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Tru.L.I. 2011, 25(2), 66-86

Trust Law International

2011

An impregnable fortress?Possible attacks on the Singapore trust?

Tang Hang Wu

2014 Bloomsbury Professional Ltd

Subject: Trusts.Other Related Subject: Family law. Insolvency. Legal systems. Succession

Keywords:Bankruptcy; Divorce; Family provision; Islamic law; Settlors; Singapore; Trusts

Legislation cited:Trust Companies Act 2006(Singapore) s.2,s.49,Sch.3

Residential Property Act 2009(Singapore) s.3,s.25

Trustees Act 2005(Singapore) s.90

Cases cited:CH v CI [2004] SGDC 131 (District Ct (Sing))

Schmidt v Rosewood Trust Ltd [2003] UKPC 26; [2003] 2 A.C. 709 (PC (IoM))

*66 Introduction

In the past ten years, Singapore has emerged as one of the most important wealth management centres in

Asia.1This development can be attributed to a number of factors.First, favourable laws were enacted to

encourage high net worth individuals to park their money in Singapore.These include changes to laws

governing trust companies, confidentiality, taxation rules with regard to foreign earned income, abolition of

estate duty and amendments to the TrusteesAct.2Secondly, both the private and public sectors embarked on

an aggressive marketing campaign to promote Singapore as a wealth management centre.3Thirdly,

Singapore has one of the most liberal immigration policies in the world with regard to high net worth

individuals.Until recently under the Financial Investors Scheme, a foreigner is able to obtain Permanent

Resident status in Singapore if he or she maintains S$5 million of assets to be booked and managed by a

financial institution regulated by the Monetary Authority of Singapore for a period of five years.This scheme

enables the foreign person to obtain Permanent Resident status for his or her immediate family members as

well.The amount required under this scheme has currently been changed to S$10 million.4The Financial

Investors Scheme does not mandate any language, education or age requirements.It would seem that theselaws and policies as well as the marketing efforts have paid off handsomely.The amount of wealth that has

been flowing into Singapore has been nothing short of startling.Between the years 2000 to 2006, Singapore's

fund management industry grew from S$280 billion to more than S$600 billion.5In fact,*67 the wealth

management industry increased by a staggering 24 per cent in 2005--2006 alone.

With the influx of wealth into Singapore, it is inevitable that the local courts will have to deal with various

challenges to trust structures set up in Singapore from both domestic and overseas pressures.Such pressures

might take the form of requests from foreign governments to Singapore trustees to disclose information

pertaining to settlors and/or beneficiaries for tax collecting purposes.In this regard, Singapore has recently

endorsed the Organization for Economic Cooperation and Development's (OECD) standard on the exchange

of information for tax purposes.6OECD's standard envisages an exchange of information with foreign

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jurisdictions under Avoidance of Double Taxation Agreements.Singapore has passed the Income Tax

(Amendment) (Exchange of Information) Act 2009 which facilitates such requests from foreign

governments.Quite apart from foreign revenue authorities, a Singapore trust structure might come under

attack from private law claimants.This is the primary focus of this article.In this article, the authorinvestigates the possible lines of attack on the Singapore trust, namely from divorcing spouses, bankruptcy

creditors and disgruntled heirs.It should be noted that under Singapore law, it is also possible to set aside a

trust by characterising the trust as a sham.While there is no direct Singapore case law on sham trust, there is

no reason to think that the law of sham in Singapore is any different from that of English law.7For this

reason, this paper does not consider the doctrines relating to sham trust in any detail.8

Before proceeding further with this article, it is helpful to provide a brief background of Singapore

jurisprudence.With regard to contract and commercial law, Singapore has endeavoured to mirror English

law.True to its status as an international commercial hub, Singapore has since its earliest days attempted to

retain the purest form of English commercial law because as Voules J explained in Seng Djit Hin v Nagurdas

Purshotumdas & Co,9this policy was to inspire confidence amongst merchants by assuring them that any

questions arising in regard to their commercial transactions will be decided in the like case at the

corresponding period in England.Although the formal reception of English commercial law was

discontinued in 1993, English contract and commercial decisions are, up to today, invariably cited by

counsel in court, accepted as persuasive and routinely applied by the Singapore courts.In other words, while

English decisions are not binding in astare decisissense on the Singapore courts, they are nevertheless

regarded as highly persuasive authority.This is not to suggest that the entire jurisprudence in Singapore is a

pale carbon copy of England.In recent times, there have been some attempts to develop an autochthonous

local jurisprudence.10This article considers the relevant Singapore case law and statutes as well as extra-

judicial comments by the current Chief Justice in analysing the issues.Where there are no local sources on

point, case law from other parts of the Commonwealth is considered since it is likely that these sources will

be regarded as persuasive by the Singapore courts.

*68 Setting the stage: the fixed and discretionary trust

Before embarking on an investigation of the various ways in which a Singapore trust might be attacked, it is

necessary to consider the type of trust that is used in modern private client business.A trust may take the

form of a fixed interest trust where the shares of the beneficiaries are explicitly set out in detail from the

outset.Assuming that the settlor is not named as a beneficiary, then the trust is not susceptible to being

attacked in the event of the settlor's bankruptcy, death or divorce.This is because the settlor no longer has

any interest in the property settled on a fixed trust in favour of third party beneficiaries.Effectively, the

settlor drops out of the picture unless the settlor reserves certain powers.The only way in which the settlor

might have a residual interest in such a fixed trust is if there happens to be a gap in the beneficial

ownership.In such a case, the beneficial interest reverts to the settlor by reason of a resulting trust.This will

rarely occur in a well drafted fixed trust.In fixed interesttrusts, the attackers are likely to be the beneficiary's

creditors, spouse or heirs.Since the beneficial interest vests at the outset, the trust is clearly relevant in

situations where the fixed interest beneficiaries pass away, become bankrupt or divorce their spouses.In

other words, the beneficiaries' share in the trust ought to be regarded as the property of the beneficiaries and

is certainly relevant in these situations.

Matters become more complicated when the trust that is settled is a discretionary trust.11Anecdotal evidence

suggests that this is more commonly used than a fixed trust in wealthmanagement.12A settlor might wish to

declare a discretionary trust because such trust affords flexibility to cater to the settlor's change of

circumstances.Moreover, the trust may be drafted in a way to give the settlor some influence over the

trustee's exercise of discretion in the appointment of the beneficiaries.Such discretionary trust may also

confer on the trustee a general power to add anyone in the world as a beneficiary.13As such, any change in

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the familial situation of the settlor (divorce, new children etc) could be accommodated by the trustees.The

settlor may inform the trustee of his wishes from time to time through a letter of wishes as to the settlor's

wish on the appointment of the beneficiary.14The letter of wishes is usually drafted as a non-binding

expression of wishes.Under orthodox English trust law, a settlor's wishes is certainly a relevant factor that atrustee ought to take into account when exercising his or her discretion.This is consistent with Viscount

Dilhorne inMcPhai l vDoulton15where he said: the court, if called upon to execute the trust power, will do

so in the manner best calculated to give effect to the settlor's or testator's intentions.If the class of

beneficiaries is drafted widely enough, the settlor might even be a potential beneficiary through an exercise

of the trustee'sdiscretion.16In addition, the settlor might wish to include

Tabular or graphic material set at this point is not displayable.

*69 a protector, ie a third party who will have a role in the administration of the trust.17Typically, the

protector is given the power to veto or authorise a trustee's action in certain matters.A pictorial

representation of the discretionary trust is shown above in Figure 1. Since a discretionary trust is more

commonly used in wealth management these days, this paper considers the possible avenues of attacks on a

Singapore discretionary trust.

