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[1988] Part 3 Case 10 [HC,S'pore] |
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www.ipsofactoJ.com/archive/index.htm
[1988] Part 3 Case 10 [HC,S'pore] |
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HIGH COURT OF SINGAPORE |
Hong Kong Trustee (S) Ltd
- vs -
Tan Farrer
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Coram SK CHAN JC |
19 JANUARY 1988 |
Judgment
SK Chan JC
Clause 11 of the will of Ho Sok Choo Neo made on 22 December 1930 provided as follows:
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I give and devise unto my trustees my plantation in Holland Road Singapore wherein my father the late Ho Yang Moh deceased was buried together with the temple and other buildings erected thereon and also together with the sum of Dollars Ten thousand ($10,000) in cash such land forming the plantation and such cash to be held by them upon the following trusts, namely:
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By cl 21 of her will, the testatrix declared that ‘if any legacies or bequests hereinbefore contained shall fail for any reason whatsoever then the property thereby devised or bequeathed shall fall into and form part of my residuary estate’.
The testatrix died on 18 September 1931 and left surviving her two natural sons, viz Edward Tan Tat Min and Farrer Tan Kong Min. Probate of her will was granted to the executors named therein on 6 November 1931. On 15 March 1974, the plaintiffs were appointed the sole trustee in substitution for and in place of the former trustees.
The land comprising the plantation mentioned in cl 11 of the will and on which was situated the temple, the buildings and the graves was compulsorily acquired by the government on 14 February 1980. In consequence, the purposes of the trust created by cl 11 became impossible of performance when the government resumed ownership of the said land.
The trust fund now consists of investments in stocks and shares and in cash. As at 17 August 1987, the capital value of the fund was approximately $1,816,000 and the total accrued income was approximately $286,000.
The plaintiffs/trustees, being in doubt as to how the trust fund should be continued to be applied, have now taken out this application for the determination by the court of the following questions:
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(1) |
Whether, upon the true construction of cl 11 of the said will and the events which have happened, the trust has failed. |
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(2) |
Whether, upon the true construction of cl 11 of the said will and the events which have happened,
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(3) |
That if the answer to question 2 above be in terms of sub-para (i), that it may be determined whether the trustee should distribute both the capital and the income of the trust fund:
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(4) |
That if the answer to question 2 above be in terms of sub-para (ii), that it may be determined whether the income of the trust should be:
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The male descendants of the testatrix alive at the date of this application are her son, Farrer Tan Kong Min, his sons, Christopher Man Hsien Tan and Jonathan Man Sui Tan, her grandson Peter Tan Man Fui (son of Edward Tan Tat Min, deceased), her great grandson, Edwin Tan Tsun Wing (son of Peter Tan) and they are respectively the first, second, third, fourth and fifth defendants herein.
The sixth defendant, Chye Cheng Tan, an advocate and solicitor, was appointed on 23 January 1987 by order of court in place of LAJ Smith (who died on 5November 1986) to represent the interests of the male descendants not yet born of the testatrix, who would be entitled to benefit under cl 11 if the trust expired by the natural effluxion of time.
At the outset of the hearing, counsel for the plaintiff made an application that the estate of Edward Tan, deceased, be separately represented by counsel. The application was supported by counsel for the first defendant on the ground that if the income or the capital of the trust fund were to go to the next of kin or into the residuary estate under the will, his interest would be affected. The application was also supported by the sixth defendant on the ground that otherwise any decision of the court would not be binding on him. I made no order on the application as I was of the view that the interest of the estate of Edward Tan in the trust fund was indirectly represented and therefore sufficiently protected either by the representation in these proceedings of the brother, the first defendant, or the son, the fourth defendant. Also, I was not inclined to accept the argument that any decision of the court would not be binding on the estate of Edward Tan as a sufficient ground for appointing separate counsel.
The submissions of counsel for the parties are summarized below.
Counsel for the plaintiffs quite properly took a neutral stance in these proceedings, but nevertheless made the following submissions in order to assist the court:
the trust declared by cl 11 was valid as it did not infringe the rule against perpetuities or the rule relating to accumulations;
the object of the trust having failed, the income falls into residue under cl 21 to be distributed in accordance with its terms but the capital must be kept intact until the royal lives period prescribed in cl 11, i.e. 20 years after the death of the last descendant of His Majesty George V living at 18 September 1931 (the trust period);
the doctrine of acceleration does not apply;
upon the vesting of the capital, it should be divided into two shares and distributed in equal shares per stirpes, one among the male descendants of and including Edward Tan and the other share among the male descendants of and including Farrer Tan.
