Analysis
Morgan J had held that the late Lim Lie Hoa (Madam Lim) had until her death in 2009 held the house, its proceeds of sale and other rights relating to it upon the trusts of a settlement dated 14 December 1985 signed by her and by the appellant Ong Siauw Ping (Ping), her son.
Ping had opposed the claim that the house was held upon the declared or any trust. The only issues raised by the appeal were: (i) whether Madam Lim made a declaration of trust in respect of the house; and, if she did, (ii) whether it was ‘manifested and proved’ by the writing requirements of s53(1)(b) of the Law of Property Act 1925.
Factual background
Madam Lim had three children, referred to in the judgment as Tjoan, Elton and Ping. Madam Lim died on 8 August 2009, leaving a will dated 9 July 2009, which Ping proved as her executor in Singapore in May 2011 and in England in February 2015. He is the sole representative of the estate.
In 1982, Tjoan married Jane Butler, the first claimant. They had three children, the second, third and fourth claimant. Tjoan and Jane separated in 1986 and a decree nisi was granted in 1989 which has never been made absolute.
In December 1985, Madam Lim contracted to buy the house. It completed in January 1986, when Tjoan, Jane and their three children moved out. Tjoan later moved out and Madam Lim later still sued Jane for possession. By February 2006, Madam Lim sold the house for about £3.2m. Jane and her children claimed that Madam Lim had declared a trust of the house in about April 1986 and that, after the sale, the proceeds became held on the same trust.
The facts relating to the purchase of the house and the claimed trust
Morgan J had been unimpressed by Jane’s evidence. The judge based his findings of fact in relation to the claim that there was a declaration of trust primarily on the contemporaneous documents and the inherent probabilities of the case as well as any non-contentious oral evidence.
By 1985, Tjoan, Jane and Madam Lim were looking for a house that Madam Lim would buy and make available for occupation by Tjoan, Jane and their children. There was no suggestion that anything would be payable for their occupation. It was also understood that there would be some sort of trust, the beneficiaries of which would include Tjoan, the children, and Elton: however, Morgan J found at [24] that ‘the precise terms of the trust as contemplated on 14 December 1985 were far from settled or clear’.
Despite her solicitor’s advice as to the proposed ownership of the property, Madam Lim had the property transferred into her sole name.
On 18 February 1986, Mr Coxe the accountant wrote to Madam Lim’s solicitor with what Morgan J said may have been the first suggestion that the property would be held by Madam Lim on a discretionary trust. Mr Coxe suggested that if Madam Lim had already bought the house, and it could not be argued that she had bought it on behalf of the trustees of a settlement to be formed, he would suggest she set up a foreign discretionary trust and sell the property into the trust. Morgan J commented that ‘matters were not arranged precisely in accordance with Mr Coxe’s advice’.
On 25 February 1986, Mr Hyde wrote to Madam Lim stating that a trust had been set up on 14 December 1985. It was common ground that this was wrong and that all that had happened was Madam Lim’s expression of an intention to establish a trust on terms yet to be decided. Morgan J said that the earliest draft of the trust deed in evidence was dated 27 February 1986.
On 3 March 1986, Madam Lim informed Mr Hyde by letter that she would like to appoint Ping as the new and sole additional trustee. The court stated at [27] that the first paragraph of her letter conveyed that Madam Lim had ‘at best little understanding of the nature of the draft settlement’. By return Mr Hydge stated that it was drawn as a discretionary trust, and that to specify in it the shares she wished the five beneficiaries to enjoy would have adverse tax effects.
On 20 March 1986, Madam Lim’s solicitors returned the transfer to HM Land Registry unamended, as the registration was to proceed in Madam Lim’s name alone. The court noted that there was no evidence relating to the giving of these instructions or as to how the change in them came about.
On 14 April 1986, Madam Lim enclosed a copy of a document in the form of the engrossment sent to her on 13 March, the original having apparently been signed by Madam Lim and Ping. Schedule 1, the ‘initial settled property’, was still blank. On the face of it, therefore, the signed document declared trusts in respect of nothing. It was common ground that the original document had been signed by Madam Lim and Ping but not executed under seal. The signing pre-dated the change in the law with regard to the execution of deeds introduced by the Law of Property (Miscellaneous Provisions) Act 1989 and Morgan J noted that, as signed, it was not therefore a deed although he would refer to it as such, as did the Court of Appeal. He found that a copy of the document as executed was enclosed with the letter of 14 April.
