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CASE SUMMARIES

BOM v BOK and another appeal [2018] SGCA

83
SUPREME COURT OF SINGAPORE

29 November 2018

Case summary

BOM v BOK and another appeal [2018] SGCA 83

Civil Appeals Nos 3 and 5 of 2018

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Decision of the Court of Appeal (delivered by Judge of Appeal

Andrew Phang Boon Leong):

Outcome: CoA dismisses appeal against High Court’s decision that a

deed of trust ought to be set aside for misrepresentation, mistake,
undue influence and unconscionability.

Pertinent and significant points of the judgment

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1 Undue influence did not operate only where the person exerting
the influence was also the person benefitting from the voluntary
disposition. There was no reason in principle why the operation of
undue influence ought to be confined to situations where the party
exerting the influence was also the party benefitting from the voluntary
disposition or transaction (at [103]).

2 The narrow doctrine of unconscionability applied in Singapore. But

in addition to considering whether the plaintiff was poor and ignorant,
the court would also consider situations where the plaintiff was
suffering from other forms of infirmities – whether physical, mental
and/or emotional in nature – that the other party exploited in procuring
the transaction. Crucially, not every infirmity would suffice; it must have
been of sufficient gravity as to have acutely affected the plaintiff’s ability
to conserve his own interest. Upon the satisfaction of this requirement,
the burden was on the defendant to demonstrate that the transaction
was fair, just and reasonable. While the successful invocation of the
doctrine did not require that the transaction was at an undervalue or
that the plaintiff lacked independent advice, these were factors that the
court would invariably take into account. In a typical improvident
transaction in which the sale was at a considerable undervalue and the
plaintiff’s vendor had not received any independent advice, it would be
extremely difficult for the defendant to show that the transaction was
fair, just and reasonable (at [140]–[142]).

3 The proposed approach as set out in the preceding paragraph

ought to be applied through the lens of cases exemplifying the narrow
doctrine (eg, Fry and Cresswell) rather than those embodying the
broad doctrine (eg, Amadio). This starting point distinguished the
narrow doctrine subtly but significantly from the broad doctrine and
represented a middle ground based on practical application rather than
theoretical conceptualisation (at [144]).

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Background facts

1 In March 2014, the respondent (“the Husband”) executed a deed

of trust (“DOT”) that was drafted by the first appellant (“the Wife”). The
effect of the DOT was that the Husband and Wife would hold all of the
Husband’s assets on trust for their son, the second appellant (“the
Son”). Eventually, the Husband sought to have the DOT set aside on
the grounds of misrepresentation, mistake, undue influence and
unconscionability. At first instance, the trial judge (“the Judge”) found
that all four vitiating factors were made out and set aside the DOT.
Dissatisfied with the outcome, the Wife and the Son (collectively, “the
Appellants”) appealed against the entirety of the Judge’s decision.

2 The Husband and Wife married in August 2012, but mostly lived
apart in the period thereafter. The Husband lived with his mother – who
strongly opposed the couple’s marriage – in one of her properties (“the
Holland Road Property”), while the Wife stayed with her parents in their
family home (“the Stevens Road Property”). In March 2014, shortly
before the execution of the DOT, the Husband’s mother was killed at
the Holland Road Property, which was subsequently cordoned off by
the police. The Husband thus moved into the Stevens Road Property to
live with the Wife and her family.

3 On 26 March 2014, three days after the funeral, the Husband and
his sister met with their mother’s lawyers to read her will. They
discovered that their mother had created a testamentary trust over her
assets. Her assets were valued at about $54m and comprised, among
other things, two landed properties including the Holland Road Property
and another property (“the Bukit Timah Property”). After reading their
mother’s will, the Husband and his sister had lunch with the Wife and
her mother at the Stevens Road Property. The siblings agreed not to
reveal the will’s contents to the Wife. But upon being questioned by the
Wife, the Husband lied that his mother had willed all her property to

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charity. They then discussed the idea of converting the Bukit Timah
Property into an art gallery in remembrance of her. After lunch, the
Husband and his sister left the Stevens Road Property.

4 When the Husband returned in the evening, the Wife asked him
into her bedroom to sign the DOT. It is undisputed that the Husband
initially refused to sign the DOT but relented eventually. However, the
parties dispute the precise events that took place in the Wife’s bedroom
that evening. On the one hand, the Husband claimed that he was
ambushed by the Wife, who threatened to kick him out of the Stevens
Road Property if he did not sign the DOT. He further averred that she
represented to him that the trust would only take effect upon his death,
until which time he was free to use his assets (“the Misrepresentation”).
On the other hand, the Wife claimed that she had drawn up the DOT at
the Husband’s request, and that he had signed the DOT on his own
accord.

