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HighCourtAppliesResultingTrustPrinciplesInFavourOfRodyk'sClient
RODYKREPORTER
June2008|Litigation&Arbitration|LitigationBrief
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Puttingthepresumptionstothetest
In November last year, the Singapore Court of Appeal reviewed the presumption and
elementsofresultingtrustsinLauSiewKimvYeoGuanChyeTerence [2008] 2 SLR 108
("LauSiewKim").
In its thorough review of resulting trust principles, the Court of Appeal considered but
firmlyrejectedanyabolitionofthepresumptionofresultingtrustoranydowngradeofthe
presumption from a rebuttable presumption of law to a presumption of fact, explaining
that a "moderate and nuanced approach" is appropriate. In particular, the preferred
approach concerns "the strength of the presumption which should vary when invoked in
differentfactualmatrices".
Withregardstodeterminingthestrengthofthepresumptionofadvancementinanygiven
case,theCourtofAppealheldthattwokeyelementswerecrucial:"first,thenatureofthe
relationshipbetweenthepartiesandsecond,thestateoftherelationship".
In Lau Siew Kim, the Court of Appeal disagreed with the approach that one presumption
would prevail over the other from the outset based on the facts of a particular case.
Instead, it decided that a twostage test should be adopted. First, the Court had to
determineifthepresumptionofresultingtrustaroseonthefacts.Secondly,itwasonlyif
a resulting trust was presumed that the presumption of advancement would apply to
displacetheinitialpresumption.
Thedoctrinalbasisofthepresumptionofresultingtrust
The High Court's judgment of Yong Ching See v Lee Kah Choo Karen [2008] SGHC 68
("YongChingSee"),cameswiftlyinthewakeofLauSiewKim.ItwasthefirstHighCourt
judgment which had the occasion to apply the twostage test formulated by the Court of
Appeal in Lau Siew Kim. After a trial involving 10 witnesses, the High Court reserved
judgment.
On 8 May 2008, the High Court delivered its judgment in favour of Rodyk's client and
awarded the plaintiff final judgment on his claim with costs together with the costs in the
OriginatingSummonsfromwhichtheactionhadinitiallycommenced.
The plaintiff was represented by Philip Jeyaretnam, SC, assisted by associate Jeannette
Lim.
TheFacts
InYongChingSee,theplaintifftransferredabout$1milliontoacompanycalledAlsecure
InternationalPteLtd("Alsecure").Halfofthisamountwaschanneledtothepaidupcapital
ofAlsecure,ofwhich175,000shares(theShares)wereallottedtothedefendant.
TheplaintiffclaimedthatthedefendantheldtheSharesonaresultingtrustfortheplaintiff
andwantedtheSharestobetransferredtohim.
Thedefencewasthataresultingtrustdidnotexistand,inthealternative,thattheplaintiff
hadbeenpreventedbytheestoppelofconventionand/orbyrepresentationfrommaking
hisclaim.
TheissuesbeforetheHighCourtwere(1)whohadthebeneficialownershipoftheShares
and whether, on the evidence, a resulting trust had arisen and, if so, (2) whether the
presumptionofresultingtrusthadbeenrebutted.
The presumption of advancement did not apply in Yong Ching See as the defendant did
not stand in one of the established relationships that gave rise to a presumption of
advancement,suchasafamilialrelationship.Torebutthepresumptionofresultingtrust,
the defendant had to adduce evidence that the plaintiff had intended to benefit her with
theregistrationoftheShares.
TheJudgment
TheCourtheldthat,ontheevidence,thedefendanthadfailedtodisplacethepresumption
ofaresultingtrustintheplaintiffsfavourasshecouldnotprovethat(1)shewasentitled
to the beneficial ownership of the Shares as a gift, or (2) that the sums put into the
companybytheplaintiffwereloans.(Thelawisthatthepresumptionofresultingtrustwill
alsoberebuttedwhereevidenceshowsthatmoneywasadvancedbywayofaloan).The
High Court also rejected the defences of estoppel by representation and estoppel by
convention.
IntentionandtheResultingTrust

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2/2/2015

Rodyk&DavidsonLLP:Lawyers,Advocates&Solicitors
What differentiates an express trust, a constructive trust and a resulting trust? In Yong
Ching See, the High Court considered this important question. The High Court
comprehensively examined the doctrinal basis of a resulting trust and observed that the
distinctionbetweenexpress,constructiveandresultingtrusts"reallylies,interalia,inthe
intentionofasettlorandwhetherthetransferistheproductofanimpliedintention".
The High Court noted that while express trusts are founded on the "express or inferred
intentionofthesettlor",constructivetrustsareimposedonapersonwhoholdsthetitleto
property"againsthisintention".Incontrast,resultingtrustsarefoundedonthe"presumed
intention"ofthetransferorofproperty.
Thus,eventhoughtherehasbeenatransferofpropertytogetherwithatransferoflegal
title, the transferee will not be permitted to receive the property (absolutely for his own
benefit) if there has been no intention by the transferor to divest himself fully of all his
interestinthatproperty.Instead,thetransfereewillbesaidtohaveheldthepropertyon
resultingtrustforthetransferor.Accordingly,wheredisplacingapresumptionofresulting
trustisconcerned,thefocusmustbeontheintentionofthetransferordidthetransferor
display an intention to part with beneficial interest in the property? If he had not, the
presumptionofresultingtrusthasnotbeendisplaced.
TheNatureofIntention
Thenatureoftheintentionofthetransferorwhichformedthebasisofthepresumptionof
resultingtrustwasconsideredbytheHighCourt.
Doesapresumptionofresultingtrustarisebecause(1)theCourtpresumesanintentionof
thetransferorthathedesirestoretainownershipdespitethetransferoflegaltitle,ordoes
thepresumptionarisebecause(2)theCourtpresumesalackofintentionofthetransferor
tobenefitthetransferee?
Atfirstblush,bothtypesofintentionseemthesamebothfocusontheintentionofthe
transferor and appear to be two sides of the same coin. In most circumstances, the
outcomewouldbethesame.However,thedifferenceisnotmerelyacademicoramatter
ofexpression.
InYongChingSee,theHighCourtheldthat,followingLauSiewKim,the"lackofintention"
(i.e.(2)above)"ispreciselythefactbeinginferredwhenthepresumptionisapplied".The
rationaleisthatthepresumptionoperates"toestablishdefectiveconsent"inthetransferor
wherethereisanabsenceofanintentionbythetransferortopassabeneficialinterestto
thetransferee.
It is not so much, then, that the presumption arises because the Court presumes a
positive intention by the transferor to retain ownership despite the transfer of legal title.
Rather, the presumption arises in response to a lack of intention by the transferor to
benefitthetransferee.
This reasoning is correct. In most resulting trust cases, it would be difficult to show that
thetransferorhasapositiveintentiontoretainownership.Itwouldbeeasiertoshowthat
helackedanyintentiontobenefitthetransferee.Thisispreciselywhythepresumptionof
resulting trust has developed to alleviate the practical difficulties of proving positive
intentioninsuchcases.

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