Foo Jee Seng v Foo Jhee Tuang

• Jurisdiction: Singapore
• Judgment Date: 28 October 2011
• Date: 28 October 2011
• Docket Number: Originating Summons No 909 of 2010
• Court: High Court (Singapore)

Foo Jee Seng and others

Plaintiff

and

Foo Jhee Tuang and another

Defendant

[2011] SGHC 235

Judith Prakash J

Originating Summons No 909 of 2010

High Court

Succession and Wills—Construction

Trusts—Trust for sale—Trustees—Duties—Powers—Testator devising property to trustees to hold on trust for sale for beneficiaries—Trustee under duty to sell property but with absolute discretion to postpone sale—Whether beneficiaries could compel trustee to sell trust property and distribute proceeds—Whether court could interfere in trustee's non-exercise of powers

The plaintiffs and the defendants were siblings and the beneficiaries under a trust contained in a will dated 8 May 1975 (‘the Will’). This Will was made by their father, the testator, who devised a property (‘the Property’) to his wife, one Madam Yap, and his eldest son, the first defendant, to hold on trust for the beneficiaries. The testator passed away in 1979, and Madam Yap died in 2005. By this action, the plaintiffs sought to compel the first defendant, as trustee, to sell the Property and distribute the proceeds of sale in accordance with the terms of the Will.

The Property was a wooden house in a shabby condition, and had been partitioned into as many as ten rooms. The testator had rented these rooms out to obtain a source of income for the family. The rooms continued to be tenanted after his death, with Madam Yap, the first and third plaintiffs, and the first defendant successively taking over the business of rent collection.

The terms of the Will stated, inter alia, that the trustees were to hold the Property on trust to sell the same, but with an absolute discretion to postpone the sale. The Will specified that before the sale of the Property, the beneficiaries would be entitled to the rents and profits accruing from it. Should the Property be sold, the trustees might apply the sale proceeds to various specified trusts for the benefit of the beneficiaries.

Counsel for the plaintiffs submitted that the Property should be sold, because on the true construction of the Will, the testator's intention was to provide for his wife and then infant children from the rental income of the Property. This was irrelevant now that the rental income of the Property was meagre, and the children were adults. Counsel for the first defendant contended that on the proper construction of the Will, the Property was meant to be used as an investment property, and there was an express discretionary power conferred on the trustees to postpone the sale. Counsel submitted that there was no reason to compel a sale of the Property since rental income was still being generated and the first defendant had exercised his discretion in a bona fide manner.

Held, dismissing the application:

(1) The trust in the Will was a trust for sale. This device vested trust property in the trustees to hold until sale, and thereafter hold the proceeds of sale upon specified trusts for the beneficiaries: at [16].

(2) A trust for sale was a method of creating successive interests in land. It facilitated the distribution of trust property amongst the beneficiaries by requiring that the trustees sell the land, so that the land was converted into money which was easily portioned out to the beneficiaries: at [17] and [18].

(3) The equitable doctrine of conversion operated to deem the beneficiaries' interests to be in the sales proceeds of the land, rather than the land itself. As long as the obligation on the trustees to sell was immediate and binding - notwithstanding that the sale had yet to take place - the doctrine of conversion would be triggered on the basis that the rights of those entitled to either realty or personalty should not depend on the time at which the duty to convert the property was fulfilled: at [18] and [19].

(4) The settlement was another method for settling land. Unlike the trust for sale, the settlement aimed to preserve a family estate. Settlements related to interests in realty, not personalty, and were governed by the Settled Estates Act (‘SEA’); with the 1970 version of this Act being the law as it stood at the time the testator made the will: at [17] and [20].

(5) Under the SEA 1970, land under a settlement could only be sold and leased out with the authorisation of the High Court, with attendant consent and notice requirements and costs. In contrast, a trustee under a trust for sale of land could deal with the land with ease. Legal title to the land was vested in the trustee, and he could sell and lease the land with far greater autonomy: at [22].

(6) A trust for the sale of land could be used to evade the application of the SEA 1970 or its subsequent iterations. In this case, the testator might have created a trust for the sale of the Property as an alternative to creating a settlement of land. The Property was rented out during his lifetime to provide a source of rental income. Flexible powers of administration would have been required to manage the leases of the many rooms in the Property: at [21], [23] and [42].

(7) The Will was drafted by a lawyer, rather than the testator himself. The lawyer would have known how to navigate the legislation and drafting practices of the time to achieve the result the testator wanted: at [42].

(8) The court did not supervise the day-to-day exercise of discretion by the trustees. Instead, the court depended on the beneficiaries to bring alleged instances of improper trustee behaviour to its attention: at [25].

