Ho Yew Kong v ERC Holdings: Trust, Disclaimer, Quistclose Trust & Constructive Trust

In the High Court of Singapore, Ho Yew Kong initiated an interpleader action against ERC Holdings Pte Ltd (ERCH) and KPM Holdings Pte Ltd (KPMH) concerning one million shares of Gryphon Real Estate Investment Corporation Pte Ltd (GREIC). Both ERCH and KPMH claimed ownership of the shares. KPMH argued for an express, Quistclose, or constructive trust, while ERCH contended that KPMH had disclaimed its interest in the trust, leading to a resulting trust in favor of ERCH. The court held that no express, Quistclose, or constructive trust was applicable and that the shares were held on resulting trust for ERCH. The court ruled in favor of the first defendant, ERCH.

1. Case Overview

1.1 Court

High Court of Singapore

1.2 Outcome

Judgment for First Defendant

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Interpleader action concerning GREIC shares. Court held no express, Quistclose, or constructive trust existed; shares held on resulting trust for ERCH.

1.7 Decision Date

26 November 2018

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Ho Yew Kong	Plaintiff	Individual	Neutral	Neutral	Samuel Chacko, Lim Shack Keong, Anne-Marie John, Too Fang Yi
ERC Holdings Pte Ltd	Defendant	Corporation	Judgment for Defendant	Won	Vikram Nair, Foo Xian Fong
KPM Holdings Pte Ltd	Defendant	Corporation	Claim Dismissed	Lost	Koh Swee Yen, Ong Pei Chin, Margaret Huang, Nicholas Liu

3. Judges

Judge Name	Title	Delivered Judgment
Valerie Thean	Judge	Yes

4. Counsels

Counsel Name	Organization
Samuel Chacko	Legis Point LLC
Lim Shack Keong	Legis Point LLC
Anne-Marie John	Legis Point LLC
Too Fang Yi	Legis Point LLC
Vikram Nair	Rajah & Tann Singapore LLP
Foo Xian Fong	Rajah & Tann Singapore LLP
Koh Swee Yen	WongPartnership LLP
Ong Pei Chin	WongPartnership LLP
Margaret Huang	WongPartnership LLP
Nicholas Liu	WongPartnership LLP

4. Facts

Ho Yew Kong held one million shares of Gryphon Real Estate Investment Corporation Pte Ltd.
Both ERC Holdings Pte Ltd and KPM Holdings Pte Ltd claimed ownership of the shares.
Andy Ong is the controlling mind of ERCH; Douglas Foo is the controlling mind of KPMH.
KPMH paid $1,000,000 to GREIH on 23 November 2009.
KPMH claimed ERCH set up a trust of the GREIC shares for KPMH’s benefit.
ERCH contended the $1,000,000 was a loan and Mr. Foo disclaimed his interest in the trust.
Mr. Ho signed an undated Trust Deed declaring he held the shares on trust for KPMH, but it was not signed by KPMH.

5. Formal Citations

Ho Yew Kong v ERC Holdings Pte Ltd and another, Originating Summons No 876 of 2018, [2018] SGHC 258

6. Timeline

Date	Event
2009-11-23	KPMH issued a cheque for $1,000,000 in favour of GREIH.
2010-03-04	Sakae's CFO asked Mr. Foo to confirm he had no shareholdings in interested parties.
2010-09-19	Share transfer form signed for transfer of GREIC shares by ERCH to Mr. Ho.
2012-03-09	Email explained ERCH held shares on behalf of Mr. Ho and shares were to be transferred back.
2012-06-11	Transfer approved at an Extraordinary General Meeting of GREIC.
2012-07-09	Certificate of stamp duty payment obtained.
2013-01-01	Originating Summons No 124 of 2013 filed.
2013-02-19	Mr. Ong filed an affidavit describing a trust arrangement.
2013-04-12	Mr. Foo filed affidavits disavowing knowledge of any trust arrangement.
2013-05-03	Originating Summons No 124 of 2013 was discontinued.
2013-01-01	Sakae commenced Suit No 122 of 2013 against Mr. Ong.
2013-01-01	Sakae commenced Suit No 1098 of 2013 alleging minority oppression.
2015-07-21	Mr. Ho stated in his Defence for Suit 1098/2013 that he was approached by Mr. Andy Ong to hold the shares for Mr. Foo.
2015-11-23	Mr. Ong attested to the trust arrangement in an affidavit.
2016-01-20	Mr. Foo denied the trust arrangement during cross-examination.
2017-06-12	KPMH filed a proof of debt for a $1,000,000 loan in GREIH’s winding up.
2017-01-01	High Court ordered that GREIH be wound up in Sakae Holdings Ltd v Gryphon Real Estate Investment Corp Pte Ltd.
2018-06-29	Appeals dealt with by the Court of Appeal in Ho Yew Kong v Sakae CA.
2018-07-03	KPMH's solicitors requested the transfer of the GREIC shares to KPMH.
2018-07-17	Mr. Ho filed this interpleader action.
2018-09-13	GREIH liquidators informed KPMH's solicitors of a cheque deposit of $1,000,000 identified as a loan from ERC Holdings.
2018-09-20	Douglas Foo Peow Yong's 3rd Affidavit.
2018-09-26	Hearing date.
2018-10-31	Hearing date.
2018-11-27	Judgment reserved.

