Court of Appeal · Decided 13 August 2015

Kuek Siang Wei and another v Kuek Siew Chew

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[2015] SGCA 39Case no. Civil Appeal No 167 of 2014

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Grounds of decision

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Sundaresh Menon CJ (delivering the grounds of decision of the court):
Introduction
[1] This appeal arose from Suit No 966 of 2012, an action commenced by the respondent, Kuek Siew Chew (“the Respondent”), against the first appellant, Kuek Siang Wei (“the First Appellant”), and the second appellant, Kuek Tsing Hsia (“the Second Appellant”), to set aside three instruments – a letter of consent, a deed of consent and a deed of family arrangement – which were purportedly executed to give effect to the wishes of a deceased person, Mr Kuek Ser Beng (“Mr Kuek”), as to how his assets were to be distributed among the surviving members of his family. The subject of the appeal mainly concerned the decision of the judicial commissioner (“the Judge”) to set aside the second of the three instruments, ie, the deed of consent (see Kuek Siew Chew v Kuek Siang Wei and another [2014] SGHC 237 (“the GD”)). The Judge considered that deed to be a family arrangement and analysed its validity on that footing. He set it aside on the ground that the Respondent had not been informed about the full value of Mr Kuek’s estate before she signed that deed. The First Appellant and the Second Appellant (collectively, “the Appellants”) appealed against the Judge’s decision. We agreed with the Judge that the deed of consent was a family arrangement, and that it should be set aside because material facts had not been disclosed to the Respondent prior to its execution. Hence, we dismissed the appeal. We now set out the detailed grounds for our decision.
Background facts
The demise of Mr Kuek and the discovery of his handwritten note
[2] Mr Kuek passed away on 30 January 2007 without leaving a will. He was married to Mdm Lim Swee (“Mdm Lim”) and they had three children together, namely, a son (Kuek Hock Eng (“Hock Eng”)) and two daughters (the Respondent and Kuek Siew Eng (“Siew Eng”)). He also had a second family with Mdm Goh Ah Pi (“Mdm Goh”), with whom he had five children (four daughters and a son). For ease of reference, we refer to Mdm Lim and her children as “the first family”, and Mdm Goh and her children as “the second family”. In addition, we include within our definition of “the first family” the following persons: (a) Hock Eng’s wife, Mdm Ho Per Jong (“Mdm Ho”); (b) Hock Eng’s five children (three daughters and two sons); (c) Mr Kuek’s brother, Mr Kerk Hup Hin (“Hup Hin”); and (d) Hup Hin’s wife, Mdm Yak Hong Eng (“Mdm Yak”). Although this point was disputed at the trial below, it bears mentioning that there is some evidence that the members of the first family did not know about the existence of the second family prior to Mr Kuek’s demise.
[3] Approximately two months after Mr Kuek’s death, the members of the first family found in Mr Kuek’s safe a note dated 23 May 2002 written by him (“the Note”). By that time, Hock Eng, Mdm Ho and their children had already moved into Mr Kuek’s matrimonial home at Toh Tuck Road (“the Toh Tuck Road Property”). The Note set out Mr Kuek’s wishes as to how his assets were to be distributed among the surviving members of the first and second families. At [12] of the GD, the Judge found that the evidence as a whole supported the conclusion that the Note was genuine. This finding was not contested on appeal. The Note was not a valid testamentary instrument because Mr Kuek did not sign it; nor was it attested to by any witnesses. It therefore did not meet the requirements set out in s 6 of the Wills Act (Cap 352, 1996 Rev Ed) for a valid will. Hence, Mr Kuek’s estate stood to be distributed in accordance with the regime set out in the Intestate Succession Act (Cap 146, 1985 Rev Ed) (“the ISA”). However, it was open to the beneficiaries of Mr Kuek’s estate under the ISA, all of whom were also among the beneficiaries named in the Note, to agree to compromise their respective entitlements under the intestacy regime and to accept, instead, a different basis of dividing the assets in the estate.
The distribution envisaged in the Note
[4] Under the Note, Hock Eng and his family stood to receive the bulk of Mr Kuek’s estate. Specifically, Hock Eng was to receive $400,000 and two properties in Johor Bahru, Malaysia (“the Malaysian Properties”). His wife, Mdm Ho, was to receive $200,000. His three daughters (the Second Appellant, Kuek Tsing Qi (“Tsing Qi”) and Kuek Tsing Xiu (“Tsing Xiu”)) each stood to receive $100,000. The Toh Tuck Road Property and the residuary estate – ie, the balance of the assets (primarily cash and shares) which were not particularised in the Note – were to be given to Hock Eng’s two sons (the First Appellant and Kuek Yong Wei (“Yong Wei”)). The Toh Tuck Road Property was valued at $3.3m as at 30 January 2007 in the declaration of estate duty which the Appellants made to the Commissioner of Estate Duties on 31 October 2011 in their capacity as the administrators of Mr Kuek’s estate. In that same declaration, the residuary estate was valued at approximately $8.3m. The residuary estate was the largest part of Mr Kuek’s estate, forming about 60% of the whole estate. In total, excluding the value of the Malaysian Properties, Hock Eng’s family stood to receive cash and assets valued at about $12.5m under the division envisaged in the Note.
[5] Mdm Lim and her two daughters (namely, the Respondent and Siew Eng) stood to receive $200,000 each under the Note.
[6] As for the members of the second family, they were to receive a shophouse at Jurong Kechil (“the Jurong Kechil Shophouse”). This was valued at $800,000 as at 30 January 2007 in the aforementioned estate duty declaration.
[7] The Note also dealt with a total sum of $1.65m that Mr Kuek wished to be distributed among the members of the first family, including his brother, Hup Hin, and the latter’s wife, Mdm Yak. The specific distribution of this sum as envisaged in the Note was as follows:
(a) Mdm Lim (Mr Kuek’s wife): $200,000;
(b) Hock Eng (Mr Kuek’s son with Mdm Lim): $400,000;
(c) Mdm Ho (Hock Eng’s wife): $200,000;
(d) the Respondent (Mr Kuek’s daughter with Mdm Lim): $200,000;
(e) Siew Eng (Mr Kuek’s daughter with Mdm Lim): $200,000;
(f) the Second Appellant (Hock Eng’s daughter): $100,000;
(g) Tsing Qi (Hock Eng’s daughter): $100,000;
(h) Tsing Xiu (Hock Eng’s daughter): $100,000;
(i) Hup Hin (Mr Kuek’s brother): $100,000; and
(j) Mdm Yak (Hup Hin’s wife): $50,000.
The distribution under the intestacy regime
[8] The distribution envisaged in the Note was drastically different from that which would obtain if the assets in Mr Kuek’s estate were distributed in accordance with the intestacy regime set out in the ISA. Under s 7 of the ISA, Mdm Lim would receive a half-share of the estate, and her three children (ie, the Respondent, Siew Eng and Hock Eng) would each receive a one-sixth share of the estate. Mdm Ho, Hup Hin, Mdm Yak and Mr Kuek’s grandchildren, including the Appellants, would not receive any share in the estate.
[9] The question of whether the members of the second family would receive any share in Mr Kuek’s estate under the intestacy regime set out in the ISA would depend entirely on the strength of their case that they had a right to participate in the distribution of the estate under that regime on the basis that Mdm Goh was Mr Kuek’s common law wife. The question of whether Mdm Goh was Mr Kuek’s common law wife was not the subject of the suit below. The distribution set out in the preceding paragraph would be significantly different if Mdm Goh was recognised as a spouse entitled to participate in the distribution of the estate under the intestacy regime. On that basis, Mdm Lim and Mdm Goh each would receive a one-quarter share, and the eight children would each receive a one-sixteenth share. It should be noted that in disposing of the suit, the Judge ordered the Appellants to take all necessary steps to ascertain the status of the second family under the ISA.
[10] It would be evident that the Respondent, Mdm Lim and Siew Eng stood to lose the most if Mr Kuek’s estate was distributed according to the Note instead of according to the intestacy regime set out in the ISA. If Mdm Goh was not recognised as a lawful spouse entitled to participate in the distribution of the estate under the intestacy regime, the Respondent and Siew Eng would each stand to lose about $2.1m and Mdm Lim, about $6.7m, by agreeing to abide by the Note instead of proceeding in accordance with the ISA; whereas if Mdm Goh was recognised as a lawful spouse entitled to participate in the distribution of the estate under the intestacy regime, the Respondent and Siew Eng would each stand to lose about $662,500 and Mdm Lim, about $3.25m. These figures are based on the estimated value of Mr Kuek’s total estate as stated in a letter dated 23 June 2010 (“the 23 June 2010 Letter”) that Mr Chia Soo Michael (“Mr Chia”), the solicitor who represented the first family at the material time, sent Mr Dennis Singham (“Mr Singham”), the solicitor who represented the second family.
