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The Singapore Law Gazette

Deputies, Donees and Disputes: Cases on the Mental Capacity Act

Introduction

Since the Mental Capacity Act (Cap. 177A, 2010 Rev. Ed.) (“MCA”) came into force, there has been significant judicial clarifications on various issues on the Act. This commentary surveys the significant cases for practitioners and relevant individuals to note the issues, pitfalls and judicial guidance on this area of law, which will no doubt continue to develop over time especially with an increasingly ageing Singapore society.

Court of Appeal’s Guidance on Evidence to Determine Mental Capacity Generally and in Circumstances of Undue Influence

Facts and Holding

  1. In the only reported Court of Appeal decision on the MCA, Re BKR [2015] 4 SLR 81 (CA), the Court had to determine an application under the MCA for a declaration that an elderly individual (“BKR”) was unable to make decisions as to her property and affairs because of an impairment or disturbance of functioning of her mind, and for a consequential order that deputies be appointed to make all decisions on her behalf. The application was made by BKR’s sisters (the appellants). The appellants alleged that BKR was under the undue influence exercised by her youngest daughter and that daughter’s husband (the 2nd and 3rd respondents respectively). BKR herself and the 2nd and 3rd respondents opposed the application. The parties are from a wealthy and prominent family.
  1. The Court had to determine the approach it should take in MCA proceedings concerning the mental capacity of a person where there was an interaction between (a) mental impairment afflicting that person and (b) allegations that the person had come under the undue influence of other persons.
  1. On the facts, a few key events were central to the dispute: (a) BKR set up a trust which appeared to bring benefit to the 2nd respondent but not to herself; (b) BKR’s issuing successive contradictory instructions to her bankers regarding assets in her banks; and (c) BKR moving to live overseas with the 2nd and 3rd respondents, and cutting off contact with her siblings and other children despite their efforts to reach her.
  1. The Court found that the evidence suggested that BKR’s mental impairment was situated somewhere along the continuum between “Mild Cognitive Impairment” (MCI) and dementia. Further, the Court found that BKR was been acting under the undue influence of the 2nd and 3rd The actual circumstances of BKR’s life had positive hindrances to her decision-making independence. Thus, the Court held that the combination of BKR’s mental impairment and circumstances led to an inability to make decisions on setting up the trust or transfer of assets in her banks. The Court also held that the statutory test for lack of capacity under the MCA was fulfilled, and her decisions to set up the trust and transfer her bank assets were set aside, and deputies were appointed to make decisions on her behalf.

Significant Points

  1. In coming to its decision, the Court made several important points of guidance and clarification.

Functional and Clinical Components to Test for Capacity

  1. The test for capacity in s 4(1) of the MCA may be thought of as having:
    1. a functional component: that the person who is alleged to lack mental capacity (“P”) must be unable to make a decision; and
    2. a clinical component: P’s inability must be caused by a mental impairment.1 Re BKR [2015] 4 SLR 81 (CA) at [134].

These two components were adopted from the equivalent United Kingdom legislation.

  1. The courts will require the assistance of expert evidence, i.e. medical professionals, when addressing the clinical component of the test to determine whether P has a mental impairment based on the observable symptoms and any other diagnostic tools available, and if so, what that impairment is, and what effect it has on P’s cognitive abilities.2 Re BKR [2015] 4 SLR 81 (CA) at [134].
  1. As for the functional component, it is a question for the Court, with limited scope for the involvement of the medical experts. The courts are able to form their own assessment from the evidence, including a cross-examination of P and the clinical interviews, as to the degree to which her mental functioning is compromised.3 Re BKR [2015] 4 SLR 81 (CA) at [134]. The requirement for a functional inability is focussed on P’s decision-making process rather than the outcome of her decision.

Actual Circumstances and Effective Cause

  1. Where there was an interaction between mental impairment and allegations of undue influence, the Court has to consider the actual circumstances in which P lived, and not adopt a theoretical analysis.4 Re BKR [2015] 4 SLR 81 (CA) at [120]. In coming to this conclusion, the Court considered English cases (arising from the English Court of Protection) under the UK Mental Capacity Act 2005 (c 9).5 Re BKR [2015] 4 SLR 81 (CA) at [88]-[120].
  1. There must be a causative nexus between P’s mental impairment and her inability to make decisions. There is no need for her mental impairment be the effective cause of the inability to make decisions. The MCA will apply so long as one of those causes is P’s mental impairment.6 Re BKR [2015] 4 SLR 81 (CA) at [111]-[116].

