Lin v Lin

1 This proceeding concerns a protracted dispute over the control and administration of two family trusts, the Lin Family Trust (LFT) and the Lin Family Trust No 2 (LFT No. 2) (collectively, 'the Trusts'). The Trusts were settled in 1989 - 1990 for the purpose of making provision for the primary beneficiaries and general beneficiaries as defined in the relevant trust deeds. The primary beneficiaries of the Trusts are Wen Chih Lin, the patriarch of the Lin family who died on 18 December 2016, his wife Tsai Mei Chuan Lin (the first plaintiff) and their children: Shih-Hsien Lin (the first defendant), Shih-Kai Lin (the second plaintiff) and Shu Chen Lin (the sixth defendant). The general beneficiaries comprise the primary beneficiaries, as well as the brothers and sisters of Wen Chih Lin and the first plaintiff; their grandchildren; and any company or trustee in which any of these individuals hold an interest.

2 Wen Chih Lin was the original appointor of the Trusts. About six months before his death, he appointed his son Shih-Hsien Lin as appointor of the Trusts. About 18 months later, Shih-Hsien Lin exercised his powers of appointment to remove the then corporate trustees of the Trusts and appointing in their stead two companies which he controlled.[1]

3 On 1 June 2018, the plaintiffs commenced this proceeding challenging the validity of Shih-Hsien Lin's appointment as appointor of the Trusts and the validity of his exercise of the power of appointment in appointing the second and third defendants as trustees. Following a hearing over four days in February - March 2022, McMillan J upheld the validity of Shih-Hsien Lin's appointment as appointor.[2] The remaining issues for determination in the proceeding were the subject of a further trial before McMillan J which commenced in January 2023. The proceeding settled on the eighth day of the trial on the basis of undertakings given to the Court by Shih-Hsien Lin. The undertakings (recorded in 'Other Matters') and the orders made with the consent of the parties on 2 February 2023 were as follows:

OTHER MATTERS:

1. In these orders, references to the Lin Family Trust are references to the trust known as the Lin Family Trust established by deed dated 17 August 1989 between Peter Stephen Fraser as settlor and Javelin Towns Pty Ltd as trustee, and references to the Lin Family Trust No 2 are references to the trust known as the Lin Family Trust No. 2 established by deed dated 11 September 1990 between Peter Stephen Fraser as settlor and W C Lin Nominees Pty Ltd as trustee.

B. Upon the first defendant by his counsel undertaking to the Court that:

(i) within seven days of the identification of the Independent Trustee pursuant to para 1 or 2 of these orders, he shall exercise his power under cl 17 of the trust deed of the Lin Family Trust to remove the second defendant as trustee of the Lin Family Trust and appoint the Independent Trustee as the trustee of the Lin Family Trust;

(ii) within seven days of the identification of the Independent Trustee pursuant to para 1 or 2 of these orders, he shall exercise his power under cl 17 of the trust deed of the Lin Family Trust No 2 to remove the third defendant as trustee of the Lin Family Trust No 2 and appoint the Independent Trustee as the trustee of the Lin Family Trust No 2;

(iii) he shall not exercise his power under cl 17 of the trust deed of the Lin Family Trust to remove the Independent Trustee as trustee of the Lin Family Trust or to appoint any additional trustee or trustees of the Lin Family Trust in addition to the Independent Trustee without leave of the Court;

(iv) he shall not exercise his power under cl 17 of the trust deed of the Lin Family Trust No 2 to remove the Independent Trustee as trustee of the Lin Family Trust No 2 or to appoint any additional trustee or trustees of the Lin Family Trust No 2 in addition to the Independent Trustee without leave of the Court;

(v) until the Independent Trustee is appointed, he shall not without the written consent of the plaintiffs or leave of the Court cause or permit, or cause the Second or Third Defendants to cause or permit, the payment, distribution or disbursement of any funds of the Lin Family Trust or the Lin Family Trust No 2 other than by continuing to pay or discharge proper trust expenses where any such expense is less than $3,000 in amount.

...

