$7m house legally belongs to firm, not buyer's son: Top court

The High Court had ruled in April last year that the 9,708sq ft Glasgow Road property, though registered in the name of family-owned Geok Hong Company, belonged to the estate of one sibling, Mr Tan Tiong Luu.
The High Court had ruled in April last year that the 9,708sq ft Glasgow Road property, though registered in the name of family-owned Geok Hong Company, belonged to the estate of one sibling, Mr Tan Tiong Luu.ST FILE PHOTO

A property worth more than $7 million changed hands when an appeal court ruled it belonged to a family-owned company instead of only one of the children as found by the High Court last year.

The man had argued earlier that his father had bought the house for him but registered it in the company's name so that it would not go to his wife in the event of a divorce.

But the Court of Appeal last Thursday allowed the appeal by Geok Hong Company as it found that the family of the late Tan Tiong Luu had failed to rebut the presumption that the company, as legal owner of the property, was also the beneficial owner.

The High Court had ruled in April last year that the 9,708sq ft Glasgow Road property, though registered in the name of family-owned company Geok Hong, belonged to the estate of one sibling, Mr Tan Tiong Luu, who died in 2012.

His widow, Madam Koh Ai Gek, had claimed the house, which Mr Tan had bequeathed her in his will, based on a constructive trust - an asset legally held on behalf of a separate beneficial owner - over the property.

In assessing the evidence overall, the High Court found the property was held on trust by the company for Mr Tan Tiong Luu and ordered its return to the dead man's estate.

The court had then recognised that documentation and objective evidence on both sides were lacking in many respects and had reached its judgment on the balance of probabilities.

The company, represented by Rajah & Tann Senior Counsel (SC) Lee Eng Beng and lawyer John Seow, appealed to the top court in January, pointing to the default rule that where both parties fail to prove their positive cases, it is presumed the beneficial interest in the property would follow the legal interest.

SC Lee argued that the respondents had to prove "what one dead man said to another dead man 40 years ago", which was difficult without direct or documentary evidence and without cross-examination.

Madam Koh, her three sons and daughter-in-law, who defended themselves in the appeal court, argued that Mr Tan Tiong Luu was expressly assured by his father, Mr Tan Geok Chuan (TGC), that the property belonged to him and all company members knew of this arrangement. "The company was run by a typical Chinese family in Singapore in the 1970s with TGC as the head and Tiong Luu as his most capable child," they added.

A statutory declaration made by Mr Tan Tiong Luu nine days before he died in 2012 was pivotal to their case. In the statutory declaration, he had declared that TGC told him the Glasgow Road house was bought for him in 1975 but registered in the company's name to make it "divorce-free".

He said his father did this because he did not want Mr Tan Tiong Luu's wife to get a share of the house if there were a divorce.

But the Court of Appeal, in judgment grounds last Thursday, pointed out the authenticity of the statutory declaration did not mean its contents were also true.

"What would have happened if (Tiong Luu) had passed away suddenly? The company would be none the wiser of this alleged arrangement and would continue to be its legal and beneficial owner," wrote Judge of Appeal Steven Chong on behalf of the court, which included Justice Belinda Ang and Justice Quentin Loh.

The lack of documentary evidence to prove the oral remarks by Mr Tan Tiong Luu in the statutory declarationwas "a significant evidential gap'' which could not be ignored, said the court.

"Given that the oral representation cannot be established, there is thus nothing to rebut the presumption that the company as legal owner is also the beneficial owner of the property."

The court, in allowing the appeal, ordered $50,000 in costs to be paid to the company by the respondents and the costs in the earlier High Court trial to be assessed in the company's favour. Mr Tan Tiong Luu owned 11.8 per cent stake in the company as at 1994, noted the court.

A version of this article appeared in the print edition of The Straits Times on March 04, 2019, with the headline '$7m house legally belongs to firm, not buyer's son: Top court'. Print Edition | Subscribe