Actual Circumstances Assessed

  1. Applications under the MCA can become very contentious, adversarial, long-drawn and costly. The Court of Appeal has posited the guideline that cases involving questions of mental capacity under the MCA should be better dealt with in a more inquisitorial and less adversarial mode, with the Court directing the inquiry, assisted by an assessor if need be.7 Re BKR [2015] 4 SLR 81 (CA) at [212].
  1. The Court may direct parties on the evidence, especially expert evidence, that it requires in order to reach its decision. Also, in any inquiry into a person’s mental capacity, she should be independently examined in consultation with her own doctor rather than have her capacity assessed under cross-examination, and the Court ought to appoint the independent expert should parties be unable to agree on the appointment of the expert. There is no need for multiple experts traversing the same ground.8 Re BKR [2015] 4 SLR 81 (CA) at [216].

Deputies Making Investments

  1. In the decision by Colin Tan DJ in Re TQR [2016] SGFC 98, the Court had to consider whether to grant deputies powers to make investments with P’s assets and if so, the extent of those powers. Section 24(9)(b) of the MCA permits the Court to grant such powers to deputies. The Court then made several observations and pointers on deputies’ powers to make investments.
  1. Given that a deputy has to act in best interest of P, a deputy making an investment decision for an incapacitated person must consider what the incapacitated person would have done in the same circumstances, but also has to consider other factors as well and cannot make a decision on the sole ground that the incapacitated person would have done the same if he had mental capacity.9 Re TQR [2016] SGFC 98 at [12]-[16].
  1. Citing the English case of The Public Guardian v C [2013] EWHC 2965 (COP), the Court observed that a deputy must always consider the issue of preserving P’s assets for his maintenance as first priority.10 Re TQR [2016] SGFC 98 at [18]-[19], [23].s
  1. A deputy cannot base his decisions solely, or even mainly, on how this would increase the asset pool and benefit P’s heirs in future.11 Re TQR [2016] SGFC 98 at [22].
  1. When deciding whether to grant deputies power to make investment decisions, the Court must consider the following matters:-12 Re TQR [2016] SGFC 98 at [24].
    1. Whether P has enough assets to permit some of them to be used for investment?
    2. What is the relationship between P and the deputy?
    3. What are the safeguards that should be put in place to protect P’s assets from bad investment decisions?
  1. Investments come with risks. So if P has very little assets, there is very little buffer if anything goes wrong with the investments and the Court would therefore be slow to permit a deputy to invest those assets because of the risk of loss.13 Re TQR [2016] SGFC 98 at [27]-[28]. Conversely, if P has significant assets that are more than sufficient for his needs, then the Court may be more willing to permit investment since such P would still have enough assets for his maintenance even if the investments resulted in significant losses.14 Re TQR [2016] SGFC 98 at [29].
  1. As regards the relationship between P and the deputy, presumably close relatives would be more likely to be concerned with P’s interests. And potential heirs would subconsciously think about their future inheritance.15 Re TQR [2016] SGFC 98 at [31]-[33]. The relationship between a deputy and P is akin to the fiduciary relationship between a trustee and a beneficiary.16 Re TQR [2016] SGFC 98 at [34], citing Wong Meng Cheong and another v Ling Ai Wah and another [2011] SGHC 233. So potential heirs should not be influenced by their future inheritance in making investment decisions.
  1. As regards safeguards against loss of assets, the aim is to limit the extent of possible loss and ensure that there is a reserve of funds or assets for P’s use no matter what happens to the investments. Such safeguards could potentially differ greatly from case to case.17 Re TQR [2016] SGFC 98 at [37]-[38].
  1. In that case, P had over $6 million worth of assets. The Court granted the deputies investment powers on condition of the following safeguards:
    1. they would maintain a minimum sum of $200,000 as a reserve fund which would not, under any circumstances, be invested;
    2. they would seek advice from qualified persons in relation to proposed investments;
    3. all investment decisions would be taken by both deputies jointly;
    4. in the event that P’s investments fall in value by more than 30%, the deputies would be personally responsible to P for the loss and would reimburse P for the loss sustained;
    5. the deputies were to furnish the Public Guardian with a list of P’s assets and their current value every 6 months in addition to the annual report that they had to submit to the Public Guardian.
  1. This decision therefore helpfully illuminates the principles governing the Court’s approach to granting deputies investment powers, as well as deputies’ exercise of those powers.

