The Singapore Law Gazette

Nuanced Outcomes in Joint Tenancies

In Ng Lai Kuen Priscilla Elizabeth v Ng Choon Keong Steven, the General Division of the High Court decided that the law did not allow legal joint tenants other than married couples to hold property in equity in a nuanced fashion of unequal shares inter vivos while allowing the surviving joint owner to benefit from the right of survivorship in equity. It is argued here that while the arguments made in Ng Lai Kuen in favour of this nuanced position were correctly rejected, the decision itself is inconsistent with the authority relied on in Court of Appeal’s decision in Lau Siew Kim and with established principle.

Introduction

In Ng Lai Kuen, the General Division of the High Court decided that legal joint owners were generally not able to hold the property in equity in the nuanced manner of having disposable unequal beneficial interests inter vivos but preserving the surviving joint owner’s right of survivorship in equity (the “nuanced outcome”). ¹Ng Lai Kuen Priscilla Elizabeth and others v Ng Choon Keong Steven (2023) SGHC 343 at (91) to (102). The contrary Court of Appeal dicta in Lau Siew Kim was read down to be confined to an exception made in favour of married couples.²Lau Siew Kim v Teo Guan Chye Terence and another (2007) 2 SLR(R) 108 at (97) to (108). It is submitted that while the Court’s rejection of the nuanced outcome in Ng Lai Kuen was understandable in light of the arguments recorded and rejected in that case, the decision itself cannot be reconciled with Lau Siew Kim’s express accommodation of this nuanced outcome (especially in light of the authorities cited therein). Further, the nuanced outcome is achievable through the application of orthodox principles property law and equity. Its outright rejection therefore ought to be revisited.

Facts in Ng Lai Kuen

Ng Lai Kuen concerned a dispute between four siblings, effectively over the estate of their late father. The father had purchased a property together with the brother as legal joint tenants. It was not disputed that the father alone paid for the property. The sisters contended that the father was the sole beneficial owner of the property under a presumed resulting trust, with the result that all four siblings would have a 25% share in the property as a result of intestate succession.

The brother first contended inter alia that the father intended to give him the entire property upon the father’s passing under the doctrine of survivorship.³The argument was advanced under step (d) of the Chan Yuen Lan framework. His case was rejected on the evidence.

The Court did not accept that the father had the actual intention of making a gift to the brother.⁴Ng Lai Kuen at (34). The brother next contended that he would receive the sole beneficial interest in the property under the presumption of advancement,⁵Ng Lai Kuen at (35). but the Court found that the presumption had been rebutted.⁶Ng Lai Kuen at (47).

All this was well within the trial judge’s fact-finding powers, and led to the appeal to the Appellate Division being dismissed. But the Appellate Division left the controversial legal proposition stated by the trial judge open.⁷See the LawNet editorial note to Ng Lai Kuen Priscilla Elizabeth and others v Ng Choon Keong Steven (2023) SGHC 343.

General division limits nuanced outcome

It may be useful to first explain why the brother had to argue in favour of the nuanced outcome at all. This was because the brother had given evidence that the father intended to retain sole beneficial ownership of the property in the father’s lifetime, with the brother receiving a gift only upon the father’s passing.⁸Ng Lai Kuen Priscilla Elizabeth and others v Ng Choon Keong Steven (2023) SGHC 343 at (34). This introduced complexity into the nature of the gift to the brother, whether directly proven or presumed, when compared to the vanilla rebuttal of the presumption of resulting trusts which leads to an equitable tenancy in common.⁹Ng Lai Kuen Priscilla Elizabeth and others v Ng Choon Keong Steven (2023) SGHC 343 at (89) The General Division rejected the legal possibility of such a nuanced outcome for two reasons.

First, it was said that a right of survivorship is not a form of property, and therefore could not be the subject matter of a gift.¹⁰Ng Lai Kuen Priscilla Elizabeth and others v Ng Choon Keong Steven (2023) SGHC 343 at (91). It is likely that this aspect of the judgment was in response to the brother’s argument that his right of survivorship arose upon the father’s demise.¹¹Ng Lai Kuen Priscilla Elizabeth and others v Ng Choon Keong Steven (2023) SGHC 343 at (88). It is eminently correct that a right of survivorship is not a property right. Nothing is transferred upon the demise of the first joint tenant. Instead, it is hornbook law that the surviving joint tenant becomes the sole legal and equitable owner of the property because the rights vested in the deceased joint tenant, whether legal or equitable, are extinguished.¹²(2024) UKPC 25 at (15). The right of survivorship is therefore a feature of holding property in a joint tenancy. It is only in this sense that the interest of the first to die “passes” to the surviving joint tenant.¹³Janet Bignell KC, Martin Dixon and Nicholas Hopkins (eds), Megarry & Wade: The Law of Real Property 10^th Ed (Sweet & Maxwell, 2024) at (12-003). While correct in and of itself, that the right of survivorship is not a property and therefore cannot be the subject matter of trust is neither here nor there. It does not really explain why the nuanced outcome is legally impossible.

