Introduction

1. A donor intends to make a cash gift to a family member but fails to follow through with the processes required at law. Should the Court give effect to the donor’s intention? This is a legal issue that courts in the Commonwealth have had to deal with since 1836, and the Singapore High Court and the Singapore Appellate Division had the chance to determine this precise issue in some detail in the recent decision of WDS v WDT [2022] SGHCF 12 and the corresponding appeal WDT v WDS [2023] SGHC(A) 7 (collectively, the WDS Decision).
2. In this article, we will unpack the WDS Decision, which serves as a timely reminder that an intention to give is clearly not enough; the donor must have at least done everything in her power to effect the gift. In the case of a cash gift intended to come from a bank account, the donor must have at least signed the bank transfer form and passed the bank transfer form to the bank or the donee.

The facts of the WDS Decision

3. The case facts of the WDS Decision are as follows.
4. In 2013, a 90-year-old matriarch (the Deceased) executed: (i) her last will and testament where she divided her estate (in varying proportions and with different vesting dates) among her 4 children; (ii) an accompanying letter of wishes to her 4 children; and (iii) a deed of gift for S$2.5 million to her youngest daughter who out of her 4 children was her main caregiver (the Daughter).
5. In her Will, the Deceased included a “no contest” clause prohibiting her 4 children from challenging the validity of her Will and/or any gifts or transfers that she made in her lifetime.
6. Notwithstanding the inclusion of a “no contest” clause in the Will, and pursuant to the advice of her solicitors in Singapore, the Deceased underwent 2 psychiatric evaluations: the first in New York prior to her signing of the aforementioned documents to ensure that she had the requisite mental capacity to do so, and the other in Singapore shortly after the signing to confirm the contents of the documents.

7. In August 2016, when the Deceased was back in Canada where she lived, she decided to make another cash gift of US$1.5 million to the Daughter to express her appreciation for the Daughter’s love and care, and through her confidante there (the Confidante) informed her solicitors in Singapore of her intention to make the additional cash gift. The Deceased’s solicitors advised her to undergo another psychiatric assessment before executing a further deed of gift for the US$1.5 million.

8. While the Deceased’s solicitors were liaising with the Confidante to set up the advised psychiatric assessment appointment and prepare the underlying deed of gift, the Deceased in the meantime and without her solicitors’ knowledge, signed a letter whereby she purported to instruct her bankers and lawyers to execute all “necessary fund transfers” to make the cash gift to the Daughter “now” (the 14 September 2016 Letter). The 14 September 2016 Letter was prepared by the Confidante based loosely on the earlier deed of gift executed by the Deceased in 2013. The Confidante witnessed the Deceased signing the 14 September 2016 Letter but kept the letter with her and did not notify anyone of it until after the Deceased’s death. Instead, the Confidante continued to liaise on the Deceased’s behalf with her solicitors on the psychiatric assessment appointment and the contents of the draft deed of gift. During this time, options in Toronto and New York were explored before it was finally decided by default that the assessment and consequently, the execution of the deed of gift be done in Singapore since the Deceased was already amid relocating from Canada back to Singapore for good.
9. While en-route in New York to Singapore (and crucially, before the advised psychiatric assessment was done and the deed of gift was executed), the Deceased passed away.
10. After the Deceased’s passing, the Confidante handed the 14 September 2016 Letter to the Daughter, who in turn handed it to the sole executor and trustee of the Deceased’s Will (the Executor). The Executor then obtained a notarized statement from the Confidante whereby she explained on oath the circumstances leading up to the Deceased’s execution of the 14 September 2016 Letter.
11. The Executor was legally advised that the 14 September 2016 Letter and the circumstances leading up to the 14 September 2016 Letter detailed in the Confidante’s notarized statement were insufficient to create any proprietary or personal right in those monies in the Daughter’s favour. The Executor duly informed the Daughter of this legal conclusion but the Daughter refused to accept it and demanded that the Executor take out an application to the Court to determine its legal status since it was the Executor who had any doubts as to the alleged gift.
12. As the Executor had already obtained a second legal opinion confirming that the Daughter had no valid claim, it did not plan to apply for the Court’s direction; but the Executor later, with the consent of all the beneficiaries of the estate, relented and agreed to file an application under Rule 786 of the Family Justice Rules 2014 for a declaration that the Daughter did not have a valid claim as a creditor against the Deceased’s estate and further or alternatively, for an order that the Executor be permitted to distribute the assets of the estate in accordance with the Deceased’s Will without regard to the Daughter’s alleged claim.
13. The Executor named the Daughter as a respondent to the Court application so she could make the necessary submissions to prove her alleged claim against the estate.