Contested Application to Make a Statutory Will: The Fall of the Infamous Fraudster

  1. TCZ v TDA, TDB and TDC [2015] SGFC 63 concerned one aspect of the saga involving an infamous fraudster who was formerly a tour guide from China. The fraudster was later charged and convicted for, inter alia, criminal breach of trust and falsification of receipts. In this case, the plaintiff applied under section 23(1)(i) of the MCA for Court sanction to make and seal a statutory will on the part of a wealthy elderly widow who lacked testamentary capacity and whose estate was estimated to be $35 million. A draft statutory will was presented to the Court for endorsement.
  1. The fraudster was a tour guide to the widow in China and remained in contact with her thereafter. He subsequently came to Singapore and set up a company naming him and the widow as directors. He stayed in her home until her niece removed her to live with her. Later, the widow was diagnosed with dementia, and the niece found out that a Lasting Power of Attorney (“LPA”) was registered two years ago appointing the fraudster as the widow’s donee. The niece also discovered a will executed by the widow four years prior, bequeathing all her assets to the fraudster. This did not square with the widow’s commitment to charitable causes. It was later found that there were no longer any funds in the widow’s foreign currency accounts held with OCBC. There were also many missing pieces of jewellery and art work belonging to the widow which could not be accounted for.
  1. A series of legal proceedings was then started by the niece. The niece successfully applied for limited powers to institute legal proceedings against the fraudster in the widow’s name for, inter alia, breach of his fiduciary duties under the LPA and for damages arising from the misappropriation of the widow’s assets. The niece also successfully obtained a Mareva injunction from the High Court in August 2014 prohibiting the fraudster from disposing the widow’s assets worldwide. In 2014, the application in the name of the widow to revoke her LPA appointing the fraudster was granted.
  1. The Court heard evidence on former executed and unexecuted wills of the widow, which “provided the Court with an insight into the mind of [the widow] when she was in relatively better health”.18 TCZ v TDA, TDB and TDC [2015] SGFC 63 at [14]. Further, the unchallenged expert evidence of a psychiatrist was adduced proving that the widow did not have the capacity to renounce her previous wills nor make a new one by that time of the proceedings.19 TCZ v TDA, TDB and TDC [2015] SGFC 63 at [24].
  1. The Court considered that in determining the best interests of the widow, it had to consider the non-exhaustive list of factors in section 6 of the MCA, including in this case, the need to ascertain the widow’s past and if ascertainable, present wishes, her feelings, beliefs and values which would likely have influenced her decision if she had the capacity.20 TCZ v TDA, TDB and TDC [2015] SGFC 63 at [27].
  1. A procedural point was highlighted at the hearing of the application, one which would be of significance subsequently on appeal. Paragraphs 46 and 57(1) of the Family Justice Court (“FJC”) Practice Directions 2015 provided that evidence for the MCA application, which is to be made by way of Originating Summons (“OS”), is given by way of affidavit. During the Pre-Trial Conference (“PTC”) of the matter, parties raised the possibility of calling witnesses for cross-examination given the allegations of undue influence. However, the fraudster decided not to do so to support his defence. At the hearing, the fraudster’s counsel submitted that the Court could and should on its own volition, call on certain witnesses who were alleging that the fraudster had exercised undue influence over the widow. The Court declined to do so.
