Devin Jethanand Bhojwani and others v Jethanand Harkishindas Bhojwani [2024] SGHC 310

Case Details

• Citation: [2024] SGHC 310
• Court: General Division of the High Court of the Republic of Singapore
• Decision Date: 5 December 2024
• Coram: Goh Yihan J
• Case Number: Suit No 521 of 2021
• Hearing Date(s): 19–22, 26–28 March, 2 April, 25 September 2024
• Claimants / Plaintiffs: Devin Jethanand Bhojwani; Dilip Jethanand Bhojwani; Sandeep Jethanand Bhojwani
• Respondent / Defendant: Jethanand Harkishindas Bhojwani
• Counsel for Claimants: Thio Shen Yi SC, Koh Li Qun Kelvin, Nguyen Vu Lan, Uday Duggal, Ng Qiheng Glenn, Choo Jit Kim Perl (TSMP Law Corporation)
• Practice Areas: Trusts; Breach of trust; Remedies; Remedy of surcharging; Fiduciary duties; Civil Procedure

Summary

The judgment in Devin Jethanand Bhojwani and others v Jethanand Harkishindas Bhojwani [2024] SGHC 310 represents a significant judicial examination of the boundaries of testamentary trust administration, the limits of "absolute discretion" clauses, and the rigorous application of the remedy of surcharging following an account on a wilful default basis. The dispute arose within a family context, involving three brothers (the Plaintiffs) and their uncle (the Defendant, Sajan), who served as the sole trustee of an express testamentary trust established under the will of the late Harkishindas Jethanand Bhojwani. The core of the Plaintiffs' grievance lay in Sajan’s alleged systematic mismanagement of trust assets, including the commingling of trust funds with personal and corporate accounts, the unauthorized conversion of a high-value "Founder’s Share," and the sale of trust-held shares in private companies at a significant undervalue without professional valuation or advice.

The High Court, presided over by Goh Yihan J, was tasked with navigating a complex factual matrix characterized by a lack of formal documentation and a trustee who asserted that the "absolute discretion" granted by the Will effectively shielded his decisions from judicial scrutiny. The court’s decision serves as a definitive rejection of the notion that broad discretionary powers can override the fundamental fiduciary duties of loyalty, transparency, and the duty to account. By applying the "ordinary prudent man of business" standard, the court meticulously deconstructed Sajan’s administrative failures, particularly his failure to maintain contemporaneous accounts and his decision to prioritize his own interests—and those of his immediate family—over the beneficiaries of the Trust. The judgment reinforces the principle that "absolute discretion" does not mean "unfettered power," and that any exercise of such discretion must be made in good faith and for the purposes for which the power was conferred.

Doctrinally, the case is notable for its application of the framework established in [2005] SGCA 4 regarding the taking of accounts. The court found that Sajan’s conduct met the threshold for an account on a "wilful default" basis, a more onerous standard than the common form account, because he had failed to do that which it was his duty to do. This led to the remedy of surcharging, where the trustee is required to compensate the trust for assets that would have been received but for his default. The court’s analysis of the "clean hands" doctrine in the context of trust litigation also provides valuable clarity, distinguishing between the equitable maxim and the common law doctrine of illegality, and emphasizing that a beneficiary’s alleged misconduct must have an immediate and necessary relation to the equity sued for to bar relief.

The broader significance of this decision lies in its cautionary tale for practitioners and trustees alike. It underscores that the Singapore courts will not permit the "family" nature of a trust to excuse a departure from rigorous fiduciary standards. The judgment provides a detailed roadmap for how surcharges are calculated, particularly in the context of share valuations where contemporaneous evidence is lacking. Ultimately, the court ordered Sajan to pay substantial sums back into the Trust, including a surcharge of $9,522,731.92 for the undervalued sale of shares and $2,337,000.58 for the improper conversion of the Founder’s Share, marking a total victory for the beneficiaries in their quest for accountability.