On 16 May 1988, Madam Lim wrote to her solicitors to the effect that she would like to cancel the trust.
The judge’s decision
The judge said he decided all questions by reference to English law. The claimants’ assertion had been that Madam Lim made an express declaration of a trust of the house on the terms of the deed she had signed no later than April 1986. If that was true, a question arose as to s53(1)(b) of the Law of Property Act 1925.
The judge said that for an express declaration to be valid it had to be one that sufficiently identified the property the subject of the trust, which required an objective assessment of the words used by and the conduct of the claimed settlor. The claimed settlor is said to be presumed to intend the consequences of his words and actions. The judge held that what had happened gave rise to a trust of the house.
The judge held in relation to s53(1)(b) that the trust Madam Lim had declared was manifested and proved by the letter of 14 April 1986 taken together with the executed trust deed. The judge said that the same result could be achieved by starting with Madam Lim’s letter of 16 May 1988, which recognised that the trust existed at the date of the letter.
The appeal
The Court of Appeal noted that there was no evidence that Madam Lim made any oral declaration of trust in respect of the house. The question was whether it was possible to infer from the documents that by signing the trust deed she was thereby evincing an intention to subject the house to its trusts. Counsel for Ping submitted that on the true interpretation of (i) the signed trust deed and (ii) Madam Lim’s letter dated 14 April 1986 in accordance with the usual contractual principles, a reasonable person would not have understood those documents to mean that Madam Lim was declaring that she held the house on the trusts of the settlement. The Court of Appeal commented at [42] that if those documents were to be read and considered in isolation, they would be disposed to agree with counsel for Ping. Counsel for Ping rejoined that on a consideration of the background circumstances, Madam Lim could not be taken to have intended to create a settlement which would have triggered a large capital transfer tax liability. The Court of Appeal considered that this submission failed on the facts. Mr Hyde had given Madam Lim poor advice on the consequences of creating such a trust.
The Court of Appeal considered that the question for the reasonable person tasked with determining what Madam Lim was up to when executing the settlement is whether: (i) she intended to create a settlement with elaborate trusts that applied to nothing, or (ii) she intended its trusts to apply to the house. The Court of Appeal considered that the reasonable person would be reluctant to accept the first alternative. Madam Lim was to be taken as having understood, and accepted, the essence of the advice that Mr Hyde gave her. The Court of Appeal concluded that ‘on that basis, the inference that she both intended the house to be held on the trusts of the settlement, and regarded it as so held, appears to [me] irresistible’.
Mr Hyde was wrong that the trust was created on 14 December 1985. The so-called maxim that ‘equity looks on as done which ought to be done’ did not have any application to unenforceable expressions of intention. However, there was no evidence that Madam Lim realised that Mr Hyde was wrong. She would have read his letter of 25 February accordingly and would have thought that the document sent to her would, when signed, govern the trust in respect of the house. The inference from that was that when she signed the deed, she must have intended the house to become subject to the trusts of the deed. This was the ‘objective of what she had set out to achieve as from the moment that she bought the house’. There was also an explanation for how Madam Lim might have regarded the house as being subject to the trusts of that deed given that she would have seen the deed made no reference to it: the reasonable man would not regard it as remarkable that Madam Lim would have assumed, understood and intended that the house would automatically become subject to the trusts of the deed when she signed it.
Accordingly, as to the first issue:
- 1. The Court of Appeal concluded that the reasonable person would have no hesitation in concluding from the correspondence that, when she signed the settlement, Madam Lim understood and intended that the house should thereupon become subject to its trusts.
- 2. An express oral declaration of trust was not necessary: for there to be a clear declaration of trust, conduct could suffice.
As to the second issue:
- 1. The Court of Appeal expressed a reservation about the letter of 14 April 1986.
- 2. However, they confirmed the judge’s finding on the letter of 16 May 1988, which they found ‘provided sufficient proof and manifestation for s53(1)(b) purposes of the trust she had created’.
The appeal was dismissed.
JUDGMENT SIR COLIN RIMER: Introduction [1] On 17 June 2015, following an eight day trial in the Chancery Division in February and March, Morgan J delivered a reserved judgment occupying 342 paragraphs. It dealt with many issues in a dispute between members of the Ong family. The claim related to a house at 39 Sheldon …Continue reading "Ong & ors v Ping [2018] WTLR 1365"