Chai Choon Yong v Central Provident Fund Board and Others

• Judge: Belinda Ang Saw Ean J
• Judgment Date: 31 March 2004
• Neutral Citation: [2004] SGHC 65
• Citation: [2004] SGHC 65
• Defendant Counsel: Chia Ti Lik (Chia Ngee Thuang and Co),Andy Chiok (Michael Khoo and Partners),Kamala Ponnampalam (Insolvency and Public Trustee's Office)
• Published date: 02 April 2004
• Plaintiff Counsel: Tan Chee Kiong (Seah Ong and Partners)
• Date: 31 March 2004
• Docket Number: Originating Summons No 173 of 2003
• Court: High Court (Singapore)
• Subject Matter: Words and Phrases,Provident Fund,Whether testator could dispose of CPF moneys in will,"Written law",Whether CPF money payable to sole beneficiary under will if CPF nomination invalid,Whether Public Trustee should dispose of CPF money in accordance with Intestate Succession Act or tesator's will,Beneficiary,Non-compliance with rules of attestation,Failure to make nomination,Use of the word "shall" in legislation -Test to be applied,Whether mother had standing to challenge daughter's CPF nomination,Succession and Wills,"Shall",Section 25(1) Central Provident Fund Act (Cap 36, 2001 Rev Ed), r 4 Central Provident Fund (Nominations) Rules (Cap 36, R 1, 1998 Rev Ed),Nomination,Intestate Succession Act (Cap 146, 1985 Rev Ed),Rule 4 Central Provident Fund (Nominations) Rules (Cap 36, R 1, 1998 Rev Ed),Whether nomination null and void,Whether reference to "written law" in s 25(2) Central Provident Fund Act (Cap 36) includes Wills Act (Cap 352),s 25(2) Central Provident Fund Act (Cap 36, 2001 Rev Ed),Section 25(2) Central Provident Fund Act (Cap 36, 2001 Rev Ed), Wills Act (Cap 352, 1996 Rev Ed),Power of disposition by will

31 March 2004

Belinda Ang Saw Ean J:

1 This originating summons concerns some moneys standing to the credit of the account of a deceased member, Wang Lee Jun (“Wang”) in the Central Provident Fund (“the CPF Money”). The plaintiff, Chai Choon Yong, is Wang’s mother and she seeks an order to declare as null and void Wang’s Central Provident Fund (“CPF”) nomination dated 2 August 1988.

2 Wang, a spinster, died testate on 15 April 2001. It is common ground that in her last will and testament dated 2 December 1996, she appointed the second defendant, Lai Weng Kwong (“Lai”), executor of her will. Probate was granted to Lai on 9 November 2001. It is also common ground that Lai is the sole beneficiary under her will. In her lifetime, Wang had on 2 August 1988 nominated Lai as recipient of the CPF Money.

3 Although the nomination was made on 2 August 1988, the parties proceeded on the basis that the current legislation, that is, ss 25(1) and 25(2) of the Central Provident Fund Act (Cap 36, 2001 Rev Ed) (“CPF Act”) and r 4 of the Central Provident Fund (Nominations) Rules (Cap 36, R 1, 1998 Rev Ed) (“the Rules”) apply, as these provisions in the CPF Act and the Rules are substantially the same as those as at 2 August 1988.

4 The plaintiff’s counsel, Mr Tan Chee Kiong, challenges the validity of the nomination of Lai on the ground that the nomination did not comply with s 25(1) of the CPF Act read with r 4 of the Rules in that Wang’s signature was not witnessed in the presence of two witnesses. Neither did the witnesses sign the nomination form in each other’s presence. Consequently, there was no nomination subsisting at the time of the member’s death. Thus, by virtue of s 25(2) of the CPF Act, the CPF Money is to be paid to the Public Trustee for disposal in accordance with the Intestate Succession Act (Cap 146, 1985 Rev Ed). Since Wang died a spinster and her mother survived her, the plaintiff is entitled to a distribution of the CPF Money.

5 Lai opposes the originating summons. His counsel, Mr Chia Ti Lik, argues for the validity of the nomination. Even if the nomination were invalid, so the alternative argument runs, the CPF Money is payable to Lai as sole beneficiary under the will. And contrary to the plaintiff’s contention, if a member died testate without making a nomination under the CPF Act, the CPF Money would be paid to the Public Trustee for disposal in accordance with Wang’s will and not the Intestate Succession Act. Mr Chia argues that reference to “written law” in s 25(2) of the CPF Act includes the Wills Act (Cap 352, 1996 Rev Ed).

6 The Central Provident Fund Board (“the Board”) is sued as first defendant. The Board’s position as put forward by its counsel, Mr Andy Chiok, is that there is a subsisting nomination at the time of Wang’s death and, hence, the Board is obliged to make payment of the CPF Money to Lai as nominee.

7 It is not disputed that the Board received Wang’s nomination form in August 1988. Upon receipt of the nomination form, the Board sent Wang a “NOM 22” letter. In that letter, Wang was asked to consider including in her nomination form her dependants or next-of-kin. It was the Board’s practice back then, and even now, to send such a letter when a member nominates a non-family member. Wang replied on 22 September 1988 to confirm the nomination of Lai as the sole nominee. The Board received her letter on 24 September 1988. Upon receipt of Wang’s written confirmation, Alice Tan Lee Hua, the CPF officer handling the file, spoke to Wang. She explained the implications of Wang’s nomination. Essentially, Wang understood what she was doing and the effect of her decision. Alice Tan made a contemporaneous note of the conversation on Wang’s letter.

