Introduction
Where parents have purchased a property held on trust for their minor child, under what circumstances can they obtain approval from the court to sell the property? What matters must be disclosed to the court for their application to succeed?
In Re Tan Yi Lin Cheryl and another [2025] SGHC 215 (“Re Cheryl“), the first applicant had purchased a condominium unit for S$1.8 million in trust for her then-six year old son. About six years later, she applied for the High Court’s (“Court’s“) approval to sell the unit as she had found a buyer for S$2.28 million. Due to a requirement under the Trustees Act 1967 for the proceeds from the sale of a trust property to be deposited in an account with at least two names, she joined her brother as the second applicant.
After the Court enquired as to why the first applicant’s husband was not joined as a co-applicant, new information emerged. The husband was deceased after a “fall from height” in Australia. The first applicant had changed her name twice for “feng shui” reasons. Finally, the first applicant had been party to several lawsuits in the Court:
- A claim for a S$1 million insurance payout for her husband’s death, which was dismissed as her husband had failed to disclose his six other life insurance applications totalling S$6.25 million;
- A claim against a second insurance company, which was eventually settled; and
- An application for the bills for legal fees for the above claims to be assessed by the Court due to alleged over-charging, which was dismissed.
Decision of the Court
The Court highlighted that a trustee’s duty was to preserve the trust assets, and not treat them as investment capital or deal with them unless specifically empowered to do so. In this case, the first applicant’s only reason for the sale was that the value of the flat had increased. This was insufficient reason to allow the sale.
The Court must also be satisfied that the trust was not created as a means to evade the additional buyers’ stamp duties (“ABSD“), or to protect the trust property from any creditors. Accordingly, the trustee’s personal financial position may become relevant, and the Court may refuse a sale if it appears that the trust structure was used improperly or that the trustee stands to benefit indirectly. The first applicant was therefore obliged to make full disclosure of her personal assets and liabilities.
Such disclosures had “disconcertingly” not been made. Further, the non-disclosures of the death of the first applicant’s husband and the failed legal proceedings added to the furtive nature of the application. The Court therefore dismissed the application.
Concluding Remarks
Re Cheryl carries several learning points for both the trustees and the settlors of a trust. If a settlor contemplates that the trust property may eventually be sold, the trust deed should clearly provide for the trustee’s power to effect such a sale without the need to obtain court approval. The trust should also not be established for improper reasons, such as the avoidance of ABSD or to put the trust property beyond the reach of creditors.
Where the trust deed does not contain such a provision, a trustee must be able to provide good reason for the sale, and make full and frank disclosure of their personal assets and liabilities to satisfy the Court as to the propriety of the sale. Applications involving property held for a minor will be scrutinised closely, and trustees must ensure that they act transparently and in the best interests of the beneficiary at all times.
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