THE COURT ORDERS BY CONSENT THAT:

1. The First and Second Plaintiffs and the First and Sixth Defendants shall by agreement choose an independent person to be the sole trustee of the Lin Family Trust and the Lin Family Trust No 2 ('the Independent Trustee').
2. Failing agreement under paragraph 1 of these orders within 21 days of the date of these orders, the First and Second Plaintiffs and the First and Sixth Defendants shall request the President of the Law Institute of Victoria to nominate a suitably qualified and experienced solicitor to be the Independent Trustee.
3. With effect upon the appointment of the Independent Trustee, pursuant to s 51(1) of the Trustee Act 1958 (Vic):

(a) the property of the Lin Family Trust shall vest in the Independent Trustee; and

(b) the property of the Lin Family Trust No 2 shall vest in the Independent Trustee.

1. Upon the appointment of the Independent Trustee, the First Defendant shall:

(a) cause the Third Defendant to remove the caveat lodged by it on or about 13 May 2019 over the title of the land described in certificate of title volume 8263 folio 465;

(b) do all such things and deliver all such records and things and execute all such documents as are reasonably necessary to give effect to paragraph 3 of these orders; and

(c) cause the Second and Third Defendants to do all such things and deliver all such records and things and execute all such documents as are reasonably necessary to give effect to paragraph 3 of these orders.

1. Upon the appointment of the Independent Trustee, the Second Plaintiff shall:

(a) do all such things and deliver all such records and things and execute all such documents as are reasonably necessary to give effect to paragraph 3 of these orders; and

(b) cause the Third and Fourth Plaintiffs to do all such things and deliver all such records and things and execute all such documents as are reasonably necessary to give effect to paragraph 3 of these orders.

6. There is liberty to apply in respect of these orders.

7. The proceeding is otherwise dismissed.

8. There is no order as to costs.

4 As is apparent, the orders required the parties to agree on an independent person to be the trustee of the Trusts or, in the absence of agreement, for the President of the Law Institute of Victoria to nominate a suitably qualified and experienced solicitor to be trustee of the Trusts. Following events which it is not necessary to recount,[3] on 14 March 2023 the Court made further orders appointing a solicitor, Lachlan Vallance, trustee of the Trusts.

5 Although the proceeding stood dismissed by the orders made on 2 February 2023, some 18 months later on 6 August 2024, Shih-Hsien Lin filed a summons seeking leave to exercise his power of appointment to remove Mr Vallance as trustee of the Trusts and to appoint in his place a suitably qualified and experienced solicitor to be nominated by the President of the Law Institute of Victoria (the August summons).

6 On 22 November 2024, Mr Vallance filed a summons seeking that the August summons be stayed on the grounds that it constituted an abuse of process or lacked a proper basis in law. On 5 December 2024, the Court as presently constituted dismissed Mr Vallance's summons of 22 November 2024 and made orders providing for a timetable for the filing of materials in relation to the August summons.[4] Mr Vallance was later joined as a defendant in the proceeding. On 4 April 2025, the Court made orders by consent referring the proceeding to private mediation. Following the adjournment of the proceeding at the parties' request, on 5 September 2025 the Court fixed the August summons for hearing.

7 The plaintiffs and Mr Vallance opposed the relief sought by Shih-Hsien Lin in the August summons. The hearing of the summons proceeded over two days. Affidavit and oral evidence was given by Shih-Hsien Lin, Shih-Kai Lin and Mr Vallance, and the parties relief on extensive written and oral submissions. At the conclusion of the hearing, I pronounced orders dismissing the summons. These are the reasons of the Court in so ordering.

8 It was submitted on behalf of Shih-Hsien Lin that the central issue on the application was whether, as appointor of the Trusts, he should be granted leave pursuant to the grant of liberty to apply in the orders made 2 February 2023 to exercise his power of appointment to replace Mr Vallance with a new independent trustee in circumstances where he had genuine concerns about Mr Vallance's management of the Trusts. It was submitted that leave should be granted if the Court was satisfied that the power of appointment was proposed to be exercised bona fide and for a proper purpose. It was emphasised that Shih-Hsien Lin did not seek to appoint himself or any company he controls as trustee of the Trusts; he sought leave to appoint a new independent trustee nominated by the Law Institute of Victoria.

9 It was submitted that there was no requirement that powers of appointment be exercised for the benefit of the beneficiaries; all that was required was that the power of appointment not be exercised fraudulently. The power of appointment was controlled by the doctrine of fraud on the power which required that a power be exercised bona fide and for the purpose for which it was conferred. The Court should begin from the position that a person is acting in good faith for proper purposes, unless the contrary is shown. The essential focus, it was submitted, was whether the Court could be satisfied that Shih-Hsien Lin was proposing to exercise the power of appointment bona fide, for a legitimate purpose.

