Lek Eng Hock v Leck Ah Bah (W-02(IM)(NCVC)-828-05/2019)

LEK ENG HOCK Between LECK AH BAH APPELLANTS (In the matter of Notice of Application dated the $ 2 7^{th} $ day of September 2018 (Enclosure 6) in Originating Summons No.: WA-24NCvC-1578-08/2018 RESPONDENT In the High Court of Malaya at Kuala Lumpur (Civil Division) In the matter of the estate of Lek Ah Lek, the deceased (NRIC No. : 480820-10-5648) And In the matter of grant of letters of administration granted by the High Court of Malaya at Shah Alam on 29 August 2012 via Petition No. 31-279-06/2012 In the matter of Section 43, 60(4), 68(1) and 71(1) Probate and Administration Act 1959 In the matter of Section 6(1)(i) of the Distribution Act 1958 And

Lek Eng Hock (NRIC No.: 511022-10-5773)

Lek Poh Siok (NRIC No.: 540120 10-5390) Applicants) CORAM ROHANA YUSUF,PCA MOHAMAD ZABIDIN BIN MOHD DIAH,JCA SUPANG LIAN,JCA JUDGMENT Introduction [1] On 21 July 2020 we allowed the appellants' appeal against the decision of the High Court in allowing the respondent's application to intervene and be added as a party to the ex-parte Originating Summons No. WA-24NCvC-1578-08/201 (the "OS"). Below are the grounds for our decision. 5 Background [2] The OS pertains to the estate of a woman by the name of Lek Ah Lek ("the deceased"). She had vanished without trace on 14 October 2000 and an Order of Presumption of Death was granted by the High Court of Malaya at Shah Alam on 23 March 2012. Since she left no will, she had died intestate. [3] In addition, the deceased left no spouse, issue and parent(s). In the circumstances, the beneficiaries of the estate are the four surviving siblings of the deceased, namely: i. Lek Eng Hock ( $ 1^{\mathrm{st}} $ appellant), ii. Lek Poh Siok ( $ 2^{n d} $ appellant), iii. Leck Ah Bah (respondent /intervener) and iv. Lek Ah Soo. [4] The appellants were appointed as joint administrators of the estate through the grant of Letters of Administration by the High Court of Malaya at Shah Alam on 29 August 2012 under Petition Number 31-279-06/2012 and which was issued on 18 October 2012. In the application for grant of Letters of Administration, the respondent had expressly renounced his rights to be an administrator. [5] On 8 August 2018, the appellants filed the ex-parte OS under the provisions of the Probate and Administration Act 1959 ("PAA 1959") for the following orders: a. that the appellants be given approval and full authority to sell and transfer the immovable properties of the deceased; b. that the appellants be given approval and full authority to call in, sell and convert the movable properties of the deceased; c. to pay the appellants the just expenses for the administration of the estate amounting to RM3,000- 00; d. to pay all legal fees, just debts and expenses relating to the administration of the estate and the OS; e. the residue of the proceeds of the sales of the movable and immovable properties to be distributed to the beneficiaries of the estate; f. alternatively, to deal with the immovable properties of the estate such that:- i. it is to be valued at RM1,570,000-00 and each of the four beneficiaries be entitled to a share entitlement of RM392,500-00 each; and ii. the share entitlement be satisfied by way of transfer of five properties belonging to the estate to the various beneficiaries; g. upon the distribution to the beneficiaries, the estate is to be wound up and the appellants be released and discharged as co-administrators and trustees of the estate. The Respondent's Application [6] In the course of the OS, the respondent filed the application to intervene pursuant to Order 15, Rule 6(2)(b) Rules of Court 2012 ("ROC") and to be made a party to it. The application was necessary, said learned counsel, because the appellants had failed to render and disclose all the relevant accounts of the estate. The High Court Decision [7] On 11 April 2019, the High Court allowed the respondent's application, hence, the present appeal. [8] The learned High Court Judge had agreed with the respondent that the appellants were legally bound to render accounts of the estate. She stated as follows in the Grounds of Judgment:- "9. As the estate's trustees, the Co-Administrators were duty bound to disclose latest accounts of the estate to all it's (SIC) beneficiaries. Instead to date, the Co-Administrators as contended by the Proposed Intervener was still in continued and exclusive possession of all the estates movable and immovable properties held on trust for other beneficiaries.

The Court was thus in agreement with the Proposed Intervener's contention that balance of convenience was not be in favour of preserving the status quo pending the appeal's disposal.

