Shih Shin Wang-Liu and Another v Tsai Pei Lun Betty alias Tsai Pei Loon and Another

• Jurisdiction: Singapore
• Judge: Judith Prakash J
• Judgment Date: 31 October 2006
• Neutral Citation: [2006] SGHC 196
• Court: High Court (Singapore)
• Published date: 02 November 2006
• Year: 2006
• Plaintiff Counsel: Kee Lay Lian and Chou Tzu (Rajah & Tann)
• Defendant Counsel: Mohamed Gul (Gul & Robert) and Tan Aye Cheng (Aye Cheng & Grace)
• Citation: [2006] SGHC 196

31 October 2006 Judgment reserved.

Judith Prakash J:

1 This case arises, sadly, from an all too common story of a family fighting over money. Specifically, the question is whether moneys in a Singapore bank account held in the name of a deceased person, one Stanley Tsay-Shing Kim also known as Shih Tsay-Shing (“Stanley”), belonged beneficially to him so that they should be distributed as part of his estate or whether Stanley was holding those moneys on trust for his natural parents.

Background

2 There are two plaintiffs in this action. The first plaintiff is Mrs Shih Shin Wang-Liu (“Mrs Shih”) and the second plaintiff is described as “Estate of Shih Shui-Mu, Deceased”. Shih Shui-Mu (“SSM”) was Mrs Shih’s husband and together they (“the Shihs”) owned a family business in Taiwan known as Fonen and Fonher Enterprise Co Ltd (“the company”). They had four children, one of whom was Stanley who was born on 14 November 1966 in Taiwan. Stanley married Betty Tsai Pei Lun alias Tsai Pei Loon (“Ms Tsai”) in October 2002 and she is the defendant in this action, both in her personal capacity and as the administratrix of his estate.

3 The undisputed facts are that in 1981 when Stanley was 14 years old, his parents took him to the US. He was taken to live with a couple named Billy Ching-Soo Kim and Betty Gum-Shan Kim (“the Kims”) whose daughter was then engaged to Stanley’s elder brother. Subsequently, in November 1982, the Kims formally and legally adopted Stanley. By virtue of his adoption, Stanley became a citizen of the US. I should mention here that since Stanley’s death, the legality and validity of the adoption has been challenged by Mrs Shih apparently on the ground that at the time she signed the adoption papers, she was not aware of their true nature and thought that they were guardianship papers required to allow Stanley to live and study in the US.

4 In 1990, when Stanley had completed his studies in the US, he returned to Taiwan and went to work for the company. Some time in 1999, he met Ms Tsai. At that time, Stanley was living with Mrs Shih and SSM in their family home in Tainan, Taiwan. He was then working for the company in its sales department. Subsequently, Stanley moved into Ms Tsai’s home in Taipei, Taiwan. There was a dispute as to whether he continued to work for the company thereafter. Ms Tsai’s version was that he stayed home since he saw no need to work for a living as he had money collected from the rent of his properties in the US and received maintenance from Mrs Shih who also paid his credit card bills. The plaintiffs’ version was that Stanley continued to be employed by the company until his death. Stanley died on 9 January 2004 of a heart attack sustained whilst he and Ms Tsai were on holiday in Japan. His father, SSM, died some two months later.

5 Stanley died intestate. According to Ms Tsai, his administratrix, he had the following assets at the time of his death:

(a) In the US

(i) two residential real properties and one mixed-use real property with appraised values totalling US$7,273,000;

(ii) cash in bank – US$11,351; and

(iii) rent income – US$23,650.

(b) In Taiwan

(i) cash in bank – NT$357,328;

(ii) Fonyuo Enterprise Company Ltd – 2,747,000 shares totalling NT$48,852,098;

(iii) Fonen and Fonher Enterprise Co. Ltd – 6,354,120 shares totalling NT$94,514,357

(c) In Singapore

US$1,726,958 in an account with UBS AG Singapore Branch (“the UBS account”)

Ms Tsai estimated the total gross value of Stanley’s estate, before deduction of outstanding liabilities, as being US$13,306,096. The properties in the US were subject to mortgages but she did not disclose the outstanding amounts due in respect of these mortgages. According to Ms Tsai, she and the Kims were the beneficiaries of Stanley’s estate.

6 After Stanley’s death, the parties became embroiled in several law suits. First, Ms Tsai took out a probate action in Probate No RP04169270 in Alameda County California Superior Court (“the US Suit”) naming herself and the Kims as the beneficiaries of Stanley’s US estate. The plaintiffs in this action or their representatives intervened in the US Suit on the basis that Ms Tsai had failed to give them notice of the US Suit as she should have done as they were also beneficiaries and entitled to inherit Stanley’s estate. They raised various issues in the US Suit including issues of jurisdiction and the validity of Stanley’s adoption. The US Suit is pending. Second, an application for probate was taken out in the San Francisco Superior Court under Probate No PES-04-286815. That suit is also pending. Third, there were some proceedings in Taiwan that resulted in a decision by a Taiwanese court in December 2005 that the adoption of Stanley by the Kims was null and void and that the Shihs were his legal parents.