The High Court’s decision

14. Foremost, the High Court noted that the Daughter’s case was not that the Deceased had declared an express trust in her favour but that the Deceased had purported to make an outright gift to her. Accordingly, there was no need for the Court in that case to consider whether the legal requirements of an express trust are met.
15. There was likewise strictly speaking no need for the Court to consider other associated legal doctrines such as a dying gift (donatio mortis causa) and proprietary estoppel because these were eventually not raised by the Daughter at the hearing at the High Court. However, for the sake of completeness, the Executor did pre-emptively address – and correspondingly, the High Court in its grounds of decision did consider (and ultimately rejected) – the applicability of these doctrines.
16. Next, the High Court noted that while the Daughter accepted that equity generally does not assist a volunteer to perfect an imperfect gift, the Daughter relies on 1 of the following 3 case authorities to persuade the Court to make an exception.
17. The 3 case authorities are Re Rose; Rose v Inland Revenue Commissioners [1952] Ch 499 (re Rose), T Choithram International SA & ors v Pagarani & ors [2001] 2 All ER 492 (T Choithram), and Pennington & anor v Waine & ors [2002] 1 WLR 2075 (Pennington).
18. The Daughter relied on re Rose for the proposition that once the Deceased had done all that was necessary on her part, but the transfer did not happen for reasons beyond her control, equity would regard the transfer as completed. She argued that: (a) the Deceased had already done everything she thought was necessary; (b) in any event, the Deceased had objectively done all she could by giving instructions to her solicitors about her intention to make the alleged gift; and (c) further or alternatively, the Deceased had objectively done all she could by executing the 14 September 2016 Letter.
19. The Daughter relied on T Choithram and Pennington to argue that there has been a shift in judicial attitudes in recent times towards the giving effect to, as opposed to the frustration of, failed gifts, and contended that “if a gift was made imperfect by a third party, the gift should nevertheless be perfected once there is clear evidence of the donor’s intention”.
20. Justice Mavis Chionh, who heard the case at the High Court, rejected each of the Deceased’s arguments.
21. On the Deceased’s instructions to and communication with her solicitors, Justice Chionh held that these were insufficient to satisfy the rule in re Rose because when the contemporaneous email exchanges were examined closely, it showed that the Deceased’s instruction was for her solicitors to prepare a deed of gift for her approval and eventual signature, but these were not completed at the time of her death. The email exchanges also show that the Deceased was aware, following her previous experience in 2013 when the Deceased gave the Daughter the cash gift of S$2.5 million, that even after the deed of gift was executed, the Deceased still needed to personally provide the bank with the executed deed of gift, furnish the bank with her verbal banking instructions, and sign a bank funds transfer form. Since all these steps were not done, the Deceased could not be said to have done everything that she needed to do to complete the gift.
22. On the Deceased’s execution of the 14 September 2016 Letter, Justice Chionh held that it was also not possible to conclude by such an act alone that the Deceased had done everything within her power because she had plainly not forwarded the instructions in the letter to her bankers, her lawyers or to anyone for that matter.
23. Justice Chionh further agreed with the Executor that the instructions in the 14 September 2016 Letter was ambiguous as the letter did not identify the source of the funds for the alleged gift with the result that even if the Deceased had forwarded the 14 September 2016 Letter to her bankers and lawyers, they would have needed more information from the Deceased before they could themselves complete or effect the gift in accordance with her instructions.
24. Finally, Justice Chionh held that the cases of T Choithram and Pennington do not assist the Daughter’s case. She held that the liberal judicial statements made in those cases must be viewed contextually and since there are no parallels in the fact matrix in the WDS Decision to those cases, the said judicial statements were inapplicable.
25. The Daughter was not satisfied with Justice Chionh’s decision and appealed to the Appellate Division.