  1. The Court examined the affidavit evidence and found that the fraudster had exercised undue influence over the widow.21 TCZ v TDA, TDB and TDC [2015] SGFC 63 at [55]. The Court found that the timing between the fraudster’s entry into the widow’s life and the execution of the will in his favour; the hurried pace at which things were done; the fact that he introduced himself as a staff of the Chinese Embassy to the widow’s former lawyers and that no one knew about the wills save for the fraudster, makes any suggestion that the widow freely chose to execute a will in favour of the fraudster a distortion of the evidence. The Court observed that “the motivations of any beneficiary of a will who involves himself so deeply in the execution of that will are in [its] view, suspect”.22 TCZ v TDA, TDB and TDC [2015] SGFC 63 at [55(b)]. The Court also gave significance to the fact that “that the LPA has since been revoked by [the widow] signifying her position that she [did] not want [the fraudster] to be in charge of her and her assets”.23 TCZ v TDA, TDB and TDC [2015] SGFC 63 at [55(g)].
  1. In the circumstances, the Court allowed the application for the execution of a will on behalf of the widow but made amendments to the amounts the niece’s mother (the widow’s sister) and the widow’s close family friend would benefit under the statutory will. The Court took cognizance of the fact that the draft statutory will was “in perfect alignment” with the widow’s 1989 will and an unexecuted 2009 will.24 TCZ v TDA, TDB and TDC [2015] SGFC 63 at [56]-[57].
  1. The fraudster then appealed against this decision on the basis that the decision should not have been summarily decided and should thus be set aside and the matter remitted for a retrial at which witnesses could be called and cross-examined. In TDA v TCZ, TDB and TDC [2016] SGHC 63, Judith Prakash J (as she then was) threw out his appeal.
  1. Prakash J considered Rule 512 of the Family Justice Rules 2014 (“FJR”) which addresses conversion of an OS to a writ action, Rule 590(3) of the FJR which addresses cross-examination of witnesses who gave affidavits without conversion of the OS to a writ, and Rule 575 of the FJR which concerns the Court’s discretionary power to call witnesses. Given that there was no prior case law on the Court’s exercise of discretion under these rules, Prakash J compared them with Order 28 rule 8 of the Rules of Court (“ROC”).25 (Cap 322, R 5, 2014 Rev Ed). However, Prakash J observed that, drawing from Re BKR,26 Re BKR [2015] 4 SLR 81 (CA) at [214]. “a judge hearing an MCA matter should be accorded a greater degree of discretion than a judge hearing an ordinary civil matter in which the parties are, by and large, the masters of the litigation”.27 TDA v TCZ, TDB and TDC [2016] SGHC 63 at [22].
  1. After considering various authorities,28 Kamla Lal Hiranand v Lal Hiranand [2003] 3 SLR(R) 198 (HC) at [7]; Woon Brothers Investments Pte Ltd v MCST Plan No 461 [2011] 4 SLR 777 (CA) at [30]; Re Deadman [1971] 1 WLR 426 (HC); Cheong Kim Hock v Lin Securities (Pte) [1992] 1 SLR(R) 497 (CA) at [41]; Rainforest Trading Ltd v State Bank of India Singapore [2012] 2 SLR 713 (CA) at [42]; Tan Sock Hian v Eng Liat Kiang [1995] 1 SLR(R) 730 at [9]. Prakash J observed that generally, allegations of undue influence or fraud will strongly incline a Court toward ordering conversion to a writ provided there is, first, controversy concerning the facts per se and, second, at least a credible matrix of facts supporting the allegations or denials.29 TDA v TCZ, TDB and TDC [2016] SGHC 63 at [33].
  1. However, Prakash J also observed that a party can lose the ability to ask the Court to order such a conversion by way of its election.30 TDA v TCZ, TDB and TDC [2016] SGHC 63 at [34]-[36]; LS Investment Pte Ltd v Majlis Ugama Islam Singapura [1998] 3 SLR(R) 369 (CA); Haco Far East Pte Ltd v Ong Heh Lai Francis [1999] 3 SLR(R) 959 (CA). Such election not only pertained to forgoing an opportunity to apply for conversion of an OS to a writ action, but also whether that party had elected to forgo an opportunity to call and cross-examine witnesses. The rationale is that any potential prejudice from non-conversion to a writ action could be prevented by allowing the calling and cross-examination of witnesses, even if there was no conversion.31 TDA v TCZ, TDB and TDC [2016] SGHC 63 at [37].
  1. On the facts of the case, Prakash J found that the fraudster had elected to forgo the opportunity to call and cross-examine witnesses32 TDA v TCZ, TDB and TDC [2016] SGHC 63 at [38]-[49]. and failed to establish at least a credible matrix of facts to support his position.33 TDA v TCZ, TDB and TDC [2016] SGHC 63 at [50]-[53].

