Tjiong v Chang

Currie v Dempsey (1967) 69 SR (NSW) 116 Derrawee Pastoral Company Pty Limited v McConochie [1995] NSWCA 123 ET-China.com International Holdings Ltd v Cheung [2021] NSWCA 24; (2021) 388 ALR 128 Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 Gallo v Dawson [1990] HCA 30; (1990) 64 ALJR 458 Jackamarra v Krakouer (1998) 195 CLR 516; [1998] HCA 27 James Roscoe (Bolton) Ltd v Winder [1915] 1 Ch 62 Kara Kar Holdings Pty Ltd v Brookton Holdings [1997] NSWCA 171 Kara Kar Holdings Pty Ltd v Brookton Holdings Pty Ltd [1996] NSWCA 292 Kramer v Stone (2023) 112 NSWLR 564; [2023] NSWCA 270 Lee v Lee (2019) 266 CLR 129; [2019] HCA 28 Lewis v Nortex Pty Ltd (In Liq); Lamru Pty Ltd v Kation Pty Ltd [2004] NSWSC 1143; (2004) 214 ALR 634 Lofts v MacDonald (1974) 3 ALR 404 Ludwig v Jeffery (No 4) [2021] NSWCA 256; (2021) 394 ALR 360 Macdonald v Horn [1995] 1 All ER 961 Meehan v Glazier Holdings Pty Ltd (2002) 54 NSWLR 146; [2002] NSWCA 22 Miller v Cameron (1936) 54 CLR 572; [1936] HCA 13 Moore (a pseudonym) v The King [2024] HCA 30; (2024) 419 ALR 169 Murdocca v Murdocca (No 2) [2002] NSWSC 505 Naaman v Jaken Properties Australia Pty Ltd [2025] HCA 1 Nelson v Campbell (1928) VLR 364 Nowell v Palmer (1993) 32 NSWLR 574 Oshlack v Richmond River Council (1998) 193 CLR 72 Precision Plastics Pty Ltd v Demir (1975) 132 CLR 362; [1975] HCA 27 Re Beddoe; Downes v Cottam [1893] 1 Ch 547 Re Buckton, Buckton v Buckton [1907] 2 Ch 406 Re Dargie, Miller v Thornton-Jones [1953] 2 All ER 577 Re Dion Investments (2014) 87 NSWLR 753; [2014] NSWCA 367 Re Global Finance Group Pty Ltd (In Liq)(Supervisor Appointed) and Global Mortgage Investments Pty Ltd (in Liq); Ex parte Read and Herbert (as Liquidators of Global Mortgage Investments Pty Ltd and as Liquidators of Global Finance Group Pty Ltd) [2002] WASC 63 Re Grimthorpe [1958] Ch 615 Re Hallett's Estate; Knatchbull v Hallett (1880) 13 Ch D 696 Re Sutherland; France Caledonia Travel Service Pty Ltd (in liq) (2003) 59 NSWLR 361; [2003] NSWSC 1008 Sons of Gwalia Ltd v Margaretic [2006] FCAFC 92; (2006) 232 ALR 119 Tjiong v Tjiong [2010] NSWSC 578 Tjiong v Tjiong [2012] NSWCA 201 Tjiong v Tjiong [2021] NSWSC 1389 Tomko v Palasty (No 2) (2007) 71 NSWLR 61; [2007] NSWCA 369 University of Wollongong v Metwally (No 2) [1985] HCA 28; (1985) 59 ALJR 481 Warren v Coombes (1979) 142 CLR 531; [1979] HCA 9 Water Board v Moustakas (1988) 180 CLR 491; [1988] HCA 12 Watson v Foxman (1995) 59 NSWLR 315 Wentworth v Rogers (2006) 66 NSWLR 474; [2006] NSWCA 145 Whittingham v Proudfoot [1861-72] Mac 457 Young v Queensland Trustees Ltd (1956) 99 CLR 560; [1956] HCA 51 Texts Cited: CR Williams, "Burdens and Standards in Civil Litigation" (2003) 25 Syd Law Review 165 Hafeez-Baig and English, The Law of Tracing (The Federation Press, 2021) JD Heydon, Cross on Evidence (10th ed, 2015, LexisNexis) JD Heydon and MJ Leeming, Jacobs' Law of Trusts in Australia (8th ed, 2016, LexisNexis Butterworths) Category: Principal judgment Parties: Katrina May Lan Tjiong (Appellant / Cross-Respondent) Tzer Chin Chang (First Respondent) Timothy Paul Heesh and Mark Kenneth John Everingham (Second and Third Respondents / First and Second Cross-Applicants) Representation: Counsel: R Wilson SC / M Evans / T Ross (Appellant/Cross-Respondent) T Harris-Roxas (First Respondent) D Barlin (Second and Third Respondents/First and Second Cross-Applicants)

Solicitors: O'Brien Lawyers (Appellant / Cross-Respondent) Commlex Pty Ltd (First Respondent) Albus Legal (Second and Third Respondents / First and Second Cross-Applicants) File Number(s): 2024/61464 Publication restriction: Nil Decision under appeal Court or tribunal: Supreme Court Jurisdiction: Equity Citation: [2022] NSWSC 1092; [2024] NSWSC 74 Date of Decision: 16 August 2022 Before: Henry J File Number(s): 2020/217303

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

HEADNOTE [This headnote is not to be read as part of the judgment] On 15 March 1976, Hok Njan Tjiong sent a letter to his son George Tjiong, which was held by Palmer J in 2009 (2009 judgment) to have created a trust with respect to a Burwood unit purchased in the name of his son for $25,000 (Burwood Trust). The terms of the Burwood Trust were amended by a subsequent letter written on 10 October 1978. The amended terms provided that the unit was to be sold (upon Hok Tjiong's death) in order to provide funds for his wife, and after her death, for his son from an extramarital relationship if in need, but otherwise for family in need. The unit was sold by George Tjiong in 1996, with the net proceeds (some $168,000) deposited in an existing bank account and comingled with personal funds. As a result, the Burwood Trust formed part of his estate upon his death in 2004. George Tjiong appointed his brother Richard Tjiong as his executor and left his estate to his daughter Katrina Tjiong and his son Lindsay Tjiong in equal shares. In June 2009 Katrina Tjiong replaced Richard Tjiong as administrator of the estate. The present proceedings were commenced by Tzer Chang (the plaintiff), a grandson of Hok Tjiong and an eligible beneficiary under the Burwood Trust (if it still existed), seeking an account and appointment of new trustees. Katrina Tjiong, as administrator of George Tjiong's estate and, in that capacity, trustee of the Burwood Trust, was the defendant. Katrina Tjiong contended that the Burwood Trust had been terminated by a distribution of $199,000 made by George Tjiong to his son Lindsay Tjiong in 1999. On 16 August 2022, Henry J (the trial judge), rejected Katrina Tjiong's submission and upheld the plaintiff's claim that the Burwood Trust was extant. New trustees were appointed and directed to prepare a report as to the assets of the Burwood Trust and to identify any claims Katrina Tjiong, as the retiring trustee, for indemnity from the Burwood Trust. On 9 February 2024, the trial judge ordered Katrina Tjiong to pay $638,432 to the new trustees. Both parties appealed; the primary issues for determination on appeal were whether: (i) the Burwood Trust was terminated in 1999; and (ii) the trial judge erred in determining the claims for indemnity. The Court (Basten AJA, Price AJA agreeing; Griffiths AJA dissenting) held: As to issue (i) (existence of the trust) by Basten AJA (Price AJA agreeing) 1 The plaintiff bore the burden of demonstrating that there was a trust fund, which had not been fully distributed. There was no evidence that Hok Tjiong's wife was in need at the time of the payment to Lindsay Tjiong, nor any dispute that he was an eligible beneficiary of the Burwood Trust: [34], [36]. 2 The unchallenged evidence given by Lindsay Tjiong as to his conversation with his father, and George Tjiong's letter to his son, supported an inference that the payment to him had been a distribution from the Burwood Trust. The trial judge erred in diminishing the value of his evidence, which was not inconsistent with, but rather supported, by contemporary documents, namely his father's letter to Lindsay: [43]-[44]; [504]. Watson v Foxman (1995) 49 NSWLR 315 distinguished. 3 The fact that George Tjiong had earlier promised to help his son did not undermine the available inference that George Tjiong considered that his father's instructions as to the Burwood Trust permitted him to use the fund to assist in providing a home for his son, who was at the time in need and struggling. The effect of the payment was to exhaust the corpus of the available funds; the plaintiff therefore failed to demonstrate that the Burwood Trust existed at the time of George Tjiong's death: [105], [106]; [506]. by Price AJA 4 The defendant bore the onus of establishing that the Burwood Trust had been terminated by the payment to Lindsay Tjiong: [493]. by Griffiths AJA (in dissent) 5 The trial judge did not reverse the onus of proof in her analysis of the 1999 payments, rather she was simply responding to the prominence given to the issue of determination as raised by Katrina Tjiong in her defence: [340]. Nor did she err in placing greater weight on the contemporaneous documents than on Lindsay Tjiong's evidence of conversations with his father: [314]-[325]. Watson v Foxman (1995) 49 NSWLR 315 applied. 6 The trial judge provided cogent and valid reasons for not accepting that the Burwood Trust had been determined by distribution by the payments to Lindsay Tjiong: [325]. She did not err in her treatment of the letter sent to Lindsay Tjiong by his father by inferring that it referred to his earlier promise to assist him in 1993: [328]. Further, she did not err in failing to infer from George Tjiong's failure to alter his will after the 1999 payments that the payments came from the Trust: [332]. No error was demonstrated in the weight given to George Tjiong's statements in the letter, as the evidence demonstrated he had other funds available to him apart from the Burwood Trust moneys: [335]. As to issue (ii) (claims for indemnity) by Basten AJA (Price AJA not deciding) 7 If the Burwood Trust was determined in 1999, the claims of Ms Tjiong as the retiring trustee to indemnity are irrelevant: [110]; (Price AJA at [508]). 8 The trial judge erred in rejecting Ms Tjiong's submission that where legal costs were incurred to preserve the estate, an indemnity should be available against the trust funds in accordance with the proportion which the trust funds bore to the general estate: [111]. Ms Tjiong's subjective belief that the Trust no longer existed did not disentitle her to indemnification for costs resulting in a material benefit test to the Trust. Where fiduciary duty and personal interest coincided, the trustee did not have to establish that the fiduciary duty was the effective subjective motivation for incurring the costs: [115]-[116]. 9 Applying those principles the claims for indemnity should have been allowed in an amount of $375,667, leaving a balance of $315,651 in the Trust: [191]-[192]. by Griffiths AJA 10 The trial judge was correct to reject claims 1, 3, 8, 10, 12 and 13 brought by Katrina Tjiong for indemnity, as they related to costs incurred, not for the benefit of the Burwood Trust, but for her personal benefit: [436]-[437], [442], [450], [451], [461], [462]. 11 The trial judge erred in rejecting claims 6 and 11 brought by Katrina Tjiong for indemnity, as the costs incurred were not, in substance, for her personal benefit but rather for the benefit of the Burwood Trust in her capacity as trustee: [446], [456]. 12 The claims made by the plaintiff in his cross-appeal ought be rejected, as the trial judge correctly held that the amounts were costs incurred by Katrina Tjiong in her capacity as trustee of the Burwood Trust: [466]-[477].