[11] On the other hand, Hock Eng and his family stood to gain the most if the Note was adhered to. They stood to receive about 90% of Mr Kuek’s estate if it was distributed in accordance with the Note. In contrast, under the intestacy regime, only Hock Eng would have inherited anything, and he would have received only either a one-sixth or a one-sixteenth share of the estate, depending on whether the members of the second family were entitled to participate in the distribution of the estate under that regime. It should also be noted that Hock Eng was in severe financial difficulty in 2007, having been adjudged bankrupt on 5 November 2004. This meant that any inheritance which he received under the intestacy regime would end up with his creditors; whereas under the arrangement envisaged in the Note, although Hock Eng’s own share of the estate would likewise be subject to his creditors’ rights, his wife and his children would receive a substantial share of the estate free of the creditors’ interests.
The signing of the letter of consent and the events occurring thereafter
[12] On or around 19 March 2007, almost two months after Mr Kuek’s death, all the parties named in the Note, including the members of the second family, signed a letter of consent (“the Letter of Consent”) indicating their agreement to abide by Mr Kuek’s wishes as set out in the Note. At that point, it appears that the members of the first family were predominantly concerned as to whether there would be enough liquid assets in the estate to give those members of the family who were beneficiaries of the $1.65m cash gift the respective sums which Mr Kuek indicated, in the Note, he wanted them to receive. This is evident from the fact that there were only two clauses in the Letter of Consent. The first related to the agreement of all the parties named in the Note (including the members of the second family) to abide by the wishes of Mr Kuek; and the second related to the agreement of those members of the first family who were beneficiaries of the $1.65m cash gift to bear any shortfall in that amount proportionately. There was no attempt in the Letter of Consent to particularise the assets in Mr Kuek’s estate. The full terms of the Letter of Consent are as follows:
[13] Mdm Ho contended that all the parties agreed that Hock Eng should act as the administrator of the estate since he was Mr Kuek’s eldest and only male child with his lawful wife, Mdm Lim. However, this was contested by the Respondent. She claimed that Hock Eng told Mdm Lim to sign the renunciation of her right of administration in his favour so as to enable him to apply for the grant of letters of administration without explaining what that entailed. It is not necessary for us to establish which account is true. What matters is that Mdm Lim did sign the requisite renunciation. Hock Eng applied for the grant of letters of administration in respect of Mr Kuek’s estate in September 2007, even though he was an undischarged bankrupt at that point. The documents required for Hock Eng’s application were prepared by Mr Goh Peck San (“Mr Goh”) of M/s P S Goh and Co, the firm of solicitors appointed to handle the matter. Hock Eng’s supporting affidavit for the application contained a statement setting out the amount of cash which Mr Kuek had in his bank accounts as well as statements setting out the stocks which Mr Kuek held. Hock Eng was duly appointed as the administrator of the estate, notwithstanding his status as an undischarged bankrupt. However, the letters of administration were never extracted and nothing was done to effect the distribution of Mr Kuek’s estate.
[14] In April 2010, the second family reneged on the Letter of Consent. Mdm Goh indicated that she and her family did not wish to be bound by the Note. She claimed, instead, that they were entitled to half of Mr Kuek’s estate under the intestacy regime set out in the ISA and lodged a caveat against the estate in the Subordinate Courts (now known as the State Courts). She also filed an application for one of her daughters, Kuek Geok Hua (“Geok Hua”), and herself to be added as co-administrators of the estate. As a result, the court process relating to the administration of the estate came to a complete standstill.
[15] Hock Eng and his wife, Mdm Ho, then sought the assistance of a new firm of solicitors, M/s Sankar Ow & Partners LLP, on 10 May 2010 to resist Mdm Goh’s application and negotiate a settlement with the second family. Mr Chia, a solicitor at that firm, was in charge of the matter. Although Mr Chia stated in his affidavit of evidence-in-chief (“AEIC”) that he “agreed [to] act for Hock Eng”, in the course of cross-examination, he accepted that he had been engaged to act for the first family as a whole. However, as will become evident in the course of these grounds, Mr Chia had a woeful understanding of his duty to the other members of the first family aside from Hock Eng’s family, and he was oblivious to the possibility of a conflict of interest between Hock Eng’s family on the one hand, and the Respondent, Siew Eng and Mdm Lim on the other.
[16] At their meeting with Mr Chia on 10 May 2010, Hock Eng and Mdm Ho showed Mr Chia the Note and the Letter of Consent, among other documents. Mr Chia stated in his AEIC that he told Hock Eng and Mdm Ho that the Note was not a valid will, but that the court would uphold the Letter of Consent as a valid family arrangement. Thereafter, Mr Chia met Hock Eng, Mdm Ho, Siew Eng and the Respondent at his office on 13 May 2010. At that meeting (“the 13 May 2010 meeting”), Mr Chia repeated his opinion concerning the Note and the Letter of Consent. In the course of cross-examination, counsel for the Respondent, Mr Tng Kim Choon (“Mr Tng”), went to great lengths to elicit from Mr Chia confirmation that at that meeting, he had told the Respondent (as well as Siew Eng) that the Letter of Consent would likely be upheld by the court:
[17] It bears emphasis at this point that Mr Chia’s view as to the likelihood of the Letter of Consent being upheld by the court was expressed in the context of the second family’s reneging on its earlier agreement to be bound by the Note. Hence, the real point that was being made by Mr Chia at the 13 May 2010 meeting was that in his view, the second family’s attempt to set aside the Letter of Consent and migrate to the intestacy regime under the ISA was not likely to be successful. Mr Chia was saying, in effect, that the court would likely accept the Letter of Consent as valid and, as a result, bind the parties to the distribution reflected in the Note. However, contrary to this and unknown to the Respondent, Mr Chia subsequently sent a letter to Hock Eng alone on 18 May 2010 (“the 18 May 2010 Letter”), in which he expressed a markedly different view concerning the Letter of Consent. There, he stated:
[18] The reference to “the application by M/s Singham” was a reference to the application filed on behalf of Mdm Goh for herself and her daughter, Geok Hua, to be added as co-administrators of the estate on the basis of Mdm Goh’s status as Mr Kuek’s common law wife. That application had been made with a view to realising the second family’s rights under the ISA instead of proceeding on the basis of the Note. In the 18 May 2010 Letter, Mr Chia also stated that there might be “an issue of the appropriateness of [Hock Eng] continuing to act as Administrator” given his status as an undischarged bankrupt. It was not disputed that this letter was not extended to the Respondent, Siew Eng or Mdm Lim.
[19] When the difference in the advice which he had given concerning the validity of the Letter of Consent was pointed out to Mr Chia in cross-examination, he said that he did not consider his advice in the 18 May 2010 Letter to be different from that which he had expressed earlier at the 13 May 2010 meeting. He said that all he was seeking to do in the 18 May 2010 Letter was to “set out … the risk of litigation”. The relevant excerpt from the cross-examination goes thus:
