Legal Update 5 of 2010

Whether a family arrangement is a valid contract

Case:

Tang Meng Hock v Tan Ming Seng [2010] 1 AMR 540

Issue:

Whether a family arrangement is a valid contract.

Brief Facts:

• The defendant is the plaintiff's elder brother (Ming Seng) and executor of their late father's will.

• Under the will, Ming Seng was to get 15% of the sale of a property, while Meng Hock was to get RM10,000 and the remaining proceeds to be distributed at Ming Seng's discretion.

• Ming Seng and Meng Hock entered into an family arrangement whereby Ming Seng agreed to give Meng Hock RM60,000, an apartment and a piece of land and in return Meng Hock agreed not to make any further claim against the him or their father's estate.

• Ming Seng delivered everything but the land.

• Meng Hock demanded that he fulfil his promise and deliver the land but Ming Seng declined and instead unilaterally revoked the family arrangement.

• Meng Hock filed an action for breach and Ming Seng counterclaimed, seeking a declaratory order that the family arrangement was void.

• The High Court held the family arrangement to be valid and ordered the transfer of the land.

• Ming Seng appealed to the Court of Appeal.

Decision:

• The intention of the parties had been clearly set out.

• Court held that such an arrangement is not void if expressed in writing and registered under the law, if any, for the time being in force for the registration of such documents.

• The family arrangement has been in writing, duly stamped and registered with the endorsement of the Stamp Office.

• The phrase "natural love and affection" cannot be read in isolation and must be linked to the requirement that the parties be "standing in a near relation to each other". Being biological brothers satisfies this requirement.

• The family arrangement is valid and enforceable. Appeal dismissed with costs.