table of contents BASTEN AJA [1] Background [2] Origins of the trust [2] Commencement of current proceeding [10] The appeal - procedural matters [15] Grounds of appeal [20] Ground 3 - termination of trust [24] Maintenance of trust fund [24] Relevant legal principles [28] Characterising the 1999 payment [37] Lindsay Tjiong's evidence [97] Preferred findings [98] Orders [107] Claims for indemnity - ground 4 [110] Nature of claims [111] Procedural background [122] Legal principles [132] Determination of claims for full indemnity [144] Claim 4 - 2014 correspondence [145] Claim 5 - photocopying expense [147] Claim 6 - Nevett Ford advice [148] Claim 7 - further advice from counsel in relation to the Burwood Trust [151] Claim 8 - cost of District Court proceeding re costs assessment [154] Claim 9 - responding to lawyers acting for Soei Chang [155] Claim 3 - costs in proceedings 2011/098337 [159] Claim 11 - proceeding 2019/211113 [169] Conclusions - full indemnity claims [173] Apportioned indemnity claims [175] Claim 1 - costs of 2005 removal proceedings [175] Claim 8 - District Court proceedings 2017/222385 [182] Claim 10 - costs of proceedings 2019/061978 [183] Claim 12 - costs of proceedings 2019/278508 [187] Claim 13 - costs of engaging insolvency specialists [188] Conclusions - grounds 4 and 5 [189] Orders - based on grounds 4 and 5 [193] GRIFFITHS AJA [199] Further background matters summarised [227] The first primary judgment summarised [239] The second primary judgment summarised [252] (a) Determination of the corpus and income of the Burwood Trust [253] (b) Katrina's claims for indemnity [265] The proceedings in this Court [267] (a) Procedural rulings [267] (b) Katrina's appeal [277] Consideration of grounds 1 and 2 in the appeal [282] Consideration and determination of ground 3 in the appeal [310] Consideration and determination of grounds 4 and 5 in the appeal [341] The earlier litigation and some related events summarised [342] The primary judge's reasons for determining the relevant claims for indemnity summarised [373] Claim 1: Costs of the 2005 Removal Proceedings (1453/2005): $116,470.50 [380] Claim 2: Net costs of proceedings 2010/406799 in the District Court: $599.92 [384] Claim 3: Costs of Alternate Will Proceedings 2011/098337 in Supreme Court: $99,429.10 [387] Claim 4: Costs of responding to correspondence from Richard Tjiong: $4,686 [390] Claim 5: Fees paid to Macquarie Bank for missing statement pages: $350 [394] Claim 6: Fees paid to Nevett Ford, Lawyers of Ballarat for advice about the Burwood Trust: $5,569.30 [395] Claim 7: Fees for advice from counsel on the Burwood Trust and s 63 of the Trustee Act: $22,000 [398] Claim 8: Costs of proceedings 2017/222385 in the District Court: $13,805.73 [401] Claim 9: Fees for responding to correspondence from Griffin Lawyers of Adelaide: $25,850 [404] Claim 10: Costs of proceedings 2019/061978 in the Supreme Court: $8,840.38 [407] Claim 11: Costs of proceedings 2019/211113 in the Supreme Court: $70,576 [410] Claim 12: Costs of proceedings 2019/278508 in the Supreme Court: $17,358.94 [413] Claim 13: Costs of engaging Somerville Legal, insolvency specialists: $2,913.14 [416] Determination of grounds 4 and 5 in the appeal [420] Claim 1: Costs of the 2005 Removal Proceedings (1453/2005): $116,470.50 (ground 4(a)) [420] Claim 3: Costs of Alternate Will Proceedings 2011/098337 in Supreme Court: $99,429.10 (ground 4(b)) [438] Claim 6: Fees paid to Nevett Ford, Lawyers of Ballarat for advice about the Burwood Trust: $5,569.30 (ground 4(h)) [445] Claim 8: Costs of proceedings 2017/222385 in the District Court: $13,805.73 (ground 4(f)) [449] Claim 10: Costs of proceedings 2019/061978 in the Supreme Court: $8,840.38 (ground 4(c)) [451] Claim 11: Costs of proceedings 2019/211113 in the Supreme Court: $70,576 (ground 4(d)) [452] Claim 12: Costs of proceedings 2019/278508 in the Supreme Court: $17,358.94 (ground 4(e)) [459] Claim 13: Costs of engaging Somerville Legal, insolvency specialists: $2,913.14 (ground 4(g)) [462] Ground 5 [463] The cross-appeal [465] Determination of cross-appeal in respect of Katrina's claims for indemnity [466] Claim 4: Costs of responding to correspondence from Richard Tjiong: $4,686.00 (ground 1 of draft notice of cross-appeal) [466] Claim 7: Fees for advice from counsel on the Burwood Trust and s 63 of the Trustee Act: $22,000 (ground 2 of draft notice of cross-appeal) [468] Claim 9: Fees for responding to correspondence from Griffin Lawyers of Adelaide: $25,850 (ground 3 of draft notice of cross-appeal) [473] Costs [478] Conclusion [479] PRICE AJA [480] The onus of proof [484] The correctness standard applies [495] The primary judge's reliance on Watson v Foxman [500] The Primary judge's approach was incorrect [505] Grounds 4 and 5 [508]

1. BASTEN AJA: These proceedings concern the continued existence of a trust created by Hok Njan Tjiong by a letter to his son George Tjiong dated 15 March 1976. The legal effect of the letter, as determined by Palmer J in proceedings in the Equity Division in March 2009, was to create a trust with respect to a home unit purchased for $25,000. [1]

Origins of the trust

1. The letter, translated from a mixture of Indonesian, Dutch and English, was set out in Palmer J's judgment at [13]. The home unit was to be registered in George Tjiong's name for three reasons. First, it was said to be "without caveat of my interests, to avoid death duty". Secondly, it was said that, "[a]fter I go, [my wife] is better to live in the home of a child. The money in Belmore Street is for [her] needs". Thirdly, the remainder of the fund, after her death, was to go to Hok Tjiong's mistress, Kazuko Nikaido, in Yokohama.
2. Two and a half years after the first letter, on 10 October 1978, Hok Tjiong wrote to George Tjiong again, noting that he had terminated the relationship with his mistress, but wished to provide for his son of that relationship, Roy Grant. Palmer J held that this was an effective amendment to the terms of the trust; it is convenient that the change be set out verbatim: [2] "My son, Roy Grant, is finishing his higher degree; he wants to do more specialist study. My spirit will rest when you and the rest of the family accept him. I cannot expect that from Mum. Take care of this child's needs. He is very clever …. My ways have offended and upset Mum. Look after her after I am gone. It is better that she live with a child. Use the money from the home unit for her. If there is any left over after she is gone, use it for Roy if he still needs it. There are also others in the family who need the money for their studies."
3. The unit in Belmore Street, Burwood, was in fact registered in the name of Hok Tjiong's son, George Tjiong. Hok Tjiong died in 1981. After Hok Tjiong's death, his wife, Kwat Nio Tjiong, (George Tjiong's mother) continued to live there until about 1994, when she moved in with one of her daughters, as her husband had anticipated. The unit was sold in 1996 with net proceeds of $168,331. In the course of the later proceedings it was labelled the "Burwood trust".
4. By the time the proceedings were commenced in the Equity Division, all three parties to this arrangement had died, Hok Tjiong in 1981, his wife, not until December 2006, and their son George, on 30 January 2004.
5. In an affidavit sworn on 14 May 1984, in divorce proceedings involving George Tjiong and his then wife, in terms accepted by Palmer J, George Tjiong stated: "I do not have any beneficial interest in [the unit]. I am the registered proprietor of [the unit]. I hold this property on trust for my mother and I do not hold any beneficial interest in the property."

Commencement of current proceeding

1. George Tjiong had two offspring, Katrina May Lan Tjiong (Ms Tjiong) and Lindsay Kuang Djin Tjiong, to whom he left his estate in equal shares. He appointed his brother Richard Tat Tjhien Tjiong to be his executor. Since December 2001 George had been incapacitated; his affairs were administered by Richard Tjiong under an enduring power of attorney by which George had appointed Richard Tjiong and Ms Tjiong jointly and severally. Before George's death Richard, with Katrina's consent, had established a trust (the George Tjiong or "GT" trust) and transferred $1.3m of George's property into that trust. In 2005, Katrina and Lindsay Tjiong commenced proceedings against Richard, seeking to set aside the GT trust and remove him as executor of George's will. On 7 June 2010, Palmer J delivered a second judgment, setting aside the GT trust on the basis that Ms Tjiong's consent had been obtained by a fraudulent misrepresentation, supported by evidence fabricated by Richard Tjiong.
2. In 2011, Ms Soei Chang commenced a fresh proceeding against Ms Tjiong alleging that she, Soei Chang, had discovered in mid-July 2009, a will executed by her father, Hok Njan Tjiong in December 1980, revoking his earlier wills and also terminating the Burwood Trust, so that the "full value of the property at … Belmore Street, Burwood, is to revert back to my estate". There was no plausible explanation as to why, if true, it had not been brought forward in her 2006 claim. A report by a forensic examiner, of 9 September 2011 concluded that the signature attributed to George Tjiong was probably a forgery. Ms Soei Chang withdrew the proceedings, leaving only the issue of costs to be resolved. By a judgment delivered on 23 December 2011, White J gave leave to the plaintiff to discontinue the proceedings and ordered that each party bear her own costs. [3] (White J was not affirmatively persuaded that Soei Chang was responsible for the forgery.)
3. Finally, on 14 December 2017, solicitors for Ms Chang wrote to Ms Tjiong's solicitors alleging "a clear case of breach of fiduciary duties owed by your client as the Administrator of her father's estate and as the Administrator of the trust". It was that letter to which Ms Tjiong's solicitors provided a lengthy response of 16 January 2018 to which reference will be made below.
4. The present proceedings were commenced in 2020 by Ms Chang's son, Tzer Chin Chang (the plaintiff), who sought relief under s 70 of the Trustee Act 1925 (NSW) on the basis that he was a beneficiary of the Burwood trust. The defendant was Katrina Tjiong as administrator of George Tjiong's estate and, in that capacity, trustee of the Burwood trust, if still extant. Ms Tjiong contended that the trust had been terminated by her father's payment to her brother, Lindsay Tjiong, of an amount in the order of $200,000 in August 1999.

The appeal - procedural matters

1. The present appeal challenges the orders made in both the first judgment and the second judgment. As explained by Griffiths AJA, although the first judgment left certain matters undetermined, it was itself a final judgment (not an interlocutory judgment), so that the purported notice of intention to appeal, served on 19 February 2024, was ineffective. Ms Tjiong required an extension of time of some 20 months. The second judgment was an interlocutory judgment and required leave for that reason.
2. If, as appears to have been assumed by those acting for Ms Tjiong, the second judgment had been the final judgment, it would have been open to Ms Tjiong to challenge the 2022 orders, as interlocutory orders, without a requirement for leave. On that basis, a brief extension was required with respect to the second judgment as, despite the effectiveness of the notice of intention to appeal, the notice of appeal was not filed until 20 days after expiry of the three-month period permitted by the Uniform Civil Procedure Rules 2005 (NSW), (UCPR) r 51.10.
3. Although that understanding of the status of the two judgments was erroneous, the hearing of a timely appeal from the first judgment might well have awaited the calculation of the payments due, so that all issues could have been determined together. In that situation, it cannot be said the respondents were prejudiced by the delay; indeed, on 12 June 2024, apparently relying on the validity of the appeal, the trustees sought leave to cross-appeal. [6] Therefore, and subject to one possible qualification, Ms Tjiong should have an extension of time within which to appeal from the first judgment. The qualification relates to grounds 1 and 2(a) in the notice of appeal which challenged the appointment of the independent trustees and the basis upon which they were directed to identify the fund the subject of the trust. The appointment of independent trustees had been accepted by the parties as an appropriate step, [7] and the report ordered was prepared. However, as it has been concluded below that the Trust has been determined, the orders will be set aside as nugatory.
4. So far as Ms Tjiong required leave to appeal from the consequential interlocutory judgment, and a brief extension of time within which to do so, subject to the filing of the appropriate summons, that leave should also be granted, as should the extension of time.

Grounds of appeal

1. Grounds 1 and 2(a) related to the orders appointing the trustees and the nature of the report they were required to prepare. For reasons noted above, to the extent that an extension of time was required to permit that challenge, it should be refused.
2. Ground 2(b) merely asserted error on the part of the trial judge in ordering the payment of the amount assessed in the second judgment. That amount was erroneous if any one of grounds 3, 4 and 5 were to be upheld; it requires no separate consideration.
3. Grounds 4 and 5 related to the claim by Ms Tjiong for an indemnity from the Burwood Trust and assume that the trust is extant. They may be put to one side for present purposes, as may the trustees' cross-appeal which concerned claims for indemnity which the trial judge had allowed.
4. There remains ground 3 which addressed the fundamental findings made by the trial judge in concluding that the Burwood trust had not been determined by a payment to Lindsay Tjiong in July 1999. It is that matter which will be addressed first below.

