Judgment

KC Lai J

1. By three orders made on 29 October 1980 under originating motions bearing Nos 69, 70 and 71 of 1978, D’Cotta J ordered respectively the discharge of the injunctions upon and the transfers of 63,000 shares in United Overseas Bank Ltd 49,400 shares in Overseas Union Bank Ltd and 251,700 shares in Overseas Chinese Banking Corp Ltd to the executors of the estate of Lee Wee Nam, deceased (the Wee Nam estate). Against these decisions, the appellants have brought these appeals under civil appeals Nos 94, 95 and 96 of 1980. These appeals may be conveniently dealt with together as one set of appeals.

2. By three orders also made on the same day in the same originating motions, D’Cotta J also ordered respectively the discharge of the injunctions upon and the transfers of 28,000 shares in United Overseas Bank Ltd 22,000 shares in Overseas Union Bank Ltd and 112,000 shares in Overseas Chinese Banking, Corp Ltd to Lee Hiok Kwee and Lee Hiok Kher in equal shares and in their capacity as the beneficiaries of the residuary estate of Lee Wee Kheng, deceased (the Wee Kheng estate). They were also at all material times the executors and trustees of the Wee Kheng estate. Against these orders, the appellants have brought the appeals under civil appeal Nos 97, 98 and 99 of 1980. As the factual matrices and procedural background of all six appeals are somewhat identical, all six appeals were heard together and are dealt with together in this judgment.

3. The appellants are the sons and grandsons of the late Lee Wee Kheng. They reside in Thailand. They are collectively entitled to 60% of the residuary estate of the Wee Kheng estate. The other 40% of the residuary estate was bequeathed to the executors of the Wee Kheng estate personally in equal shares.

4. By an agreement in Chinese dated 31 January 1927 (hereinafter referred to as the partnership agreement) Lee Wee Kheng, Lee Wee Nam and Lee Wee Kiat, who were brothers, entered into a partnership to manage the moneylending and other businesses and the properties mentioned therein upon the terms and conditions therein set out under the style and firm name of Wee Kee Kongsi (the firm). The partnership agreement provided (inter alia) as follows:

   (a)	That the capital assets and profits of the firm should be held by and belong to the following in the shares set out against their respective names: Lee Wee Kheng ..  ..  .. 4 shares Lee Wee Nam ..  ..  .. 4 shares Lee Wee Kiat ..  ..  .. 3 shares Sze Teck Tng Chye Kee ..  ..  .. 2 shares
   (b)	That in 1927 the three brothers had ‘agreed to amalgamate’ their assets and businesses under the Firm with its place of business at No 17 New Bridge Road, Singapore, and that the assets and businesses were described in 22 items set out in the partnership agreement.

5. Lee Wee Kiat died on 6 May 1927 and his estate on 22 October 1940 withdrew from the Firm. After the withdrawal, the assets and profits of the Firm were from 22 October 1940 held in the following shares:

   Lee Wee Kheng	:	9/21 shares
   Lee Wee Nam	:	8/21 shares
   Sze Teck Tng Chye Kee	:	4/21 shares

6. For the purpose of these appeals, it has been considered by all parties that it is unnecessary to determine the nature and beneficial owners of the entity described as ‘Sze Teck Tng Chye Kee’.

7. Lee Wee Kheng died on 18 July 1962. By his will made on 12 December 1961 he appointed Lee Hiok Kwee and Lee Hiok Kher to be the executors and trustees thereof. The testator directed that distribution shall take place five years from his death. Probate of the will of Lee Wee Kheng was granted on 17 September 1962 in probate No 519 of 1962 but the said grant of probate was extracted only on 3 April 1975.

8. Lee Wee Nam managed the firm in the lifetime of Lee Wee Kheng. He continued to do so after the death of Lee Wee Kheng. Lee Wee Nam died on 22 January 1964. By his will dated 2 March 1961 he appointed the respondents in Civil Appeal Nos 94, 95 and 96 of 1980 as the executors and trustees. There was some 11 years’ delay in extracting the grant of probate. Although probate was granted on 30 April 1964 the said grant of probate was extracted only on 20 August 1975.

9. After the death of Lee Wee Nam, the executors of the Wee Nam estate took over the management of the firm. They have disclosed that the firm beneficially owned shares in four insurance companies and two firms and also the following shares in three banks which are public companies listed on the Stock Exchange of Singapore:

   1. As at 12 June 1976, 1,261,980 shares of $1 each in Overseas Chinese Banking Corp Ltd;

   2. As at 17 January 1977, 1,067,220 shares of $1 each in United Overseas Bank Ltd; and

   3. As at 12 September 1978, 224,200 shares of $1 each in Overseas Union Bank Ltd.

   All the shares were registered in the name of the estate of Lee Wee Nam as trustee for and on behalf of the Firm.