An unresolved question in Singapore trust jurisprudence is how the Singapore courts will construe the office

of the protector if it is included in a trust deed.There are a couple of difficult issues related to introducing

the concept of the protector into an onshore trust jurisdiction like Singapore.The first issue is this: will the

office of a protector be recognised by a Singapore court?Second, if protectors are recognised by the courts,

what are the duties owed by protectors?Finally, what are the remedies available if protectors breach these

duties?It should be noted that there are no Singapore cases or statutes which deals directly with the office of

the protector.A local commentator expressed reservations on the trust protector as follows:

although trust protectors may be an important component of offshore trust structure, such an office is

actually unnecessary in onshoretrusts, which are functioning perfectly well with the traditional truststructure.Indeed, introducing the trust protector in onshoretrustsmay introduce much uncertainty into the

existing trust structure which would be undesirable to all concerned.18

With respect to the learned author, his cautious view on trust protectors essentially conflates two distinct

questions.The two inquiries are: first, how would a Singapore court*70 interpret a trust deed which attempts

to incorporate a trust protector?; and, secondly, what are the duties of the trust protector?While it is true that

the second inquiry is still an unresolved question, it could be that the uncertainty on the scope of the

protector's duty is a risk that settlors are prepared to undertake in order to ensure that there is a third party

who can act as the trustee's watchdog.In any case, the protector is usually someone who is closely connected

with the settlor or the beneficiaries and, hence, would in most cases discharge his or her function

properly.Thus, the more important question for trust practitioners is this: would the incorporation of a trust

protector invalidate a Singapore trust?This is a most unlikely outcome.After all, a reference in a trust deed toa third party is not unknown under English trust jurisprudence.In a recent example a reference to a third

party by the trustee on whether to accept a proposed settlement was upheld inCitibank NA v QVT Financial

LP.19Thus, the principle that emerges from this case is that a reference to a third party will not be struck

down so long as it does not take the trustee's duties below the irreducible core20of trustobligations.21My

own view is that the Singapore courts will recognise the office of a protector.This conclusion is implicitly

supported by the Honourable Chief Justice Chan Sek Keong's extra-judicial comments on the trust protector

at the 10th Singapore Conference on International Business Law: The Regulation of Wealth Management.In

describing the office of the protector, the Chief Justice said that this is something that is not new to

practice, but may have been fully explored in the decided cases.22While the Chief Justice did not state a

final opinion on the office of the protector, he concluded the paragraph by saying:

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Given the flexibility of the trust device, however, it may be that much more can be done in using Singapore

law to meet client needs for wealth management and protection than has hitherto been the case here.23

The Chief Justice's comments suggest that Singapore courts will not be hostile to the office of aprotector.Thus, the primary difficulty lies in defining the precise scope of duties owed by the protector24and

the remedies associated with a breach of such duties.This uncertainty is a problem that is faced not just in

Singapore but in other parts of the Commonwealth.It is beyond the scope of this paper to consider this issue

at length.Ultimately, this uncertainty is a matter of risk management that the settlor might wish to consider if

the settlor chooses to include a trust protector in the trust deed.

Confidentiality and disclosure of documents

A perennial difficulty for any party who intends to challenge the validity of a trust or the trustee's exercise of

discretion is access to trust information.Without access to trust information, it is difficult to work out

precisely the grounds of challenge in the first place.As such, access to trust information is a preliminary but

crucial step to any attack on a trust.It is*71 foreseeable that many such challenges will fail at this early stagedue to a lack of information.Non-beneficiaries who wish to obtain trust information would be met by

trustees who will resist requests for information because trustees are under an equitable duty of

confidentiality not to disclose information to thirdparties.25Thus, disappointed heirs under forced heirship

regimes, divorcing spouses and bankruptcy creditors who might wish to attack the trust would encounter

problems obtaining detailed information about the trust.

Quite apart from the equitable duty of confidence, a licenced trust company in Singapore would have

additional onerous statutory duties of confidence under the Trust Companies Act.26Section 49(1) of the

Trust Companies Act provides that licenced trust companies are not entitled to disclose information

regarding a protected party or the business or other affairs of the protected party (referred to as protected

information) to any other person except as expressly provided in this Act.Section 2 of the Trust Companies

Act defines a protected party as follows: in relation to a trust company, means a trust for which the trust

company provides trust business services and includes the settlor and beneficiary under the trust.The Third

Schedule of the Trust Companies Act provides for the following situations when information may be

disclosed:

(1) where the settlor or a protected party consents to disclosure;

(2) where the settlor passes away and there is no personal representative and the licenced trust company

deems disclosure to the relevant parties necessary in discharge of its duties;

(3) disclosure is in connection with an application for a grant of probate or letters of administration in

respect of a protected party's estate;

(4) disclosure is solely in connection with a situation where the protected party has become bankrupt or

wound up;

(5) disclosure is solely with a view to the institution of, or solely in connection with, the conduct of

proceedings relating to a trust that is administered by a licensed trust company;

(6) where disclosure pertains to the investigation of an offence that is alleged or suspected to have been

committed under any written law;

(7) where disclosure is necessary for compliance with a garnishee order served on a licensed trust company

attaching assets in a trust; and

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(8) where disclosure is in compliance with any notice by the Monetary Authority of Singapore.

The penalty for breaching this statutory duty of confidentiality is quite onerous.An individual guilty of

breaching the duty of confidentiality may be fined up to S$75,000 and/or imprisoned up to three years whilecompanies that are in breach might be fined up to S$150,000.The upshot of these provisions is that licenced

trust companies are under very strict duties of confidence in Singapore.

There are a few important points to note with regard to the duties of confidence pursuant to the Trust

Companies Act.First, the Trust Companies Act empowers the court to*72 order the proceedings to be in

camera where disclosure is necessitated in the following situations:

(a) where a protected party is insolvent or wound up; and

(b) where there are proceedings relating to a trust that is administered by a licensed trust company.

This is no doubt to ensure the protected party's confidentiality.Otherwise, if an application for access to

information is subject to a written judgment, this would mean that details of the protected party will be put

in the public domain.27Secondly, it should be noted that the Trust Companies Act does not provide for

disclosure in circumstances where the protected party is undergoing a divorce.Therefore, divorcing spouses

will face difficulties in obtaining disclosure of information from licenced trust companies.This issue of

divorce will be considered in the next section.

Divorce

Recent case law indicates that divorcing spouses have mounted numerous challenges totrustswhich have

been settled by the other spouse prior to the divorce.28The main contention in these cases is that the assets

held by the trustee ought to be taken into account in the exercise of the division of matrimonial

property.From the perspective of Singapore, I consider the following scenarios:

Scenario A: The divorce proceeding takes place in Singapore.One of the spouses has previously settled a

discretionary trust in Singapore.Scenario B: The divorce proceeding takes place outside Singapore.One of

the spouses has previously settled a discretionary trust in Singapore.

Scenario A

The Family Court in Singapore has the jurisdiction to hear proceedings for a divorce if either of the parties

to the marriage is domiciled in Singapore at the time of commencement of the proceedings or habitually

resident in Singapore for the period of three years immediately preceding the commencement of the

proceedings.29In terms of division of matrimonial property, the Singapore courts have given a range of

orders dividing the property between the couple in shares of 50-50 per cent to 65-35 percent.30In two casesinvolving high net worth individuals, the court ordered division of the property in the following shares:

70-30 percent31and75-25 percent.32

Again, the issue of disclosure of information becomes paramount in ancillary proceedings concerning the

division of matrimonial property.It is interesting to note that*73 Form3533which is the standard form of the

Affidavit of Assets and Means which must be filed in ancillary proceedings makesnoreference to an interest

in a trust.Therefore, it is entirely foreseeable that some unscrupulous spouses would not declare any trust

which has been previously settled.Singapore's Affidavit of Means and Assets is unlike the English Financial

Statement found in form E which must be filed before ancillaryproceedings.34Box 2.17 ofthe English form

explicitly states that parties are to give details of any other assets including:

Trust interests(including interests under a discretionary trust), stating your estimate of the value of the

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interest and when it is likely to become realisable.If you say it will never be realisable, or has no value, give

your reasons. (Emphasis in the original).

As the learned editors ofInternational Trust and Divorce Litigation35note, if this part of the form iscompleted in an unsatisfactory manner, the non-disclosing spouse can expect a lengthy follow up from his or

her spouse seeking clarification on the trust interests.

