Nagaraja v Salem: Dispute over Beneficial Ownership of Shares in SLI Developments Pte Ltd

In Kotagaralahalli Peddappaiah Nagaraja v Moussa Salem and others, the High Court of Singapore dismissed the plaintiff's claim for beneficial ownership of shares in SLI Developments Pte Ltd. The plaintiff sought to vindicate his rights under a written declaration of trust. The court held that the second defendant holds the shares on resulting trust for the first defendant, as the first defendant provided the consideration for the shares. The judgment was delivered by Justice Vinodh Coomaraswamy on January 6, 2023.

1. Case Overview

1.1 Court

General Division of the High Court of the Republic of Singapore

1.2 Outcome

Plaintiff's claim dismissed.

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

The plaintiff's claim to beneficial ownership of shares in SLI Developments Pte Ltd was dismissed, with the court holding that the shares are held on resulting trust for the first defendant.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Kotagaralahalli Peddappaiah NagarajaPlaintiffIndividualClaim DismissedLost
Moussa SalemDefendantIndividualJudgment for DefendantWon
Serene Phey Sai LinDefendantIndividualNeutralNeutral
SLI Developments Pte LtdDefendantCorporationNeutralNeutral

3. Judges

Judge NameTitleDelivered Judgment
Vinodh CoomaraswamyJudge of the High CourtYes

4. Counsels

Counsel NameOrganization
Afzal AliAllen & Gledhill LLP
Ramesh Kumar s/o RamasamyAllen & Gledhill LLP
Edmond LimAllen & Gledhill LLP
Lin ChunlongWongPartnership LLP
Chiam YunxinWongPartnership LLP
Koh Swee Yen SCWongPartnership LLP
Leo Cheng SuanInfinitus Law Corporation
Lee Shu XianInfinitus Law Corporation
Chua Sui TongRev Law LLC
Gan Jhia HueiRev Law LLC

4. Facts

  1. The plaintiff claimed beneficial ownership of shares in the third defendant based on a 2015 Trust Deed.
  2. The first defendant claimed the shares were held on resulting trust for him due to his payment for the incorporation and capital of the third defendant.
  3. The second defendant was a nominee shareholder and director of the third defendant.
  4. The third defendant was incorporated as an investment vehicle for a project in Sri Lanka.
  5. The first defendant paid the fees and disbursements for the incorporation of the third defendant.
  6. The 2015 Trust Deed declared that the second defendant held one-third of the shares in the third defendant on trust for the plaintiff.
  7. The first defendant's intent was that the plaintiff was to have no proprietary interest in the Project.

5. Formal Citations

  1. Kotagaralahalli Peddappaiah Nagaraja v Moussa Salem, Suit No 663 of 2020, [2023] SGHC 6

6. Timeline

DateEvent
Second defendant executed the 2015 Trust Deed.
Third defendant was incorporated.
Plaintiff was removed as a director of the third defendant.
Additional shares in the third defendant were allotted and issued to the second defendant.
Second defendant executed the 2016 Trust Deed.
Suit filed in 2020
Kotagaralahalli Peddappaiah Nagaraja’s Affidavit of Evidence-in-Chief dated
Moussa Salem’s Affidavit of Evidence-in-Chief dated
Mendel Gluck’s Affidavit of Evidence-in-Chief dated
Aaron Jordan’s Affidavit of Evidence-in-Chief dated
Richard Michael Baldock’s Affidavit of Evidence-in-Chief dated
Trial began
Judgment reserved.

7. Legal Issues

  1. Beneficial Ownership of Shares
    • Outcome: The court held that the second defendant held the shares on resulting trust for the first defendant, not on express trust for the plaintiff.
    • Category: Substantive
    • Sub-Issues:
      • Validity of express trust
      • Presumption of resulting trust
      • Rebuttal of resulting trust
  2. Resulting Trust
    • Outcome: The court found that a presumed resulting trust arose in favour of the first defendant because he provided the consideration for the shares.
    • Category: Substantive
    • Sub-Issues:
      • Presumption of resulting trust
      • Rebuttal of presumption
      • Donative intent
  3. Express Trust
    • Outcome: The court held that the 2015 Trust Deed did not create a valid express trust in favor of the plaintiff because the second defendant did not hold the beneficial interest in the shares at the time of execution.
    • Category: Substantive
    • Sub-Issues:
      • Validity of trust deed
      • Intention to create trust
      • Effect of prior resulting trust

