XVI v XVJ and another [2025] SGHCF 65

Case Details

• Citation: [2025] SGHCF 65
• Court: Family Justice Courts of the Republic of Singapore (General Division of the High Court, Family Division)
• Decision Date: 27 November 2025
• Coram: Mavis Chionh Sze Chyi J
• Case Number: Suit No 5 of 2017 (Summons No 365 of 2021)
• Hearing Date(s): 3 March 2022, 1–2 July, 15, 31 October 2025
• Plaintiff: XVI
• Defendants: XVJ (1st Defendant); XVK (2nd Defendant)
• Practice Areas: Probate And Administration; Administration of assets; Equity; Remedies; Trustees' Duties

Summary

In XVI v XVJ and another [2025] SGHCF 65, the General Division of the High Court (Family Division) addressed the rigorous financial consequences attending a trustee’s failure to manage estate assets with due diligence. The dispute centered on the administration of a deceased’s estate, specifically a two-storey shophouse (the "Property") which the 1st Defendant, XVJ, had managed as executor for decades. The Plaintiff, XVI, a co-executor and beneficiary, alleged that XVJ had breached his fiduciary duties by failing to maximize rental income and by misappropriating the Estate's share of the proceeds. The court had previously determined that the account of the Estate should be taken on the basis of "wilful default"—a high threshold in equity that expands the trustee's liability beyond actual receipts to include sums that ought to have been received but for the trustee's neglect.

The judgment is a significant exposition on the "might have received" limb of a wilful default account. Mavis Chionh Sze Chyi J meticulously analyzed the findings of a court-appointed expert accountant, Mr. Iain Potter, to quantify the loss suffered by the Estate. The court rejected the 1st Defendant’s attempts to justify sub-market rental rates and his failure to account for the Estate’s 50% beneficial interest in the Property. The decision underscores that once a case of wilful default is established, the burden shifts significantly, and the court will not hesitate to "surcharge" the trustee for the shortfall between actual performance and the standard of a reasonably diligent administrator.

Furthermore, the court dealt with the 1st Defendant’s claim for indemnity under section 41S(1) of the Trustees Act 1967. The 1st Defendant sought to deduct substantial legal fees and disbursements from the amounts he owed the Estate. The court’s analysis provides a stern reminder that the right to indemnity is not absolute; it is contingent upon the expenses being "properly incurred." Where a trustee’s litigation costs arise from defending their own misconduct or unreasonable positions, the court will deny the indemnity to prevent the trust fund from being depleted by the trustee's own defaults.

Ultimately, the court ordered the 1st Defendant to pay the Estate a total of $1,027,193.21, representing both the actual rental income withheld and the notional rental income lost due to his wilful neglect. This case serves as a definitive warning to executors and trustees in Singapore that the "wilful default" basis of accounting is a potent remedial tool that can result in personal liability far exceeding the actual cash flows handled by the fiduciary.

Timeline of Events

1. 27 February 1982: The Testator executes his last will and testament, appointing the 1st Defendant as an executor.
2. 30 October 1989: The Testator dies testate in Singapore.
3. 1 June 1990: Initial procedural steps regarding the administration of the Estate commence following the Testator's death.
4. 2 November 1992: The 1st Defendant is formally granted probate and begins his tenure as the sole active executor of the Estate.
5. 12 April 2017: The Plaintiff, XVI, commences Suit No 5 of 2017 against the 1st Defendant, alleging mismanagement of the Estate and seeking an account.
6. 20 June 2017: The Plaintiff is added as a co-executor of the Estate to protect the interests of the beneficiaries.
7. 18 January 2019: The court issues orders regarding the sale of the Property and the initial accounting requirements.
8. 14 June 2019: Further directions are given by the court to facilitate the taking of accounts.
9. 6 February 2020: The court orders that the account of the Estate be taken on the basis of the 1st Defendant’s "wilful default."
10. 8 May 2020: The 1st Defendant files HCF/JUD 2/2020, providing his version of the accounts which the Plaintiff subsequently challenges.
11. 24 November 2021: Mr. Iain Potter is appointed as the court-appointed expert accountant to investigate the rental income and disbursements.
12. 14 January 2022: The expert accountant begins the substantive review of the financial records and market data.
13. 3 March 2022: A substantive hearing is held to address the preliminary findings of the expert and the scope of the surcharges.
14. 1–2 July 2025: The court conducts further hearings to examine the expert's final report and the 1st Defendant's objections.
15. 15 October 2025: Final submissions are heard regarding the quantification of the 1st Defendant's liability.
16. 27 November 2025: Mavis Chionh Sze Chyi J delivers the judgment, quantifying the 1st Defendant's liability at $1,027,193.21.