10 It was submitted that these requirements were satisfied because Shih-Hsien Lin had genuine and well-founded concerns about the ongoing management of the Trusts under Mr Vallance's administration. Three principal areas of concern were identified which, for present purposes, it is sufficient to briefly describe in general terms.

(a) Shih-Hsien Lin had genuine concerns about the amount of fees and disbursements charged by Mr Vallance in the period of his appointment.[5] The amount of the fees was disproportionate to what was said to be the relatively unsophisticated nature of the Trusts. It was also submitted that the composition and calculation of these fees was opaque and that Mr Vallance had failed to transparently communicate with Shih-Hsien Lin in relation to his legitimate inquiries about the reasonableness and proportionality of the costs, including in circumstances where the legal costs were incurred by a law firm of which Mr Vallance was a principal.

(b) Shih-Hsien Lin held genuine and well-founded concerns about Mr Vallance's failure to take reasonable steps to lease the whole of the property held by the LFT No. 2, being a commercial property in Box Hill, the primary asset of the trust (the Box Hill property). It was submitted that Mr Vallance had failed to make the trust productive by failing to lease all the available suites in the Box Hill property and that, as a result, rent had been lost. Mr Vallance was also criticised for failing to apply to the Court to be substituted as a party in a separate proceeding to agitate a counterclaim against Shu-Chen Lin which, if successful, would have resulted in the Trusts being repaid significant sums. For these reasons it was submitted that there had been a material diminution in the Trusts' assets under Mr Vallance's administration.

(c) Shih-Hsien Lin held a genuine concern in relation to Mr Vallance's proposal to make payments of unpaid present entitlements (UPEs) and the proposed sale of the Box Hill property to fund those payments. It was submitted that the value of the UPEs was uncertain and Mr Vallance had failed to engage with Shih-Hsien Lin about his concerns in relation to what were said to be past accounting anomalies in respect of the UPEs.

11 Senior counsel emphasised that the question was not whether these concerns held by Shih-Hsien Lin were well-founded in fact.[6] Instead, the essential issue was whether they were genuinely held by Shih-Hsien Lin, a matter which was to be assessed by reference to his subjective state of mind and the circumstances said to motivate him to seek leave and to replace the trustee.[7] If the Court was satisfied that Shih-Hsien Lin was acting genuinely and in good faith, it should grant leave for him to exercise his power of appointment to replace the trustee.[8]

12 In Lin v Lin (No. 4), the Court found that, although the proceeding had been dismissed, it retained jurisdiction to consider an application to be discharged from the undertakings given by Shih-Hsien Lin as part of the grant of final relief.[9] It was not then necessary, but it is now, to consider the basis upon which the Court might exercise that jurisdiction.

13 In Lin v Lin (No. 4), I referred to the following observations of Jenkins LJ in Russell v Russell:[10]

Any undertaking given to the court is capable of being discharged by the court whenever it appears to the court that circumstances have arisen which make that course a proper one in the interests of justice.

...

It is always competent to the court to discharge an undertaking given to it, if in its discretion the court comes to the conclusion that that is the proper course in the interests of justice.

I also referred to the statement by Butler-Sloss LJ in Kensington Housing Trust v Oliver[11] 'that an undertaking wherever recorded which is accepted by the court can be discharged by the court at any stage if it is just to do so'.[12]

14 The basis upon which a court might exercise its jurisdiction to release a party from an undertaking was considered in detail by Pritchard J in Commonwealth Bank of Australia v Law Debenture Trust Corp PLC (No 4).[13] Her Honour observed that, because an undertaking is a promise to the Court, it does not confer a personal right or remedy on a party.[14] The Court's power to release a party from an undertaking is discretionary, the onus being on the party who seeks to be released from the undertaking to persuade the Court that, in the exercise of its discretion, the undertaking should be discharged.[15] After an extensive examination of the authorities, her Honour identified that, consistent with the approach adopted by the plurality of the High Court in in Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc,[16] the test as to whether a court should release or discharge a party from its undertaking is whether its continuation would be unjust.[17] This assessment is not to be undertaken 'solely by reference to the position of the party seeking to be released from its undertaking'. [18] Injustice is instead to be assessed by reference to all of the circumstances, the Court's exercise of its jurisdiction necessarily requiring the balancing of a range of factors relevant to whether it would be unjust for an undertaking to be maintained.[19]

