Uvh v Uvj

• Jurisdiction: Singapore
• Judge: Valerie Thean J
• Judgment Date: 15 October 2019
• Court: High Court (Singapore)
• Docket Number: Suit No 6 of 2016 (Taking of Accounts or Inquiries No 1 of 2017)
• Date: 15 October 2019

UVH and another

and

UVJ and others

[2019] SGHCF 22

Valerie Thean J

Suit No 6 of 2016 (Taking of Accounts or Inquiries No 1 of 2017)

High Court (Family Division)

Civil Procedure — Damages — Interest — Beneficiaries seeking account against executors of late father's estate — Executors alleging beneficiaries had commenced action with unreasonable delay — Beneficiaries deciding not to testify — Whether pre-judgment interest should run from date of writ or dates when causes of action arose — Whether to award pre-judgment interest at default rate — Section 12(1) Civil Law Act (Cap 43, 1999 Rev Ed)

Civil Procedure — Damages — Interest — Beneficiaries seeking account against executors of late father's estate — Whether pre-judgment interest accrued on account of profits

Held, ordering pre-judgment interest on the Judgment Sum to commence from the date of the writ at 5.33% until its payment:

(1) Pre-judgment interest accrued on the Judgment Sum. The Brothers' position that pre-judgment interest did not accrue on the account of profits as the Estate would not have been entitled to the directors' remuneration, or that the remuneration sums were not moneys that belonged to the Estate, was not supported by precedent. As a matter of principle, the Estate was entitled to the unauthorised profits received by the Brothers at the date the Brothers received the profits. Accordingly, the Estate was kept out of money owed to it at the date that the Brothers' profits accrued, and interest could therefore be ordered: at [15], [17], [19] and [21].

(2) The general rule was that claimants who had been kept out of pocket without basis should be able to recover interest on money that was found to have been owed to them from the date of their entitlement until the date it was paid. However, the court had the discretion to depart from this general rule where there was unreasonable delay in commencing the action. In the present case, the Sisters would have been aware that the Brothers were alleging that there was unwarranted delay in commencing the action. As the Sisters chose not to call evidence of their own, the Brothers did not have the opportunity to cross-examine the Sisters on when they knew about their status as beneficiaries of the Estate or their reasons for not taking action earlier. Their late father's death was known to them and their not having taken action despite an expectation of inheritance required explanation. While this did not have a bearing on the taking of the accounts, such a finding would be material in determining whether there was unreasonable delay in commencing the action. Pre-judgment interest on the Judgment Sum was thus ordered to commence from the date of the writ: at [26], [27], [30] and [31].

(3) There was no reason to deviate from the default rate of interest at 5.33% per annum. Although the Brothers contended that the moneys would have lain fallow in the Estate's account even if they had come into the account, the court was entitled to assume otherwise. The Brothers' foremost duty was to act in the best interests of the beneficiaries, and a fiduciary was precluded from setting up a case inconsistent with the obligations of his fiduciary position: at [32] and [36].

Case(s) referred to

AG for Hong Kong v Charles Warwick Reid [1994] 1 AC 324; [1993] 3 WLR 1143 (refd)

Cochrane v Black (1855) 17 D 321 (refd)

Commonwealth of Australia, The v SCI Operations Pty Ltd [1998] 192 CLR 285 (refd)

Diplock, Re [1948] Ch 465 (refd)

FHR European Ventures LLP v Cedar Capital Partners LLC [2015] AC 250; [2014] 3 WLR 535 (refd)

Grains and Industrial Products Trading Pte Ltd v Bank of India [2016] 3 SLR 1308 (folld)

Guy Neale v Nine Squares Pty Ltd [2015] 1 SLR 1097 (folld)

Jones v Foxall (1852) 15 Beav 388 (refd)

Kettle Chip Company Pty Ltd v Apand Pty Ltd (No 2) (1998) 83 FCR 466 (refd)

Lakshmi Prataprai Bhojwani v Moti Harkishindas Bhojwani [2019] 3 SLR 356 (refd)

Lalwani Ashok Bherumal v Lalwani Shalini Gobind [2019] 4 SLR 1304 (refd)

LED Builders Pty Ltd v Eagle Homes Pty Ltd [1999] FCA 584 (refd)

Lehman Bros (in administration) (No 8), Re, Lomas v Revenue and Customs Commissioners [2019] 1 WLR 2173 (refd)

Libertarian Investments Ltd v Thomas Alexej Hall [2013] HKCFA 93 (refd)

