True Economic Substance of Transaction Relevant in Determining Presumption of Resulting Trust

23 Jan 2024 CaseWatch

In Kotagaralahalli Peddappaiah Nagaraja v Moussa Salem and others [2023] SGHC 6 (KPN v Moussa Salem), the General Division of the High Court of Singapore (General Division) adopted the approach taken in the English case of Ltd and others v Cooper and others [2008] All ER (D) 183 (Fanmail), and held that, in determining whether a presumption of resulting trust has arisen over property in favour of a party, the court may have regard to the true economic substance of the parties’ transaction seen in its wider context, and not just the direct consideration for the property.

Relying on Fanmail, the General Division found, despite the execution of a trust deed declaring that shares in a company were held on trust for the plaintiff, the first defendant and another party in equal proportions, that all shares were held on a presumed resulting trust in favour of the first defendant alone, as the first defendant had borne the consideration for the incorporation of the company, having paid the fees and disbursements of the company’s incorporation and having contributed the company’s initial paid-up capital.

On 23 October 2023, the Appellate Division of the High Court of Singapore (Appellate Division) heard and dismissed the plaintiff’s appeal against the General Division’s decision.

Our partners Koh Swee Yen, SC and Lin Chunlong successfully represented the first defendant before both the General Division and the Appellate Division. Our associates, Darren Tan and Cindy Chua, were part of the team representing the first defendant in the appeal before the Appellate Division.

This update takes a look at the General Division’s decision in KPN v Moussa Salem.

If you would like information and/or assistance on the above or any other area of law, you may wish to contact the Partner at WongPartnership whom you normally work with or any of the following Partners:

KOH Swee Yen, Senior Counsel
Head – International Arbitration
Partner – Commercial & Corporate Disputes
d +65 6416 6876
Click here to view Swee Yen’s CV.

LIN Chunlong
Partner – Commercial & Corporate Disputes
d +65 6416 8119
Click here to view Chunlong’s CV.