Quite apart from the issue of disclosure (or lack thereof) there is also some uncertainty as to whether the

courts will regard a discretionary trust as matrimonial assets which are subject to division between the

spouses.CH v CI36suggests that where a spouse declares an irrevocable fixed trust where a third party is a

beneficiary, the Family Court will not consider suchtrustsas falling within the concept of matrimonial

assets.37However, inCH v CIa statutory trust created over an insurance policy in favour of the wife was held

to be part of the matrimonial assets.The position is unclear with regard to a discretionary trust as there is no

direct case law on this.An extra-judicial anecdote by the Chief Justice Chan Sek Keong suggests that the

Singapore courts will regard a discretionary trust as part of the couple's matrimonial assets.The Chief Justice

said:

A case that may have some relevance to the trust as a vehicle for wealth management and which I heard as

Judge was a matrimonial dispute concerning maintenance.The couple had lived in the UK where the

husband sold his business for a considerable sum of money.The couple then migrated to Australia where the

husband found the tax regime intolerable.So he put his capital into a Cayman Island discretionary trust to

avoid having to pay either income tax or estate duty should he die.They then came to Singapore where the

marriage fell apart, resulting in a claim by the wife for maintenance and custody of the two children of the

marriage.The husband appeared in person and offered a ridiculously small sum for maintenance on the

ground that he had no money as he no longer had a proprietary interest in the capital in the trust fund which

was no longer under his control.When I asked him who owned the fund, he replied that it was the bank

which had legal title to the funds.I replied that I would*74 only accept his argument if the bank concernedwas prepared to testify that it had beneficial ownership of the fund.End ofargument.38

Section 114(1) (a) of the Women's Charter is also relevant when a discretionary trust has been settled.This

section provides that the court in determining the amount of maintenance payable to the other spouse shall

have regard to various factors which include other financial resources which each of the parties to the

marriage has or is likely to have in the foreseeable future.A discretionary trust has been interpreted as a

financial resource available to the spouse.39The recent case ofTQ v TR40also displays the court's hostile

attitude to a trust which was settled when the divorce proceedings were ongoing.In this case, the husband

settled a trust in Mauritius for the benefit of the children after decree nisi had been granted.Andrew Phang

JA, delivering the judgment of the Court Appeal, characterised this as a naked attempt to present the court

with a fait accompli in respect of issues pertaining to maintenance and distribution of matrimonial assets.As

such, the Court of Appeal ordered the husband to pay an equivalent sum into a Singapore bank accountwhich could be used by either parent for the benefit of the children.

In England, one of the main lines of attack on the trust has been applications to the courts to vary the trust to

provide a non-beneficiary spouse with money from the trust.This power to vary nuptialtrustsis found in

various Englishstatutes.41Is a variation of a trust possible under Singapore law?In Singapore, the court is

unlikely to entertain such an application to vary a trust.This is because there is no explicit provision under

the Women's Charter42which allows for variation of a nuptial trust.It should also be noted that Singapore

does not have the equivalent of the English Variation ofTrustsAct 1958.The power of amendment is usually

found in the trust deed and s 56 of the TrusteesAct.43Even if the power of amendment is written into the

trust deed, it is unlikely that the trustee would exercise this power in favour of a non-beneficiary

spouse.Section 56 of the Trustees Act allows for the court to authorise dealings with trust property arising

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from the management or administration of the trust property if it is in the court's opinion that the act is

expedient.44A literal construction of this section suggests that this provision does not allow the court to vary

a settlement pursuant to matrimonial proceedings.However, it should be noted that inCH vCI45the Family

Court regarded a statutory trust created over an insurance policy where the wife is named as the beneficiaryto be part of the matrimonial assets.In this case, District Judge Lim Hui Min held that the court had the

power pursuant to the Women's Charter to make such orders in relation to such a life insurance policy as it

sees fit including ordering the removal or a change of the named beneficiaries.It remains to be seen whether

the Singapore court will extend the reasoning ofCH v CIto a discretionary trust where one of the spouses is a

potential beneficiary.

Although the Women's Charter does not have any provision which allows for the*75 Family Court to vary a

nuptial trust, s 132 of the Women's Charter allows a non-beneficiary spouse to apply to set aside a

disposition of property if he or she can prove that the disposition was made with the object of either

reducing the amount of maintenance payable or to deprive the spouse of rights to the property.The relevant

time period in which such dispositions of property are vulnerable to being set aside is within the preceding

three years before the application pursuant to s 132 is made to the court.Presumably, s 132 of the Women's

Charter allows the Family Court to set aside a trust if the pre-conditions are met.However, it should be noted

that Singapore courts have not invoked this particular section lightly.InNI v NJ,46the husband created a

family trust where he settled a New Zealand property, stocks and investments for the benefit of the

children.VK Rajah J (as he then was) noted that the husband had declared the trust because he was

concerned that the children's interest be protected since the wife had adopted a rather generous spending

approach from time totime.47As such, the learned judge declined to set aside the trust.

Quite apart from s 132 of the Women's Charter, a spouse may also rely on s 73B of the Conveyancing and

Law of Property Act48(CLPA) to set aside a trust which was meant to put assets out of his or her

reach.Section 73B of the CLPA provides that a conveyance with intent to defraud creditors, shall be

voidable, at the instance of any person thereby prejudiced.InNg Bok Eng Holdings Pte Ltd and another vWong SerWan,49the husband transferred a property worth S$8 million to a third party for a consideration of

US$2 million.The wife found out about it and successfully applied for the transfer to be set aside.

Scenario B

Where the divorce proceedings take place overseas and there are assets settled on trust in Singapore, it is

foreseeable that the Singapore trustee might possibly be faced with several lines of attacks.First, there might

be a letter of request sent to judicial authorities in Singapore asking them to examine the trustees for

information pertaining to the trust.Secondly, the trustees might be presented with a foreign court order

which could affect the trust.And finally, the foreign divorce court might treat the Singapore trust as a

financial resource which is available to one of the spouses.The final point of treating the Singapore trust as a

financial resource would only work practically if there are substantial assets in the jurisdiction where thedivorce is takingplace.50By treating the Singapore trust as a financial resource available to one spouse, the

foreign court would then be able to apportion a larger share of the assets within that jurisdiction in favour of

the other spouse.51Since there are substantial assets within the jurisdiction, there is no difficulty with

enforcing the court order.Hence, this issue is essentially governed by the law where the divorce is taking

place and not Singapore law.Since the trust as a financial resource aspect has already been well covered in

pre-existingliterature52and is not really a point of Singapore law, this paper will not consider this issue in

any detail.

A foreign divorcing spouse might procure a letter of request to be sent from the foreign court to the relevant

Singaporean authorities to examine the trustees and asking the trustees *76 to produce trust documents.A

letter of request from a contracting State of the Hague Convention on the Taking of Evidence Abroad in

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Civil or Commercial Matters would prima facie be taken seriously since Singapore is party to this

Convention.53Thus far, there is no Singapore case law on letters of request sent to licenced trust companies

pursuant to divorce proceedings abroad.There are two possible views on whether such letter of requests

would be entertained by Singapore courts.The first view is that the courts will conduct a balancing exercisein deciding whether to accede to such letters of request.As Kerr LJ said inRe State of Norway's Application

54the balancing exercise entails the following considerations:

In the scales on one side must be placed the desirable policy of assisting a foreign court, in this case

supported by both parties to the litigation before it.On the other side there is the opposing principle that the

court will give great weight to the desirability of upholding the duty of confidence in relationships in which,

as here, it is clearly entitled to recognition and respect.Which way the balance then tilts depends upon the

weight which is properly to be given to all the other circumstances of thecase.55

While this is an English case which deals with duty of banking confidentiality, Singapore courts have

always regarded English cases as highly persuasive and it is possible that a Singaporean judge would adopt a

similar approach with regard to licenced trustcompanies.56It should be pointed out that the House of LordsinRe State of Norway's Application57felt that since the letter of request did not amount to a fishing

expedition, the public policy of assisting the Norway courts outweighed the duty of banking confidentiality.