Maintenance of trust fund

1. It was not in dispute that when George Tjiong received the proceeds of sale of the Burwood unit he paid the full amount into an existing investment account in his own name which contained his personal funds. At times the mixed funds were reduced below the amount of the trust moneys; but then increased to a greater sum. The trial judge stated: "91 Katrina places emphasis on the tracing exercise in relation to the funds in the MacBank Account, as set out in the January 2018 letter. She submits that the Court should infer that on each occasion the credit balance in the MacBank Account went below $168,331.06 (being the sum of the Unit sale proceeds) George intended to, and did in fact, restore the Burwood Trust funds until 19 July 1999, when George made the payments to Lindsay, arguing that the MacBank Account was a trust account, not a general trading account."
2. The judge then identified the relevant legal principles before addressing the question whether the payment to Lindsay Tjiong was an exercise of George Tjiong's power of appointment. [8] Returning to Ms Tjiong's submissions as to "tracing", the trial judge accepted the reasoning of Ward J in Australian Receivables Ltd v Tekitu Pty Ltd [9] that there was "no presumption that the further payments into the fund replaced the lost moneys of the beneficiary" and that, while an intention to restore the depleted fund cannot be ignored, proof of an "express intention" is required. [10] She was not satisfied that the such an intention had been established. [11]
3. It is not clear how this reasoning fitted with the conclusion that the payment out to Lindsay Tjiong was not intended to be a payment of trust funds. In principle, an intention to maintain a sufficient balance in an investment account (albeit not a trust account) to maintain an ability to apply the trust funds properly might be thought to support a conclusion that a payment which would have qualified as a distribution of trust funds was intended to be such. On the other hand, if there were other reasons to think that the 1999 payment was a distribution of trust funds, that would support an inference that George Tjiong had been intending to maintain the full amount of the trust funds in his investment account prior to that payment. There are two separate intentions at play, but they are not entirely independent.
4. The judge left the matter on the following basis: "101 … In that context, I do not consider that the Court is required to make a positive finding as to what has happened to the Burwood Trust funds. Nor it is appropriate to seek to do so based on the limited evidence before the court and in circumstances where I have concluded that Katrina has not established that the Burwood Trust has been terminated by distribution to Lindsay and orders should be made for the appointment of independent trustees." (The final sentence is one of a number of statements apparently reversing the onus of proof.)

Relevant legal principles

1. McLure J observed in Re Global Finance Group [12] that "[t]here are a number of general rules relating to tracing into a mixed fund. The rules are complex and not invariably applied." That is not because of uncertainty as to the law, but a recognition that circumstances vary. The underlying concern is to protect the interests of beneficiaries from breaches of duty by fiduciaries.
2. The reference to "tracing" is inapt in relation to consideration of whether, where a comingled fund has been depleted, later payments in by the trustee should be treated as making good any deficiency in the trust funds. By way of contrast, had the plaintiff's case been that trust funds were wrongly distributed to Lindsay Tjiong, the plaintiff could have brought proceedings (if not statute-barred) to trace those funds into the property owned by Mr Tjiong. Replenishment of the trust fund by the trustee is an entirely separate question, as recognised by the trial judge at [101].
3. The issue of replenishment is often discussed in the context of tracing because it arises in cases dealing with comingled funds. Jacobs' Law of Trusts in Australia states: [13] "Where the fiduciary's breach of duty involves withdrawals from a fund in which the moneys of the beneficiary have been blended with those of the fiduciary, the principle laid down in Hallett's case treats the fiduciary as bound by a presumption of honest intention, which may also be expressed as an irrebuttable presumption of intention. This will mean that the result will be no different if the fiduciary expressly manifested an intention of drawing out the beneficiary's money first. However, where the fiduciary, after depleting the mixed fund, pays into it further moneys of his or her own, there is, it seems from the decisions in James Roscoe (Bolton) Ltd v Winder [14] and Lofts v MacDonald, [15] no presumption, and certainly no irrebuttable presumption, that the further payments in replace the lost moneys of the beneficiary. That is not to say, as the judgment in James Roscoe … itself makes plain, that an intention of the fiduciary to restore the depleted fund with the later payments is to be ignored if it exists. It is to say that there is no presumption as to the existence of that intention. If the fiduciary pays money into the fund with the intention of effecting restitution, then the interest of the beneficiary in the fund will be the same as if the sum represented by the later payment in had never been withdrawn by the fiduciary. [16] The existence of such an actual intention may be inferred from the facts, even if not manifested by direct evidence."

Characterising the 1999 payment

1. Apart from the issue of reinstating the funds disbursed for personal needs, the trial judge approached the characterisation of the 1999 payment on the following basis: "94 Tzer submits that the evidence, particularly that from Lindsay, is insufficient to establish that the payments made to Lindsay by George in 1999 constituted an exercise of the power of appointment conferred on George under the terms of the Burwood Trust. I agree. … 97 In my view, the evidence overall falls short of establishing that George intended to, and did in fact, distribute the Burwood Trust property to Lindsay pursuant to George's power of appointment when he made the payments to Lindsay in July 1999. 98 Having regard to the almost 20 years that have passed and the frailty of human memory, I place greater weight on the contemporaneous documents than on the terms of the conversation to which Lindsay deposes (as referred to at [21]-[22]), which is relied on as contemporaneous evidence that suggests that the money Lindsay received in July 1999 was from the Burwood Trust funds held by George: Watson v Foxman (1995) 49 NSWLR 315 at 319. A connection between the money paid to Lindsay and the Burwood Trust property or funds held by George for the benefit of Kwat is not recorded in any document and is seemingly inconsistent with various assertions made on behalf of Katrina (and Lindsay) in legal proceedings and correspondence to which I have referred above (see in particular at [32], [35], [40], [41], [46], [47] and [57]), as well as Lindsay's evidence in cross-examination that George never told him where the money came from (T125:32-33). … 113 In conclusion, Katrina has failed to satisfy me that the payments made to Lindsay on 19 July 1999 constituted an exercise by George of the power of appointment conferred on him by Hok and effectively terminated the Burwood Trust by distribution. Based on the evidence overall, I am persuaded by Tzer's submission that, on the balance of probabilities, the payments to Lindsay were most likely a gift from George from his personal funds and were not a distribution of or from the corpus of the Burwood Trust.
2. As noted above, [94] and [97] appear to reverse the onus of proof, as does the first sentence in the conclusion at [113]. [21] Although the second sentence may be understood as correcting that approach, the reasoning as a whole reveals ambivalence.

Lindsay Tjiong's evidence

1. The final matter relied upon by the trial judge in [98], namely Lindsay Tjiong's evidence that his father "never told him where the money came from", carried no weight. On the hypothesis being explored in the judgment, it either came from George Tjiong's personal funds, or it came from the moneys he held for the Burwood trust. Why a failure to identify the source was inconsistent with the money coming from the trust is not self-evident and was not explained. The most plausible explanation for Lindsay's father not stating the source of the funds was that his father did not think it necessary or relevant. There is no discernible element of inconsistency with the inference that the money came from the trust funds.

Preferred findings

1. Because the approach adopted by the trial judge was in material respects erroneous, it is necessary for this Court to make its own findings as to the claim made by Mr Chang. That claim is, in essence, that the trust established by his grandfather in 1976 (and varied in 1978) involving the relatively small sum, even in those days, of just under $170,000, remained undistributed, at least in some part, when the initial trustee, George Tjiong, became incompetent in December 2001. (Why proceedings commenced 18 years later in 2019 were not statute barred is unclear, but the defendants did not rely upon any limitation period.) What is apparent, however, is that the plaintiff's claim cannot be easy to establish given the lapse of so many years.
2. As explained above, at least part of the case theory for the plaintiff was that because the trust did not in strict terms permit any disposal of the funds from the sale of the home unit prior to the death of the settlor's wife, any purported distribution to any other person, however needy, in the family, prior to her death must have been a breach of trust. The proposed inference was that, because it would have been a breach of trust, it was therefore not a distribution of trust moneys. The underlying logic of this proposition was not explored; nor was there any attempt to recover the moneys from Lindsay Tjiong.
3. The trial judge considered that the explanation for the gift, and George Tjiong's statement that now he could "die in peace" was a reflection of his self-imposed obligation to assist his son Lindsay if Lindsay got his life together. So much may be accepted: however, it is not inconsistent with the payment being a distribution from the trust which was understood to be available (subject to proper care being taken of George Tjiong's mother) for needy members of the family. It is more than probable that George Tjiong identified his son as a needy member of the family. Further, when he made the promise to his son, he may well have had the existence of the trust in mind, as he certainly did in 1984 when swearing an affidavit in his own divorce proceedings. There was no inconsistency between fulfilment of the promise and using the trust funds for that purpose.
4. The trial judge took the view that a finding that payment in 1999 involved a distribution of trust funds would be inconsistent with her assumption "that George intended to act rightfully and honestly and that he first used his own moneys to pay Lindsay from that account, rather than distributing the Burwood trust moneys prior to Kwat's death in breach of the express terms of the Burwood trust". [46]

Orders

1. That conclusion requires that the appeal be upheld and the substantive orders (1) and (2) made by the trial judge on 16 August 2022 be set aside. Orders (3) (appointing the new trustees), and (4)-(15) were consequential and must be set aside because there is no extant trust (and has not been for a quarter of a century). That leaves a question as to what provision should be made for the costs of the new trustees. All parties should have an opportunity to address that issue. Order (17), as to the plaintiff's costs of the trial to the date of those orders, should be set aside and the plaintiff ordered to pay the defendant's (now the first defendant's) costs of the trial. [47]
2. Because, as explained below, Ms Tjiong has been almost entirely successful on ground 4 (dealing with claims for indemnity) she should have her costs of the whole trial. Ms Tjiong should have her costs of the appeal.
3. On the basis that the trust was determined by distribution in July 1999, the Court should make the following orders, in addition to orders 6,7 and 8 at [479]: 1. Grant the appellant an extension of time to appeal from the first judgment delivered on 16 August 2022 and to the extent necessary leave to appeal from the second judgment delivered on 9 February 2024. 2. Allow the appeal and set aside orders (1)-(11), (14), (15) and (17) made by the trial judge on 16 August 2022 and orders (1)-(3) made on 9 February 2024. 3. Declare that the trust created by Hok Njan Tjiong upheld by Palmer J in Chang v Tjiong [2009] NSWSC 122 was determined by the distribution by the then trustee George Tjiong to his son Lindsay Tjiong on 19 July 1999. 4. Order that the plaintiff/cross-defendant pay the first defendant/cross-claimant's costs of the trial 5. Order that the first respondent pay the appellant/cross-respondent's costs of the appeal. 6. Direct that any party seeking an order as to the trustees' costs of the trial, or in this Court file and serve a notice of motion, affidavit and written submissions within 28 days hereof.

Claims for indemnity - ground 4

1. In the event that it was found that the Burwood Trust remained extant at the date of judgment, Ms Tjiong made claims for payment by way of indemnity from the trust moneys of various expenses incurred by her in the litigation which has now extended beyond 15 years. If in fact, as held above, the Burwood Trust was determined in 1999, these claims are irrelevant. Nevertheless, against the possibility that this view does not prevail, the claims set out in ground 4 of the notice of appeal should be addressed.

Nature of claims

1. The underlying premise of Ms Tjiong's claims is that where proceedings were brought or defended, or legal costs incurred, in order to preserve the estate, an indemnity should be available against the trust funds for moneys expended by her, or for current liabilities incurred by her, in accordance with the proportion which the trust funds bore to the general estate. That figure was calculated at 11.76%. To the extent costs were incurred relating specifically to the Burwood Trust, she claimed 100% of the expense.
2. The trial judge accepted potential entitlement in relation to the latter category, but the former (apportioned) position was rejected by the trial judge in her second judgment. The judge's assessment of the claims commenced with some general comments in the following terms: "102 Something should be said at this point about Katrina's complicated position. Katrina is a potential beneficiary of the Burwood Trust … and, from 16 June 2009, she was the administrator of George's estate and trustee of the GT Trust. It was in her capacity as administrator/trustee in relation to George's estate and the GT Trust, respectively, that Katrina came under a duty in relation to the funds attributable to the Burwood Trust. Relevantly, in these proceedings, Katrina denied that the Burwood Trust remained in existence after July 1999. Accordingly, up to August 2022, on the position that Katrina herself adopted, she cannot have understood herself to be acting as trustee of the Burwood Trust."
3. The judge then recorded the submissions for Ms Tjiong that "the relevant test was not the trustee's intention, but rather whether the trustee benefitted the trust property by incurring the relevant expenses". [48]
4. Having stated the alternative tests, the judge did not resolve which was correct, but turned immediately to the individual claims. However, in considering the first claim, she stated: "123 Katrina's right to indemnity is not established simply on the basis that the 2005 Removal Proceedings may have benefitted the Burwood Trust. The real question is whether the costs were properly incurred by Katrina in performing her role as trustee of the Burwood Trust. The 2005 Removal Proceedings were commenced by Katrina (and Lindsay) as a beneficiary under George's Will seeking the removal of Richard effectively from the administration of George's estate primarily in her own personal interest. Further, she would have incurred the costs in relation to the 2005 Removal Proceedings irrespective of whether the Burwood Trust existed or not."

