claim hopeless and for the same reasons as the High Court did.  Outcome of the argument aside, what might pique the interest of the legal community is the Court of Appeal’s consideration of the law on setting aside a voluntary transfer for mistake.  Specifically, the question is whether Singapore law would follow the English approach most recently enunciated in Pitt v Holt; Futter v Futter [2013] 2 AC 108.  According to Lord Walker, who delivered the single judgment of the UK Supreme Court, the test is a causative mistake of sufficient gravity.  On the issue of gravity, Lord Walker said that its determination is based on the injustice or unconscionability of not setting aside a mistaken disposition, and this involves an objective assessment of the facts of each case, including: (a) the circumstances of the mistake; (b) the consequences of the mistake on the settlor; (c) any relevant change of position; and (d) other matters concerning the court’s exercise of discretion. In essence, the English court’s task is to evaluate the justice of the case.  The Supreme Court rejected adopting the simple test of a causative mistake that is applicable to claims for mistaken payment in the law of unjust enrichment (thereby also rejecting fusion of law and equity in this context).  The decision has spawned endless controversy (see, for example, B Häcker, “Mistaken Gifts after Pitt v Holt” (2014) 67 CLP 333).

    Finally, and pertaining to registered land, how the setting aside of the transfer for mistake impacts the principle indefeasibility of title under the Torrens system is an important issue.  Section 46(1) of the Land Titles Act (Cap 157, Rev Ed 2004) sets out various limits to the indefeasbility of (registered) title, including the Registrar’s power to correct errors in the land-register under section 159 as well as rectification of land-register by the courts on certain grounds under section 160.   But neither section 159 nor section 160 appears to apply in the context of the transferor’s own mistake. Leading local commentators have argued that section 159 should be interpreted to pertain only to the correction of errors on the part of the Land Registry, that is, departmental errors (see Tan Sook Yee’s Principles of Singapore Land Law, 3rd Edn,  (LexisNexis, 2009) pp 290-291).  As for section 160, the provision cannot be invoked unless the registered proprietor is a party to the mistake or has caused the mistake (see section 160(2) and United Overseas Bank Ltd v Bebe bte Mohammad [2006] 4 SLR 884).  

    It also appears that the transferor’s mistake as to the nature/effect of the transaction does not fall within any of the exceptions set out under section 46(2), which reads:

    (2) Nothing in this section shall be held to prejudice the rights and remedies of any person —

    (a) to have the registered title of a proprietor defeated on the ground of fraud or forgery to which that proprietor or his agent was a party or in which he or his agent colluded;

    (b) to enforce against a proprietor any contract to which that proprietor was a party;

    (c) to enforce against a proprietor who is a trustee the provisions of the trust;

    (d) to recover from a proprietor land acquired by him from a person under a legal disability which was known to the proprietor at the time of dealing; or

    (e) to recover from a proprietor land which has been unlawfully acquired by him in purported exercise of a statutory power or authority.

    The greatest hope lies outside of the statutory regime - by arguing that such a claim is an in personam exception to the principle of indefeasibility.   The existence of in personam exceptions was clearly endorsed by Lord Wilberforce in the Privy Council case of Frazer v Walker [1967] 1 AC 569 at 585, although the local Court of Appeal decision in Bebe favoured a restrictive approach to the recognition of such exceptions.  The subject remains mired in uncertainty.  Low has nevertheless persuasively argued that these exceptions and the principle of indefeasibility operate on different planes (see K Low, “The Nature of Torrens Indefeasibility: Understanding the Limits of ‘Personal Equities’ [2009] 33 MULR 205). In his account, the principle of indefeasibility offers protection against claims based on prior title, whereas the in personam exceptions admit claims that are independent of prior title.  It follows, on Low’s rationalisation, that restitution on the basis of mistake should fall within the exceptions (see [2009 33 MULR 205 at 225-228).    Mak Saw Ching thus offers an opportunity for the Court of Appeal to revisit Bebe as well as provide further clarification on the subject of in personam exceptions. 

    In light of the interesting issues that might be discussed by the Court of Appeal, one awaits the appellate judgment with great anticipation. 

    * This blog entry may be cited as Yip Man, "The Presumption of Resulting Trust: A New Era?", Singapore Law Blog (24 November 2014) (

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

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