Chang v Tjiong; Estate of Hok Njan Tjiong

Judgment 1HIS HONOUR : This application concerns the costs orders to be made upon the discontinuance of the plaintiff's application for the grant of letters of administration with the will annexed. The proceedings relate to the estate of Hok Njan Tjiong who died on 18 May 1981. No application for probate or letters of administration was made in the period immediately following his death because it was not perceived that the deceased had any assets. 2The application for letters of administration with the will annexed was filed by the plaintiff, Soei Lan Chang, on 25 March 2011. The alleged will is a document that Mrs Chang says she discovered in mid July 2009. Her evidence was that she found the document in an envelope together with an unsigned copy in the course of cleaning out a cupboard in which she found a jacket belonging to the deceased's son, George, who himself died in 2004. 3The document purportedly bore the signatures of the deceased and of two attesting witnesses, namely a Mr Brown, and the deceased's son, George Tjiong. The document had been torn into nine pieces. A forensic examination of the document was carried out by Dr Steven Strach. In his report of 9 September 2011 he concluded that the signature attributed to George Tjiong was probably a forgery. He also concluded that the signature of the testator and of the other witness, Mr Brown, had been written very hesitantly. He said he would need many specimen signatures written by each of those persons over a period of time in order to reach any conclusion about the authenticity of their signatures, but the hesitancy caused him to advise that caution should be adopted in accepting the signatures as genuine. 4If the signature of George Tjiong was forged, it would call into question the authenticity of the entire document. 5The document contains the following provisions: " This is the last Will and Testament of Tjiong Hok Njan dated 27 December 1980. I revoke all my previuos [sic] Wills including all my my [sic] directives in relation to my property at ... Belmore Street Burwood (the 'Belmore Street Property Trust') which Dr. George Tat Loek Tjiong has been holding on my behalf. I name Dr. George Tjiong as Executor and Trustee of my estate. Should Dr. Tjiong be unable to act as my Executor and Trustee, I name Colquhoun the law firm or a partner thereof as my Executor and Trustee; should they be unable to so act, then I name my son Dr. Richard Tat Tjhien Tjiong as Executor and Trustee of my estate. On my death, I terminate the Belmore Street Property Trust. The full value of the Property at ... Belmore Street, Burwood, is to revert back to my estate. If for any reason this is not done, my directives in the following paragraphs apply also to the Property and the Property Trust as if the Property is part of my estate. " 6The document provided for the deceased's money and personal belongings to pass to his wife. It provided that his wife should have life tenure of the Burwood property. After her death the deceased purportedly directed that the residue of his estate be distributed as follows: a) a legacy of $7,500 plus CPI increases from April 1976 to be paid to Richard; b) half of the remainder to the deceased's son Roy Grant and daughter Emma Indra; and c) the remaining half of the remainder to be divided between the deceased's son Harry and his other daughters if they survived him and his wife. The last gift was subject to a presently immaterial qualification. The plaintiff did not stand to benefit, except in accordance with para (c) above. 7The plaintiff is a daughter of the deceased, and sister of George Tjiong. Whilst she professes her belief that the document is genuine, she does not wish to continue with the application in the light of the evidence of the document examiner. There is no opposition to her application that she have leave to discontinue the proceedings. Rule 42.19 of the Uniform Civil Procedure Rules 2005 provides in substance that unless the court otherwise orders, a plaintiff who discontinues proceedings must pay the defendant's costs. Mrs Chang seeks a contrary order. She submits that she should have leave to discontinue and there should be no order as to costs. 8The deceased had eight children. Two of the children, Margarita and George, have died since the deceased's death. 9The plaintiff did not name a defendant to her summons. She served citations on all relevant persons. One of the children of George Tjiong and executor of his estate, namely Katrina May Lan Tjiong, elected to be joined as a defendant and entered an appearance in her capacity as executor of his estate. She contends that the plaintiff should pay the costs of the proceedings on the indemnity basis. 10The questions are whether upon the discontinuance of the proceedings there should be no order as to costs, or whether the plaintiff should pay the defendant's costs on the ordinary basis, or whether the plaintiff should pay the defendant's costs on the indemnity basis. 