10. By 1973 the Wee Kheng estate was not even administered. The appellants made the following specific complaints. The executors of the estate had not ascertained the assets. They had not get in the assets. They did not account to the appellants who are the beneficiaries. They were not ready with full and complete information on the estate which it was their duty to obtain and provide. They have not distributed the estate, although they accepted the office 19 years ago. This unsatisfactory state of affairs prompted the appellants, as they alleged, to commence an administration action in these courts under suit no 1401 of 1973. Although the appellants have yet to receive the accounts ordered as early as 26 October 1973 by Choor Singh J, the suit at least compelled the executors of Wee Kheng estate to settle and pay for the estate duty, the delay of which, the appellants alleged, has caused loss to the Estate which had to pay to the Commissioner of Estate Duties the sum of $150,155.08 by way of additional levies. The appellants have also alleged that the executors of the Wee Kheng estate had converted to their own use the sum of $100,000 which Lee Wee Kheng had given to them in his lifetime for the purpose of paying for funeral expenses and estate duty. They also allege that they had converted to their own use the sum of $200,000 cash belonging to the Wee Kheng estate which the executors of the Wee Kheng estate had taken from a safe deposit box in a bank.

11. As against the Wee Nam estate, the appellants have asserted that Lee Wee Nam in his lifetime and after the death of Lee Wee Kheng had intermeddled and assumed dominion over the assets of the Wee Kheng estate. The executors of the Wee Nam Estate continued to manage the Firm after the death of Lee Wee Nam. The appellants therefore contend that the executors of the Wee Kheng Estate as well as the estate of Wee Nam have been and are trustees and executors de son tort and, in those capacities, they owe fiduciary duties to the appellants. The appellants also contend that both sets of executors had been guilty of serious and persistent breaches of their fiduciary duties and are accordingly liable to damages, accounts and to disgorge all assets and profits which may be traced as owned beneficially by the Wee Kheng estate.

12. The appellants have also claimed that Lee Wee Nam after the death of Lee Wee Kheng had concealed and converted a large number of the shares and landed properties of the firm. These assets, they claim, were secretly transferred to two Lee Wee Nam family companies. They allege that $3,034,700 and $100,000 which belonged to the firm were wrongfully converted and capitalised in Lee Hiok Kee Pte Ltd and Lee Investments Pte Ltd which were engaged in the same lines of business as those of the firm. The shareholders of both companies are descendants of Lee Wee Nam.

13. These allegations were made by the appellants against the trustees of the Wee Kheng estate in suit 1401 of 1973. But the executors of the Wee Nam estate are not parties to those proceedings. Since the orders made by D’Cotta J, against which these appeals are brought, the appellants have commenced proceedings against the executors of both the estates in suit no 2457 of 1981 under which the allegations should be dealt with and finally disposed of.

14. In these appeals, we ought not and we are not making any findings on the merits or otherwise of the allegations we have mentioned. But for the purposes of these appeals, it is sufficient to say that the allegations against the trustees of both estates are of a very serious character. It is without doubt that the administration of the Wee Kheng estate has taken far too long. It is also not in controversy that Lee Wee Nam in his lifetime and the executors of the Wee Nam estate have been managing and have been exercising dominion over the assets of the firm.

15. Towards the end of 1978 the assets of the firm which included substantial shares in three banks were still registered in the name of the Wee Nam estate. This situation was unacceptable to the appellants. They set out to restrain any dealings of those shares. Later, they also sought an interim distribution to themselves of the shares to which they were entitled.

16. By three orders made in originating motions 69, 70 and 71 of 1980 and on the applications of the appellants, the United Overseas Bank Ltd, the Overseas Union Bank Ltd and the Overseas Chinese Banking Corp Ltd were respectively restrained until further orders from permitting the transfers of the aforesaid 1,067,220 shares, 244,200 shares and 1,261,980 shares. Those shares were registered in the name of the Wee Nam estate. But they were beneficially owned by the firm. The applications were made under O 50 sub-r 14(1) of the Rules of the Supreme Court, 1970. The appellants claimed as beneficiaries of the Wee Kheng estate which was entitled to 9/21 shares of the assets of the Firm. The orders were made on 1 December 1978.

