BLL v BLM and another

• Jurisdiction: Singapore
• Judge: Valerie Thean J
• Judgment Date: 10 September 2019
• Neutral Citation: [2019] SGHC 208
• Plaintiff Counsel: Chin Li Yuen Marina, Alcina Lynn Chew Aiping, Muk Chen Yeen Jonathan, Chan Yi Zhang, Pang Hui Min and Cha Meiyin (Tan Kok Quan Partnership LLP)
• Docket Number: Suit No 1085 of 2016 (Summons No 4275 of 2018)
• Date: 10 September 2019
• Hearing Date: 29 April 2019,09 July 2019
• Subject Matter: Issue estoppel,Doctrine of abuse of court,Res judicata
• Year: 2019
• Defendant Counsel: Poon Kin Mun Kelvin, Zhu Ming-Ren Wilson and David Isidore Tan (Rajah & Tann Singapore LLP)
• Court: High Court (Singapore)
• Citation: [2019] SGHC 208
• Published date: 14 September 2019

Valerie Thean J: Introduction

In a previous action, the Court of Appeal declared BLL, an octogenarian,¹ unable to make decisions regarding her property and affairs. Deputies were consequently appointed for her under the Mental Capacity Act (Cap 177A, 2010 Rev Ed) (“MCA”). These deputies have now commenced Suit No 1085 of 2016 (“S 1085/2016”) against the defendants arising out of matters brought to light by the earlier suit. The youngest of BLL’s three children, BLM, is the first defendant. BLM’s husband, BLN, is the second defendant.

Summons No 4275 of 2018 (“SUM 4275/2018”) was filed by consent to determine if the defendants are prevented, because of various findings made in the previous suit, from trying certain issues in S 1085/2016 by reason of issue estoppel and the extended doctrine of res judicata. The three preliminary questions contained in SUM 4275/2018 are the subject matter of this judgment.

Background Originating Summons (Family) No 71 of 2011

Originating Summons (Family) No 71 of 2011 (“OSF 71/2011”) provides the relevant context for the present suit.

In OSF 71/2011, commenced on 18 February 2011,² two of BLL’s sisters (“the Sisters”) applied under s 20 of the MCA for a declaration that BLL was unable to make decisions regarding her property and affairs, and for a consequential order that deputies be appointed to make all decisions regarding such matters on her behalf. OSF 71/2011 was heard at first instance by a senior district judge (“the First Instance Judge”) of the Subordinate Courts (as the State Courts was then known) and her written decision was published as AUR and another v AUT and others [2012] SGDC 489 (“the First Instance GD”). As observed by the First Instance Judge, the crux of the dispute in OSF 71/2011 was the circumstances and events before and after BLL created a particular trust dated 26 October 2010 (“the Trust”) (First Instance GD at [35]). The details of the Trust will be explained more fully below.

OSF 71/2011 was heavily contested by the defendants and BLL herself (as the third defendant in OSF 71/2011), resulting in protracted litigation. At first instance, BLL was found to lack decision-making capacity but this was reversed on appeal by the High Court in Registrar’s Appeal Nos 223 and 224 of 2012. OSF 71/2011 eventually culminated in the Court of Appeal’s decision in CA 27/2014, reported as Re BKR [2015] 4 SLR 81 (“Re BKR (Court of Appeal)”). The Court of Appeal disagreed with the High Court and found that BLL lacked capacity “because of a combination of mental impairment and the circumstances in which she lives” (Re BKR (Court of Appeal) at [207]). Specifically, as to her actual circumstances, the Court of Appeal found that BLL was subject to the undue influence of the defendants and was cut off from people who would otherwise be able to give her advice (Re BKR (Court of Appeal) at [207]). Consequently, deputies were appointed to act on BLL’s behalf.

At the outset, it ought to be highlighted that the Court of Appeal had examined BLL’s capacity “in relation to specific decisions” (Re BKR (Court of Appeal) at [208]). These “specific decisions” were BLL’s decisions to set up the Trust and to transfer her assets held in UBS to DBS. The Court of Appeal held that BLL lacked capacity at the time these decisions were made. The Court of Appeal’s decision will be examined in greater detail below.

Suit No 1085 of 2016

Four years have passed since the conclusion of OSF 71/2011. In S 1085/2016, BLL, through her deputies, is advancing several claims against the defendants. First, BLL avers that the defendants breached their fiduciary duties owed to BLL, as they were her agents in relation to the Trust. Alternatively, the defendants were fiduciaries because BLL reposed trust and confidence in them in relation to her property and affairs.³ It is alleged that the defendants were in breach of their fiduciary duties as they:⁴ unduly influenced BLL when she established the Trust; unduly influenced BLL to instruct UBS to transfer all her assets in UBS to DBS for the purposes of the Trust; and cut off BLL’s access to persons who could assist her in making independent decisions representative of her wishes.