7. Legal Issues

Express Trust Creation
- Outcome: The court held that an express trust was created when ERCH transferred the shares to Mr. Ho with the intention that he hold them on trust for KPMH.
- Category: Substantive
- Sub-Issues:
  - Certainty of Intention
  - Disclaimer of Trust
Disclaimer of Trust Interest
- Outcome: The court held that KPMH, through Mr. Foo, had disclaimed its interest in the express trust due to his prior statements and conduct.
- Category: Substantive
- Sub-Issues:
  - Knowledge of Interest
  - Intention to Disclaim
Quistclose Trust
- Outcome: The court held that a Quistclose trust did not arise because there was insufficient evidence that the loan was for a specific purpose and that Mr. Foo intended to restrict the use of the funds.
- Category: Substantive
- Sub-Issues:
  - Specific Purpose of Loan
  - Intention to Restrict Use of Funds
Constructive Trust
- Outcome: The court held that a constructive trust did not arise because there was no mistaken payment.
- Category: Substantive
- Sub-Issues:
  - Mistaken Payment
  - Unconscionability
Resulting Trust
- Outcome: The court held that because KPMH disclaimed its interest in the express trust, the GREIC shares are held on resulting trust in favour of ERCH.
- Category: Substantive
- Sub-Issues:
  - Failure of Express Trust
  - Lack of Intention to Benefit
Limitation Act
- Outcome: The court did not make a holding on this issue.
- Category: Procedural
- Sub-Issues:
  - Time Barred Claim
  - Discovery of Fraud or Mistake

8. Remedies Sought

Transfer of Shares
Declaration of Trust

9. Cause of Actions

Breach of Trust
Claim for Ownership of Shares

10. Practice Areas

Commercial Litigation
Trust Litigation

11. Industries

Real Estate
Investment

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Ho Yew Kong v Sakae Holdings Ltd	Court of Appeal	Yes	[2018] 2 SLR 333	Singapore	Cited regarding prior litigation between the parties and the winding up of GREIH and GREIC.
Foo Peow Yong Douglas v ERC Prime II Pte Ltd	Court of Appeal	Yes	[2018] SGCA 67	Singapore	Cited regarding prior litigation between the parties and the winding up of GREIH and GREIC.
Guy Neale and others v Nine Squares Pty Ltd	Court of Appeal	Yes	[2015] 1 SLR 1097	Singapore	Cited for the principles regarding certainty of intention in creating a trust and how intention may be inferred from words, conduct, and surrounding circumstances.
Lady Naas and another v Westminster Bank, Limited	House of Lords	Yes	[1940] 1 AC 366	England and Wales	Cited for the principle that a disclaimer can only be made with knowledge of the interest alleged to be disclaimed and with an intention to disclaim it.
In re Paradise Motor Co Ltd	English Court of Appeal	Yes	[1968] 1 WLR 1125	England and Wales	Cited for the principle that a beneficiary may renounce his interest if he is in possession of the full facts and circumstances of his actions.
In re Rose, Rose and another v Inland Revenue Commissioners	England and Wales Court of Appeal	Yes	[1952] Ch 499	England and Wales	Cited for the principle that equitable ownership can arise even if a transfer is defective, if the transferor has done everything needed to complete the gift.
Barclays Bank Ltd v Quistclose Investments Ltd	House of Lords	Yes	[1970] 1 AC 567	England and Wales	Cited as the foundational case for Quistclose trusts, establishing the principle that a trust arises when money is advanced for a specific purpose.
Twinsectra Ltd v Yardley and others	House of Lords	Yes	[2002] 2 AC 164	England and Wales	Cited for its review of the two successive trusts analysis in Quistclose trusts and its characterization of the Quistclose trust as a resulting trust.
Challinor v Juliet Bellis & Co	High Court	Yes	[2013] EWHC 347 (Ch)	England and Wales	Cited as supporting the dominant model of Quistclose trusts in England.
Raymond Bieber and others v Teathers Ltd (in liquidation)	England and Wales Court of Appeal	Yes	[2012] EWCA Civ 1466	England and Wales	Cited as supporting the dominant model of Quistclose trusts in England.
Attorney-General v Aljunied-Hougang-Punggol East Town Council	High Court	Yes	[2015] 4 SLR 474	Singapore	Cited for endorsing the resulting trust model for Quistclose trusts in Singapore and for its observations on express Quistclose trusts.
Rajabali Jumabhoy and others v Ameerali R Jumabhoy and others	Court of Appeal	Yes	[1997] 2 SLR (R) 296	Singapore	Cited regarding whether trusts that arise by operation of law can be disclaimed.
Yong Kheng Leong and another v Panweld Trading Pte Ltd and another	Court of Appeal	Yes	[2013] 1 SLR 173	Singapore	Cited regarding whether Class 1 constructive trusts fall under s 22(1)(b) of the Limitation Act.
Tan Chin Hoon and others v Tan Choo Suan	High Court	Yes	[2016] 1 SLR 1150	Singapore	Cited for the approach of treating resulting trusts as trusts to which section 22 of the Limitation Act is applicable.
Re Pinkroccade Educational Services Pte Ltd	High Court	Yes	[2002] 2 SLR(R) 789	Singapore	Cited for the argument that a constructive trust had arisen over the $1,000,000.
In re Vandervell’s Trusts (No 2)	England and Wales Court of Appeal	Yes	[1974] 1 Ch 269	England and Wales	Cited for the principle that if there is a lack of intention to benefit Mr Ho, the GREIC shares are held on resulting trust in favour of ERCH.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Limitation Act (Cap 163, 1996 Rev Ed)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

GREIC shares
Express trust
Quistclose trust
Constructive trust
Resulting trust
Disclaimer
Settlor
Beneficiary
Certainty of intention
Loan
Bugis Cube
Interpleader action

15.2 Keywords

trust
disclaimer
shares
interpleader
singapore
ERC Holdings
KPM Holdings
Ho Yew Kong
Quistclose
constructive
resulting

16. Subjects

Trusts
Disclaimer
Interpleader
Equity

17. Areas of Law

Trust Law
Express Trusts
Quistclose Trusts
Constructive Trusts
Resulting Trusts