Fong Wai Lyn Carolyn v Kao Chai-Chau Linda: Trust Shares Dispute

In Fong Wai Lyn Carolyn v Kao Chai-Chau Linda, the High Court of Singapore addressed a dispute over 600,000 ordinary shares in Airtrust (Singapore) Pte Ltd held in trust by Linda Kao Chai-Chau. Carolyn Fong Wai Lyn, a beneficiary of the estate of Peter Fong, sought a declaration that the shares are held on trust for the estate. The court found in favor of Ms. Fong, declaring that Ms. Kao holds the shares on trust for the estate and must comply with the executor's directions regarding voting rights and disposal of the shares.

1. Case Overview

1.1 Court

High Court of the Republic of Singapore

1.2 Outcome

Judgment for Plaintiff

1.3 Case Type

Trust

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Dispute over 600,000 Airtrust shares held in trust. Court declares shares are held on trust for the estate of Peter Fong.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Carolyn Fong Wai LynPlaintiffIndividualJudgment for PlaintiffWon
Linda Kao Chai-ChauDefendantIndividualClaim DismissedLost
Airtrust (Singapore) Pte LimitedDefendantCorporationNeutralNeutral
HSBC Trustee (Singapore) LimitedDefendantCorporationNeutralNeutral

3. Judges

Judge NameTitleDelivered Judgment
Steven ChongJudge of AppealYes

4. Counsels

Counsel NameOrganization
Kee Lay LianRajah & Tann Singapore LLP
Lim Wen JuinRajah & Tann Singapore LLP
Mahesh Rai s/o Vedprakash RaiDrew & Napier LLC
Huang JunjieDrew & Napier LLC
Chan Yi ZhangTan Kok Quan Partnership
Vincent LimShook Lin & Bok LLP

4. Facts

  1. Peter Fong transferred 600,000 Airtrust shares to Linda Kao in 2000.
  2. A trust deed was executed in 2000, stating Kao held the shares on trust for Fong.
  3. Fong passed away in April 2008.
  4. Kao claimed the shares were for Airtrust employees or an absolute gift to shareholders.
  5. A supplemental deed in 2004 purportedly vested ownership in Kao, but its authenticity was challenged.
  6. HSBC, the executor, supported Fong's daughter's application.
  7. The primary objective of the application was to obtain an injunction restricting Ms Kao’s exercise of the voting powers.

5. Formal Citations

  1. Fong Wai Lyn Carolyn v Kao Chai-Chau Linda and others, Originating Summons No 725 of 2016, [2017] SGHC 111

6. Timeline

DateEvent
Airtrust (Singapore) Pte Ltd started by the late Peter Fong.
Trust deed dated 20 January 2000.
Trust shares transferred to Ms. Kao.
Purported supplemental trust deed dated 13 February 2004.
Peter Fong passed away.
Receivers and managers appointed by consent to manage Airtrust.
Receivers and managers of Airtrust announced that an AGM would be held on 20 July 2016.
Ms Fong’s application to extend the R&Ms’ appointment was dismissed.
Ms Fong instructed her solicitors to write to HSBC’s solicitors.
HSBC through its solicitors replied and wrote to Ms Kao.
Ms Fong proceeded to file the present OS 725.
Ms Kao’s solicitors replied to HSBC.
Hearing of the Injunction Application before Kan Ting Chiu SJ.
Annual general meeting.
Two new directors, Charles Chew and Fong Wei Heng, were elected.
Substantive hearing.
Court granted leave to Ms Fong and HSBC to file an affidavit each.
HSBC elaborated on its view that Ms Fong’s application is in the estate’s best interests.
Parties appeared before the court again for further submissions on locus standi.
Judgment reserved.

7. Legal Issues

  1. Beneficial Ownership of Trust Shares
    • Outcome: The court declared that the trust shares are held on trust for the estate of Peter Fong.
    • Category: Substantive
    • Sub-Issues:
      • Interpretation of trust deed
      • Validity of supplemental deed
      • Fiduciary duties of trustee
    • Related Cases:
      • [2017] SGHC 111
  2. Locus Standi of Beneficiary
    • Outcome: The court found that special circumstances existed to allow the beneficiary to bring the action on behalf of the estate.
    • Category: Procedural
    • Sub-Issues:
      • Special circumstances
      • Executor's unwillingness to act
      • Protection of estate assets
    • Related Cases:
      • [1996] 3 SLR(R) 27
  3. Trustee's Duty to Comply with Executor's Directions
    • Outcome: The court declared that the trustee is obliged to comply with the directions of the executor regarding the exercise of voting rights and disposal of the trust shares.
    • Category: Substantive
    • Sub-Issues:
      • Exercise of voting rights
      • Disposal of trust shares
      • Scope of trustee's discretion