Accordingly, BLL is claiming for damages and/or equitable compensation for the defendants’ breach of fiduciary duties. In connection with the Trust, BLL has, inter alia, incurred expenses in dismantling the Trust in the British Virgin Islands (“BVI”) and in pursuing legal action in the BVI with regard to the Trust.⁵

For completeness, I should mention that it is also alleged in the statement of claim that the defendants unduly influenced BLL when she executed a will in 2011 (“the 2011 Will”). I was informed by BLL’s counsel during the hearing on 9 July 2019 that the 2011 Will no longer forms part of their claim in S 1085/2016.⁶

Second, apart from a claim for breach of fiduciary duties, BLL also brings a claim in undue influence.⁷ BLL’s counsel clarified in the course of submissions that the claim in undue influence was one in tort or equity. For present purposes, it is not necessary to determine if undue influence, which is typically raised as a vitiating factor against contracts, can also give rise to a cause of action in its own right.

The third cause of action advanced by BLL is a claim for an abuse of the fiduciary relationship of influence and/or confidence between BLL and the defendants. As with the foregoing two causes of action, this claim is underpinned by the allegations of undue influence against the defendants.

The Trust

Before I turn to the Preliminary Issues, it is useful to briefly describe the Trust, given its centrality to S 1085/2016. The Trust is dated 26 October 2010 and the relevant documents were signed in November 2010. It was created with DBS and the trustee was a BVI trust company. The trustee had absolute discretion in applying the money in the Trust for the beneficiaries: a company which can be referred to as “B Ltd” and a class of beneficiaries being “Charities to be determined”. The first defendant, BLM, was the protector of the Trust. On 27 July 2012, a deed of understanding was entered between BLL, BLM and the trustee which provided that the moneys in B Ltd were to be used for the exclusive purpose of maintaining BLL during her lifetime (Re BKR (Court of Appeal) at [19]).

The Trust identified a class of persons, referred to as Excluded Persons, who were entirely excluded from enjoying any benefits under the Trust. The excluded persons were BLL’s two other children, NG and CK. In addition, BLM, by virtue of her position as protector of the Trust, was also an excluded person, although the Sisters contended in OSF 71/2011 that BLM would fall outside the definition of an excluded person if she relinquished her position as protector. The Trust was later amended to stipulate that BLM would also be an excluded person under the Trust, regardless of her status as protector. However, the provision of a gift of $10m to BLM, if she remained the protector on the date of BLL’s demise, was retained (Re BKR (Court of Appeal) at [20]).

Between 8 November 2010 and 15 December 2010, following the creation of the Trust, BLL issued a series of conflicting instructions to her UBS bankers to transfer her assets to DBS, which UBS did not act on (Re BKR (Court of Appeal) at [25]; First Instance GD at [106]).

After the creation of the Trust, BLL left Singapore for Hong Kong together with BLM on 28 November 2010. Based on the evidence in OSF 71/2011, it was found that the defendants began to cut off access to BLL once she was brought back to Hong Kong. BLL resided with the defendants and was isolated from her family members, including the Sisters and BLL’s two other children (Re BKR (Court of Appeal) at [202]; First Instance GD at [106]).

The Court of Appeal held that BLL lacked capacity at the time she made the decisions to set up the Trust and issued conflicting instructions to UBS (Re BKR (Court of Appeal) at [208]). Subsequently, the deputies pursued legal action in the BVI court to set aside the Trust, which was then set aside with the consent of the defendants.

Summons No 4275 of 2018

The three preliminary questions brought by consent pursuant to O 33 r 2 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“ROC”) in the present summons concern the doctrine of res judicata: specifically, they relate to issue estoppel and the extended doctrine of res judicata. The three preliminary questions are as follows:⁸ Whether the Court of Appeal, in Re BKR (Court of Appeal), found that the defendants unduly influenced BLL into deciding to set up, setting up and/or signing the settlement constituting a trust dated 26 October 2010 (“the First Preliminary Issue”). I shall in the course of this judgment also refer to this issue as the “Undue Influence Issue”; If the answer to the First Preliminary Issue is yes, whether such finding(s) are final and binding on the defendants in S 1085/2016 (“the Second Preliminary Issue”); and If the answer to the First Preliminary Issue and/or the Second Preliminary Issue is no, whether the extended doctrine of res judicata precludes the defendants from arguing that they did not unduly influence BLL into deciding to set up, setting up and/or signing the settlement constituting the Trust (“the Third Preliminary Issue”).

At the first hearing on 29 April 2019 for the present action, the defendants took the view that the Second Preliminary Issue did not encompass the extended doctrine of res judicata. SUM 4275/2018 was thus amended by consent to include the Third Preliminary Issue. Counsel for the defendants prepared his written submissions for the hearing on 9 July 2019 on the basis that the Third Preliminary Issue would be relevant only if the First and Second Preliminary Issues were both answered in the negative. Nevertheless, he was prepared to proceed, at the oral...