Lim Lie Hoa v Ong Jane Rebecca and Others and Another Appeal (No 2)

JurisdictionSingapore
CourtCourt of Three Judges (Singapore)
JudgeLai Kew Chai J
Judgment Date04 May 2005
Neutral Citation[2005] SGCA 24
Citation[2005] SGCA 24
Date04 May 2005
Plaintiff CounselKhoo Boo Jin and Daniel Tan (Wee Swee Teow and Co)
Published date06 May 2005
Docket NumberCivil Appeals Nos 59 and 60 of 2004
Defendant CounselAndre Arul (Arul Chew and Partners),Vinodh S Coomaraswamy and Chua Sui Tong (Shook Lin and Bok)

4 May 2005

Judgment reserved.

Judith Prakash J (delivering the judgment of the court):

Introduction

1 These appeals are two of the three appeals that arose out of an inquiry conducted by Assistant Registrar Phang Hsiao Chung (“AR Phang”) into the assets of the estate (“the estate”) of Ong Seng King, aliases Ong Seng Keng, Ong Keng Seng, Ong King Seng and Arief Husni (“the deceased”). The parties participating in the inquiry were all beneficiaries of the estate. AR Phang’s findings (see [2003] SGHC 126) were appealed against to the High Court. Those appeals were, however, dismissed by Choo Han Teck J (in [2004] SGHC 131) and the parties have now appealed further. The first appeal in this series was Civil Appeal No 58 of 2004 (“CA 58”). We dealt with that appeal in a separate judgment ([2005] SGCA 4). As Civil Appeals Nos 59 and 60 of 2004 (“CA 59”and “CA 60” respectively) raise similar issues, we are considering them together.

2 The background to all three appeals can be found in our judgment in CA 58. We will not repeat it in detail here. However, a brief explanation as to the parties may be helpful. The appellant in CA 59 is Lim Lie Hoa (“Mdm Lim”) who is the widow of the deceased. The appellants in CA 60 are Mdm Lim’s two younger sons, Ong Siauw Ping (“SP Ong”) and Ong Keng Tong (“KT Ong”). Mdm Lim’s eldest son, Sjamsudin Husni, alias Ong Siauw Tjoan (“ST Ong”), was the second defendant in the original proceedings. He is not a party to the appeal. The respondent to both appeals is Jane Rebecca Ong (“Jane Ong”) who was once married to ST Ong and who has an interest in the estate arising out of a deed of assignment executed by ST Ong. The direct beneficiaries of the estate are Mdm Lim, who has a half share therein; and her three sons, each of whom has a one-sixth share therein. By virtue of the deed of assignment, Jane Ong is entitled to half of ST Ong’s share in the estate as at 29 August 1991.

The appeals

3 These appeals, the first by Mdm Lim, and the second by SP Ong and KT Ong, have their main issue in common. In CA 59, Mdm Lim challenged AR Phang’s finding that only S$717,255 was distributed from the estate to ST Ong as of 29 August 1991. She submitted that, as ST Ong had admitted during the inquiry that he had received further sums of £1,018,000 and US$150,000 from the estate, these sums should be considered as distributions to him. Alternatively, Mdm Lim submitted that Jane Ong had admitted that ST Ong had received S$152,849, HK$10,087,399 and S$3,007,332 from the estate and therefore these sums should also be considered as distributions from the estate. In CA 60, SP Ong and KT Ong agreed with Mdm Lim that AR Phang had erred in his determination of the amount distributed to ST Ong from the estate. However, their figures did not correspond with Mdm Lim’s, as they contended that ST Ong had received S$3,645,804, in addition to the sum of S$717,255 found by AR Phang. Mdm Lim also appealed against the costs order that was made by AR Phang in Jane Ong’s favour (see [2003] SGHC 143).

When is a payment a distribution?

4 AR Phang’s finding that only a sum of $717,255 had been given to ST Ong as a distribution from the estate was premised on his earlier finding that during the period between 1974 and August 1991, ST Ong had relied exclusively on his mother, Mdm Lim, for all his expenses and was accustomed to being maintained by her in a luxurious lifestyle. Mdm Lim had also admitted that she had advanced some sums to ST Ong that she did not consider to be distributions of his share in the estate. AR Phang considered that, in these circumstances, it was not unreasonable for ST Ong to assume that the payments that he received from Mdm Lim were gifts from her for his maintenance unless she specifically informed him otherwise. AR Phang held that if Mdm Lim wished to treat a particular sum remitted to ST Ong as a distribution of his share in the estate, it was incumbent on her to notify him of her intention. Without such knowledge, ST Ong could not reasonably be expected to give the administrators a valid discharge for the payment received. Thus, for AR Phang, the characterisation of a payment from Mdm Lim to ST Ong was dependent on whether ST Ong was aware that that payment was intended as a distribution.