Of greater significance is the trial judge’s second reason in relation to paragraph 105 of Lau Siew Kim.¹⁴Ng Lai Kuen Priscilla Elizabeth and others v Ng Choon Keong Steven (2023) SGHC 343 at (95) to (102). On the Court’s reading, the passage could only support a situation where the deceased joint tenant only reserved to himself a life interest in the property¹⁵Ng Lai Kuen at (96). and only applied to married couples.¹⁶Ng Lai Kuen at (100).

What was actually said in Lau Siew Kim

It is submitted that both arguments advanced in relation to paragraph 105 of Lau Siew Kim are in fact inconsistent with the Court of Appeal’s reasoning therein. Paragraph 105 reads:

105 This leads us to the second point: The displacement of the presumption of advancement by Lord Upjohn in Pettitt is based on the traditional understanding and application of the presumption as one which operates to give the entire beneficial interest of the property to the wife immediately. On our extension of the presumption, the intention that is presumed is not an intention to give absolutely with immediate effect, but, rather, for the rule of survivorship to operate to pass the absolute interest of the property to the survivor of the two spouses. This interpretation is supported by the fact that a resulting trust need not necessarily relate to the entire interest in the property. The presumption of resulting trust may be rebutted as to a life interest, but may still operate in respect of the interest in remainder: see, for example, Napier v Public Trustee (1980) 32 ALR 153. Conversely, the intention may be that the contributing party should receive the income from the purchased property during his life – to this extent the resulting trust prevails, but the property should belong to the benefiting party after his death, ie, the resulting trust is rebutted as to the remainder: see, for example, Young v Sealey [1949] Ch 278. We are of the view that the presumption of advancement could similarly operate with respect to only part of the interest in the property in question; it may be rebutted as to the life interest of a property but prevail as to the remainder – one such case would be where a property is held on joint tenancy and it is inferred that there is an intention for the rule of survivorship to operate.

Not Limited to Life Interests

The General Division’s view that the passage is limited to the deceased joint tenant reserving a life interest and leaving the surviving joint tenant with the remainder¹⁷Ng Lai Kuen Priscilla Elizabeth and others v Ng Choon Keong Steven (2023) SGHC 343 at (96) cannot be reconciled with Young v Sealey, which the Court of Appeal cited for the proposition that “to this extent the resulting trust prevails, but the property should belong to the benefiting party after his death, ie, the resulting trust is rebutted as to the remainder”.

In Young v Sealey, there was a bank account in the names of an aunt and her nephew. The dispute was between the aunt’s estate and the nephew over the beneficial ownership of the funds in the account after she passed away. The aunt was the sole source of the funds, and therefore a presumption of resulting trust arose in favour of the estate. The evidence was that the aunt intended to be able to deal with the account during her lifetime as she wished, with the nephew entitled to what remained when she passed away.¹⁸Young v Sealey (1949) Ch 278 at 284. He was not to draw anything out for himself while she was yet alive.¹⁹Young v Sealey (1949) Ch 278 at 284.

The estate naturally advanced a case based on the presumption of resulting trust. No countervailing presumption of advancement could arise in favour of the nephew, who relied on the evidence of the aunt’s intentions. The only question was whether this nuanced outcome in the nephew’s favour was legally permissible. Romer J was bound by authority to say yes.²⁰Young v Sealey (1949) Ch 278 at 295.

Young v Sealey did not involve a life interest and a remainder interest in the strict sense referred to in Ng Lai Kuen. Every time the aunt drew on the account, the nephew’s interest would be affected, leaving it a real possibility that the account would be drained by the time she passed away, leaving nothing for the nephew. It therefore cannot be said that there was any separation between life and remainder interests. None of this stood in the way of recognising the intended gift of whatever was left to the nephew, displacing the presumed resulting trust.

Given the Court of Appeal’s specific reference to Young v Sealey when it mentioned the partial rebuttal of the presumption of resulting trust only as to the “remainder”, that word should be read in light of that case i.e. that it refers to whatever remains rather than the technical concept of a remainder interest.

It is therefore respectfully submitted that paragraph 105 of Lau Siew Kim cannot be read to be restricted to life and remainder interests.

Not Restricted to Married Couples

The restriction of paragraph 105 to spouses is similarly flawed. Although paragraph 105 appears under the sub-header “The case of joint tenancies between spouses: Interplay between the presumptions of resulting trust and advancement” just after paragraph 96, that appears to be a nod to the factual context of the case rather than any caveat on the application of legal principle.²¹Lau Siew Kim v Yeo Guan Chye Terence and another (2008) 2 SLR(R) 108 at (97). Indeed, Sealey v Young itself involved no spouses.

The other case cited in paragraph 105 makes the point with similar force. Napier v Public Trustee involved cohabitees,²²Napier v Public Trustee (1980) 32 ALR 153. who quite famously are couples that do not have the legal protections afforded to spouses.