8. Remedies Sought

  1. Declaration of Trust
  2. Compliance with Executor's Directions
  3. Injunctive Relief

9. Cause of Actions

  • Breach of Trust
  • Declaratory Relief

10. Practice Areas

  • Trusts
  • Estate Planning
  • Commercial Litigation

11. Industries

  • No industries specified

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Hong Alvin v Chia Quee KheeHigh CourtYes[2011] SGHC 249SingaporeCited as a previous decision related to the disputes between the parties.
Fong Wai Lyn Carolyn v Airtrust (Singapore) Pte Ltd and anotherHigh CourtYes[2011] 3 SLR 980SingaporeCited as a previous decision related to the disputes between the parties.
Lee Pei-Ru Alice and another v Airtrust (Singapore) Pte LtdHigh CourtYes[2013] SGHC 259SingaporeCited as a previous decision related to the disputes between the parties.
Airtrust (Singapore) Pte Ltd v Kao Chai-Chau Linda and another suitHigh CourtYes[2014] 2 SLR 673SingaporeCited as a previous decision related to the disputes between the parties.
Airtrust (Singapore) Pte Ltd v Kao Chai-Chau LindaHigh CourtYes[2014] 2 SLR 693SingaporeCited as a previous decision related to the disputes between the parties.
Kao Chai-Chau Linda v Fong Wai Lyn Carolyn and othersHigh CourtYes[2016] 1 SLR 21SingaporeCited as a previous decision related to the disputes between the parties.
HSBC Trustee (Singapore) Limited v Carolyn Fong Wai Lyn and othersHigh CourtYes[2016] SGHC 31SingaporeCited as a previous decision related to the disputes between the parties.
Wong Moy (administratrix of the estate of Theng Chee Khim, deceased) v Soo Ah ChoyHigh CourtYes[1996] 3 SLR(R) 27SingaporeCited for the principle that a beneficiary can bring an action on behalf of the estate in special circumstances.
Sharpe v San Paulo Railway CoCourt of AppealYes(1873) LR 8 Ch App 597England and WalesCited for the purpose of confining the right of action to the executor or trustee is to avoid multiplicity of suits and to control unilateral actions by beneficiaries.
Alexander v Perpetual Trustees WA LimitedHigh Court of AustraliaYes[2004] HCA 7AustraliaCited for the principle that the rule also avoids vexing third parties with multiple suits.
Joseph Hayim Hayim and another v Citibank NA and anotherPrivy CouncilYes[1987] AC 730England and WalesCited for the principle that when a trustee commits a breach of trust or is involved in a conflict of interest and duty or in other exceptional circumstances a beneficiary may be allowed to sue a third party in the place of the trustee.
Osborne Hilliard v Luke EiffeHouse of LordsYes(1874) 7 LRHL 39United KingdomCited for the principle that it may be pertinent to see whether the circumstances made it “impossible, or at least seriously inconvenient for the representatives to take proceedings”.
Re Atkinson, deceasedSupreme Court of VictoriaYes[1971] VR 612AustraliaCited for the principle that the decision by the trustee company not to commence the proceedings was treated as tantamount to a failure to get in the estate.
Ramage v WaclawSupreme Court of New South WalesYes(1988) 12 NSWLR 84AustraliaCited for the principle that the special circumstances justifying her claim to relief included the fact that the interest in the dwelling-house was the deceased’s major asset; the merits of the case as the evidence suggested a prima facie case of undue influence; the Public Trustee’s bona fide refusal to commence proceedings; and the fact that an asset which could markedly increase the size of the deceased’s estate could be lost unless the plaintiff were allowed to proceed.
Porker v RichardsSupreme Court of South AustraliaYes[2016] SASC 98AustraliaCited for the principle that a beneficiary may sue on behalf of an estate if the executor or trustee is unable or unwilling to bring the action and the action is meritorious.
Foo Jee Boo and another v Foo Jhee Tuang and another (Foo Jee Seng, intervener)High CourtYes[2015] SGHC 176SingaporeCited for the principle that the beneficiaries of certain superannuation funds were not entitled to recover compensation from a third party because the trustees were ready and willing to take – and did in fact take – proper steps against the third party to restore the funds.
Re Barlow’s Will TrustsHigh CourtYes[1979] 1 WLR 278England and WalesCited for a similar option to purchase.