5 AR Phang’s approach was endorsed, on appeal, by Choo J who found (at [27] of his judgment) that:

[T]he AR’s decision, to hold that payments by [Mdm Lim] to [ST Ong] would be treated as distributions of the latter’s share only if the evidence had been sufficiently clear so as to distinguish between the making of a gift and the discharge of the former’s lawful duties as the administratrix of her husband’s estate, was correct. That is the only sensible way to approach the matter.

6 The challenges to the above findings have been mounted on two bases: one legal and one factual. We will deal with the legal basis first. The submission made was that where an administrator made a payment out of estate funds without acknowledging the payment to be a distribution and without expressly informing the beneficiary, that did not lead to the conclusion that the payment could not as a matter of law constitute a distribution. In determining whether a particular payment is a distribution or not, the test to be applied could be either:

(a) a purely objective test which looked only at the source of the payment and the fact of the payment; or

(b) a combined objective/subjective test which looked at the source of the payment and the knowledge of the beneficiary.

7 SP Ong and KT Ong submitted that the purely objective test was the correct approach and that as long as a particular payment had come from estate assets and the estate retained no interest in it thereafter, it should be classified as a distribution to a beneficiary. In support of this submission, they relied on the following authorities:

(a) the definition of the term “distribution” as “the passing of personal property to an intestate decedent’s heirs” and the definition of “distributive share” as “[t]he share that an heir or beneficiary receives from the legal distribution of an estate” given by Black’s Law Dictionary (West Group, 7th Ed, 1999);

(b) Porter MR’s statement in O’Brien v Condon [1905] 1 IR 51 at 55 that he could not “see any solid distinction in law or fact between “distribute” and “dispose of””;

(c) the view of Swinfen Eady J in Re Mackinlay (1911) 56 SJ 142 at 142 that “[t]o distribute means to pay over”; and

(d) the reiteration by Lander J, when delivering the judgment of the South Australian Supreme Court in Dawson v Fitch [2002] SASC 12 at [62] of his statement in Young v IOOF Australia Trustee Ltd (1995) 180 LSJS 302 that:

It seems to me that whether distribution has or has not occurred is simply a matter of fact … and the facts that have to be determined are whether there has been a removal from the hands of the personal representatives and a placement in the hands of the beneficiary.

Similar arguments were made on behalf of Mdm Lim.

8 It was further submitted that not only was this approach well founded on legal principle but, on the facts of the present case, it was the most equitable one to adopt. The issue here concerned payments from one co-administrator to another co-administrator from funds referable to the assets of the estate. If these funds were not treated as distributions and did not reduce ST Ong’s share in the estate, he would effectively receive sums from the estate far in excess of his actual entitlement (regardless of how these sums were ultimately characterised) to the detriment of his brothers, SP Ong and KT Ong. Given the relationship of the co-administrators, it would be unrealistic to expect them to adopt the standards a professional trustee would follow when making payments to a beneficiary. Mdm Lim’s failure to inform ST Ong on each and every occasion that she paid money to him that such money was to be treated as a distribution of his share could not be determinative of the issue, particularly, when that failure caused prejudice to other beneficiaries.

9 In our view, the authorities cited are only helpful to an extent. The definition of distribution given by the legal dictionary relied on is a description of what happens when a distribution is effected. It does not state that as long as a payment is made by a trustee to a beneficiary, that alone is sufficient to constitute that payment a distribution. As far as the cases cited are concerned, they too do not really deal with this point. In each of Re Mackinlay and O’Brien v Condon, the court was concerned with construing the meaning of “distribute” as that term was used in the particular testamentary instrument before it. The judges who gave their views as to the meaning of the term did not intend to propound any definitive test for determining when a payment should be characterised as a distribution in a situation where the relationship between the payer and the payee was not only a relationship of trustee and beneficiary.

10 The relevance of subjective intent or knowledge was also not in issue in those cases. In the Australian cases cited in Dawson v Fitch and in that case itself, the question before the court was whether there had been “final distribution” of an estate for the purposes of a statute that allowed family members who had not been provided for in a deceased’s will to apply for provision from the estate as long as they made the application before the estate had been finally distributed. The issue was whether a change in the status of an executor or a transfer to new trustees to hold on behalf of the beneficiaries was sufficient to constitute a distribution or whether an actual transfer to the beneficiaries themselves was required. The courts there did not have to consider whether the payment made by the trustee was a distribution or a gift and, therefore, observations like those of Lander J, that to ascertain whether there has been distribution all that has...

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    ...was in Civil Appeal No 58 of 2004. All the appeals were dismissed on 19 January 2005 (see Lim Lie Hoa and Another v Ong Jane Rebecca [2005] 3 SLR(R) 116) (“the CA decision”). I should point out that the plaintiff went into an Individual Voluntary Arrangement (“IVA”) with her creditors in th......
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