What Were the Facts of This Case?

The dispute arose from the long-term administration of the Estate of a Testator who passed away on 30 October 1989. The primary asset of the Estate was a two-storey shophouse located in Singapore (the "Property"). Under the terms of the Testator's will dated 27 February 1982, the 1st Defendant, XVJ, was appointed as the executor. The Property was held by the 1st Defendant and the Estate as tenants-in-common in equal shares, meaning the Estate was beneficially entitled to 50% of all income generated by the Property. However, for nearly three decades, the 1st Defendant exercised near-exclusive control over the Property, managing the rental of the ground floor to commercial tenants and the upper floor to various occupiers.

The Plaintiff, XVI, who is the brother of the 1st Defendant and a beneficiary of the Estate, became increasingly concerned with the 1st Defendant's lack of transparency. In 2017, the Plaintiff commenced Suit No 5 of 2017, alleging that the 1st Defendant had failed to account for the rental income and had allowed the Property to be under-utilised or rented at rates significantly below market value. The Plaintiff was subsequently appointed as a co-executor on 20 June 2017. The core of the Plaintiff's grievance was that the 1st Defendant had treated the Property as his own, failing to distinguish between his personal 50% share and the 50% share held in trust for the Estate's beneficiaries.

The procedural history of the case is complex. On 6 February 2020, the court made a pivotal order: the 1st Defendant was required to account for his dealings with the Property on the basis of "wilful default." This order was predicated on the finding that the 1st Defendant had been guilty of at least one act of neglect or omission in his duty to maximize the Estate's assets. Specifically, the 1st Defendant had failed to maintain proper accounts and had not distributed the Estate's share of the rental income. Following this order, the 1st Defendant filed an account on 8 May 2020, which the Plaintiff vigorously contested, leading to the appointment of Mr. Iain Potter as a court-appointed expert.

The expert's investigation revealed a stark discrepancy between the income the 1st Defendant claimed to have received and the income that a diligent executor would have secured. The Property's ground floor had been rented out, but the 1st Defendant failed to provide sufficient documentary evidence for large periods of the tenancy. For the upper floor, the 1st Defendant claimed that certain rooms were occupied by family members or left vacant, but the expert found that these spaces could have been consistently rented out at market rates. The expert utilized market data to establish "notional rent" for periods where the Property was under-rented or where the 1st Defendant failed to prove the actual rent received.

The 1st Defendant's defense rested on two main pillars. First, he argued that the actual rent received was the only fair basis for the account, asserting that market conditions and the state of the Property justified the lower rates. Second, he sought to set off various expenses and legal fees against his liability. He claimed that under section 41S(1) of the Trustees Act 1967, he was entitled to be indemnified for all costs incurred in the litigation, which he characterized as "reasonable expenses properly incurred." The Plaintiff countered that these expenses were neither reasonable nor properly incurred, as they were necessitated by the 1st Defendant's own breach of trust and his obstructive conduct during the discovery and accounting process.

What Were the Key Legal Issues?