The action

7 This action concerns first, the ownership of the moneys in the UBS account and secondly, whether the plaintiffs can recover a sum of US$100,000 that Stanley gave to Ms Tsai in February 2003 out of the moneys then in the UBS account. The UBS account was opened sometime in February 1998. The plaintiffs contend that they were the source of all funds in the UBS account and that Stanley held those moneys on trust for them pursuant to a family arrangement whereby he would invest funds that the plaintiffs transferred to him from time to time. Ms Tsai agreed that on four occasions, Mrs Shih and SSM had transferred moneys from accounts they held with UBS AG London branch (“the London accounts”), into the UBS account. She maintained that these moneys were transferred solely for Stanley’s benefit and own personal investment and were monetary gifts to Stanley.

8 As at the end of the trial, the parties’ written submissions have covered much ground and there have been contentions as to the validity of certain of the arguments on the basis that these points raised were not pleaded, I think it would be helpful to state the parties’ pleadings in some detail. In that way, it would be easier to ascertain what exactly was in issue and what each party had to prove and was entitled to say in the course of making that proof.

Statement of claim

9 This action was started in July 2004 but the statement of claim was amended thereafter and took its final form in July 2005. It is stated in para 1 that the claim is made against the defendants on the basis that Ms Tsai is the administratrix of Stanley’s estate and is also, in her personal capacity, the recipient of funds paid out to her by Stanley in breach of his fiduciary duty as trustee of the plaintiffs. It should be noted that in para 3, it is stated that Mrs Shih has brought the action in her personal capacity and also as the representative of the estate of the second plaintiff.

10 Paragraph 2 of the statement of claim is significant. It states that Stanley was the biological son of Mrs Shih and SSM and was effectively treated as their lawful child during his lifetime. As far as they were concerned, at all material times, Stanley was their lawful youngest child and they maintained him as such. During his lifetime, Stanley and Ms Tsai also treated the Shihs as Stanley’s lawful parents.

11 Paragraphs 5 to 10 set out the alleged financial arrangements between the Shihs and their children. To summarise, it is averred that by a family arrangement, the Shihs authorised their children, including Stanley, to operate the Shihs’ bank accounts so that the children would, on Mrs Shih’s instructions and with her consent, remit money as directed by Mrs Shih for the purposes of investment. Such moneys sent to the children’s bank accounts belonged to the contributors, ie, SSM and Mrs Shih respectively and the children would hold the moneys on trust and only have permission to utilise the funds on behalf of the Shihs for investment in low-risk investments. The four children were thus entrusted to help Mrs Shih invest the family’s money from time to time. In para 8, the plaintiffs plead that in the alternative, a common intention is to be inferred that Stanley should hold the money transferred from the London accounts to the UBS account upon trust for the Shihs. Further, even though the Shihs allowed the children to hold the moneys on trust, there was a clear understanding and/or an oral agreement between the children and the Shihs that the funds belonged solely to the Shihs.

12 In para 12, it is averred, inter alia, that between 1992 and 1997, the Shihs had remitted more than US$5.1m and ¥51m to Stanley for him to invest into US properties on their behalf. He used these funds to purchase properties costing a total of about US$3.9m and would thereafter have held a balance of about US$1m in cash in trust for the Shihs. By para 13, it is alleged that the money in the UBS account, except for the moneys transferred from the London accounts, came from the remittances made to Stanley for the purpose of making investments in the US.

13 Paragraphs 14, 15 and 16 contain the details of the moneys sent to the UBS account from the London accounts. There were two such accounts, one in Mrs Shih’s name and the other in SSM’s name. For the purposes of making investments, Stanley was authorised to withdraw moneys from the London accounts and deposit them into the UBS account. Pursuant to this authority, Stanley arranged for four sums of money totalling US$1,522.647.67 to be transferred from the London accounts into the UBS account on various dates between 15 June 2000 and 8 January 2003. Stanley’s authority to effect these transfers was only for the purpose of investing the moneys for and on behalf of the Shihs. Details of the remittances were given showing that three of these came from SSM’s account.

14 The claims are contained in paras 18 to 23. By para 18, the plaintiffs aver that the moneys transferred from the London accounts have to date not been repaid to them. By para 19, they make a claim for the return of the four sums of money transferred from the London accounts...