Chee Yin Meh v Sim Guan Seng and others [2018] SGHCR 14

This decision concerns an application for specific discovery (“the Application”), in which the central issue was as follows: should a party claiming a beneficial interest in a piece of property under an alleged common intention constructive trust be ordered to give discovery of documents relating to her financial contributions towards that property?

On 16 October 2018, I granted the discovery sought subject to certain limitations as described in [38] below, and now provide written grounds for my decision.

Background

(a) 1% of the purchase price (ie the option fee) was paid out of an Oversea-Chinese Banking Corporation account held jointly in the names of Mr Fan and the Plaintiff (“the OCBC Joint Account”) in May 2011, with another 15% of the purchase price paid out of the same account in August 2011.

(b) 4% of the purchase price (ie the exercise fee) was paid out of a Post Office Savings Bank account held jointly in the names of Mr Fan and the Plaintiff (“the POSB Joint Account”) in May 2011.

(c) 80% of the purchase price was to be paid by way of a mortgage loan from DBS Bank, which was taken out in Mr Fan’s sole name (“the DBS Mortgage Loan”).

(d) The renovation costs were paid entirely from a separate loan from DBS Bank, which was also taken out in Mr Fan’s sole name (“the DBS Renovation Loan”).

Mr Fan was subsequently adjudged bankrupt on 30 March 2017. Mr Sim Guan Seng, Mr Khor Boon Hong and Mr Goh Yeow Kiang Victor (“the Defendants”) were appointed as private trustees pursuant to the bankruptcy order. The Defendants sold the Property in the process of realising the assets of Mr Fan’s estate.

On 11 October 2017, the Plaintiff’s then-solicitors wrote to the Defendants’ solicitors, enclosing another 100 pages of documents “evidencing loan servicing payments, [the Plaintiff’s] financial contributions to the payment of the Purchase Price of the [Property] and further relevant documents”.

(a) From 2011 to 2015, the 15% paid out of the OCBC Joint Account came from a CIMB Bank account held jointly in the names of Mr Fan and the Plaintiff (“the CIMB Joint Account”). The funds for the CIMB Joint Account, in turn, came from a term loan from CIMB Bank (“the CIMB Loan”). The DBS Loan, the CIMB Loan and the DBS Renovation Loan were serviced by the balance of the disbursement under the CIMB Loan itself, as well as funds from the POSB Joint Account.

(b) From 2016 to 2017, the DBS Loan and the DBS Renovation Loan were serviced by funds from the POSB Joint Account and a POSB account held solely in Mr Fan’s name (“Fan’s POSB Account”). In turn, the funds in the POSB Joint Account and Fan’s POSB Account allegedly came from the Plaintiff’s cash deposit as well as other DBS and UOB accounts held solely in the Plaintiff’s name.

In the light of the web of financial arrangements, the Defendants’ solicitors repeatedly requested the Plaintiff to furnish documents required for identifying the transactions and the source of the funds in the various accounts. The most recent request was made on 17 August 2018. The Plaintiff again objected to providing the documents sought, thus resulting in the Application being taken out on 13 September 2018.

As a footnote, given the extent of factual disagreement in relation to the Plaintiff’s financial contributions, it was somewhat puzzling that the substantive dispute was proceeding by way of an OS rather than a writ. However, the distinction did not have any impact on my decision, as neither party contended that discovery principles operated differently in an OS situation. Indeed, O 24 r 4(1) of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“Rules of Court”) specifically states that the court may make a discovery order under O 24 r 1 of the Rules of Court regardless of the mode of commencement of proceedings (ie “whether begun by writ, originating summons or otherwise”).

The Application

By way of the Application, the Defendants sought specific discovery of documents that would enable them to determine the sources of the funds for the OCBC Joint Account (from 1 January 2011 to 30 September 2011), the POSB Joint Account (leading up to and after May 2011), the DBS Loan (from 2011 to 2017) and the CIMB Loan (from 2011 to 2017). The Defendants specified that the documents sought included documents that would enable the identification of those who had deposited money into or received monies withdrawn from the accounts in question.

In the lead up to the hearing, the Defendants independently managed to obtain account statements for some of the accounts held solely and in joint names by Mr Fan, as set out in the 4 October 2018 affidavit of Mr Goh Yeow Kiang Victor. As such, they were able to reduce the scope of the requests to the account statements which they had hitherto been unable to obtain from the various banks.

The Plaintiff resisted the Application on the basis that the documents sought were irrelevant for determining whether a common intention constructive trust arose, and that the discovery sought was in any event unnecessary.