Revoking LPA, CPF Nomination and Property Transfer: Dementia, Depression and Alzheimer’s

  1. In two different cases, the applicants applied to revoke an LPA and a CPF nomination on the ground of lack of mental capacity due to dementia and depression respectively; the former failed and the latter succeeded. In a third case, the plaintiffs failed in applying to set aside a transfer of property on the ground of lack of mental capacity due to Alzheimer’s disease.
  1. In the case of TEB v TEC [2015] SGFC 54, P executed an LPA in late 2012, appointing the defendant, P’s nephew, as donee and granting him various powers to manage P’s affairs for her. The plaintiff, the nephew of P’s late husband, applied under section 17 of the MCA to revoke the LPA on the basis that P lacked capacity at the time of its execution and that the defendant was behaving in a way that is not in the best interests of P.
  1. The Court held that the plaintiff had failed to discharge his burden of proof. While it was clear from the evidence (and there were a total of 13 expert witnesses34 TEB v TEC [2015] SGFC 54 at [60]-[61]: one of the expert witnesses was the Colin Tan DJ’s classmate in medical school and another a lecturer when he was there, but parties had no objections to Colin Tan DJ hearing the matter.) that P had dementia and other medical conditions and therefore the first limb of the test of mental capacity had been satisfied,35 TEB v TEC [2015] SGFC 54 at [247]. a diagnosis of dementia (or any other medical condition) is not sufficient, in itself, to support a conclusion that P lacked mental capacity. The plaintiff would still have to prove that the dementia (or other medical condition) had caused P to be unable to make decisions for herself in relation to the matter in question.36 TEB v TEC [2015] SGFC 54 at [248].
  1. The Court was of the view that the plaintiff had failed to prove that P lacked mental capacity at the time of the execution of the LPA, in the light of the presumption in section 3(2) of the MCA e. that P “must be assumed to have capacity unless it is established that he lacks capacity”.37 TEB v TEC [2015] SGFC 54 at [251]-[263]. The Court considered the thirteen expert witnesses’ evidence and observed that several of these expert witnesses did not personally assess P;38 TEB v TEC [2015] SGFC 54 at [77], [120], [123]. one had “strong preconceived ideas about the entire situation involving P and the Defendant [so] there was a very real possibility that these views may have affected his objectivity in assessing P’s mental capacity”;39 TEB v TEC [2015] SGFC 54 at [93]. P’s long-time general practitioner appeared to “not know the criteria for diagnosing dementia or he had applied the wrong criteria in diagnosing dementia in P or he had been correct in his diagnosis but simply could not be bothered to provide accurate information in his first affidavit”;40 TEB v TEC [2015] SGFC 54 at [104]. three of them were family physicians, and so their possible lack of credentials compared to specialists like psychiatrists and geriatricians in this respect had to be given weight;41 TEB v TEC [2015] SGFC 54 at [116]. four others were not testifying as to P’s mental capacity;42 TEB v TEC [2015] SGFC 54 at [156], [157], [221]. two of them could not testify as to P’s mental capacity at the time of her execution of the LPA;43 TEB v TEC [2015] SGFC 54 at [151], [168]. one had his methodology of scoring P on a Severe Impairment Rating Scale questioned;44 TEB v TEC [2015] SGFC 54 at [179]. one showed a lack of familiarity with LPAs;45 TEB v TEC [2015] SGFC 54 at [207]. the expert who had personally assessed P closest to the time of the execution of the LPA testified that he came to an assumption about P’s dementia based on another doctor’s diagnosis.46 TEB v TEC [2015] SGFC 54 at [69].
  1. The Court found that while it was clear that there were various ways in which the Defendant could have better handled matters involving P, there was no evidence that he had acted so badly in terms of P’s interests. Hence, the plaintiff had failed to prove that the defendant was behaving in a way that was not in P’s best interests.47 TEB v TEC [2015] SGFC 54 at [329]. In any case, the plaintiff had failed to prove that P lacked capacity to revoke the LPA on her own and therefore the Court would not have jurisdiction to revoke the LPA on the basis of the defendant’s actions that were allegedly not in P’s best interests.48 TEB v TEC [2015] SGFC 54 at [330]-[336].
  1. In Leow Li Yoon vLiu Jiu Chang [2016] 1 SLR 595 (HC), Aedit Abdullah JC granted an appeal against the District Court’s decision to dismiss the applicant’s application to declare null and void a Central Provident Fund (“CPF”) nomination.
  1. The deceased, who was in the midst of divorcing his wife, nominated someone other than his immediate family members as the beneficiary of the funds in his CPF account. The wife and some of the rest of the family took issue with the nomination, as there were indications that the deceased was not of the right mind when the nomination was made.
