Lau Tyng Tyng v Lau Boon Wee

• Jurisdiction: Singapore
• Judgment Date: 10 June 2014
• Date: 10 June 2014
• Docket Number: Originating Summons No 1249 of 2013
• Court: High Court (Singapore)

Lau Tyng Tyng

Plaintiff

and

Lau Boon Wee

Defendant

[2014] SGHC 114

Edmund Leow JC

Originating Summons No 1249 of 2013

High Court

Gifts—Conditions attached—Clause in will purporting to prevent sale or disposal of gifts of shares in company—Whether rule against restraint on alienation applied to personalty

Succession and Wills—Conditions—Will distributing shares in company to beneficiaries absolutely—Clause purporting to entrust business to minority shareholder upon failure of certain conditions—Whether clause enforceable

Succession and Wills—Construction—Determining testator's intention

The applicant and respondent were named as the joint executors and trustees in the will of their late father (‘the testator’). The testator was the sole shareholder and director of Lau Loon Seng Holdings Pte Ltd (‘the Company’). The Company was a holding company which wholly owned four subsidiaries, including Southern Printing & Publishing Co Pte Ltd (‘SPPCPL’).

The testator had instructed the lawyer who drafted the will in Mandarin. Under cl 3 of the will, the testator distributed his shares in the Company to the beneficiaries absolutely. Clause 4 stated that it was the testator's ‘wish and strong desire’ that the beneficiaries not part with or dispose of the said shares and that his children ‘work together’ to ‘continue to grow the business’ of SPPCPL; otherwise, he would ‘entrust the business’ to the applicant.

The applicant brought this originating summons to construe cl 4 of the will. The applicant contended that the gifts of shares in cl 3 were subject to the conditions set out in cl 4 of the will. The respondent, on the other hand, argued that the testator had intended cl 4 to be merely precatory; even if the testator had intended for cl 4 to be legally binding, it was nevertheless void as a restraint upon alienation and/or for conceptual uncertainty.

Held, dismissing the application:

(1) Clause 4 was merely an expression of the testator's wishes and desires and was not intended to be valid or enforceable at law: at [12] .

(2) In appropriate circumstances, the court might admit relevant extrinsic evidence in ascertaining the testator's intention as expressed in the will. The evidence from the lawyer who assisted in the drafting and execution of the will would have been highly relevant here: at [14] and [15] .

(3) It was extremely unlikely that the testator had intended by the word ‘entrust’ to create an actual trust when the shares in the Company had already been gifted to the beneficiaries absolutely under cl 3 and the ‘business’ was actually owned by the subsidiaries of the Company. Such a trust would contradict cl 3. As cl 3 was unambiguous, cl 4 ought to be construed in a manner that was harmonious with cl 3: at [17] and [18] .

(4) Even if the word ‘entrust’ meant that the applicant was to be given control over the Company and its subsidiaries, giving effect to such an interpretation would be complicated. The fact that the will had been drafted by a lawyer, who would likely have advised the testator that such a provision was difficult to enforce, was an indication that the testator never intended cl 4 to have legal effect: at [19] .

(5) The court took into account the fact that a particular interpretation of a will would lead to a harsh result. The applicant's interpretation was harsh in two respects. First, the beneficiaries of the shares were prevented from dealing freely with their shares. Second, the breach by one beneficiary trying to sell his or her shares, or the inability of the three siblings to co-operate, would cause every beneficiary to lose substantially the rights embodied in their shares: at [20] and [21] .

(6) Although the testator would not have wanted to have his business destroyed by his beneficiaries, the applicant had not demonstrated that the testator was more concerned with his business than the welfare of his family as a whole: at [23] .

(7) If a plain reading of the clause suggested that the testator intended to do no more than express a non-legally binding desire for a certain future state of affairs, and a full and contextual examination of the will did not indicate that the testator intended anything more than that, a court should not strain to construe the clause as to give it an imperative character: at [24] .

[Observation: Even if the testator had intended cl 4 as a condition subsequent to the gift of shares in cl 3, it would nevertheless be invalid or unenforceable at law for being void as a restraint upon alienation. There was no reason why the rule against restraints on alienation, which typically applied to real property, should not also apply to personalty: at [28] and [29] .

Furthermore, cl 4 was too conceptually uncertain to be valid: at [30] to [32] .]

Bradley v Peixoto (1797) 3 Ves 324; 30 ER 1034 (refd)

Foo Jee Seng v Foo Jhee Tuang [2012] 4 SLR 339 (refd)

Lau Loon Seng v Sia Peck Eng [1999] 2 SLR (R) 688; [1999] 4 SLR 408 (refd)

Low Ah Cheow v Ng Hock Guan [2009] 3 SLR (R) 1079; [2009] 3 SLR 1079 (refd)

Toh Eng Lan v Foong Fook Yue [1998] 3 SLR (R) 833; [1999] 1 SLR 453 (refd)

Edmond Pereira (Edmond Pereira Law Corporation) for the applicant

Johnson Loo (Drew & Napier LLC) for the respondent.

Edmund Leow JC

1 The applicant (‘the Applicant’) and the respondent (‘the Respondent’) were named as the joint executors and trustees in the will (‘the Will’) of their late father (‘the Testator’). The Applicant has come to court to determine the true construction of cl 4 of the Will. The Respondent, her older brother, does not agree with her interpretation and opposes her application. Counsel for the parties appeared...