Low Gim Har v Low Gim Siah

• Jurisdiction: Singapore
• Judgment Date: 30 April 1992
• Date: 30 April 1992
• Docket Number: Originating Summons No 844 of 1990
• Court: High Court (Singapore)

Low Gim Har

Plaintiff

and

Low Gim Siah

Defendant

[1992] SGHC 108

Chan Sek Keong J

Originating Summons No 844 of 1990

High Court

Companies–Winding up–Shareholders' agreement relating to distribution of assets–Whether beneficial interest in the company's properties vest in a shareholder–Equity–Conversion–Whether shareholders' agreement had the effect of vesting beneficial ownership of the properties in a shareholder–Whether equitable doctrine of conversion applied–Succession and Wills–Revocation–Ademption–Specific gift of shares under a will–Shareholders' agreement entered into by testator relating to distribution of assets to shareholders in specie in a voluntary winding up–Whether gift of shares was adeemed

The plaintiff and defendant were children of the deceased Low Yok Kay (“LYK”). Under cl 9 of his will, all his shares in Hup Choon Kim Kee (Pte) Ltd (“HCKK”) were to be held upon trust for the benefit of certain beneficiaries and the residue of his estate was to be held upon trust to be divided equally amongst his wives and sons under cl 12 of the will. LYK appointed the plaintiff and defendant as his executors and trustees. They were also common beneficiaries under cll 9 and 12 of the will. The shareholders of HCKK resolved to voluntarily wind up the company and they also signed a shareholders' agreement to give effect to the distribution of the company's assets. LYK also executed assurances in respect of certain properties distributed under the shareholders' agreement.

The parties were in disagreement on certain events which occurred before LYK's death in relation to the assets of HCKK and the effect of such events on cl 9 of the will. The questions before the court were whether, at the date of LYK's death, the said properties formed part of: (a) LYK's shares specifically bequeathed under cl 9 of the will; or (b) LYK's residuary estate under cl 12 as property not specifically disposed of under the will.

Held, that the said properties were part of the assets to be distributed to the cl 9 beneficiaries:

(1) In a company winding up, the company retained legal ownership (and no differentiation needed to be made with respect to the equitable ownership) of all its assets and shareholders were only entitled to an aliquot part of the assets of the company. A person who owned the legal estate also had the beneficial ownership unless it was vested or may vest in someone else: at [35].

(2) The shareholders' agreement did not have the effect of vesting the beneficial ownership of the properties in LYK before he died based on the equitable doctrine of conversion. The shareholders' agreement was not enforceable by the shareholders against the liquidator or HCKK as a contract. The shareholders' agreement did not impose on the liquidator a new contractual obligation superseding his statutory obligation to distribute the immovable properties of HCKK in specie under the terms of the special resolution: at [49] and [51].

(3) The general principle was that the shareholder in a winding up of a company was entitled beneficially in specie to a particular property held by the company where he was in a position to demand that it be transferred to him. However, there was insufficient evidence that LYK was in a position to demand that the transfer of the said properties be effected in his favour. His rights were conditional upon the fulfilment of certain conditions. There was sufficient evidence to show that these conditions had not been satisfied when the purported assurances were executed. HCKK could not be considered a bare trustee of the said properties for LYK, at any time before his death: at [52] and [53].

(4) Even if the shareholders' agreement became unconditional, it could not be said that the beneficial title and legal title in the properties had been severed and the beneficial title thereby became irrevocably vested in the respective shareholders. Until the properties were actually distributed, the shareholders had the right to require the liquidator to do otherwise. The right of revocation remained as part of LYK's right of ownership of shares at the date of his death. As between them, the legal titles of the said properties remained vested in HCKK until they were actually and effectively distributed to LYK or his estate after his death: at [54] to [56].

(5) Ademption of a specific gift would occurr: (a) when the subject matter of the gift was disposed of or destroyed before the will took effect; (b) when it ceased to conform to the description by which it was given; or (c) when the nature of the gift changed its character. Whether there was ademption in any particular case was a question of construction. The present case did not fall within any of the established categories of cases where the courts have held that ademption had occurred. At the date of LYK's death, the shares remained the same as before and ademption had not taken place: at [58] to [60].