  1. Aedit Abdullah JC ordered that the CPF nomination be set aside and that the deceased’s CPF monies be distributed in the manner prescribed in the Intestate Succession Act and in accordance with section 25(2)(a) of the CPF Act. Following Wong Meng Cheong v Ling Ai Wah [2012] 1 SLR 549 (HC) at [27], the Court held that the statutory test for mental capacity, found in sections 4 and 5 of the MCA, does not differ from the position at common law. Given that the test, and hence the result, should be the same whether the MCA or common law standard is applied, it did not matter which is used. Thus the MCA formulation of mental capacity can be adopted in dealing with CPF nominations.49 Leow Li Yoon v Liu Jiu Chang [2016] 1 SLR 595 (HC) at [26].
  1. After examining the expert evidence, the Court found that the available evidence did raise a real possibility that the deceased’s depression might have left him functionally incapable of making a decision in relation to the CPF nomination at the material time.50 Leow Li Yoon v Liu Jiu Chang [2016] 1 SLR 595 (HC) at [52]. The defendant however did not call expert evidence to controvert the plaintiff’s, so she failed to discharge her burden of proof. The Court however observed that the decision in this case does give rise to a proposition that depression will always affect testamentary capacity in the same way. Much will depend on the specifics of each case.51 Leow Li Yoon v Liu Jiu Chang [2016] 1 SLR 595 (HC) at [54]. It was significant here that the plaintiff’s expert evidence was uncontroverted.
  1. Next, Wong Meng Cheong and another v Ling Ai Wah and another [2012] 1 SLR 549 (HC) involved a three-person committee of the person and estate of Wong Yip Chong (“WYC”) appointed under section 9 of the now repealed Mental Disorders and Treatment Act (Cap 178, 1985 Rev Ed). After the introduction of the MCA, the committee was deemed to be deputies appointed under the MCA. The two plaintiffs, the two sons of WYC and his wife, applied to declare null and void a property transfer to include WYC’s long-time partner Ling Ai Wah as a joint tenant. They claimed that he lacked mental capacity to execute the transfer as he had Alzheimer’s disease. They also applied to sever the joint tenancy and sell the property if the transfer was found valid. The son of Wong and Ling Ai Wah, Wong Meng Weng, however applied to, inter alia, revoke the appointment of the two plaintiffs as deputies.
  1. Lai Siu Chiu J (as she then was) dismissed the plaintiffs’ claim and revoked the appointment of the two plaintiffs as deputies. Lai J held that the MCA test for capacity applied even though it was not in force at the material time; this was because its concept of mental capacity and autonomy was no different from that of the common law’s.52 Wong Meng Cheong and another v Ling Ai Wah and another [2012] 1 SLR 549 (HC) at [27]. Lai J found on the evidence that WYC did not lack mental capacity to execute the transfer at the material time. She found that WYC did not suffer from Alzheimer’s disease at that time. Even if he did, WYC was still able to make a decision for himself regarding the transfer.53 Wong Meng Cheong and another v Ling Ai Wah and another [2012] 1 SLR 549 (HC) at [25]. It was significant that the plaintiffs’ experts evidence failed to fulfil the requirements in Order 40A rule 3(2) of the ROC in that: (i) the experts had a close relationship with the plaintiffs; (ii) their evidence displayed partiality towards the plaintiffs’ case and only highlighted material supportive of the plaintiffs’ case; (iii) their evidence did not attempt to explain the contradictory objective medical evidence which Lai J found to be highly relevant on the basis of the defendant’s expert’s evidence; (iv) they were not able to give a reliable expert opinion on the issue of WYC’s mental capacity at the time of the transfer.54 Wong Meng Cheong and another v Ling Ai Wah and another [2012] 1 SLR 549 (HC) at [58], [62]-[63], [69]-[70], [73].
  1. Further, Lai J refused the plaintiffs’ application to sever the joint tenancy because there was no evidence that WYC felt any differently at the time of the transfer with respect to how the property should be held as compared to his earlier decision. Hence, to promote WYC’s best interests, much weight had to be given to WYC’s expressed intentions in relation to the property while he was still able to decide for himself.55 Wong Meng Cheong and another v Ling Ai Wah and another [2012] 1 SLR 549 (HC) at [109].
  1. Having also considered that the plaintiffs were not acting in WYC’s best interests by, inter alia, making mala fide applications to the Court without disclosing material facts to then take the defendant’s properties, depleting WYC’s cash reserves, putting money out of WYC’s reach, wrongfully wrote off debts owed to WYC, and doing these things to benefit their own interests at the expense of WYC’s wellbeing, Lai J found that they had breached sections 6(7), (8) of the MCA and paragraphs 9.8.7 and 9.8.9 of the Code of Practice: Mental Capacity Act 2008 (section 41(5) of the MCA). Lai J thus ordered that their appointments as deputies be revoked under section 20(8) of the MCA and for an account of WYC’s assets and liabilities to be provided to the sole remaining deputy who was in the committee of the person and estate.56 Wong Meng Cheong and another v Ling Ai Wah and another [2012] 1 SLR 549 (HC) at [184].