As trustee of the estate, the Co-Administrators were legally bound to provide all records of accounts relating to the estate's movable and immovable properties which the Appellants grossly failed to adhere to." [9] Further, the learned High Court Judge found that the respondent's application was not without basis because:- "12. In the circumstances, the Proposed Intervener's prayed relief was merely to ask the Co-Administrators to disclose and render the estate's accounts in respect of both moveable and immovable properties which he has to date been denied.

Had the Co-Administrators acceded to the simple request from their sibling Intervener, also as fellow beneficiary, the Proposed Intervener will not pursue his quest to intervene in the Appellant's Originating Summons." [10] We take note that in her grounds of judgment, the learned High Court Judge had considered and applied the legal principles governing applications for stay of execution pending appeal (the 'special circumstances test'), in arriving at her decision. The Appellants' Submissions [11] There are 11 grounds of appeal stated in the Memorandum of Appeal. We will highlight the main points raised by learned counsel during submissions. [12] First, the appellants' OS is an ex-parte application under ss 43, 60(4), 68(1) and 71(1) of the PAA 1959 and in accordance with s. 6(1) (i) of the Distribution Act 1958 ("DA 1958"). Thus, the ex-parte OS is purely administrative in nature. The learned High Court Judge had erred in failing to appreciate that it is the wrong forum for the respondent to intervene, that there is no provision in law for such intervention and it is procedurally incorrect. [13] Second, the learned High Court Judge, in allowing the respondent to intervene, had erred in failing to consider that the respondent is a beneficiary and not an administrator, and hence has no legal interest in the estate: It is trite law that in determining whether a party may be added as an intervener, the test is if his 'legal interests' will be affected but not if his commercial interests alone would be affected: per Mohamed Yusof SCJ in Tohtonku Sdn Bhd v Superace (M) Sdn Bhd [1992] 2 MLJ 63 at 65. [14] In the context of beneficiaries to an estate, learned counsel relied on Chor Phaik Har v Farlim Properties Sdn Bhd [1997] 3 MLJ 188 and Chong Fook Sin v Amanah Raya Bhd (as the administrator for the estate of Raja Nong Chik bin Raja Ishak, deceased) & Ors [2011] 1 MLJ 721 where the Federal Court held that even if the interveners were beneficiaries, they did not have legal interest in the estate of the deceased pending the administration of the same. [15] Third, the learned High Court Judge erred in failing to consider that the respondent has not satisfied the threshold test for intervention under O.15, r.6 (2)(b) ROC. The Respondent has failed to fulfil the requirements - he is not a required party, nor was his presence necessary to ensure that all matters be effectually and completely determined and adjudicated upon. The matter to be decided is purely administrative and the only question for determination by the Court is 'whether the manner of distribution sought was in accordance with the Distribution Act 1958'. [16] Fourth, the learned High Court Judge erred in failing to take into account public policy considerations as by allowing the respondent to intervene in an administrative action when there are other avenues available would set an undesirable precedent and open the floodgates for beneficiaries of intestate estate to interrupt and disrupt the administration of a deceased's estate. This will hinder lawful administrators from carrying out their administrative duties, particularly in the present case whereby the administration of the estate has been delayed for more than 6 years due to constant interventions by the respondent. [17] Fifth, the allegation that the appellants had failed to render and disclose the accounts is factually untrue. In fact, statements of accounts had been rendered but the respondent was not satisfied with what was given to him. [18] Finally, learned counsel submitted that the learned High Court Judge had erroneously applied the legal principles governing stay of execution pending appeal (the 'special circumstances test') in arriving at her decision. Respondent's Arguments [19] The respondent emphasized that he neither disputes the Letters of Administration nor objects to the distribution of the immoveable property. However, he has the right to intervene in the OS for reasons as follows. [20] First, as trustees of the estate, the appellants have the basic duty to render proper accounts to the beneficiaries so they can ascertain if the estate is being properly administered. The appellants have failed to do so, thus, have failed in that duty. Therefore, they should not be allowed to wind up the estate and discharged as its co-administrators and trustees. [21] In support, learned counsel referred to s. 62 of PAA 1959 which provides that the "personal representative of a deceased person shall, when lawfully required so to do, exhibit, by affidavit filed in the Court, a true and perfect inventory and account of the movable and immovable property of the deceased, and the Court shall have power to require personal representatives to bring in inventories." It is submitted that the appellants' Affidavit-in-Support ("AIS") affirmed on 7 August 2018 in support of the orders prayed for in the OS is totally devoid of any accounts of the estate. [22] Section 2 of PAA 1959 defines 'personal representative' to mean "the executor, original or by representation, or administrator for the time being ..." Under s. 3(1) of the Trustee Act 1949 the expressions of the words "trust" and "trustee" extend "to the duties incidental to the office of a personal representative and "trustee", where the context admits, includes a personal representative ...". Hence, the appellants, it is submitted, are trustees of the estate and have a duty to render proper accounts to the beneficiaries. [23] As regards the case law, learned counsel relied on the following passages from the judgments of the Court of Appeal in:- i. Damayanti Kantilal Doshi & 2 Ors v Jigarlal Kantilal Doshi & 2 Ors [1998] 4 AMR 3904 at 3906:- "The duty to render accounts is one of the basic duties of all executors or trustees. ... Without such accounts being rendered periodically or at all (as in this case), the beneficiaries would not have any means of ascertaining whether the estate was being properly administered." ii. Dr Chan Chin Chueng v Chan Chak Chueng & Anor [2005] 2 CLJ 405 at pp 418-419:- "A trustee is obliged to render accounts of the trust property to a beneficiary. In this regard reference is made to Halsbury's Laws of Malaysia, vol 5 which says at p. 720: A trustee must furnish to a beneficiary, or to a person authorised by him, on demand, information or the means of obtaining information as to the mode in which the trust property or his share in it has been invested or otherwise dealt with, and as to where it is and full accounts respecting it, whether the beneficiary has a present interest in the trust property or only a contingent interest in remainder, or is only an object of a discretionary trust. If the trustee neglects or fails to do so, he is liable for the costs of proceedings to compel production of information or accounts. He must also allow a beneficiary to inspect the trust accounts and all documents relating to the trust, and has a duty to explain to a beneficiary what his rights are. The duty to render accounts is therefore a constituent element of the administration of the estate of a deceased person." [24] Learned counsel also referred to Raman's, Probate and Administration in Singapore and Malaysia (4th Edition) which states at para [12.37]:- [25] As for the so-called accounts of the estate namely, exhibit "LEH(I)-1" (that had been supplied), learned counsel said that these are merely draft accounts in the year 2015. They are highly inadequate because:- "In fact, the duty to render proper accounts to any beneficiary who demands the same lies on the personal representative throughout the administration of the estate. If called upon to render accounts he is obligated to provide them. It is a requirement before he winds up the administration that he submits accounts for the beneficiaries' perusal and approval prior to distribution. This is not based on any allegations of breach of trust that the beneficiary may make but arises from the fiduciary relationship between the trustee and the beneficiaries."