Ayerst (Inspector of Taxes) v C & K (Construction) Ltd [1976] AC 167 (refd)

Bancroft, In re;Bancroft v Bancroft [1928] Ch 577 (refd)

British Eagle International Airlines Ltd v Compagnie Nationale Air France [1975] 2 All ER 390 (distd)

Brown v Heffer (1967) 116 CLR 344 (refd)

Calgary and Edmonton Land Co Ltd v Dobinson [1974] Ch 102; [1974] 1 All ER 484 (refd)

Calgary and Edmonton Land Co Ltd (in liquidation), In re [1975] 1 WLR 355 (refd)

Carrington, In re;Ralphs v Swithenbank [1932] 1 Ch 1 (refd)

Caveat, In re A; Ex parte The Canowie Pastoral Company Limited [1931] SASR 502 (refd)

Central Trust and Safe Deposit Company v Harvey G Snider [1916] 1 AC 266 (refd)

Commissioner of Stamp Duties (Queensland) v Hugh Duncan Livingston [1965] AC 694 (refd)

Franklin's Selfserve Pty Limited v Commissioner of Taxation of the Commonwealth of Australia (1970) 125 CLR 52 (refd)

Lawes v Bennett (1787) 1 Cox 167; 29 ER 1111 (not folld)

M'Arthur's Executors v Guild [1908] SC 743 (refd)

Macaura v Northern Assurance Company, Limited [1925] AC 619 (refd)

Miller & Maund v Commissioner of Stamp Duties [1950] Tas SR 94 (refd)

Milroy v Lord (1862) 4 De GF & J 264; 45 ER 1185 (distd)

Oriental Inland Steam Company, In re; Ex parte Scinde Railway Company (1874) LR 9 Ch App 557 (refd)

Ponder, In re;Ponder v Ponder [1921] 2 Ch 59 (refd)

Rudge, In re; Curtain v Rudge [1949] NZLR 752 (refd)

Sen v Healdley [1991] 2 All ER 636 (distd)

Shaw Savill and Albion Company, Limited v Commissioner of Inland Revenue [1956] NZLR 211 (refd)

Strathblaine Estates, Limited, In re [1948] Ch 228; [1948] 1 All ER 162 (refd)

Sweeting (deceased), Re; Sweeting v Sweeting [1898] 1 Ch 268; [1988] 1 All ER 1016 (refd)

Walker Construction Company Limited (in liquidation), In re [1960] NZLR 523 (folld)

Companies Act (Cap 185,1970 Rev Ed)s 300 (consd);ss 121,254 (1), 292

Wills Act (Cap 352,1985 Ed)s 18

K S Loh and Kirpal Singh (Kirpal Singh & Co) for the plaintiff

Y H Cheong and Jimmy Yap (Donaldson & Burkinshaw) for the defendant.

Judgment reserved.

Chan Sek Keong J

1 The plaintiff and the defendant in this action are the children of Low Yok Kay, deceased (“LYK”). LYK made his will on 28 December 1977 and appointed the plaintiff and the defendant as his executors and trustees. After making specific legacies to his two wives and some of his children, LYK provided in his will as follows:

1. 9 I give to my trustees all my shares in Hup Choon Kim Kee (Pte) Ltd to be held by them upon trust to divide the same into two parts and to hold the same as follows: [here follows the names of the beneficiaries and their respective shares].

2. 10 I give the rest of my … property not hereby specifically disposed of to my trustees upon trust to convert … .

3. 11 [Trustees to pay debts and testamentary expenses.]

4. 12 Subject thereto my trustees shall stand possessed of my residuary estate as to both capital and income upon trust to divide the same equally among my wives …, sons … and daughters [names specified].

2 Three of LYK's children, including both the plaintiff and the defendant, are common beneficiaries under both cl 9 and cl 12 of the will. But the other beneficiaries take only under one or other of the said provisions. The plaintiff and the defendant are in disagreement with each other on (a) certain events which occurred before the death of LYK in relation to the assets of Hup Choon Kim Kee (Pte) Ltd (“HCKK”); and (b) the effect of such events on cl 9 of the will. Hence this action.

3 At the date of the will, LYK was the registered shareholder of 1,005 fully-paid shares of $100 each in the capital of HCKK, which was his father's family company. On 17 October 1983, the shareholders of HCKK unanimously passed two special resolutions: (a) to wind up HCKK voluntarily pursuant to s 254 (1) of the Companies Act (Cap 185, 1970 Ed) (“the Act”) and appoint Tan Beng Joo (“TBJ”) and Tan Hong Bak (“THB”) as liquidators, jointly and severally, for that purpose, and (b) to empower the liquidators, in accordance with the articles of association, to distribute to the membersin specie any part of the assets of HCKK.

The shareholders' agreement

4 LYK was admitted into hospital on 25 April 1985 for a terminal illness. Shortly after that, he and the other shareholders signed an agreement (“the shareholders' agreement”) to give effect to the second special resolution. The other two parties to the shareholders' agreement, which was dated 15 May 1985, were HCKK and the liquidator in his personal capacity. The first three recitals thereof recited the two special resolutions and the resignation of one of the liquidators, TBJ. Recital 4 recited the shareholders' acceptance of the valuations of HCKK's immovable properties as set out in the valuation report annexed thereto. Recital 5 acknowledged their agreement that the division of the immovable properties was fair and equitable. The last recital recited that: “The company is the legal and...