15 Justice Pritchard observed that the authorities indicated that a variety of factors may be relevant in determining whether the maintenance of an undertaking would be unjust.[20] The factors typically referred to in the authorities included, but were not limited to, the following:[21]

(i) the emergence or identification of facts or circumstances not previously in existence or known which cast a different complexion on the justice of maintaining the undertaking. In other words, if the facts or circumstances at the time of the application to discharge the undertaking are no different from what was actually expected, or which could have been reasonably anticipated when the undertaking was given, then ordinarily that would not suffice to warrant the discharge of the undertaking;

(ii) the impact on the party who gave the undertaking if it is continued in all of the circumstances;

(iii) the impact on the other party (that is, the beneficiary of the undertaking) if the undertaking is discharged in all of the circumstances;

(iv) whether that other party consents to the discharge of the undertaking. The absence of consent is not determinative against the discharge of the undertaking (especially as the undertaking is given to the Court and not to the other party), but will nevertheless be relevant. It may be indicative that the other party does not consider that it will suffer any detriment if the undertaking is discharged. The consent of the other party (or lack thereof) will be especially relevant if the undertaking was given as part of a compromise of an action;

(v) the impact on any third parties if the undertaking is discharged; and

(vi) the public interest in the maintenance of the undertaking. This will be a weightier consideration in relation to the discharge of a final undertaking, because of the importance of the public interest in the finality of the resolution of litigation.

16 The submissions advanced on behalf of Shih-Hsien Lin in support of the relief sought in the August summons did not engage with these principles. They proceeded from the misconception that an application for release from an undertaking may be considered solely by reference to the position of the party seeking the release. Instead, as the above principles make clear, the task for the Court is to determine whether, in all of the circumstances, the continuation of an undertaking given would be unjust. This assessment will typically involve the need to balance a range of factors which bear upon the assessment of whether or not it would be unjust for an undertaking to be maintained.

17 In adopting this approach, I will assume, without determining, that in seeking to exercise his power of appointment to appoint a new independent trustee to the Trusts, Shih-Hsien Lin is proposing to exercise his power of appointment bona fide and for a proper purpose. I further accept that this is a matter of significance in determining whether it would be unjust for the undertakings proffered by Shih-Hsien Lin to be maintained.[22]

18 There are, however, several important countervailing considerations which, on balance, leave me unpersuaded that it would be unjust to continue Shih-Hsien Lin's undertakings to the Court not to exercise his power of appointment.

19 It is apparent that these undertakings are an important part of the arrangements upon which the parties agreed to settle the proceeding. In those circumstances, the consent or otherwise of the other parties to an application to be released from an undertaking is a matter of particular significance. Here, the plaintiffs are vehemently opposed to Shih-Hsien Lin being released from his undertakings. Further, it is in the public interest to give effect to the finality of the resolution of the proceeding reached by the parties reflected in the undertakings given to the Court on 2 February 2023 and the orders made that day, particularly given the protracted nature of the litigation.

20 It is also significant that this is not a situation where it is submitted that new facts or circumstances have emerged which were not previously known or in existence and which cast a different complexion on the justice of maintaining the undertakings. The highest that it was put on behalf of Shih-Hsien Lin was that he had developed a number of genuine and serious 'concerns' in relation to Mr Vallance's administration of the Trusts.[23] Senior counsel for Shih-Hsien Lin submitted that no finding was sought that these concerns were well-founded in fact (a matter which was hotly contested by the plaintiffs and Mr Vallance). Some observations may however be made about the 'concerns' as identified by Shih-Hsien Lin.

21 The concern in relation to the payment of UPEs is a matter of longstanding controversy between the parties. The fact that Mr Vallance effectively seeks to resolve that controversy or impasse is a development that, when the undertakings were given to the Court, could have been reasonably anticipated to have come to pass by whoever was appointed as independent trustee of the Trusts. It would also presumably need to be addressed by another independent trustee in the event that one was appointed. The fact that Shih-Hsien Lin is aggrieved by the course proposed to be adopted by Mr Vallance in relation to the matter is therefore not a circumstance which casts a different complexion on the justice of maintaining the undertakings.