[20] Mr Chia was also asked during cross-examination why he did not send the 18 May 2010 Letter to the Respondent, Siew Eng and Mdm Lim. He replied that he did not think there was a need to do so because he had scheduled a meeting with the members of the first and second families as well as the solicitor representing the second family, Mr Singham, at his office on 18 May 2010 (“the 18 May 2010 meeting”), and he intended, on that occasion, to read the letter to the members of the first family prior to the arrival of the other parties. Mr Chia had called the 18 May 2010 meeting in an attempt to amicably resolve the dispute between the two families. Mr Chia testified clearly that at that meeting, he informed the members of the first family that they had to select someone to replace Hock Eng as the administrator of Mr Kuek’s estate. This was one of the matters which he had touched on in the 18 May 2010 Letter. However, he did not state in his evidence whether he also told all the members of the first family on 18 May 2010 that: (a) the Letter of Consent might not be upheld by the court; (b) the second family’s application for Mdm Goh and Geok Hua to be added as co-administrators of Mr Kuek’s estate might be allowed by the court; and (c) the second family might be allowed to participate in the distribution of the estate under the intestacy regime and hence obtain a larger share of the estate than the share allotted to it under the Note. We return to this issue later.
[21] The 18 May 2010 meeting did not result in an immediate settlement. Mr Chia testified that he told Mr Singham to advise his clients not to renege on the Letter of Consent and to honour Mr Kuek’s wishes instead. Mr Singham wrote to Mr Chia on 26 May 2010 asking for a list of all the assets in Mr Kuek’s estate. Mr Chia had a meeting with Hock Eng and Mdm Ho on 18 June 2010 (“the 18 June 2010 meeting”), where he drew up the said list based on documents that Mr Goh, the solicitor from M/s P S Goh and Co who had previously handled the matter, had handed him. Mr Chia accepted that he did not inform the Respondent, Siew Eng or Mdm Lim about the 18 June 2010 meeting. When he was asked, in the course of cross-examination, to explain why he did not do so, he said:
[22] By way of the 23 June 2010 Letter (see [10] above), Mr Chia provided Mr Singham with the information which he had requested and also asked Mr Singham to respond with the second family’s proposal on how Mr Kuek’s estate should be divided. Mr Singham responded on 29 June 2010 by way of a letter (“the 29 June 2010 Letter”) conveying the second family’s proposal that the estate be divided on an equal basis between the first and second families in exchange for the second family’s withdrawal of its caveat against the estate and its application for Mdm Goh and Geok Hua to be added as co-administrators.
The execution of the deed of consent and the deed of family arrangement
[23] Mr Chia called a meeting on 8 July 2010 (“the 8 July 2010 meeting”) with all the members of the first family to discuss the second family’s proposal contained in the 29 June 2010 Letter, and also to ascertain whether they had settled on who would replace Hock Eng as the administrator of Mr Kuek’s estate. Mr Chia gave evidence that he informed the Respondent, Siew Eng and Mdm Lim about the full extent of Mr Kuek’s estate at this meeting, but this was hotly contested at the trial by the Respondent and Siew Eng, who gave evidence for the Respondent. We will address this issue later.
[24] A number of matters transpired at the 8 July 2010 meeting. First, the Appellants were chosen to take over as the administrators of Mr Kuek’s estate. Second, those gathered decided to reject the second family’s proposal contained in the 29 June 2010 Letter. According to Mr Chia, the proposal was rejected because the members of the first family wanted to make sure that there would be enough money in the estate to honour the wishes of Mr Kuek as regards the sum of $1.65m which he wanted to be distributed to the persons named in the Note. Mr Chia claimed that this was why, in the counterproposal which he conveyed to Mr Singham on 21 July 2010, he stated that the first family was agreeable to a 50:50 division provided that the two Singapore properties (ie, the Toh Tuck Road Property and the Jurong Kechil Shophouse) and a sum of $1.65m were kept “out of the equation”. Third, all the members of the first family executed a deed of consent (“the Deed of Consent”) at the 8 July 2010 meeting. Mr Joseph Hoo (“Mr Hoo”), a solicitor from M/s Tan Kim Seng & Partners, was present at the meeting to witness the execution of the Deed of Consent.
[25] It appears that the Deed of Consent was entered into primarily to authorise the Appellants to apply to be appointed as the administrators of Mr Kuek’s estate and to negotiate with the second family with a view to amicably resolving the dispute between the two families. It was not disputed that Mr Chia dealt exclusively with Hock Eng’s family after the Deed of Consent was executed. He contended that he had been instructed that Mdm Ho would and did keep the Respondent, Siew Eng and Mdm Lim informed of the details of the negotiations with the second family.
[26] Negotiations then took place between the two families from July to November 2010. In this regard, Mr Chia ostensibly represented all the members of the first family, but in fact, it will become apparent that he was primarily concerned with Hock Eng’s family. The second family was represented by Mr Singham in the negotiations. The Respondent, Siew Eng and Mdm Lim were not informed of the details of the negotiations. The negotiations eventually culminated in the execution of a deed of family arrangement dated 11 November 2010 (“the Deed of Family Arrangement”). The Appellants purported to execute the Deed of Family Arrangement on behalf of all the members of the first family by relying on the authority conferred upon them by the Deed of Consent. A list of the known assets in Mr Kuek’s estate was set out in the Deed of Family Arrangement (cl 7). The Appellants agreed to disclose to Mdm Goh and Geok Hua any other assets belonging to Mr Kuek’s estate which they might discover in the course of winding up the estate (cl 8). On their part, Mdm Goh and Geok Hua agreed to withdraw their application to be added as co-administrators of Mr Kuek’s estate and also to withdraw the caveat which they had lodged (cl 5). It was further agreed that Mr Kuek’s estate would be distributed in the following manner (cl 10):
(a) The Toh Tuck Road Property was to be transferred to the First Appellant and Yong Wei or their nominee(s).
(b) The Jurong Kechil Shophouse was to be transferred to Mdm Goh or her nominee(s).
(c) A sum of $1.65m was to be set aside to be distributed in accordance with Mr Kuek’s wishes as set out in the Note.
(d) The Malaysian Properties and the residuary estate (as defined at [4] above) were to be equally divided between the first and second families. The Deed of Family Arrangement did not set out how these assets were to be divided among the individual members of each family, but it appears that the Appellants proceeded on the basis that Hock Eng’s family would receive the entirety of the first family’s share of these assets.
[27] Mr Chia then applied to the court for the Appellants to be appointed as joint administrators of Mr Kuek’s estate in place of Hock Eng. The Appellants were so appointed by the Subordinate Courts on 12 April 2011, and were granted letters of administration a year later on 12 April 2012. Following this, Mr Chia called a meeting at his office on 7 May 2012 (“the 7 May 2012 meeting”) with the members of the first family in order to give those members of the family who were entitled to a share of the sum of $1.65m their respective cash entitlements pursuant to the arrangements reflected in the Deed of Family Arrangement. Mdm Lim was not present at that meeting because she had been taken ill and had been hospitalised. The Respondent maintained that she was not aware of the Deed of Family Arrangement until that meeting. The Respondent used her mobile phone to record what was said at the meeting without the knowledge of the others present because she felt that Mr Chia had not adequately safeguarded her interests or those of Siew Eng and Mdm Lim. She produced a transcript of what transpired at the meeting (“the transcript of the 7 May 2012 meeting”) in her AEIC dated 26 April 2013. At the end of the meeting, the Respondent and Siew Eng refused to accept the two cheques for $200,000 each that had been prepared in their favour and left Mr Chia’s office.
[28] The Respondent then sought the advice of Mr Tng of M/s KC Tng Law Practice. According to her, she only found out about the full extent of Mr Kuek’s estate in 2012 after she engaged Mr Tng to represent her. Eventually, she commenced the suit below to have the Letter of Consent, the Deed of Consent and the Deed of Family Arrangement set aside.
[29] Mdm Lim and Hock Eng both passed away before the matter went to trial.
The decision below
[30] The Judge dealt with the following issues in the GD:
(a) Did the Letter of Consent constitute a valid compromise of the respective entitlements of those parties who were beneficiaries under the ISA?
(b) Should the Deed of Consent be set aside based on one or more of the following grounds which the Respondent raised:
(i) non est factum;
(ii) lack of independent legal advice;
(iii) undue influence; and
