Claim Against a Trustee

28 February 2018

Foo Soon Yien

​You are a beneficiary of a trust and your trustee misappropriated trust monies without your consent. Your trustee then passes away before legal proceedings are instituted against him. What legal recourse do you have against the trustee and/or his estate? 

A executed a Trust Deed in 2004, appointing her brother, B, as her trustee for S$X million. The Trust Deed provided that B was, inter alia, under an obligation to hold the sum on trust for A, apply the proceeds towards her benefit and transfer the monies to such persons as directed by her. Pursuant to the Trust Deed, S$X million was deposited into a Trust Account in the parties’ joint names, with B designating himself as the sole signatory.

Given their close relationship, A reposed absolute trust in B and left the management of the fund entirely in his hands. A did not request for an account of the trust monies as B had regularly sent her monthly payments for her living expenses and had given the impression that he was conscientiously performing his duties as trustee.

As it subsequently transpired, B suffered a coronary disease and passed away in 2014. An application for grant of probate was taken out by his wife, C, as the sole executrix and beneficiary named in his will. Concerned about the trust monies, A procured bank statements for the Trust Account. The bank statements revealed that the deceased had, without her knowledge or consent, made several unauthorised transfers and withdrawals over the years, leaving only a paltry balance of a few thousand dollars in the Trust Account.

A caveat was lodged against the deceased’s estate to prevent C from obtaining a grant of probate. When C refused to return the trust monies to A, we filed a Writ of Summons and Statement of Claim against the estate of B, on the grounds of the deceased’s breach of trust and/or fiduciary duty with respect to the unauthorised transactions and misappropriation of trust monies. For the reasons aforesaid, we requested the Court to grant the following reliefs:

1. A declaration that there was a breach of trust by the deceased;
2. Restitution of the full sum of S$X million and all profits and interest arising therefrom;
3. A declaration for an inquiry to trace the trust monies into the properties held by the estate; and
4. An order requiring the estate to provide a full account of the use of the trust monies.

At the same time, both parties agreed that judgment by consent would be entered for C to be appointed as the representative in the legal proceedings and for an order restraining the estate and/or C from doing the following acts:

1. Removing the deceased’s assets located in Singapore or overseas, whether in his name or otherwise and whether solely or jointly owned;
2. Disposing, dealing with or otherwise diminishing the value of his assets;
3. Removing any assets from Singapore or otherwise disposing or dealing with his assets located within the jurisdiction insofar as the total unencumbered value of those assets did not exceed S$Y million.

After the caveat was lifted by A and probate was granted, we applied for and obtained judgment in default of defence against the estate. As such, A was able to successfully recover the entire sum which she was entitled to under the Trust Deed.

Comments

This case exemplifies the trite principle that all causes of action subsisting against a person survives against his estate upon his death. (see section 10(1) of the Civil Law Act) Even though B had passed away before legal proceedings could be commenced against him, the cause of action for breach of trust survived his death and continued against his estate. A was therefore able to maintain her claim, notwithstanding the death of B.
This case also highlights the importance of exercising due caution as a beneficiary of a trust. No matter how close your relationship to your trustee, it is always advisable to exercise some degree of supervision to ensure the proper administration of the trust. Such unfortunate situations, as in A’s case, can easily be avoided by taking simple steps, such as making yourself a signatory to the trust account, ensuring that your consent is required for all transactions, or requesting the trustee to provide an account of the trust assets at regular intervals. Indeed, in the wise words of Benjamin Franklin, “an ounce of prevention is worth a pound of cure”.


Foo Soon Yien
Director, BR Law Corporation
[email protected]