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Singapore – Charitable Trusts.
1 May 2014

Legal News & Analysis – Asia Pacific – Singapore  Dispute Resolution

 

In the recent case of Koh Lau Keow and others v Attorney-General [2014] SGCA 18, the Singapore Court of Appeal (“CA“) examined the requirements necessary to constitute a valid charitable trust.

 

Brief Facts

 

In 1948, the first plaintiff, Koh Lau Keow (“Koh“) acquired a plot of land (“the Property“) to establish a temple and provide a home for three unrelated elderly women (“the Aunts”).

 

In order to ensure that Koh enjoyed a property tax exemption, Koh was advised by her then lawyers to sign a document declaring that the Property was being and would continue to be used for religious purposes. To that end, a declaration of trust was executed in October 1960 (“the Trust“). The preamble to the Trust stated that the settlors (ie, Koh and the Aunts) were “desirous of dedicating [the Property] to charity”. The Trust Deed further stipulated that the Property was to be used for “all or any” of the following purposes, including “as and for a home or sanctuary for such Chinese women vegetarians of the Buddhist faith as may from time to time be chosen by
the trustees of this deed” (“Purpose B“).

 

Originating Summons No. 1021 of 2012 was instituted by Koh and the other trustees of the Trust for a declaration that the Trust was void and that Koh was the sole beneficial owner of the Property. The action below was dismissed by the High Court who held that the Trust was a valid charitable trust.

 

It was not disputed by the parties that:

 

a) As the Trust was stated to be “in perpetuity” and was a purpose trust with no definite beneficiaries, the Trust had to be a charitable trust in
order for it to be valid.

 

b) Under common law, for a trust to be a charitable trust, its objects must be wholly charitable. However it should be noted that this position has been modified by the Trustees Act. This provision in the Trustee Act does not apply to trusts declared before 14 July 1967, such as the one in this case.

 

c) For a purpose to be classified as charitable, it must fall within one of the four heads of charity:

 

(i) Trust for the relief of poverty;
ii) Trusts of the advancement of education;
(iii) Trusts for the advancement of religion; and
(iv) Trusts for other purposes beneficial for the community.

 

Koh appealed against the High Court’s decision, and the only issue before the CA was whether Purpose B, on its true construction, was charitable because it fell into one of
the above categories. The CA found that among the four categories, only the first and third categories were relevant to the current case (ie, relief of poverty and advancement of religion).

 

The Decision of the Court of Appeal

 

The CA held that it was trite law that where a bequest was capable of two constructions, the Court would adopt the one that would make it effectual. With that principle in mind, the CA examined the construction of Purpose B.

 

Trust for the Relief of Poverty

 

In determining if Purpose B fell into the category of “Trust for the relief of poverty”, the CA looked at the Trust Deed as a whole and the surrounding circumstances. The CA found that the phrase “home or sanctuary” was more likely to mean a residence for religious individuals who would practise their faith in the course of their stay. However as Purpose B did not require the trustees to allow only homeless or needy people to stay on the Property, Purpose B could not be said to be charitable on the basis that it relieved poverty.

 

Trust for the Advancement of Religion

 

The CA also held that in order for a trust that purported to advance religion to be considered charitable, it was trite law that there must be a sufficient element of public benefit – individuals who conducted private worship did not satisfy the public benefit requirement. Therefore the CA found that even if Purpose B could be said to advance religion, it did not benefit the public, as Purpose B only benefited the handful of Buddhist Chinese vegetarian women who were chosen in the absolute discretion of
the trustees to live on the Property. Those women were, in fact, Koh’s close friends and relatives.

 

For these reasons, the Court of Appeal held that, since Purpose B, being an independent object of the Trust, was not a charitable purpose, the Trust (being a trust declared before 14 July 1967) was not a valid charitable trust, and thus allowed the appeal.

 

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