(iv) material non-disclosure?
(c) Did either the Deed of Consent or the doctrine of relation back, which deems an administrator to have authority, as from the date of the deceased’s death, to deal with the assets in the deceased’s estate even though letters of administration have yet to be extracted, confer authority on the Appellants to execute the Deed of Family Arrangement on behalf of the first family?
(d) Should the court exercise its discretion to authorise and uphold the Deed of Family Arrangement pursuant to s 56(1) of the Trustees Act (Cap 337, 2005 Rev Ed)?
The validity of the Letter of Consent
[31] The Judge was of the view that a valid compromise of the respective entitlements of those parties who were beneficiaries under the intestacy regime set out in the ISA could be achieved by way of either a deed or a contract. Therefore, he considered whether the Letter of Consent could be regarded as either a valid deed or a valid contract. He held (at [32] of the GD) that it was not a valid deed because “there was no attestation or any indication of a seal which would have given rise to a valid deed”. It was also not a valid and binding contract due to the lack of consideration moving from those parties who, if not for the Letter of Consent and the Note, would not have had any share in Mr Kuek’s estate as they did not fall within the group of potential beneficiaries identified under the intestacy regime. As alluded to at [8] above, these persons included the Appellants, who, as the grandchildren of Mr Kuek, were excluded from the intestacy regime.
[32] The Judge then considered the validity of the Letter of Consent on the assumption (but without making a finding) that it constituted a family arrangement. Even on that footing, he found that the Letter of Consent could be set aside on two distinct grounds. The first was the “gross inadequacy of consideration” to compensate the Respondent, Siew Eng and Mdm Lim for the amounts which they stood to lose if Mr Kuek’s assets were distributed in accordance with the Note as opposed to under the intestacy regime (see the GD at [47]–[48]). The Judge held that this gross inadequacy of consideration was evidence from which the court could infer (together with all the other facts of the case taken as a whole) the existence of a vitiating factor such as non est factum, misrepresentation or non-disclosure of material facts. Alternatively, the consideration was so inadequate that it was invalid consideration. On either basis, the Letter of Consent would not be a valid family arrangement.
[33] Second, the Judge held that the Letter of Consent could not be regarded as a valid family arrangement because Hock Eng and Mdm Ho had not disclosed material facts which were within their knowledge to the Respondent, Siew Eng and Mdm Lim prior to the execution of that document. Specifically, the Judge found that the latter group had not been apprised of, among other things, the value of Mr Kuek’s Singapore bank accounts and the physical state of the Malaysian Properties. For these reasons, the Judge held that the Letter of Consent did not have any binding legal effect as a family arrangement.
The validity of the Deed of Consent
[34] With regard to the validity of the Deed of Consent, the Judge rejected the Respondent’s plea of non est factum. He held that the Deed of Consent “was not fundamentally different from what [the Respondent] and [Siew Eng] had believed it to be” (see the GD at [58]). They both understood the two main purposes underlying the Deed of Consent, which the Judge framed in a slightly different manner from us (see [25] above), namely: “to confirm that the distribution would be in accordance [with] the [Note] as per the [Letter of Consent] and to appoint the [Appellants] as administrators in place of [Hock Eng]” (see the GD at [60]).
[35] The Judge also rejected the Respondent’s argument that the Deed of Consent should be set aside because she had not been given an opportunity to seek independent legal advice before she signed it. He considered that the lack of independent legal advice was not, in and of itself, an independent ground to invalidate the Deed of Consent. In any event, he thought that the Respondent had ample opportunity to seek independent legal advice before signing the Deed of Consent.
[36] The Judge was of the view that the Deed of Consent did amount to a family arrangement as it was intended to resolve a pre-existing family dispute. He proceeded to consider whether the Respondent had been unduly influenced into signing the Deed of Consent and whether there had been “honest disclosure of material facts” prior to the execution of that deed (see the GD at [70]).
[37] The Judge rejected the Respondent’s argument that she had been labouring under Hock Eng’s undue influence when she signed the Deed of Consent. He noted that the Respondent’s argument rested solely on her allegation that Hock Eng had scolded her and forced her to sign the Deed of Consent at the 8 July 2010 meeting. He thought that Mr Chia would have intervened if the dispute between the Respondent and Hock Eng had gotten out of hand. He also noted that the Respondent had ample opportunity to raise any allegations of undue influence to either Mr Chia or Mr Hoo, who was present to witness the execution of the Deed of Consent. In those circumstances, he found that Hock Eng had not made any promises or threats, whether express or otherwise, to pressurise the Respondent into signing the Deed of Consent.
[38] However, the Judge agreed with the Respondent that there had been non-disclosure of material facts which was sufficient to justify setting aside the Deed of Consent. He found that in all likelihood, Hock Eng and Mdm Ho knew about the full extent of Mr Kuek’s estate. However, they kept the Respondent (as well as Mdm Lim and Siew Eng) in the dark about this. The Judge accepted that the Respondent only found out about the full extent of Mr Kuek’s estate in 2012 after she engaged Mr Tng to represent her following the 7 May 2012 meeting. Therefore, the Judge held that the Deed of Consent was not a valid family arrangement.
The validity of the Deed of Family Arrangement
[39] In respect of the Deed of Family Arrangement, the Judge was of the view that its validity depended on whether the Appellants had the requisite authority to execute that deed on behalf of all the members of the first family. Given his decision to set aside the Deed of Consent, he held that the Appellants could not rely upon that document for the authority which they needed to act on behalf of the first family. He did observe, however, that if the Deed of Consent was valid, then cl 2 of that deed would have given the Appellants authority to not only negotiate, but also enter into a binding settlement with the second family on behalf of the first family (see the GD at [108]).
[40] The Judge rejected the Appellants’ argument that the doctrine of relation back should be applied to validate the Deed of Family Arrangement. He considered that doctrine to be inapplicable to the present case because although that doctrine deemed an administrator to have authority, as from the date of the deceased’s death, to deal with the assets in the deceased’s estate before the letters of administration were extracted, it would not enable the administrator to vary the beneficiaries’ entitlements under the intestacy regime, which was what the Deed of Family Arrangement purported to do. In the circumstances, the Judge held, Mr Kuek’s estate had to be distributed in accordance with the intestacy regime set out in the ISA since the Letter of Consent and the Deed of Consent were invalid.
[41] Similarly, the Judge also rejected the Appellants’ argument that the court should exercise its discretion to validate the Deed of Family Arrangement pursuant to s 56(1) of the Trustees Act. In his view, that provision did not permit the court to empower a trustee to vary the proportion of the estate which each beneficiary was entitled to receive.
The Judge’s orders
[42] Having made the above findings, the Judge made the following orders (see the GD at [120]):
The issues on appeal
[43] Having considered the parties’ submissions on appeal, we considered that the two key issues below arose for our consideration:
(a) whether we should affirm the Judge’s holding that the Deed of Consent was not a valid family arrangement because there had been non-disclosure of material facts prior to the execution of the deed; and
(b) whether there were any legal impediments to the Appellants continuing as the administrators of Mr Kuek’s estate if the Deed of Consent were set aside.
We will elaborate on the parties’ submissions as and where appropriate in the course of our discussion below.
Our decision
Overview
