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Man won't have to sell flat to return contested $2m

Man won't have to sell flat to return contested $2m

Source: Straits Times
Article Date: 19 Sep 2019
Author: Selina Lum

But judge orders return of funds; man had used some of $2m given to him by woman with dementia to pay for flat.

A construction worker, who was given $2 million by a woman with dementia, used about $330,000 of the money to pay for a Housing Board flat.

Despite finding that Mr Kulandaivelu Malayaperumal should return the money, which had been given to him by someone lacking the mental capacity to do so, a High Court judge said she would not order him to sell the flat.

In an oral judgment released on Tuesday, Justice Debbie Ong said the reason is the man's wife is a joint owner of the flat. The judge, however, imposed what is known in legal terms as an equitable lien - a legal right granted to a creditor over the debtor's property - on the flat.

"It is possible to impose an equitable lien but still preserve the home of the HDB dwellers until an event (such as a voluntary sale) occurs where sale proceeds can be used to satisfy the equitable lien," she said.

Mr Malayaperumal is one of two men who were ordered to return a total of $3 million that the late Dr Freda Paul had given to them. The money came from the sale proceeds of her Haig Road bungalow, which was sold in 2009 for $15.4 million.

Dr Paul was a paediatrician at the Singapore General Hospital. She was single and died in August 2016 at the age of 87.

In the early 2000s, she befriended Mr Malayaperumal, who was working on a building next to her house, and his supervisor, Mr Gopal Subramaniam. Both were from India.

Mr Malayaperumal moved into her home in mid-2009.

In 2010, Mr Malayaperumal and Dr Paul's maid Arulampalam Kanthimathy each received $2 million from the sale proceeds, while Mr Subramaniam got $912,000.

Dr Paul also willed most of her assets to Mr Malayaperumal and Ms Kanthimathy, in contrast to her 2007 will, in which she wanted to set up a bursary fund for needy women medical students at the National University of Singapore.

In 2013, her distant relatives, Senior Counsel Philip Jeyaretnam and Dr Ruhunadevi Joshua, were appointed as deputies under the Mental Capacity Act. Suspecting that she had been exploited, they went to court to reinstate the 2007 will and filed a suit to recover the money.

After Dr Paul died, Mr Jeyaretnam and Dr Joshua continued the legal action as executors of her estate. Neither of them were beneficiaries.

In 2017, Mr Malayaperumal and Mr Subramaniam were ordered to return the money.

A default judgment had earlier been obtained against Ms Kanthimathy, who returned to Sri Lanka in 2012.

Despite the victory, the plaintiffs struggled to recover the money.

They sought to get back $329,812.55 that had gone into paying for Mr Malayaperumal's flat in 2014. They argued that as trustee of the money, he had breached his fiduciary duties to Dr Paul.

Justice Ong found Mr Malayaperumal holds Dr Paul's money under a constructive trust, but said the plaintiffs are not entitled to claim the flat owing to a provision in the Housing and Development Act.

"It follows that as no constructive trust can arise in favour of the plaintiffs, there is no basis to order a sale of the HDB flat," she said.

The judge, however, said the imposition of an equitable lien is not prohibited under the Act. "An equitable lien is the least that the law must do in the circumstances where a more effective remedy of a constructive trust is expressly prohibited by statute," she added.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

 

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