11There have been two previous cases concerning the family. On 4 March 2009 Palmer J gave judgment in a matter concerning title to a home unit in Belmore Street, Burwood registered in the name of George Tjiong ( Chang v Tjiong & Ors [2009] NSWSC 122). This is the property referred to in the first and third paragraphs of the purported will. 12George Tjiong died on 30 January 2004. By his will he left the whole of his estate to his children, Katrina and Lindsay. The present plaintiff, Soei Chang, was the executrix of the estate of her and George's mother (the deceased's wife). Mrs Chang claimed that the unit at Burwood was held by George on trust for the father (the deceased) and that his beneficial interest in the unit passed on intestacy to his wife, their mother. The then executor of George's estate, Richard Tjiong (brother of George Tjiong and Soei Chang) filed a submitting appearance. The daughters of George (Katrina and Lindsay) were the active defendants. Mrs Chang relied upon an affidavit sworn by George in family law proceedings in 1984 in which he deposed that he did not have any beneficial interest in the unit, but held it on trust for his mother. She also relied on two copy letters said to have been written by the father to George dated 15 March 1976 and 10 October 1978. Palmer J found that the letters were genuine (at [23]). His Honour was satisfied that George's statement in the affidavit filed in the family law proceedings was true, but found the father was not the beneficiary of the trust and therefore the unit did not pass to the father's estate. His Honour held that pursuant to the terms of the letter of 1978, George held the property on trust for the benefit of his mother during her lifetime and thereafter to apply it according to George's discretion for the benefit of another sibling, Roy, or other members of the father's family according to their needs (at [36]). His Honour concluded that if George had not exercised the power of appointment in favour of his daughters, then the question of how the power should be exercised was a matter arising in the administration of George's estate. Soei Chang, as executrix of the mother's estate, did not have an interest in that issue. She was merely one of a number of potential discretionary objects in whose favour a power of appointment of the trust property might be exercised. His Honour concluded that Soei Chang failed to show that the unit and the proceeds of its sale were held by George upon trust for the father alone, and for that reason the proceedings were dismissed (at [42] and [43]). 13Palmer J noted (at [20]) a submission of counsel for Katrina Tjiong that the letters of 15 March 1976 and 10 October 1978 were not authentic, and that the explanation for their production in the proceedings was not credible. His Honour rejected that contention. In part, his Honour's rejection of that submission was based upon other unimpeachable correspondence from the solicitors who acted on the purchase of the unit. They had written to George noting that the father had taken possession of the relevant keys and other relevant papers. Palmer J observed that that letter was of critical importance in confirming what appeared in the father's letter of 15 March 1976, as well as in George's affidavit that the unit was not purchased by George for his own benefit (at [16]). 14The second decision of Palmer J was delivered on 4 June 2010 ( Tjiong v Tjiong [2010] NSWSC 578). In that case Katrina and Lindsay, the daughters of George, sued Richard, the brother of George, who had been appointed executor of George's estate. By his will George had left his estate to his daughters. In December 2001, shortly after making his will, George suffered a massive stroke during surgery. He survived, but was seriously incapacitated. Palmer J recorded that pursuant to an enduring power of attorney that had been executed by George some five years previously, Richard took over management of George's investments. Six weeks before George's death a substantial part of the assets in George's estate were transferred to the trustee of a discretionary trust that Richard caused to be established. The value of the assets transferred was about $1.3 million. The directors of the trustee company were Richard, Katrina and Lindsay. However, Richard had power as appointor under the trust deed to change the trustee. The trust was a discretionary trust giving the trustee a discretion to appoint capital and income. 15The hearing before Palmer J took place over two stages in June and December 2009. On the third day of the hearing, counsel appearing for Richard informed the court that Richard was willing to resign the trusteeship of the trust in favour of an entity controlled by Katrina and Lindsay. On 17 June 2009 by consent Katrina was appointed as trustee of the family trust in place of Richard, the grant of probate of George's will to Richard was revoked, and Katrina was appointed administrator of George's estate with the will annexed. Consequential orders were made for the transfer and vesting of assets. Richard resigned as appointor under the family trust deed. 16The proceeding was adjourned because counsel for Richard advised that Richard had become ill and had been admitted to hospital so that his cross-examination could not proceed. The only remaining relief that was sought was a declaration that consent that had been given by Katrina and Lindsay to the establishment of the family trust was obtained by fraud, or the wrongful exercise of undue influence, or unconscionable conduct on the part of Richard (at [21]). That declaration was sought as a foundation for a costs order against Richard on the indemnity basis (at [22]). Katrina and Lindsay were successful in their allegations of fraud against Richard. Palmer J found that Richard had obtained the agreement of Katrina and Lindsay to the establishment of the family trust through misrepresentations. His Honour found that Richard had fabricated documents and evidence for the purposes of the litigation and referred the papers to the Attorney General and the Director of Public Prosecutions for consideration as to whether Richard should be prosecuted for perjury. 