Introduction
Trust over HDB Flat?

In the recent case of [2019] SGHC 128, the topic of beneficial ownership of a property is once again brought up. 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. That is where a person has paid the purchase price of a property and the property is transferred to another person, a resulting or constructive trust arises. This presumption is rebuttable by evidence of an intention on the part of the person paying to intend it as a gift.
While this rule is well established under Common Law, such resulting or constructive trust is being applied differently when dealing
with HDB flats under the Housing and Development Act (Cap.129) (“HDB Act”).

Facts of the Case

The case deals with the determination of the beneficial ownership of the HDB flat and division of matrimonial assets. For the purposes of this newsletter, we will only focus on the discussion/judgement in relation to the resulting trust.
The Husband and the Mother applied for an HDB flat (“AMK Flat”). At the time of the application, the Mother and Father (a bankrupt but has since died) were joint owners of the Owen Flat. The application of the AMK Flat was approved on the basis that the Owen Flat was on 2 conditions:

1. That the Owen Flat is disposed within 6 months of taking possession of the AMK Flat (“the Disposal Condition”); and

2. To comply with the Official Assignee’s condition that half the net proceeds of the sale of the AMK Flat is to be remitted to the Official Assignee for the benefit of the late Father’s creditors.

As the time of the case, the AMK Flat has not been sold, as such, only the Disposal Condition is relevant.
The AMK Flat was subsequently bought under the Husband’s sole name in June 1993 as the Mother only transferred the Owen Flat her children excluding the Husband in December 1994.

The Husband and the Wife were married in July 1994 and on their third anniversary in February 1997, the Wife’s name was added as a joint owner of the AMK Flat.

The Mother became the owner of the Owen Flat again when her children transferred the Owen Flat back to her respectively in February 1997 and September 1999 until December 2017 where she transferred the Owen Flat to her daughter and daughter’s husband.

In March 2016, the Wife filed for a divorce and interim judgement was granted in March 2017. However, the proceedings were stalled after the Husband claims that the Mother has a share in the AMK Flat. A separate court proceeding was commenced for a declaration of the ownership of the AMK Flat, but due to circumstances of the case, the High Court ordered both the declaration application and the contested ancillary matter to be heard together.

The Arguments

The Husband argued that the Mother has a 50% beneficial ownership as the Husband and the Mother agreed that this would be the case regardless of their respective contribution towards the AMK Flat. The Husband further argued that the Mother become eligible to hold the AMK Flat when she fulfilled the Disposal Condition in December 1994. In the Mother’s affidavit, it was stated that she agreed to allow the Wife to be included in the AMK Flat only in so far that the Wife’s joint portion was limited to the Husband’s 50% share.

The Wife argued that section 51(10) of the HDB Act prohibits the Mother from claiming any entitlement in the AMK Flat as she flouted the Disposal Rule when she became the owner of the Owen Flat again in February 1997. It was also further mentioned in the case that between the period of December 1994 and February 1997, the Mother was an occupier of the AMK Flat and there was no evidence to mention that the relevant authorities were aware of the Mother’s beneficial interest as she claimed. If the relevant authorities were informed about the Mother’s alleged beneficial interest, it is likely that the relevant authorities would not have allowed the children to transfer the Owen Flat back to the Mother as she would have become ineligible under section 47(1)(a) of the HDB Act.

Relevant Legislation

The relevant legislation is reproduced here for easy reference.

HOUSING AND DEVELOPMENT ACT (CHAPTER 129)

Section 47
(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 authorized occupier —
(a) is the owner of any other flat, house, building or land or has an estate or interest therein…

Section 51
(9) Every trust which purports to be created in respect of any protected property without the prior written approval of the Board shall be null and void.
(10) No person shall become entitled to any protected property (or any interest in such property) under any resulting trust or constructive trust whensoever created or arising.

The Decision

The Court reviewed an earlier case, [1999] SGCA 27, on the interpretation of the relevant legislation, namely section 47 and section 51 of the HDB Act.

In the earlier case, the Court of Appeal held that in order for the respondent to comply with section 47, he transferred Flat A to his mother. Having bought a new flat, Flat B, the respondent was then not eligible to hold any interest in Flat A and the Court of Appeal held that the resulting trust arising in the favour of the respondent would be against the policy consideration when the government enacted the HDB Act. Applying to the case before the High Court, the High Court held that even if the High Court were to recognize the alleged 50% beneficial interest of the Mother, the Mother lost the eligibility to hold the beneficial interest of the AMK Flat when she became the owner of the Owen Flat again in February 1997. Her subsequent conveyance of the Owen Flat to her daughter in December 2017 did not revive her eligibility to the AMK Flat. The High Court further held that the Mother, being an ineligible person, is prohibited under section 51 (10) from any interest to the AMK Flat.

Conclusion

Having considered the facts and the relevant laws, both statutory and common law, the High Court ruled in the Wife’s favour stating that the Mother has no beneficial interest in the AMK Flat.

While the law in relation to claiming beneficial interest is well-established over properties, caution will still have to be exercised when dealing with such interest. This is especially so when dealing with HDB flats where are these additional regulations governing both the legal and beneficial ownership of the flat.

Serena Wong
Advocate & Solicitor