A father died in 1989, leaving a two-storey shophouse as the main asset of his estate. One son, appointed executor, controlled and let the property for over 30 years, keeping the rent. Another son sued. The High Court’s decision shows how an executor who fails to manage estate property diligently can be made to pay for income that was never collected.
Background
The executor was also the registered co-owner, holding half the shophouse for himself and half on trust for the estate (at [6]). He let the ground floor and parts of the upper floor and kept the rent (at [7]). After a trial on liability, the court ordered an account on the wilful default basis and a sale of the property (at [9]). The property was sold in 2022, and a joint accountant was appointed to reconstruct what the property had earned and should have earned.
The principles
- A beneficiary is not entitled to a wilful default account as of right; at least one act of wilful neglect or default must be shown (at [15]).
- The account covers what the trustee received and also what he might have received with proper diligence (at [16]), and the court may examine every aspect of his management (at [17]).
- The usual remedy is a surcharge: the trustee must make good the lost benefit (at [20]).
What the court found
The executor’s argument that no wilful default had been established was rejected (at [53]). He had admitted he did not market the property to maximise occupancy, did not check market rents, and collected only what tenants could pay (at [57]).
The plaintiff’s claim that rent had been under-declared failed: the burden was on him, and the executor’s ledger matched his tax filings (at [60]–[64]). But the estate had received only $406,788.13 (at [67]). The court preferred the joint accountant’s method based on the property’s annual values, which put the rent that should have been earned at $605,121.04 including interest (at [69]–[71]). The executor was surcharged the difference, $198,332.91, to be deducted from his share of the estate, with interest at 5.33% from September 2022 (at [77], [82]).
On costs, the proceedings were found to benefit the estate. The executor was ordered to pay costs and the joint accountant’s fees, and could not recoup his own costs from the estate (at [83]–[102]).
Why it matters
Executors who use or let estate property must manage it as a prudent owner would: market it, check market rents, keep records and pay income into the estate. Beneficiaries who suspect an estate is being run for one family member’s benefit can ask the court for an account, but should be ready to prove at least one act of wilful default.
Common questions
What is an account on the wilful default basis?
An order that a trustee or executor account for what they would have received had they managed the assets diligently, not just what they actually received. The beneficiary must show at least one act of wilful default first.
What is a surcharge?
The usual remedy after a wilful default account. The executor is treated as having received the lost benefit and must make good the shortfall to the estate.
Can an executor recover their legal costs from the estate?
Usually, for costs properly incurred. Here the executor was ordered to bear his own costs of the trial and the account, and could not recoup them from the estate.
Akesh Abhilash is a Singapore disputes lawyer with eleven years in practice, acting in commercial, cross-border and criminal matters before the Court of Appeal, the High Court, the State Courts and international tribunals. Read his profile.