Procedural background

1. For reasons which will become apparent in dealing with claim 1, the procedural background pursuant to which the claims were addressed should be noted. The trial proceeded in two stages. Stage 1 addressed Ms Tjiong's defence denying the ongoing existence of the Burwood Trust. On day 2 of the trial (9 March 2022) she sought leave to file an amended defence, the application being supported by an affidavit of her solicitor, Mr Andrew O'Brien, dated 4 March 2022. The application included two sets of amendments, the first set not being pressed. [49] The second set of amendments dealt with the claims for indemnity. Following a short adjournment, the judge rejected the application for leave to amend, giving brief reasons. [50]
2. However, in her first judgment, having determined that the Burwood Trust remained extant, and that new trustees should be appointed, the judge made directions for the new trustees to prepare a report identifying the corpus of the trust and also identifying "any claims that Katrina makes against the Burwood Trust funds, noting that she asserts a lien over the funds based on a right of indemnity from the assets of the Burwood Trust in relation to the costs she has incurred in dealing with issues relating to the Burwood Trust". [51] These matters would then be addressed at a resumed hearing, referred to here as stage 2.
3. Mr O'Brien's affidavit of 4 March 2022 itemised the costs which Ms Tjiong had incurred. Objection was taken to passages in the affidavit which stated that Ms Tjiong (and, where relevant, her brother) "are entitled to indemnity": those passages were not read. Otherwise, the affidavit was admitted without objection. Mr O'Brien gave evidence that he had been the solicitor for Ms Tjiong from about 1 May 2004, when he was working as an employed solicitor with Ryan & Bosscher and, from about March 2006, as the principal of O'Brien Lawyers, having left his employment with Ryan & Bosscher.
4. Mr O'Brien gave evidence of the costs incurred by Ms Tjiong in the various proceedings. There was no challenge to any of his evidence in that regard. For this purpose, he identified a hypothetical notional value of the Burwood Trust as a percentage of the notional value of the estate. [52] He then stated "[i]n fact expenses, particularly legal expenses, had been paid from the Estate and the GT Trust and the value of the Investments of the Estate and the Trust, at least as at 5 January 2012 was $1,549,923.71", rather than the gross estimate of $2,866,754.56. [53]

Legal principles

1. The primary basis for rejecting the bulk of the defendant's claims at trial was a ruling that a trustee could not apportion legal costs of protecting the estate by reference to the proportion of the estate which was found to constitute the Burwood Trust. In adopting that submission, the trial judge appears to have relied on two partly inconsistent propositions.
2. The first proposition was that a trustee is only entitled to recover the costs of defending the corpus of the trust where she intends to act as trustee. Thus, in circumstances where Ms Tjiong was denying the continued existence of the trust (or at least that it had any assets) she could not claim any part of the costs against that part of the estate which the Court found comprised the Burwood Trust. Alternatively, the principle was expressed in terms of a predominant purpose. Thus, where the bulk of the estate was being protected by Ms Tjiong as the administrator, either objectively, or by way of presumed intention, her predominant purpose was not to protect the trust but to protect the bulk of the estate.
3. The trial judge dealt with this issue in her second judgment, identifying the circumstances and submissions in the following terms: "103 In the present proceeding, Katrina submitted that the relevant test was not the trustee's intention, but rather whether the trustee benefitted the trust property by incurring the relevant expenses. On this argument, she contends that it is irrelevant that when she incurred the expenses she believed the Burwood Trust was determined and that she was acting as administrator of George's estate: this is because, she submitted, those expenses were in aid of proceedings which in fact safeguarded the Burwood Trust's property (even if Katrina had no such intention) and as such they were sufficiently connected with that trust to ground an indemnity. 104 In argument, the Trustees did not focus on the complexities of Katrina's position vis à vis the Burwood Trust. In the main, they adopted two lines of attack. The first was to argue that, for many of the expenses claimed, Katrina could offer no proof that she had come under an actual liability to pay. The Trustees (and Tzer along with them) argued that proof of a liability to pay and either actual payment or a subsisting debt was [sic] essential before awarding any indemnity."
4. Although the trial judge did not rule on the distinction between a subjective intention and an objective effect, it appears that she adopted the latter approach, by reference to a predominant purpose or predominant consequence involved in incurring the expenses. Thus, in relation to the first claim concerning the costs of the removal proceedings of 2005, the judge gave, inter alia, the following reasons: "123 Katrina's right to indemnity is not established simply on the basis that the 2005 Removal Proceedings may have benefitted the Burwood Trust. The real question is whether the costs were properly incurred by Katrina in performing her role as trustee of the Burwood Trust. The 2005 Removal Proceedings were commenced by Katrina (and Lindsay) as a beneficiary under George's Will seeking the removal of Richard effectively from the administration of George's estate primarily in her own personal interest. Further, she would have incurred the costs in relation to the 2005 Removal Proceedings irrespective of whether the Burwood Trust existed or not. 124 The 2005 Removal proceedings were not about the Burwood Trust. In my view, the costs Katrina incurred in those proceedings were not incurred by her as part of or in connection with the proper performance of her duties or exercise of her powers as trustee of the Burwood Trust."

Determination of claims for full indemnity

1. There were thirteen claims for indemnity, of which seven claimed full indemnity on the basis that the amounts related only to interests in the Burwood Trust, namely claims 3, 4, 5, 6, 7, 9 and 11. Of these, the trial judge accepted claims 4, 5, 7 and 9, but rejected the others. The remaining claims, 1, 8, 10, 12 and 13, related to proceedings with mixed purposes for which 11.76% of the amounts was claimed. [64] Because the accepted claims suggested elements of inconsistency in approach, a fact relied on in the trustees' cross-appeal, it is convenient to address them first in dealing with those for which full recovery was sought.

Claim 4 - 2014 correspondence

1. Claim 4 related to correspondence received by O'Brien Lawyers from a solicitor for Richard Tjiong, described in Mr O'Brien's affidavit as "making enquiries about certain matters alleged to arise in the administration of the estate and the trust but, primarily, the Burwood Trust". [65] The claim, for $4,686, included both solicitor's costs and counsel's fees. The plaintiff submitted that the claim should not be accepted because there was no costs agreement provided, or receipt showing payment of the bill. In respect of this claim, the judge dismissed those objections. Why that was so was not explained, but they are raised again in the trustees' cross-appeal. As the trustees submitted in support of the cross-appeal, the judge's finding was "not consistent with the principles accepted by the trial judge". [66]
2. The assertion of inconsistency is correct, but for reasons explained above, the error lay in adopting the principles relied upon by the plaintiff. That aspect of the cross-appeal should be rejected.

Claim 5 - photocopying expense

1. This claim was for a small amount, $350, incurred in obtaining missing pages from bank accounts relevant to establishing what happened to the proceeds of sale of the Burwood unit, which constituted the original asset of the Burwood Trust. The trial evidence included a photocopy of Ms Tjiong's cheque for that amount. It related solely to Ms Tjiong's attempts to trace the assets of the Burwood Trust. The plaintiff did not (and does not) challenge acceptance of that claim.

Claim 6 - Nevett Ford advice

1. In March 2015, Ms Tjiong obtained advice from Nevett Ford Lawyers, described by the trial judge as being "in relation to the Burwood Trust". [67] The fees were $5,569.30. There was evidence of payment of that amount. The claim was rejected on the basis that "the advice obtained by Katrina was for her personal benefit". [68] The only reason for that conclusion was the content of the advice given, which did not recommend an application be made for judicial advice.
2. With respect, that approach was flawed. Whether the cost was incurred in relation to the Burwood Trust depended upon whether Ms Tjiong sought the advice as to whether she should obtain a judicial opinion concerning the existence of the trust. In that respect, the trial judge noted the description of the circumstances set out in Mr O'Brien's affidavit, which was in the following terms: [69] "Having completed her investigation into the facts of the actual receipt and investment of the proceeds of sale of the [Burwood unit], and the subsequent dealings with that money, Katrina sought advice during the period 2014 to 2016 from lawyers in both Sydney and in Melbourne, as to what steps she should take in regard to the Burwood Trust, including advice about an application for judicial advice under s 63 of the Trustee Act 1925 (NSW). That advice included advice from Nevett Ford, lawyers of Ballarat."
3. The contents of the advice confirmed that that was the subject matter on which the lawyers were asked to advise. That purpose was not contradicted or diminished by the nature of the advice given: the trial judge was in error in relying on the content of the advice. Ground 4(h) should be upheld and claim 6 allowed.

Claim 7 - further advice from counsel in relation to the Burwood Trust

1. Claim 7 sought to recover $22,000 for advice from Sydney counsel as referred to in Mr O'Brien's affidavit quoted in relation to claim 6. [70] The trial judge noted submissions of the plaintiff, including as to the absence of a costs agreement or proof of payment, and an assertion that the advice was sought for "Katrina's benefit in her personal capacity, rather than in any trustee capacity". [71] In upholding the claim, the judge rejected the objections in the following terms: "158 The advice was directed to whether judicial advice should be sought in relation to the Burwood Trust. While some aspects were not consistent with Palmer J's findings, I am satisfied that the costs were incurred by Katrina as part of or in connection with the proper performance of her duties or exercise of her powers as trustee of the Burwood Trust. I do not consider that it is necessary for proof of payment in order for a right of indemnity to arise and the invoice satisfies me that there is a current liability, notwithstanding the absence of a cost agreement for that amount."
2. For the reasons noted in relation to claim 6, the judge was wrong to characterise relationship between the act of seeking the advice and the Burwood Trust by reference to the advice given. The purpose for which the advice was obtained supported the claim for indemnity, for the reasons explained in relation to claim 6. As to the second part of the judge's reasons, she was right to hold that there was a current liability, notwithstanding the absence of a costs agreement and proof of payment.
3. The plaintiff challenged that conclusion in the cross-appeal, but accepted that the claim should be dealt with in the same manner as claim 6. [72] The cross-appeal observed that the finding was "not consistent with the principles accepted by the trial judge at [106] of the second judgment". That proposition appears to be correct, but the statement of principle was incorrect. That part of the cross-appeal must be rejected.

Claim 8 - cost of District Court proceeding re costs assessment

1. Claim 8 related to a final step in the 2005 removal proceedings, being an appeal by Richard Tjiong in the District Court against the decision of a costs assessment review panel, an appeal he later abandoned. The trial judge observed that the claim for a portion of those costs (the total amount being $13,805.73) was unsupportable because, as with other apportioned claims, they related to the 2005 removal proceedings, which concerned the due administration of George Tjiong's estate generally, including, but not limited to, the assets of the Burwood Trust. Accordingly, claim 8 will be dealt with on the same basis as claim 1.

Claim 9 - responding to lawyers acting for Soei Chang

1. On 14 December 2017 O'Brien Lawyers received a letter from Griffin Lawyers in Adelaide seeking information about the Burwood Trust and related issues and threatening legal proceedings. Griffin Lawyers were then acting for Ms Soei Chang, described as "an eligible beneficiary of the Burwood Trust". The whole of the letter was directed to questioning the administration of the trust by Ms Tjiong. Claim 9, in an amount of $25,850 covered advice obtained by Ms Tjiong and the preparation of a letter responding by O'Brien Lawyers.
2. Objection was taken by the plaintiff (and the trustees) on the basis that there was no evidence of a costs agreement or proof of payment of the costs, and on the basis of statements made in the responding letter as to the extinguishment of the trust.
3. The trial judge accepted the claim for indemnity, based on the basis that "[t]he substance of O'Brien's letter relates to the Burwood Trust". [73] Whilst noting the submissions of the plaintiff (and the trustees) the judge did not respond to them in her reasons. Unsurprisingly, the cross-appeal repeated the reasons for not accepting the claim, as it had done with respect to the earlier claims, referred to above.
4. The indemnity should be upheld, not on the basis of the content of the letter responding, but on the basis of the content of the letter from Griffin Lawyers which was wholly directed to the administration of the Burwood Trust. For reasons already noted, complaints as to the lack of evidence of a costs agreement or proof of payment of costs did not provide a basis for rejecting the claim.

