Lee Koon (by her attorneys Seah Teong Kang and Seah Chiew Tee) v Seah Yong Chwan (executor of the estate of Seah Eng Teow, deceased)
Jurisdiction | Singapore |
Judge | Edmund Leow JC |
Judgment Date | 30 December 2013 |
Neutral Citation | [2013] SGHC 285 |
Court | High Court (Singapore) |
Docket Number | Originating Summons No 875 of 2013 |
Published date | 15 September 2015 |
Year | 2013 |
Hearing Date | 07 November 2013 |
Plaintiff Counsel | Earnest Lau and Tan Tian Luh (Chancery Law Corporation) |
Defendant Counsel | Tay Yong Seng and Alexander Yeo (Allen & Gledhill LLP) |
Subject Matter | Probate and administration,Distribution of assets |
Citation | [2013] SGHC 285 |
The issue in this case is whether a specific bequest of company shares made under a will was defeated by the winding up of that company so that the liquidation surplus paid out in relation to those shares falls into the residue of the estate. If so, the plaintiff is entitled to the entire surplus as she is the residuary beneficiary under the will, even though she was a specific legatee of only some of those shares.
On 7 November 2013, I heard arguments from the parties and thereafter reserved judgment. That same evening, solicitors for the defendant wrote to the Registry of the Supreme Court requesting leave to make further arguments. On 11 November 2013, solicitors for the plaintiff wrote to object to the defendant’s request. I declined to hear further arguments and now give my judgment.
The factsThe plaintiff is the widow of one Seah Eng Teow (“the Deceased”). She is now 83 years old and is suing by her attorneys, her elder son Seah Teong Kang (“Teong Kang”) and her daughter Seah Chiew Tee (“Chiew Tee”). The defendant is her younger son and executor of the Deceased’s estate.
The Deceased owned 1.2 million shares (“the Shares”) in Teow Aik Realty (S) Pte Ltd (“the Company”). The Company was incorporated on 2 March 1983 and had a paid up capital of $5m in the form of 5 million shares of $1 each. It was evidently a family owned and run company. The shareholders who were also the directors were:
By way of a will dated 19 December 2007 (“the Will”), the Deceased bequeathed his 1.2 million Shares in the following manner: 1,000,000 to the defendant; 100,000 to the plaintiff and 100,000 to Chiew Tee. These were what I will term the “specific legatees” of the Shares. The plaintiff was also named the residuary beneficiary of the estate. There were other bequests that are not material.
On 17 December 2007, which I note was just two days
In June 2012, the defendant sent to the plaintiff and Chiew Tee each a cheque for $15,488, being the liquidation surplus received in respect of each of their entitlements to the Shares under the Will. The defendant claimed the remainder of the Sum. Neither the plaintiff nor Chiew Tee ever accepted the cheques. Instead the plaintiff demanded the entire Sum. She asserted her claim as the residual beneficiary. She said she had been willed Shares and so she could get only Shares; the surplus from liquidation was not the same as the Shares. All of this surplus should have fallen into the residuary estate of the Deceased and thereby have come to her in full.
Chiew Tee, who is currently living with and looking after the plaintiff, accepted that she was not entitled to any money, but said the entire Sum should be paid to the plaintiff to be used for her upkeep and medical expenses. She filed an affidavit to that effect. Her brother, Teong Kang, who together with her is looking after the plaintiff in her old age, also filed a brief affidavit in support.
The defendant filed an affidavit. He averred that the liquidation surplus from the Shares of 15.488 cents per share was a gross value, and after adjustments for sums due and from the estate, the net payment came to about 14.796 cents per share. Nevertheless he was willing to pay to the plaintiff and his sister Chiew Tee the gross value of their share of the Shares and did in fact send them cheques for that amount at 15.488 cents per share. He said that on 28 March 2013, he had received a letter of demand from the plaintiff stating that she was entitled to the entire Sum. The defendant said he disagreed and sent a fresh cheque for $15,488 as the previous one had been issued more than six months previously.
On 18 September 2013, the plaintiff filed this originating summons for a declaration that the Sum forms part of the residuary estate and for a consequential order that the defendant transfer the Sum to the plaintiff forthwith. On 26 September 2013, the defendant sent a third fresh cheque for $15,488 as both of the previous cheques had by then lapsed. None of the cheques were ever accepted.
The plaintiff’s case The plaintiff says that under cl 3(ii) of the Will the specified legatees were supposed to be given the Shares and not the moneys realised on liquidation that were paid out to shareholders in their aliquot shares. Clause 3(ii) reads:
The plaintiff says the defendant and executor could not pay over the liquidation surplus in lieu of the Shares themselves because the plaintiff and Chiew Tee were entitled to the Shares
But, at all events, “profits credited or paid” are, as it seems to me, pointed to “profits” which have in some way been made a debt by the company to the shareholder, &c. In the case of a shareholder, that would be by a “dividend or bonus” — or even by "interest" used in the sense of distribution of profits. But the declaration of a “dividend” creates a debt ... Where there is no debt, or “debit”, the word “credit” or the word “pay” in relation to profits is meaningless, for there is nothing calling for payment and there is no balance to be struck. And in its essence the distribution of surplus assets in winding up creates nothing in the nature of a debt by the company to anybody (see
Spence v Coleman ). Nor is it a payment. The debts owing by the company have been paid; the debts owing to the company are gathered in; the contributories’ positions are equalized or are as agreed; and the property of the company falls to be divided, not by the corporation, but among the corporators, for the company has itself ceased to have any use for it since its undertaking is at an end ... and it is on the road to dissolution.
…
The plaintiff says that as the surplus is neither a debt nor a chose in action, it follows that liquidation surplus funds have their own unique proprietary identity. The specific legatee, in order to become entitled to this surplus, must therefore already be either the legal or beneficial owner of the Shares at the point in time the surplus became available for distribution. But the specific legatees never become either legal or equitable owners of the Shares due to the operation of s 259 of the Companies Act (Cap 50, 2006 Rev Ed) (“CA”) which reads:
Nor could beneficial ownership pass to the specific...
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Lee Koon v Seah Yong Chwan
...Seah Teong Kang and Seah Chiew Tee) Plaintiff and Seah Yong Chwan (executor of the estate of Seah Eng Teow, deceased) Defendant [2013] SGHC 285 Edmund Leow JC Originating Summons No 875 of 2013 High Court Probate and Administration—Distribution of assets—Bequest of shares of company in wind......