The sixth defendant made the following submissions:
the trust declared by cl 11 was valid as it did not infringe the rule against perpetuities;
there was an implied direction in cl 11 for accumulation of the surplus income throughout the trust period and accordingly such direction was void to the extent that it contravened the Accumulations Act 1800;
the expression ‘male descendants’ included male issues of female granddaughters.
The submissions of counsel for the first defendant were:
the trust was valid, it being of a public character and within the perpetuity period;
the purpose of the trust having failed, the capital and income of the trust fund fell into residue;
cl 11 contained an implied direction to accumulate the income beyond the period allowed by the Accumulations Act 1800;
the accumulation period ended in 1952 and all income thereafter fell into residue and there should be an inquiry as to how much income had since then been accumulated.
Counsel for the grandsons, the second and third defendants, associated himself with the submissions of counsel for the first defendant but contended additionally that the trust failed ab initio on two grounds:
it infringed the rule against perpetuities as the testatrix in prescribing the trust period intended to use the land forever as a burial ground;
there was uncertainty as to the beneficiaries in that the expression ‘male descendants’ was uncertain in meaning; accordingly there was a resulting trust of both the capital and the income in favour of the beneficiaries mentioned in cl 21 of the will.
The trust created by cl 11 of the will is generally known as a purpose trust, i.e. a trust in which there are no human beneficiaries and which is not charitable. It is a fundamental principle of English law that no trust which is not a charitable trust can be valid if it has no beneficiary. However, for reasons attributable to human weakness or sentiment, the English courts have upheld a number of such trusts as valid provided that the purposes are sufficiently defined and they did not last longer than the perpetuity period (which, for this purpose, was of the duration as the perpetuity period for the vesting of an interest). These recognized classes of purpose trusts are regarded as anomalous exceptions to the general rule and their classes will not be extended. In Re Endacott [1960] Ch 232, Lord Evershed MR, after referring to the classification of these exceptions (one of which is trusts for the erection or maintenance of monuments and graves) in Morris & Leach, The Rule Against Perpetuities (1956), said (at p 246):
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Still, in my judgment, the scope of these cases (and I can call them anomalous because they have been so called both in the book of Mr. Morris and Professor Barton Leach and in the course of the argument) ought not to be extended. So to do would be to validate almost limitless heads of non-charitable trusts, even though they were not (strictly speaking) public trusts, so long only as the question of perpetuities did not arise; and, in my judgment, that result would be out of harmony with the principles of our law. No principle perhaps has greater sanction or authority behind it than the general proposition that a trust by English law, not being a charitable trust, in order to be effective, must have ascertained or ascertainable beneficiaries. These cases constitute an exception to that general rule. The general rule, having such authority as that of Lord Eldon, Lord Parker and my predecessor, Lord Greene MR, behind it, was most recently referred to in the Privy Council in Leahy v A-G for New South Wales. |
The law in Singapore is the same, subject, however, to local circumstances.
In the present case, it is common ground that the trust created by cl 11 of the will for the purpose of keeping the temple, the buildings and the graves in a good and decent state of repair, if considered as an integral purpose, would fall within one of the recognized exceptions. If the said purpose were severable, that part concerning the upkeep of the ‘buildings’ ought not to be valid, but since the parties have not contended otherwise, I shall assume that the point is inconsequential. It should also be noted that the trust declared in cl 11 included another quite separate and distinct purpose, which was to keep the plantation clean, weeded and in good and clean condition. As the trust for this object is not within any of the recognized classes of purpose trusts, it ought to have failed for want of a beneficiary. Again, counsel have not addressed me on this point or on the consequence, if any, of the invalidity of this part of the trust to the destination of the income of the trust fund. Accordingly, I must assume that the parties are content to treat the trusts declared by cl 11 as forming an integral purpose and also that in the events that have happened, nothing would be gained by resurrecting this issue as what has been done cannot be undone and that there is now no possibility of the income being used for any unlawful purposes.
