Peter Kwee registered properties in daughter’s name to avoid estate duty: lawyers

MOTORING tycoon Peter Kwee admitted in court that one of the reasons that several properties he is laying claim to were registered in his daughter Karen’s name was to avoid estate duty.

However, this could be achieved only if the owner of Laguna National Golf Resort Club retained zero beneficial interest in the properties, said lawyers acting for his daughter’s bankruptcy estate, in their written submissions on Friday (Feb 21) at the end of a nine-day trial. 

When Peter Kwee first took the stand on Feb 4, he said that estate duty was one of the things on his mind when he purchased the properties, and that he considered estate duty as a “risk management issue”. 

“If (Peter) Kwee retained a beneficial interest in the properties, he would be deemed competent to dispose of those properties... And these interests would be deemed to pass on his death... Estate duty would then be payable,” law firm Shook Lin & Bok said on behalf of Lai Seng Kwoon, the private trustee of Karen Kwee’s bankruptcy estate. 

Of the five properties being contested, two are landed homes in Singapore purchased in 1997 and 2000 in Karen’s name. One of them is a three-storey detached house in King’s Drive, and the other is a cluster house in The Teneriffe development. Both were purchased before estate duty was abolished in 2008. 

In Peter Kwee’s closing submissions, his lawyers from Chong Chia & Lim argued that Peter Kwee, being a layperson, “genuinely believed at the material time” that his practice of placing properties under the names of family members would “allow him to retain ownership of the... properties while he is alive”.

His lawyers said: “Upon his death (he) would immediately pass the ownership of the real properties to Karen without (them) forming part of his estate and therefore avoiding estate duties. 

“There is no evidence to suggest that (Peter) Kwee knew or suspected, from the inception of the name-placing agreement, that such an agreement would be legally unworkable.” 

There is nothing “inherently illogical” about (Peter) Kwee’s belief that he would still “retain full control and true ownership of his assets” by placing them under the names of his family members, his lawyers said. 

“It is undisputed that (Peter) Kwee views himself as the ‘leader of the family’ and the ‘owner’ of family assets.” 

The lawyers added that the tycoon expected the property to belong to him if he made payments for the purchase and that his ownership included his right to manage the property as he saw fit. 

As an example, Chong Chia & Lim, drew a parallel between the five properties and how a separate property, an apartment in The Claymore, was dealt with by the Kwee family. 

“Karen signed the sale agreement under (Peter) Kwee’s instructions without question. Karen did not object or attempt to resist (Peter) Kwee’s application of the sale proceeds,” the lawyers said. 

“But for the intervening event of Karen’s bankruptcy, the subject properties would have played out in a similar manner – put to (Peter) Kwee’s use until it is disposed of when he thinks the time or need arises.” 

Lawyers from Shook Lin & Bok pointed out how steps were taken by (Peter) Kwee and his daughter to assert his beneficial interest and protect the assets from her creditors when Karen was “at an imminent risk of bankruptcy”. 

They said: “(Karen) Kwee confirmed that she received the statutory demand on the same day it was posted, and that it would likely lead to a bankruptcy application if she did not pay.”

(Peter) Kwee claimed that he did not see the statutory demand, and initially asserted that he lodged a caveat on the King’s Drive property only after one Low Kai Yang attempted to enforce an option to purchase that Karen had issued to him for the property. 

This does not explain why a caveat was also lodged in respect of the Teneriffe property, the lawyers said. 

Shook Lin & Bok said: “(Peter) Kwee subsequently admitted that he lodged the caveats because he was informed that (Karen) was in financial trouble, arising from the very claims for which the statutory demand was served. 

“Their evidence has been fabricated for the purpose of preventing (Karen’s) assets from falling into the hands of her creditors.” 

(Peter) Kwee’s lawyers acknowledged that insofar as the evidence of their client and his daughter “may appear to be self-serving in nature”, it was a matter for the courts to determine the precise weight to ascribe to their evidence and “not a ground for the complete dismissal of such evidence”. 

It was suggested by Lai’s lawyer, Daryl Fong of Shook Lin & Bok, that (Peter) Kwee previously registered the properties in his daughter’s name to prevent his creditors from having recourse to the properties if he were to become bankrupt.

(Peter) Kwee’s lawyer Chong Kuan Keong rebutted this on Friday, saying that instead of trying to put the properties beyond the reach of creditors, what (Peter) Kwee did was to “bundle all his properties and secure bigger loans” for himself. 

“If the Claymore property and the Teneriffe property were a gift from (Peter) Kwee to Karen, and Karen was the sole legal and beneficial owner of the real properties from the outset, there was no good reason for Karen to have allowed the (property) to (be) cross-collaterised in a pool of assets securing present and even future facilities for (Peter) Kwee’s use,” Chong’s law firm said.  

Justice Philip Jeyaretnam, who presided over the case, said he would deliver a written judgment at a later date.