17. By an order made by the Honourable CJ in Suit No 1401 of 1973 the executors of the Wee Kheng estate were ordered to take immediate steps to obtain the share certificates and duly executed transfer forms in respect of half of some undisputed shares in the three banks which were admittedly owned by the Wee Kheng estate and distribute them to each of the appellants according to their respective entitlement. In effect, the appellants obtained an interim distribution of 42,600 shares in United Overseas Bank Ltd, 33,600 shares in Overseas Union Bank Ltd and 169,800 shares in Overseas Chinese Banking Corp Ltd. After some delay which the appellants say was due to the delaying tactics of the executors of the Wee Kheng estate, the appellants finally received the shares in the proportions of their respective entitlements as beneficiaries of the Wee Kheng estate. After the order was obtained, the appellants applied as a matter of formality for the partial discharge of the injunctions obtained by them under the aforesaid three originating motions.

18. Seeing that the appellants had obtained in effect an interim distribution of the assets of the Wee Kheng estate in the firm, the executors of the Wee Nam estate also made three applications under the three originating motions for the release and delivery up to the estate of a proportionate number of the shares in the three banks from the injunctions made on 1 December 1978. Similarly, the executors of the Wee Kheng estate also made three applications under the three originating motions for the release and delivery up of the proportionate number of shares in the three banks to themselves equally as beneficiaries of the Wee Kheng estate. On 29 October 1980 D’Cotta J made six orders in terms of the applications which in effect also ordered interim distribution of the shares in the three banks to the Wee Nam estate and the executors of the Wee Kheng estate in their personal capacities as beneficiaries of the Wee Kheng estate. The orders were made presumably on the footing that since the Wee Nam estate and the executors of the Wee Kheng estate were in the same position as the appellants, they were also entitled to the partial discharge of the injunction to enable them to receive their respective proportions of the shares in the three banks.

19. In these appeals, it was canvassed on behalf of the appellants and we accept the contention that all the respondents in these appeals are not in the same position as the appellants. So far as the executors of the Wee Kheng estate are concerned, they are trustees as well as beneficiaries. As far as the Wee Nam estate and its personal representatives are concerned, the position is this. Having intermeddled in the assets of the firm and having asserted dominion over the bank shares of the firm, the estate of Wee Nam and the executors of the Wee Nam estate were trustees of the appellants to whom they owe fiduciary duties. Erskine CJ in Re James Seaber (1837) 3 Cases in Bankruptcy 207, 211; 6 LJ Bcy 49 said:

    It is a clear rule in equity, that where a party is found in possession of, and exercising dominion over, trust property, knowing it to be so – unless he can show some other character, to which his act can be properly referred, – he is always held responsible to the cestuis que trust, in the same manner as if he had been duly appointed a trustee, in respect of the property over which he has assumed the dominion.

20. We also accept the appellants’ contention that a trustee/beneficiary cannot obtain an interim distribution of the trust fund until the final disposal of the serious claims made against him. The facts in these appeals bear a striking resemblance to those which arose in Re Rhodesia Goldfields Ltd [1910] 1 Ch 239. The question which fell for determination was whether upon payment out of court to the debenture stockholders of the amounts owing to them upon a distribution of the funds realised in the action the court ought to retain for the time being the amounts appearing to be due to one Partridge. Partridge was a director of the company. He was also one of the trustees of the debenture stockholders. There were serious claims against him in pending proceedings, which included moneys actually belonging to the company. The claims were disputed and would have to, be established. Swinfen Eady J refused to make the distribution. He set out the principle at p 247 which we would respectfully follow:

    In my judgment the rule is of general application that where an estate is being administered by the court, or where a fund is being distributed, a party cannot take anything out of the fund until he has made good what he owes to the fund. It is immaterial whether the amount is actually ascertained or not. If it is not actually ascertained it must be ascertained in order that the rights of the parties may be adjusted, and it would be a strange travesty of equity to hold that in distributing the fund Partridge was entitled to be paid at once all that was due to him out of the company’s money, and subsequently to find, after it had been established that he owed money to the fund, that the amount could not be recovered from him.

21. We accordingly allow the appeals with costs here and below. The orders made by D’Cotta J on 29 October 1980 are set aside.

Cases

James Seaber v Re [1837] 3 Cases 207; 6 LJ Bcy 49; Rhodesia Goldfields, Re [1910] 1 Ch 239

Legislations

Rules of the Supreme Court 1970: Ord.50 r 14(1)

Representations

Michael Anthony Bowes Burke-Gaffrey QC and B Mohan Singh (B Mohan Singh & Co) for the appellants.

YH Cheong (Goh Chong & Goh) for the respondents (CA Nos 94, 95 and 96 of 1980).

Mary de Souza (JB Jeyaretnam & Co) for the respondents (CA Nos 97, 98 and 99 of 1980).