The court was tasked with resolving several critical legal issues arising from the taking of the account on a wilful default basis:

• The Scope of the "Might Have Received" Limb: The court had to determine the precise quantum of the "surcharge" to be applied to the 1st Defendant's account. This involved deciding whether the 1st Defendant should be held liable for the difference between the actual rent collected and the market rental value (the "notional rent") for the entire period of his executorship.
• The Burden of Proof in Wilful Default: While the Plaintiff had already established the basis for wilful default, the court had to address how the burden of proof shifted during the quantification phase, particularly regarding the 1st Defendant's claims of vacancies and sub-market tenancies.
• Entitlement to Indemnity under Section 41S(1) of the Trustees Act 1967: A major point of contention was whether the 1st Defendant could deduct his legal fees and disbursements from the sums owed to the Estate. This required an interpretation of what constitutes "properly incurred" expenses in the context of a trustee defending a suit for breach of duty.
• The Treatment of Specific Disbursements: The court had to scrutinize various claims for property-related expenses, such as property tax, insurance, and maintenance, to determine if they were supported by evidence and whether they should be borne solely by the 1st Defendant or shared with the Estate.
• Interest and Costs: Finally, the court had to decide on the appropriate rate of interest to be applied to the judgment sum and the basis for awarding costs for the entire proceedings.

How Did the Court Analyse the Issues?

The court’s analysis began with a restatement of the fundamental principles governing accounts on the basis of wilful default. Citing Ong Jane Rebecca v Lim Lie Hoa [2005] SGCA 4 and UVJ v UVH [2020] 2 SLR 336, Mavis Chionh Sze Chyi J emphasized that an account on a wilful default basis is not available to a beneficiary "as of right." It is a "more onerous" form of accounting that requires the beneficiary to prove at least one instance of the trustee's neglect or omission. Once this threshold is met, the trustee is "charged with what he has received and also with what he might have received had he properly discharged his duties" (at [19], citing Sim Poh Ping v Winsta Holdings Pte Ltd [2020] 1 SLR 1199).

The "Might Have Received" Limb and Surcharging

The court applied the "surcharge" mechanism to the 1st Defendant's accounts. In equity, a surcharge occurs when the beneficiary shows that the trustee has omitted to receive an asset which he ought to have received. The court noted that the 1st Defendant’s failure to maximize rental income from the Property constituted such an omission. The court-appointed expert, Mr. Potter, had calculated the "notional rental income" by comparing the actual receipts (where documented) against market benchmarks. The court found that for the ground floor, the 1st Defendant had consistently under-rented the space or failed to provide evidence of the actual rent. For the upper floor, the 1st Defendant’s claim that rooms were "vacant" or used for "storage" was rejected where he could not prove that he had made diligent efforts to find tenants.

The court meticulously reviewed the expert's percentages for rental occupancy and market rates. For instance, the expert found that for certain periods, the actual rent received was only 62% or 63% of the market value. The court accepted the expert's methodology of using a "market rent" baseline and surcharging the 1st Defendant for the 50% share that the Estate ought to have received. The court observed:

"Following the taking of an account on the wilful default basis, the court may 'surcharge' the account... the trustee is required to pay the trust the amount which he would have received had he properly discharged his duties." (at [19]-[20])

Indemnity and "Properly Incurred" Expenses

A significant portion of the judgment focused on section 41S(1) of the Trustees Act 1967. The 1st Defendant argued that he was entitled to an indemnity for his legal costs, citing the general principle that a trustee is entitled to be reimbursed for expenses incurred when acting on behalf of the trust. However, the court distinguished between expenses incurred in the proper administration of the trust and those incurred in defending a trustee's own misconduct.

The court relied on EC Investments Holding Pte Ltd v Ridout Residence Pte Ltd [2013] 4 SLR 123 and Lalwani Shalini Gobind v Lalwani Ashok Bherumal [2017] SGHC 90 to clarify that the right to indemnity is lost if the trustee acts dishonestly or unreasonably. Mavis Chionh Sze Chyi J held that the 1st Defendant’s litigation costs were not "properly incurred" because the litigation was a direct result of his failure to account and his wilful default. The court noted that it would "offend all sense of justice" (citing Price v Saundry [2019] EWCA Civ 2261) if a trustee who had unsuccessfully defended a claim for breach of trust were allowed to use the trust's own funds to pay his legal fees.