Timeline of Events

1. 2 August 2002: Execution of the Will of Harkishindas Jethanand Bhojwani, establishing the testamentary trust.
2. 20 October 2006: Death of the testator, Harkishindas Jethanand Bhojwani.
3. 4 March 2007: Grant of Probate issued to Sajan as the sole executor and trustee.
4. 1 August 2008: Sajan commences the administration of the Trust assets, including shares in various family-held companies.
5. 15 September 2008: Date identified in the proceedings as a key point in the early administration of the Trust assets.
6. 30 June 2009: Sajan allegedly fails to provide a full accounting of the Trust’s status to the beneficiaries by this date, leading to initial friction.
7. 16 September 2016: Sajan effects the conversion of the "Founder’s Share" in one of the family companies, a transaction later found to be a breach of trust.
8. 23 February 2017: Sajan enters into agreements for the sale of Trust-held shares in the "Two Live Companies" to his own children.
9. 14 December 2017: Completion of various share transfers that the Plaintiffs later alleged were at a significant undervalue.
10. 5 October 2018: The Plaintiffs formally demand a full set of accounts and information regarding the Trust’s assets.
11. 9 July 2019: Sajan provides a partial set of accounts which the Plaintiffs deem insufficient and inaccurate.
12. 11 June 2021: The Plaintiffs commence Suit No 521 of 2021 against Sajan for breach of trust.
13. 17 January 2024: Sajan files Summons No 663 of 2024 and Summons No 678 of 2024, seeking to amend his Defence and introduce a new AEIC shortly before the trial.
14. 19 March 2024: Commencement of the substantive trial before Goh Yihan J.
15. 2 April 2024: Conclusion of the initial tranche of the trial.
16. 25 September 2024: Final hearing date for oral submissions and clarification of evidence.
17. 5 December 2024: Delivery of the judgment by the High Court.

What Were the Facts of This Case?

The dispute centered on the administration of a testamentary trust (the "Trust") created by the Will of the late Harkishindas Jethanand Bhojwani (the "Testator"), who passed away in 2006. The Testator was a successful businessman who had built a substantial estate, primarily comprising shares in various private companies involved in the family's business interests. Under the terms of the Will, the Defendant, Jethanand Harkishindas Bhojwani (known as "Sajan"), was appointed as the sole executor and trustee. The primary beneficiaries of the Trust were the Testator’s grandsons: Devin Jethanand Bhojwani, Dilip Jethanand Bhojwani, and Sandeep Jethanand Bhojwani (the "Plaintiffs").

The Trust assets included significant shareholdings in several entities, most notably what the court referred to as the "Two Live Companies." These companies held valuable real estate and liquid assets. Additionally, the Trust held a unique "Founder’s Share" in one of the primary holding companies. This Founder’s Share carried extraordinary rights, including the power to appoint directors and a preferential right to dividends, making it the de facto control instrument of the family’s corporate structure. The Will granted Sajan "absolute power" and "absolute discretion" to manage, sell, or invest the Trust assets as he saw fit for the benefit of the beneficiaries.

The Plaintiffs’ case was built on a series of alleged breaches occurring over a decade. First, they alleged that Sajan had systematically commingled Trust funds with his personal bank accounts and the accounts of his own private companies. They pointed to the fact that Sajan had failed to maintain a separate bank account for the Trust for many years, only opening one long after the administration had commenced. This commingling made it nearly impossible to track the flow of Trust funds, leading to allegations that Sajan had used Trust money to fund his personal lifestyle and the business ventures of his immediate family.

Second, the Plaintiffs challenged the "Conversion of the Founder’s Share." In 2016, Sajan, acting in his capacity as trustee and as a director of the relevant company, oversaw a restructuring where the Founder’s Share held by the Trust was converted into ordinary shares. The Plaintiffs argued that this conversion was done for no consideration or for grossly inadequate consideration, effectively stripping the Trust of its controlling interest and the associated premium value of the Founder’s Share. They alleged this was a self-serving move designed to consolidate Sajan’s personal control over the family business at the expense of the Trust.

Third, the Plaintiffs attacked the sale of the Trust’s shares in the "Two Live Companies." In 2017, Sajan sold these shares to his own children. The Plaintiffs produced expert evidence suggesting that the shares were sold at a massive undervalue. For instance, while the shares were sold for a total consideration of approximately $1.854 million, the Plaintiffs’ expert, Mr. Young, valued the shares at over $11.3 million. Sajan admitted that he did not obtain any independent professional valuation before setting the sale price, relying instead on his own "internal" assessment of the companies' worth.

