The Singapore Law Gazette

The Unique Nature of the Charitable Trust

Lessons from Lian Chee Kek Buddhist Temple v Ong Ai Moi and others [2023] SGHC 172

Cases relating to charitable trusts do not frequently come before the courts in Singapore. This article examines the recent decision of Lian Chee Kek Buddhist Temple v Ong Ai Moi and others [2023] SGHC 172 for lessons on the unique legal character of a charitable trust.

1. Cases relating to charitable trusts do not frequently come before the courts in Singapore, much less get reported in the Singapore law reports with the last reported case already a few years ago. The recent decision of Lian Chee Kek Buddhist Temple v Ong Ai Moi and others [2023] SGHC 172 (the LCK Temple Case) thus serves as a useful and timely reminder that charitable trusts are unique legal structures and their special legal character must be considered carefully before any litigation is brought; otherwise, unintended consequences like a summary dismissal of a potential claim over the charitable trust might follow.

The Case Facts of the LCK Temple Case

2. In 1985, the owner of a land in Paya Lebar by an indenture conveyed the land and the buildings on the land (the Premises) to certain trustees as joint tenants upon trust to allow the Premises to be used, occupied, and enjoyed as a place of public worship according to Chinese religious rites and customs of followers of Kwan Yin. The indenture had a clause that allowed the existing trustees to appoint new trustees in the event of any retirement or death. The defendants in the LCK Temple Case were the current trustees appointed in accordance with this proviso of the indenture.
3. Pursuant to the trust, the Premises was indeed used as a temple known as “the Lian Chee Kek Buddhist Temple”. The abbot of the temple, one Venerable Tjie (the Abbot), was invited by the trustees to stay at the Premises and ran and managed the temple without reference to the defendants but was not appointed as a trustee of the trust.
4. In 2006, the Abbot applied to register Lian Chee Kek Buddhist Temple (the Temple) as a charity, naming 15 persons including himself as the Temple’s management committee and adopting a constitution commonly used by associations. The constitution stated that the property of the Temple shall vest in trustees and these trustees may be removed by a resolution passed at the general meeting of the Temple. The Commissioner of Charities accepted the registration, and the Temple was thus registered as a charity.
5. In 2020, when the Temple sought approval for certain renovation works, the Urban Redevelopment Authority pointed out that the approval of the registered owners – who were the defendants and not the Temple itself – was required. The Temple thus instructed solicitors to demand the defendants sign off on the approval, and to also retire from the trust so that the Temple’s management committee could take over, but each time, the defendants did not respond. The Temple thus moved to remove the defendants as trustees in absentia pursuant to the terms of the Temple’s constitution and to appoint the Abbott and two others as new trustees.
6. The Temple then filed an Originating Summons in the General Division of the High Court for declarations that the defendants were validly removed as trustees and the new trustees were validly appointed, and for an order for the Premises to be vested in the new trustees.
7. The defendants applied to strike out the claim on the ground that the Temple lacked the necessary legal capacity to bring the claim as it did not exist in law as a separate legal person that could sue or be sued.
8. The Temple resisted the striking out on the basis that it had acquired the necessary legal personality from its registration under the Charities Act, and alternatively, it argued that any lack of legal capacity (arising from any lack of legal personality) could be remedied by its further but belated application to add the Abbott and another member of the Temple’s management committee as plaintiffs.
9. At first instance, the Assistant Registrar agreed with the Temple and dismissed the striking out application. The defendants then appealed to a High Court Judge in Chambers.

The Decision of the LCK Temple Case

10. The General Division of the High Court was tasked to decide two main legal issues: first, whether the Temple had the necessary legal capacity to sue, and second, whether the application to join the additional plaintiffs should be allowed.
11. On the first issue, the High Court held that the Temple was actually an unincorporated association of members, and so it did not have a legal personality separate from its members. The High Court further held that registration under the Charities Act did not create the required separate legal personality. Accordingly, the High Court found that the Temple did not have the requisite legal capacity to sue on its own in this matter.
12. On the second issue, the High Court held that while the addition of the two proposed plaintiffs may address the issue of the lack of legal capacity, it was nevertheless inappropriate to add them as parties to the Originating Summons in question because the dispute would then become wholly different from how it was originally conceived, and such a dispute would in any event, require the Writ of Summons and the accompanying cross-examination procedure to resolve.
13. In its judgment, the High Court restated some legal principles touching on the overall legal character of a charitable trust. The principles were so important that the High Court opened its judgment with them essentially as a reminder:

