Chen Xiaoqi v Chen Fangqi
| Jurisdiction | Singapore |
| Judge | Goh Yihan JC |
| Judgment Date | 21 April 2023 |
| Docket Number | Originating Application No 696 of 2022 |
| Court | High Court (Singapore) |
[2023] SGHC 107
Goh Yihan JC
Originating Application No 696 of 2022
General Division of the High Court
Contract — Formation — Acceptance — Parties negotiating on basis of some agreed terms and some unsettled terms — Whether there was binding agreement
Contract — Formation — Acceptance — Parties taking preparatory steps — Whether such preparatory steps evidenced binding agreement
Equity — Remedies — Account — Beneficiaries seeking account on common basis — Standard trustee had to meet to discharge obligation to account on common basis
Equity — Remedies — Account — Beneficiaries seeking account on common basis — Whether beneficiaries should be allowed to exercise their right to ask for account
Probate and Administration — Administration of assets — Co-administrator applying for order for sale of properties — Whether it was necessary or expedient to grant order for sale — Section 18(2) Supreme Court of Judicature Act 1969 (2020 Rev Ed)
Probate and Administration — Administrator — Co-administrator applying to have sole conduct of sale of properties — Whether application was in substance for removal of other co-administrator
Probate and Administration — Administrator — Remuneration — Co-administrator applying for remuneration from estate — Principles applicable to court's discretion to allow remuneration — Section 66(1) Probate and Administration Act 1934 (2020 Rev Ed)
Held, granting the application in part and dismissing the cross-claim:
Whether there was a settlement agreement reached between the parties on 24 August 2022
(1) There were three applicable principles governing the question of whether the parties had reached a settlement. First, the general principles of contract law applied to the law of compromise or settlement as in other contractual contexts. Second, its terms must be certain. Third, the court would look at the whole suite of correspondence between parties to ascertain whether a valid compromise or settlement agreement had been formed between the parties: at [13] to [15].
(2) The parties did not enter into a binding settlement agreement on 24 August 2022 through the Letter as there was no offer and acceptance. The parties had been negotiating on the basis they that they would record the terms that had been agreed to make clear the remaining points of disagreement. Thus put, this arrangement was merely meant to be an administrative procedure to make the negotiation process more efficient. It could not be that the parties simply intended to be bound by discrete terms that had been recorded as having been “agreed”, without a holistic assessment of the broader package deal: at [16] and [17].
(3) Where parties were proceeding on the basis of careful negotiations by correspondence undertaken by solicitors and where some terms had yet to be agreed, one should be slow to find agreement from the correspondence unless the parties expressly stated that they had agreed on a compromise or settlement agreement. Ultimately, the important question was whether the parties, by their words and conduct, had made it objectively clear that they intended to be bound despite the unsettled terms: at [19].
(4) Even if there was an offer and acceptance between the parties, the resulting agreement supposedly formed on 24 August 2022 would have been too uncertain to be unenforceable. If there was an essential part of the contract that was incomplete, and which could not be remedied by, inter alia, an implication of a term, then the contract would be unenforceable. The alleged agreement arising from the Letter was too uncertain as it lacked a number of material terms. For example, the parties did not agree on how the defendants could buy over the claimants' interests in the Properties. This was a material term because it constituted a fallback position in the event that the Properties were not sold on the open market: at [22].
(5) The taking of preparatory steps, on the basis of a hope and expectation that there would be an agreement in the future, could not form the basis of a contract where the negotiations between the parties had not crystallised into a contractually binding agreement. There was clear evidence showing that negotiations had not crystallised into a binding agreement on 24 August 2022 and the engagement of valuers did not detract from that conclusion: at [23].
