LAU SHENG JAN, ALISTAIR v LAU CHEOK JOO RICHARD & Anor

Facts

Lau Sheng Jan, Alistair, aged 26, applied in Originating Application No 492 of 2022 to end a trust and have a property transferred to him. His parents, Lau Cheok Joo Richard and Sng Gek Hong Cynthia, had bought the property in July 2020 for $4.925m and, through a deed dated 27 July 2020 prepared by a solicitor at Lee & Lee, held it as joint trustees for his sole benefit. Clause 7 provided for the legal title to pass to him at his request once he reached 40. The parents later separated and the mother began divorce proceedings. The son wanted the property vested in him so that he, his mother and his sister would keep a home.

The mother agreed. The father, who acted in person, objected. He said the trust was a sham meant to avoid Additional Buyer's Stamp Duty (ABSD), and that the solicitor had advised it could be collapsed after four years so the parents could take the property back. He also relied on an unsigned loan agreement under which the parents would lend the son the purchase price; its purpose was disputed. The mother said the trust was meant to give their only son a legacy property while they were alive, with any ABSD saving only incidental. The court ordered cross-examination on these disputed facts.

Issues

1. Whether the son had a prima facie right to end the trust under the rule in Saunders v Vautier
2. Whether the trust deed was a sham and therefore invalid
3. What test governs an illegality defence raised against enforcing a trust
4. Whether the trust was unenforceable because it was created to avoid ABSD

Holding

Goh Yihan JC allowed the application. He declared that the trust be terminated and ordered the property to be transferred from the parents to the son. The trust was neither a sham nor unenforceable for illegality. Costs were to be agreed within 14 days, failing which the parties were to file short submissions.

Reasoning

The son met the requirements of Saunders v Vautier: he was of full age, a psychiatrist had certified he had no mental disability, and he was the sole beneficiary. His claim could fail only if the father's arguments succeeded.

On sham, the person alleging it bears the burden, against a strong presumption that parties mean what their documents say. The court found the parents, then in their mid-50s, genuinely meant to benefit their son. There was no credible evidence they could not afford the ABSD, since they owned other properties and had substantial funds. The court preferred the mother's account of the solicitor's advice, which was supported by the firm's letter and an attendance note recording that the son could collapse the trust before 40. That note was admissible under the Evidence Act as a record of the solicitor's own advice. The father's own draft loan agreement only made sense if the son held the beneficial interest.

On illegality, the court declined to apply the formal reliance rule from Tinsley v Milligan [1994] 1 AC 340, finding it arbitrary. It adapted the framework in Ochroid Trading Ltd and another v Chua Siok Lui (trading as VIE Import & Export) and another [2018] 1 SLR 363 for trusts. A trust prohibited by statute or falling within an established category is void. A trust created for an illegal purpose is judged by proportionality factors. If unenforceable, the court asks whether another proprietary basis exists, subject to stultification. The restitution stage does not apply to claims to enforce proprietary interests.

Applying this, the Stamp Duties Act did not expressly or by clear implication prohibit such trusts, and given the findings on sham, the trust was not created for the illegal purpose of avoiding ABSD.

From the judgment