[44] Like the Judge, we are satisfied that the Deed of Consent should be regarded as a family arrangement. One important consequence which flows from this is that the validity of the Deed of Consent rests upon there having been full and frank disclosure of all material facts at the time it was entered into. Mr Chia’s assessment of the strength of the second family’s claim for a share of Mr Kuek’s estate under the intestacy regime set out in the ISA and the total value of Mr Kuek’s estate were material facts, but they were withheld from the Respondent (as well as from Mdm Lim and Siew Eng). In our view, the non-disclosure of these facts justified the setting aside of the Deed of Consent.
The principles governing family arrangements
Examples of types of family arrangements
[45] We begin our analysis by first outlining what constitutes a “family arrangement”. There does not appear to be a precise definition of this term; but in our judgment, stated broadly, it refers to an agreement between members of the same family which is intended to be generally and reasonably for the benefit of the family (see Pek Nam Kee and another v Peh Lam Kong and another [1994] 2 SLR(R) 750 (“Pek Nam Kee”) at [107], as well as Halsbury’s Laws of England vol 91 (Butterworths, 5th Ed, 2012) (“Halsbury’s Laws of England vol 91”) at para 903). The parties to a family arrangement act not just out of self-interest, but also in furtherance of the interest of the family unit to which they belong. Often, this means that one or more of them might sacrifice their own interests for what they perceive to be the greater good of the family.
[46] In the Canadian case of Grenon v Grenon Estate [1980] BCJ No 42, it was held that for an agreement to be treated as a family arrangement, a key requirement was the presence of some form of benefit to the family. There, an agreement was reached between a widower (“Grenon”) and one of his sons (“Olson”), pursuant to which Grenon agreed, in exchange for C$10,000, to renounce his interest in his deceased wife’s estate in favour of Olson. The agreement had been entered into prior to the deceased wife’s will being declared invalid by reason of non-compliance with certain statutory requirements. Although it is not entirely clear from the judgment, it appears that Grenon would not have received anything under the invalid will (see [13]). The British Columbia Supreme Court rejected the submission that the agreement was a family arrangement. It said (at [18]):
[47] The requirement that there be some form of benefit to the family can be met in a number of ways. For example, members of the same family may enter into agreements to compromise doubtful or disputed rights so as to preserve the peace and harmony of the family, which would be disrupted if the disputing members of the family were to litigate their disputes in court. Such agreements have been regarded as family arrangements, as can be seen from the Privy Council’s decision in Cashin v Cashin [1938] 1 All ER 536 (“Cashin”).
[48] In Cashin, the father (“Sir Michael”) passed away in 1926, and was survived by his wife (“Lady Cashin”) and his four adult children (three sons and a daughter). In his will, he bequeathed $40,000 to each of his three sons and left the residue of his estate to Lady Cashin. It turned out that Sir Michael’s estate was insufficient to pay the legacies in full. Two years prior to his death, Sir Michael had made, or at least, had attempted to make, some large gifts to Lady Cashin. In particular, he had transferred some bearer bonds to her. Six months after Sir Michael’s passing, the Ministry of Finance attempted to obtain payment of death duties on those bonds. The Ministry contended that the bonds formed part of Sir Michael’s estate because the gift of the bonds was imperfect and therefore void. One of the executors of Sir Michael’s estate, Lawrence Cashin, who was also one of Sir Michael’s sons (the other executor was Lady Cashin), and his brother, Peter Cashin, sought legal advice on the course that should be pursued by the estate. The advice was “not encouraging”. Ultimately, it was decided that payment of the additional death duties should be made. Thereafter, a deed was entered into between Lady Cashin and her three sons. The deed stated that Lady Cashin was to provide a sum sufficient to pay the additional death duties and all the pecuniary legacies in full, and, on their part, her three sons were to give up any claim against her in relation to the aforesaid bonds. In 1930, Peter Cashin commenced an action to have the deed set aside on the basis, among other things, that the executors had failed to disclose that the bonds had not been the subject of a completed gift by Sir Michael to Lady Cashin, and therefore formed part of his estate at his death.
[49] The Privy Council said that the question of whether the deed should be set aside was to be approached in the following manner (at 543):
This passage is instructive because it sets out – correctly, in our judgment – the two-stage inquiry which applies when considering whether an agreement that is alleged to be a family arrangement should be set aside on the basis of, specifically, non-disclosure of material facts. In such situations, it is necessary, first, to ascertain whether the agreement in question should be interpreted and treated as a family arrangement. Second, if the agreement is indeed regarded as a family arrangement, the court must then consider whether there were any material facts which were withheld from one or more of the parties to the agreement prior to its execution.
[50] On the facts of Cashin, as to the first of these two questions, the Privy Council said (at 543):
This is a clear illustration that an agreement between members of the same family that seeks to compromise doubtful or disputed rights among them may be interpreted as a family arrangement.
[51] Agreements between members of the same family to preserve family property may also fall under the rubric of family arrangements. Pek Nam Kee is an example of this. We set out the facts of that case in some detail as we will return to it later. Mr Pek Boon Bok (“Mr Pek”) died intestate in 1973, leaving his estate to be divided between his second wife (“Mdm Ow”) and his 13 children, seven of whom were from his marriage with his first wife (who predeceased him) and six of whom were the progeny of his second marriage. Mr Pek’s fourth son from his first marriage (“Lam Kong”) and Mdm Ow were the administrators of the estate. The major asset in the estate was a piece of commercial property. In 1988, a contract was entered into to sell that property. Discussions took place between the members of the family as to how the proceeds of sale were to be dealt with. Lam Kong came up with a proposal, but Mdm Ow passed away before a deed could be executed to give effect to that proposal. Mdm Ow left a will bequeathing her property to her six children in equal shares. This had the effect of increasing the share of Mr Pek’s estate that Mdm Ow’s six children would be entitled to. After Mdm Ow’s demise, Lam Kong pressed on with his proposal, but in a modified form. In gist, he suggested that Mdm Ow’s share be fixed at $510,000, and that the balance be divided equally between all 13 siblings. The 13 siblings would then inject their respective one-thirteenth shares of the balance of Mr Pek’s estate (ie, what remained of Mr Pek’s estate after Mdm Ow’s estate had been given the $510,000 apportioned to her) into a company called “PBB”. In addition, Mdm Ow’s six children would inject their respective shares of the $510,000 which they stood to receive as beneficiaries of Mdm Ow’s estate into another company called “SPL”, and PBB would match their investment by injecting a further sum of $510,000 into SPL.
[52] A deed was drafted by a firm of solicitors on Lam Kong’s instructions to give effect to the aforesaid proposal. When the accounts of Mr Pek’s estate were drawn up, Lam Kong was careful to ensure that the expenses which he had incurred as one of the administrators of the estate were included, but he left out the expenses incurred by Mdm Ow. Prior to the signing of the deed, two of Mdm Ow’s children sought independent legal advice. They were advised not to sign the deed. Their solicitors wrote to Lam Kong’s solicitors asking various questions about the accounts of the estate. They were told that their clients could inspect the accounts at Lam Kong’s office. That, however, was never done. Subsequently, the two children who had sought independent legal advice agreed to sign the deed, against the advice of their solicitors. Eventually, the deed was signed by all the siblings. Lam Kong became the chairman of the board of directors of both PBB and SPL; he was also the managing director of SPL. SPL had two other directors, one of whom was Mdm Ow’s fourth son (“Nam Kee”). After some time, the relationship between Nam Kee and Lam Kong became strained. Nam Kee was one of the plaintiffs who commenced proceedings to have the deed set aside on the ground, among other things, of non-disclosure of material facts. Judith Prakash J concluded that the agreement had been entered into to ensure that family property remained in the family. She said (at [107]):