However, it is suggested there is another possible approach with regard to letters of request, ie that the

Singapore courts will not compel licenced trust companies to give evidence.This argument is based on s 5(1)

of the Evidence (Civil Proceedings in Other Jurisdictions) Act58which provides that a person shall not be

compelledto give any evidence which he could not be compelled to give -- (a) in civil proceedings in the

High Court of Singapore.It could be argued that since the Trust Companies Act59does not allow for

disclosure of information in matrimonial proceedings, the licenced trust companies are under a statutory

duty of confidence.As such, since the licenced trust company cannot be compelled to give evidence about

the trust in the High Court of Singapore, the licenced trust company similarly cannot be compelled to giveevidence pursuant to a letter of request.Re State of Norway's Application60may be distinguished because

this case dealt with the law of English banking secrecy which is governed by the common law.It has long

been recognised in England that banking secrecy is qualified by several exceptions.61Kerr LJ inRe State of

Norway's Applicationwas particularly influenced by Lord Wilberforce's judgment inBritish Steel

Corporation v Granada Television Ltd62who said that in all cases of confidence (including*77 banking

confidentiality), the court may have to decide whether the interest in preserving this confidence is

outweighed by other interests to which the law attaches importance.Thus,Re State of Norway's Application

approached the issue of whether to accede to a letter of request as essentially a balancing exercise between

two competing policies.In contrast, Singapore's Trust Companies Act does not contain such a wide public

policy qualification to a duty of confidence.Instead, the Trust Companies Act provides for specific instances

when the duty of confidentiality is exempted.Thus, there is a persuasive case to be made that the Singapore

authorities will be justified in refusing to accede to letters of request to examine Singapore licenced trust

companies in the context of assisting foreign divorce proceedings since this is not within the excepted

statutory categories.

Another possible attack arising from a foreign divorce is the foreign court issuing an order purporting to

vary a Singapore trust.63Are such variation orders enforceable in Singapore?It is suggested that such a

variation order is unenforceable in Singapore.64The general principle on enforceability of a foreign

judgment is encapsulated in the following statement by Chief Justice Chan Sek Keong inPoh Soon Kiat v

Desert Palace Inc (trading as Caesars Palace):65

Anin personamfinal and conclusive foreign judgment rendered by a court of competent jurisdiction, which

is also a judgment for a definite sum of money (hereafter called a foreign money judgment), is enforceable

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in Singapore unless: (a) it was procured by fraud; or (b) its enforcement would be contrary to public policy;

or (c) the proceedings in which it was obtained were contrary to natural justice.

As the learned editor of theHalsbury's Laws of SingaporeVol 6(2), Conflict of Laws writes:

There is no authority in Singapore or English law for the enforcement of a foreign judgment ordering final

specific relief (eg, injunction or specific performance), and such judgments are assumed to be

unenforceable.66

Since an order to vary a trust is an order for a specific relief, it should be unenforceable in

Singapore.Furthermore, as pointed out above, save for an express provision in the trust deed, Singapore

courts have limited statutory powers to vary a trust.

The settlor's bankruptcy

Another possible avenue a trust may come under attack from is the settlor's creditors in the event of the

settlor's bankruptcy.Viewed from this perspective, the settlor's creditors must be able to demonstrate that the

bankrupt is the settlor of the trust in the first place.In modern trust structures, there is the practical

preliminary problem of establishing the identity of the *78 settlor.Schmidt v Rosewood TrustLt d67is an ideal

case to illustrate the difficulties of establishing the identity of the settlor.It is helpful to examine the facts of

this case in some detail.Vitali Schmidt, a wealthy Russian oil and gas man, was the alleged co-settlor of two

trusts, the Angora Trust and the Everest Trust.The trustee was Rosewood Trust Ltd (Rosewood) which

was based in the Isle of Man.The salient features of the trust were as follows:

(1) there was initially some dispute as to the identity of the settlor because the money was channelled by

Schmidt through a company (Pacqurette Ltd);

(2) Schmidt was named as the protector of the trust;

(3) there was a wide power of appointment exercisable by the trustees with prior consent of the protector;

(4) the potential class of beneficiaries were defined as the Royal National Lifeboat Institution and persons

listed in a schedule; and

(5) in the Everest Trust, there was a wide power for the trustee to add any person or charity (except the

current trustee) as a beneficiary.

There was evidence that Schmidt wrote two letters to the trustees expressing his wish that his son, Vadim,

was to benefit from these twotrustsin the event of his death.Schmidt subsequently died under mysterious

circumstances.Schmidt's wishes were not fulfilled and Vadim brought proceedings seeking disclosure of

documents.Imagine a hypothetical situation of Schmidt becoming bankrupt and Schmidt's creditors

attempting to claw back assets settled on trust.If Schmidt's creditors wanted to attack the Angora and Everest

Trusts, they would have the practical hurdle of proving that Schmidt was indeed the settlor of the trust in

the first place.Recall that since the money was channelled through a company (Pacqurette Ltd), the creditors

would have to demonstrate that the true settlor was Schmidt.This is not an easy task as the creditors might

not have access to the trust documents.

Assuming that the practical hurdle of discovering the identity of the settlor can be overcome, what is the

position of Singapore law on foreign bankruptcies and its impact on a trust structure set up in Singapore?Let

us consider the following scenario: X, a person domiciled in Ruritania, settles a discretionary trust in

Singapore.X becomes bankrupt in Ruritania.X's creditors want to claw back the trust assets in Singapore.As

compared to the divorcing spouse, X's creditors would have an easier task in obtaining discovery from the

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trustees.This is because the Third Schedule of the Trust Companies Act68allows for disclosure of

information in connection with the bankruptcy of the protected party.Recall that the protected party includes

the settlor and beneficiary of thetrust.69The court has the power to order the proceedings to be conducted in

camera.70Despite the fact that X's creditors might be able to obtain discovery of trust documents, it is noteasy for X's creditors to succeed in claiming that X retained beneficial interest in the trust.This is because it

is likely that the class of beneficiaries under the discretionary trust would be drafted widely without naming

X explicitly as a potential beneficiary.Even if X was a potential beneficiary, X merely has a spesor hope of

being a beneficiary.As such, it would be extremely difficult to argue that the assets held on trust belonged to

X.71X's creditors might try to argue that the Singapore trust is a sham.However, such an argument is

notoriously hard to prove in the*79 absence of clear evidence of a shamming intention.72X's creditors

must demonstrate a shamming intention on the part of X and the trustees.As Singer J said inMinwalla v

Minwalla and DM Investments SA, Midfield Management SA and CI Law TrusteesLtd:73

In order for a trust to be found to be a sham, both of the parties to the establishment of the trust (that is to

say the settlor and the trustees in the usual case) must intend not to act on the terms of the trust

deed.Alternatively in the case where one party intends not to act on the terms of the trust deed, the other

party must at least be prepared to go along with the intentions of the shammer neither knowing or caring

about what they are signing or the transactions they are carrying out.

If the trustees are a reputable bank or licenced trust company, it is highly unlikely that the sham argument

will prevail.Another possible argument is to try to set aside the trust using s 73B of the Conveyancing and

Law of PropertyAct74(CLPA).In order to do so, the creditors would have to demonstrate that the trust was

declared with the intent to defraud the creditors.If the trust was declared long before X's bankruptcy, then it

is unlikely that this argument will prevail.

Yet another possibility is for X's creditors to file for bankruptcy proceedings in Singapore and attempt to set

aside the trust on the ground that trust is a transaction at an undervalue.This avenue is also fraught withpractical difficulties.In order for X's creditors to file for bankruptcy in Singapore, they must cross two

hurdles.First, the creditor must demonstrate that X was:

(i) domiciled in Singapore;

(ii) has property in Singapore; or

(iii) has, at any time within the period of one year immediately preceding the date of the making of the

application:

(a) been ordinarily resident or has had a place of residence in Singapore; or

(b) carried on business in Singapore.75

Secondly, since the debt is probably a foreign debt, the creditor must demonstrate that the debt is payable by

the debtor to the applicant creditor by virtue of a judgment or an award which is enforceable by execution in

Singapore.76The Bankruptcy Act allows the Official Assignee to set aside a transaction at an undervalue if

the transaction was made within the period of five years ending on the day of the making of the bankruptcy

application on which the individual is adjudgedbankrupt.77If the trust was settled before the statutory claw

back period, then the trust may not be attacked as a transaction at undervalue.

Matters become slightly trickier if X is a foreign company.X's foreign liquidator would*80 have to apply to

wind up X in Singapore pursuant to ss 350-354 of the Companies Act.78Such a winding up order will then

allow the liquidator and/or the creditors to rely on s 329 of the Companies Act which empowers the court to

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set aside transactions on the ground of unfair preference.Section 329 of the Companies Act specifically

refers to the Bankruptcy Act and provides that the ground of setting aside a transaction on unfair preference

under the Companies Act is identical to the Bankruptcy Act.79

Forced heirshiprules80

In some countries, a person who is subject to Muslim or civil law may not have full testamentary capacity

because the law prescribes that a certain percentage of his or her estate must go to a fixed list of

beneficiaries.This is sometimes known as forced heirship rules.81Individuals who are subject to such

regimes might, for reasons of their own, try to get around these requirements by settling an inter vivostrust.

