The introduction of Additional Buyer’s Stamp Duty (“ABSD”) to rein in speculative behaviour in the Singapore residential property market has led to the emergence of the 99:1 “decoupling” practice1 . One common reason for holding properties in a 99:1 proportion is to enable property buyers to qualify for a larger housing loan, which in itself is not objectionable. However, illegality in the form of understamping may arise at the decoupling stage.
The Singapore High Court in Ngor Shing Rong Jake v Wong Mei Lee Millie [2025] SGHC 119 (“Jake v Millie”) had to decide whether a 1% property owner in a “99:1” arrangement should be prohibited by illegality from asserting a resulting trust in his favour.
Table of contents
Background
Millie and Jake (who were unmarried) bought a condominium and registered their legal ownership in a 99:1 ratio, even though Jake had contributed a larger share of the condominium’s purchase price. When the relationship broke down, Millie claimed that she owned 99% whereas Jake claimed a beneficial interest of more than 50% under a resulting trust, proportionate to his financial contribution.
On the facts, the judge found that Jake did not intend to benefit Millie (immediately and unconditionally) with his financial contributions to the condominium. Accordingly, a resulting trust arose in Jake’s favour, in proportion to his direct contributions to the purchase price of the condominium. Applying Lau Siew Kim v Yeo Guan Chye Terence and another [2008] 2 SLR(R) 108, the Court held that in the absence of a prior agreement between the parties, each of Jake and Millie was regarded as having contributed to half of the purchase price, as the mortgage loan was taken out in their joint names.
Issue
The critical issue was whether the claim for a resulting trust should be allowed, as one of the reasons for the deliberate 99:1 ownership registration ratio was to avoid paying ABSD if and when they were to purchase a second property.
Applying the legal framework developed in Lau Sheng Jan Alistair v Lau Cheok Joo Richard and another [2023] 5 SLR 1703 (“Alistair Lau”) for dealing with allegations of illegality in the context of trusts, the Court was of the view that:
- The beneficial interests of resulting trusts arise by operation of law, as a response to the absence of an intention on the part of the transferor to benefit the recipient: Chan Yuen Lan v See Fong Mun [2014] 3 SLR 1048, citing Air Jamaica Ltd v Joy Charlton [1999] 1 WLR 1399 at 1412. In other words, as resulting trusts are typically not illegal, the first stage inquiry of “whether the trust in question is illegal in itself and therefore void and unenforceable” is typically inapplicable.
- The primary question was whether the trust was created either for an “illegal purpose”, or arose as an incidental consequence of an illegal purpose. If yes, the next enquiry is whether allowing the claim would be a “proportionate response” to the illegal purpose, having regard to relevant factors such as:
- whether allowing the claim would undermine the purpose of the prohibiting rule;
- the nature and gravity of the illegality;
- the remoteness or centrality of the illegality to the trust;
- the object, intent and conduct of the parties; and
- the consequences of denying the claim.
Analysis
Relying on the Court of Appeal case in Ting Siew May v Boon Lay Choo and another [2014] 3 SLR 609 which held that an illegal purpose crystallises when the parties have an intention to carry out an illegal act even though the illegal act itself never actually takes place, the Court found that an illegal purpose existed, as Jake admitted that one of the main reasons for the 99:1 registration ratio was to enable the parties to transfer and pay stamp duty on Jake’s 1% share (even though he retained a larger beneficial interest in the condominium) at the decoupling stage – this understamping would had constituted a breach of Section 4 of the Stamp Duties Act.
However, the Court held that denying Jake’s 54.22% beneficial interest in the condominium because it arose incidentally to a contemplated understamping would be an excessive response outweighing the gravity of any intended illegality, for the following reasons:
- The contemplated “illegal” purpose in the instance case was understamping2 , not tax evasion – the evidence adduced did not support such a fraudulent intention on Jake’s part.
- The resulting trust arose from Jake’s lack of donative intention, and not on Jake’s positive intention to secretly retain a beneficial interest in the condominium. Although understamping could have arisen, the court was of the view that the parties had “no nefarious intention or even knowledge that [what the parties planned to do] would be an unlawful act”.
- The Court found that that the primary objective of the 99:1 registration ratio was to address Millie’s insecurity. The contemplation of purchasing a second property was a secondary consideration.
- The unlawful understamping was never executed, and was merely contemplated.
Final Take
Both Jake v Millie and Alistair Lau have broad similarities in that one party denied the other party’s beneficial interest under a trust, by impugning the trust as arising from an illegal purpose, namely the avoidance of ABSD. However, it should be noted that the decision in Jake v Millie is specific to the parties’ circumstances in the case and readers should be cautious in relying on this decision to all cases of 99:1 arrangements.
The decoupling strategy discussed in Jake v Millie should also not be confused with the “99-to-1” purchase arrangements which typically involve deliberate staggering of a single transaction into multiple discrete transactions, which enable parties to only pay ABSD on a subsequent 1% transfer (rather than on the entire purchase price), typically to a spouse or other immediate family member who has a higher ABSD profile (but with the ability to secure financing for the property). Such intentional “99-to-1” arrangements have been classified by IRAS as tax avoidance arrangements.
This article was prepared with contributions from Ms Lynn Chan Yuen Ling (Legal Associate) at LONGBOW Law Corporation.
If you require any further information, please do not hesitate to contact Mr David TEO Shih Yee (Managing Director) at: [email protected]
Disclaimer: The views expressed herein are the author’s and do not necessarily represent the view of LONGBOW Law Corporation (“LONGBOW”) or any of its lawyers. LONGBOW did not represent any parties in the case discussed. This article is a summary for general information and discussion only and should not be construed as providing legal advice concerning the laws of Singapore or of any other jurisdiction. It is not a full analysis of the matters presented and may not be relied upon as legal advice. Readers should consult with counsel for legal advice on the matters addressed herein.
1 Generally, the 99:1 arrangement proceeds as follows:
(a) 1st Purchase: The first-time home buyers will purchase their first property in a 99:1 ownership ratio. This allows both co-owners to use their CPF funds to finance the property purchase and for both of their incomes to be assessed to maximise their loan eligibility.
(b) Decoupling: Once the co-owners are ready to purchase their second property, the 1% owner will sell their 1% share to the 99% owner, incurring ordinary buyers stamp duty only on the 1% transfer.
(c) 2nd Purchase: The first property will therefore become solely owned by the former 99% owner, allowing the former 1% owner to purchase a second property without incurring ABSD.
2 Section 46 of the Stamp Duties Act provides a mechanism for the Commissioner of Stamp Duties to correct unstamped or insufficiently stamped instruments.
