Lalwani Shalini Gobind and another v Lalwani Ashok Bherumal

• Jurisdiction: Singapore
• Judge: Aedit Abdullah JC
• Judgment Date: 24 April 2017
• Neutral Citation: [2017] SGHC 90
• Court: High Court (Singapore)
• Docket Number: Suit No 323 of 2015
• Published date: 17 April 2018
• Year: 2017
• Hearing Date: 21 September 2016,29 November 2016,20 September 2016
• Plaintiff Counsel: Nandwani Manoj Prakash and Ong Xuan Ning, Christine (Weng Xuanning) (Gabriel Law Corporation)
• Defendant Counsel: Lim Thian Siong Sean and Han Shanru Gloria Bernadette (Hin Tat Augustine & Partners)
• Subject Matter: Probate and administration,Executors,Equity,Remedies,Account,Equitable compensation
• Citation: [2017] SGHC 90

Aedit Abdullah JC: Introduction

In these proceedings, beneficiaries of an estate sought accounts to be taken against the sole executor and trustee, and recovery of sums that were said to have been misappropriated by him. Having heard the parties, I granted most of the reliefs sought, including orders for accounts to be taken on a common basis, and repayment of the specific sums. The sole executor and trustee has appealed.

Background

The patriarch of the family (“the Testator”) passed away on 9 July 1999 leaving behind his son and two daughters. By virtue of a handwritten will dated 2 July 1999 (“the Will”), the validity of which was not challenged, the Testator provided for his son to inherit 50% of his estate and for the remaining 50% to be divided equally between his daughters, who are the plaintiffs in this action (“the Plaintiffs”). The Testator also provided in the Will that his estate (“the Estate”) was to be administered by his son and his brother as co-executors.

Grant of probate was issued on 13 February 2001 to the executors based on an incomplete schedule of assets. On 20 March 2002, the Testator’s son passed away intestate, leaving behind no spouse or issue. Two consequences flowed from this. One, the Plaintiffs became the lawful beneficiaries to the son’s share of the Testator’s estate, and were accordingly each a beneficiary to 50% of the Estate. Two, the Testator’s brother, who is the defendant in this case (“the Defendant”), bore the duty of distribution as the sole surviving executor.

Thereafter, a finalised Schedule of Assets with 41 assets dated 31 December 2008 was filed with the Commissioner of Estate Duties (“Schedule of Assets”), upon which permission to distribute the assets of the Estate was granted after the estate duties were finalised and paid.

For easy of reference, the names of the Testator’s and the Defendant’s siblings are as follows in decreasing order of age: Lalwani Moti (“Moti”) deceased; Lalwani Bhagwan Bherumal (“Bhagwan”) deceased; Lalwani Gobind Bherumal, who is the Testator; Lalwani Jiwan Bherumal (“Jiwan”) deceased; Lalwani Rajan Bherumal (“Rajan”); and Lalwani Ashok Bherumal, who is the Defendant.

The Plaintiffs’ Case

The Plaintiffs’ present suit related to the Defendant’s discharge of duties as executor and/or trustee in relation to certain assets of the Estate.

The Plaintiffs’ first set of claims related to the taking of accounts. They submitted that the Defendant, as sole executor of the estate, owed fiduciary duties to the Plaintiffs as beneficiaries in relation to the administration of the Estate. By virtue of this, the Defendant was liable to furnish to them accounts relating to the Estate’s assets. In particular, the Defendant had allegedly failed to properly account for the following assets of the Estate: shareholding in Basco Enterprises Pte Ltd (“Basco”) and Eltee Development Pte Ltd (“Eltee”); interest in Bob’s Partnership (“Bob’s”) and any dividend payment or interests therefrom; the balance compensation (“the Property Proceeds”) arising from the compulsory acquisition of 48 and 50 North Bridge Road Singapore (“the North Bridge Road Property”) and 39 Stamford House Singapore (“the Stamford House”); and the Estate’s share in the estate of the Testator’s mother, Lalwani Lilan Bherumal (“Lilan”).

In addition, the Plaintiffs sought recovery of specific sums that they alleged were misappropriated by the Defendant in breach of his fiduciary duty: a total sum of $118,000 which was withdrawn in 13 tranches by the Defendant from a UOB account designated to receive and hold all monies belonging to the Estate (“the Estate Account”); a sum of $136,561.76, being half of the monies maintained in a UOB account held jointly by the Defendant and the Testator while the Testator was alive (“the Joint UOB Account”); and a sum of $40,641.78 being the remaining debt owed by the Testator’s eldest brother, Moti, to the Estate under High Court Suit No 349 of 1997, which according to the Plaintiffs had since become time-barred under s 6 of the Limitation Act (Cap 163, 1996 Rev Ed) (“Moti’s Debt”).