(a) they are not the latest up-to-date accounts;

(b) they are supported by dubious receipts; and

(c) they are lacking in certain details vis-à-vis certain movable properties, for example, rental of the immovable properties belonging to the estate. [26] Second, under O.15, r. 6(2) (b) (ii) ROC 2012, the respondent has the right to intervene in the OS. In this regard, learned counsel refers to Pegang Mining Co Ltd v. Choong Sam & Ors [1969] 2 MLJ 52 at 55 56 where Lord Diplock said:- " In their Lordships' view one of the principal objects of the rule is to enable the court to prevent injustice being done to a person whose rights will be affected by its judgment by proceeding to adjudicate upon the matter in dispute in the action without his being given an opportunity of being heard. It has been sometimes said as in Moser v. Marsden and in In re L.G. Farbenindustrie A.G. that a party may be added if his legal interests will be affected by the judgment in the action but not if his commercial interests only would be affected. While their Lordships agree that the mere fact that a person is likely to be better off financially if a case is decided one way rather than another is not a sufficient ground to entitle him to be added as a party, they do not find the dichotomy between "legal' and "commercial" interests helpful. A better way of expressing the test is: will his rights against or liabilities to any party to the action in respect of the subject matter of the action be directly affected by any order which may be made in the action?" [27] It is submitted that as a beneficiary of the estate, the respondent's rights will be directly affected by any order which may be made in the OS. Thus, it would be just and convenient to determine the issue (of the nonrendering of the accounts) as between the respondent and the administrators in the OS. [28] Third, pursuant to the provisions of s. 60 (1) of the Trustee Act 1949, the respondent, counsel argued, has legal interest to intervene in the OS. The section reads:- "(1) An order under this Act ... concerning any interest in land, stock, or thing in action subject to a trust may be made on the application of any person beneficially interested in the land, stock, or thing in action, whether under disability or not, or on the application of any person duly appointed trustee thereof." [29] Section 3 (1) of the Act defines:- "land" as immovable property and includes any interest therein and also an undivided share of land, and "stock" to include fully paid up shares and, so far as relates to vesting orders made by the Court under this Act, includes any fund, annuity, or security transferable in books kept by any corporation, company, association, or society, or by instrument of transfer, either alone or accompanied by other formalities, and any share or interest therein. [30] As a beneficiary of the estate, counsel said, the respondent is beneficially interested in the land (being land owned by the estate), the stock (being the estate's shares in Bursa Malaysia) and the "thing in action" (being the monies, rental and EPF monies belonging to the estate). The respondent thus has legal interest in the estate and entitled under s. 60 (1) to make the application to intervene. [31] According to learned counsel, s. 60 (1) of the Trustee Act was neither referred to nor considered in any of the three cases cited by the appellants, namely, Tohtonku (supra), Chong Fook Sin (supra) and Chor Phaik Har (supra). As such, the principle enunciated in the three cases "that a beneficiary under intestacy has no interest or property in the personal estate of the deceased until the estate had been fully administered and distribution made" is 'judge-made law', in other words, common law. [32] The Federal Court in Affin Bank Bhd v Mohd Kasim Ibrahim [2013] 1 CLJ 465 held that statute overrides common law. As such, learned counsel said, s. 60 of the Trustee Act 1949 overrides Tohtonku, Chong Fook Sin and Chor Phaik Har and the respondent does have "legal interest" in the estate and entitled to intervene. [33] Fourth, as held in Ong Thye Peng V. Loo Choo Teng & Ors [2008] 1 CLJ 571 at 572. the appellants as administrators of the estate "must act in the interest of all beneficiaries" and "their duty is to ensure that the estate of which they are trustees benefits as much as possible when they deal with trust property." It is submitted that the appellants had not acted in the interest of the respondent as a beneficiary given that no proper, clear and accurate accounts of the estate have been rendered. [34] Based on the above, the learned