SOURCE: Sim Mong Teck & Partners, WRITTEN BY: Jolene Chia (Advocate & Solicitors)
The decision to purchase an immovable property can be a huge one. When 2 or more individuals buy property together, they will need to decide on the manner of holding the property upon the transfer of flat ownership. Co-owners of an immovable property can choose to hold the property either as joint tenants or as tenants in common.
One of the main differences between the two types of shared ownership is what happens to the property when one of the owners dies. When a property is owned by joint tenants, the interest of a deceased owner automatically gets transferred to the remaining surviving owners. When a property is held as a tenancy in common, each tenant is free to deal with his/her respective share in the event of his/her demise.
However, what happens when co-owners hold property as a joint tenancy and one joint tenant wishes to unilaterally sever it?
In this month’s case study, we will look at a case brought before the High Court where a joint tenant sought to sever a joint tenancy by way of a unilateral declaration based on the parties’ unequal contributions to the purchase price of the property.
FACTS OF CASE STUDY
a) The Plaintiff and the Defendant are both father and son and hold a Housing Development Board (“HDB”) flat as joint tenants. b) The HDB flat was purchased in 1983 for $115,000. The Defendant contributed $6,400 towards the purchase, while the rest of the purchase price was paid by the Plaintiff.
b) The HDB flat was purchased in 1983 for $115,000. The Defendant contributed $6,400 towards the purchase, while the rest of the purchase price was paid by the Plaintiff. Effectively, the Plaintiff contributed 94.4% of the purchase price and the Defendant contributed 5.6% of the purchase price.
c) The Defendant subsequently ran into financial difficulties and left Singapore. On 3 February 2010, the Plaintiff, by way of a unilateral declaration, severed the joint tenancy as tenants in common in equal shares.
d) However, when applying to court for, amongst other things, an order for the land register to be rectified to reflect the Plaintiff and the Defendant as tenants in common for the flat, the Plaintiff sought for such rectification to reflect the holding of shares proportionate to the Plaintiff’s and the Defendant’s contributions to the purchase price, which Plaintiff’s counsel argued was 95% and 5% respectively. Plaintiff’s counsel’s argument was that the Plaintiff had made a “mistake” when he severed the joint tenancy as tenants in common in equal shares in 2010. e) Alternatively, the Plaintiff sought a declaration that the Defendant held a 45% share of the HDB flat on resulting trust for the Plaintiff, by virtue of their unequal contributions towards the purchase price of the HDB flat. The Defendant did not enter
The Defendant did not enter appearance and the Plaintiff sought judgment in default of appearance.
DECISION OF THE HIGH COURT
Choo Han Teck J sitting in the High Court had to decide whether there was a basis for the land register to be rectified to reflect the Plaintiff and the Defendant as tenants in common with the holding of shares proportionate to the Plaintiff’s and the Defendant’s contributions to the purchase price.
The learned Judge made reference to section 53(6) of the Land Titles Act (“LTA”). Section 53(6) of the LTA, as it was last amended in 2014, reads as follows:
“(6) Upon the registration of the instrument of declaration which has been duly served as required by subsection (5), the respective registered estates and interests in the registered land shall be held by the declarant as tenant-in-common with the remaining joint tenants, and the declarant shall be deemed to hold a share that is equal in proportion to each of the remaining joint tenants as if each and every one of them had held the registered land as tenants-in-common in equal shares prior to the severance.”
The learned Judge held that pursuant to the reading of section 53(6) of the LTA, it is clear that unilateral severance of a joint tenancy can only be in equal shares. This is especially so when parties bearing close ties purchase properties in the other’s name. The burden is on the giver to rebut this presumption.
Furthermore, a conscious decision to unilaterally sever a joint tenancy as tenants in common in equal shares may give rise to an inference of fact that the purchaser had always intended to give to the other party a 50% share of the property, even though the party have contributed less to the purchase price.
Choo Han Teck J held that on the facts, it could not be said that the Plaintiff had made a “mistake” when he severed the joint tenancy as tenants in common in equal shares in 2010. To allow the Plaintiff to rectify the land register showing him and the Defendant as tenants in common in unequal shares will unfairly vary the proprietary interest of the Defendant unilaterally, contrary to the express intention of Parliament in enacting section 53 of the LTA.
On the alternative argument on resulting trust, the learned Judge found that there was basis pursuant to section 53(7) of the LTA, which provides as follows:
“(7) Where a joint tenant holds an estate or interest in registered land on trust, the severance of the joint tenancy shall not affect the rights of the beneficiary of the trust or the operation of the law relating to breaches of trust.”
However, the learned Judge recognized that issues arising from the law of trusts can be complicated. The law and evidence between a resulting trust and a constructive trust must be differentiated and ventilated at trial. There were also issues of law to be addressed, in particular, because the dispute is in relation to an HDB flat.
Choo Han Teck J concluded that these issues cannot be swept aside under an application for default judgment. The learned Judge dismissed the Plaintiff’s application for default judgment and held that the action must proceed to trial.
A learning point from our case study is that the law relating to severance of joint tenancy through unilateral declaration is pretty well-settled; unilateral severance of a joint tenancy can only be in equal shares.
Even though the presumption is a rebuttable one, the burden on the giver to rebut this presumption is a high one. It is the intention of the parties at the time of purchase of the property that matters. Therefore, when a property is purchased to be held in joint tenancy, we can see why the presumption that the purchaser bought the property as a gift to the other is a hard one to rebut. Moreover, the issues arising from the law of trusts can be complicated and each case turns on its own facts and evidence.
Therefore, should a joint tenant wish to sever a joint tenancy in unequal shares, he should avail himself to the other methods of severance, for example, by mutual agreement. Alternatively, in order to avoid the problem altogether, individuals purchasing property together may wish to consider holding the property as tenants in common, even if it is to hold the property in equal shares.
Article contributed by:
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M/s Sim Mong Teck & Partners.
Note: The above article is intended to provide general information. Although we endeavour to ensure that the information contained herein is accurate, we do not warrant its accuracy or completeness or accept any liability for any loss or damage arising from any reliance thereon. The information herein should not be treated as a substitute for separate legal advice concerning particular situations.
If you would like to obtain advice, please do not hesitate to get in touch with Gary, +65 9107 5225, [email protected], M/s Sim Mong Teck & Partners.
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