Foo Jee Seng v Foo Jhee Tuang

• Jurisdiction: Singapore
• Judgment Date: 07 August 2012
• Date: 07 August 2012
• Docket Number: Civil Appeal No 70 of 2011
• Court: Court of Appeal (Singapore)

Foo Jee Seng and others

Plaintiff

and

Foo Jhee Tuang and another

Defendant

[2012] SGCA 41

Chao Hick Tin JA

,

Andrew Phang Boon Leong JA

and

V K Rajah JA

Civil Appeal No 70 of 2011

Court of Appeal

Succession and Wills—Construction—Determining testator's intention—Whether to give literal reading of will or rely on overriding intention of testator

Trusts—Breach of trust—Trustee exercising his discretion in whether to postpone sale or not—Majority of beneficiaries' needs and desires indicating that sale should take place—State of property and rental proceeds showing that little benefit was being reaped from property remaining unsold—Whether court's purview was limited to instances where there was bad faith—Whether there was duty to exercise discretion properly

Trusts—Trust for sale—Majority of beneficiaries' preferences and interests indicating that sale should take place—First respondent postponing sale based on irrelevant considerations—Whether power of postponement in trust for sale could be exercised indefinitely—Whether there was overall duty to sell property

The parties, all siblings, were the beneficiaries, along with their mother and deceased brother, of an express trust created by their father's (‘the testator’) will (‘the will’). The will devised a trust for sale which involved the family home (‘the property’) where the whole family used to stay in, with the first respondent (‘the 1st Respondent’) and the parties' mother (collectively ‘the trustees’) being named as the trustees. Under the terms of the trust, the trustees were directed to sell the property, with a power to postpone the sale in their absolute discretion, and divide the proceeds among the beneficiaries. When the parties' mother was still alive, rooms in the property were rented out for extra income, and this continued even after her death. Eventually, all the siblings ceased to live on the property, and disagreements about how the property should be dealt with began to arise between them. The appellants (‘the Appellants’) wanted the property to be sold, but the 1st Respondent, insisting that the property was an ancestral home and still capable of reaping benefits without being sold, refused to do so. The property at that stage was in a dilapidated state and while the rooms were still being rented out, the rental proceeds were paltry in comparison to the value of the property. The Appellants, in a bid to compel the 1st Respondent, as trustee, to sell the property and distribute the proceeds of sale in accordance with the will, commenced proceedings against the Respondents, including the second respondent (‘the 2 nd Respondent’) whose stand the Appellants could not ascertain and who took no part in these proceedings.

Held, allowing the plaintiffs' claim:

(1) The overriding aim in construing a will was to give effect to the testator's intention, which had to be derived from the wording of the will: at [17] and [77].

(2) While a trust for sale would implicitly incorporate the doctrine of conversion, on the basis of case law from other common law jurisdictions, it did not follow that the court would apply the doctrine without consideration of the objects behind the trust. Similarly, although a trustee of a trust for sale was accorded the power to postpone sale as he thought fit, such a power had to still be exercised reasonably. Whether a court should intervene in the decision of the trustee was fact-sensitive and would ultimately be dictated by the demands of justice of the case: at [22] to [39], [42], [43] and [64].

(3) Given that a rigid instrument like a settlement could be approved for sale by the court, it was incongruous that a flexible instrument like the trust for sale should not be subject to the court's intervention in the appropriate circumstances: at [44] to [46].

(4) The 1st Respondent's assertion that the testator intended the property to be an ancestral home was untenable given that the will directed the property to be sold by the trustees: at [49].

(5) While the testator had every right to determine how his assets were to be managed through his will, the trustees' duty to exercise discretion under the will also had to be exercised properly. This duty would be subject to the court's purview, and was not only limited to instances where there had been bad faith on the trustee's part. However, this court would not go so far as to invoke principles of public law like the English courts had apparently done: at [51] to [53], [59] to [61] and [64].

(6) The following factors made it clear that the 1st Respondent had acted unreasonably in refusing to sell the property: 30 years had elapsed since the testator's death, the current dilapidated state of the property, the dismal rental income, the 1st Respondent's lack of plans for the property, the beneficiaries were all getting on in years, none of them were living in the property, and most of them were in favour of a sale: see [65] and [66].

(7) The discretion to postpone sale given to the trustees was for the purpose of ensuring that the sale would be effected at an appropriate moment so that maximum benefit could be obtained for the beneficiaries. In the circumstances here, to postpone the sale any longer would amount to depriving the beneficiaries of their just entitlement under the will. It could not be the testator's intention that the trustees should postpone the sale indefinitely: at [78] and [79].

(8) The 1st Respondent's decision to not sell the house was baffling and put him in breach of his fiduciary duties as the surviving trustee. He had taken into account an irrelevant consideration, viz, that the testator had intended the property to be an ancestral home, and failed to take into account a relevant consideration, viz, that the continued holding of the property would no longer be of benefit to the beneficiaries: at [66] and [80].

(9) Trustees were under a duty to keep account of the trusts and allow the beneficiaries to inspect them as requested: at [86].

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Molly Lim SC, Hwa Hoong Luan and Ang Hou Fu (Wong Tan & Molly Lim LLC) for the appellants

Tan Hee Liang and Tan Hee Jock (Tan See Swan & Co) for the respondents.

Judgment reserved.

Chao Hick Tin JA

(delivering the judgment of the court):

Introduction

1 This is an appeal from a decision of a High Court Judge (‘the Judge’) made in Originating Summons No 909 of 2010/W (‘OS 909’) dismissing the application of the appellants for the sale of a real property in Singapore known as 39 Lorong Marzuki (‘the Property’) and the consequential division of the proceeds of sale. The issue in this appeal concerns the effect of an express trust for sale which was created in a will with powers conferred upon the executors and trustees to postpone the sale of the Property as they in their discretion deem fit.

Background

2 The parties to OS 909 are all siblings. The Property belonged to one Foo Tai Joong (‘the Testator’), who was the father of the parties. The Testator and his wife, Mdm Yap Wee Kien, have four sons and two daughters. The diagram below shows the entire family's members...