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Singapore – Wills And Succession: AEL & Ors V Cheo Yeoh & Associates LLC & Anor [2014] SGHC 129.

7 August, 2014

 

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

 

A solicitor owes a duty of care to the beneficiaries of a will to ensure that the will is properly executed and otherwise valid under the provisions of the Wills Act:
— AEL & Ors v Cheo Yeoh & Associates LLC & Anor [2014] SGHC 129 (Singapore, High Court, 2 July 2014)


Facts


The Testator was an Indonesian businessman who had made a will (the “New Will”) for the distribution of his assets in Singapore. The New Will was made with the legal assistance of the second defendant (the “Second Defendant”), who was a solicitor of the first defendant firm (collectively, the “Defendants”), and was intended to replace an earlier will that the Testator had made jointly with his wife who had predeceased him. The significant difference in the New Will was that the Testator had entirely disinherited two of his six children, which altered the distributions bequeathed to the First to Third Plaintiffs (who were three of the Testator’s children) and the Fourth to Eighteenth Plaintiffs (who were the Testator’s 15 grandchildren) (collectively, the “Plaintiffs”).


However, the New Will was later discovered to be defective. This discovery was only made after the death of the Testator when an application for probate was rejected. The Testator’s estate was accordingly distributed under the Intestate Succession Act, which resulted in the two disinherited children receiving an equal share of the estate along with their siblings, and thereby reducing the amount bequeathed to the First to Third Plaintiffs and the Fourth to Eighteenth Plaintiffs receiving nothing at all.


The Plaintiffs brought an action in tort against the Defendants, claiming damages equivalent to the difference in amount that they would have received under the terms of the New Will and that which they received under intestacy.


Decision


The main issue before the Singapore High Court was whether the Defendants owed a legal duty of care to the Plaintiffs in tort given that they were beneficiaries under the New Will and not the Defendants’ clients as such.

 

The Court first started by considering the scope of the Second Defendant’s retainer with the Testator. This was because the parties had impliedly agreed that he could not be made liable towards the Plaintiffs for the negligent performance of certain tasks if he had not been engaged by the Testator to perform those tasks in the first place. On an examination of the factual matrix, the Court held that in all the circumstances, the Second Defendant’s retainer with the Testator included the proper drafting and execution of the New Will.


Having determined the precise scope of his retainer, the Court then considered whether it was justified as a matter of law to impose a duty of care in tort in drafting and executing the New Will where such a duty was owed not only to the Testator but also to the Plaintiffs as beneficiaries. The Court first noted that the test to be applied in determining this is a two-stage one: The first step is an inquiry into proximity and the second calls for a consideration of relevant policy considerations. As a threshold matter though, both stages are preceded by an assessment of factual forseeability.


The Court noted that the threshold of factual forseeability is easily overcome and held that it was unarguable that a reasonable solicitor in the Second Defendant’s position would have foreseen the possibility of loss being suffered by the Plaintiffs due to the negligent discharge of his undertaking to the Testator.


With regard to the next question of proximity, the Court held that the Plaintiffs and the Second Defendant stood in a sufficiently proximate relationship:

 

  • There was no doubt that the Second Defendant had assumed responsibility towards the Testator for the proper drafting and execution of the New Will since there was a contractual relationship between solicitor and client. The very objective of the Second Defendant’s retainer with the Testator was to enable the latter to confer a benefit on the Plaintiffs through the transmission of property under a valid will.
  • There was a relational or circumstantial proximity between the Plaintiffs and the Second Defendant. The Second Defendant knew that if the Testator’s instructions were not properly carried out, the economic wellbeing of the Plaintiffs would be adversely affected and therefore the Plaintiffs were in the Second Defendant’s direct contemplation, even though he had no direct interaction with them.
  • Causal proximity was also established. The Plaintiff’s entitlement to the Testator’s estate was wholly dependent on the New Will being effective and the task of making an effective will was entrusted by the Testator to the Second Defendant. The Court held that it must have been plain to the Second Defendant that if the New Will was defective, that would lead inevitably to economic loss suffered by the Plaintiffs on the death of the Testator.

 

The Court next held that no cogent policy reasons had been raised to negate the imposition of a duty of care on the Second Defendant. Conversely, there were in fact policy considerations which operated to affirm a duty of care in cases such as the present one:

 

  • If no remedy is extended to third party beneficiaries, then the only claim that can be made against a negligent solicitor is that by the estate. However, the estate will have suffered no real loss and will accordingly only be entitled to nominal damages.
  • The imposition of a duty on the solicitor to take reasonable care towards third party beneficiaries is desirable from a policy standpoint because it serves to complement and enhance the solicitor’s duties towards the testator client.
  • Imposing a duty in such circumstances also has the beneficial effect of promoting the vigilance and competence of solicitors who advise in the context of will-making.

Accordingly, the Court held that a duty of care had been owed by the Second Defendant to the Plaintiffs and that the Second Defendant had breached this duty of care by failing to ensure that the New Will had been properly executed.


Our Comments / Analysis


The disappointed beneficiaries succeeded in claiming against the solicitor largely because they were specifically named in the New Will, and would have inherited, but for the defective execution of the New Will. The requirements of relational and causal proximity for the imposition of a duty of care on the solicitors to the third party as set out in the Singapore Court of Appeal in Anwar Patrick Adrian & Anor v Ng Chong & Hue LLC & Anor (2014) are satisfied given that:

 

  • The instructions from the client included the conferment of benefit on the beneficiaries; and
  • The solicitor would be aware of the direct repercussions of his acts on the beneficiaries’ interest.

It remains to be seen, if such proximity can be shown to exist where the instructions are in a commercial (for example, a sale and purchase agreement) as opposed to a family context.

 

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For further information, please contact:

 

Bock Eng Sim, Partner, WongPartnership

[email protected]

 

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