High Court Judge has not erred in allowing the respondent's application to intervene, said learned counsel. Our Decision [35] It is trite law that the appellate court would be slow to disturb the finding of the trial court unless: a) the decision made by the trial court is plainly wrong; or b) there is a failure in the findings of the evidence that was put forward. (see UEM Group Berhad (previously known as United Engineers (M) Bhd v Genisys Integrated Engineers Pte Ltd & Ors [2018] Supp MLJ 363 FC para 26 at p 151). [36] In our view, the decision of the learned High Court Judge is plainly wrong and there was a failure in the findings of the evidence that was put forward in regard to the rendering of the statement of accounts of the estate. [37] We do not agree that the appellants, contrary to the principle propounded in Damayanti Kantilal and Dr Chan Chin Chueng (supra), have failed to render and disclose the accounts of the estate to the respondent as a beneficiary. It is not in dispute that the statement of accounts of the estate, including rentals received, had in fact been rendered to the respondent. The appellants have produced the said statement of accounts that was rendered as exh. "LEH(I)-1" (see pp 327 335, Rekod Rayuan (Jilid 3)). [38] It would appear that the respondent was dissatisfied with whatever was rendered to him. The appellants have deposed to this fact in their affidavit (at pp 74-102 and pp 121-156, Rekod Rayuan (Jilid 2)). This was also raised in the numerous correspondences between the appellants' solicitors and the respondent's previous solicitors Messrs Steven Tai, Wong & Partners (at pp 316-366, Rekod Rayuan (Jilid 3)). [39] According to the respondent, the so-called statement of accounts given to him are mere draft accounts for the year 2015 and not a set of accounts at all. This is because there was no among others, itemization of every single detail i.e. source, description of source and date, description of use etc. [40] To our minds, the stance of the respondent on this is unreasonable and premature. In effect, he is demanding that the appellants (as the administrators) provide a financial statement or audited accounts instead of a statement of account. The learned High Court Judge, in our view, has failed to appreciate that the appellants (as administrators and in accordance with their duties) would in due course prepare and render final accounts before the estate is wound up. The appellants' undertaking on this is to be found in para 8 of the applicants' Affidavit-in-Reply No. 2 (see p. 151, Rekod Rayuan Jilid 2). It is not in dispute that the bulk of the assets of the estate consists of the immoveable properties and the respondent is not objecting to the manner of its distribution as specified in the OS. Ironically, it is the respondent's own intervention that has stalled the application to obtain the order to administer and distribute the estate's assets to all beneficiaries (including the respondent) without which the accounts of the estate cannot be finalized. [41] Moreover, the learned High Court Judge, in our view, has failed to appreciate that the respondent being the party that wishes the Court to believe in the existence of a fact, viz., the appellants' failure to render accounts, bears the burden of proof (see s. 103 of the Evidence Act 1950). The respondent has not referred to any provision of law or case law on the format of the statement of accounts that he sought from the appellants. It therefore does not lie with him to say that the statements of accounts rendered to him are insufficient or inadequate. [42] Thus, the respondent's claim that the appellants have failed in their duty to render accounts does not hold water. With all due respect, the learned High Court Judge was plainly wrong in concluding otherwise. [43] In the second place, we are of the view that the learned High Court Judge has erred in not judicially appreciating and considering the threshold requirements for intervention as set out in O.15, r.6(2)(b) ROC 2012. Instead, as can be seen from the Grounds of Judgment under the heading "The Law" (at pp 10-12, Rekod Rayuan Tambahan), the learned High Court Judge, in coming to her decision, had embarked on a consideration of and wrongly applied the legal principles governing applications for stay of execution pending appeal (the 'special circumstances test'). [44] Be that as it may, given that the appeal is by way of a rehearing, it behoves us to consider whether the respondent has satisfied the threshold requirements stipulated under O.15,r. 6 (2)(b) ROC 2012 which are:- "O.15,r.6