Awarding Costs in MCA Disputes

  1. Wong Meng Cheong and another v Ling Ai Wah and another [2012] 1 SLR 549 (HC) was also significant for its decision on the order of awarding costs in MCA disputes. Lai J observed that the court ultimately has discretion on costs in such disputes: Order 99 rule 13 of the ROC provided that the costs of proceedings under the MCA would be paid by the deputised person or charged to his estate, unless the court otherwise directed; and section 40(2) of the MCA provided that the court had full power to determine by whom and to what extent the costs were to be paid. The general rule that a trustee who sued for the protection of trust property against a third party would be indemnified against his costs applied to MCA disputes because the fiduciary relationship between a deputy and the deputised person was akin to that of trustee and beneficiary. However, the rule was qualified.57 Wong Meng Cheong and another v Ling Ai Wah and another [2012] 1 SLR 549 (HC) at [192].
  1. It is established that a trustee is entitled to full indemnity out of a trust estate against all his costs, charges and expenses if they were “properly incurred” in an action respecting the trust estate. For costs to be considered “proper”, the trustee had to satisfy two tests, reasonableness and bona fides.58 Wong Meng Cheong and another v Ling Ai Wah and another [2012] 1 SLR 549 (HC) at [193], citing In re Beddoe; Downes v Cottam [1893] 1 Ch 547 (CA). A trustee should avoid all litigation unless there was such a chance of success as to render it desirable in the interests of the estate that the necessary risk should be incurred. The trustee who was uncertain about the desirability of litigation could take out an originating summons, state the point under discussion, and ask the Court whether the point was one which should be fought out or abandoned (referred to as a Beddoe application).59 Wong Meng Cheong and another v Ling Ai Wah and another [2012] 1 SLR 549 (HC) at [194].
  1. Applying the aforementioned principles to the facts, Lai J found that the plaintiffs had clearly not acted properly in commencing the litigation. It was not bona fide and was also patently unreasonable. The costs of commencing the action were also entirely out of proportion to the amount of liquid funds available in WYC’s estate at the time the proceedings were initiated. The plaintiffs failed to make a Beddoe application and did not pay heed to their co-deputy’s well founded objections. Lai thus ordered the plaintiffs to pay the defendant’s costs on an indemnity basis, and the co-deputy’s costs on a standard basis, while the shortfall between the co-deputy’s standard basis costs and the solicitor and client costs was to be paid out of WYC’s estate as he had acted reasonably in the proceedings as a deputy.60 Wong Meng Cheong and another v Ling Ai Wah and another [2012] 1 SLR 549 (HC) at [195]-[199], [203].
  1. Colin Tan DJ also considered the issue of awarding costs in MCA disputes in TRD v TRE and others [2016] SGFC 55. The Court surveyed section 40, MCA; and Rule 190, 852(2), 854(b) and (c), and 856 of the Family Justice Rules and observed that:61 TRD v TRE and others [2016] SGFC 55 at [6]-[8].
    1. generally P’s estate would bear the costs of proceedings because such proceedings are normally for the benefit of P and it is only fair that P pays for the proceedings (in line with section 9 of the MCA which provides that if necessary goods and services are provided to P then P must pay a reasonable price for these);
    2. this norm however should be departed from if the circumstances of the case warrant it, e.g. where the conduct of parties or unnecessary claims have contributed to making the proceedings more protracted and more costly;
    3. in contested cases, costs generally follow the event, but if the parties who may otherwise have to pay costs can demonstrate that they have acted reasonably and in P’s best interests, it may, depending on the facts of the case, be appropriate for the costs of the unsuccessful party to also be borne by P’s estate.
  1. In that case, the Court considered that there were no wasted costs due to improper or unreasonable acts. The Court took into account the nature of the claims as well as the conduct of the parties and also the size of P’s estate, for reasonable costs of the proceedings to be paid by P.62 TRD v TRE and others [2016] SGFC 55 at [10]-[11]. The Court observed that if payment of costs would be a great burden to P, then it may be necessary to decline to order that P’s estate bears the costs even though the party or parties may be “entitled” to this. Further, the Court would take into account work done, proportionality between costs and outcome or benefit to P, and the reasonableness of conduct of the parties (including whether a more conciliatory approach should have been taken).63 TRD v TRE and others [2016] SGFC 55 at [14]-[21].

 

The author is grateful to Tedric Chai, Daniel Foo, and Mark Lim for their helpful assistance. All errors are the author’s.

Endnotes   [ + ]