82For example, let us consider the following scenarios:

(1) the settlor, X, is a Muslim person domiciled in Malaysia.X has assets in Malaysia worth S$1 million and

S$9 million in Singapore.X has three children, amongst whom is Y, who is a special needs child.X settles a

trust in Singapore naming Y as the sole beneficiary for the entire S$9 million;

(2) the same facts as example (1), but assume that X is a Singaporean Muslim or a Muslim person domiciled

in Singapore.

In both examples, X is subject to Islamic rules of inheritance known asfaraidwhich only allow a testator to

dispose of a third of his assets.83UnderIslamic law, the other two thirds of the assets must go to prescribed

beneficiaries.In these scenarios, the inter vivos trust, if upheld, would frustrate the operation of the forced

heirship rules because Y would stand to benefit up to 90 per cent of the X's wealth.84It is therefore

foreseeable that thefaraidbeneficiaries would challenge the trust.

1. X, a Muslim person domiciled in Malaysia, settles a trust in Singapore

Thefaraidbeneficiaries might challenge the trust on the ground that the settlor, X, does not have the capacityto settle the trust.The question of capacity of the settlor is a complex inquiry.Essentially, there are two

questions bound up within this challenge.First, did the settlor have the capacity to transfer the property to

the trustee?Secondly, did the settlor have the capacity to create the inter vivos trust?

*81 Capacity to transfer the property to the trustee

To answer the property question, it is helpful to consider whether the property that has been settled on trust

in Singapore consists of immoveables or moveables.If the property concerned is land, then it is likely that a

Singaporean court would adopt the principle that immoveables are governed by the law of the lex situs.85

Thus, if X settled real property held in Singapore on trust for Y, Singapore law would apply.The question of

whether X has the capacity to transfer the property under Singapore law would depend on whether there are

any Singapore statutes prohibiting the transfer of real property to the trustees.Singapore law allowsforeigners a free hand in purchasing and selling private flats and condominiums.86Thus, there are no

restrictions on X in transferring the flat or condominium to the trustee.

Matters become more complicated when the property concerned is considered to be restricted residential

property as defined under the Residential Property Act.87Restricted residential property includes vacant

residential land, landed property (ie detached house, semi detached house, terrace house (including linked

house or townhouse), as well as landed property in strata developments which are not approved

condominium developments under the Planning Act.88Prima facie, a foreigner is not entitled to acquire

residential property.89However, pursuant to s 25 of the Residential Property Act, a foreign person may

apply to the Minister of Law through the Controller of Residential Property for permission to purchase

restricted residential property.The Minister of Law may in his discretion grant such approval to a person

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who intends to purchase or acquire restricted residential property for the purpose of his or her own

occupation and that of his family as a dwelling-house in the following situations:

(1) the foreign person is a permanent resident of Singapore;

(2) the foreign person is of economic benefit to Singapore; or

(3) the foreign person possesses professional or other qualifications or experience which are of value or of

benefit or advantageous to Singapore.

Suppose X acquires restricted residential property after obtaining permission from the Minister of Law.Is X

then entitled to settle the residential property on trust for his special needs child, Y? Assuming that Y is a

foreigner, then the answer to this question is no.Section 3(b) of the Residential Property Act is quite clear

in stipulating no person shall create any trust for sale in respect of any residential property or any estate or

interest therein in favour of any foreign person.If X attempted to settle the restricted residential property on

trust for Y, then presumably the trust is void and the property is held on resulting trust for X'sestate.However, this does not necessarily mean that thefaraidbeneficiaries will automatically be able to

claw back the residential property fully.Assuming that X died intestate with regard to the residential

property, then the next issue would be what is the choice of law of intestate succession?It is likely that

Singapore law would follow the English rule that the succession of immovables to an intestate is governed

by thelex situs.90The*82 Administration of Muslim Law Act91does not apply because it only affects

Muslim persons domiciled in Singapore.Instead the applicable statute governing this issue would be the

Intestate Succession Act.92Section 4(2) of the Intestate Succession Act specifically provides that the

distribution of the immovable property of a person deceased shall be regulated by this Act wherever he may

have been domiciled at the time of his death.

If the trust property consists of moveables such as cash, then there should be no restrictions for X to transfer

the property to the trustees to hold on trust for Y.

Capacity to create an inter vivos trust

With regard to the settlor's capacity to create an inter vivos trust, there are three possibilities for the choice

of law governing this issue:

(i) the proper law of the trust;

(ii) the law where the moveables are situated; or

(iii) the law of the settlor'sdomicile.93

In Singapore, the question is governed by s 90(1) of the Trustees Act94which provides that:

where a person creates a trust or transfers movable property to be held on an existing trust during his

lifetime, he shall be deemed to have the capacity to so create the trust or transfer the property if he has

capacity to do so under any of the following laws:

(a) the law applicable in Singapore;

(b) the law of his domicile or nationality; or

(c) the proper law of the transfer.

Section 90(2) explicitly states:

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No rule relating to inheritance or succession shall affect the validity of a trust or the transfer of any property

to be held on trust if the person creating the trust or transferring the property had the capacity to do so under

subsection (1).

Thus, the resultant effect of ss 90(1) and 90(2) of the Trustees Act is that the issue is divided into two

stages.First, s 90(1) provides that the capacity to create the trust or transfer movable property is governed by

either Singapore law, the law of domicile or the proper law of the transfer.As long as the settlor has the

capacity to create the trust or transfer movable property underanyof the following laws, then the settlor will

be deemed to have the capacity to create the trust or transfer the property.It is suggested that for a foreign

settlor the most helpful reference would be to Singapore law since this would exclude any foreign forced

heirship laws.Section 90(4) makes it clear that the reference to law does not include any choice of law

rules forming part of that law.This section appears to be designed to eliminate the possibility of the

operation of inter-personal choice of law rules which might lead to the application of the foreign forced

heirship rules.The upshot of this sub-section is that the reference to Singapore law in s 90(1) of the Trustees

Act is a reference to domestic civil law.Thus, in the hypothetical, *83 X would have the capacity to create

the trust and transfer the property pursuant to s 90(1) of the Trustees Act even if this was in breach of the

forced heirship laws of X's domicile.This is because under Singapore law, X does not face any legal

impediment to creating the trust or transferring the property.Second, s 90(2) stipulates that the question of

the validity of a trust or the transfer ofanyproperty to be held on trust specifically excludes inheritance or

succession rules if the person had the capacity to do so under s 90(1) of the Trustees Act.Read together, ss

90(1) and 90(2) are intended to exclude the operation of foreign inheritance or succession rules which might

invalidate a Singapore trust.

It is also vital to highlight the significance of s 90(3) of the Trustees Act.Section 90(3)(a) provides that s

90(1) doesnotapply if the person creating the trust or transferring the property is a citizen of Singapore or is

domiciled in Singapore.This suggests that s 90(1) is not meant to affect the issue of interpersonal conflict of

laws with regard to Singaporeans or persons domiciled in Singapore.Section 90(3)(b) is also importantbecause it provides that s 90(1) only applies in relation to a trust only if the trust is expressed to be

governed by Singapore law and the trustees are resident in Singapore.Therefore, settlors who wish to take

advantage of the operation of s 90(1) of the Trustees Act ought to include Singapore as the choice of law in

their trust deed and select Singapore trustees.