The Appellate Division’s decision

26. The Daughter instructed new legal counsel and applied to admit additional evidence in the appeal to prove that the Daughter knew about the Deceased’s intention to make the gift and that the Daughter had a power of attorney over 1 of the Deceased’s bank accounts so as to contend that Justice Chionh was wrong to have found the re Rose test inapplicable. According to the Daughter, once she had the requisite knowledge of the alleged gift and since she was armed with a power of attorney, the Deceased’s execution of the 14 September 2016 Letter alone would be sufficient to allow the Daughter to effect the alleged gift on her own.
27. The Appellate Division dismissed the Daughter’s application to admit the additional evidence because the additional evidence were in its view ultimately not relevant to the appeal.
28.  More specifically, the Appellate Division held that the Daughter’s knowledge of the intended gift would have been irrelevant to the only legal query in question in the appeal namely whether the Deceased had done everything necessary to perfect the gift. Similarly, the Appellate Division held that whether the Daughter had a power of attorney over the Deceased’s bank account would be irrelevant unless the power of attorney was given in order to effect the gift, or the Deceased had given specific instruction to the Daughter as her attorney to effect the transfer (both of which there was no evidence of), because without such specific instruction, the Daughter would not have been able to use the power of attorney to complete the alleged gift.
29. As the Daughter had premised her appeal on her application to adduce the additional evidence, the Appellate Division held that the dismissal of the application to adduce additional evidence meant that the appeal should consequentially be dismissed, with costs.
30. For completeness, the Appellate Division opined that it nevertheless agreed with Justice Chionh’s conclusion that the 14 September 2016 Letter was insufficient on its own to prove that the Deceased had done everything in her power because the fact remains that the Deceased did not instruct the Confidante to pass the 14 September 2016 Letter to her bankers and lawyers or to the Daughter as her attorney.
31. Finally, the Appellate Division also agreed with Justice Chionh that the circumstances show the Deceased’s plan all along was to undergo a mental capacity assessment before executing the deed of gift and this plan remained unchanged even though she executed the 14 September 2016 Letter. Her failure to follow through these steps before she passed away was strongly indicative that the Deceased did not do all that was within her power to effect the gift.
32. Accordingly, even if the Appellate Division had allowed the Daughter’s application to admit the additional evidence, it would still have dismissed the appeal.

     