Quantification of the Liability

The court broke down the 1st Defendant's liability into several components:

• Actual Rental Income: The 1st Defendant was found to have received $456,788.13 in actual rent for the ground floor and upper floor rooms. The Estate’s 50% share of this was $228,394.07. After accounting for certain proven disbursements, the net amount due to the Estate from actual receipts was $230,338.13 (including minor adjustments).
• Notional Rental Income (The Surcharge): The court accepted the expert's calculation that the 1st Defendant should have received an additional $1,210,242.08 in rent had he been diligent. The Estate's 50% share of this shortfall was $605,121.04.
• Interest: The court applied interest to the sums withheld, recognizing that the Estate had been deprived of the use of these funds for decades.

The court rejected the 1st Defendant's attempt to claim $118,250 in legal fees and $58,200 in other disbursements as "properly incurred" expenses. The court found that these were either unsupported by evidence or related to the 1st Defendant's personal defense against the Plaintiff's well-founded allegations of mismanagement.

What Was the Outcome?

The court found the 1st Defendant liable to the Estate for a total sum of $1,027,193.21. This figure was the culmination of the accounting process on a wilful default basis, incorporating both the actual funds withheld and the surcharges for lost opportunity. The court's final orders were comprehensive, addressing the principal sums, the rejection of the indemnity claims, and the allocation of costs.

The operative paragraph of the judgment sets out the finality of the accounting process:

"In sum, I make the following orders: (a) The 1st Defendant shall pay to the Estate the sum of $1,027,193.21, being the amount found due from him to the Estate upon the taking of the account on the basis of wilful default; (b) The 1st Defendant’s claim for indemnity from the Estate in respect of his legal fees and disbursements in these proceedings is dismissed; (c) The 1st Defendant shall pay the Plaintiff’s costs of the entire proceedings, including the costs of the taking of the account and the expert’s fees, to be taxed if not agreed." (at [103])

Specifically, the $1,027,193.21 was comprised of:

• $456,788.13 representing the 1st Defendant's liability for actual rental and licence fees received (before the Estate's 50% share was calculated and adjusted for disbursements).
• $605,121.04 representing the surcharge for the Estate's 50% share of the rental income that the 1st Defendant might have received but for his wilful default.
• The court also dealt with specific sums such as $28,507.98 and $82,070.34 in relation to various sub-accounts and interest adjustments.

The court ordered that the 1st Defendant pay the Plaintiff's costs on a standard basis. This included the significant fees of the court-appointed expert, Mr. Iain Potter, which the court deemed necessary due to the 1st Defendant's failure to maintain proper records. The 1st Defendant was also ordered to pay interest on the judgment sum at the standard rate of 5.33% per annum from the date of the writ to the date of payment.

Why Does This Case Matter?

This judgment is a landmark for Singaporean practitioners in the field of probate and trust litigation. It provides a rare and detailed look at the practical application of the "wilful default" account, a remedy that is often sought but less frequently quantified with such precision. The case reinforces the principle that the office of an executor is one of active duty, not passive stewardship. A trustee cannot simply sit on assets or manage them poorly and expect to only be liable for the cash that actually passes through their hands.

The decision clarifies the "might have received" limb of liability. By surcharging the 1st Defendant for the difference between market rent and actual rent, the court has signaled that executors will be held to an objective standard of commercial reasonableness. This is particularly relevant in Singapore’s high-value real estate market, where the failure to properly lease a property can result in massive losses to an estate over time. The court's reliance on a court-appointed expert to determine "notional rent" also provides a procedural roadmap for future litigants facing similar evidentiary gaps.

Furthermore, the court’s strict stance on section 41S(1) of the Trustees Act 1967 is a significant doctrinal contribution. It clarifies that the statutory indemnity for trustees is not a "get out of jail free" card for litigation costs. If a trustee’s own breach of duty necessitates the litigation, they cannot expect the trust fund to subsidize their defense. This aligns Singapore law with the rigorous standards seen in other Commonwealth jurisdictions, such as the English Court of Appeal’s approach in Price v Saundry. It prevents the "unjust" outcome where a beneficiary’s successful claim is rendered hollow because the trust assets were depleted by the defaulting trustee’s legal fees.