Despite the wide ambit of s 90 of the Trustees Act it may not be wholly effective especially where there are

complex cross border issues.An example would be a purported trust consisting of shares in foreign

companies.95While s 90(1) of the Trustees Act may arguably apply and deem the settlor as having both the

capacity and the right to transfer the shares, this position might not be recognised by the law of the country

in which the company was incorporated or the country where the register of the company is situated.The

foreign jurisdiction might decide that the foreign forced heirship rule take precedence over s 90(1) of the

Trustees Act and as a result will not recognise the trust.If so, the Singaporean trustee will not be able to

register his or her name as the legal owner of the shares or assert any rights associated with share ownership

in the foreign company.This simple example illustrates the complexity involved in a trust holding shares of

foreign companies.In any case, anecdotal evidence suggests that most professional trustees are quite

reluctant to hold foreign shares on trust due to the onerous duties that this entails.96

2. X, a Singaporean Muslim or a Muslim person domiciled in Singapore, settles a trust for Y

Matters become more controversial when the settlor, X, is a Muslim person and a Singapore citizen or a

Muslim person domiciled in Singapore.Does X have the capacity to create such an inter vivos trust?This

question is complicated by s 111 of the Administration of Muslim Law Act97which provides that:

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no Muslim domiciled in Singapore shalldispose of his property by will except in accordance with

the provisions of and subject to the restrictions imposed by the school of Muslim law professed by him.

Can it be argued that the inter vivos trust is avoided as a result of a contravention of this provision?

*84 Although there are no cases directly on point, it is suggested that an inter vivos trust is not caught under

the provisions of the Administration of Muslim Law Act.A literal reading of s 111 of the Administration of

Muslim Law Act makes it clear that this is a prohibition in relation to a disposal of property by will and not

an inter vivos transfer of property.If the property is settled on an inter vivos trust, then there is a strong

argument to say that this matter is entirely outside the purview of this section.The recent Court of Appeal

decision inShafeeg bin Salim Talib and another v Fatimah bte Abud bin Talib and Others98implicitly

supports this argument.Shafeegwas a case where the Singapore Court of Appeal considered whether the right

of survivorship inherent in joint tenancies offended the provisions of the Administration of Muslim Law

Act.In this case, the deceased, who is a Muslim person, held the property on joint tenancy with his wife.On

his death, thefaraidbeneficiaries challenged the operation of the right of survivorship as being inconsistent

withsyariahlaw.In dismissing this challenge, Chan Sek Keong CJ relied on the Malaysian case ofRe Man binMihat,Decd99and said:

there is no restriction against a Muslim giving away all his property inter vivos during his lifetime to any

person he wishes, and thereby depriving his legal heirs under Muslim law of any estate which they can

inherit.

The Malaysian case ofRe Man bin Mihat, Decd100also suggests that an inter vivos trust is not subject to

Muslim inheritance laws.The deceased created a statutory trust over his insurance policy in favour of his

wife.On his death, one of the contentions was that the proceeds from the insurance ought to be subject to

Muslim inheritance laws.Suffian J rejected this argument saying:

Muslim law rigidly prescribes the share of every heir and no alteration of these shares may be made by will,for a bequest to an heir requires the consent of all co-heirs and a bequest to strangers may not take effect

beyond of the testator's estate, but there are no restrictions beyond these two limitations.So it is lawful for a

Muslim to alter the prescribed shares of his heirs by disposing outright during his lifetime part or the whole

of his property to a favoured wife, either directly by way of a gift inter vivos or indirectly through trustees.

The passage above was cited with approval by Chan Sek Keong CJ in Shafeeg.101Thus, it is likely that a

Singapore court would hold that it is lawful for a Muslim person to create an inter vivos trust.This position

is bolstered by the fact a Muslim person is entitled to create irrevocable trust nomination for their insurance

policies pursuant to s 49(L) of the InsuranceAct.102Since a Muslim person is allowed to create such a trust

over an insurance policy, it is contended that a Muslim person may similarly declare an inter vivos trust.

In any case, it might be advisable for a Muslim settlor to execute anuzriah/nasr*85 contemporaneously with

the settling of the inter vivos trust.103Sproules J described thenuzriahas follows inRe Fatimah binte

Mohamed bin All Al Tway, Decd:104

A Nasr is a kind of bargain with the Almighty.A donor vows, conditionally upon recovery from an illness,

or the fulfilment of some other dear wish, that he will make a gift, it may be a sacrificial offering, it may be

to charity or to some individual for the sake of God.If the heart's wish be granted then the vow in God's

name becomes irrevocable by a devout Mohamedan.

Thenuzriahmay lessen litigation risk faced by the beneficiaries of the inter vivos trust.It is interesting to note

the Islamic Religious Council of Singapore's (Majlis Ugama Islam) position on thenuzriah.On theirwebsite,

105the following examples are given:

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For example: making a nuzriah to give all of one's wealth to his wife with the intention of preventing his

disobedient and disrespectful child from receiving anything is considered haram [forbidden] in Islam.

[translation added]

On the other hand, making a nuzriah to ensure the well-being of another party after a person's death is

permissible in Islam.For example: someone who makes nuzriah to give his house to his wife with the

intention that the house will not be sold and distributed among his legal beneficiaries.This will ensure that

his wife will still have a house after his death.The nuzriah is permissible in Islam.However, his other estates

or wealth should be distributed among his legal beneficiaries according to the law of faraidh.

The argument that anuzriahmay be used to validate an inter vivos trust under Islamic law is implicitly

supported by Islamic Religious Council of Singapore'sfatwain 2008 on joint tenancies.106Thefatwadeclares

that where no arrangements have been made between joint tenants, the surviving joint tenant will only have

50 per cent of the property upon the death of the other owner.The remaining 50 per cent of the property

would presumably be distributed in accordance withfaraid.However, thefatwagoes on to say that where there

is anuzriah:

which expressly states that the property is to be given wholly to the surviving joint tenant, in the event

of death of one of the joint tenants, then the entire property shall vest in the surviving joint tenant.

Thus, it may be argued by analogy that anuzriahmight be used to validate aninter vivostrust under Islamic

law.

*86 There are limitations to the use of thenuzriah.If thenuzriahis meant to take effect as a testamentary

disposition, then it would probably be struck down.The courts will examine this question by looking at the

substance of the transaction and not the form.In this regard, it is worth mentioning the judgment of Rubin J

inMohamed Ismail bin Ibrahim and another v Mohammad Taha bin Ibrahim107which considered the

nuzriah.InMohamed Ismail,thenuzriahwas contained in a will and purported to take effect three days beforeor one hour before the death of the testator.As such, it was unsurprising that the learned judged held that the

nuzriahwas invalid because it transgressed Muslim inheritance laws.108However, it is interesting to note

that Rubin J said:

If the portion delineated was given away during his lifetime by the testator to the named beneficiaries, it

would have constituted a gift inter vivos and the plaintiffs would not have been in a position to challenge the

said direction, for there is no legal impediment in Muslim law for a person to give away any amount of his

wealth or assets during his lifetime.

Thus, the takeaway lesson fromMohamed Ismailfor persons who are drafting a trust for Muslims is to ensure

that the trust is an inter vivos trust and that the property is transferred to the trust while the settlor is

alive.Any transfer of property by will to the trust is vulnerable to being challenged as being inconsistent

with the Administration of Muslim Law Act.

The conclusion on the use of thenuzriahis that while its binding effect is subject to some dispute under

secular andsyariahlaw,109the presence ofanuzriahmight pose as a moral and psychological disincentive to

somefaraidbeneficiaries from challenging the trust.This is because thenuzriahrepresents a solemn

irrevocable vow with God that the deceased made to dispose his or her property in a certain way andfaraid

beneficiaries might be wary of disrupting the deceased's vow.

Conclusion

This paper has examined the various possible ways in which a Singapore trust might be attacked by private

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law claimants.It is foreseen that these claimants would principally be divorcing spouses, bankruptcy

creditors and disappointed heirs.As demonstrated in this paper, the primary hurdle for such claimants is to

obtain information and documents from the trustees.In this regard, Singapore law imposes an onerous duty

of confidentiality on licenced trust companies.Compounding the difficulties for such claimants is the factthat the trust might be structured in such a manner where the settlor technically no longer has any beneficial

interest in the trust.Thus, the upshot of this paper is that the Singapore trust if properly structured, while

certainly not an impregnable fortress, would be able to withstand most attacks.