Issues

The Application gave rise to two issues:

(a) First, whether documents relating to the Plaintiff’s financial contributions in the purchase and renovation of the Property were relevant for determining the existence of the alleged common intention constructive trust.

(b) Second, whether the discovery sought was necessary.

First Issue: Whether the documents sought were relevant

The main issue in the OS concerned whether the Plaintiff had a beneficial interest in a half-share of the Property on the basis of a common intention constructive trust. The first issue in the Application was therefore whether documents relating to the Plaintiff’s financial contributions in the purchase and renovation of the Property were relevant for determining the existence of the alleged common intention constructive trust.

Parties’ Arguments

Counsel for the Plaintiff, Ms Lee Ping (“Ms Lee”), submitted that the documents sought were irrelevant to the OS. The key authority she relied on was the High Court decision of Lai Hoon Woon (executor and trustee of the estate of Lai Thai Lok, deceased) v Lai Foong Sin and another [2016] SGHC 113 (“Lai Hoon Woon”). In particular, she cited the following observations of the court (Lai Hoon Woon at [95]):

Relying on this passage, Ms Lee made two related arguments:

(a) First, as the Plaintiff was proceeding on the basis of common intention constructive trust (contra resulting trust), on the authority of Lai Hoon Woon, it would be incorrect to engage in “strict arithmetic calculus” to determine the extent of the Plaintiff’s beneficial interest in the Property. The Defendants’ attempt to engage in what Ms Lee described as a “forensic accounting exercise” was therefore an unjustified attempt to seek discovery of irrelevant material.

(b) Second, the statement in Lai Hoon Woon that “[t]he focus remains very much on the financial contributions of the parties” applied only where the parties sought to rely on inferred or implied common intention, and not where the common intention arose from express discussion. In this regard, Ms Lee contended that the Plaintiff was relying on express discussions between the Plaintiff and Mr Fan as the basis for the alleged common intention constructive trust, as well as a number of additional points, eg, that the Property was intended to be a family home (rather than an investment property) and that some of the monies paid came from joint accounts (rather than entirely from Mr Fan’s personal accounts). She emphasised that the Plaintiff had at no point represented that she had contributed any specific percentage of the purchase price and renovation costs.

When queried as to why the Plaintiff had adduced considerable amounts of evidence of her financial contributions to the Property, Ms Lee explained that this was by way of “background information” only.

Counsel for the Defendants, Mr Alexander Yeo (“Mr Yeo”), disagreed with Ms Lee’s submissions. He pointed out that in the very passage cited by Ms Lee, the court had clearly recognised that financial contributions were relevant for determining the common intention of the parties. He also added that courts have, on various occasions, considered the sources of funds used for the purchase of property in determining whether a common intention constructive trust arose on the facts, although he acknowledged that these decisions did not relate directly to discovery obligations: see, eg, Wong Meng Cheong and another v Ling Ai Wah and another [2012] 1 SLR 549 and Ng So Hang v Wong Sang Woo [2018] SGHC 162 (“Ng So Hang”).

On the facts of the present case, Mr Yeo submitted that the Plaintiff’s true position was that the alleged common intention was demonstrated by her financial contributions to the Property, as evident from paragraph 1.3.10 of the Plaintiff’s OS Affidavit:

Mr Yeo further pointed out that the bulk of the Plaintiff’s OS Affidavit concerned the complex web of financial arrangements evidencing the Plaintiff’s financial contributions (see [7] above). This approach was entirely consistent with the approach taken by the Plaintiff in the early round of letters, in which she had of her own volition adduced in excess of 100 pages of account statements, cheque stubs, cashier’s orders and other evidence of cash transfers, and had taken the position that her financial contributions supported the alleged common intention constructive trust (see [5] and [6] above).

Mr Yeo also contended that the circumstances of the case further rendered relevant and necessary the discovery of documents relating to the Plaintiff’s financial contributions. In particular, Mr Fan appeared to have been the only gainfully employed person in the marriage at the relevant time and it was therefore curious as to how the Plaintiff managed to contribute funds towards the Property. Furthermore, records suggested that the Plaintiff may have withdrawn more money from the joint accounts than she had contributed, and thus cannot claim to have contributed through the joint accounts. Finally, the source of funds for the repayment of certain loans raised concerns over whether the loans were in fact used to pay for the Property; for instance, there appeared to be round-tripping of the CIMB Loan funds to pay for the CIMB Loan itself, instead of being used to pay for the Property.