“A trust is not a legal person. It is a relationship concerning property ordinarily between the persons who hold that property on trust and those for whose benefit they do. In an exceptional category of charitable purpose trusts, the trustees hold the trust property for the charitable purpose set out in the trust deed. As a trust is not a legal person, it cannot sue or be sued. It is the trustees who must sue or be sued in respect of the trust property or the administration of the trust”.

14. The passage cited above conveys the following three legal principles, which are points of interest and will be further discussed in this article:

1. 1. First, a trust does not create a new legal entity. It simply defines a (new fiduciary) relationship between the trustee and the beneficiary of the trust.
   2. Second, since a trust does not create a new legal entity, the parties to a trust dispute must already exist as legal persons before they can bring or defend an action in respect of the trust.
   3. Third, since a charitable trust is intended for a charitable purpose, there are no individual beneficiaries in the usual private trust sense. Instead, the trustees of a charitable trust hold the property for the expressed charitable purpose and in the event of a trust dispute will have to be policed on a public interest basis.

A trust does not create a new legal entity

15. The legal principle that the creation of a trust only defines a legal relationship between the trustee and the beneficiary of the trust and does not in itself create a new legal entity or vehicle, is uncontroversial. But this legal principle may sometimes elude the untrained or the unsuspecting mind, particularly when the habendum clause in the trust deed expressly names an entity as a part of the trust.
16. Indeed, in many cases of charitable trusts, settlors link their expressed charitable purpose to a specified entity (sometimes without the settlors themselves first considering the issue of whether the specified entity even exists at law). As a result, the parties involved in the trust may start to regard the specified entity as if it were a sort of body corporate and recognised at law, even if it was not.
17. For example, in one case Choong Wai Phwee and others (Trustees of Cheong Liam Um Vegetarian Temple) v Chileon Pte Ltd [2000] 2 SLR(R) 637 (which went on appeal and was then reported as [2001] 1 SLR(R) 384), the settlors in creating their trust on the following simple terms, linked their intended charitable purpose to a specified entity, coincidentally, also a temple:

“To hold the same unto the trustees in fee simple upon trust to manage the said land and premises and permit the same to be occupied for the purposes of the Cheng Liam Um Vegetarian Temple and if not so occupied to let the same and to receive the rents profits and income thereof and pay and apply the same to the use and benefit of the said Cheng Liam Um Vegetarian Temple and the members thereof.”

18. The naming of the entity such as a temple or a church may give rise to the impression that the temple or the church so named is a separate legal entity when it could very well not have been the case; the temple or the church could just have been the colloquial name of the building that stood at the location. The High Court in the LCK Temple Case explained this common misconception in the following manner:

“The correct analysis is as follows. The Lian Chee Kek Buddhist Temple, in the sense of the building situated upon the Premises and in which religious activities are practised, is real property that forms part of the subject matter of the Trust. The Lian Chee Kek Buddhist Temple, in the sense of the organisation of Worshippers operating on the Premises, is the group of people who claim to have been fulfilling the purpose of the Trust. The Plaintiff’s submissions conflate the two.”

19. This is an important point because a declaration of trust – such as that in the Cheong Liam Um Vegetarian Temple case referred to above – may be sufficient to create a valid charitable trust but it certainly does not create a separate legal entity behind the trust.
20. It cannot be overemphasised that the creation of a separate legal entity only happens if the group of people who oversees or runs the specified entity decide to further register the entity under the Societies Act, the Companies Act, or an equivalent empowering statute that expressly confers the specified entity with either a body corporate status capable of suing or be sued by itself, or an equivalent legal capacity. Until such time, the specified entity – even if named in the declaration of trust – will not have a separate identity at law.

