Pek Nam Kee and Another v Peh Lam Kong and Another

JudgeJudith Prakash JC
Judgment Date10 June 1994
Neutral Citation[1994] SGHC 163
Citation[1994] SGHC 163
Defendant CounselTang Khin Wai and Stacey Ong (Lee & Lee)
Published date19 September 2003
Plaintiff CounselGiam Chin Toon and Chiah Kok Khun (Wee Swee Teow & Co)
Date10 June 1994
Docket NumberSuit No 20 of 1991
CourtHigh Court (Singapore)
Subject MatterWhether any undue influence brought to bear on any party to the arrangement,Administrator failing to draw up proper accounts of estate and make clear what beneficiaries' full entitlement was,Whether founded on honest disclosure of material facts,Probate and Administration,Administrator,Distribution of assets,Interests of the family to be considered,Fiduciary duties,Deed of family arrangement drawn up by administrator,Duty to disclose beneficiaries' share of estate,Setting aside of deed,Duty to draw up full and complete accounts of the estate,Breach
Introduction

Cur Adv Vult

In 1973, Pek Boon Bok (`the father` or `the deceased`) died intestate leaving a substantial estate to be shared among his widow, Mdm Ow, and his 13 children, seven of whom were from his marriage with his first wife who pre-deceased him, and the other six of whom were the issue of his second marriage. Letters of administration to the deceased`s estate were subsequently granted to Mdm Ow and the first defendant, the deceased`s fourth son. Mdm Ow herself died in 1988. At that time the estate had not yet been wound up. The next year, the remaining and major asset of the estate was sold, and in 1990 the 13 siblings entered into a deed of family arrangement which dealt with their inheritance from the estate of their father. Now the plaintiffs, who are Mdm Ow`s third and fourth children, seek to set aside that deed on the grounds that:

(a) the first defendant, in breach of his fiduciary position, manipulated to deprive Mdm Ow`s children of their full entitlement in their father`s estate and place all their money completely in his hands and control;

(b) the deed is detrimental to them and is an unconscionable document; and

(c) alternatively, that they were persuaded to execute the deed by coercion or fraud or the undue influence of the first defendant over them.



The action was started against the first defendant as the only surviving administrator of the father`s estate and against the second defendant as the executor of Mdm Ow`s estate.
In relation to the second defendant, the allegation was that he had condoned the first defendant`s actions and/or had connived with the first defendant to cause loss to the estate of Mdm Ow and thereby to her heirs, her six children. The second defendant, a bankrupt, did not take an active part in the proceedings and by the time the hearing started before me, judgment had been obtained against him. The case therefore proceeded against the first defendant only.

In summary, the stand taken by the first defendant is that the plaintiffs as well as all the other siblings signed the deed voluntarily with full knowledge and appreciation of its contents and the effects of the arrangement.
He denies that he was in breach of any duty or that he had persuaded the plaintiffs to sign the deed by the exercise of coercion, fraud or undue influence. He also denies that the deed is unconscionable. Further, he asserts that the plaintiffs are not entitled to rescind or set aside the deed because they have affirmed or acquiesced in it, they do not come to court with clean hands and, finally, because they are unable to put the parties who entered into the deed back into their original positions.

First, a brief description of the main persons involved:

(1) Pek Boon Bok: The deceased. He had seven children between 1933 and 1953 by his first wife and a further six children from 1957 onwards from his marriage with Mdm Ow.

(2) Mdm Ow Kim Kwai: The deceased`s second wife and one of the co-administrators of his estate. The mother of Nam Kee and Siew Hong.

(3) Peh Lam Kong: The first defendant and the deceased`s fourth son of his first marriage. Born in 1951, he became co-administrator of his father`s estate at the age of 22 and took an active part in dealing with the affairs of the estate. The most educated of the siblings, he holds a diploma from the Singapore Polytechnic and runs his own contracting business.

(4) Peh Lam Eng: The second defendant and Mdm Ow`s second son. Born in 1960, he took and passed at least five `O` level examinations. He is the executor of Mdm Ow`s estate.

(5) Pek Nam Kee: The first plaintiff and Mdm Ow`s fourth son. Born in 1962, he was aged 11 at his father`s death. Educated in the Chinese stream, he passed `O` levels but attained only one `A` level pass. He runs his own sub-contracting business.

(6) Pek Siew Hong: The second plaintiff and Mdm Ow`s second daughter. She was born in 1959. She left school after secondary three and is now a housewife.

(7) Sally Tang: Nam Kee`s wife. They were legally married in 1985 though the customary ceremony took place in 1989. She successfully completed her `A` levels, is an executive secretary and speaks fluent English.