17On the present application, the defendant, Katrina Tjiong, contends that the plaintiff, Soei Chang, is aligned with Richard in the family dispute. That appears to be so. The defendant contends that once it is accepted that the alleged will is a forgery, the evidence given by the plaintiff as to how she came to find the will should lead to the conclusion that she had some role in, or knowledge of, the circumstances in which the forged document came to be generated. It was submitted for the defendant that " the story by the plaintiff of her late discovery of the will of Hok Njan Tjiong has a familiar ring to it ." It was said that she had given similar evidence in the first proceedings in relation to her discovery of letters whose authenticity the defendant had denied in those proceedings. It was submitted that the late discovery of the alleged will which has subsequently been shown to be a forgery by the opinion of the document examiner casts doubt on the findings of Palmer J in the first proceedings that the letters were genuine. Counsel submitted that: " In this case the plaintiff has not put forward any evidence from which the court could find that it was reasonable for her to have commenced these proceedings, seeking to propound a forged will in the circumstances in which the document has emanated from her. Or, to put it the other way, the plaintiff has not provided any sound or positive ground or good reason for departing from the ordinary course. These proceedings must be seen against the background of other proceedings arising from the Estate of George Tjiong, in particular proceedings No 1453/05, and the veritable flood of falsehoods, fabrications and forged documents produced in relation to those proceedings by Richard Tjiong, and his close alliance with the plaintiff in these proceedings in bringing claims concerning the Burwood property against that estate. In the circumstances, the court should order that the plaintiff pay the defendants' costs on the indemnity basis, including all costs of obtaining the report of Forensic Document Services. The claim brought by the plaintiff was based on a forged document and must be based on falsehoods as to the provenance of that document. The defendants should not be out of pocket one cent in being forced to meet this claim. " 18Such conclusions could only be arrived at after a full hearing. The court will not try the action to decide questions of costs ( Re The Minister for Immigration & Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622 at 624). In substance the defendant says that the court should find that the plaintiff was aware when the proceedings were filed that the document was forged. Not only could that finding not be made without a full hearing, but it is not a probable finding. 19The defendant submits that the evidence of the document examiner that the signature of George Tjiong is probably forged casts doubt on the authenticity of the letters of 1976 and 1978 that Palmer J accepted were genuine. The defendant says that if the propounded will was forged, the other documents could also be inferred not to be genuine. The document examiner concluded that the paper on which the alleged will is written is of the same kind as the paper on which the 1976 and 1978 letters were written. But if the will were forged in connection with the forgery of the 1976 and 1978 letters that Palmer J found were authentic, one would expect the will to have been produced at the hearing of the first case before Palmer J. That is because the will provides: " On my death, I terminate the Belmore Street Property Trust. The full value of the Property at ... Belmore Street, Burwood, is to revert back to my estate. If for any reason this is not done, my directives in the following paragraphs apply also to the Property and the Property Trust as if the Property is part of my estate. " 20It is not clear to me that the deceased would have been entitled to terminate by his will the trust of the Belmore Street property that Palmer J found had been created. Counsel were not able to provide a clear answer to that question. Mr Evans, counsel for the defendant, submitted that the father was the beneficial owner of the property until he settled it on trusts contained in the 1978 letter. However, Palmer J found that the 1976 letter was not merely precatory, but created a trust ( Chang v Tjiong & Ors at [34]). His Honour must have considered that the father retained the power to resettle the trust property. If that could be done during his lifetime, it was at least arguable that it could be done after his death. If the document were forged, the motive of the forgery would seem to be to achieve the result that the Burwood unit should revert to the deceased's estate. If that was the intention of either Richard Tjiong or the plaintiff, it would be expected that they would have produced the document in the hearing of the first case. 21The defendant submits that it should be inferred that having lost the first case and the second case, the document was fabricated to attempt to retrieve the losses. If that were so, one would expect there to be evidence from a forensic examination of the document that the document was not created until about 2009. There is no such evidence. The report of the document examiner, Dr Strach, is that the purported will and the 1978 letter came from the same generic type of paper stock and letterhead, and the evidence was supportive of the purported will and the 1976 and 1978 letters having been prepared on the one typewriter. 22Moreover, it must be recalled that Palmer J's findings as to the authenticity of the 1976 and 1978 letters was substantially based upon objective corroboration from George Tjiong's affidavit in the family law proceedings and the letter from the solicitors who acted on the purchase of the unit referred to above. 