Seah Peng Koon and others (the trustees of the estate of Seah Liang Seah, deceased) v Seah Peng Song

• Jurisdiction: Singapore
• Judge: Goh Phai Cheng JC
• Judgment Date: 26 March 1993
• Neutral Citation: [1993] SGCA 19
• Docket Number: Civil Appeal No 62 of 1992
• Date: 26 March 1993
• Published date: 19 September 2003
• Year: 1993
• Plaintiff Counsel: KK Subramaniam (Boswell Hsieh & Lim)
• Citation: [1993] SGCA 19
• Defendant Counsel: Wu Chang-Sheng (Donaldson & Burkinshaw)
• Court: Court of Appeal (Singapore)
• Subject Matter: Binding effect,Whether beneficiary's differing beneficial interests under the will fully represented in previous proceedings,Whether trustees entitled to deduct commission on an award made for acquisition of land belonging to the trust,O 15 r 14(1) & O 80 r 2(2) Rules of the Supreme Court,Estate may be made party,Civil Procedure,Parties,Judgments and orders,Remuneration,Construction of will,Whether commission should be deducted at end of limited period for trust fund or upon immediate receipt of money,Res Judicata,Where estate made party to action, beneficiaries bound by judgment or order obtained unless their interests not represented by trustees,Trusts,Trustees,All interested parties to be made parties to action,Construction of provision in previous proceedings,Whether beneficiary precluded from instituting proceedings raising issue of construction of provision on ground of res judicata,Provision for deduction of commission by trustees

Cur Adv Vult

This appeal arises from the order of court made by Chan Sek Keong J on 9 April 1992 in Originating Summons No 91 of 1990 by which he ordered the trustees of the estate of Seah Liang Seah, deceased (`testator`) to refund to the estate the commission deducted by the trustees on the award made in favour of the estate by the Collector of Land Revenue pursuant to the acquisition by the state of various properties belonging to the estate. The main issue in this appeal therefore is whether the trustees are entitled to receive the commission. The relevant provision in the will of the testator is cl 19 which provides:

I declare that my trustees shall be entitled to deduct commission at the rate of five per centum upon and from all moneys belonging to my estate collected or received by them personally or by agent and I direct that such commission shall be divided equally between and paid to such of the trustees of this my will as shall act as such provided always that any trustee of this my will who shall on account of ill health or other good reason (as to which the remaining trustees shall be judges) be incapable of acting in the trusts hereof shall be entitled to receive and be paid his share of the said commission notwithstanding that he shall not for the time being be acting as a trustee of this my will.

In Originating Summons No 55 of 1946 heard by Brown J in 1947, a number of questions had been posed on the interpretation to be given to various provisions in the will of the testator. One of these involved cl 19 and the question was: whether the trustees are entitled to retain a commission of 5% on the amount of the proceeds of sale of capital assets which are realized for the purpose of distribution to the persons beneficially entitled, and if they are not so entitled for an order fixing the amount of commission that they shall be entitled to retain on the proceeds of sale of the residuary estate and `son`s properties` as defined in the will.

It was argued before Brown J that cl 19 entitles the trustees to deduct a 5% commission only in respect of moneys of an income nature that comes into their hands and not moneys of a capital nature. In support of this argument, attention was drawn to cl 12 of the will where, upon a sale of the son`s properties, the trustees were specifically authorized to pay expenses `of and incidental to such sale and conversion and consequent thereon` without any mention of payment of any commission to the trustees from the proceeds of sale. It was argued on behalf of the trustees that the words `consequent thereon` in that phrase were not a mere repetition of the provision to pay expenses of and incidental to the sale but were in fact intended to cover the payment of the 5% commission under cl 19.

Brown J recognized that if cl 19 were to be construed as authorizing the trustees to retain 5% of moneys (whether of a capital or of an income nature) coming into their hands, it would have the effect of cutting down the clear gifts made in the will and that a court would not so construe cl 19 unless the words used were so clear and unambiguous as to leave no alternative. He could not see any ambiguity in the provisions of cl 19 and held that the trustees were entitled to retain a commission of 5% on the sale of capital assets.

In Originating Summons No 45 of 1981, the trustees applied to court to have the following two questions determined:

(1) Whether the trustees are entitled to deduct and be paid a commission of 5% from the supplementary award of the Collector of Land Revenue for the acquisition of the properties known as Government Resurvey Lots 204-4 and 204-13 of Town Subdivision XVII, Serangoon Road (`Bendemeer properties`) in the sum of $2,285,000 and interest thereon at 6%pa from 15 January 1964 to 10 August 1979 amounting to $2,135,000.80.

(2) In the event the answer to Question 1 is determined in the affirmative, which of the trustees are entitled to receive the said commission and in what proportion.