At the time of his death in December 1973, the deceased owned a business with premises in Nankin Street and approximately 36,000 sq ft of land at Tannery Lane (`the property`).
The property, then under mortgage, was occupied by Mdm Ow and some of the siblings and also by various tenants for a number of years thereafter. It was not in dispute that until the property was vacated Mdm Ow collected the rentals. The exact amount she collected is in dispute. Lam Kong, the first defendant, says that the rentals approximated $8,000 a month, but the tenancy agreements and income tax statements produced before me show monthly rentals in the region of $4,000 to $4,800.

Over the years, various crises arose in connection with the property.
Loans had to be taken and interest had to be paid in order to preserve the main asset of the estate. Also, Mdm Ow and Lam Kong had plans from time to time to develop the property and improve the value of the estate. These plans necessarily incurred expenses. Some of the estate`s expenses were paid by Lam Kong and others (as came out in evidence) were paid by Mdm Ow. For one reason or another, the various development plans came to nought. By 1988, it had been decided to sell the property. By this time also the property had been completely vacated.

Some time in the first half of 1988, a contract was entered into to sell the property for about $3.2m. Around the same time, discussions took place as to how the proceeds of sale were to be dealt with.
Mdm Ow was concerned to have enough money to purchase a semi-detached house of her own. After some discussion, it was proposed that she be paid $510,000 (being the estimated purchase price of such a house) in full settlement of her claim on the estate and that the balance would be divided equally among the siblings. In fact, Mdm Ow was entitled in law to a half share in the estate and each of the siblings was at that time entitled to a one twenty-sixth share therein. It was also proposed that the money due to each sibling be utilised in subscribing to shares in a company called Pek Boon Bok & Sons Pte Ltd (`PBB`) which could then be used as a vehicle for further investment. According to the plaintiffs, these proposals emanated from Lam Kong whereas he contended that they were agreed amongst all the siblings and that the proposal to pay Mdm Ow a certain sum with which to purchase a house came from her.

Lawyers were consulted and the parties were advised that Mdm Ow should have separate representation.
Mdm Ow then went to see the firm of Choo & Yap whilst Lam Kong, as administrator of the estate, was advised by Lee & Lee. On 1 August 1988, Lee & Lee sent Choo & Yap the first draft of a deed of family arrangement incorporating the proposals made. The deed recited, inter alia, that the estate was at that time indebted to Lam Kong in the sum of $339,557.18. Its main effect was that Mdm Ow agreed to release her interest in the estate in return for payment of $510,000. A second draft of this deed was sent out by Lee & Lee a month later. By that time, the first sale had fallen through and there was a possibility of a new sale at the increased price of $4,129,426. The new price and the consequent change to the value of the siblings` shares in the estate were shown in the amended draft. Otherwise the second draft was, in substance, the same as the first. On 30 September 1988, Choo & Yap, acting for Mdm Ow on the instructions of Lam Eng who was now holding her power of attorney, approved the second draft and asked for the engrossed copy for execution by their client through her attorney. By this time, however, Mdm Ow was very ill. She died on 23 November 1988 before the deed could be executed.

Mdm Ow left a will in which she appointed Lam Eng as her executor and bequeathed her property to her six children in equal shares.
This had a significant impact on the rights of the two sets of siblings to share in their father`s estate. Whilst Mdm Ow was alive each of the 13 children had a one twenty-sixth share in their father`s estate. After her death, each of the children of the first wife was entitled to 6/156 shares in the estate while each of Mdm Ow`s children was entitled to 19/156 shares in the estate (ie three times more than their half siblings) because they were each entitled to one-sixth of Mdm Ow`s half share in the estate.

After Mdm Ow`s death, Lam Kong pressed on with his proposals regarding the family arrangement.
He now proposed that there be two companies: PBB and a company which was eventually called `Sheng Xing Fa Pte Ltd` (after the father`s business name). The scenario was that Mdm Ow`s share of the net proceeds of the sale of the property be fixed at $510,000 and the balance be divided equally between all 13 siblings. The 13 siblings would then pay their inheritance into PBB. In addition, Mdm Ow`s six children would pay their inheritance from her estate (ie $85,000 each being one-sixth of $510,000) into Sheng Xing Fa Pte Ltd (`SPL`) while PBB would invest the same amount in SPL. In the result, each of the 13 siblings would have an equal shareholding in PBB and Mdm Ow`s six children would own 50% of SPL with the other 50% being owned by PBB.

In May 1989, a contract for the sale of the property at $4,250,000 was entered into by Lam Kong on behalf of the estate.
The sale was completed in August 1989. Subsequently, on Lam Kong`s instructions, his new lawyers, Chor Pee & Co, drafted a deed of family arrangement for execution by the 13 siblings. This deed contained a schedule setting out the accounts of the estate and effects of the deceased. The schedule showed a gross sale price (inclusive of interest) of $4,297,699.36. From this was deducted property tax, income tax, brokerage commission,...

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