8. Remedies Sought

  1. Declaration of Beneficial Ownership
  2. Vindication of Rights

9. Cause of Actions

  • Breach of Trust
  • Declaration of Trust

10. Practice Areas

  • Commercial Litigation
  • Trust Litigation
  • Corporate Law

11. Industries

  • Real Estate
  • Product Distribution

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Chan Yuen Lan v See Fong MunCourt of AppealYes[2014] 3 SLR 1048SingaporeCited for the principle of determining donative intent in resulting trust cases.
Lim Chen Yeow Kelvin v Goh Chin PengHigh CourtYes[2008] 4 SLR(R) 783SingaporeCited for the principle that the presumption of resulting trust should be treated as an evidential instrument of last resort.
Lau Siew Kim v Yeo Guan Chye Terence and anotherHigh CourtYes[2008] 2 SLR(R) 108SingaporeCited for the principle of presumption of advancement and resulting trust.
Koh Lian Chye and another v Koh Ah Leng and another and another appealCourt of AppealYes[2021] SGCA 69SingaporeCited for the principle of resulting trust and the separation of equitable interest from legal interest.
Westdeutsche Landesbank Girozentrale v Islington London Borough CouncilHouse of LordsYes[1996] AC 669England and WalesCited for the principle of resulting trust when consideration is furnished for property conveyed to another.
FanmailUK.com Ltd and others v Cooper and othersHigh CourtYes[2008] All ER (D) 183England and WalesCited for the principle of determining beneficial ownership of shares based on true economic substance and wider context.
FanmailUK.com Ltd v Cooper and othersCourt of AppealYes[2009] EWCA Civ 1368England and WalesAffirmed the High Court's decision in FanmailUK.com Ltd and others v Cooper and others.
Smith and others v Hinchliffe and othersHigh CourtYes[2010] EWHC 396 (Ch)England and WalesCited for following Fanmail in considering objective intention regarding ownership of shares.
Smith and others v Hinchliffe and othersCourt of AppealYes[2010] EWCA Civ 1561England and WalesCited Fanmail with apparent approval.
Andrew Curley v Nicola ParkesCourt of AppealYes[2004] EWCA Civ 1515England and WalesCited for the principle that a mortgagor is treated as having provided the purchase price of the property.
Currie v HamiltonSupreme Court of New South WalesYes[1984] 1 NSWLR 687AustraliaCited for the principle that the cost of acquiring property includes incidental costs, fees, and disbursements.
Cong v Shen (No 3)Supreme Court of New South WalesYes[2021] NSWC 947AustraliaCited for reiterating that regard may be had to the incidental costs of the purchase, such as legal expenses, stamp duty and registration.
Tay Yak Ping and another v Tay Nguang Kee SereneHigh CourtYes[2022] SGHC(A) 22SingaporeCited for the principle that the resulting trust analysis should include transaction costs such as stamp duty.
Independent Trustee Services Ltd v GP Noble Trustees Ltd and others (Morris intervening); Morris v Morris (Independent Trustee Services Ltd and another intervening)High CourtYes[2013] Ch 91England and WalesCited for the principle that a conveyance of trust property in breach of trust to a bona fide purchaser of a legal interest in the trust property for value without notice is effective to vest title to the property in the purchaser.
MKC Associates Co Ltd and another v Kabushiki Kaisha Honjin and others (Neo Lay Jiang Pamela and another, third parties; Honjin Singapore Pte Ltd and others, fourth parties)High CourtYes[2017] SGHC 317SingaporeCited for the principle that a bona fide purchaser’s legal title to what was formerly trust property defeats any beneficial interest which may have subsisted in the property up to that point.
Day, Ashley Francis v Yeo Chin Huat Anthony and othersHigh CourtYes[2020] 5 SLR 514SingaporeCited for the principles of promissory or proprietary estoppel, estoppel by representation, and estoppel by convention.
Keppel Tatlee Bank Ltd v Teck Koon Investment Pte Ltd and othersHigh CourtYes[2000] 1 SLR(R) 355SingaporeCited for the principle that for estoppel by acquiescence to be established, it must be shown that the party estopped stood by while knowing full well that an innocent party was mistaken as to his rights.
Chiang Sing Jeong and another v Treasure Resort Pte Ltd and othersHigh CourtYes[2013] SGHC 126SingaporeCited for the principle that a declaration of trust makes the beneficiary the beneficial owner of the rights attached to the shares, including the right to be offered new shares in accordance with the rights of pre-emption.
Shephard v CartwrightHouse of LordsYes[1955] AC 431England and WalesCited for the principle of ascertaining whether the presumption of resulting trust arises in favour of B.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Companies Act 1967 (2020 Rev Ed)Singapore
Civil Law Act 1909 (2020 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Beneficial Ownership
  • Resulting Trust
  • Express Trust
  • Shares
  • Trust Deed
  • Nominee Shareholder
  • Donative Intent
  • Consideration
  • Subscriber Shares
  • Additional Shares

15.2 Keywords

  • Trust
  • Shares
  • Beneficial Ownership
  • Resulting Trust
  • Express Trust
  • Singapore
  • Company
  • SLI Developments

17. Areas of Law

Area NameRelevance Score
Express trusts85
Resulting Trust80
Trust Law75
Shares60
Company Law40
Contract Law20
Estoppel15

16. Subjects

  • Trust Law
  • Company Law
  • Equity