The Defendant’s Case

The Defendant did not contest that he owed a fiduciary duty to the Plaintiffs in relation to his administration of the Estate as the executor and/or trustee, but denied all allegations of breach. In relation to the accounts sought to be taken, the Defendant argued that he had, at various times prior to or during the trial, given sufficient account as regards the Estate’s assets to the Plaintiffs, whose allegations to the contrary were baseless, untrue, or based on their own poor recollection of the matter.

In relation to the three specific sums claimed, the Defendant conceded that he withdrew the $118,000 from the Estate Account but submitted that his liability in that respect could be set off against his cross-claim against the Estate. This cross-claim allegedly arose because of his half-share interest in the constituent shares of a Central Depository Account (“the CDP Account”), the proceeds of which were later deposited into the Estate Account, and which was held in the Testator’s sole name while he was alive when it was in truth under the joint ownership of the Testator and the Defendant.¹ As regards the monies from the Joint UOB Account, the Defendant maintained that the sum was properly expended and used, inter alia, to pay off the Testator’s funeral expenses, medical bills, and outstanding debts. Finally, the claim for Moti’s Debt against the Defendant was argued to be premature as there was no evidence that Moti’s estate was denying liability, or that a defence of time bar would be raised if a claim for recovery were brought against Moti’s estate.

The decision

Most of the prayers sought in relation to the taking of accounts on a common basis were granted. The trustee’s duty to furnish accounts to the beneficiary in relation to his administration of the trust assets is continuous and on demand. There may be limits to this duty, but none were applicable on the facts of this case. The transfer of some trust assets to the Plaintiffs, and the substitution of the Plaintiffs as the new executors and trustees of certain other assets, did not obviate the Defendant’s duty to account for his conduct during his term as trustee. The mere provision of some financial documents by the Defendant during the course of trial also did not necessarily constitute full satisfaction of his duty to furnish accounts.

In relation to the claims in breach of trust, the Defendant was found liable for misappropriation of the sums of $118,000 from the Estate Account, and $136,561.76 from the Joint UOB Account. The Plaintiffs’ claim for repayment of Moti’s Debt of $40,641.78 was, however, premature, and the taking of accounts in relation to the said debt was instead ordered.

The analysis Duties of an executor and trustee

In the present proceedings, it was not disputed that both executors and trustees owe fiduciary duties to the beneficiaries of an estate in relation to the administration of that estate. In Lee Yoke San and another v Tsong Sai Cecilia and another [1992] 3 SLR(R) 516 (“Lee Yoke San”), the High Court held that (at [35]):

An executor "calls in” the estate that collects and converts the assets into cash, and pays all the funeral and testamentary expenses, estate duty, debts and legacies. When he has done this, he has discharged his duties as an executor. Then he steps into the shoes of a trustee. He owes a fiduciary duty to the beneficiaries, whether he is an executor or trustee.

As an incidence of this fiduciary relationship, the executor or trustee owes several specific duties to the beneficiaries of the estate, including the duty to determine the extent of the testator’s assets and liabilities, to act diligently in the realisation of such assets, and to pay for the testator’s debts and testamentary expenses (see generally Foo Jee Boo and another v Foo Jhee Tuang and others [2016] SGHC 260 (“Foo Jee Boo”) at [73]-[83]). These specific duties are set against the backdrop of a general duty on the part of the executor or trustee to act with impartiality in the best interests of the beneficiaries (Lee Yoke San at [35]; Foo Jee Boo at [83]).

In the present case, the position of the executor is not significantly distinct from that of a trustee and, for ease of reference, the latter term will be used.

Taking of accounts The law on accounts

In addition to the specific duties identified above, a critical aspect of the custodial fiduciary relationship is the duty of the trustee to keep accounts of the trust and to allow the beneficiaries to inspect them as requested. This accounting procedure serves two primary purposes: (a) “the informative purpose of allowing the beneficiaries to know the status of the fund and what transformations it has undergone”, and (b) a “substantive purpose… [to ensure] that any personal liability a custodial fiduciary may have arising out of maladministration is ascertained and determined” (Steven Elliott, Snell’s Equity (John McGhee QC gen ed) (Sweet & Maxwell, 33rd Ed, 2015) (“Snell’s Equity”) at para 20-013; see generally, Yip Man & Goh Yihan, “Navigating the Maze: Making Sense of Equitable Compensation and Account of Profits for Breach of Fiduciary Duty” (2016) 28 SAcLJ 884 at 899-900).

Generally, the claim for an account on a common basis may be divided into three stages: (a) whether the claimant has a right to an account; (b) the taking of the account; and (c) any consequential relief (Chng Weng Wah v Goh Bak Heng [2016] 2 SLR 464 (“Chng Weng Wah”) at [22], [38]).

In this case, it was not in dispute that the Plaintiffs, as beneficiaries of the Estate, had a prima facie right to take an account of the trust assets. As the Court of Appeal explained in Foo Jee Seng v Foo Jhee Tuang [2012] 4 SLR 339 (“Foo Jee Seng”), “[b]eneficiaries are entitled,...