[53] Such agreements to preserve family property can benefit the family, for example, by creating a situation where the returns on the property are not compromised as a result of the property being broken up into smaller parts, and may properly be regarded as family arrangements.
[54] A third category of agreements which will likely be regarded as family arrangements are those which are entered into to safeguard the honour of the family. Stapilton v Stapilton and others [1558–1774] All ER Rep 352 (“Stapilton”) has been interpreted as standing for this proposition (see Stockley v Stockley (1812) 35 ER 9 at 12; see also Halsbury’s Laws of England vol 91 at para 903). In Stapilton, an agreement was entered into between a father (“Stapilton”) and his two sons (“Henry” and “Philip”) to deal with the question of how his property was to be shared among his sons after his passing. Ostensibly, the agreement was entered into for the purpose of “preventing disputes and controversies that might possibly arise between the two sons” (at 352). Following the demise of both Stapilton and Henry, Henry’s son and heir commenced an action against Philip for, among other things, an account of rents received by Philip from Stapilton’s property. Philip contended that contrary to the agreement which had earlier been entered into, he was entitled to the whole of Stapilton’s estate as Henry was an illegitimate child. Henry was indeed found to be illegitimate. However, Henry’s son and heir contended that the agreement should nonetheless be upheld. The court agreed, saying (at 353–354):
[55] Yet another category of agreements which are generally treated as family arrangements are those entered into between the surviving descendants of a deceased person to give effect to testamentary wishes which the deceased expressed before his death in a manner that is not and cannot take effect as a will. Williams v Willliams (1866) LR 2 Ch App 294 (“Williams”) provides an illustration of this. There, the father (“Williams”) died and was survived by his two sons (“John” and “Samuel”) and his widow. A testamentary document was found, but it was not a valid devise of Williams’ estate because it had not been witnessed by anyone. That document purported to give the whole estate, subject to certain provisions for the widow during her lifetime, to the two sons equally. The estate comprised real property of different tenures as well as personal property. Under the then prevailing intestacy regime, the two sons were each entitled to different parts of the real property in the estate based on the type of tenure that Williams had over the property. The widow also had certain rights to the assets in the estate. There was a finding of fact that John (the elder son), who was entitled to a larger share of the estate, had declared that the invalidity of the testamentary document left behind by Williams should make no difference between himself and his brother, and that the property should be “not mine or thine, but ours” (at 296).
[56] For a period of time following Williams’ demise, the two brothers continued to treat the real and personal property of the estate as common property. The widow also did not assert her legal rights to the assets in the estate. After a time, John asserted his legal rights in Williams’ estate. The suit which he instituted never came on for hearing. Samuel’s executors and devisees in trust then commenced a suit in order to determine the rights of the two brothers in the properties comprised in the estate. It was strongly argued on behalf of John that there had been no family arrangement between the parties (see 304). The court rejected this argument and held that a valid family arrangement had been made between them, and that they should be equally entitled to the properties in the estate. The following excerpt from Lord Chelmsford LC’s judgment suggests that an agreement entered into to give effect to a deceased person’s testamentary wishes can be regarded as a family arrangement, provided it was supported by some consideration, even if the consideration is “trifling” (at 300):
[57] It is not hard to see why the courts will strain to see that such agreements should be regarded as family arrangements. They satisfy the requirement that there should be some form of benefit to the family. In such a case, the benefit is not of a pecuniary nature, but simply the satisfaction that the members of the family derive from seeing the testamentary wishes of the deceased fulfilled.
[58] As we said at the beginning of this discussion, a family arrangement is an agreement between members of the same family which is intended to confer some benefit upon the family. Often, such agreements involve one or more of the parties to the agreement putting the greater interest of the family before their own so as to confer some benefit upon the family. The various types of agreements which we have referred to above are meant to illustrate general categories of agreements that will commonly be treated as family arrangements, and are not meant to be exhaustive.
Effect of treating a particular agreement as a family arrangement
[59] We turn to consider some of the legal consequences of holding that a particular agreement is a family arrangement. At the outset, it should be noted that there are strong public policy considerations in favour of encouraging family arrangements as they go towards preserving peace, harmony and unity in families. One effect which flows from this is that an agreement which is found to be a family agreement, assuming it is reduced into writing, will not be interpreted with an excessive degree of formalism. Rather, the court will apply the rules of construction to ascertain the parties’ intentions and, so far as possible, endeavour to give effect to them (see Sheares Betty Hang Kiu v Chow Kwok Chi and others [2006] 2 SLR(R) 285 at [17]). Prakash J also made the following pertinent observation in Pek Nam Kee at [107], which we referred to earlier (at [52] above):
[60] However, as is evident from the excerpt which we quoted from Williams at [56] above, such a policy does not supersede the need for valid consideration. Although the court will not scrutinise the pecuniary worth of the consideration too closely, the court can set aside an agreement which purports to be a family arrangement if the inadequacy of the consideration is so gross as to lead the court to conclude that a party was unduly influenced into entering into the agreement; or entered into the agreement believing it to be something radically or fundamentally different from what it turned out to be, ie, the inadequacy of the consideration is so gross that the court can infer the vitiating factor of non est factum (see Pek Nam Kee at [108], and Halsbury’s Laws of England vol 91 at para 914).
[61] As long as the agreement was fairly and freely entered into without any concealment or unfair pressure, and provided there is no question of a plea of non est factum being successfully taken, the court will uphold the agreement even though the parties may have misunderstood the true state of their legal rights prior to entering into the agreement. Lord Eldon LC put it in the following manner in Gordon v Gordon (1821) 36 ER 910 (“Gordon”) at 917:
[62] In essence, it may be said that the most important effect which flows from holding that an agreement is a family arrangement is that the agreement will generally be upheld provided it has been entered into fairly, “without concealment or imposition on either side, with no suppression of what is true, or suggestion of what is false” (per Lord Eldon in Gordon at 917). But, the corollary to this is that the agreement will be set aside if any party to it had intentionally suppressed facts that might have been material or suggested matters that were false before the agreement was entered into so as to influence another party’s decision on whether or not to adopt the family arrangement in question. Even if the non-disclosure in question is not dishonest, so long as material facts have been withheld from one or more of the parties before the execution of a family arrangement, the agreement may be set aside (see further [64]–[65] below). Material facts in this context refer to such facts as may reasonably affect the parties’ determination of whether they will enter into the agreement in question (see Greenwood v Greenwood (1863) 46 ER 285 (“Greenwood”) at 290).
