Chan Yun Cheong (trustee of the will of the testator) v Chan Chi Cheong (trustee of the will of the testator)

• Jurisdiction: Singapore
• Judge: Judith Prakash JCA
• Judgment Date: 09 April 2021
• Neutral Citation: [2021] SGCA 33
• Published date: 14 April 2021
• Docket Number: Civil Appeal No 63 of 2020
• Year: 2021
• Hearing Date: 20 November 2020
• Plaintiff Counsel: Lau Wen Jin and Shivam Ahuja (Dentons Rodyk & Davidson LLP)
• Citation: [2021] SGCA 33
• Defendant Counsel: Giam Chin Toon SC, Hui Choon Wai and Ho Si Hui (Wee Swee Teow LLP)
• Court: Court of Appeal (Singapore)
• Subject Matter: Trusts,Trustees,Retirement

Judith Prakash JCA (delivering the judgment of the court):

Trusteeship is a serious appointment that comes with responsibilities. Once a person takes up a trusteeship, he cannot simply relinquish his duties at will, but is only able to do so in accordance with the law and the terms of the trust instrument.

The appellant and respondent were appointed in 2017 as two out of three trustees of a trust arising out of the will of their late grandfather. Each of them says that he has validly retired and no longer holds the position of trustee. It is common ground that if either of them has validly retired the other would be unable to retire from the trust unless a replacement trustee can be found. The respondent sought to retire as a trustee pursuant to s 40 of the Trustees Act (Cap 337, 2005 Rev Ed) (“the Trustees Act”) (s 40 being hereafter called “s 40 TA”), which provides that such retirement can only be effective if it is by deed and the remaining trustees consent, also by deed, to his discharge. The appellant refused to give his consent to the respondent’s deed of retirement but instead sought himself to resign by way of a letter of resignation, claiming that such mode of retirement was authorised by the terms of the will.

This dispute raised the question of whether the conditions prescribed by s 40 TA have to be met where a trustee seeks to retire pursuant to an express power in the trust instrument. The High Court Judge (“Judge”) held that the conditions applied and ordered the appellant to give his consent to the respondent’s retirement. He also ordered the appellant to execute a deed to confirm that an earlier trustee had retired. The reasons for the decision can be found in Chan Chi Cheong (trustee of the will of the testator) v Chan Yun Cheong (trustee of the will of the testator) [2020] SGHC 43 (“Judgment”). The appellant appeals against the entirety of the Judgment.

Background facts

The material facts are straightforward and undisputed. The appellant is Chan Yun Cheong. The respondent is Chan Chi Cheong, the plaintiff in the originating summons action (HC/OS 703/2019 (“OS 703”)) out of which this appeal arises.

The trust instrument is a will dated 5 February 1947 (“Will”) executed by their late grandfather, Chan Wing (“Testator”). The Testator passed away a few weeks later, whereupon a number of his sons became trustees of his estate which mainly comprised assets in Malaya and Singapore. Over time, some trustees died or retired and replacement appointments were made. Around 1973, one of the Testator’s sons, Chan Kat Cheung, purported to retire as trustee by way of a letter of resignation. There was no evidence that he ever executed a deed of retirement. However, it appears that the remaining trustees accepted the letter as a valid method of retiring from the trust.

By June 2003, the trust had only three trustees, viz, Chan Chee Chiu (“CCC”), Chan See Chuen and Chan Fatt Cheung (“CFC”). In March 2009, CFC resigned as trustee. Again, no deed of retirement was executed. In April 2017, Chan See Chuen passed away. In June 2017, the only remaining trustee, CCC, appointed the respondent and appellant as co-trustees pursuant to a deed of appointment, thereby restoring the number of trustees to three.

Thereafter, disagreements arose among the trustees relating to the stewardship of the assets of the trust. On 10 January 2019, the respondent’s solicitors wrote to CCC’s solicitors informing them of the respondent’s intention to retire as a trustee and attaching an unsigned draft deed of retirement (“Draft Deed”). On 15 January 2019, CCC’s solicitors advised the respondent that CCC had no objections to the retirement and they returned the Draft Deed with CCC’s signature appended thereto. The following day, the respondent’s solicitors wrote to the appellant, informing him of the respondent’s intention to retire as a trustee and attaching CCC’s solicitor’s e-mail of 15 January 2019 as well as an unsigned copy of the Draft Deed. They asked the appellant to consent to the respondent’s retirement. The appellant did not sign the Draft Deed. Instead, on 1 February 2019, the appellant wrote a letter (“Resignation Letter”) to the respondent and CCC, stating that he thereby resigned as trustee with immediate effect, and that his resignation was prompted by his inability to effectively discharge his duties as a trustee due to certain areas of concern. The appellant set out these areas of concern in the Resignation Letter and, in particular, cited a disagreement concerning a certain fund transfer which had allegedly happened without his authorisation.

