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Singapore – Disputing The Legality Of A Trust Deed On The Ground Of Non-Registration.

16 October, 2014

 

Legal News & Analysis – Asia Pacific – Singapore –  Construction & Real Estate

 

In a dispute over land involving a trust deed, the legality of the trust deed can be challenged in different ways. For example, a common argument is that a party did not read or understand the trust deed before signing it or that the terms of the trust deed did not create a valid trust. Another possible argument, which recently arose in Zulaikha Bee Binte Mohideen Abdul Kadir v Quek Chek Khiang and others [2014] SGHC 168 (“Zulaikha”), is that the trust deed was not properly registered and is thus inadmissible as evidence in a court of law. The High Court, however, held in Zulaikha that non-registration of the trust deed with the Registry of Deeds itself did not render the trust deed inadmissible as evidence or invalid.

 
Facts

 
Zulaikha involved a family dispute concerning the beneficial ownership over a plot of land (“the Land”) on which three houses were located – 261 JCP, 261A JCP and 263 JCP. The legal owner of the Land (“F”) was the mother of the plaintiff (“P”) and the third defendant (“N”).

 
In 1956, P’s husband (“S”) purchased the Land, who conveyed it to F in 1960. F then mortgaged the Land to S and leased 261A JCP to N’s husband (“R”), who in turn subleased it to a third party (“T”). In 1967, F executed a trust deed vis-à-vis 263 JCP, which she was to hold as trustee for P’s brother-in-law. This trust deed was registered.

 
In 1971, P and F executed a trust deed, in which F declared that she was to hold the Land as trustee for P (“the 1971 Trust Deed”). When the 1971 Trust Deed was executed, the Land was under the purview of the Registration of Deeds Act (“RODA”). The 1971 Trust Deed was, however, not registered.

 
After S and F passed away, P proceeded to recover possession of 261AJCP by issuing, in 2001, a notice to quit to R. Subsequently, T’s wife agreed to give vacant possession of 261A JCP after R’s representative commenced legal proceedings in 2003. In 2006, P herself instituted proceedings in the District Court against T’s wife and R’s representative to recover possession of 261A JCP and arrears of rent. In 2010, P’s claim was dismissed as the District Court did not have jurisdiction to hear the matter.

 
P then commenced proceedings in the High Court against T’s wife, R’s representative, N and F’s estate. T’s wife was, however, not involved in the High Court proceedings as P had obtained judgment in default of appearance against her in 2013.

 

In the High Court, P claimed to be the beneficial owner of 261 JCPand 261A JCP based on the 1971 Trust Deed. The remaining three defendants alleged that the 1971 Trust Deed was invalid on several grounds. One of the grounds was that as the 1971 Trust Deed was not registered, s 4 of the RODA rendered the 1971 Trust Deed inadmissible.

 
Section 4 of the RODA states:

 

All instruments affecting land may be registered


Subject to this Act and the rules, all assurances executed or made,
and all probates and letters of administration granted, before or after
30th November 1988 by which any land within Singapore is affected
and which have not been registered under any repealed enactment,
may be registered in such manner as is hereinafter directed, and
unless so registered shall not be admissible in any court as evidence
of title to such land.” [emphasis added]

 
Decision

 
The High Court observed that s 4 of the RODA did not seem to apply to trust deeds and that the definition of “assurance” in s 2(1) of the RODA, which in turn referred to the term “conveyance” that was also defined in the RODA, did not clarify matters. Although the defendants argued, relying on two Straits Settlements cases, that a declaration of trust was an “assurance” or “conveyance” which must be registered under s 4 of the RODA, the High Court was not convinced as other authorities suggested otherwise.

 
Nevertheless, the High Court based its decision on the notion that s 4 of the RODA was not a bar to “a proper vindication of the true proprietary relationship” as between the registered proprietor (who is the trustee) and the beneficiary. To hold otherwise would allow “the trustee a convenient escape to obligations which he or she clearly undertook to observe under the trust”. As P was seeking to exercise her rights as a beneficiary against F, the trustee and registered proprietor of the Land, the 1971 Trust Deed was admissible as evidence so as to achieve a “proper vindication” of the “true proprietary relationship” between P and F’s estate.

 
The High Court also rejected the defendants’ other grounds for alleging that the 1971 Trust Deed was invalid. The High Court found that F had duly and properly executed and attested the 1971 Trust Deed. In addition, F had understood the contents of the 1971 Trust Deed when she executed it, after it had been interpreted and explained to her. There was also no evidence that the 1971 Trust Deed, which was duly stamped,was a sham document. Non-registration itself was not conclusive evidence that the 1971 Trust Deed was a sham.

 
As for the fact that P only decided to exercise her rights under the 1971 Trust Deed after more than 30 years, the High Court held that her action was not time-barred as no period of limitation applied under the Limitation Act given that the 1971 Trust Deed created an express trust and P, as the beneficiary, was seeking to enforce it. Neither did the doctrine of laches apply as under the 1971 Trust Deed, P was allowed “to decide at any time to convey the said property to any person that she decides” and no delay therefore arose. Moreover, the defendants were not prejudiced by any purported “delay” as this was not a case where most of the key witnesses had passed away. On the contrary, the testimonies of the key witnesses indicated that F understood the contents of the 1971 Trust Deed.

 
In conclusion, the High Court declared that P was the beneficial owner  of 261 JCP and 261A JCP.

 
Comment

 
The Zulaikha decision demonstrates that a trust deed can be valid and admissible as evidence despite non-registration, even though a plain reading of s 4 of the RODA suggests that registration is a pre-requisite for the admissibility of the 1971 Trust Deed. Putting aside technical arguments as to whether, in the first place, a trust deed is registrable as an “assurance” under s 4 of the RODA, the High Court, in effect, seemed to have adopted a purposive construction by holding that s 4 was not intended to preclude a determination of the property rights between the registered proprietor of the land and the beneficiary.

 
The High Court’s judgment was fortified by the fact that no issue of a subsequent acquisition of a legal title by another party arose in this case. In our view, a different outcome may have been reached if F’s legal title to the Land had been acquired by another party, as P’s application would therefore not strictly be a vindication of her rights as a beneficiary vis-à-vis F’s estate.

 
Moreover, the High Court noted that T’s wife was no longer a tenant of 261A JCP. It remains to be seen what the outcome will be if, in a future case, the chain of title ownership is more complex and third party rights are involved.

 

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For further information, please contact:

 

Sandra Han, Partner,  RHTLaw Taylor Wessing
sandra.han@rhtlawtaylorwessing.com

 
Chen Yiyang,  RHTLaw Taylor Wessing
yiyang.chen@rhtlawtaylorwessing.com

 

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