22 Similarly, Shih-Hsien Lin's acceptance in cross examination that one of the suites in question at the Box Hill property has been vacant since about 2021 indicates that his concern about Mr Vallance's alleged failure to lease all the available suites in the property is not to be viewed as a new circumstance which has emerged since he gave the undertakings to the Court.

23 In relation to the quantum of fees which have been charged by Mr Vallance, I note Mr Vallance's candid acknowledgment that, having regard to the nature of the Trusts, the total amount is indeed 'very high'. However, Mr Vallance's evidence was that, although a beneficiary would be entitled to be concerned about the level of his costs, they were nonetheless reasonable in the circumstances. This was because the costs had been independently assessed by reference to the Practitioner Remuneration Order which was accepted by the beneficiaries prior to his appointment as the basis on which his remuneration was to be calculated. He also referred to the voluminous and complex correspondence he had received from the parties, and in particular, from Shih-Hsien Lin. The costs were also reasonable given the need for accountants to be retained to prepare financial statements and tax returns for the Trusts dating back to 2015.

24 Given the contested claims made about this issue and the fact that the Court has not been asked to determine whether there is a proper basis in fact for Shih-Hsien Lin's concerns in relation to Mr Vallance's fees, this is not a matter which leads me to consider that it would be unjust for the undertakings to be maintained. However, it must also be steadily borne in mind that it is of course inevitable that costs will be incurred, whoever is appointed as independent trustee of the Trusts. Further, my strong impression is that, in the circumstances of the case, those costs will very likely be materially larger than what would ordinarily be anticipated as a result of what was described by Shih-Hsien Lin and Shih-Kai Lin as the 'toxic' relationship between the siblings; their entrenched positions; and their propensity to send prolix and discursive correspondence to each other and the independent trustee in which various claims, both new and old, are agitated. It falls upon the independent trustee to read and consider this correspondence. It can also reasonably be anticipated that substantial additional costs would likely be incurred in the event that a new trustee was appointed because of the need for that trustee to acquaint themselves with the long and contested history to this proceeding and the administration of the Trusts.

25 For the foregoing reasons, Shih-Hsien Lin has failed to discharge the onus on him to persuade the Court that, in the exercise of its discretion, he should be released from the undertakings he gave to the Court on 2 February 2023.

TSAI MEI CHUAN LIN (in her own capacity and as administrator First plaintiff

JAVELIN TOWNS PTY LTD (ACN 007 274 259) Third plaintiff

(in its own capacity and as trustee for THE LIN FAMILY TRUST)

W C LIN NOMINEES PTY LTD (ACN 007 455 987) Fourth plaintiff

(in its own capacity and as trustee for THE LIN FAMILY TRUST NO 2)

WEN CHIH LIN MEMORIAL PTY LTD (ACN 622 246 575) Second defendant

(in its own capacity and as trustee for THE LIN FAMILY TRUST

WEN CHIH LIN MEMORIAL PTY LTD NO 2 (ACN 622 246 619) Third defendant

(in its own capacity and as trustee for THE LIN FAMILY TRUST NO 2)

LUXTRON PTY LTD (ACN 007 442 819) Fourth defendant

EAST OCEAN INVESTMENTS PTY LTD (ACN 122 892 095) Seventh Defendant

LACHLAN JAMES VALLANCE in his capacity as Trustee of the Eighth defendant

[1] Being the second and third defendants.

[2] See Lin & Ors v Lin & Ors (No. 2) [2022] VSC 542.

[3] They are outlined in [7]-[15] of Lin v Lin (No. 3) [2024] VSC 17.

[4] See Lin v Lin (No. 4) [2024] VSC 759 ('Lin v Lin (No. 4)').

[6] Relying on Baba v Sheehan [2019] NSWSC 1281 [61], affirmed on appeal in Baba v Sheehan [2021] NSWCA 58 [17].

[10] [1956] P 283.

[13] [2018] WASC 165 ('CBA v Law Denture Trust Corp PLC (No 4)').

[14] Ibid [84], citing Buckley LJ in Re Hudson [1966] 1 Ch 209 at 213.

[16] [1981] HCA 39; (1981) 148 CLR 170 .

[17] CBA v Law Denture Trust Corp PLC (No 4) (n 13) [108], [125].

[22] Specifically, the undertakings recorded in subparagraphs (iii) and (iv) of paragraph B of Other Matters in the orders made on 2 February 2023.

[23] As outlined in [10] above.