Since a trust does not create a new legal entity, the parties to a trust dispute must already exist as legal persons before they can bring or defend an action in respect of the trust

21. If the specified entity does not exist at law, this leads to the second legal principle, namely that the entity cannot then act in its own name, including commencing or defending an action in respect of the trust. Conversely, if people purport to act for the specified entity and then proceed to commence litigation in the name of that specified entity as if it were a proper legal entity (when it is not), such litigation may be doomed from its inception for lack of a proper plaintiff.
22. Indeed, the LCK Temple Case is not the first time that a case was struck out because the putative plaintiff lacked the required legal capacity to sue.
23. In an earlier case Chee Hock Keng v Chu Sheng Temple [2016] 3 SLR 1396, the Singapore Court of Appeal had the opportunity to consider the same exact legal issue viz whether a temple known as the Chee Hock Keng Temple was a separate legal entity at law that allowed the temple to sue on its own. In that case, a confederated master temple known as the Chu Sheng Temple (the master temple) was said to be comprised of three separate temples namely, the Chee Hock Keng Temple, the Hwa Tong Hoo Temple and the Ling Chuan Giam Temple, and each of these three temples had representatives in the master temple’s management committee. The dispute arose when the then representatives of the Chee Hock Keng Temple were not re-elected at an annual general meeting of the master temple; as a result, those dissatisfied representatives went to belatedly register the Chee Hock Keng Temple under the Societies Act which then led to these representatives being expelled as members of the master temple. The Chee Hock Keng Temple (as registered as a society by the expelled members) then commenced an action against the master temple in the High Court to seek declarations that the master temple’s decision was wrongful, and the master temple’s trustees held one third of the premises of the master temple on trust for the Chee Hock Keng Temple. The Court of Appeal dismissed the claim on the ground that at the time the Chee Hock Keng Temple joined the master temple, up to the time its members were expelled from the master temple, it was not a separate entity at law and its subsequent registration by some but not all of the original members of the Chee Hock Keng Temple did not retrospectively grant it the requisite legal capacity to sue. The case was thus thrown out of court.
24. However, the LCK Temple Case appears to be the first time that the High Court has held that registration of the entity as a charity under the Charities Act did not remedy the problems of a prior failure of registration or incorporation of the entity under the Societies Act, Companies Act, or equivalent empowering statute. This reinforced the importance of the prior registration or incorporation process under such an empowering statute to acquire the necessary legal identity.
25. Following the LCK Temple Case, it is now ever more important that people purporting to act for a specified entity, even if the specified entity is already registered under the Charities Act, must ensure that the specified entity is a valid entity at law at the time the alleged harm was suffered, before they commence any form of litigation in the name of that entity; failing which, the case will likely be liable to be summarily dismissed.

