Ong Ah Tang @ Tan Ah Soo (f) & Anor v Soh Bee Yong (suing as the executor of the estate of Soh Kim Siah @ Soh Kee Lin, deceased) [2012] 5 MLJ 484

Ong Ah Tang @ Tan Ah Soo (f) & Anor v Soh Bee Yong (suing as the executor of the estate of Soh Kim Siah @ Soh Kee Lin, deceased) [2012] 5 MLJ 484

Court of Appeal (Putrajaya)

Administration of Estate

Facts

1.     This is a dispute between the administrators over the administration of the estate of Soo Wan Yau @ Soh Get Swee (‘Deceased’) involving two pieces of land held under CT No 1655, Lot 3454 and Grant No 14271, Lot 2211, in the township of Bandar Maharani, Muar, Johor (‘the Lands’).

2.     The Appellants (the plaintiffs in the court below) and the Respondent are joint administrators of the Deceased estate.  The letters of administration were granted to them by the High Court, Muar on 16 April 1979.

3.     They are also parties who have interests in the said lands.  The First Appellant is the Deceased’s lawful wife while the Second Appellant and the Respondent are the Deceased’s children.

4.     The document of titles is with the Respondent who had been in occupation of the said Lands for years.

5.     The Appellants preferred to sell the Lands by way of a public auction and distribute the proceeds of sale of the Lands among the beneficiaries in accordance with the Distribution Act 1958 (Act 300), after deducting the costs and related expenses.

6.     There was a verbal offer to the Appellants to purchase the said Lands for a sum of RM713,510.00.

7.     On 7 October 2004, the Appellants, through their solicitors wrote to the Respondent giving him the first option to purchase the Lands at RM713,510.00, failing which they would apply to the High Court to sell the lands by public auction.

8.     Based on valuation reports in May 2005, the market value of Lot 2211 and Lot 3453 in May 2005 was RM224,000.00 and RM252,000.00 respectively. There was no response from the Respondent to the letter from the Appellants’ solicitors.

9.     As the matter could not be resolved and had derailed the administration of the Deceased’s estate, the Appellants filed an application by way of an originating summons at the Muar High Court for an order, inter alia, that the Lands be sold by public auction and that the proceeds of the sale of the Lands be distributed among the beneficiaries in accordance with the Act 300.

10.  Six other children of the Deceased had given their written consent to the application and agreed that the lands to be sold by public auction.

11.  Two adopted children of the Deceased, who were also named as beneficiaries, did not give their written consent to the application but they did not file any affidavit in opposition to the application.

12.  The Respondent however opposed the application on the ground that he had been in occupation of the lands for years and that he wanted to buy the lands himself.

13.  He had made known his intention to the Appellants.  There was however no response from the Appellants.

14.  The Respondent had even made an offer, through his solicitors, to purchase the lands at a total price of RM480,000.00, which was above the market value of the said Lands, but this was rejected by the Appellants, as they believed that the Lands could fetch a higher price if sold by way of public auction.

15.  On 17 July 2007, the learned judge dismissed the Appellants’ application on the ground, among others, that there was no concrete proof that there was an offer to purchase the lands at RM713,510.00.

Issue

1.     Whether the learned judge went beyond the scope of their application by ordering the Lands to be sold to the Respondent rather than ordering the Lands to be sold by public auction.

Ratios

1.  Whether the learned judge went beyond the scope of their application by ordering the Lands to be sold to the Respondent rather than ordering the Lands to be sold by public auction.

(a)   The Court agreed with the Appellants that, after dismissing their application for an order of sale of the Lands by public auction, the learned judge went beyond the scope of the application by ordering the Lands to be sold to the Respondent.

(b)   Section 60(2) of the Probate and Administration Act 1959 (Act 97) empowers the High Court to make an order of sale without the concurrence of all the personal representatives.

(c)   Furthermore, Section 60(4)(a) of Act 97 provides that an administrator may not sell any immovable property without the sanction of the Court.

(d)   The Federal Court in Yap Yoke Luan & Ors v Ong Wee Tok & Ors [1984] 1 MLJ 23; [1983] CLJ (Rep) 433 held that in an application for an order of sale by the administrators of the deceased estate, the duty of the Court is to protect the rights of the beneficiaries and not to consider the interests of the proposed purchasers.

(e)   In exercising its discretion, the Court will have to look into the facts and surrounding circumstances of the case ie whether the proposed sale was favourable to the beneficiaries and whether the administrators had acted with proper prudence in exercising their overriding duty to obtain the best possible price.

(f)     In Ong Thye Peng v Loo Choo Teng & Ors [2008] 4 MLJ 31; [2008] 1 CLJ 571, the Federal Court held that the trustees of the estate, just like the administrators, must act in the interest of all the beneficiaries.

(g)   Their duty is to ensure that the estate of which they are trustees benefits as much as possible when they deal with trust property.

(h)   In the instant appeal, the High Court ordered the Lands to be sold to the Respondent contrary to the relief sought by the Appellants and against the wishes of the majority of the beneficiaries who supported the application that the Lands be sold by public auction.

(i)      There is no averment in the Respondent’s affidavit in opposition, that the Lands be sold to him at RM480,000.00. He merely urged the Court to dismiss the Appellants’ application.

(j)      Therefore, the Court of Appeal was of the view that the learned judge clearly went beyond the scope of the Appellants’ application in ordering the Lands to be sold to the Respondent after having dismissed the Appellants’ application for an order of sale by public auction.

(k)    This is because, there was no evidence before the Court to determine what was the best possible price at the time of making the order.

(l)      Thus, in the circumstances of the case, such an order is legally unsustainable.

Decision

1.     The Court of Appeal allowed the appeal by the Appellants with cost, set aside the order of the High Court and substituted it with an order that the Lands be sold by way of a public auction.

Key Take Away

1.     According to Section 346 of the National Land Code 1965, the first step in transferring immovable property from the estate of the deceased to the beneficiary is to register the vesting of the property forming part of the estate of the deceased to himself at the land office.

2.     The second step is determined by whether the deceased died with a will or intestate.  If a valid will exists, the personal representative can transfer the property to the beneficiaries by presenting the memorandum of transfer at the land office.

3.     In contrast, if the deceased died intestate, the personal representative must obtain the necessary order from the High Court sanctioning the transfer under Section 60 of Act 97 before the transfer can be presented at the land office.

4.     If, instead of being transferred to a beneficiary, the property is to be sold to a third-party purchaser, an order of the High Court sanctioning the sale must be obtained under section 60 of Act 97 before the transfer can be presented at the land office.

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