Trust properties can be included in a will's residuary clause, permitting distribution despite the settlor's death, thus avoiding intestacy.

[1] The plaintiff had filed encl 25 pursuant to O 80 of the RHC 1980 (the Rules) in the High Court for a decision on points of law namely:

(i) whether trust properties and still being trust properties at the time of the death of the settlor can be will out or in other words whether it has a depository effect; and

(ii) whether trust properties that resulted back to the settlor but long after his death, will fall under intestacy.

[2] The 3rd and 4th defendants hereinafter referred to as the respondents, filed encl 32 about six months after the filing of encl 25 pursuant to O 14A of the Rules, for the High Court to determine the matter on the following questions of law, namely:

(a) based on the last will of Lim Eow Thoon, deceased, dated 14 August 1976, indenture dated 17 September 1930 made between Tan Tay Seang, deceased as transferor and Lim Eow Thoon, deceased as confirmor and Lim Eow Hooi, deceased, Lim Keng Chuan, deceased, and Lim Seong Wah, deceased, as trustees and any other documents available, whether the lands that were held on trust by Lim Eow Hooi, deceased, Lim Keng Chuan, deceased and Lim Seong Wah deceased and thereafter goes back to Lim Eow Thoon, deceased, on the death of the last surviving trustee [with the resulted back of the land affirmed by the Penang High Court in an order dated 9 January 1996 in Originating Summons No 24-758-1995 with particulars of the land being stated in the Schedule in para 23 in the amended statement of claim herein], has to be distributed to the residuary legatees stated in paras 5 and 6 in the last will of the said Lim Eow Thoon or the said lands have to be distributed to all the lawful children or heirs of Lim Eow Thoon, deceased; and

(b) in the event the lands go to the residuary legatees, the plaintiffs whole claim herein be dismissed with costs.

[3] On 26 April 2012, the learned judge answered affirmatively the respondents application under encl 32 pursuant to O 14A of the Rules, and dismissed the plaintiffs (hereinafter referred to as the appellant) application of encl 25. Being aggrieved, the appellant filed an appeal to the Court of Appeal but lost there too. The appellant successfully obtained leave from the Federal Court on 20 November 2012 to have the following question determined by us, that is:

"In a case of wills, does a residuary clause include too property which the testator does not own at the time of his death."

Background Facts

[4] Real property, initially held by one Lim Leng Cheak (died on 10 February 1901), was vested on his widow, ie one Madam Tan in her own rights absolutely by the High Court in Penang on 21 December 1927 (Re Lim Leng Cheak, Deceased; Lim Eow Thoon v. Lim Keng Chuan & Anor, 1968 MarsdenLR 271 ). By an indenture dated 24 March 1929 Madam Tan transferred the property to her son, ie Lim Eow Thoon (deceased), and vide an indenture dated 17 September 1930 the latter evinced an intention to create a trust. It was not disputed that the latter indenture was declared a valid private express trust by the courts. The properties involved in the trust were 13 pieces of land (the lands).

[5] The relevant parties involved in the 17 September 1930 indenture were Tan Tay Seang (Madam Tan/deceased) the transferor of the first part, Lim Eow Thoon (deceased) as the testator of the 2nd part, and Lim Eow Hooi (deceased), Lim Keng Chuan (deceased) and Lim Seong Wah (deceased) as trustees of the lands of the 3rd part. The purpose of the trust as far as possible was to maintain and keep the lands as burial grounds, and out of the profits and income derived t