[63] Both the tendency to uphold family arrangements if they have been entered into fairly, as well as the readiness to invalidate them in the stated circumstances stem from the fact that family arrangements are agreements between members of the same family, and very often, the parties do not deal with each other on a commercial basis or at arm’s length. As Prakash J stated in Pek Nam Kee, such arrangements are often “founded on sentiment rather than commerce” (at [108]). The parties to a family arrangement may repose a certain degree of trust in the counterparties to the agreement. Additionally, since family arrangements are ostensibly for the greater good of the family, the parties may be more willing not to insist on their strict legal rights so that the family benefits as a whole. Given these circumstances, there is a duty on all the parties to a family arrangement to make full disclosure, before the arrangement is entered into, of all material facts known to them so that no party’s ignorance of the true state of affairs is taken advantage of.
[64] As mentioned earlier at [62] above, where a party’s non-disclosure of material facts is deliberate and calculated to influence another party’s decision as to whether or not to adopt the family arrangement in question, the arrangement will be set aside. In Pek Nam Kee, Prakash J said as follows in explaining her reasons for setting aside the deed which constituted the family arrangement in that case:
[65] As we also noted at [62] above, there does not need to be a finding that the non-disclosure in question was dishonest before a family arrangement can be set aside. Rather, a family arrangement is liable to be set aside if one party to the arrangement has material information in his possession which, even without any dishonest intention, he happens not to communicate to the others before the arrangement is entered into. In such circumstances, an argument that the aggrieved party could have found out about the true state of affairs by making inquiries will not assist the party that seeks to have the arrangement upheld. This can be seen from Greenwood, which involved two agreements entered into between siblings following the death of two of their brothers who carried on business in New Zealand together with a third brother, the defendant (“George”). Under the first agreement, the surviving siblings agreed to share the deceased brothers’ estates equally. Under the second agreement, the surviving siblings agreed to sell their respective shares of the deceased brothers’ estates to George for £500. The deceased brothers had substantial assets in New Zealand. It was alleged that George, by virtue of having been in correspondence with one of the deceased brothers who was his business partner, knew about this and had withheld this information from the other surviving siblings prior to their entering into the agreements. The court refused to uphold the two agreements. Turner LJ said (at 290):
Summary of the relevant principles
[66] The principles that we have set out above can be summarised as follows:
(a) A family arrangement is an agreement between members of the same family which is intended to confer some benefit upon the family. Often, such agreements involve one or more of the parties to the agreement putting the greater interest of the family before their own so as to confer some benefit upon the family.
(b) The following is a non-exhaustive list of general categories of agreements that will commonly be treated as family arrangements because they confer some form of benefit on the family:
(i) agreements between members of the same family, pursuant to which one or more of them agrees to compromise doubtful or disputed rights so as to preserve peace and harmony within the family, which would be disrupted if the disputing members of the family were instead to litigate their disputes in court;
(ii) agreements between members of the same family to preserve family property – such agreements can benefit the family, for example, by creating a situation where the returns on the property are not compromised as a result of the property being broken up into smaller parts;
(iii) agreements which are entered into to safeguard the honour of the family; and
(iv) agreements entered into between the surviving descendants of a deceased person to give effect to testamentary wishes which the deceased expressed before his death in a manner that is not and cannot take effect as a will – in such a case, the benefit that is conferred on the family is not of a pecuniary nature, but simply the satisfaction that the members of the family derive from seeing what they believe to be the testamentary wishes of the deceased fulfilled.
(c) The following is a list of some of the legal consequences that flow from holding that a particular agreement is a family arrangement:
(i) The agreement, assuming it is reduced into writing, will not be interpreted with an excessive degree of formalism. Rather, the court will apply the rules of construction to ascertain the parties’ intentions and, so far as possible, endeavour to give effect to them.
(ii) The agreement must be supported by valid consideration. Although the court will not scrutinise the pecuniary worth of the consideration too closely, the court can set aside a family arrangement if the inadequacy of the consideration is so gross as to lead the court to conclude that a party to the agreement was unduly influenced into entering into the agreement, or entered into the agreement believing it to be something radically or fundamentally different from what it turned out to be (ie, the inadequacy of the consideration is so gross that the court can infer the vitiating factor of non est factum).
(iii) As long as the agreement was fairly and freely entered into without any concealment or unfair pressure, and provided there is no question of a plea of non est factum being successfully taken, the court will uphold the agreement even though the parties may have misunderstood the true state of their legal rights prior to entering into the agreement.
(iv) The agreement will generally be upheld as long as it has been entered into fairly. But, the corollary to this is that the agreement will be set aside if it is found that any party to it had either intentionally suppressed facts that might have been material or suggested matters that were false before the agreement was entered into so as to influence another party’s decision on whether or not to adopt the family arrangement in question.
(v) There is no need for a finding that any non-disclosure of material facts that may have transpired was dishonest before a family arrangement may be set aside. A family arrangement is liable to be set aside if one party to the arrangement has in his possession material information which, even without any dishonest intention, he happens not to communicate to the others before the arrangement is entered into.
[67] In the light of the applicable principles, we turn to consider how these apply to the facts in the present case.
Whether the Deed of Consent should be treated as a family arrangement
[68] As we have already said (see [44] above), we were satisfied that the Deed of Consent should be treated as a family arrangement. It may be categorised as a family arrangement under the last of the categories we have mentioned above at [55]–[57]. Although there was a lack of consideration moving from those members of the first family who were not beneficiaries under the intestacy regime set out in the ISA (such as the Appellants), there was, on the other hand, no dispute that the agreement was effected by way of a deed. Aside from this, the agreement also falls into the first of the aforementioned categories of agreements which have traditionally been regarded as family arrangements. At the time the Deed of Consent was signed, there were disputes between the members of the first and second families, and the deed was intended (among other things) to authorise the Appellants to negotiate, on behalf of the first family, an amicable settlement with the second family.
[69] The circumstances that existed prior to the execution of the Deed of Consent are material. As mentioned earlier, in April 2010, Mdm Goh indicated that she and her family did not wish to be bound by the Note. She claimed that they were entitled, instead, to half of Mr Kuek’s estate under the intestacy regime set out in the ISA. On 26 April 2010, Mdm Goh and Geok Hua applied to be added as co-administrators of Mr Kuek’s estate. This was followed soon after by the lodging of a caveat against Mr Kuek’s estate on 30 April 2010. As a result, the court process relating to the administration of the estate was brought to a standstill. Given those circumstances, there were disputes between the members of the first and second families over at least two issues, namely: (a) whether Mdm Goh was a lawful spouse entitled to participate in the distribution of Mr Kuek’s estate under the intestacy regime; and (b) whether the Letter of Consent was valid and binding. Mr Chia advised Hock Eng, Mdm Ho, Siew Eng and the Respondent on these issues at the 13 May 2010 meeting.