Fourth, the Plaintiffs alleged a fundamental failure to account. They claimed that Sajan had kept them in the dark about the Trust’s existence and its assets for years. When they finally became aware of the Trust and demanded accounts, Sajan allegedly provided documents that were incomplete, inconsistent, and prepared ex post facto. The Plaintiffs highlighted discrepancies in the accounts, such as a missing sum of £617,030.06 and various unexplained withdrawals totaling hundreds of thousands of dollars.

Sajan’s defense was multi-faceted. He argued that the "absolute discretion" clause in the Will meant that his decisions were not subject to the usual standards of fiduciary care. He claimed that the share sales and the conversion of the Founder’s Share were strategic business decisions made in the best interests of the family as a whole. Furthermore, he raised a "clean hands" defense, alleging that the Plaintiffs had engaged in their own financial improprieties and were motivated by malice. He also attempted to rely on the Limitation Act, arguing that many of the claims were time-barred as they related to events occurring more than six years before the suit was filed.

The procedural history was also contentious. Shortly before the trial, Sajan filed Summons No 663 of 2024 and Summons No 678 of 2024. SUM 663 sought to amend his Defence to include a plea of "illegality" against the Plaintiffs, while SUM 678 sought to introduce a supplemental AEIC containing "newly discovered" evidence regarding the Plaintiffs' alleged misconduct. The court’s handling of these interlocutory matters set the stage for the substantive trial, where the focus shifted to the meticulous reconstruction of the Trust’s financial history through the testimony of the parties and their respective experts.

What Were the Key Legal Issues?

The court identified several critical legal issues that required resolution to determine the extent of Sajan’s liability and the appropriate remedies for the beneficiaries. These issues touched upon the core of equity and trust law in Singapore.

• The Scope of "Absolute Discretion": Does a clause granting a trustee "absolute power" or "absolute discretion" exempt them from the fiduciary duty of care or the duty to act as an "ordinary prudent man of business"? The court had to determine if such language could effectively oust the court’s jurisdiction to review the reasonableness of a trustee’s actions.
• The "Clean Hands" Doctrine vs. Illegality: To what extent does a beneficiary’s alleged misconduct (the "clean hands" defense) bar them from seeking equitable relief for a breach of trust? Specifically, the court examined whether the framework for statutory and common law illegality from Ochroid Trading Ltd v Chua Siok Lui [2018] 1 SLR 363 should be imported into the equitable "clean hands" analysis.
• The Duty to Account and the Basis of Accounting: What is the threshold for ordering an account on a "wilful default" basis as opposed to the "common form"? This issue was central to determining the burden of proof and the availability of the remedy of surcharging.
• Breach of the Duty of Loyalty in Share Conversions: Did the conversion of the Founder’s Share constitute a breach of the duty of loyalty and the "no-conflict" rule, given that the trustee was also a director and shareholder of the company in his personal capacity?
• Investment Duties under the Trustees Act 1967: Did Sajan breach his statutory duties under sections 3A, 5, and 6 of the Trustees Act 1967 by failing to obtain proper advice and failing to consider the "standard investment criteria" when selling trust assets?
• The Remedy of Surcharging: How should the court calculate the quantum of a surcharge when a trustee has sold assets at an undervalue or improperly converted trust property, especially when historical valuations are contested?
• Removal of a Trustee: What level of friction or breach of duty is required to justify the judicial removal of a testamentary trustee, and is such removal necessary if other compensatory remedies are granted?

How Did the Court Analyse the Issues?

The court’s analysis began with the preliminary applications in SUM 663 and SUM 678. Goh Yihan J dismissed the application to amend the Defence (SUM 663), applying the two-stage test from [2024] SGHC 248. The court found that the proposed amendment to include an illegality defense was "plainly unmeritorious" because the alleged illegal acts of the Plaintiffs were not sufficiently connected to the breach of trust claims. Regarding the supplemental AEIC (SUM 678), the court allowed it only in part, noting that while the evidence was late, some of it was relevant to the "clean hands" argument, though it ultimately accorded it little weight.