The intended arrangement in Napier was the reverse of that in Sealey. There, Mr Napier paid for the whole of the purchase price of the property. The property was however transferred into Mrs Evans’ sole name. Naturally, a presumed resulting trust arose in the Mr Napier’s favour. Their common intention was for Mrs Evans to receive the net rental income from the property in her lifetime, but with the property to pass back to him or his children under a codicil to her will. Unfortunately, no codicil was ever executed. The Public Trustee represented the woman’s estate.

Napier was therefore a case concerning a true life and a remainder interest, but with a twist. Mr Napier’s claim was for a nuanced presumed resulting trust in his favour where his presumed intention to retain the life interest was rebutted by direct evidence, but that as to the remainder is not rebutted. His claim finally succeeded on appeal to the High Court of Australia. The significance of Napier for us is the possibility for a partial rebuttal of the presumption of resulting trust even as between cohabitees where no presumption of resulting advancement can arise.

Given the relationships involved in both Young v Sealey and Napier v Public Trustee, it is respectfully submitted that it would be a strained reading of paragraph 105 of Lau Siew Kim to limit its effect to spouses. This reading is also inconsistent with paragraph 108 of Lau Siew Kim.

Alternative route: Survivorship and Vandervell v IRC

Finally, there is an orthodox route to reaching the nuanced outcome. It involves combining the extinctive effect of the right of survivorship with the principle in Vandervell v IRC.²³(1967) 2 AC 291. No reliance on any gift of or trust over the right of survivorship is required.

In Vandervell v IRC, the subject matter was shares in a private company. Mr Vandervell, who ultimately owned the shares, wished to make a charitable donation to the Royal College of Surgeons in a tax-efficient manner. The shares were held on trust by a bank for Mr Vandervell at the outset. The structure of the donation was as follows:

1. The bank, on Mr Vandervell’s instructions, transferred the shares to the College.
2. The company then declared dividends which were paid to the College. The College, being a charity, could then recover taxes that been paid on the dividends prior to declaration.
3. On receipt of the shares, the College then gave Vandervell Trustees Ltd an option to purchase the shares for £5,000.

The structure was intended to allow the College to receive the dividends tax-free, and to prevent Mr Vandervell from being liable for tax on the dividends since he would have no interest in the shares. However, there was no express declaration of trust over the shares which would be purchased by Trustees from the College. Mr Vandervell therefore remained liable for tax on the dividends because the option to purchase (and subsequently the shares) ended up being held on trust for him under a failed trust resulting trust.

However, the Revenue made another argument that was unsuccessful. The argument was that although the bank conveyed legal title to the shares to the College, there was no effective disposition of the equitable title by Mr Vandervell in step a. above because the English equivalent of section 7(2) of the Civil Law Act 1909 had not been complied with. On this argument, Mr Vandervell was liable for tax because he never parted with the beneficial interest in the shares in step a. The House of Lords rejected this, holding that the transfer to the College gave the College absolute title to the shares, with a corresponding destruction of the original beneficial interest that Mr Vandervell had. This must be correct. Otherwise, the College would at all times have been holding the shares on trust for Mr Vandervell, and would not be beneficially entitled to the dividends.

The upshot of Vandervell v IRC is therefore that where the beneficiary of a trust causes the trustees to transfer legal title in trust property to a third party with the intention that the third party takes absolutely, the beneficiary’s equitable interest is extinguished in the transfer of legal title by the trustee to the third party.

Armed with this principle, we can then explain how the surviving joint tenant ends up the sole absolute owner upon the passing of the other joint tenant:

1. While the first joint tenant is alive, both joint tenants hold the property on resulting trust solely the first joint tenant’s benefit.
2. When the first joint tenant passes away, legal title is transmitted into the survivor’s sole name by virtue of the extinction of the deceased’s legal title.
3. The evidence will need to establish the first joint tenant’s actual intentions that the survivor is to take absolutely upon transmission.
4. As in Vandervell v IRC, the survivor then takes the property absolutely with the first joint tenant’s beneficial interest being destroyed.

Significantly, since no title of any form is transferred, there is no testamentary disposition that can be subject to the Wills Act 1838,²⁴This incidentally addresses an objection to the nuanced position argued in Young v Sealey (1949) Ch 278 at 287 – 288 citing Irish and one line of Canadian authority. nor is there any disposition of an equitable interest that can be subject to section 7(2) of the Civil Law Act 1909. In this way, the nuanced outcome can be achieved on the operation of survivorship of the legal title alone.

This argument also finds support in In re Reid,²⁵(1921) 50 Ont LR 595. where a joint account held by father and son, with the funds coming from the son. The son’s intention was for the son to retain exclusive use of the account during the son’s lifetime, with the father to beneficially receive whatever was left on the son’s passing (much like in Young v Sealey). The son passed away from illness some three weeks after the account was opened. The bank account was similarly held to belong to the father on the basis of an effective gift by the son.

Conclusion

It is therefore respectfully submitted that the legal arguments made in Ng Lai Kuen against the nuanced outcome being generally open to all joint owners of property cannot be reconciled with Lau Siew Kim and is not consistent with established principle. The proposition stated therein should therefore be treated with circumspection.