Malaysian International Trading Corp Sdn Bhd v Interamerica Asia Pte Ltd [2002] 2 SLR(R) 896; [2002] 4 SLR 537 (refd)

Ong Teck Soon v Ong Teck Seng [2017] 4 SLR 819 (distd)

Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134 (refd)

Robertson Quay Investment Pte Ltd v Steen Consultants Pte Ltd [2008] 2 SLR(R) 623; [2008] 2 SLR 623 (refd)

Thahir Kartika Ratna v PT Pertambangan Minyak dan Gas Bumi Negara (Pertamina) [1994] 3 SLR(R) 312; [1994] 3 SLR 257 (refd)

Facts

Two Sisters (“the Sisters”) sought an account against their three brothers (“the Brothers”), who were the executors of their late father's estate (“the Estate”). The Sisters contended that the Brothers had breached their fiduciary duties in their capacity as executors of the Estate.

The Estate had a sizeable real estate portfolio which was held through four private companies (“the Companies”). The Estate had various shareholdings in the Companies. The Brothers were directors in the Companies and held shares in their own names.

The High Court granted the Sisters' summary application for an account to be taken of the Estate on a wilful default basis. Following the taking of accounts, the High Court ordered the following remedies: (a) an account of profits for the directors' remuneration received by the Brothers from the Companies throughout the accounting period, on the basis that they had failed to disclose their conflict of interest; (b) a surcharge on the Estate's account for the benefits-in-kind enjoyed by the first defendant and the second defendant from renting properties belonging to the Companies below market value; and (c) a falsification of the legal fees which were incurred in prior legal proceedings taken out by the Brothers' half-siblings against them, as they were not reasonably incurred (collectively, “the Judgment Sum”).

The Sisters' position was that pre-judgment interest ought to accrue on the Judgment Sum at the default rate of 5.33% per annum (as stated in para 117(5) of the Family Justice Court Practice Directions dated 1 January 2015). To the contrary, the Brothers submitted that no pre-judgment interest ought to be payable on the Judgment Sum. In any case, even if pre-judgment interest were to be ordered, an interest rate of 1.5% was more appropriate.

Legislation referred to

Civil Law Act (Cap 43, 1999 Rev Ed) s 12(1) (consd)

Family Justice Rules 2014 (S 813/2014) r 590(1)

Rules of Court (Cap 322, R 5, 2014 Rev Ed) O 38 r 2(1)

Philip Antony Jeyaretnam SC and Chua Weilin (Dentons Rodyk & Davidson LLP) for the plaintiffs;

N Sreenivasan SC and Lim Shu Fen (K&L Gates Straits Law LLC) for the first to third defendants;

Deborah Evaline Barker SC (Withers KhattarWong LLP) for the fourth to sixth defendants.

15 October 2019

Valerie Thean J:

Introduction

1 In Suit No 6 of 2016, two sisters (“the Sisters”) sought an account against their three brothers (“the Brothers”), the first to third defendants who were the executors of their late father's estate (the “Estate”). My decision in the taking of the accounts is detailed in UVH and another v UVJ and others[2019] SGHCF 14 (“UVH”). The Brothers have since appealed against my decision by way of Civil Appeal No 127 of 2019.

2 These grounds of decision deal with the pre-judgment interest ordered against the Brothers subsequently. On 18 July 2019, counsel agreed they would write in with submissions, and I would deal with the matter by way of a letter. I so did on 16 August 2019, holding that pre-judgment interest on the previously ordered sums should commence from the date of the writ at 5.33% per annum. It is this holding that forms the subject matter of the Sisters' appeal in Civil Appeal No 172 of 2019. I now give my reasons for that decision.

Background

3 The facts pertinent to the suit and taking of accounts were set out in UVH. I therefore only refer here to the facts material to these supplemental grounds, which are as follows.

4 The testator passed away on 30 May 1997. In his will, he appointed the Brothers as the executors of his Estate. Grant of probate was issued on 4 September 2000. Clause 3 of the will devised all of the testator's real and personal property to his wife and the siblings. In particular, the Estate had a sizeable real estate portfolio held through four private companies (“the Companies”) in which the Brothers were directors. The Estate had various shareholdings in the Companies (UVH at [2] and [7]).

5 The suit was commenced by the Sisters on 25 July 2016. This was followed by a summary application for an account to be taken of the Estate on a wilful default basis. On 10 April 2017, I granted the order and highlighted at least two breaches of the Brothers' fiduciary duties: the failure of the Brothers to furnish any account for some 19 years, and the...