Except for the suggestion by counsel for the second and third defendants that the testatrix had intended to tie up the land forever as a burial ground, which suggestion is contrary to the terms of cl 11, it is also common ground that the trust period in cl 11 would not last longer than the perpetuity period and that the use of royal lives beginning with the descendants of King George V did not make the determination of the time of vesting uncertain: see Re Villar [1929] 1 Ch 243 and Re Leverhulme [1943] 2 All ER 274.
The next issue is whether cl 11 infringed the Accumulations Act 1800 (which is part of the law of Singapore: see Tan Jiak Kim v Tan Jiak Whye (1879) 4 SSLR 141) in so far as cl 11 might have allowed an accumulation of income beyond 21 years from the death of the testatrix. It is not-disputed that the defraying of income for the upkeep of the plantation, the buildings, the temple and the graves thereon did not amount to an accumulation of income to the said property: see Re Gardiner [1901] 1 Ch 697 and Vine v Raleigh [1891] 2 Ch 13. However, it was contended by counsel for the first defendant and the sixth defendant that cl 11 contained an implied direction to accumulate income during the trust period as nothing was said about the disposal of the surplus income. As I understand it, the argument was that the implied direction to accumulate could be inferred from the expression ‘cash’ in cl 11(c), which expression, it was contended, meant ‘income’. No authority was produced to show why the said expression meant income and not, for example, capital held in the form of cash. It was suggested that since the word ‘cash’ was used in juxtaposition with the words ‘investments’ and ‘plantation’, which latter expressions both refer to the capital of the trust fund, the word ‘cash’ must refer to ‘income’. It might also be suggested that at the end of the trust period, the trustees could be holding unused income in the form of cash. However, I do not agree with this contention for the following reasons.
Firstly, cl 11 uses the expression ‘cash’ in the opening words and paras (a) and (b) to refer to the sum of $10,000 cash which the trustees must invest to provide the income to carry out the purpose trusts. At the end of the trust period, the cash and investments are to be held in trust for the male descendants under para (c). In my view, the expression ‘cash’ in para (c) is used in the same sense as it is used in paras (a) and (b) as no income is intended to be included in the gift over.
Secondly, the testatrix has in cl11 used the expression ‘income’ when she meant income.
Thirdly, since cl 11 expressly directed the trustees to apply the income to carrying out the purposes trusts, without any qualification, it meant that they were required to apply all the income. Accordingly, it would be a contradiction in terms to speak of cl 11 as containing an implied direction to accumulate. To amount to such a direction, the property must be given in such a manner that the accumulation becomes necessary: see Theobald on Wills (14th Ed) pp 616–617. An example of this would be that the amounts directed to be expended can never exhaust the income. A direction to accumulate should not be implied where an accumulation has occurred temporarily or fortuitously or through the neglect or breach of duty on the part of the trustees in carrying out the trust.
Finally, the contention appears to be academic as there is no evidence that there was any surplus income at all at any time during the period prior to the failure of the trust.
Accordingly, I hold that nothing in cl 11 has infringed the Accumulations Act 1800.
The next issue raised by counsel for the second and third defendants is that the trust failed for uncertainty in that it is not certain what the testatrix meant by ‘male descendants’. I do not agree with this contention. The rule of certainty of the objects or persons to be benefited by a trust simply means that they must be expressly designated or capable of being ascertained, except where the trust is for charitable purposes: 48 Halsbury’s Laws of England (4th Ed) para 553. In the present case, the testatrix has designated her ‘male descendants’ to be the beneficiaries of the gift over. The description is not so vague as to have no meaning or so uncertain that the persons falling within it cannot be determined when the gift over takes effect: see Mcphail v Doulton [1971] AC 424. It is not disputed that the male descendants of a person may come from the male line as well as from the female line, and so they do. Therefore, that should be its ordinary and natural meaning and this was so decided by the Court of Appeal in Re Drake [1971] Ch 179 where it was said that the expression was an ordinary description and not a term of art and that, unless the context required otherwise, it bore its ordinary and natural meaning of male persons descended in any manner from a common ancestor, including those descended through females. This contention therefore fails. It should, however, be noted that this contention had no relevance to the validity of the purpose trusts but only to the validity of the gift over.
The next point is where in the generations of male descendants the stirpital division should begin. Counsel for the trustees has suggested that the stirpital division should begin with the two natural sons of the testatrix. No contrary or different argument has been advanced to me by counsel for the other parties.