Claim 3 - costs in proceedings 2011/098337

1. Two other claims for full indemnity were rejected by the trial judge. The earliest, claim 3, sought an indemnity for costs incurred in defending Ms Soei Chang's promotion of a freshly discovered will of her father, Hok Njan Tjiong.
2. On 16 August 2010, four siblings of George Tjiong, including Soei Chang, claimed that their father, had left a will dated 27 December 1980 disposing of the assets of the Burwood Trust by leaving the Burwood unit to his wife, Kwat, and terminating the trust upheld by Palmer J. In March 2011, Ms Chang made an application for a grant of letters of administration of the will. The proceedings were abandoned by Ms Chang, after Ms Tjiong had obtained a forensic analysis of the will which cast doubt upon its authenticity. An application for costs made by Ms Tjiong was dismissed by White J on 23 December 2011 on the basis that he was not satisfied that Ms Chang was responsible for the forgery. On 7 December 2011, O'Brien Lawyers sent Ms Tjiong a memorandum of fees, including counsel's and expert's fees, totalling $99,429.10.
3. The trial judge rejected the claim for indemnity in what were described as the "alternate will proceedings" in the following terms: "141 While these proceedings related to the Burwood Trust, I am not satisfied that Katrina has established that the costs were incurred in carrying out her duties as trustee of the Burwood Trust in circumstances where she elected to join the proceedings and appeared in her capacity as the executor of George's estate and there were other contradictors who could have taken action, as the Trustee submits. As Katrina did not seek judicial advice in her capacity as trustee of the Burwood Trust before taking steps to join and seek to defend the proceedings, she was also at risk that she would not recover her costs."
4. There are four propositions contained within these reasons. First, although the proceedings "related to the Burwood Trust" Ms Tjiong was said not to have established that she was carrying out her duties as trustee in defending the proceedings. That was because she "elected" to join the proceedings and "appeared in her capacity as the executor of George's estate". The factual premise for those statements was to be found in the judgment of White J. [74]
5. In circumstances where the plaintiff had not named a defendant to her summons, the fact that Ms Tjiong "elected" to be joined does not mean that her purpose was not to defend the challenge to the existence of the trust. Secondly, the fact that she entered an appearance in her capacity as executor of the estate, which included the trust assets (if any), was at best a neutral consideration. Had Ms Chang's proceedings succeeded and had the proceeds of sale of the unit been traceable to George Tjiong's estate, consequential orders would have been made for payment of the proceeds of sale from George's estate to Kwat Tjiong's executor. On the assumption that those proceeds were the subject of the Burwood Trust, the only consequence for George's estate would be the removal of the trust funds. Accordingly, neither of the first two reasons provided by the trial judge supported a conclusion that Ms Tjiong was acting otherwise than in relation to the Burwood Trust.

Claim 11 - proceeding 2019/211113

1. On 8 July 2019, two months before he entered bankruptcy, Richard Tjiong commenced proceedings 2019/211113 in respect of the Burwood Trust. (The immediately prior events are addressed below in relation to claim 10.) The trial judge accepted that the proceedings asserted "an alleged breach of duty in relation to the Burwood Trust seeking an order for accounts and her removal as trustee": second judgment at [176].
2. Had the proceedings been maintained, it is arguable that the trustee should have submitted to orders of the Court, or defended the proceedings in a different capacity. However, a trustee is entitled to resist a claim of misconduct and, as a practical matter, there was merit in simply proceeding on the basis of the bankruptcy to have the proceedings stayed or struck out, rather than incur expenditure in seeking to have them reconstituted. The proceedings were dismissed by Parker J.
3. The trial judge gave two reasons for rejecting the claim for indemnity: "181 First, Katrina was at risk of paying costs herself in circumstances where she took steps to defend the proceedings without obtaining judicial advice. 182 Second, and although these proceedings relate to the Burwood Trust, I am not satisfied that these costs were incurred by Katrina as part of or in connection with the proper performance of her duties or exercise of her powers as trustee of the Burwood Trust when her stated position at this time was that the Burwood Trust had determined and she had disclaimed her role as trustee."
4. The first reason has already been rejected as not a material basis for rejecting an indemnity. The second repeats the "disclaimer" reason relied on in relation to claim 10 and addressed below. In circumstances where the judge accepted that "these proceedings relate to the Burwood Trust", on the basis of a finding that the trust in fact existed, there is no reason to dismiss the claim for a successful defence of the proceedings on the ground that at the time the trustee believed the trust had been fully executed. Ground 4(d) should be upheld and the full amount of the claim ($70,576) accepted.

Conclusions - full indemnity claims

1. Each of the claims for the whole of the costs claimed allowed by the trial judge was properly so allowed. In addition, claims 3, 6 and 11 should have been allowed, giving a total of claims allowed in full as $228,460.40.
2. As noted above, claim 8 should be treated as an apportioned claim and dealt with on the same basis as claim 1. It is convenient next to turn to claim 1, and claims 8, 10, 12 and 13, which turn on similar issues.

Claim 1 - costs of 2005 removal proceedings

1. The substance of the 2005 removal proceedings, which resulted in orders by Palmer J removing Richard Tjiong as administrator of George Tjiong's estate and as trustee of the GT Trust (set up by Richard Tjiong in December 2003) has been adequately discussed above. The hearing of the 2005 removal proceedings did not occur until after Palmer J had disposed of Ms Soei Chang's proceedings on 4 March 2009. At an early stage in the removal proceedings, namely on 3 June 2009 in the course of oral submissions, counsel for Katrina and Lindsay Tjiong raised the issue of the Burwood Trust. [76] The issue of the Burwood Trust was ultimately not dealt with in the 2005 removal proceedings, because, on day 9 of the trial (16 June 2009), consent orders were made providing for Ms Tjiong to replace Richard Tjiong as trustee of the GT Trust and to appoint her as administrator of George Tjiong's estate.
2. The consent orders made on 16 June 2009 included a note of an undertaking given by the plaintiffs (Katrina and Lindsay Tjiong), with respect to the assets of the estate of the late George Tjiong, namely that they would not sell, encumber, deal with or dispose of the assets "pending any other final orders made in proceedings No 2078 of 2006 in this Court including any orders or directions made pursuant to any summons for judicial advice in those proceedings or in fresh proceedings for judicial advice in respect of the matters the subject of the Court's judgment in the said proceedings No 2078 of 2006".
3. Proceedings No 2078 of 2006 were the proceedings in which the existence of the Burwood Trust was established by the orders made on 4 March 2009. Although in due course the plaintiffs were released from those undertakings without further steps being taken in relation to the Burwood Trust, the possibility that George Tjiong's estate included trust assets was expressly recognised and addressed in the course of the 2005 removal proceedings.
4. In refusing the claim for indemnity in relation to the costs of the 2005 removal proceedings, the trial judge identified four interrelated propositions. The first relied upon the absence of any "costs agreement, tax invoices that make up the claim or receipts for payment". [77] That statement overlooked a number of facts, including that Palmer J had made a costs order in favour of the plaintiffs; that the costs had been duly assessed and a certificate of assessment issued on 2 August 2017 and that the assessment (including interest) was entered as a judgment of the Court in the amount of $990,395.42. The assessment of costs on an indemnity basis, enforceable against Richard Tjiong until the time of his bankruptcy, was sufficient evidence that the costs had been incurred and the amount of the costs. The trial judge was wrong to dismiss the claim on that basis. Similarly, for reasons already considered, she was wrong to accept the trustee's submission that liability for any costs incurred in the 2005 removal proceedings "would now be statute barred": second judgment at [122].

Claim 8 - District Court proceedings 2017/222385

1. These proceedings in the District Court concerned the recovery of the costs order made against Richard Tjiong in the 2005 removal proceedings. The judge (correctly) refused the claim for full indemnity on the basis that it should have been dealt with as an apportioned claim, but held it should be refused on the same basis as the rejection of claim 1: at [162]. Those reasons having been rejected, the claim should be allowed, not in full but as an apportioned claim, that is in an amount calculated as $13,805.73 x 11.76% = $1,623.55. Ground 4(f) should be upheld to that limited extent and otherwise dismissed.

Claim 10 - costs of proceedings 2019/061978

1. In 2019 Richard Tjiong commenced proceedings against Ms Tjiong and her brother in the Equity Division, seeking to set aside the orders made in the 2005 removal proceedings. Katrina and Lindsay Tjiong filed a notice of motion seeking summary dismissal of the proceedings; orders to that effect were made on 5 July 2019. Although they were granted leave to file a motion seeking an order for costs to be assessed on a lump sum basis, Richard Tjiong entered bankruptcy on 10 September 2019 and no costs were recovered. A tax invoice of fees and disbursements incurred in the proceedings totalled $75,173.30, of which 11.76% is $8,840.38.
2. The trial judge rejected the claim, but treated the proceedings as related to the 2005 removal proceedings and applied the reasons adopted in relation to the rejection of claim 1: at [175]. That is, the judge was not satisfied that the costs were incurred "by Katrina as part of or in connection with the proper performance of her duties or exercise of her powers as trustee of the Burwood Trust". She continued: "This is particularly as, by this time, Katrina's stated position was that the Burwood Trust had determined and she had disclaimed her role as trustee. It seems to me that Katrina was acting in these proceedings in her personal interest, rather than as trustee of the Burwood Trust."
3. The use of the term "disclaimed", which was repeated in relation to claims 11 and 13, relied on a representation to Soei Chang in a letter dated 16 January 2018 "that the Burwood Trust had been distributed and determined by the July 1999 payments to Lindsay": at [172]. That was a factual assertion which she maintained in these proceedings: it is not so much a disclaimer of her role as trustee as a statement of belief that the trust had been fully executed. It does not provide a separate basis for rejecting claims for indemnity in circumstances where a court has later found that the trust continued to exist.
4. Ground 4(c) should be upheld and claim 10, in an amount of $8,840.38, accepted.

Claim 12 - costs of proceedings 2019/278508

1. This claim, as the trial judge noted, concerned the third set of proceedings commenced by Richard Tjiong in 2019 seeking to set aside orders made in the 2005 removal proceedings. Although the proceedings were commenced on 6 September 2019, only an amended statement of claim filed on 4 October 2019 was served. The document ran for 55 pages and contained multiple allegations of fraud on the part of the defendants, being Katrina and Lindsay Tjiong. As with the earlier challenge to the findings of Palmer J, they were repetitive of the first set of proceedings in 2019 which were later dismissed on the grounds that Richard Tjiong remained an undischarged bankrupt. The claim for indemnity was for an amount of $17,358.94, being 11.76% of a tax invoice rendered on 10 November 2021. The judge rejected the claim "for the same reasons" as she refused claim 10: at [186]. Those reasons having been rejected, ground 4(e) should be upheld and the apportioned indemnity accepted.

Claim 13 - costs of engaging insolvency specialists

1. Ms Tjiong sought advice on several occasions from Somerville Legal in relation to her attempts to recover costs from Richard Tjiong, both prior to and subsequent to him entering bankruptcy. Some eleven tax invoices were issued in a total of $24,771.60. [79] The claim was rejected on the same basis as claim 1. [80] Reliance on her having "disclaimed her role as trustee" was repeated. These reasons have all been addressed above and rejected. For the reasons given above the claim should have been accepted on an apportioned basis, namely in an amount of $2,913.14. Ground 4(g) should be upheld.

Conclusions - grounds 4 and 5

1. The trial judge allowed an amount of $52,886 by way of indemnity claims. The challenges by the plaintiff in his cross-appeal in relation to three of those amounts should be rejected. In addition, the amounts sought in grounds 4(b), (d) and (h) should also be accepted, giving a total of $228,460.40 in relation to the claims for 100% of the costs incurred. Further, grounds 4(a), (c), (e), (f) and (g) should be accepted on the proportionate basis, allowing 11.76% of the amount of costs incurred. Those claims total $147,206.51.
2. The total amount to be allowed by way of indemnities is therefore $375,666.91.
3. Ground 5 in the notice of appeal stated that the trial judge should have found that Ms Tjiong was entitled to an indemnity in the amount of $334,961.17. That figure in fact reflected the additional amounts sought in ground 4 and omitted the amount of $52,886 which the trial judge had accepted. However, it is not possible simply to add the accepted amount to the additional amount because ground 4(f) was upheld only as an apportioned claim and not as a full claim. Making allowance for those two considerations and rounding to the nearest dollar, the amount of the indemnity should be $375,667, as noted above.
4. The net amount of the corpus of the Burwood Trust, on the assumption that it continued to exist as at 12 December 2023, should be $315,651. There should be judgment in that amount, in favour of the new trustees, to take effect from that date.

