Court of Appeal Rejects Resulting Trust Claim in 99-1 Condo Dispute

The 99-1 property ownership arrangement is a controversial one and has recently landed agents and lawyers in court. Under current rules, Singapore citizens pay 20 per cent ABSD when purchasing a second residential property and 30 per cent for a third and subsequent home.

The 99-1 arrangement is sometimes used by co-owners seeking to purchase two properties without incurring the levy. Under the scheme, a first property is bought in a 99-1 ratio, allowing both parties to obtain housing loans and use Central Provident Fund (CPF) monies for the purchase. The co-owners subsequently decouple their interests in the first property, with the 1 per cent owner transferring his share to the 99 per cent owner before purchasing a second home in his sole name without incurring ABSD.

In December 2019, Millie Wong and Jake Ngor, who were then in a relationship, purchased a condo unit in Hillcrest Arcadia for S$1.9 million. The property was registered in a 99-1 ratio, with Wong holding the bigger stake.

Ngor contributed S$359,949.42 towards the purchase while Wong contributed S$159,678. The remainder was financed through a mortgage loan serviced mainly through the parties’ CPF monies and rental proceeds from the property.

After the relationship ended in 2020, a dispute arose over the parties’ interests in the condo, with Ngor later seeking a declaration that he held a 71 per cent beneficial interest in the property despite his registered 1 per cent title share.

Ngor had argued that the parties initially intended to purchase the property in equal shares before agreeing to the 99-1 arrangement. According to his case, Wong would become fully entitled to the property only if Ngor cheated on her or if he later transferred his share to her so that he could purchase a second property in his sole name. Since neither condition was fulfilled, Ngor argued that he retained a larger beneficial interest in proportion to his financial contributions.

Wong’s case was that she was “insecure in the relationship” and Ngor “promised to give her 99 per cent of the property” to “assure her that he would not cheat on her”.

The High Court judge found that Ngor did not intend to immediately and unconditionally benefit Wong with his financial contributions to the condo unit, but only if he cheated on her, thus holding part of her registered interest on a resulting trust for him. The judge also found that the resulting trust arose as an incidental consequence of an illegal purpose of understamping but determined that denying the claim would be a disproportionate response to the illegality.

On appeal, Wong argued that the evidence did not support the finding of a resulting trust. She said the High Court had erred in allowing Ngor’s claim despite the illegality issues surrounding the 99-1 arrangement.

The Court of Appeal found that the evidence showed the parties intended the 99-1 ratio to reflect both their legal and beneficial ownership of the property. It also noted that both parties did not understand the distinction between legal and beneficial ownership, and there was no evidence that they intended to own the property differently from their registered shares.

Delivering the decision, Justice Hri Kumar Nair said: “The court must first analyse the evidence from which the transferor’s intention may be inferred and recourse to presumptions may only be necessary in cases where there is no or insufficient evidence from which such an inference may properly be drawn.”

Although the apex court noted that it was unnecessary to decide the illegality issue after finding that no resulting trust arose, it observed that, if such a trust existed, recognising it would effectively endorse an intention to evade ABSD and undermine Singapore’s stamp duty regime.

The court said that the resulting trust over the property is a “precise legal arrangement”, which undisclosed to the authorities, would have “allowed Ngor to retain a beneficial interest in the property whilst purchasing a second property without incurring ABSD, thereby amounting to tax evasion”.

“The mere existence of a statutory mechanism to retrospectively correct an illegality does not detract from the fact that it is impermissible and unacceptable for parties to deliberately structure their transactions in a way which evades their tax obligations,” said the judge. He added: “Where the illegal purpose in question involved dishonesty, it will be extremely rare that the financial consequences of denying a claim will outweigh the gravity of the illegality.”

The court has ordered Ngor to pay Wong S$50,000 in costs for the appeal.