The matter came up for hearing before Lai Kew Chai J in 1981. Lai Kew Chai J held that the trustees were entitled to deduct and be paid a commission of 5% of the award made by the Collector of Land Revenue and on the interest thereon. On the second question, Lai Kew Chai J held that the 5% commission was to be shared equally between two (out of the three) trustees.

The application by Seah Peng Song in the present proceedings (Originating Summons No 91 of 1990) also relates to the same Bendemeer properties acquired by the government and dealt with in Originating Summons No 45 of 1981. By this action Seah Peng Song sought a ruling that the trustees were not entitled to 5% commission on compensation moneys received by them or on the interest thereon. He also sought a ruling that if the trustees were entitled to such commission, the commission should only be deducted at the end of the limited period from the entire trust fund and not on each occasion that compensation money is received by them.

Seah Peng Song, although not named as a defendant, had entered an appearance in Originating Summons No 45 of 1981 but otherwise took no active part in the proceedings. The trustees argued before Chan Sek Keong J that although Seah Peng Song had not been a party to Originating Summons No 45 of 1981, he had nevertheless been privy to the proceedings in the sense that as a derivative income beneficiary, his interests were represented by those representing the estate of Seah Eng Thye (his father), the first defendants in that action. It was submitted by the trustees that Seah Peng Song was precluded from instituting these proceedings, either because of res judicata or because of estoppel by acquiescence.

Res judicata

The reply by Mr TQ Lim, counsel for Seah Peng Song (who appeared as amicus curiae), on res judicata, was that Seah Peng Song was also a contingent corpus beneficiary under cl 7 of the will; whilst the trustees may have represented the interests of Seah Peng Song as a derivative income beneficiary they did not represent him in his capacity as contingent corpus beneficiary; indeed the interests of the entire class of contingent corpus beneficiaries were unrepresented before Lai Kew Chai J with the result that Seah Peng Song, so far as that interest was concerned, was not a party or privy to Originating Summons No 45 of 1981. The learned trial judge accepted this reply.

Counsel for the trustees, Mr Wu, in challenging this decision of the learned trial judge drew our attention to O 80 r 2(2) and O 15 r 14(1) of the Rules of the Supreme Court (Cap 322, R 5)(`the RSC`) and submitted that, in the light of those provisions, it is not necessary, in instituting administration proceedings, to bring in every conceivable party. Mr Wu submitted that at all times the trustees of an estate were proxies in law of the interests of the beneficiaries of that estate. Where the trustees had been made parties it would not be necessary to make the beneficiaries parties as well. Mr Wu submitted that in Originating Summons No 45 of 1981 all beneficiaries were parties to the action either directly, or as beneficiaries under their father`s estate, or (in the case of infants) through their fathers, or (in the case of beneficiaries yet to be born) by the then trustees of the will. It was therefore not necessary for the trustees to have sought to appoint someone to separately represent the interests of the contingent corpus beneficiaries. Mr Wu submitted, on the authority of Re Whiting`s Settlement 1 that, in any event, in so far as beneficiaries yet unborn were concerned, an order for representation could not be obtained. Mr Wu submitted that as the estate of Seah Eng Thye was a defendant in Originating Summons No 45 of 1981, Seah Peng Song, as a beneficiary of that estate, was in law privy to the proceedings. He further submitted that as every income beneficiary was necessarily also a contingent corpus beneficiary, it was not open to any beneficiary to say that the position he took before Lai Kew Chai J was in his capacity as income beneficiary and not in his capacity as contingent corpus beneficiary.

The provisions of the RSC, referred to by Mr Wu do not do away with the need for all interested parties to be made parties to the action. It is incumbent on the plaintiff to make such persons parties as having regard to the nature of the relief or remedy claimed in the action, should properly be parties. In Originating Summons No 45 of 1981, the trustees had not made the beneficiaries under the estate of Seah Eng Thye parties but had made the estate itself a party. This is permissible under O 15 r 14(1) and any judgment or order obtained is binding on the beneficiaries; but this rule is subject to the proviso contained in the rule that the court in those proceedings or a court in some other proceedings can order otherwise on the grounds that the trustees could not or did not in fact represent the interests of these persons. That is precisely what the learned trial judge did in this case - he found that the trustees of the estate of Seah Eng Thye did not in Originating Summons No 45 of 1981 represent the interest of Seah Peng Song as a contingent corpus beneficiary. That being so, the learned trial judge held that Lai Kew Chai J`s ruling could not bind Seah Peng Song.

The interests of the contingent corpus beneficiaries arise from cl 7 of the will of the testator. Clause 7 provides, in effect, as follows:

I declare that my trustees shall stand possessed of ... the Bendemeer estate ... upon trust to hold and manage the same for ... (the limited period) and immediately before the expiration thereof upon trust as to the Bendemeer estate and Chin Choon Plantation to sell the same ... and after payment of the costs and expenses of and incidental to such sale out of the proceeds thereof to divide the residue of such proceeds equally between such of the sons, grandsons and

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