Whether there were good reasons to grant the orders in relation to the Properties
(6) It was “necessary or expedient” for a sale of the Properties to be ordered pursuant to s 18(2) of the Supreme Court of Judicature Act 1969 (2020 Rev Ed) (“SCJA”). First, the relationship between the parties had clearly broken down, and this was an unfortunate circumstance where each family member had a certain immovable perspective of the state of affairs that had led to the present difficulties. It was preferable to accord the parties a clean break as far as this was possible. Second, the orders sought did not prejudice the defendants as they did not dispute the need for the sale. Third, there was no prior agreement on 24 August 2022 for the sale of the Properties: at [28] and [29].
(7) However, it was not realistic or expedient to order that the sale of the Properties be conducted jointly in light of the breakdown the parties' relationship with one another. In relation to the prayer for Xiaoqi to have sole conduct of the sale of the Properties, the court would consider whether the prayer sought for was, in substance, for the removal of an administrator to determine if the stricter standard for such applications should apply. However, the mere fact that an administrator was not to be involved in a certain facet of the administration could not mean that he or she was thereby removed or was seen to be removed as an administrator. Apart from the Properties, the Estate comprised various assets in respect of which Xiaoqi would not be prevented from exercising her rights as administrator. As such, it was incorrect to characterise this prayer as a request to remove Xiaoqi as a co-administrator: at [33] and [34].
(8) Notwithstanding this, given that the Properties were a major portion of the Estate and had led to disagreements between the parties over the years, it was preferable for the parties to jointly appoint an independent third-party solicitor to conduct the valuation and sale of the Properties: at [38].
Whether orders for account and payment against Fangqi should be granted
(9) Since the claimants were seeking for an account for the assets that Fangqi had received in her accountable capacity, by virtue of her fiduciary relationship between the beneficiaries, and what had happened to those assets, this was for an account on a common basis. Claims for an account on this basis were divided into three stages: (a) the claimant's right to an account; (b) the taking of the account, which ends in a settlement covering the accounting period; and (c) consequent relief such as an order for payment. Stages (a) and (b) were informative in the sense of letting the beneficiaries understand the status of the assets, whereas stage (c) was substantive in effecting various consequential relief: at [41] and [42].
(10) A beneficiary's right to an account was a near-absolute right and he or she did not need to provide a good reason in asking for an account. However, that right was to be exercised within proper bounds, ie, in a manner that was not unduly onerous for the trustee: at [54].
(11) As for the standard that a trustee had to meet in order to discharge his or her obligation to account on a common basis, a trustee was expected to provide an explanation for the breakdown of expenses and to substantiate the same with sufficient supporting evidence, oral or documentary, depending on the nature and quantum of such expenses. However, what amounted to sufficient supporting evidence was a fact-sensitive assessment. The factors to consider would include: (a) the nature of the expenses; (b) the quantum; and (c) whether such expenses would typically be reflected in some documentation. The principle that undergirded these (non-exhaustive) factors was whether the court could be satisfied that the account was generally accurate and credible. This hearkened back to the purpose of the taking of an account, which was intended to allow beneficiaries to know the status of the fund and to ascertain any breaches of fiduciary duty. If these purposes could not be met because the trustee had not provided sufficient documentation of how the trust property was applied, then it followed that the trustee's account was inadequate: at [59] and [62].
(12) In relation to the rental income received by one of the Properties of the Estate, Fangqi had not provided a sufficient account. First, the volume of transactions reflected in her accounts did not appear to be very high and might not be accurate. Second, the quantum of the transactions appeared to be significant enough to have warranted the keeping of proper records. Third, many of the transactions listed in her accounts did not appear to be of the nature where providing documentation would have been too onerous. For these reasons, Fangqi was ordered to provide an account of the rental income in the manner sought by the claimants: at [70] and [71].
Whether Fangqi was entitled to remuneration as administrator of the Estate
(13) The starting point was that s 66(1) of the Probate and Administration Act 1934 (2020 Rev Ed) gave the court a discretion to allow the administrator a commission not exceeding 5% of the total value of the estate's assets. However, this was only a discretion that the court could choose whether to apply. In exercising this discretion, the court must consider the conduct of the executor or administrator in the administration of the estate. The true test for the calculation of what remuneration an executor or...
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