Orders - based on grounds 4 and 5

1. On the assumption that the Burwood Trust continues to exist and that the indemnity claims should be allowed as set out above, some further observations are required in relation to the orders sought.
2. First, on that assumption, none of the substantive orders made on 16 August 2022 should be set aside. However, order (1) made on 9 February 2024, specifying the amount that Ms Tjiong is to pay to the new trustees should be varied.
3. Order (2) made on 9 February 2024 with respect to costs was in two parts. The first was that Ms Tjiong pay the plaintiff's costs of a notice of motion filed by the new trustees on 1 September 2023; the second part related to the plaintiff's costs of the proceedings since that date. Order (3) provided that the new trustees be indemnified for their costs from the amount ordered to be paid into the trust pursuant to order (1).
4. Again on the assumption that the trust continues to exist, order (17) made on 16 August 2022, that Ms Tjiong pay the plaintiff's costs of the proceedings to date on the ordinary basis, with no right of indemnity or exoneration from the income or capital of the Burwood Trust, should stand. (So should order (18) dealing with the plaintiff's costs of a notice of motion, although that might be thought to be encompassed within order (17).)
5. As to the costs of the plaintiff with respect to stage 2 of the proceedings, the plaintiff was properly entitled to resist claims for indemnity made by Ms Tijong but was unsuccessful in doing so. Accordingly, the plaintiff should pay the first defendant's costs of the second stage of the trial. Alternatively, the plaintiff and the first defendant have each had a large measure of success on the appeal and cross-appeal and should bear their own costs.
6. The new trustees, joined as the second and third defendants, were properly entitled to be indemnified for their costs from the Burwood Trust, but those costs should not include the costs of their active involvement in the hearing in resisting claims for indemnity made by Ms Tjiong. Having identified the claims, in accordance with the orders made by the Court on 16 August 2022, any resistance to acceptance, which was to be dealt with by the Court, was properly and actively pursued by the plaintiff. The new trustees had no interest in the amount of the corpus, beyond their entitlement to recover their costs, an interest which did not entitle them to actively resist the claims for indemnity made by the previous trustee. They should be left to bear their own costs of representation at the second stage of the hearing. (The fact that the plaintiff adopted a largely secondary role appears to have been a function of the arrangements between the new trustees and the plaintiff as to representation, which resulted in lead counsel for the plaintiff in the first stage appearing for the new trustees in the second stage.)

Further background matters summarised

1. The following summary of some additional background facts draws heavily on the primary judge's findings, which I understand not to be controversial.
2. In late 2001, George had a stroke and was rendered incapable of looking after his affairs. George had executed a Power of Attorney on 29 March 1996 in favour of Richard and Katrina jointly. Richard was the "effective controller" of George's financial affairs from 24 December 2001 until George's death in January 2004. In January 2003, Richard sold George's property at Terrey Hills. Later that year, Katrina and Lindsay consented to the establishment of the George Tjiong Family Trust (GT Trust). Richard was the appointor of the GT Trust. In late-December 2003, prior to George's death, Richard transferred assets and cash of George in the total amount of approximately $1.35 million into the GT Trust.
3. On 18 March 2004, probate of George's will was granted to Richard.
4. Relations between Richard and both Katrina and Lindsay seriously deteriorated from around April 2004.
5. In late-January 2005, Richard established a discretionary trust called the Oninama Charitable Foundation with him as sole trustee. He then caused a sum of approximately $135,000 to be transferred from the GT Trust to the Oninama Charitable Foundation.
6. On 10 July 2007, Richard placed assets of George's estate and of the GT Trust under the management of Perpetual Trustee Co Ltd, without attempting to identify or separate the assets of the Burwood Trust.
7. During the period between 2005 and 2019, various proceedings were brought in the District Court and the Supreme Court relating to George's estate and the administration of the Burwood Trust and/or the GT Trust. To avoid duplication, I will defer summarising those proceedings until later in these reasons for judgment when addressing grounds 4 and 5 of Katrina's appeal, as some of the proceedings are relevant to her claims for indemnity (see below at [342]ff).
8. The first and second primary judgments and related orders which are the subject of the present proceedings stem from a statement of claim which Tzer filed in the Supreme Court on 24 July 2020.
9. Tzer claimed that George had breached his duties as trustee by mingling the assets of the Burwood Trust with his own following the sale of the Burwood Unit in 1996. He also claimed that Katrina became a bare trustee of the Burwood Trust on and from 16 June 2009 (being that date on which she was appointed administrator of George's estate and trustee of the GT Trust) and that she was obliged as bare trustee to restore the Burwood Trust property and "to keep proper accounts in respect of the Burwood Trust and produce them to any beneficiary when required". Tzer sought an order that Katrina "provide an account in respect of the Burwood Trust to the Court".

The first primary judgment summarised

1. In brief, the primary judge concluded that George's payments to Lindsay in July 1999 did not determine the Burwood Trust.
2. The primary judge noted at PJ1[64] that, by the end of the hearing, the parties were "largely agreed" as to the form of orders if the Court concluded that the Burwood Trust had not been determined by the payments made by George to Lindsay in July 1999. Accordingly, her Honour made orders for the appointment of independent trustees and other matters in accordance with short minutes of order which her Honour described at PJ1[9] as being, "in the main, agreed by the parties by the end of [the] hearing". Her Honour noted that Tzer had agreed to fund the appointment of an independent trustee in the amount of $30,000 (PJ1[66]).
3. In the course of explaining why the Court refused leave for Katrina to file an amended defence, her Honour noted at PJ1[79] that the question "of what had happened to the Burwood Trust and what would be required as part of taking an account were plainly in issue since the proceedings were first commenced in 2021".
4. The primary judge's reasons for concluding that the Burwood Trust had not been determined by the payments from George to Lindsay in July 1999 may be summarised as follows.
5. Her Honour concluded that the evidence fell short of establishing that the payments had been made pursuant to George's power of appointment. Given the effluxion of time, her Honour said at PJ1[98] that she placed greater weight on contemporaneous documents than on Lindsay's recollection of conversations he had had with George about those payments. Her Honour noted that George's letter to Lindsay which accompanied the payments made no reference to the sale proceeds of the Burwood Unit, or that George was using trust money. Rather, her Honour found that the payments were made pursuant to a promise given by George to Lindsay in 1993 to assist Lindsay in purchasing a property if he could get his life together.
6. Her Honour concluded at PJ1[109] that it was more likely that the funds in the XX8055 Account had already lost their character as Burwood Trust moneys by the time the payments were made to Lindsay. If any funds in that Account remained impressed with the Burwood Trust in July 1999, her Honour said that the principle in Re Hallett's Estate; Knatchbull v Hallett (1880) 13 Ch D 696 applied.

The second primary judgment summarised

1. Two broad issues were determined in the second primary judgment. The first related to the making of orders arising from the trustees' report concerning the value of the corpus of the Burwood Trust. The second involved the primary judge's determination of Katrina's claims for indemnity out of the Burwood Trust funds and the amount to be paid to the trustees.

(a) Determination of the corpus and income of the Burwood Trust

1. The primary judge described various procedural matters which occurred after publication of the first primary judgment. Her Honour referred to a report dated 7 February 2023, which was described by the trustees as an "interim report". It was noted that this report raised several issues or questions on which the assistance or advice of the Court was sought by the trustees prior to a final report being produced (PJ2[34]).
2. By notice of motion filed on 1 September 2023, the trustees sought the Court's advice concerning several questions relating to both the calculation of the corpus of the Burwood Trust and income from the date of receipt of the proceeds of sale of the Burwood Unit on 31 December 1996. The questions on which the Court's advice was sought are set out at PJ2[43]. Katrina also confirmed that her claims for indemnity were those set out at [16] of her written submissions dated 1 October 2023, as elaborated upon in an affidavit sworn by her instructing solicitor.
3. The primary judge recorded that, at the end of the hearing of the trustees' motion on 18 October 2023, she had notified the parties of her current thinking on several issues. The proceedings were adjourned to 25 October 2023 to enable the parties to confer and seek to agree on what issues remained.
4. When the hearing resumed on 25 October, the parties were agreed on some matters, including that the proceedings should be relisted for a final hearing on all remaining issues (which included Katrina's claims for indemnity), and that beforehand the trustees were to serve a revised report.
5. Further procedural directions were made on 27 October for the trustees to serve a report and the parties to provide further submissions on the remaining issues.
6. After the parties were unable to agree as to the next iteration of the trustees' report, the primary judge made directions on that subject on 17 November 2023. The directions included that the trustees serve their revised report by 22 November 2023 and that the report include a separate section on the corpus of the Burwood Trust and provide calculations in respect of certain specified matters, as well as summarise Katrina's claims for indemnity. Directions were also made concerning tracing of the amount applied by George in purchasing the Terrey Hills property.

(b) Katrina's claims for indemnity

1. As noted above, the primary judge's determination of some of Katrina's claims for indemnity against the Burwood Trust are challenged either by Katrina or by the cross-applicants.
2. To avoid duplication, I will defer summarising the relevant claims and the basis upon which they were determined in the second primary judgment to later in these reasons when I address grounds 4 and 5 of the notice of appeal (see below at [379]ff).

(a) Procedural rulings

1. Katrina requires leave to appeal from the second primary judgment which, in effect, implemented the orders made at the end of the first primary judgment on 16 August 2022. The orders made in conjunction with the first primary judgment are properly regarded as final orders, whereas the orders made at the end of the second primary judgment are properly regarded as interlocutory and therefore leave to appeal is required under s 101(2)(e) of the Supreme Court Act (see Derrawee Pastoral Company Pty Limited v McConochie [1995] NSWCA 123 at 2; Kara Kar Holdings Pty Ltd v Brookton Holdings Pty Ltd [1996] NSWCA 292 at 1; Kara Kar Holdings Pty Ltd v Brookton Holdings [1997] NSWCA 171 at 12-13 per Beazley JA; and Meehan v Glazier Holdings Pty Ltd (2002) 54 NSWLR 146; [2002] NSWCA 22 at [36] per Giles JA, with whom Sheller and Beazley JJA agreed).
2. Katrina also needs an extension of time to appeal from the first primary judgment.
3. As previously mentioned, the Court indicated at the hearing that it would determine these procedural matters and give reasons in due course.
4. The application for an extension of time was opposed by all three respondents. Katrina relied upon an affidavit by her instructing solicitor, Mr Andrew O'Brien, filed on 17 August 2024. He deposed that Katrina did not file an appeal after the first primary judgment was published because a further hearing was contemplated and it was considered more efficient to deal with all the matters together after the proceedings were ultimately finalised.
5. For reasons which are given below at [294]-[309], I consider that time should not be extended in respect of grounds 1 and 2, but there should be an extension of time to enable Katrina to raise ground 3.
6. Consequently, the first respondent's notice of motion filed on 1 August 2024 challenging the competency of the appeal in respect of those grounds of appeal which relate to the first primary judgment or associated orders should be allowed in respect of grounds 1 and 2, but dismissed in respect of ground 3.
7. Leave to appeal is not required in respect of the orders made in conjunction with the first primary judgment because, as explained above at [267], those orders are properly viewed as final orders.
8. Turning now to Katrina's belated oral application for leave to appeal in respect of the second primary judgment, in order for all appropriate matters in dispute to be resolved I consider that leave should be granted in respect of grounds 4 and 5 (which relate to Katrina's claims to an indemnity).