On 19 February 2019, the respondent’s solicitors replied, asserting that the appellant was still a trustee and would remain so until a proper deed of retirement was executed. On 22 February 2019, the appellant replied contesting this; he cited an express provision in the Will which he claimed allowed him to resign without a deed of retirement, and also cited the example of CFC who had retired without such a deed. The portion of the Will (cl 3) cited by the appellant states:

… Upon the death or retirement of any Trustee, the person appointed as his successor in office shall nevertheless be my male descendant through a male line.

If any of my Trustees disagree with the others or have to attend to other business, he is at liberty to resign and the vacancy thereby created shall be filled accordingly.

On 6 March 2019, the respondent executed the Draft Deed, even though the appellant had yet to give his consent. About two months later, in May 2019, the respondent’s solicitors informed the appellant that CFC had signed a Deed of Retirement and Confirmation (“Confirmation Deed”) on 25 April 2019, which confirmed that he had retired as a trustee with effect from March 2009. The respondent’s solicitors also attached the Confirmation Deed which had been executed by CFC, CCC, and the respondent. They requested the appellant to sign the Draft Deed and the Confirmation Deed (collectively, “the Deeds”), When the appellant refused, the respondent filed OS 703, asking the court to order the appellant to sign the Deeds.

Summary of arguments below Respondent’s arguments

The respondent argued that the court had power to compel the appellant to consent to the Deeds, pursuant to s 18 of the Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed) (“SCJA”) read with item 14 of the First Schedule thereof, or by virtue of the inherent powers of the court found in O 92 r 4 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“ROC”). The order should be granted as the appellant should not be allowed to refuse/withhold his consent unreasonably. Alternatively, the court should direct the Registrar of the Supreme Court (“RSC”) to execute the Deeds on behalf of the appellant, pursuant to s 14(1) of the SCJA.

The respondent’s position was that the appellant could sign the Deeds as he remained a trustee. His attempt to resign as trustee by way of letter was not valid, as the only way a trustee can resign is in accordance with s 40 TA, ie, through a duly executed deed of retirement. The provisions of the Will dealing with resignation do not make sense when read without incorporating the requirements of s 40 TA as the Will is silent as to: (i) the mode of resignation; (ii) whether the consent of the other trustees should be obtained; (iii) whether the trust assets should be transferred to the continuing trustees; and (iv) whether there should be at least two remaining trustees. Further, the estate held substantial assets, which could not be transferred to the continuing trustees by way of a simple letter of resignation.

Appellant’s arguments

The appellant argued that he was no longer a trustee and could no longer provide his consent, as he had resigned effectively via the Resignation Letter, since cl 3 of the Will allowed him to resign without any formalities and without the consent of the other trustees. The effectiveness of the appellant’s resignation was independent of any vesting of the trust assets in the continuing trustees as the vesting was a matter of implementation that would arise only after the discharge of a trustee was deemed effective. The respondent was also estopped from asserting that the appellant was unable to resign by way of letter as the respondent and CCC had accepted CFC’s resignation, which constituted a representation to the appellant that resignation by letter was effective, and the appellant had relied on this to his detriment.

Alternatively, even if the Resignation Letter was not effective and the appellant was still a trustee, there was no basis upon which the court could compel him to sign the Deeds.

Decision below

The Judge framed the issues as follows (Judgment at [20]): whether cl 3 of the Will or s 40 TA was the operative mode for a trustee under the Will to resign or retire; and whether the appellant could be compelled to provide his consent to the Deeds.

The Judge held in relation to the first issue that a trustee seeking to retire had to comply with s 40 TA. Section 2(2) of the Trustees Act provided that the powers conferred by that Act on trustees would apply in so far as the trust instrument did not express a contrary intention (Judgment at [32]). Section 40 TA constituted a “power” and would apply unless the Will expressed a contrary intention (Judgment at [35] to [39]). A contrary intention need not be express, as long as on a fair reading of the trust instrument, the power would be inconsistent with the purport of the trust instrument (Judgment at [40] to [41]). On an objective reading of cl 3, nothing in that clause implied that the Testator intended to void the application of s 40 TA; that section thus applied (Judgment at [42]). Further, the appellant was still a trustee as he had not met the conditions prescribed by that section (Judgment at [51]).

Although CFC’s resignation in 2009 also did...