5 On 9 May 2014, the Husband exercised the option to purchase an

apartment, which the couple had identified as their potential family
home (“the Scotts Road Apartment”). On the same day, he executed a
second trust deed (“the Scotts Road Trust”), under which he declared
that he held the Scotts Road apartment on trust for the Son. The Scotts
Road Trust further provided that the Husband would be entitled to use
of the rental income for his own benefit until the Son turned 21 years
old.

6 Approximately a month after the Scotts Road Trust was executed,

in June 2014, the Wife sent two e-mails in quick succession to the
solicitor who had been appointed to assist with the administration of the
Husband’s mother’s estate (“the Solicitor”). In these e-mails, the Wife
enclosed a copy of the DOT and asked the Solicitor to take note of it in
administering the Husband’s mother’s estate. In December 2014, the
Wife sent another e-mail to the Solicitor in relation to the transfer of
property from the Husband’s mother’s estate to the Son. The Husband
was not copied in any of the Wife’s e-mails.
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7 The parties’ relationship quickly fell apart in December 2014. On

18 December 2014, the Solicitor replied to the Wife and copied the
Husband, informing them that the matter was best handled by his
colleague. After receiving the Solicitor’s e-mail, the Husband sought
legal advice on the DOT. And on 11 February 2015, he resolved to
leave the Stevens Road Property. He also wrote a letter to the Wife,
claiming that he would not have signed the DOT if she and her father
(“the Father”) had not pressured him into signing it. The next day, on 12
February 2015, the Husband went back to the Stevens Road Property
to deliver the letter to the Wife. This resulted in a heated confrontation
between the Husband, the Wife and the Wife’s mother. Their argument
was secretly recorded by the Husband (“the Recorded Conversation”),
which revealed that the Husband and the Wife disagreed as to whether
the Husband had been pressured into signing the DOT, and whether
the Wife had asked the Husband to consult a lawyer before signing the
DOT.

8 On 30 November 2015, the Husband initiated the present

proceedings to set aside the DOT. In the event, the Judge held in the
Husband’s favour, holding that the DOT ought to be set aside on the
basis of misrepresentation, mistake, undue influence and
unconscionability.

Court of Appeal’s decision

Substantive appeal on setting aside the DOT

Misrepresentation and mistake

9 The Court of Appeal found that the Husband had not intended to
execute a trust that stripped him immediately of all his assets. In this
regard, the Appellants referred to a diary entry, which they claimed to
show that the Husband wanted to put his fortune into a trust for his
children. But the evidence suggested that the diary entry was made a
substantial time after the DOT had been executed, which meant that it

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shed no light on the Husband’s state of mind at the time that the DOT
was signed. Further, it was unlikely that the Husband had the
necessary means to fund the purchase of the Scotts Road Apartment
(which was purchased at the price of $4.3m) just a few weeks after he
had divested all his assets upon the signing of the DOT. This showed
that the Husband continued treating the assets as his own to use freely,
and supported the conclusion that the Husband had not intended and
was ignorant as to the DOT’s true legal effect (at [56]–[63]).

10 The Court of Appeal also affirmed the Judge’s finding that the
Husband had a layperson’s understanding of how trusts operated. The
Appellant’s argument that the Judge failed to give adequate weight to
the fact that the Husband had a Masters of Law (“LLM”) from University
College London missed the point. Not only was there no evidence to
show that the Husband had passed the module on corporate equity
and trusts, the evidence suggested that each module in his LLM course
had a basic syllabus and that he only had a very rudimentary
understanding of trusts when he signed the DOT. In this vein, the
Appellants also pointed to an e-mail dated 27 March 2014, in which the
Husband asked the Solicitor about the stamp duty payable on the
Scotts Road Apartment in the light of him holding certain properties in
his name for the Son. The Appellants claimed that he knew of the
DOT’s legal effect, but the Court of Appeal disagreed. The e-mail was
drafted by the Wife, and the Husband had simply forwarded it to the
Solicitor without second guessing its contents (at [64]–[69])

11 The Court of Appeal further affirmed the finding that the Wife had
made the Misrepresentation. Among other things, the Recorded
Conversation revealed that the Wife had wanted the Husband to sign
the DOT under threat of chasing him out of the Stevens Road Property.
Further, the Wife’s contention that the Husband had told her that he
wanted to give everything to the Son did not cohere with the objective
evidence. The Wife’s sense of urgency in drafting the DOT was also
inexplicable given its drastic consequences, especially when one
considered the care with which she facilitated the signing of the Scotts
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Road Trust, which had far less serious consequences than the DOT. In
this connection, it was also held that the Judge was correct to prefer
the Husband’s account that the Father had helped convince him to sign
the DOT in the light of the Father’s unduly evasive behaviour on the
witness stand, which undermined his credibility at trial (at [70]–[88]).

