Jurisdiction - Singapore
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Singapore – Clause Expressing Testator’s Wishes And Desires Is Unenforceable.

5 August, 2014

 

Legal News & Analysis – Asia Pacific – Singapore – Dispute Resolution

 

A Singapore High Court decision issued in June 2014, Lau Tyng Tyng v Lau Boon Wee [2014] SGHC 114, found that an ambiguous clause in the testator’s will expressing his wishes and desires was not intended to be valid or enforceable at law. An important feature of this decision was the absence of any evidence from the lawyer who assisted in the drafting and execution of the will. This decision highlights the approach that a Court may take where no relevant extrinsic evidence can be admitted as an aid to the construction of the will. 


Facts 


The testator was the sole shareholder and director of a company (“the Company”), which was a holding company and wholly owned four subsidiary companies. One of the subsidiary companies, which was incorporated in Singapore (“the Singapore subsidiary”), was in the business of printing and publishing, amongst others, periodicals, books and magazines.
The testator had three children: (a) the Applicant, his daughter and a director of the Singapore subsidiary; (b) the Respondent, his elder son and the Applicant’s older brother; and (c) Samuel, his younger son. The testator was divorced in 1998 and became the sole proprietor of the business. 


On or about 26 October 2010, the testator executed a will (“the Will”) in the presence of two lawyers from a law firm. The Will was drafted by the solicitors of the law firm, based on instructions given by the testator in Mandarin. Before the testator executed the Will, one of the witnessing lawyers interpreted the contents of the Will in Mandarin. The Applicant and the Respondent were named as the joint executors and trustees of the Will.
Under Clause 3 of the Will, the testator gave, devised and bequeathed all his shares in the Company to various beneficiaries absolutely, including the Respondent (20%), the Applicant (20%), Samuel (20%) and the testator’s former wife (10%).

 

The issue in this case was the true construction of Clause 4 of the Will, which read:

 

“It is my wish and strong desire that my beneficiaries will not sell or otherwise part with the shares of [the Company]. The Company is the sole shareholder of [the Singapore subsidiary], which was founded and built up by me through many years of hard work and toil. It is also my desire that my children will work together, hand in hand, to continue to grow the business of [the Singapore subsidiary]. Otherwise, I entrust the business to [the Applicant].”


The Applicant argued that the gifts of the shares in Clause 3 were subject to the conditions set out in Clause 4, namely: (a) the beneficiaries must not part with or dispose of their gifts; and (b) the testator’s children must work together in the operation and management of the Singapore subsidiary. 


In her affidavit, the Applicant stated that she had contributed financially to the testator’s business and that the Respondent and Samuel never contributed to the business of the Company. However, the Respondent asserted in his affidavit that he had helped to build up the business of the Singapore subsidiary and Samuel had helped to expand the business into Malaysia. It was undisputed that the shares in the Company comprised the bulk of the testator’s assets. 


Decision 


The High Court rejected the Applicant’s contention and found that Clause 4 was “merely an expression of the [t]estator’s wishes and desires” and “was not intended to be valid or enforceable at law”. 


The High Court referred to the principles governing the construction of wills, as summarised by the Court of Appeal in Foo Jee Seng and others v Foo Jhee Tuang and another [2012] 4 SLR 339 at [17]. The key principles are:

 

  • The overriding aim of the court in construing a will is to “seek and give effect to the testamentary intention as expressed by the testator”.
  • The testator’s intention must “predominantly be derived from the wording of the will itself, although the circumstances prevailing at the time the will was executed may be taken into account”. 
  • “Where a strict literal construction of the will would give rise to an effect which is clearly out of sync with the general intention of the testator as derived from the will as a whole, such a reading should give way to a more purposive interpretation.” 
  • Therefore, there is a presumption that effect should be given to every word of the will, and “the court should not discount any part of the will if there can be some meaning that is not contrary to the express intention that could be ascribed to it”.

The High Court also noted that “[i]n appropriate circumstances, the court might admit relevant extrinsic evidence in ascertaining the testator’s intention as expressed in the will”. In this case, the High Court observed that as Clause 4 was ambiguously drafted, it “would have been highly relevant” for the lawyer who assisted in the drafting and execution of the Will to have given evidence. However, as it did not have the benefit of such evidence, it proceeded to construe Clause 4 and examine the Will contextually as follows:

 

  • The use of precatory words (“wish and strong desire”) indicated that Clause 4 was only “an expression of desire that [the testator’s] children keep his business in the family and that they work together to grow the business of [the Singapore subsidiary]”;
  • As the testator had clearly, under Clause 3, gifted all the shares in the Company to his beneficiaries absolutely, he could not have intended, by virtue of Clause 4, to create an actual trust over his business; 
  • The testator’s intention to entrust his business to the Applicant did not mean that the Applicant was to be given control over the Company and its subsidiaries, given that the Applicant was a mere 20% shareholder and the remaining shares would not be transferred to her; 
  • The Applicant’s interpretation of Clause 4 would lead to a harsh result. Not only would the beneficiaries of the shares be prevented from dealing freely with their shares, but also every beneficiary would lose substantially the rights in their shares if only one beneficiary tried to sell his or her shares, or the testator’s three children were unable to cooperate; and 
  • Although the testator would not have wanted to have his business destroyed by his beneficiaries, the evidence showed that the testator was more concerned with the welfare of his family as a whole.

The High Court concluded that Clause 4 was precatory in nature and that Clause 3 operated unconditionally. It reasoned that the testator’s intention in this case would not be achieved by “[g]iving legal effect to words which are meant to do no more than to appeal to the conscience of the beneficiaries”. 


Even if the testator had intended Clause 4 to be a condition subsequent to the gifts of shares in Clause 3, the High Court held that Clause 4 would be void because: (a) it prevented the beneficiaries from selling or otherwise parting with their shares in the Company; and (b) the testator’s intention that, for instance, his children “work together, hand in hand, to continue to grow the business of [the Singapore subsidiary]” was ambiguous and uncertain. 


Comment 


It is trite that a testator is entitled to draw up a will capriciously if he uses clear words to evidence his intention. In this case, however, Clause 4 of the Will was ambiguously drafted and, without the benefit of any extrinsic evidence, the High Court had to rely on, inter alia, a canon of interpretation noted by the Court of Appeal in Low Ah Cheow and others v Ng Hock Guan [2009] 3 SLR(R) 1079 that in such cases, the court would “prefer an alternative interpretation that leads to a fair, rational and reasonable disposition and distribution of the testator’s estate”. This case is a salutary reminder of the importance of clarity and coherence in drafting a will and that precatory words are not sufficientto enforce the testator’s intention at
law.

 

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For further information, please contact:

 

Sandra Han, Partner, RHTLaw Taylor Wessing
sandra.han@rhtlawtaylorwessing.com


Yiyang Chen, RHTLaw Taylor Wessing

yiyang.chen@rhtlawtaylorwessing.com

 

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