Decision

In determining the first issue, it was necessary to examine briefly the law on common intention constructive trusts. In essence, a person acquires a beneficial interest in a property pursuant to a common intention constructive trust when he relies, to his detriment, on a common intention that the beneficial interest in that property is to be shared. Such common intention may arise from express discussion, be inferred from evidence of that person’s financial contributions to the purchase price of the property, or exceptionally, be implied by other relevant conduct of that person: see, eg, Lai Hoon Woon at [95].

Where parties claim, in the absence of an express trust, beneficial interests in a property that differ from the legal interest, common intention constructive trust analysis must be considered in the context of the analytical framework for approaching such situations, as set out in Chan Yuen Lan v See Fong Mun [2014] 3 SLR 1048 (“Chan Yuen Lan”) at [160]:

The opening words of [160(a)] of Chan Yuen Lan made clear that financial contributions were relevant to the first stage of inquiry, which concerned the issue of whether a presumption of resulting trust arose. However, there was no express statement on whether financial contributions would be relevant if a party sought only to rely on establishing a common intention constructive trust, without claiming any beneficial interest under a resulting trust. I therefore considered two subsequent High Court decisions which provided further guidance on the relevance of financial contributions in common intention constructive trust analysis.

(a) In Lai Hoon Woon, the court found that while non-financial contributions may be relevant in discerning the common intention, these would be “the exception”, and “[t]he focus remains very much on the financial contributions of the parties” (Lai Hoon Woon at [95]). This was because financial contributions lay down “a clear if not the clearest marker of a common intention”, and would also serve the additional purpose of constituting relevant evidence of conduct in reliance on the common intention (Lai Hoon Woon at [114]).

(b) Similarly, in Ng So Hang, the court held that the making of financial contributions towards the purchase price is “generally necessary for a constructive trust to arise”; without such financial contributions, and in the absence of some other form of detrimental reliance, there would be little basis for imposing a constructive trust on the back of a bare promise (Ng So Hang at [66], citing John McGhee, Snell’s Equity (Sweet & Maxwell, 33rd ed, 2015) at para 24-057).

In the light of the above, while I agreed with Ms Lee that the apportionment of beneficial interest in common intention constructive trust analysis was not based on a “strict arithmetic calculus” (see [16(a)] above), it did not follow that financial contributions were therefore irrelevant. Indeed, Lai Hoon Woon and Ng So Hang have suggested that financial contributions are usually the main focus of the analysis.

I would add a further observation which may provide an additional perspective from which to approach the relevance of financial contributions where a party has claimed a beneficial interest under a common intention constructive trust, without claiming any such interest under a resulting trust. As mentioned at [24] above, Chan Yuen Lan did not deal directly with such a situation. However, I would venture to suggest that even in such a case, if that party has adduced evidence of his or her financial contributions, that party should generally be made to prove the contributions made. Put another way, if some evidence of financial contributions has been, or will be, placed before the court, all relevant evidence of such contributions ought to be adduced even if the party does not claim any interest under a resulting trust. This is to ensure that the court may determine, in accordance with the approach in Chan Yuen Lan, the eventual holding of beneficial interests in the event that there is insufficient evidence to support the existence of a common intention constructive trust.

I turn now to the facts of the present case. Here, it is patently clear from the Plaintiff’s OS Affidavit (see [7] and [19]–[20] above) and the earlier letters (see [5]–[6] above) that the Plaintiff had expended considerable effort in evidencing her financial contributions, and intended to put these in issue in the OS. Indeed, the Plaintiff’s OS Affidavit stated that her solicitors had provided “information” to the Defendants which “clearly establish Fan’s and my common intention to hold [the Property] in equal shares”, such “information” being a reference to the earlier letters as well as further documents relating to the Plaintiff’s financial contributions. There were also express statements in the Plaintiff’s OS Affidavit which suggested that her personal financial contributions were very much in issue. For instance:

The Plaintiff cannot on the one hand delve extensively into her financial contributions as evidence of the alleged common intention, while on the other hand take the position that documents relating to her financial contributions are irrelevant. If she wished to buttress her claim for a common intention constructive trust by relying on evidence of her financial contributions, surely the Defendants ought to be permitted to examine the full extent of these contributions. Indeed, while Ms Lee submitted that the financial contributions were “background information” only (see [17] above), she also took the position that these were “a factor to show that there was a common intention”.