12 In the light of the above, the Court of Appeal held that the DOT
ought to be set aside for misrepresentation. The Wife made the
Misrepresentation, which she knew was false. Additionally, she made it
with the intention that the Husband would rely on it to sign the DOT.
This led the Husband to sign the DOT, thinking that he would be free to
use his assets until his death, but was instead effectively rendered a
pauper by doing so (at [91]).

13 Likewise, it was held that the DOT ought to be set aside for
mistake. The mistake harboured by the Husband as to the effect of the
DOT was engendered by the Wife’s Misrepresentation, and the gravity
of the mistake was also sufficiently serious as to make it unjust for the
court to refuse relief. The DOT had a completely different legal effect
from what the Husband thought it had, and the result was that his
assets were completely negated because of his mistake (at [92]).

Undue influence

14 At the outset, the Court of Appeal disagreed with the Appellants

that undue influence operated only where the person exerting the
influence was also the person benefitting from the voluntary disposition.
Citing Bridgeman v Green (1757) Wilm 58 affirmatively, it noted that
there was no reason in principle why the operation of undue influence
ought to be confined to situations where the party exerting the influence
was also the party benefitting from the voluntary disposition or
transaction (at [103]).

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15 The Court of Appeal upheld the Judge’s decision that “Class 1”

undue influence was made out on the facts. The critical question in this
regard was whether the Husband was suffering from such acute grief
that put him in a vulnerable state. The expert evidence at trial was
unanimous that the Husband was suffering from acute grief, which
impaired his judgment at the material time. Further, the Appellants’
contention that the Husband did not lack mental capacity was
misplaced. There was no requirement that undue influence could arise
only from a lack of mental capacity. The law recognised that bullying
may sufficiently impair a person’s free will as to constitute undue
influence, and the facts of this case exemplified such bullying. The Wife
was aware that the Husband was not in an appropriate state of mind to
execute a will, that he was a lonely individual, and that the Son and her
were the only family that he had left. But that did not stop her from
pressuring him into signing the DOT under threat of being chased out
of the Stevens Road Property. It was thus clear that the Wife was
taking advantage of the Husband’s grief by badgering him into signing
the DOT (at [104]–[107])

16 However, the Court of Appeal disagreed with the Judge that the
DOT ought to be set aside for “Class 2A” undue influence. Specifically,
it found that there was no implied retainer between the Husband and
the Wife such that there arose an irrebuttable presumption of a
relationship of trust and confidence. It was of the view that the Judge
ought to have given more weight to the fact that the Husband and Wife
were in a marital relationship that was far removed from the
commercial contexts in which implied retainers were typically found.
Simply because the Husband had traditionally relied on the Wife for her
legal knowledge did not necessarily mean that the Husband reasonably
considered the Wife as his solicitor, or that the Wife ought to have
known that she was representing the Husband. To hold otherwise
would mean that every legally-trained person would have to be careful
with the legal knowledge that they share with their spouse. That would
have been neither desirable nor consistent with the reality of marital
relationships. That being said, the Court of Appeal did not foreclose the
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possibility of an implied retainer arising as between spouses, and

observed only that it would nevertheless be a rare case in which such a
scenario would arise (at [108]–[113])

Unconscionability

17 The Court of Appeal observed that the concept of

“unconscionability” had at least two meanings within the law. The first
was unconscionability as a rationale, which could be construed in the
layperson’s sense of a contract being perceived as being unfair.
Inasmuch as such an approach towards the concept of
“unconscionability” was a mere general underlying justification for a
different doctrine, there were few objections. However, the second
distinct meaning of “unconscionability”, viz, “unconscionability” as a
doctrine was much more problematic. It was by no means clear
precisely what legal criteria it embodied and this lack of legal guidance
would therefore lead to uncertainty as well as unpredictability. It might
further be argued that situations in which the doctrine of
unconscionability might potentially apply to could be dealt with better by
alternative legal doctrines that were more established from a legal point
of view – for example, undue influence and duress (at [117]–[122]).