The (lack of) beneficiaries of a charitable trust

26. The final legal principle extracted from the LCK Temple Case is the emphasis that a charitable trust is a purpose trust and not a traditional “person(s)” trust.
27. What this means is that there are no beneficiaries in the legal sense: even if an entity or individual stands to factually benefit from the charitable trust, that entity or individual does not have an ordinary right (that a beneficiary in a private trust would have had) to sue in respect of the trust.
28. Instead, the enforcers of a charitable purpose trust would ordinarily be the Attorney-General (under the common law) and the Commissioner of Charities (under the Charities Act).
29. The issue of whether a charitable trust lacked beneficiaries was first raised in the case of Eng Foong Ho and others v Attorney-General [2008] 3 SLR(R) 437 which concerned a suit by devotees of one Jin Long Si Temple for the alleged violation of the constitutional right of equality due to the compulsory acquisition by the state of only the land in which the said temple was located without the acquisition of other religious sites nearby. In resisting the claim, the Attorney-General argued that there were no beneficial owners in a charitable trust for religious purposes (and so the devotees could not have suffered the nature of loss complained of), but notwithstanding the allure and soundness of the argument, the Singapore High Court did not proffer its views on the issue as it dismissed the devotees’ claim by simply finding that the trustees, who were the legal owners of the property in question and should have been the rightful party to bring any claim in respect of the property, were not before the Court. The issue was therefore left undecided until 2017.
30. In 2017, the Singapore High Court in Zhao Hui Fang and others v Commissioner of Stamp Duties [2017] 4 SLR 945 then had the opportunity to directly consider the legal issue of the identity of the beneficiary of a charitable trust. In the Zhao Hui Fang case, the trustees of a charity with the authority of the Commissioner of Charities and pursuant to a court consent order purchased a property to substitute one that was bequeathed by the testator to the charity under his will. The Commissioner of Stamp Duties sought to impose additional buyer’s stamp duty of $984,000 on the trustees on the ground that the beneficial owner of the property was a foreigner or an entity under section 4(1) read with article 3(bf)(viii) of the First Schedule of the Stamp Duties Act. The trustees disputed the charge and appealed to the High Court for a determination of whether ABSD was indeed chargeable on the transfer. To answer that legal question, the High Court had to decide where the beneficial ownership of a property held under a charitable purpose trust lies.
31. The Commissioner of Stamp Duties argued that the beneficial ownership of a property held under a charitable purpose trust belonged either with: (a) the persons who may factually benefit from the charity’s work, (b) the trustees themselves, or (c) the public at large. He further argued that on either of these three alternate scenarios, the transfer would result in at least one beneficial owner who is an entity or a foreigner and should correspondingly attract ABSD.
32. The High Court rejected all the Commissioner of Stamp Duties’ arguments. It held that in the case of a charitable purpose trust, neither the factual beneficiaries of the charitable trust, nor the trustees, nor the public, can be said to be the beneficial owners of property held under the charitable purpose trust. Instead, the beneficial interest in a charitable purpose trust is simply “in suspense” and not extant, and there is “no ascertained or ascertainable beneficiary”. Accordingly, the transfer did not attract the stamp duty payable under the charging provision in question.
33. While the Zhao Hui Fang case was technically only on the obligation of a factual beneficiary of a charitable trust (i.e., whether the trustee had to pay stamp duty on behalf of the factual beneficiary, in that case the charity) and not on the entitlement of the factual beneficiary (i.e., whether a factual beneficiary could on its own capacity sue the trustee for breach of trust), the High Court’s holding that there are no legal beneficiaries in a charitable purpose trust, notwithstanding that there are factual beneficiaries, was of such general application that it applies to both the obligation and entitlement of the factual beneficiary.
34. Indeed, the LCK Temple Case has now made it abundantly clear that a beneficiary of a charitable trust will need the approval of the Attorney-General (under section 9 of the Government Proceedings Act) and if the charity is registered under the Charities Act, the approval of the Commissioner of Charities (under section 32 of the Charities Act) to sue the trustees for breach of trust as the Attorney General and the Commissioner of Charities are ultimately, the enforcers of the charitable trust.
35. In short, to enforce a charitable trust, the Attorney-General must either sue or give consent to sue. In addition, if the proceeding in question is a charity proceeding, the Commissioner of Charities must also give his consent. Without such consent(s), any legal proceeding brought on behalf of a factual beneficiary in respect of the charitable trust may also be struck out on this ground for lack of legal standing.

Conclusion

36. Given the rarity of local reported charitable trust cases, we might not see another case soon, and we should derive lessons wherever we can. It is in this regard that the LCK Temple Case presents a rare opportunity.
37. The LCK Temple Case reminded us of three relatively straightforward and trite legal principles but are nevertheless worth unpacking and reiterating as they may sometimes be ironically overlooked for being so rudimentary and fundamental.
38. At the end of the day, the takeaway is that charitable trusts have some unique legal traits such as the aforesaid three legal principles that parties involved in such trusts should be aware of. Indeed, there are some other unique legal principles of a charitable trust such as the need for the purpose of the trust to be exclusively charitable in order to be a valid charitable trust (see for example Koh Lau Keow and others v Attorney-General [2014] 2 SLR 1165) and the applicability of the cy-pres doctrine in the event of a failure of a charitable trust (such as that applied in Lam Joon Shu and others v. Attorney General [1993] 3 SLR(R) 156) that were not discussed in this article (or indeed in the LCK Temple Case) but are equally important and will need to be further analysed should another charitable trust case arise in the future.