The analysis may have been different if the Plaintiff had not adduced any evidence of her financial contributions, and instead made clear her intention to rely only on express discussions to demonstrate the common intention and some other manner of detrimental reliance. However, that was clearly not the situation here. Indeed, other than the Plaintiff’s financial contributions, the Plaintiff’s OS Affidavit did not mention any other significant form of detrimental reliance, which is one of the key elements for establishing a common intention constructive trust (see [22] and [24(b)] above).

Even proceeding on the basis of Ms Lee’s submission that the financial contributions were intended solely as “background information”, it would appear that more information to verify her financial contributions would still be required. Otherwise, there would be uncertainty as to the weight to be given to the Plaintiff’s supposed financial contributions in the absence of any countervailing evidence. Furthermore, in view that some evidence of financial contributions had already been placed before the court, the absence of a complete set of evidence may give rise to the difficulties alluded to (see [26] above) in the event that the Plaintiff fails to establish a common intention constructive trust.

I therefore found that the discovery sought in the Application was relevant to the OS.

Second Issue: Whether the discovery sought was necessary

The second issue in the Application concerned the requirement of necessity in O 24 r 7 of the Rules of Court:

Parties’ Arguments

Ms Lee contended that the discovery sought was oppressive as it required the Plaintiff to account for every transfer made in and out of multiple personal and joint accounts, over a period of one to seven years. It would also unjustifiably intrude into the Plaintiff’s personal matters, given that the discovery requests required her to identify the persons or entities who deposited money into or received money withdrawn from the accounts, even where these had nothing to do with the Property. In addition, she contended that the discovery requests were vague and unspecified, and that the Defendants were obliged to clearly delineate the documents required and to ensure that the requests were not wider than necessary. Ms Lee also surmised that even if discovery was ordered, it would be “almost certain” that the Defendants would have to inquire into the purpose of each deposit and withdrawal (ie whether it was for the benefit of the Plaintiff, Mr Fan, or both). As a result of all of the above, the probative value of the documents sought would be so slight such that, even if they existed, this would not justify the inconvenience that such discovery would cause to the Plaintiff.

Mr Yeo pointed out that as a starting point, the court may order discovery even if it would cause inconvenience to the Plaintiff (citing Singapore Court Practice 2018 (Jeffrey Pinsler gen ed) (LexisNexis, 2018) at paragraph 24/1/5). He further went on to argue that the requests were not oppressive at all, raising four arguments:

(a) First, the Plaintiff had already gone through the transfers and transactions and exhibited those favourable to her case in the Plaintiff’s OS Affidavit (while, inter alia, redacting the unfavourable portions).

(b) Second, the alleged complexity of the discovery exercise arose entirely from the very nature of the Plaintiff’s own claims in the OS, where she delved into a complex web of financial arrangements. The complexity involved made it even more necessary for proper discovery to be given, so as to ensure that the Plaintiff’s financial contributions could be accurately assessed.

(c) Third, the contention that the Defendants had to inquire into the purpose of each deposit and withdrawal was “bizarre”, because the Plaintiff had seen no need to provide any explanations for the transfers or transactions which she had exhibited in support of her position. Furthermore, such a contention would only suggest that the documents provided would be insufficient, and might well be a basis for further rather than less discovery.

(d) Fourth, the Defendants had successfully obtained most of the relevant account statements involved, and had specifically listed the account statements that remained outstanding (see [11] above). This narrowed the scope of discovery sought, and undermined the Plaintiff’s arguments on oppressiveness.

Decision

It could hardly be said that the discovery sought was oppressive, particularly when keeping in view that the Defendants had proactively narrowed the scope of discovery (see [11] and [34(d)] above). The remaining discovery requests generally required the Plaintiff to request for her account information from the respective banks to, which does not appear to be a particularly onerous task. Indeed, the fact that the Plaintiff had already exhibited redacted versions of some of her account statements in her OS Affidavit suggested that she may already be in possession of the relevant information.

I therefore sought Mr Yeo’s submissions on a reasonable “floor” for the value of transactions for which discovery ought to be given at the present stage of the proceedings. Mr Yeo suggested the value of $20,000. Having considered a sampling of the account statements that had been independently obtained by the Defendants, I agreed that $20,000 would be a reasonable “floor” for discovery at this time.

Conclusion

For the foregoing reasons, I granted the Application subject to the limitations described in [38] above. I further directed the Plaintiff to make the necessary requests to the banks within two weeks and to file and serve a list of documents within two months of the specific discovery order, with liberty to apply for a reasonable extension of time if so required.