23I do not conclude that there was a remarkable similarity in Mrs Chang's evidence in relation to the finding of the two letters and her evidence of the finding of the purported will to conclude that she was complicit in the tender of forged documents. She deposed that she found the two typed letters a few days after her father's death in May 1981 and removed them from her father's cabinet so that her mother who was still living in the Burwood property would not see them. The reason for that was because the letters made provision for a lady in Japan with whom her father had had an affair. Palmer J accepted this evidence ( Chang v Tjiong & Ors at [21] and [23]). It is inherently plausible. The plaintiff's evidence that George Tjiong was keeping a copy of the torn will together with an unsigned copy of the document in a plain envelope in his jacket pocket when he was admitted to hospital and that the plaintiff did not notice the envelope when she took the jacket in 2001 until she embarked on a clean out in 2009 is less inherently plausible. But whether or not that version of events is accurate could not be determined, except on a full hearing. The court would not embark upon such a hearing to determine questions of costs. 24For these reasons I reject the defendant's submission that the plaintiff must have known of the circumstances in which the will, said to have been forged, came into being. 25Nor has there been a finding that the will was forged. The fact that the plaintiff does not press her claim that the document should be admitted as a testamentary document is not an admission of forgery. If there are grounds for suspicion that a document propounded as a testamentary instrument is not genuine and that suspicion is not rebutted, probate may be refused even if the evidence does not establish affirmatively that the document was forged ( Burnside v Mulgrew & Anor; Re the Estate of Grabrovaz [2007] NSWSC 550; Ortner v Mewjork; Estate of Shing [2009] NSWSC 1381 at [26]-[27]). 26I do not conclude that, properly advised, the plaintiff should have appreciated when she commenced the proceedings that she had no real prospect of success (compare Colgate-Palmolive Pty Ltd v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225; (1993) 118 ALR 248). I reject the defendant's submission that the plaintiff should pay costs on the indemnity basis. 27The question remains whether an order should be made to displace the prima facie rule that on discontinuing the proceedings the plaintiff should pay costs on the ordinary basis. In Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32, Hodgson JA (with whom Tobias and Basten JJA agreed) said (at [53]-[54]): " [53] It has been said that UCPR 42.19 does not give rise to a presumption that costs will be ordered against the discontinuing party: Fordyce v Fordham [2006] NSWCA 274; (2006) 67 NSWLR 497; Foukkare v Angreb Pty Limited [2006] NSWCA 335 at [65]. [54] However, like UCPR 42.20, UCPR 42.19 states what the order for costs is to be unless there is a discretionary decision to order otherwise: Australiawide Airlines Ltd v Aspirion Pty Limited [2006] NSWCA 365 at [53]. This means there is an onus on the discontinuing party to make an application in respect of costs if it does not propose to pay the costs of the other parties: Foukkare at [65]. In my opinion, it also means that there must be 'some sound positive ground or good reason for departing from the ordinary course ': Australiawide Airlines at [54]. " 28Basten JA said: " [74] However, it is less clear what was intended in Fordyce by stating that the default order constituted a material consideration in exercise of the discretion to otherwise order. No doubt it is true to say that the default order is relevant in the sense that it identifies that from which the court is invited to depart. Beyond that, the existence of the default consequence is not itself helpful in deciding whether to depart from it. Rather, it is the underlying reason for the default position with respect to costs that may bear upon the exercise of the discretion. A party which seeks to discontinue must generally, in a relevant sense with respect to costs, be treated as an unsuccessful party. The general costs rule set out in s 98 of the Civil Procedure Act 2005 (NSW) does not identify the limits of the court's discretion with respect to costs. The most important limitation for present purposes is the requirement that, again subject to the court otherwise ordering, costs should follow the event: see r 42.1. If that rule were to be applied, absent persuasion that the court should otherwise order, the plaintiff would be required to pay the costs of discontinuance. It seems likely that it is consistency with that general principle which underlies the default consequence provided in r 42.19. If that rule has application with respect to a discontinuance (and no reason was proffered as to why it should not) the discretion to make a costs order under r 42.19 will be confined by that general principle. In that respect, it may be misleading to describe the discretion under r 42.19 as ' unconfined ': see Fordyce at [87]. In some cases (though not necessarily all) discontinuance will involve the termination of proceedings without the court knowing what the result would have been had they been determined on the merits. In one sense, the existence of a hearing on the merits may be largely irrelevant, just as the actual result of a hearing on the merits will not be affected by the fact that the proceedings might have been run differently and might then have achieved a different result." 29None of the cases to which I was referred in the context of Uniform Civil Procedure Rules, r 42.19 dealt with the discontinuance of a probate action. Probate actions are different from ordinary claims between party and party because a determination of whether a particular document was or was not the will of the deceased binds the world, that is, it operates in rem . A probate action cannot be settled simply by consent of the parties without the court's being satisfied that the settlement is appropriate. One of the reasons is that the court is concerned to ensure that the wishes of the deceased, if he or she were a capable testator, are given effect to, irrespective of the wishes of the litigating parties. Mr Ellison SC for the plaintiff submits that she had a public obligation to put the document before the court, there being nothing on the face of the document to indicate that it did not reflect the testamentary wishes of the deceased. 