Associate Professor, Faculty of Law, National University of Singapore.I owe a debt of gratitude to the

following people who have helped me with this paper: Tan Choog Ing, Dora Neo, Chan Wing Cheong, Lee

Woon Shiu, Hans Tjio, Daphne Chang, Alfred Dodwell, Stephen Phua, KC Lye, Jeffrey Pinsler, Wee Meng

Seng, Tracey Evans Chan, Barry Crown, Debbie Ong, Yeo Tiong Min, Rachel Leow, Shn Warnock-Smith,

Jonathan Speck, Joshua S Rubenstein, Tan Yock Lin and the anonymous referees.The usual caveats

apply.This paper was first presented at Legalweek'sPrivate Client Forum Asia Conference: Wealth

Management for a New Generation,Shangri-La Hotel, Singapore, 12 October 2010.

1. For a background of the rise of Singapore's trust industry see H W Tang, Teaching Trust Law in the

Twenty First Century in E Bant and M. Harding (eds),Explori ng Private Law,(CUP, 2010), pp 125,

132-136.

2. For an overview of the changes to the trust legislation see H W Tang and D P Sandrasegara, Equity and

Trusts in KS Teo (ed),Developments in Singapore Law Between 2001 and 2005(Singapore Academy of

Law, Singapore, 2006) pp 892--94.

3. These efforts are described in a speech by the Deputy Managing Director of Monetary Authority of

Singapore, Mr Ong Chong Tee at a Private Wealth Management Conference in 2006 at

http://www.mas.gov.sg/news_room/statements/2006/Private_Wealth_Management_Conference.html

4. Tougher for Investors to Apply for PR Status, inThe Straits Times,(Singapore), 1 October 2010.5. See L Tan, Spore Needs Up to 1,000 More Wealth Managers Now in The Straits Times(Singapore) 30

June 2006.

6. E Leow and S Michaels, Has Banking Secrecy Come to an End on Singapore?, The Business Times

(Singapore) 8 June 2010.

7. Thelocus classicuson sham is of courseSnook v London and West Riding Investments Ltd[1967] 2 QB 786.

Snookhas been applied in Singapore.See, egKoon Seng Construction Pte Ltd v Chenab Contractor Pte Ltd

and another[2008] 1 SLR(R) 375.

8. SeeMidland BankvWyatt[1997] 1 BCLC 242 (noted S Warnock-Smith,Midland Bank v Wyatt:Sham

TrustsCome to the United Kingdom (1994) 6 PCB 410).See also M Conaglen, Sham Trusts (2008) 67

CLJ 176; P Matthews, The Sham Argument and How to Avoid It (2007) 21 TLI 191.

9. [1928] AC 444.10. See, eg A Phang,The Development of Singapore Law : Historical and Socio-Legal Perspectives,

(Butterworths, 1990).

11. See generally I J Hardingham and R Baxt,DiscretionaryTrusts,(Butterworths, 1975).

12. See, egSchmidt v Rosewood Trust Ltd[2003] AC 709 (noted by D Davies, Integrity of Trusteeship

(2004) 120 LQR 1).See also P Matthews, Black Hole Trust: Uses, Abuses and Possible Reforms Part 1 and

Part 2 [2002] 1 PCB 42; [2002] 2 PCB 103.

13. Ibid.

14. On the trustees duties on appointment see J Mowbray, Choosing Among the Beneficiaries of a

DiscretionaryTrusts [1998] PCB 239.See alsoBreakspear v Ackland[2009] Ch 32 (noted T H Tey, Letters

of Wishes and Trustee's Duties (2008) 22 TLI 126; G Griffiths, An Inevitable Tension?The Disclosure of

Letters of Wishes [2008] Conv 322; D Fox, Disclosure of a Settlor's Wish Letter in a Discretionary Trust

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(2008) 67 CLJ 252).A letter of wishes was used in a local context inRajabali Jumabhoy and others v

Ameeral i R Jumabhoy and others[1997] 2 SLR(R) 296.

15. See [1971] AC 424, 457.

16. See, egCharman v Charman[2007] EWCA Civ 503.17. On trust protectors see P Matthews, Protectors: Two Cases, Twenty Questions (1995) 9 TLI 108; D W

M Waters, The Protector: New Wine in Old Bottles? in A J Oakley, (ed), Trends in Contemporary Trust

Law(Clarendon, 1996), p 63; Protectors inThe International Trust,(Jordans, 2006), p 193; A Duckworth,

Protectors: Fish or Fowl?Parts 1, 2 and 3 (1996) PCB 169, 245, 328; T H Tey, Trust Protector (2008) 20

SAcLJ 99; G Thomas and A Hudson,The Law ofTrusts,(OUP, 2010), paras 23.34-23.36.

18. T H Tey, Trust Protector (2008) 20 SAcLJ 99, 133.

19. [2007] EWCA 11, 1 All ER (Comm) 475 (noted by A Trukhtanov, The Irreducible Core of Trust

Obligations (2007) 123 LQR 342).

20.Armitage v Nurse[1998] Ch 241.

21. If the protector is given too many duties, it may be that the protector ought to be treated as a trusteede

son tort.22. Opening Address by the Honourable Chief Justice Chan Sek Keong in H Tjio, (ed), The Regulation of

Wealth Management,(NUS, 2008), xxvi.

23. Ibid.

24. G S Alexander, Trust Protectors: Who Will Watch the Watchmen? (2006) 27 Cardozo Law Review

2807; S E Sterk, Trust Protectors, Agency Costs, and Fiduciary Duty (2006) 27 Cardozo Law Review

2761; T Z W Tan, The Irreducible Core Content of Modern Trust Law (2009) 15 Trust and Trustees 477,

482--485.

25. The modern principles of disclosure of information have been restated inSchmidt v Rosewood Trust Ltd

[2003] AC 709.See also L Ho, Trustees' Duties to Provide Information in E Bant and M Harding (eds),

Exploring Private Law(CUP, 2010), 343.

26. (Cap 336, 2006 Rev Ed).Section 15 of the Trust Companies Act exempts certain institutions like banks

and merchant banks from obtaining a trust licence.However, the Monetary Authority of Singapore may

prescribe that certain portions of the Trust Companies Act would be applicable to such institutions.

27. See, egSchmidt v Rosewood Trust Ltd[2003] AC 709.

28. See, egJ v V[2003] EWHC 31110;Minwalla v Minwalla[2005] 1 FLR 771;Charman v Charman[2007]

EWCA Civ 503;A v A[2007] EWHC 99;Mubarak v Mubarak[2007] EWCA Civ 879, [2008] JRC 136.

29. Section 93, Women's Charter (Cap 352, 2009 Rev Ed).

30. For a comprehensive discussion of the case law see W K Leong,Elements of Family Law,(LexisNexis,

2007), 665-758.

31.Chan Teck Hock David v Leong Mei Chuan[2002] 1 SLR 177.

32.Ng Ngah Len@Datin Sandra Kuah v Kuah Tian Nam@Dato Peter Kuah[2003] SGHC 109.

33. Found in The Subordinate Courts Practice Directions, (2006 Ed) at

http://app.subcourts.gov.sg/Data/Files/File/PracticeDirections/MasterPD_9_6_2010.pdf34. Form E may be found here http://www.hmcourts-service.gov.uk/courtfinder/forms/form_e_1205.pdf

35. (Jordans, 2007), p 127.

36. [2004] SGDC 131.

37. See alsoShi Fang v Koh Pee Huat[1996] 1 SLR(R) 906 which suggests that where the property is not

considered to be matrimonial asset if a spouse is holding it on a purchase price resulting trust in favour of a

third party.

38. Opening Address by the Honourable Chief Justice Chan Sek Keong in (H. Tjio, (ed),The Regulation of

Wealth Management,(NUS, 2008), xxv. The case was not actually reported.However, the same parties came

before Selvam J inMarie Eileen Guin Nee Fernandez v Arun Guin[1994] SGHC 157.

39. SeeMarie Eileen Guin Nee Fernandez v Arun Guin[1994] SGHC 157.

40. [2009] 2 SLR(R) 961, para 27.

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41. See, eg s 24(1)(c) of the Matrimonial Causes Act 1973; s 6 of the Civil Partnership Act 2004.

42. (Cap 352, 2009 Rev Ed).CfCH v CI[2004] SGDC 131.

43. (Cap 337, 2005 Rev Ed).

44. This section is similar to s 57 of the UK Trustees Act 1925.See Sutton v England[2010] WTLR 335;ReThomas[1930] Ch 194;Re Downshire[1953] Ch 218;Re Freeston's Charity[1978] 1 WLR 741.