18 Accordingly, it was observed that the challenge was to distil the

general rationale of unconscionability into a legally workable doctrine.
To that end, the Court of Appeal identified two doctrines of
unconscionability, one narrow and one broad. The narrow doctrine of
unconscionability emanated from a strand of cases (eg, Fry v Lane
(1888) 40 Ch D 312 (“Fry”) and Cresswell v Potter [1978] 1 WLR 255
(“Cresswell”)) dealing with situations that were known as improvident
transactions or bargains. These were situations where expectant heirs
were exploited by the other party and were deprived of their respective
inheritances. To invoke the narrow doctrine, the plaintiff had to be poor
and ignorant. The transaction also had to have been at a considerable
undervalue, and the plaintiff must not have had the benefit of

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independent advice. Upon the satisfaction of these factors, the onus

was on the defendant to show that the transaction was fair, just and
reasonable (at [127]–[131]).

19 In contrast, the Court of Appeal noted that the broad doctrine (as
best exemplified in The Commercial Bank of Australia v Amadio (1983)
151 CLR 447 (“Amadio”)) was phrased in too broad a manner and
afforded the court too much scope to decide on a subjective basis. It
ought therefore to be rejected. Moreover, it was thought that the broad
doctrine came dangerously close to the ill-founded principle of
“inequality of bargaining power” as introduced in Lloyd’s Bank Ltd v
Bundy [1975] QB 326 (at [132]–[133]).

20 The Court of Appeal held that the narrow doctrine of

unconscionability applied in Singapore. But in addition to considering
whether the plaintiff was poor and ignorant, the court would also
consider situations where the plaintiff was suffering from other forms of
infirmities – whether physical, mental and/or emotional in nature – that
the other party exploited in procuring the transaction. Crucially, not
every infirmity would suffice; it must have been of sufficient gravity as to
have acutely affected the plaintiff’s ability to conserve his own interest.
Upon the satisfaction of this requirement, the burden was on the
defendant to demonstrate that the transaction was fair, just and
reasonable. While the successful invocation of the doctrine did not
require that the transaction was at an undervalue or that the plaintiff
lacked independent advice, these were factors that the court would
invariably take into account. In a typical improvident transaction in
which the sale was at a considerable undervalue and the plaintiff’s
vendor had not received any independent advice, it would be extremely
difficult for the defendant to show that the transaction was fair, just and
reasonable (at [140]–[142]).

21 The proposed approach as set out in the preceding paragraph

ought to be applied through the lens of cases exemplifying the narrow
doctrine (eg, Fry and Cresswell) rather than those embodying the
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broad doctrine (eg, Amadio). This starting point distinguished the

narrow doctrine subtly but significantly from the broad doctrine and
represented a middle ground based on practical application rather than
theoretical conceptualisation (at [144]).

22 In reaching its conclusion that the narrow doctrine was the

applicable doctrine, the Court of Appeal also noted that it was arguable
that the expansion of the narrow doctrine of unconscionability was
historically flawed inasmuch as it proceeded from a non-existent
doctrine of unconscionability (this last-mentioned doctrine being, in
effect, the then existing doctrine of “Class 1” undue influence). It
therefore observed that the development of the broad doctrine of
unconscionability was historically unsound, and looked like a broad
discretionary legal device which permitted the court to arrive at any
decision which it thought was subjectively fair and thus ought to be
rejected. It also acknowledged that there was much force in the
argument that the narrow doctrine was redundant. But it saw no reason
to take special pains to declare that it was not part of Singapore law
since its acceptance would not lead to any obvious legal anomalies and
since it had been generally accepted across the Commonwealth.
Moreover, given the myriad of possible fact situations that might come
before the courts, the Court of Appeal found it imprudent to rule out
completely situations where the application of undue influence and the
narrow doctrine of unconscionability might lead to different results (at
[148]–[149]).

23 On the facts, the Court of Appeal held that the Judge was correct
to set aside the DOT on the basis of unconscionability. The impairment
of the Husband’s mental state due to his acute grief was of such gravity
that it constituted an infirmity that the Wife knew about and took
advantage of by leveraging on his sense of loneliness (at [154]).

Coda

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24 In a coda, the Court of Appeal considered the question of whether

an umbrella doctrine subsuming the doctrines of duress and undue
influence would be desirable. It acknowledged that there were linkages
between the three doctrines. However, it held in the negative, finding
that such an umbrella doctrine had no workable criteria and would
therefore permit excessive subjectivity on the part of the court that
would lead to excessive uncertainty and unpredictability (at [177]).

This summary is provided to assist in the understanding of the Court’s

judgment. It is not intended to be a substitute for the reasons of the
Court. All numbers in bold font and square brackets refer to the
corresponding paragraph numbers in the Court’s judgment.

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