(b) Katrina's appeal

1. In brief, the grounds of appeal are as follows: 1. The primary judge erred in determining the second primary judgment on the basis of an account on a wilful default basis in circumstances where there was no pleading in Tzer's originating statement of claim that Katrina (or George) had failed to account for the assets of the Burwood Trust on a wilful default basis. Relatedly, the primary judge erred in making an order on 17 November 2023 that the trustees provide a report to the Court on the basis not of what money had in fact been received or come into the Burwood Trust, but rather on the basis of what was the value of the Burwood Trust (grounds 1(c) and (d)). 2. The primary judge erred in failing to find that, subject to the issue of Katrina's liability as a bare trustee, any order for repayment should have been on the basis of a liability to replenish funds depleted by George (ie, making restitution for the benefit received by George) rather than on the basis of valuing the corpus of the Burwood Trust as at 12 December 2023. Relatedly, the primary judge erred in ordering Katrina to pay the trustees an amount of $638,432 (grounds 2(a) and (b)). 3. The primary judge erred in not finding that the payments George made to Lindsay on 19 July 1999 terminated the Burwood Trust by distribution (ground 3). 4. The primary judge erred in rejecting Claims 1, 3, 6, 8, 10, 11, 12 and 13 (grounds 4 and 5).
2. In relation to ground 1 (and noting that grounds 1(a) and (b) were abandoned), Katrina submitted that the proceedings miscarried because, despite there being no finding of breach of trust, Katrina's liability as bare trustee of the Burwood Trust was determined by valuing the Burwood Trust as at December 2023 and deducting her claims for indemnity, whereas the appropriate process would have been to value the trust as at June 2009 (when she was appointed administrator of George's estate), and then seek an account on a common form basis of her receipts and disbursements up until the date of the hearing.
3. In her outline of written submissions on the appeal, Katrina described the central point in the appeal as being that the primary judge failed to consider the question of her liability as a bare trustee before finding that she was liable to pay $638,432 to the trustees. Relatedly, Katrina submitted that the further central point was that the primary judge should have found that, absent an accounting on a common form basis, Katrina, as a bare trustee, could not be liable to pay any amount to the trustees.

Consideration of grounds 1 and 2 in the appeal

1. Katrina requires an extension of time to challenge any aspect of the first primary judgment, noting that the orders made then are in the nature of final orders.
2. Grounds 1 and 2 were developed on the basis of the distinction between a taking of accounts in common form and a taking of accounts for wilful default or neglect. Essentially, Katrina complained that, although Tzer only sought an account in common form in his originating statement of claim, the primary judge erroneously treated the trustees' final report as if it were an account on a wilful default basis even though no allegation of wrongful default had been made against Katrina.
3. The differences between a taking of accounts in common form as opposed to on a wilful default basis were helpfully described in Meehan at [13]-[15] by Giles JA. Under a taking of accounts in common form, the accounting party accounts only for what has actually been received and disposed of. It is open to the other party to the accounting to challenge the accounting party's account by asserting that more was received or that less was disposed of.
4. In contrast, under a taking of accounts on the basis of wilful default or neglect, the accounting party must account not only for what has been received, but also for what should have been received, in the sense of what would have been received if the relevant duties of the accounting party had properly been discharged. This is a more onerous form of accounting and may result in the accounting party having to pay more to the other party to the accounting than under an account in common form.
5. Conduct which is a breach of trust is not necessarily of itself sufficient to justify accounting on the basis of wilful default (see Meehan at [65]). There may be a breach of trust which is not a wilful default. Merely because a trustee fails to maintain adequate books and records, which failure amounts to a breach of trust, this does not mean that something not received as a result of that breach constitutes wilful default. Even where there is inadequate recordkeeping by the trustee, all assets of the trust may nevertheless have been got in and properly dealt with (see Meehan at [66]).
6. The taking of accounts is dealt with at some length in Pt 46 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR).

Consideration and determination of ground 3 in the appeal

1. As mentioned above, ground 3 of the notice of appeal relates to the issue whether the Burwood Trust had terminated in July 1999.
2. Her Honour's reasons for rejecting Katrina's claim that the July 1999 payments to Lindsay determined the Burwood Trust by distribution are summarised at [242]-[245] above. Katrina does not need to obtain leave to appeal to raise ground 3 because her Honour's rejection of Katrina's primary position was made in the first primary judgment, which is a final judgment for reasons explained above.
3. Katrina advanced nine contentions in support of her claim that the primary judge erred in finding that the evidence failed to establish that George intended to, and did in fact, distribute the Burwood Trust property pursuant to his power of appointment when he made the payments to Lindsay in July 1999. Those contentions are as follows: 1. Her Honour erroneously discounted the telephone conversation which Lindsay said he had had with his father in 1999 regarding Lindsay's interest in buying the property in the Northern Territory, because it was never claimed that Lindsay was not a truthful witness or that the conversation did not occur and what Lindsay claimed George said to him was in fact true, namely, George did have some money set aside for the care of Kwat and she was being cared for by the family. 2. Her Honour erroneously discounted George's letter to Lindsay in July 1999 (which also enclosed the two bank cheques) on the basis that it made no reference to the proceeds of sale of the Burwood Unit. 3. Her Honour erred in concluding that this letter, together with Lindsay's evidence, suggested that the payments harked back to George's promise to Lindsay in 1993 that he would assist Lindsay to buy a property if Lindsay could get his life together. That promise was not inconsistent with the possibility that when it came time for George to implement his promise, he did so by exercising his power of appointment and distributing money from the Burwood Trust to Lindsay. 4. Her Honour incorrectly found at PJ1[100] that even if Lindsay's evidence that George said he had money set aside for Kwat was accepted, that could have been a reference to money held by George personally rather than the proceeds of the sale of the Burwood Unit. There was no evidence of any other fund that George held in 1999 for Kwat. 5. Her Honour erred in failing to take into account that George asked Lindsay to keep the fact of the payments to himself. In particular, the primary judge's finding at PJ1[111]-[112] that George's request for secrecy could equally be explained on the basis that George wanted Lindsay to keep the payments secret from Katrina is inconsistent with what George told Lindsay, namely that Lindsay should leave matters to him and that he "will tell Katrina". 6. Her Honour failed to take proper account of the contents of George's will dated 8 February 1992 and his 2001 will. In the 1992 will, he provided that Kwat should be permitted to live in the Burwood Unit and that, if she ceased to do so, the Unit would be held on trust in accordance with cl 3 of that will, which left the residue of his estate to Katrina and Lindsay equally. In his 2001 will, George left the whole of his estate to Katrina and Lindsay equally. In these circumstances, Katrina contended that if the payments to Lindsay were from George's own funds, he would have tried to even things up between Katrina and Lindsay in the 2001 will. His failure to do so is explained on the basis that the payments to Lindsay were from funds in the Burwood Trust, rather than from George's personal moneys. 7. Her Honour erred in not giving sufficient weight to the fact that George said at the end of his letter to Lindsay that he could now "die in peace". It should have been inferred that George had disposed of the balance of the Burwood Unit proceeds, plus some of his own moneys, in providing for Lindsay's future; hence he had carried out Hok's wishes in the way George interpreted them. 8. Her Honour incorrectly concluded at PJ1[109] that it was more likely that the funds in the XX8055 Account had already lost their character as Burwood Trust moneys by July 1999. In concluding, by reference to various transactions concerning that account during the period between 1996 to 2001, that George used moneys from that account for non-trust purposes, the primary judge conflated dealings with the account after the payments to Lindsay in July 1999 with prior dealings. 9. Her Honour erred in purporting to apply the rule in Re Hallett in reverse by concluding that George should be presumed to be drawing his own money out of the mixed fund in the XX8055 Account when he made the payments to Lindsay. This approach failed to recognise that George actively sought to maintain the credit balance of that account at a figure over $168,331.06 from December 1996 to July 1999, and then disregarded that balance after July 1999 when the payments were made.

Consideration and determination of grounds 4 and 5 in the appeal

1. These grounds relate to Katrina's claims for indemnity. Some of those claims relate to previous litigation, while others concern the cost of correspondence and other related matters. Accordingly, it is desirable to summarise that earlier relevant litigation and the other matters to which the claims for indemnity relate. I will then summarise the basis upon which the relevant claims were determined by the primary judge in the second primary judgment, including Claims 4, 7 and 9, which are challenged in the cross-appeal.

The earlier litigation and some related events summarised

1. On 11 February 2005, Katrina and Lindsay commenced proceedings in the Supreme Court (no. 1453/2005) seeking orders which included the removal of Richard as executor of George's estate and as trustee of the GT Trust (2005 Removal Proceedings). They sought to revoke the grant of probate of George's will (of whom they were the sole beneficiaries) to Richard. They also sought orders to have Richard reimburse the GT Trust for legal costs regarding a bogus medical negligence claim made against George's estate. Furthermore, they sought repayment to the GT Trust of the amount of $134,945.78 which Richard had paid over in January 2005 to the Oninama Charitable Foundation.
2. In 2006, and well before the 2005 Removal Proceedings trial began, Soei (George and Richard's sister) commenced separate proceedings in the Equity Division as executrix of her mother Kwat's estate (no. 2078/06). She claimed that the Burwood Unit was held by George on resulting trust for Hok and that, on Hok's death, his beneficial interest passed, on his intestacy, to Kwat. Katrina and Lindsay, as sole beneficiaries of George's estate, were joined as parties to the proceedings and were the active defendants. Richard, as then executor of George's estate, filed a submitting appearance.
3. On 4 March 2009, Palmer J delivered reasons for judgment in Soei's proceedings (see Chang v Tjiong [2009] NSWSC 122). Palmer J held that George's failure to keep the trust funds separate was a breach of trust but one for which no remedy was presently required. His Honour left open the question whether George had exercised the power of appointment. His Honour rejected the claim that the Burwood Unit and the proceeds of its sale were held by George on trust for his father alone and absolutely, with the consequence that, upon George's death, they were not held wholly for the benefit of Kwat's estate.
4. At [7], Palmer J summarised Katrina and Lindsay's joint position as follows: 1. There was insufficient evidence to establish that George held the Burwood Unit on trust for Hok. 2. Alternatively, if there was such a trust, there was no breach of trust by George in renting out the Unit until December 1996 when he sold it, because the terms of the Burwood Trust permitted Hok and Kwat to live there for as long as they wished and, thereafter, the proceeds of sale were for the benefit of such of Hok's family as George should appoint.

The primary judge's reasons for determining the relevant claims for indemnity summarised

1. It is desirable first to outline the primary judge's description of the relevant legal principles concerning a trustee's right of indemnity, which her Honour said at PJ2[92] were not in issue. I did not understand the parties in the appeal to challenge that statement. Although both Katrina and Tzer challenged her Honour's determination of some claims for indemnity, they did not do so on the basis that her Honour had misstated the relevant legal principles.
2. In brief, the relevant legal principles are as follows: 1. Where a trustee acts within his or her power, the trustee is entitled to an indemnity out of the trust estate, whether that be by way of reimbursement or exoneration, depending on whether the relevant liability of the trust has been discharged from the trustee's personal property or by applying the trust property (see Chief Commissioner of Stamp Duties for New South Wales v Buckle (1998) 192 CLR 226; [1998] HCA 4 at [47]). 2. The right of indemnity is recognised in s 59(4) of the Trustee Act 1925 (NSW), which provides: (4) A trustee may reimburse himself or herself, or pay or discharge out of the trust property all expenses incurred in or about execution of the trustee's trusts or powers. 1. Where costs are incurred by a trustee in legal proceedings in his or her capacity as trustee, r 42.25 of the UCPR applies. It provides (noting the exception in r 42.25(2)(b)): 42.25 Costs of trustee or mortgagee (1) Subject to subrule (2), a person who is or has been a party to any proceedings in the capacity of trustee or mortgagee is entitled to be paid his or her costs in the proceedings, in so far as they are not paid by any other person, out of the fund held by the trustee or out of the mortgaged property, as the case may be. (2) The court may order that the person's costs not be so paid if - (a) the trustee or mortgagee has acted unreasonably, or (b) in the case of a trustee, the trustee has in substance acted for his or her own benefit rather than for the benefit of the fund. 1. In respect of the exception in r 42.25(2)(b), it is desirable to set out PJ2[97], which does not appear in the version of the judgment published on Caselaw, but does appear in the certified copy contained in the appeal papers: [97] The exception in subrule (2)(b) reflects equity's position that a trustee's prima facie right of indemnity in relation to costs incurred in proceedings may not apply where the claim and the trustees' defence (or a claim by trustees) was for the trustees own personal benefit rather than for the benefit of the trust: Miller v Cameron (1936) 54 CLR 572 at 579 per Latham CJ; [1936] HCA 13. 1. For a trustee to be entitled to indemnity for payment of expenses, there must be a connection between the relevant expenses and the trust business (see Buckle at [47] and other cases referred to by the primary judge at PJ2[98]). 2. A trustee is only entitled to an indemnity for costs and expenses that are properly incurred (Re Beddoe; Downes v Cottam [1893] 1 Ch 547 at 560 per Bowen LJ). 3. A trustee who acts in litigation without taking judicial advice does so at their own risk as to costs (Re Beddoe at 555). 4. Failing to take judicial advice and instead relying only on a lawyer's advice may render unreasonable a trustee's decision to defend or commence proceedings, which could engage the exception in r 42.25(2)(a) of the UCPR and deprive the trustee of a costs indemnity.