The principle for determination of stocks for the purpose of a distribution per stirpes is succinctly stated in 50 Halsbury’s Laws of England (4th Ed) in para 575 as follows:
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The determination of the persons forming the stocks from which the stirpes are to spring is a matter of construction of each will. Sometimes it may appear from the terms of the gift that the stocks should be persons who might themselves take under the gift, for example the original takers for whom the stirpes are substituted, and not ancestors of such takers, but there is no rule of construction which requires that the stocks of descent are to be found among the takers and not among the ancestors. |
In the present case, the gift over will take effect 20 years after the royal lives period. Long as this period would have appeared when this will came into effect in 1931, the gift over could still have vested within the lifetime of either of the natural sons of the testatrix. Therefore, the testatrix could not have intended to exclude them as possible takers.
In Sidey v Perpetual Trustees Estate and Agency Co of New Zealand [1944] AC 194, the will provided for the distribution of the residuary estate ‘amongst my then surviving descendants in such manner that the same shall be divisible per stirpes among the children, grandchildren and remoter issue of such of my children as shall have left issue’. In other words, the children of the testator were expressly excluded as possible takers. Notwithstanding that, the Privy Council decided, on a construction of the will in question, that the stirpital division should begin with the ancestors (i.e. the children of the testator) rather than the possible takers. At pp 202–203 of their judgment, their Lordships said:
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There appears to them on principle to be no reason why, in the construction of a gift per stirpes the stocks should be found among the takers and not among their ancestors. In the simplest case, where a gift is made to a number of persons of different stocks, but of the same generation per stirpes and not per capita, it is manifest that the stocks are to be found, not in the takers, but in the ancestors, and this result is reached, not by the displacement of any prima facie rule of construction, but by the consideration of the language of the gift without any predilection. The language of the will under appeal is to be approached in the same way. |
It would therefore appear that whichever rule of construction (i.e. possible takers versus ancestors) is applied in the present case, the ultimate result in this case is the same. In my view, however, I can find nothing in the will to exclude her sons as the stocks for the stirpital division of the capital of the trust fund under cl 11.
I come now to the final question for determination and that is, the purposes of the trusts having been made impossible by reason of compulsory acquisition, what is to happen to the capital and income of the trust fund. The answers are clear. The testatrix has directed that only the income be used for carrying out the purpose trusts. Since these trusts cannot be carried out now, the income now or hereafter accruing can no longer be applied in accordance with cl 11 (or cy-pres, since it is also common ground that the trusts were not charitable). It must therefore fall into the residuary estate as directed by cl 21. The property in the plantation (in its converted state) and the investments, including any capital held in cash, has yet to vest in the male descendants since the trust period has not expired. The contingent gift over has not failed. The trustees will therefore have to hold the said assets (including the land in its converted state) until they vest in the male descendants of the testatrix.
Accordingly, I will answer the questions for determination not in the way or the order in which they have been stated but as follows:
the purpose trusts declared by cl 11 of the will having failed, the income which has accrued or accruing from the date of such failure shall fall into the residuary estate under, and shall be distributed in accordance with, cl 21 of the will;
the trustees shall hold the capital of the trust fund until the expiry of the trust period when the said capital shall be divided into two halves and distributed one half each equally among the male descendants (from both the male and female lines of descent) then living of Edward Tan and Farrer Tan respectively.
The costs of this application to be corpus. Liberty to apply.
Cases
Drake, Re [1971] Ch 179; Endacott, Re [1960] Ch 232; Gardiner, Re [1901] 1 Ch 697; Leverhulme, Re [1943] 2 All ER 274; Mcphail v Doulton [1971] AC 424; Sidey v Perpetual Trustees Estate and Agency Co of New Zealand [1944] AC 194; Tan Jiak Kim v Tan Jiak Whye [1879] 4 SSLR 141; Villar, Re [1929] 1 Ch 243; Vine v Raleigh [1891] 2 Ch 13
Authors and other references
Halsbury’s Laws of England (4th Ed), vol 48, vol.50
Morris & Leach, The Rule Against Perpetuities (1956)
Theobald on Wills (14th Ed)
Representations
HM Dyne (Donaldson & Burkinshaw) for the plaintiffs.
TPB Menon (Oehlers & Choa) for the second and third defendants.
CC Tan (Tan, Rajah & Cheah) for the male descendant unborn.
KS Lo (Allen & Gledhill) for the first defendant.
David Hew (Tang & Tan) for the fourth and fifth defendants.
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