(a) ...

(b) order any of the following persons to be added as a party, namely-

(i) any person who ought to have been joined as a party or whose presence before the Court is necessary to ensure that all matters in dispute in the cause or matter may be effectually and completely determined and adjudicated upon; or

(a) Under limb (i) that he ought to have been joined as a party or his presence before the court is necessary to ensure that all matters in dispute may be effectually and completely determined and adjudicated upon; or

(b) Under limb (ii) that he has an interest in the subject matter of the action and the court considers it just and convenient to determine the issue as between him and any party to the action as well as between the parties to the action within the same proceeding. [46] We find that the respondent has not met the threshold requirements above. [47] Firstly, in our view, intervention by the respondent in the present OS is procedurally wrong in law as this proceeding is not the correct or proper forum to ask for the accounts of the estate. The present OS, as we all know, is filed ex-parte with a view to obtaining an order for the distribution of all moveable and immovable properties of the deceased as well as winding-up of the estate. This is pursuant to the requirements of sections 43, 60 (4), 68 (1) and 71(1) of the PAA 1959 and section 6(1) (i) of the DA 1958. [48] Section 68(1) PAA 1959 sets out the duties of an administrator to sell the immoveable properties and to call in and convert the moveable properties of the estate. Under s. 71(1), the administrators, in exercising their powers of administration of the estate, are allowed to enter into contracts in relation to the immovable properties. However, in order to carry out the duties of disposing of the immoveable properties, the administrators are required under s. 60(4) to apply for prior permission of the Court. It is therefore in accordance with the requirements of the law that the appellants have filed the present OS. [49] Besides, the appellants have sought in the alternative (under s. 6(1) of DA 1958) for the estate to be divided in equal shares between the surviving siblings i.e. $ \frac{1}{4} $ each. [50] As such, the ex-parte OS was merely to obtain the Court's permission for the appellants to deal with the assets of the estate in accordance with the provisions of the PAA 1959 and the DA 1958. It was made as a matter of course and procedure. In our view, it is not for the respondent to intervene at this point to prematurely request for the accounts of the estate. [51] If the respondent insists on being provided the accounts of the estate, then he ought to go by way of the procedure laid down in Order 80 of the ROC 2012 which is re-produced below: "Determination of questions without administration (O.80 r.2)

(1) An action may be brought for the determination of any question or for any relief which could be determined or granted, as the case may be, in an administration action and a claim need not be made in the action for the administration or execution under the direction of the Court of the estate or trust in connection with which the question arises or the relief is sought.

(a) an order requiring an executor, administrator or trustee to furnish and, if necessary, verify accounts;... Grant of relief in action begun by originating summons (O.80,r.4)

In an administration action or such an action as is referred to in rule 2, the Court may make any certificate or order and grant any relief to which the plaintiff may be entitled by reason of any breach of trust, wilful default or other misconduct of the defendant." (Underline added) [52] The following propositions can be gathered from the above provisions:

(i) an action may be brought for an executor, administrator or trustee to furnish and verify accounts (O.80, r.2(3));