30I accept that if the plaintiff acted reasonably in propounding the document before there was expert evidence that at least cast doubt on its authenticity, this would be " some sound positive ground or good reason for departing from the ordinary course " ( Australiawide Airlines Ltd v Aspirion Pty Limited [2006] NSWCA 365 at [54]; Bitannia Pty Ltd v Parkline Constructions Pty Ltd at [54] and Altium Limited v APGF Property Limited [2010] NSWSC 732 at [60]). That is particularly so given that the document the plaintiff propounds is not wholly in her favour. If the document had been admitted as a testamentary instrument, the plaintiff would have stood to gain only a small share of the residue of the deceased's estate. 31Did the plaintiff act reasonably in filing the summons seeking a grant of letters of administration with the will annexed? 32Three reasons may be advanced as to why the plaintiff acted unreasonably in commencing the proceedings. First, it could be argued that the grant of probate would have achieved no purpose because there were no assets of the estate to distribute. Secondly, it could be argued that probate would in any event have been refused on the basis that the alleged will had been torn into nine pieces and was to be taken therefore to have been destroyed with the intention of its being revoked. Thirdly, it could be argued that the plaintiff ought to have first obtained the advice of a document examiner of the kind that was contained in the report of 9 September 2011 where Dr Strach concluded that in his view, the signature of George Tjiong was forged. 33As to the first matter, for the reasons in para [20], if the deceased had power to resettle the trust, as Palmer J must have thought he did, it would be arguable that he could have brought the trust to an end by his will. The Burwood property would then have been included in his estate. 34As to the second matter, it would have been arguable had the matter proceeded to a hearing that the circumstances rebutted the presumption that the deceased revoked his will by tearing it into nine pieces. It would have been arguable that the deceased's conduct in keeping the nine original pieces and in apparently keeping those pieces together with a copy of the alleged will, rebutted his having an intention to revoke the will. 35In relation to the third matter, the plaintiff gave evidence that the alleged will was submitted to Dr Strach. He referred to the earlier examination in his report of 9 September 2011. Dr Strach did not provide a written report in relation to the first examination. Mrs Chang gave evidence that having found the document in July 2009, and having spoken to her brother Richard about it, the document was submitted by Richard to Dr Strach for his examination. Although Mrs Chang said at one point in her cross-examination that she was not present when Richard gave instructions to Dr Strach, she was present when he handed over the document to Dr Strach. Richard asked Dr Strach to give his opinion as to whether the document was genuine. Mrs Chang was present when Dr Strach reported over the speakerphone to her and to Richard about the document. Dr Strach observed that the deceased's signature on the document was " a bit wobbly ". In his report over the phone Dr Strach reported that the paper on which the document was written and the typewriter used was the same as for the 1976 and 1978 letters. He did not then express a view as to whether the signatures were genuine. 36On 9 November 2010 the plaintiff's solicitors advised the solicitors for the defendant of the discovery of the alleged will and the circumstances of its discovery. On 10 December 2010 they advised that the plaintiff had previously engaged the services of Forensic Document Services Pty Limited, Manly (Dr Strach), but due to the cost involved the plaintiff had not obtained a written report as a result of that examination. 37I was told without objection that the cost of the written report of 9 September 2011 that was obtained on the joint instructions of the parties, was in the order of $20,000. 38When the document was initially given to Dr Strach in August 2009 he did not give an opinion as to the authenticity of the signature of George Tjiong as attesting witness. Nor does it seem that he was then asked to give an opinion on that matter or that he had the materials that would have been necessary to do so. 39Having regard to the costs involved and to the opinions that Mrs Chang had received from Dr Strach prior to commencing proceedings, I do not think that she acted unreasonably in commencing proceedings when she did, and on the basis of the information she then had. 40Given that this is a probate action to which special rules about costs apply, that the persons affected by a decision as to whether probate should or should not be granted to the document were all members of the family, that the plaintiff personally had a relatively small financial interest in the question, that there is a public interest in ensuring that the testamentary wishes of a free and capable testator are given effect to, that the plaintiff was under something akin to a public duty to propound the purported will unless she had reason to suspect its authenticity, and that the challenges to the plaintiff's bona fides are not made good, there is some sound positive ground, or good reason, for making an order to displace the operation of Uniform Civil Procedure Rules, r 42.19. 41It is appropriate that each party pay her own costs of the proceedings. 42For these reasons I make the following orders: