Woman wins appeal against ex-boyfriend in 99-1 condo dispute

But, in a written judgment delivered on May 20, the Court of Appeal ruled that “even if we had not found that the parties’ common intention was for the 99:1 ratio to reflect their legal and beneficial ownership, the issue of illegality would have been an independent basis for denying Jake’s claim”.

This is because allowing Mr Ngor’s claim would amount to condoning an illegal purpose to evade the ABSD.

Real estate agencies and some law firms have been mired in legal disputes with buyers in recent months after the Inland Revenue Authority of Singapore began cracking down on “99-1” property sale arrangements that enabled buyers to avoid paying more in stamp duties.

Singapore citizens pay 20 per cent ABSD when purchasing a second residential property and 30 per cent for a third and subsequent home.

The 99-1 arrangement is a method by which co-owners seek to purchase two residential properties without incurring the ABSD. First, the co-owners purchase the first property in a 99:1 ratio. This allows them to obtain housing loans in both their names and to access both their Central Provident Fund monies to finance the purchase.

The co-owners decouple their interests in the first property. The 1 per cent owner transfers the 1 per cent share to the 99 per cent owner, and the parties pay stamp duty on that 1 per cent transfer.

The owner who no longer retains an interest in the first property is now able to purchase the second property in his name without incurring the ABSD.

The Court of Appeal found that if the resulting trust had arisen over the property, it would have “allowed Jake to retain a beneficial interest in the property while purchasing a second property without incurring ABSD, thereby amounting to tax evasion”.

“Given the serious nature and gravity of tax evasion and the importance of maintaining compliance with the ABSD regime, we are of the view that it would not have been a disproportionate response to the illegality to deny Jake’s claim,” it ruled.

The Court of Appeal also found that the lower court’s evaluation of the evidence was incorrect because it “did not properly address the numerous difficulties and inconsistencies in Jake’s case, and appears not to have considered or given weight to Millie’s evidence without explaining why that evidence was not credible”.

The Court of Appeal rejected Mr Ngor’s claims that he only agreed to Ms Wong beneficially owning her 99 per cent registered interest in the property if he cheated on her. The three-judge court found his explanation of this so-called cheating condition “inconsistent and unreliable” and “not borne out by the evidence”.

“Initially, Jake suggested that the cheating condition was that if he cheated on Millie, she would fully own the property… But his case on the cheating condition morphed at trial. He suggested that the cheating condition was that if he cheated on Millie, he would not contest her 99 per cent registered interest, and only then would she beneficially own 99 per cent of the property.

“No explanation was given for this inconsistency and the (High Court judge) failed to consider this. Given that the cheating condition was central to Jake’s case, this inconsistency severely undermined that case,” the Court of Appeal ruled.

In contrast, Ms Wong’s case that her 99 per cent beneficial ownership of the property was not conditional on Mr Ngor cheating is more logical, it found.

Her position was that she wanted them to remain in a relationship. As she was insecure about Mr Ngor’s fidelity, she wanted 99 per cent ownership of the property as a demonstration of his commitment.

If he cheated on her and they broke up, he would be left holding just 1 per cent of the property and would no longer be entitled to regard the property as a joint investment.

“This deterrence was therefore precisely what Millie wanted – the property would be held by her as ransom and Jake would only enjoy its benefits if he did not cheat and remained in a relationship with her,” the Court of Appeal found.