The key takeaways from the WDS Decision

33. There are three take-aways from the WDS Decision.
34. First, the WDS Decision provides a timely reminder that a donor’s intention alone is not good enough.
35. For an inter-vivos gift to be valid, there must be both an intention to gift and transfer of the precise subject matter of the gift, such transfer or conveyance must be in accordance with the relevant legal requirements (Toh Eng Tiah v Jiang Angelina and another appeal [2021] 1 SLR 1176).
36. If the intended gift is not transferred or conveyed in accordance with the relevant legal requirements, the intended gift is left imperfect; in that event, even if donor had harboured and continued to harbour the intention to make such a gift, equity will not perfect the imperfect gift (Edwards v Jones (1836) 1 My & Cr 226).
37. The policy behind this rule is in the final analysis paternalistic: it is to permit donors the opportunity to change their minds at any time before the gift becomes completely constituted (see Edwards v Jones at page 366 and Pennington at page 48C). The rule is the same whether the donor is still living or has since passed away.
38. Second, the WDS Decision also provides a timely reminder that to benefit from the equitable exception laid down in re Rose, the donee must be able to prove objectively that the donor had taken all necessary steps and conversely, no further steps were required of the donor, for the transfer to be processed.
39. It must be emphasized that the steps are not just what the donor thought she needed to do; rather, it was what the donor would have had to do in the circumstances. In other words, the test is objective not subjective.
40. The Appellate Division opined that in the case of a cash gift intended to come from a bank account, the donor must have at least signed the bank transfer form and passed the bank transfer form to the bank or the donee.
41. The criteria of the donor having to do what is objectively and not subjectively needed to be done is amply illustrated by the English Court of Appeal case of Kaye v Zeital [2010] 2 BCLC 135, a case that was also referred to with approval by Justice Chionh in her grounds of decision. In that case, the deceased passed the claimant a blank and undated share transfer form with the intention to transfer the share to her, but he was unable to give her the corresponding share certificate because it was missing. Notwithstanding these facts, the Court still held that the deceased did not do all in his power to transfer that share to the claimant because it was open to him to apply for a replacement share certificate, and he did not do so. The English Court of Appeal thus held that the re Rose exception did not apply.
42. Relatedly, the High Court in the WDS Decision also seemingly upheld the authoritativeness of the re Rose decision: the manner in which Justice Chionh had reached her decision at the High Court appears to suggest that the re Rose rule was not overtaken by the cases of T Choithram or Pennington, and the liberal judicial statements made therein remain confined to their unique fact matrixes.
43. Third, the WDS Decision serves as an example of what an executor should do when an estate is faced with a claim by an alleged creditor who is at the same time also a beneficiary of the estate.
44. In the WDS Decision, the Executor had acted more than reasonably by taking legal advice not once but twice on the Daughter’s alleged claim (the second time from a Senior Counsel) so as to prove to the Daughter that the alleged claim, although seemingly unfortunate, had no legal merits.
45. When the Daughter refused to accept the estate’s legal position, the Executor then obtained the consent of all the beneficiaries of the estate before it took out an application under rule 786 of the Family Justice Rules to summarily determine the status of the Daughter’s claim. The application not only gave the Daughter - in her position as an alleged creditor of the estate - an opportunity to articulate her claim once and for all, the nature of the application on the authority of In re Buckton; Buckton v Buckton [1907] 2 Ch 406 also assured the Executor that the legal costs it would incur for the application would ordinarily be reimbursed out of the estate.
46. The Court’s implicit endorsement of the Executor’s approach, and its acceptance of the In re Buckton case authority in the WDS Decision now serves as a good example for future executors who are faced with a similar contentious situation to follow.

Conclusion

47. In closing, we respectfully suggest that while the WDS Decision has provided some very useful guidance on the law of gifts, particularly on the applicability and application of the re Rose exception as outlined above, the decision was also a missed opportunity to clarify some uncertain aspects of it.
48. For instance, it seems commonly accepted that if the re Rose exception is made out, the Court will recognize a beneficial interest over the intended gift in the donee’s favour through the creation of a constructive trust. This should mean that there is a need for the subject matter upon which the constructive trust may be imposed, to be identifiable.
49. Indeed, we respectfully suggest that the need to identify the subject matter is how Justice Chionh’s decision on the need to identify the bank account in which the funds for the alleged gifts were to come (i.e., the source of the monies), could be best reasoned.
50. However, the Appellate Division had said in passing in its grounds of decision that it accepts that “the absence of naming a specific bank account by itself may not necessarily be critical”.
51. The Appellate Division did not explain whether it was referring to the donor or the donee’s bank account. If the Appellate Division was referring to the donor’s bank account, then this part of its judgment appears to conflict with the commonly accepted view outlined at paragraph 48 above.
52. To add to the uncertainly, the Appellate Division concurrently endorsed paragraph 33 of Justice Chionh’s grounds of decision, which is the same paragraph where Justice Chionh had agreed with the Executor that the source of the monies needed to be identified.
53. The uncertainty on this jurisprudential part of the re Rose exception therefore warrants further clarification from an appellate court in future.
54. The Appellate Division’s decision was also confined to the application of the re Rose exception. It did not take the opportunity to clarify whether the Pennington case authority, which appears to broaden the re Rose exception but has since been criticized by academics in the UK as uncertain and as a hard case making bad law, should be accepted as good law in Singapore. This determination would thus have to be left for another time.
55. Until these further legal issues are clarified, potential donors who are clear as to their intention to gift should take timely legal advice, and discuss with their solicitors when they want the gift to take effect and what they should do to ensure that all necessary steps are promptly taken to effect the gift to avoid a similar unfortunate case from arising in future.

[The author had successfully acted for the Executor in resisting the Daughter’s alleged claim. The news report on the CNA website dated 9 February 2023 had left out key details from the Executor’s perspective which the author hopes this article would help clarify]