[70] The first family wanted to avoid protracted litigation with the second family over these issues. The Deed of Consent was thus executed in order to authorise the Appellants to negotiate, on behalf of the first family, with the second family with a view to amicably resolving the disputes between the two families. As the Judge noted, the Deed of Consent conferred broad authority upon the Appellants to enter into a binding settlement with the second family on behalf of the first family. In agreeing to the Deed of Consent, the various parties seemingly intended to give up their strict legal rights under the intestacy regime and agreed instead to abide by whatever settlement the Appellants might reach with the second family. Therefore, we were satisfied that the Deed of Consent should be treated as a family arrangement.
Non-disclosure of material facts in relation to the execution of the Deed of Consent
[71] We turn now to our reasons for setting aside the Deed of Consent for non-disclosure of material facts. In our judgment, two facts were withheld from the Respondent (as well as from Mdm Lim and Siew Eng) prior to the execution of the Deed of Consent, namely:
(a) the strength of the second family’s claim for a share of Mr Kuek’s estate under the intestacy regime set out in the ISA; and
(b) the size of Mr Kuek’s estate, in particular, the residuary estate.
We considered both of these facts material to the Respondent’s decision to agree to the Deed of Consent. We analyse each non-disclosure in turn.
Strength of the second family’s claim for a share of Mr Kuek’s estate
[72] In our judgment, contrary to the evidence which he gave, Mr Chia in fact thought there was a good chance that the Letter of Consent would not be upheld by the court, and that the members of the second family would be entitled to share in Mr Kuek’s estate under the intestacy regime set out in the ISA. However, he did not convey this to the Respondent, Mdm Lim and Siew Eng. We do not accept Mr Chia’s contention that he was always of the view that the Letter of Consent would be upheld, and that he was merely setting out the “risk of litigation” in the 18 May 2010 Letter, which was sent only to Hock Eng, but not to the Respondent, Siew Eng or Mdm Lim (see [18] above). We reject Mr Chia’s evidence for two reasons. First, it does not reflect what the 18 May 2010 Letter says. On its terms, the 18 May 2010 Letter suggests that there was a “real risk” that Mdm Goh’s application for herself and Geok Hua to be appointed as co-administrators of Mr Kuek’s estate might succeed, and that there was “some doubt” as to whether the Letter of Consent could “override the default position provided by the law of intestacy”. Second, we note that after the Deed of Consent was entered into, Mr Chia effectively advised and represented Hock Eng’s family in the negotiations with the second family, and these culminated in the Deed of Family Arrangement, under which the second family was to receive a half-share of the residuary estate as well as a half-share of the Malaysian Properties (see [26(d)] above). This leads to the inescapable inference that Hock Eng’s family had been led to believe that the second family’s claim for a share of Mr Kuek’s estate under the intestacy regime set out in the ISA was a strong one. The agreement to set aside the sum of $1.65m to be distributed in accordance with Mr Kuek’s wishes as set out in the Note was the only amendment that was eventually made to the second family’s initial proposal that the estate be divided equally between the two families (see [22] above). In our judgment, this is wholly consistent with Mr Chia having formed the view that the second family’s claim had a high likelihood of success. This was not communicated to the Respondent (nor to Mdm Lim and Siew Eng) prior to the execution of the Deed of Consent.
[73] In our judgment, the high likelihood of the second family’s claim succeeding was a material fact. To understand why this is so, it is important to appreciate the Respondent’s motivation for agreeing to the Letter of Consent and the Deed of Consent. The Respondent had an interest in seeing Mr Kuek’s wishes upheld. In our view, this is the only motivation that explains why she was prepared to give up her entitlement under the intestacy regime in exchange for the small fraction of that entitlement reflected in the sum of $200,000 allotted to her under the Note. Both the Letter of Consent and the Deed of Consent make express reference to the parties’ desire to honour Mr Kuek’s wishes and intentions. The Respondent did not know the full extent of Mr Kuek’s estate, in particular, the residuary estate, when the Letter of Consent and the Deed of Consent were executed (see [87]–[88] below). However, she was aware that he had two properties in Singapore (ie, the Toh Tuck Road Property and the Jurong Kechil Shophouse) and two other properties in Malaysia (ie, the Malaysian Properties). She was entitled to either a one-sixth share or a one-sixteenth share of the estate comprising (among other assets) those properties, depending on whether or not the second family was entitled to share in the distribution of the estate under the intestacy regime; she also had a contingent interest in Mdm Lim’s share of the estate. The only conceivable reason for her willingness to give up her legal rights in the estate under the intestacy regime would have been the desire to see Mr Kuek’s wishes honoured in their entirety or very nearly so. This is borne out by her evidence under cross-examination, which reflects the fact that her desire all along was to see all the family members adhere to Mr Kuek’s wishes as set out in the Note:
[74] It does not appear that Mr Chia appreciated the Respondent’s desire to see Mr Kuek’s testamentary wishes honoured. He laboured throughout under the misconception that her only interest in the matter was to receive the $200,000 that Mr Kuek had bequeathed to her under the Note, and that Hock Eng and his family were free to negotiate whatever settlement they wanted with the second family so long as the sum of $1.65m which Mr Kuek wanted to be distributed to various named persons was not affected. This emerges from Mr Chia’s admission under cross-examination that he did not think it was necessary to keep the Respondent, Siew Eng and Mdm Lim informed of the “minute” details of the negotiations between the two families that culminated in the execution of the Deed of Family Arrangement as long as their respective shares under the Note remained unaffected. We set out the relevant parts of his evidence below:
[75] In our judgment, this passage throws into sharp relief the conflict of interest that Mr Chia was faced with:
(a) The members of the second family wished to depart from the Note. In fact, their proposal had been for Mr Kuek’s estate to be split equally between the two families, but this had been rejected by the first family (see [22]–[24] above).
(b) In rejecting the second family’s proposal, the first family must have taken into account the advice conveyed by Mr Chia at the 13 May 2010 meeting that he expected the Letter of Consent would likely be upheld by the court (see [16] above).
(c) Mr Chia was ostensibly representing the whole of the first family. Within this client group was one faction consisting of Mdm Lim, the Respondent and Siew Eng, who stood to lose a great deal by standing by the Note, and another faction consisting of Hock Eng and his family, who stood to gain a great deal by this.
(d) The only conceivable motivation for Mdm Lim, the Respondent and Siew Eng to go through with abiding by the Note, at considerable cost to themselves, was to honour Mr Kuek’s wishes.
(e) But, such a motivation would make no sense in isolation. There would be no satisfaction in having Mr Kuek’s wishes honoured by one small suffering group on its own, but by no one else in the first and second families.

The judgment continues past this page. Read the rest at eLitigation.

Kuek Siang Wei and another v Kuek Siew Chew

Laws this judgment relies on

Grounds of decision

Introduction

Background facts

The demise of Mr Kuek and the discovery of his handwritten note

The distribution envisaged in the Note

The distribution under the intestacy regime

The signing of the letter of consent and the events occurring thereafter

The execution of the deed of consent and the deed of family arrangement

The decision below

The validity of the Letter of Consent

The validity of the Deed of Consent

The validity of the Deed of Family Arrangement

The Judge’s orders

The issues on appeal

Our decision

Overview

The principles governing family arrangements

Examples of types of family arrangements

Effect of treating a particular agreement as a family arrangement

Summary of the relevant principles

Whether the Deed of Consent should be treated as a family arrangement

Non-disclosure of material facts in relation to the execution of the Deed of Consent

Strength of the second family’s claim for a share of Mr Kuek’s estate