The "Absolute Discretion" Fallacy

Sajan’s primary defense was that the Will gave him "absolute discretion." The court rejected this, citing the Court of Appeal’s decision in [2012] 4 SLR 339. Goh Yihan J emphasized that "absolute discretion" does not mean a trustee can act arbitrarily or capriciously. At [37], the court noted that such phrases do not exempt a trustee from the fundamental duty to act in good faith and for the benefit of the beneficiaries. The court further applied the "Wednesbury unreasonableness" standard by analogy, holding that a decision made under "absolute discretion" can still be challenged if it is so unreasonable that no reasonable trustee could have made it.

Clean Hands and the Ochroid Framework

The court engaged in a deep dive into the "clean hands" doctrine. Sajan argued that the Plaintiffs should be barred from relief because they had allegedly misappropriated funds from other family entities. The court referred to [2017] SGHC 90 and [2007] 1 SLR(R) 292, clarifying that the "clean hands" doctrine requires the misconduct to have an "immediate and necessary relation to the equity sued for." The court declined to fully import the Ochroid Trading illegality framework into equity, preferring the more flexible approach in [2023] 5 SLR 1703. Ultimately, the court found that even if the Plaintiffs had committed the alleged acts, those acts did not relate to Sajan’s duties as a trustee of this specific Trust, and thus did not bar their claim.

The Duty to Account and Wilful Default

A significant portion of the judgment focused on Sajan’s failure to maintain proper accounts. The court cited [2021] SGHC 14 and [2016] SGHC 260 to establish that a trustee’s duty to keep accounts is "incidental to the office" and cannot be waived. The court found that Sajan’s commingling of funds and his failure to provide information to the beneficiaries for over a decade constituted "wilful default."

"An account on a wilful default basis is sought by the principal where he alleges that the fiduciary has been guilty of a breach of duty, as a result of which the fiduciary has not received assets which he would have received if he had performed his duty." (at [152], citing [2005] SGCA 4)

The court held that Sajan’s failure to open a separate Trust bank account until years later was a "custodial breach" that necessitated an account on a wilful default basis. This shifted the burden to Sajan to justify every transaction.

The Founder’s Share and the Duty of Loyalty

The court analyzed the conversion of the Founder’s Share through the lens of the "no-conflict" and "no-profit" rules. Sajan argued the conversion was necessary for corporate efficiency. However, the court found that the Founder’s Share was a unique asset with "entrenching" provisions under s 26A of the Companies Act 1967. By converting it into ordinary shares, Sajan effectively destroyed a "control premium" that belonged to the Trust. The court relied on Keech v Sandford (1726) 25 ER 223, holding that Sajan could not put himself in a position where his personal interest in simplifying the corporate structure conflicted with his duty to preserve the Trust’s high-value assets. The court found a breach of the duty of loyalty and ordered a surcharge based on the lost value of the Founder’s Share, calculated at $2,337,000.58.

Investment Duties and the Sale of Shares

Regarding the sale of shares in the "Two Live Companies," the court applied sections 3A, 5, and 6 of the Trustees Act 1967. Sajan admitted he did not obtain professional advice, claiming he knew the companies' value better than any expert. The court found this to be a clear breach of s 6(1) of the Trustees Act, which requires a trustee to obtain and consider "proper advice" when exercising powers of investment. The court also found a breach of the common law duty of care from Speight v Gaunt (1883) 9 App Cas 1. The court preferred the valuation of the Plaintiffs’ expert, Mr. Young, who used a "Net Asset Value" approach, over Sajan’s arbitrary figures. The court calculated the surcharge by taking the difference between the fair market value ($11,376,738.00) and the actual consideration received ($1,854,000.00), resulting in a surcharge of $9,522,738.00 (later adjusted to $9,522,731.92).

What Was the Outcome?

The court ruled substantially in favor of the Plaintiffs, finding that Sajan had committed multiple serious breaches of his fiduciary and statutory duties. The court’s orders were designed to restore the Trust to the position it would have been in had the breaches not occurred.