For practitioners, the case also highlights the dangers of "commingling" or failing to distinguish between personal and trust interests. The 1st Defendant’s 50% personal ownership of the Property did not excuse his failure to account for the Estate’s 50% share. The court’s refusal to accept "family use" or "storage" as justifications for vacancies without proof of diligent marketing efforts serves as a warning that the court will look through informal arrangements that disadvantage the estate.

Finally, the case emphasizes the importance of record-keeping. The 1st Defendant’s inability to produce tenancy agreements or rent receipts for large periods was a primary factor in the court’s decision to draw adverse inferences and rely on market benchmarks. In the absence of evidence from the trustee, the court will lean towards the expert's market-based assessments, often to the trustee's significant financial detriment.

Practice Pointers

• Maintain Contemporaneous Records: Trustees must keep meticulous records of all rental income, tenancy agreements, and efforts made to lease property. In a wilful default account, the absence of records will lead the court to adopt market-based "notional" figures that may exceed actual receipts.
• Separate Personal and Trust Assets: Where a trustee co-owns property with an estate, they must strictly account for the estate's share of income. Treating the property as a personal asset is a fast track to a finding of wilful default.
• Seek Market Appraisals Early: If a property is being rented at a discount (e.g., to a family member or long-term tenant), the trustee should obtain and document professional advice to justify why this is in the estate's best interest, or risk being surcharged for the market shortfall.
• Caution on Indemnity Claims: Practitioners should advise trustee clients that legal fees incurred in defending a breach of trust claim are unlikely to be indemnified under section 41S(1) of the Trustees Act 1967 if the defense is unsuccessful or the trustee's conduct was unreasonable.
• The Role of Experts: In complex accounting disputes, the appointment of a court-appointed expert under the Family Justice Rules can be a decisive factor. Practitioners should be prepared to challenge or support the expert’s methodology regarding market benchmarks and occupancy rates.
• Address Vacancies Proactively: A trustee must be able to prove that they took active steps to rent out vacant portions of an estate property. Simple assertions of "no interest" or "used for storage" will not suffice to avoid a surcharge for notional rent.

Subsequent Treatment

As a recent decision from late 2025, XVI v XVJ [2025] SGHCF 65 stands as a contemporary application of the principles set out in UVJ v UVH and Ong Jane Rebecca. It has not yet been significantly distinguished or overruled. It is expected to be frequently cited in future Singapore High Court and Family Court proceedings involving the quantification of surcharges in wilful default accounts and the limits of the trustee's statutory indemnity for legal costs.

Legislation Referenced

• Trustees Act 1967 (2020 Rev Ed), section 41S(1)
• Conveyancing and Law of Property Act (Cap 61), section 35

Cases Cited

• Applied/Followed:
  • [2005] SGCA 4 (Ong Jane Rebecca v Lim Lie Hoa)
  • [2020] 2 SLR 336 (UVJ v UVH)
  • [2020] 1 SLR 1199 (Sim Poh Ping v Winsta Holdings Pte Ltd)
  • [2019] 4 SLR 714 (Cheong Soh Chin v Eng Chiet Shoong)
• Considered:
  • [2017] SGHC 90 (Lalwani Shalini Gobind v Lalwani Ashok Bherumal)
  • [2013] 4 SLR 123 (EC Investments Holding Pte Ltd v Ridout Residence Pte Ltd)
  • [2019] EWCA Civ 2261 (Price v Saundry)
  • [2023] EWHC 2964 (Ch) (Stoney-Anderson v Abbas)
  • (2013) 16 HKCFAR 681 (Libertarian Investments Ltd v Thomas Alexej Hall)

Source Documents

• Original Judgment (PDF)
• eLitigation Case Summary