45. [2004] SGDC 131.

46. [2007] 1 SLR(R) 75.

47. Ibid, para 24.

48. (Cap 61, 1994 Rev Ed).SeeQuah Kay Tee v Ong and Co Pte Ltd[1996] 3 SLR(R) 637.

49. [2005] 4 SLR(R) 561.

50. See, egCharman v Charman[2007] EWCA Civ 503.

51. Ibid.

52. See Mark Harper et al (eds),International Trust and Divorce Litigation(Jordans, 2007), 67-77.

53. See Ord 66 of the Rules of Court; J Pinsler et al (eds), Supreme Court Practice 2009,1307-1312.

54. [1987] QB 433.The result was overturned by House of Lords in [1990] 1 AC 723 but the balancingexercise analysis was endorsed.

55. Ibid, 486.

56. See alsoSusilawati vAmericanExpress Bank Ltd[2009] 2 SLR(R) 737 where the Singapore Court of

Appeal said that Singapore's statutory regime on banking secrecy left no room for the four general common

law exceptions to co-exist.

57. [1990] 1 AC 723.

58. (Cap 336, 2006 Rev Ed).

59. (Cap 336, 2006 Rev Ed).

60. [1990] 1 AC 723.

61.Tournier v National Provincial and Union Bank of England[1924] 1 KB 461.

62. [1981] AC 1096, 1168.

63. See discussion in Mark Harper et al (eds),International Trust and Divorce Litigation,(Jordans, 2007),

62-67.

64. On Jersey's experience in dealing with such issues see D Hayton, Death of a Marriage: Marital

Breakups and Interests underTrusts (2010) 16(8) Trust and Trustees 617.

65. [2010] 1 SLR 1129, para 14.

66. LexisNexis, 2009.See the difficult litigationMurakami Takako v Wiryadi Louise Maria[2008] 3 SLR(R)

198;Murakami Takako (executrix of the estate of Takashi Murakami Suroso, deceased) v Wiryadi[2007] 4

SLR(R) 565;Murakami TakakovWiryadi Louise Maria and others[2007] 1 SLR(R) 1119;Murakami Takako

(executrix of the estate of Takashi Murakami Suroso, deceased, Wiryadi[2009] 1 SLR(R) 508.However, it is

impossible to draw definitive general principles from this series of litigation since they essentially involved

questions of interlocutory procedure.

67. [2003] AC 709 (noted by D Davies, Integrity of Trusteeship (2004) 120 LQR 1).68. (Cap. 336, 2006 Rev Ed).

69. Section 2, Trust Companies Act (Cap. 336, 2006 Rev Ed).

70. Section 49(3), Trust Companies Act (Cap. 336, 2006 Rev Ed).

71.Clarkson v Clarkson[1994] BCC 921.

72. See egGrupo Torras SA v Al-Sabah (No 8)[2004] WTLR 1.

73. [2005] 1 FLR 771, paragraphs 54--55.

74. (Cap 61, 1994 Rev Ed).Section 86 of the Trustees Act (Cap 337, 2005 Rev Ed) makes it clear that this

section is applicable to a trust.See alsoQuah Kay Tee v Ong and Co Pte Ltd[1996] 3 SLR(R) 637.See alsoIn

re Butterworth(1881--1882) L R Ch D 588.

75. Section 60 of the Bankruptcy Act (Cap 20, 2009 Rev Ed).

76. See s 61(d) of the Bankruptcy Act (Cap 20, 2009 Rev Ed).See alsoAmbank Bank (M) Bhd v Yong Kim

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Yoong Raymond[2009] 2 SLR(R) 659.

77. Sections 98 and 100 of the Bankruptcy Act (Cap 20, 2009 Rev Ed).Section 87(1) of the Trustees Act

(Cap 337, 2005 Rev Ed) makes it clear that these bankruptcy provisions apply to a trust.

78. (Cap 50, 2006 Rev Ed).79. See Companies (Application of Bankruptcy Provisions) Regulations.See also E B Lee, The Avoidance

Provisions of the Bankruptcy Act 1995 and Their Application to Companies [1995] Sing JLS 597.

80. See generally T H Tey,Trustsand Forced Heirship(NUS, 2010).

81. For an overview see P Matthews, Capacity to Create a Trust: The Onshore Problems, and the Offshore

Solutions (2002) 6 Edin L R 176; A Duckworth, Forced Heirship -- Where Are We Now? (2005) 4 PCB

208.

82. See, egIn re The Lemos Trust Settlement(1992-93) CILR 26 andLemos & Others v. Coutts & Co

(Cayman) Ltd and Others(1992-93) CILR 5.

83. For Singapore see s 114 of the Administration of Muslim Law Act (Cap 3, 2009 Rev Ed);Mohamed

Ismail bin Ibrahim and another v Mohammad Taha bin Ibrahim[2004] 4 SLR(R) 756.See also Y L Tan,

Conflicts Issues in Family and Succession Law(Butterworths, 1993), pp 91-117.84. These two scenarios are constructed for the purposes of discussion.A settlor might well choose to settle a

very widely drafted discretionary trust with a corresponding letter of wishes expressing the settlor's wish

that Y is to be the primary beneficiary of the trust.

85. See, egRe Fatimah binte Mohamed bin All Al Tway, Deceased[1933] 1 MLJ 211.See L Collins et al

(eds),Dicey and Morris The Conflict of Laws(Sweet & Maxwell, 2006), r 123.

86. See s 4 of the Residential Property Act (Cap 274, 2009 Rev Ed).See also S Y Tan et al ( eds),Tan Sook

Yee's Principles of Singapore Land Law(LexisNexis, 2009), Ch 10.

87. (Cap 274, 2009 Rev Ed).

88. (Cap 232, 1998 Rev Ed).

89. Section 3 of the Residential Property Act (Cap 274, 2009 Rev Ed).

90. See s 4(2) of the Intestate Succession Act, (Cap 146, 1985 Rev Ed).See alsoSoundara Achi v Kalyani

Achi[1953] MLJ 147; Y L Tan,Conflicts Issues in Family and Succession Law,(Butterworths, 1993),

593-594.

91. Section 112 of the Administration of Muslim Law Act (Cap 3, 2009 Rev Ed).

92. (Cap 146, 1985 Rev Ed).

93. See P Matthews, Capacity to Create a Trust: The Onshore Problems, and the Offshore Solutions (2002)

6 Edinburgh Law Review 176 for a very thorough discussion of this issue.

94. (Cap 337, 2005 Rev Ed).

95. See generally M Ooi,Shares and Other Securities in the Conflict of Laws(Oxford, 2003).

96. SeeBartlett v Barclays Bank (Nos 1 and 2)[1980] 2 WLR 430.

97. (Cap 3, 2009 Rev Ed).

98. [2010] 2 SLR 1123.

99. [1965] 2 MLJ 1.100. [1965] 2 MLJ 1.

101. [2010] 2 SLR 1123, para 24.

102. (Cap 142, 2002 Rev Ed).See also s 111 of the Administration of Muslim Law Act (Cap 3, 2009 Rev

Ed).

103. On thenuzriahsee generally Hairani Saban Hardjoe, Estate Planning for Muslims -- Industry and Legal

Dilemmas (2010) Law Gazette at http://www.lawgazette.com.sg/2010-06/feature2.htm Cf. there might be

technical difficulties in executing a nuzriah in Singapore because such an instrument would have to be

sanctioned and validated or ratified in writing in accordance with Muslim law by the President of Islamic

Religious Council of Singapore (Majlis Ugama Islam).See s 60 of the Administration of Muslim Law Act

(Cap 3, 2009 Rev Ed).

104. [1933] 1 MLJ 211.

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105. http://www.muis.gov.sg/cms/oomweb/irsyad.aspx?id = 14408

106. http://www.muis.gov.sg/cms/oomweb/fatwa.aspx?id = 14386

107. [2004] 4 SLR(R) 756.

108. Cf. it is interesting to note that such a gift would probably be valid under Jewish law.See, eg B C Wolf,Resolving the Conflict between Jewish and Secular Law (2009) 37 Hofstra Law Review 1171, 1186-1188.

109. Report on the Muslim Law Practice Committee Roundtable: Implications ofShafeeg's Case, Law

Gazette,August 2010, 21.

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