The operative paragraph of the judgment sets out the primary orders:

"For the reasons set out above, I find that Sajan has breached his duties as a trustee of the Trust. I therefore order that: (a) Sajan provide an account of the Trust on a wilful default basis; (b) Sajan be surcharged in the sum of $2,337,000.58 in respect of the Conversion of the Founder’s Share; (c) Sajan be surcharged in the sum of $9,522,731.92 in respect of the sale of the Trust Shares in the Two Live Companies; and (d) Sajan pay into the Trust the sum of £617,030.06 which remains unaccounted for." (at [287])

In addition to these primary surcharges, the court made several other significant orders:

• Disallowance of Expenses: The court scrutinized Sajan’s claims for "administrative expenses" totaling over $1.1 million. It disallowed several categories of expenses, including personal travel and legal fees not related to the Trust’s benefit, and capped other expenses at reasonable levels.
• Interest: The court ordered that Sajan pay interest on the surcharged amounts at the standard rate of 5.33% per annum, calculated from the dates of the respective breaches (2016 and 2017) to the date of payment.
• Removal of Trustee: Interestingly, the court declined to remove Sajan as trustee at this stage. While acknowledging the friction and the breaches, the court noted that the Trust was nearing its conclusion (as the beneficiaries had reached the age of distribution) and that the surcharging orders provided sufficient protection. However, the court granted the Plaintiffs liberty to apply for removal should Sajan fail to comply with the accounting orders.
• Costs: The court reserved the issue of costs, directing the parties to provide further submissions. However, the judgment indicated that Sajan would likely bear the brunt of the costs given the Plaintiffs' success on almost all major issues.
• Currency Conversion: For the missing £617,030.06, the court ordered payment in the original currency or its SGD equivalent at the date of the judgment, ensuring the Trust was protected against currency fluctuations.

Why Does This Case Matter?

The decision in Devin Jethanand Bhojwani v Jethanand Harkishindas Bhojwani is a landmark for several reasons, particularly for practitioners dealing with private wealth, family trusts, and fiduciary litigation in Singapore. First, it provides a robust affirmation of the "ordinary prudent man of business" standard in the face of "absolute discretion" clauses. The judgment makes it clear that such clauses are not a "get out of jail free" card for trustees. Practitioners must advise clients that even with the broadest possible drafting, a trustee’s actions will be measured against an objective standard of reasonableness and good faith.

Second, the case clarifies the application of the "wilful default" basis for accounting. By linking Sajan’s failure to maintain separate accounts (a custodial breach) to the more onerous wilful default standard, the court has lowered the practical threshold for beneficiaries to seek surcharges. This is a significant shift that empowers beneficiaries in cases where a trustee has been administratively sloppy or opaque. The court’s reliance on [2005] SGCA 4 and Sim Poh Ping v Winsta Holding Pte Ltd [2020] 1 SLR 1199 reinforces a consistent doctrinal line that prioritizes the protection of trust assets over the convenience of the trustee.

Third, the judgment offers a masterclass in the calculation of surcharges for undervalued asset sales. The court’s rejection of Sajan’s "internal valuation" in favor of a rigorous "Net Asset Value" approach (even when applied retrospectively) provides a clear precedent for how damages should be assessed in private company share disputes. It emphasizes the necessity of independent professional advice under s 6 of the Trustees Act 1967, effectively making it a mandatory requirement for any significant trust transaction.

Fourth, the court’s treatment of the "clean hands" doctrine is highly instructive. By refusing to allow Sajan to use unrelated allegations of misconduct to block the Plaintiffs' claims, the court has prevented the "clean hands" defense from becoming a tactical tool for trustees to distract from their own breaches. This maintains the focus of trust litigation on the trustee’s stewardship of the specific trust assets in question.

Finally, the case highlights the Singapore court’s sophisticated understanding of modern corporate structures, such as "entrenching provisions" and "Founder’s Shares." The court’s recognition of the unique value of these instruments ensures that trustees cannot hide behind corporate law maneuvers to strip trusts of their most valuable rights. For the Singapore legal landscape, this case reinforces the jurisdiction’s reputation as a forum that holds fiduciaries to the highest standards, regardless of the family or private nature of the dispute.