(9) The principle of non-intervention applied to instances where the trustees had absolute discretion in the exercise of their powers. The court would not interfere in the trustees' exercise or non-exercise of their powers unless there was an allegation that the trustees had exercised their discretion in a manner that was mala fide.The court did not sit to hear appeals against trustees' decisions. On the facts, there was no allegation of mala fides: at [25] to [27], [29] and [30].

Kipping, Re [1914] 1 Ch 62 (refd)

Leo Teng Choy v Leo Teng Kit [2000] 3 SLR (R) 636; [2001] 1 SLR 256 (refd)

Loke Soh Lui, deceased, Re Will of [1997] 3 SLR (R) 956; [1999] 3 SLR 370 (folld)

Londonderry's Settlement, Re [1965] Ch 918 (folld)

Marquis Camden v Murray (1880) 16 Ch D 161 (folld)

Public Trustee v Cooper [2001] WTLR 901 (folld)

Tempest v Lord Camoys (1882) 21 Ch D 571 (folld)

Rules of Court (Cap 322, R 5, 2006 Rev Ed) O 80 r 2, O 80 r 2 (3) (c) , O 80 r 2 (3) (e) , O 92 r 4

Settled Estates Act (Cap 39, 1970 Rev Ed) ss 2, 7, 8, 9, 10

Supreme Court of Judicature Act (Cap 322, 1999 Rev Ed) s 18, First Schedule

Trustees Act (Cap 337, 2005 Rev Ed) s 56 (1)

Law of Property Act 1925 (c 20) (UK)

Settled Land Act 1925 (c 18) (UK)

David De Souza and Kevin De Souza (De Souza Lim & Goh LLP) for the first and second plaintiffs

Vangadasalam Ramakrishnan (V Ramakrishnan & Co) for the third plaintiff

Tan Hee Liang and Tan Hee Joek (Tan See Swan & Co) for the first and second defendants.

Judith Prakash J

1 At the centre of this controversy was the land and premises known as 39 Lorong Marzuki, Singapore (‘the Property’). It was the subject of an express trust contained in a will dated 8 May 1975 (‘the Will’) made by one Foo Tai Joong (‘the testator’), who was the father of all the parties before this court. The plaintiffs, who were beneficiaries under the trust, by this action sought to compel the first defendant, as trustee, to sell the Property and distribute the proceeds of sale in accordance with the terms of the Will. On 18 May 2011, I dismissed the plaintiffs' application, and I now set out the grounds for my decision.

Background

2 The testator had sought by the Will to make provision for all the members of his family. The most significant asset in his estate was the Property and he devised the same to his wife, one Yap Wee Kien (‘Mdm Yap’), and his son, the first defendant Foo Jhee Tuang, (together, ‘the Trustees’), to hold on trust for the named beneficiaries of the Will. These beneficiaries comprised the testator's wife and all six of his children (‘the Beneficiaries’), and the Will provided for them in the following terms:

1. 1. I APPOINT my wife YAP WEE KIEN and my son FOO JHEE TUANG if and when he attains the age of 21 years to be my Executrix and Executor and Trustees of this my Will (hereinafter called 'my Trustees').

2. 2. I GIVE and DEVISE my property known as No. 39, Lorong Marzuki, Singapore, unto my Trustees UPON TRUST to sell call in and convert the same into money with power to postpone the sale calling in and conversion thereof so long as they shall in their absolute discretion think fit without being liable for loss and to hold the net proceeds of the said sale and conversion upon the following trusts:-

(a) Upon trust to invest in their names in any investments authorised by law and to stand possessed of such investments and the said property if unsold.

(b) Upon trust to divide the net income from the said investments or the net rent and profits from the said property equally to my wife and children namely the said YAP WEE KIEN, FOO JEE FONG, FOO LEE LEE, FOO JEE SENG, FOO JHEE TUANG, FOO CHIN CHIN AND FOO JEE BOO.

(c) Upon trust to hold the said property or the net proceeds of sale and conversion thereof and any investments therefrom in trust to divide the same to my wife and the said children in equal shares.

3 The testator passed away on 5 May 1979, and Mdm Yap obtained a grant of probate on 30 November 1979 as one of the executors of the will. The first defendant was about 18 years old at the time of his father's death, and leave was reserved to him to come in and prove the Will when he attained the age of 21 years. As it turned out, the first defendant only did so much later, when he obtained a grant of double probate on 4 March 2010. It was the first defendant's position that as long as Mdm Yap was alive she administered the...