Commentary

[Trusts] [Equity] The Presumption of Advancement

Case Commentary: BMM v BMN [2017] SGHC 131

The general principle concerning the presumption of advancement is that where a man transfers a gift to his wife or to his children, it is presumed that he intended for the legal and beneficial interest to pass to either party. The reverse is not true, i.e. where a woman makes such a transfer to her husband or to her children. This is an exception to the automatic resulting trust rule, that where a transfer of property is made to a third party, it is presumed that the third party holds the property on trust for the transferor.

Interestingly, in the High Court decision of BMM v BMN [2017] SGHC 131, accessible on Singapore Law Watch here, the High Court held that a man need not necessarily be legally married to his companion before the presumption of advancement may arise.

Quoting extensively from Lau Siew Kim v Yeo Guan Chye Terence and another [2008] 2 SLR(R) 108, the Judicial Commissioner Foo Tuat Yuan held inter alia:-

In my view, the nature of the relationship is sufficient in this case to trigger the operation of a considerably strong presumption of advancement. First, the parties were in what they thought was a marriage. Second, [X] was financially dependent on [Y] to an appreciable extent. The state of the relationship (ie, that [X] and [Y] were in a close and loving relationship at the material time) also supports this conclusion.

Although the Court ultimately held that Y had the sole beneficial interest in the property, the decision is nonetheless critical as it expands the presumption of advancement to relationships which did not previously fit the strict criteria for the application of the principle.

It should be borne in mind, however, that the presumption of advancement is only an evidential presumption and may be rebutted by evidence to the contrary.

The statements of the Court of Appeal in Lau Siew Kim v Yeo Guan Chye Terence and another [2008] 2 SLR(R) 108 are worthy of reproduction as a timely reminder of how equity is not beyond the age of child-bearing:-

75. In order to ensure that the presumption of advancement dovetails with modern norms and expectations, courts have also increasingly regarded the presumption to be of varying strength in spousal relationships characterised by different dynamics. In Pettitt v Pettitt [1970] AC 777 (“Pettitt”), Lord Reid, with his customary acuity, observed that the strength of the presumption of advancement, when applied to spousal relationships, should generally be considered as having diminished significance.

77. We maintain the view expressed in Low Gim Siah. The presumption of advancement is still very relevant today in the established (both traditional and extended) categories of relationships; it is the strength of the presumption that should vary with the circumstances in accordance with modern social conditions. Thus, on this point, we must respectfully depart from the learned trial judge’s bare assertion that the Singapore courts had moved away from the presumption of advancement and that the presumption was no longer applicable in modern times unless there was evidence to support it (see [16] above). In fact, we find that the strength of the presumption of advancement, whether in cases concerning spouses or otherwise, should not even be generally diminished as appeared to be suggested in Pettitt. Instead, it should only be where the present realities are such that the putative intention inherent in the presumption of advancement is not readily inferable from the circumstances of the case, that the presumption would be a weak one easily rebuttable by any slight contrary evidence.

78 The overall aim of the presumption of advancement is to discern the intention of the transferor. As Gibbs CJ remarked in Calverley v Green ([37] supra) at 250:

The presumption should be held to be raised when the relationship between the parties is such that it is more probable than not that a beneficial interest was intended to be conferred, whether or not the purchaser owed the other a legal or moral duty of support. [emphasis added]

The nuanced, fact-sensitive approach advocated in Low Gim Siah is therefore preferred; all the circumstances of the case should be taken into account by the court when assessing how strongly the presumption of advancement should be applied in the particular case. The financial dependence of the recipient on the transferor or contributor, mentioned in Low Gim Siah, is but one factor which may affect the strength of the presumption of advancement. In our judgment, two key elements are crucial in determining the strength of the presumption of advancement in any given case: first, the nature of the relationship between the parties (for example, the obligation (legal, moral or otherwise) that one party has towards another or the dependency between the parties); and second, the state of the relationship (for example, whether the relationship is a close and caring one or one of formal convenience). The court should consider whether, in the entirety of the circumstances, it is readily presumed that the transferor or contributor intended to make a gift to the recipient and, if so, whether the evidence is sufficient to rebut the presumption, given the appropriate strength of the presumption in that case.longer applicable in modern times unless there was evidence to support it (see [16] above). In fact, we find that the strength of the presumption of advancement, whether in cases concerning spouses or otherwise, should not even be generally diminished as appeared to be suggested in Pettitt. Instead, it should only be where the present realities are such that the putative intention inherent in the presumption of advancement is not readily inferable from the circumstances of the case, that the presumption would be a weak one easily rebuttable by any slight contrary evidence.

78 The overall aim of the presumption of advancement is to discern the intention of the transferor. As Gibbs CJ remarked in Calverley v Green ([37] supra) at 250:

The presumption should be held to be raised when the relationship between the parties is such that it is more probable than not that a beneficial interest was intended to be conferred, whether or not the purchaser owed the other a legal or moral duty of support. [emphasis added]

The nuanced, fact-sensitive approach advocated in Low Gim Siah is therefore preferred; all the circumstances of the case should be taken into account by the court when assessing how strongly the presumption of advancement should be applied in the particular case. The financial dependence of the recipient on the transferor or contributor, mentioned in Low Gim Siah, is but one factor which may affect the strength of the presumption of advancement. In our judgment, two key elements are crucial in determining the strength of the presumption of advancement in any given case: first, the nature of the relationship between the parties (for example, the obligation (legal, moral or otherwise) that one party has towards another or the dependency between the parties); and second, the state of the relationship (for example, whether the relationship is a close and caring one or one of formal convenience). The court should consider whether, in the entirety of the circumstances, it is readily presumed that the transferor or contributor intended to make a gift to the recipient and, if so, whether the evidence is sufficient to rebut the presumption, given the appropriate strength of the presumption in that case.”

[emphasis added in underline]

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