1. Re BKR [2015] 4 SLR 81 (CA) at [134].
2. Re BKR [2015] 4 SLR 81 (CA) at [134].
3. Re BKR [2015] 4 SLR 81 (CA) at [134].
4. Re BKR [2015] 4 SLR 81 (CA) at [120].
5. Re BKR [2015] 4 SLR 81 (CA) at [88]-[120].
6. Re BKR [2015] 4 SLR 81 (CA) at [111]-[116].
7. Re BKR [2015] 4 SLR 81 (CA) at [212].
8. Re BKR [2015] 4 SLR 81 (CA) at [216].
9. Re TQR [2016] SGFC 98 at [12]-[16].
10. Re TQR [2016] SGFC 98 at [18]-[19], [23].s
11. Re TQR [2016] SGFC 98 at [22].
12. Re TQR [2016] SGFC 98 at [24].
13. Re TQR [2016] SGFC 98 at [27]-[28].
14. Re TQR [2016] SGFC 98 at [29].
15. Re TQR [2016] SGFC 98 at [31]-[33].
16. Re TQR [2016] SGFC 98 at [34], citing Wong Meng Cheong and another v Ling Ai Wah and another [2011] SGHC 233.
17. Re TQR [2016] SGFC 98 at [37]-[38].
18. TCZ v TDA, TDB and TDC [2015] SGFC 63 at [14].
19. TCZ v TDA, TDB and TDC [2015] SGFC 63 at [24].
20. TCZ v TDA, TDB and TDC [2015] SGFC 63 at [27].
21. TCZ v TDA, TDB and TDC [2015] SGFC 63 at [55].
22. TCZ v TDA, TDB and TDC [2015] SGFC 63 at [55(b)].
23. TCZ v TDA, TDB and TDC [2015] SGFC 63 at [55(g)].
24. TCZ v TDA, TDB and TDC [2015] SGFC 63 at [56]-[57].
25. (Cap 322, R 5, 2014 Rev Ed).
26. Re BKR [2015] 4 SLR 81 (CA) at [214].
27. TDA v TCZ, TDB and TDC [2016] SGHC 63 at [22].
28. Kamla Lal Hiranand v Lal Hiranand [2003] 3 SLR(R) 198 (HC) at [7]; Woon Brothers Investments Pte Ltd v MCST Plan No 461 [2011] 4 SLR 777 (CA) at [30]; Re Deadman [1971] 1 WLR 426 (HC); Cheong Kim Hock v Lin Securities (Pte) [1992] 1 SLR(R) 497 (CA) at [41]; Rainforest Trading Ltd v State Bank of India Singapore [2012] 2 SLR 713 (CA) at [42]; Tan Sock Hian v Eng Liat Kiang [1995] 1 SLR(R) 730 at [9].
29. TDA v TCZ, TDB and TDC [2016] SGHC 63 at [33].
30. TDA v TCZ, TDB and TDC [2016] SGHC 63 at [34]-[36]; LS Investment Pte Ltd v Majlis Ugama Islam Singapura [1998] 3 SLR(R) 369 (CA); Haco Far East Pte Ltd v Ong Heh Lai Francis [1999] 3 SLR(R) 959 (CA).
31. TDA v TCZ, TDB and TDC [2016] SGHC 63 at [37].
32. TDA v TCZ, TDB and TDC [2016] SGHC 63 at [38]-[49].
33. TDA v TCZ, TDB and TDC [2016] SGHC 63 at [50]-[53].
34. TEB v TEC [2015] SGFC 54 at [60]-[61]: one of the expert witnesses was the Colin Tan DJ’s classmate in medical school and another a lecturer when he was there, but parties had no objections to Colin Tan DJ hearing the matter.
35. TEB v TEC [2015] SGFC 54 at [247].
36. TEB v TEC [2015] SGFC 54 at [248].
37. TEB v TEC [2015] SGFC 54 at [251]-[263].
38. TEB v TEC [2015] SGFC 54 at [77], [120], [123].
39. TEB v TEC [2015] SGFC 54 at [93].
40. TEB v TEC [2015] SGFC 54 at [104].
41. TEB v TEC [2015] SGFC 54 at [116].
42. TEB v TEC [2015] SGFC 54 at [156], [157], [221].
43. TEB v TEC [2015] SGFC 54 at [151], [168].
44. TEB v TEC [2015] SGFC 54 at [179].
45. TEB v TEC [2015] SGFC 54 at [207].
46. TEB v TEC [2015] SGFC 54 at [69].
47. TEB v TEC [2015] SGFC 54 at [329].
48. TEB v TEC [2015] SGFC 54 at [330]-[336].
49. Leow Li Yoon v Liu Jiu Chang [2016] 1 SLR 595 (HC) at [26].
50. Leow Li Yoon v Liu Jiu Chang [2016] 1 SLR 595 (HC) at [52].
51. Leow Li Yoon v Liu Jiu Chang [2016] 1 SLR 595 (HC) at [54].
52. Wong Meng Cheong and another v Ling Ai Wah and another [2012] 1 SLR 549 (HC) at [27].
53. Wong Meng Cheong and another v Ling Ai Wah and another [2012] 1 SLR 549 (HC) at [25].
54. Wong Meng Cheong and another v Ling Ai Wah and another [2012] 1 SLR 549 (HC) at [58], [62]-[63], [69]-[70], [73].
55. Wong Meng Cheong and another v Ling Ai Wah and another [2012] 1 SLR 549 (HC) at [109].
56. Wong Meng Cheong and another v Ling Ai Wah and another [2012] 1 SLR 549 (HC) at [184].
57. Wong Meng Cheong and another v Ling Ai Wah and another [2012] 1 SLR 549 (HC) at [192].
58. Wong Meng Cheong and another v Ling Ai Wah and another [2012] 1 SLR 549 (HC) at [193], citing In re Beddoe; Downes v Cottam [1893] 1 Ch 547 (CA).
59. Wong Meng Cheong and another v Ling Ai Wah and another [2012] 1 SLR 549 (HC) at [194].
60. Wong Meng Cheong and another v Ling Ai Wah and another [2012] 1 SLR 549 (HC) at [195]-[199], [203].
61. TRD v TRE and others [2016] SGFC 55 at [6]-[8].
62. TRD v TRE and others [2016] SGFC 55 at [10]-[11].
63. TRD v TRE and others [2016] SGFC 55 at [14]-[21].

Ronald JJ Wong
Director
Covenant Chambers LLC
E-mail: ronald.wong@covenantchambers.com

Ronald JJ Wong is a Director at Covenant Chambers LLC, practising in litigation, advisory, and non-disputes work, with special interest in technology, corporate disputes and transactions, investments and acquisitions, financial regulations, and employment.