Management Corporation Strata Title Plan No 1933 v Liang Huat Aluminium LtdCourt of AppealYes[2001] 2 SLR(R) 91SingaporeCited for the principle that a recital in a deed can only assist in the construction of the substantive terms of the deed; it cannot override or control the operation of the substantive terms where such terms are clear and unambiguous.
Walsh v TrevanionQueen's BenchYes(1850) 15 QB 733England and WalesCited for the rule of construction that when the words in the operative part of a deed of conveyance are clear and unambiguous, they cannot be controlled by the recitals or other parts of the deed.
Ex parte Dawes; In re MoonCourt of AppealYes(1886) 17 QBD 275England and WalesCited for the rules applicable to the construction of such an instrument.
Tiger Airways Pte Ltd v Swissport Singapore Pte LtdHigh CourtYes[2009] 4 SLR(R) 992SingaporeCited for the principle that recitals do not impose legal obligations on the parties, they can often be of assistance to the courts in the construction of contractual terms.
A S Nordlandsbanken and another v Nederkoorn Robin HoddleHigh CourtYes[2000] 3 SLR(R) 918SingaporeCited for the principle that where the recital states a specific point of agreement, there being nothing inconsistent in the operative [part], the parties are bound by the agreement evidenced by and contained in the recital.
Low Gim Har v Low Gim SiahHigh CourtYes[1992] 1 SLR(R) 970SingaporeCited for the definition of ademption.
Foo Jee Seng and others v Foo Jhee Tuang and anotherCourt of AppealYes[2012] 4 SLR 339SingaporeCited for the principle that the discretion exercised by the trustees should, as a rule, be respected.
Tempest v Lord CamoysCourt of AppealYes(1882) 21 Ch D 571England and WalesCited for the principle that when a [settlor] has given a pure discretion to trustees as to the exercise of a power, the Court does not enforce the exercise of the power against the wish of the trustees, but it does prevent them from exercising it improperly.
Re BrockbankHigh CourtYes[1948] Ch 206England and WalesCited for the principle that beneficiaries cannot dictate the way a trustee should exercise his discretion.
Butt v KelsonHigh CourtYes[1952] 1 Ch 197England and WalesCited for the principle that if necessary, beneficiaries could compel trustees to use their voting powers attached to trust shares in the manner as the beneficiaries directed.
Re George Whichelow Ld Bradshaw v OrpenHigh CourtYes[1954] 1 WLR 5England and WalesCited as a case where the court declined to apply Butt v Kelson because not all the potential beneficiaries of the trust shares were before the court.
Burns v SteelHigh CourtYes[2006] 1 NZLR 559New ZealandCited as a case where the court agreed that Butt v Kelson should be restricted to trustee-shareholders who are also directors.
Kirby v WilkinsHigh CourtYes[1929] 2 Ch 444England and WalesCited for the principle that where a shareholder holds shares as a bare trustee for a third person, he is no doubt obliged to exercise his voting power in the way that the cestui que trust desires.
Hotung & Anor v Ho Yuen KiCourt of AppealYes[2002] 4 HKC 233Hong KongCited for the principle that a bare trustee can be directed by the beneficiary as regards his manner of voting.
Saunders v VautierRolls CourtYes(1841) 4 Beav 115England and WalesCited for the principle that beneficiaries who are sui juris and together entitled to the whole beneficial interest are entitled to direct the trustees to transfer the trust property to them or such persons as they direct.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Intestate Succession Act (Cap 146, 2013 Rev Ed)Singapore
Civil Law Act (Cap 43, 1999 Rev Ed)Singapore
Rules of Court (Cap 322, R 5, 2014 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Trust Shares
  • Trust Deed
  • Beneficial Ownership
  • Executor
  • Locus Standi
  • Special Circumstances
  • Voting Rights
  • Fiduciary Duty
  • Absolute Gift
  • Estate

15.2 Keywords

  • trust
  • shares
  • estate
  • beneficiary
  • executor
  • Airtrust
  • Singapore
  • fiduciary duty
  • voting rights

17. Areas of Law

Area NameRelevance Score
Trust Law90
Estate Administration70
Beneficiaries Rights50
Civil Procedure30
Corporate Law20
Company Law20

16. Subjects

  • Trusts
  • Estate Administration
  • Shareholder Rights