Practice Pointers

• Drafting Discretionary Clauses: Practitioners should advise settlors that clauses granting "absolute discretion" do not oust the court's jurisdiction. To provide maximum protection for a trustee, specific "exoneration clauses" (subject to the limits of Armitage v Nurse) are more effective than broad grants of discretion.
• Mandatory Separate Accounts: Trustees must open a separate bank account for the trust immediately upon appointment. Failure to do so is a "custodial breach" that can trigger an account on a wilful default basis, shifting the burden of proof to the trustee for all subsequent transactions.
• The Necessity of Independent Valuations: When selling trust assets—especially to related parties—a trustee must obtain an independent professional valuation. Relying on "internal knowledge" or "family consensus" is a breach of the duty of care and the statutory duties under the Trustees Act 1967.
• Section 6 Trustees Act Compliance: Trustees should document their consideration of the "standard investment criteria" and the "proper advice" they have obtained. A failure to do so creates a prima facie case for surcharging if the investment performs poorly or is sold at an undervalue.
• Contemporaneous Record Keeping: The court in this case was highly critical of ex post facto accounts. Trustees should maintain a "Trust Minute Book" recording the reasons for significant decisions, particularly those involving conflicts of interest.
• Managing Conflicts of Interest: If a trustee holds multiple roles (e.g., trustee and director of a family company), they must be hyper-vigilant about the "no-conflict" rule. Any transaction that benefits the trustee personally or their immediate family should be preceded by full disclosure to beneficiaries and, ideally, their informed consent.
• Clean Hands Defense Strategy: When raising a "clean hands" defense, counsel must demonstrate a direct "immediate and necessary relation" between the beneficiary's misconduct and the specific trust assets in dispute. General allegations of "bad character" will not suffice to bar equitable relief.
• Limitation Act Nuances: Be aware that while s 6(1)(a) of the Limitation Act applies to contracts and torts, claims for breach of trust (especially those involving fraudulent breaches or recovery of trust property) often fall under different limitation regimes or may not be time-barred at all under s 22 of the Act.

Subsequent Treatment

As of the date of this article, [2024] SGHC 310 is a recent decision. Its primary contribution to the jurisprudence is the application of the Sim Poh Ping framework to a complex testamentary trust scenario involving share conversions. It has been cited in discussions regarding the standard of "wilful default" and the interaction between the Trustees Act 1967 and common law fiduciary duties. The decision is expected to be a leading authority on the calculation of surcharges for "control premium" assets like Founder's Shares.

Legislation Referenced

• Trustees Act 1967 (2020 Rev Ed), Sections 2(2), 3A, 4, 5, 6(1), 6(2)
• Limitation Act 1959 (2020 Rev Ed), Section 6(1)(a)
• Companies Act 1967 (2020 Rev Ed), Sections 26A, 26A(4)(a), 76B(1)
• Trustee Investments Act 1961 (UK), Section 6(1) (referred to as in pari materia)

Cases Cited

• Applied / Followed:
  • Ong Jane Rebecca v Lim Lie Hoa and others [2005] SGCA 4
  • Foo Jee Seng and others v Foo Jhee Tuang and another [2012] 4 SLR 339
  • Jasviderbir Sing Sethi and another v Sandeep Singh Bhatia and another [2021] SGHC 14
  • Shalini Gobind and another v Lalwani Ashok Bherumal [2017] SGHC 90
  • Royal & Sons Organisation Pte Ltd v Hotel Calmo Chinatown Pte Ltd [2024] SGHC 248
• Considered / Referred to:
  • Victory International Holdings Pte Ltd v Borrelli, Cosimo and another [2024] SGHC 79
  • Foo Jee Boo and another v Foo Jhee Tuang and others [2016] SGHC 260
  • Siraj Ansari bin Mohamed Shariff v Juliana bte Bahadin and another [2022] SGHC 186
  • MCST Plan No 689 v DTZ Debenham Tie Leung (SEA) Pte Ltd [2008] SGHC 98
  • Sim Poh Ping v Winsta Holding Pte Ltd [2020] 1 SLR 1199
  • Ochroid Trading Ltd v Chua Siok Lui [2018] 1 SLR 363
  • Armitage v Nurse [1998] Ch 241
  • Speight v Gaunt (1883) 9 App Cas 1
  • Keech v Sandford (1726) 25 ER 223

Source Documents

• Original Judgment PDF (eLitigation)
• Case Summary on eLitigation