8 The third defendant is the Public Trustee whose involvement in the proceedings is for the sole purpose of making representations, if any, on the Public Trustee’s position on such matters in general.

The issues

9 An issue before me is whether in a situation where Wang died testate leaving her residuary estate to the second defendant, the plaintiff has, as a matter of law, an interest in the CPF Money to enable the latter to challenge the nomination dated 2 August 1988. If the answer is no, the parties agree that the second defendant is entitled to the CPF Money. On the other hand, if the answer is yes, a second question that arises for determination is whether a nomination subsisted at the time of death.

Section 25(2) of the CPF Act

10 In dealing with the first issue, it is necessary to consider what is meant by the words “for disposal in accordance with any written law” in s 25(2) of the CPF Act. In the context of this case, would Lai, as sole beneficiary of Wang’s estate under her will, have a free-standing right to the CPF Money? It is convenient to begin by setting out the relevant provisions of the CPF Act.

15(5) After the death of a member of the Fund, a person nominated by that member in accordance with section 25(1) shall be entitled to withdraw such portion of the sum standing to the credit of that member in the Fund as is set out in the memorandum executed in accordance with that section.

24(3A) All moneys paid out of the Fund on the death of any member of the Fund shall be deemed to be impressed with a trust in favour of —

(a) the person or persons nominated under section 25(1) by the deceased member, if any; or

(b) the person or persons determined by the Public Trustee in accordance with section 25(2) to be entitled thereto,

but shall, without prejudice to the operation of the Estate Duty Act (Cap 96), be deemed not to form part of the deceased member’s estate or to be subject to his debts.

25.—(1) Any member of the Fund may by a memorandum executed in the prescribed manner nominate a person or persons to receive in his or their own right such portions of the amount payable on his death out of the Fund under section 20 (1) or of any shares designated under section 26(1) as the memorandum shall indicate.

(2) If, at the time of the death of a member of the Fund, there is no person nominated under subsection (1), the total amount payable out of the Fund shall be paid to the Public Trustee for disposal in accordance with any written law for the time being in force.

11 In Saniah bte Ali v Abdullah bin Ali [1990] SLR 584, the CPF member died intestate. During his lifetime, he nominated his stepsister to receive in her own right the entire amount in his account with the CPF payable on his death. Upon his death, the stepsister withdrew the money and that amount under s 23(3) (now s 24(3A) of the CPF Act) was deemed to be impressed with a trust in her favour. However, the deceased’s brother under Muslim law would be entitled to the whole estate of the deceased. The question before L P Thean J (as he then was) was whether the nominee’s right to the CPF money was subject to the law governing succession to a deceased’s estate, and in that particular case, Muslim law under s 112(1) of the Administration of Muslim Law Act (Cap 3, 1985 Rev Ed). His Honour, in ruling in favour of the stepsister, said at 590, [11]:

I now come to s 24 [s 25 of the current CPF Act]. The intention of this section is this. It is to enable a member of the Fund by an instrument to nominate a person or persons to receive in his or their own right such portions of the amount payable out of the Fund on his death as indicated in the instrument and to give to such person or persons so nominated a right to receive such amount or amounts. The instrument of nomination signed by a member is not a will; nor does s 24 say that it operates as a will. Nonetheless, it is intended by that section to be an effective direction by a member (until it is revoked or varied by him) to the CPF Board to pay to the person or persons nominated by him moneys payable out of the Fund on his death. It is also intended by that section that such person or persons receive the moneys in his or their own right and not as trustee or in any other representative capacity. The words “in his or their own right” appearing in s 24(1) are clear and effect must be given to them. Section 24(2) by implication makes this point even clearer: it provides that if there is no person so nominated, the moneys shall be paid to the Public Trustee for disposal in accordance with the written law for the time being in force, and the written law must mean the Act or enactment governing succession to the estate of the deceased member. Certainly, the intention is that the moneys are to be paid to a person or persons entitled to the same under sub-s (1) or failing that under sub-s (2). This is reinforced by s 23(3) which expressly creates a trust on such moneys in favour of such persons or persons and also expressly keeps the moneys out of the estate of the member or from being subject to a payment of any debt. It seems to me that the general scheme of the CPF Act, and in particular ss 23 and 24, is to treat a member’s moneys in the Fund as a species of property separate and distinct from his other property and having the following characteristics: it cannot be disposed of by a member by any instrument inter vivos or by will; it can only be disposed of by an instrument of nomination made by a member under s 24(1), which unless it is revoked or varied, takes effect on his death; it is not subject to any levy, sequestration or attachment or payment of any debt of the member; it does not pass to the Official Assignee upon the bankruptcy of the member, and on his death it does not form part of his estate; nor is it then subject to his debts. [emphasis added]

12 In that case, there was a valid nomination and the CPF money was paid out accordingly. Whilst the issue in the present case is different, the outcome of the issue before Thean J nevertheless turned on the construction of the then ss 24 and 25 of the CPF Act. Mr Chiok for...