Claim 1: Costs of the 2005 Removal Proceedings (1453/2005): $116,470.50

1. Katrina claimed an indemnity of $116,470.50, calculated as 11.76% of the $990,395.42 in indemnity costs which Richard was ordered to pay to Katrina and Lindsay in the 2005 Removal Proceedings. She submitted that the percentage of 11.76% corresponds with the proportion of George's estate and the GT Trust attributable to the Burwood Trust funds.
2. The primary judge refused this claim for two reasons. First, there was no evidence that Katrina had ever paid the costs claimed or that she was still liable to pay them (in circumstances where her Honour found that a claim against Katrina for any unpaid fees would now be statute barred, as contended by the trustees).
3. Secondly, the primary judge rejected Katrina's claim that the costs of the 2005 Removal Proceedings ensured the due administration of George's estate and related trusts, which in turn benefitted the Burwood Trust. In particular, her Honour held at PJ2[125] that the 2005 Removal Proceedings were not about the Burwood Trust. Accordingly, Katrina's costs were not incurred in the proper performance of her duties or exercise of her powers as trustee of the Burwood Trust.
4. Katrina challenges this determination in ground 4(a) of the notice of appeal.

Claim 2: Net costs of proceedings 2010/406799 in the District Court: $599.92

1. On 18 June 2013, Katrina was sent a bill of costs in the total amount of $64,300.75 for legal services provided to her concerning the District Court proceedings.
2. Katrina claimed indemnity in respect of a proportion of those costs (ie, $599.92) on the basis that the assets the subject of this administration claim included assets found to be assets of the Burwood Trust. The primary judge rejected this claim for the same reasons concerning her rejection of Claim 1.
3. The determination of Claim 2 is not challenged; hence, nothing more needs to be said about it.

Claim 3: Costs of Alternate Will Proceedings 2011/098337 in Supreme Court: $99,429.10

1. Katrina claimed indemnity for the whole of these costs because she claimed that the proceedings related solely to the Burwood Trust. A bill of costs was prepared in the amount of $99,429.10.
2. The primary judge refused Claim 3 on the basis that, while the proceedings brought by Soei related to the Burwood Trust, her Honour was not satisfied that Katrina had established that the costs were incurred in carrying out her duties as trustee of the Burwood Trust. That was because Katrina elected to join the proceedings and she appeared in her capacity as the administrator of George's estate, where other contradictors were available to defend the proceedings. Her Honour also noted at PJ2[141] that Katrina was at risk that she would not recover her costs in circumstances where she had not sought judicial advice before electing to defend the proceedings.
3. This determination is challenged in ground 4(b) of the notice of appeal.

Claim 4: Costs of responding to correspondence from Richard Tjiong: $4,686

1. Katrina sought indemnity for the costs of responding to correspondence she received in 2014 from Richard's solicitor (Peter Kennedy), which she said solely related to the Burwood Trust.
2. The trustees conceded this claim before the primary judge, but it was opposed by Tzer on the basis that no costs agreement had been produced, nor any receipt showing payment of a tax invoice.
3. The primary judge allowed this claim in light of the trustees' concession and subject matter of the correspondence.
4. This determination is challenged in ground 1 of the draft notice of cross-appeal.

Claim 5: Fees paid to Macquarie Bank for missing statement pages: $350

1. Katrina also sought indemnity in the amount of $350 for costs incurred by her in obtaining missing statement pages for the XX8055 Account. This claim was allowed by the primary judge and has not been challenged.

Claim 6: Fees paid to Nevett Ford, Lawyers of Ballarat for advice about the Burwood Trust: $5,569.30

1. Katrina also sought indemnity in the amount of $5,569.30, being the cost of advice she obtained from a Ballarat law firm in March 2015.
2. The claim was refused by the primary judge on the basis that, having regard to the terms of the legal advice itself, the advice was for Katrina's personal benefit.
3. This determination is challenged in ground 4(h) of the notice of appeal.

Claim 7: Fees for advice from counsel on the Burwood Trust and s 63 of the Trustee Act: $22,000

1. Katrina also sought indemnity in the amount of $22,000 for the fees she incurred in 2016 in obtaining advice from counsel in relation to the Burwood Trust, as well as proposed proceedings for judicial advice under s 63 of the Trustee Act. She claimed to be entitled to 100% of those fees on the basis that the advice related solely to the Burwood Trust. Although the claim was opposed by both the trustees and Tzer, the primary judge allowed the claim.
2. The primary judge found that counsel's advice was directed to whether Katrina should seek judicial advice in relation to the Burwood Trust. Her Honour was satisfied that the costs were incurred as part of, or in connection with, the proper performance of Katrina's duties or exercise of her powers as trustee of the Burwood Trust. Finally, her Honour was satisfied that it was not necessary for there to be proof of payment for a right of indemnity to arise and, although no costs agreement had been produced, a tax invoice issued in respect of that advice was sufficient to demonstrate that there was a current liability.
3. The determination of Claim 7 is challenged in ground 2 of the draft notice of cross-appeal.

Claim 8: Costs of proceedings 2017/222385 in the District Court: $13,805.73

1. Katrina also sought costs of proceedings no. 2017/222385 in the District Court in the amount of $13,805.73. Those proceedings related to the recovery of costs orders made against Richard in the 2005 Removal Proceedings. The costs as assessed were $13,805.73, including the costs of the cost assessment. Katrina sought to recover all those costs as an indemnity on the basis that they were linked to the due administration of George's estate and the GT Trust (in which the Burwood Trust funds were embedded).
2. The claim for indemnity was refused by the primary judge, who adopted and repeated her reasons for refusing Claim 1.
3. This determination is challenged in ground 4(f) of the notice of appeal.

Claim 9: Fees for responding to correspondence from Griffin Lawyers of Adelaide: $25,850

1. Katrina also claimed an indemnity in the amount of $25,850 for costs of responding to lengthy letters (particularly that dated 16 January 2018) issued by Adelaide lawyers acting for Soei regarding the Burwood Trust. She claimed indemnity for the whole of these costs from the Burwood Trust on the basis that the correspondence related solely to matters concerning the Trust and threatened legal proceedings.
2. Although both the trustees and Tzer opposed Katrina's claim, the primary judge accepted the claim. Her Honour found that the substance of the letter dated 16 January 2018 related to the Burwood Trust. Although Katrina's primary position was that the Burwood Trust had terminated so that she ceased to be the trustee, she accepted that she had an obligation as bare trustee to investigate the Trust.
3. The primary judge's acceptance of Claim 9 is challenged in ground 3 of the draft notice of cross-appeal.

Claim 10: Costs of proceedings 2019/061978 in the Supreme Court: $8,840.38

1. Katrina also sought indemnity in the amount of $8,840.38 concerning costs of proceedings no. 2019/061978.
2. This claim was refused on the same basis as that applying to the refusal of Claim 1. The primary judge also emphasised that, by this point in time, Katrina's stated position was that the Burwood Trust had terminated.
3. This determination is challenged in ground 4(c) of the notice of appeal.

Claim 11: Costs of proceedings 2019/211113 in the Supreme Court: $70,576

1. Katrina also sought indemnity in the amount of $70,576 for the whole of her costs incurred in further proceedings (no. 2019/211113) which were commenced by Richard in the Supreme Court against Katrina and Lindsay for an alleged breach of duty in relation to the Burwood Trust. Richard sought an order for the taking of accounts as well as Katrina's removal as trustee. These proceedings were dismissed by Parker J because Richard had been declared bankrupt.
2. The primary judge upheld the objections of the trustees and Tzer to this claim. Her Honour did so for two reasons: 1. Katrina was at risk of paying costs herself in circumstances where she took steps to defend the proceedings without obtaining judicial advice; and 2. although the proceedings related to the Burwood Trust, the primary judge was not satisfied that the costs were incurred by Katrina as part of, or in connection with, the proper performance of her duties or exercise of her powers as trustee of the Burwood Trust because her stated position at this time was that the Burwood Trust had been determined; namely, she had disclaimed her role as trustee.
3. This determination is challenged in ground 4(d) of the notice of appeal.

Claim 12: Costs of proceedings 2019/278508 in the Supreme Court: $17,358.94

1. Katrina sought indemnity in the amount of $17,358.94 in respect of the third set of proceedings commenced by Richard in the Supreme Court in 2019 against Katrina and Lindsay. Richard sought to set aside orders and findings made by Parker J in the 2005 Removal Proceedings. In November 2021, an invoice was issued in the amount of $147,610, including disbursements and GST, for the costs of these proceedings.
2. The claimed indemnity of $17,358.94 represented 11.76% of the costs of the proceedings. The primary judge refused the claim for the same reasons that she refused Katrina's claim in respect of a proportion of the costs of defending the first set of proceedings brought by Richard against Katrina and Lindsay (ie, Claim 10).
3. This determination is challenged in ground 4(e) of the notice of appeal.

Claim 13: Costs of engaging Somerville Legal, insolvency specialists: $2,913.14

1. Finally, Katrina sought indemnity in the amount of $2,913.14, being a proportion of the costs of engaging insolvency specialists in an attempt to recover the costs of the 2005 Removal Proceedings from Richard.
2. The claim was refused on the same basis as that applying to the refusal of Claims 1 and 10.
3. This determination is challenged in ground 4(g) of the notice of appeal.
4. To sum up, Katrina succeeded below in four of her thirteen claims for indemnity and failed in the remainder. As noted, some of these rulings are challenged either in the appeal or the cross-appeal.

Claim 1: Costs of the 2005 Removal Proceedings (1453/2005): $116,470.50 (ground 4(a))

1. In brief, Katrina contended that the primary judge erred in refusing Claim 1 on the basis that there was no costs agreement when there was in fact a cost assessment of the 2005 Removal Proceedings, which resulted in the Supreme Court making an order on 2 August 2017 that Richard pay Katrina and Lindsay $990,395.42. Katrina also contended that the primary judge erred in finding that this particular claim was now "statute barred", presumably referring to the Limitation Act 1969 (NSW).
2. Katrina claimed that the 2005 Removal Proceedings were brought by her and Lindsay in order to secure proper administration of assets held on trust, including the corpus of the Burwood Trust which was embedded in the assets and funds of George's estate and the GT Trust. Katrina challenged the primary judge's finding that she brought the 2005 Removal Proceedings (together with Lindsay) to advance their own personal interests as sole beneficiaries of George's estate, and not to secure due administration of trust assets.
3. For the following reasons, I consider that the primary judge was correct to reject Claim 1.
4. First, it may be accepted that Claim 1 is not defeated merely because Katrina was not the trustee of the Burwood Trust when the 2005 Removal Proceedings were commenced in 2005. She was not even aware of the existence of the Burwood Trust at that time. Katrina became the bare trustee of the Burwood Trust when consent orders were made on 16 June 2009, at which time she also replaced Richard as trustee of the GT Trust and the Oninama Charitable Foundation and as administrator of George's estate. Claim 1 does not rely on Katrina's status as trustee of the Burwood Trust. Rather, it is based on her status as a beneficiary in bringing (together with Lindsay) the 2005 Removal Proceedings, as was made clear at [9] of Katrina's written submissions below dated 6 December 2023.
5. Secondly, I accept that a trustee's right to be indemnified out of the trust assets for expenses and liabilities properly incurred in the execution of the trust (as to which see Naaman v Jaken Properties Australia Pty Ltd [2025] HCA 1 at [1] per Gageler CJ, Gleeson, Jagot and Beech-Jones JJ) can extend beyond a trustee and include a beneficiary who brings proceedings to compel performance of a trust or its due administration. So much was recognised by Kekewich J in Re Buckton, Buckton v Buckton [1907] 2 Ch 406 at 413-415. One of the three classes of cases identified by Kekewich J where costs of proceedings may be recovered from a trust fund is where beneficiaries have brought proceedings concerning the construction of a trust or its administration, which application could have been, but was not, brought by a trustee.

Claim 3: Costs of Alternate Will Proceedings 2011/098337 in Supreme Court: $99,429.10 (ground 4(b))

1. This claim relates to the proceedings commenced by Soei following her alleged discovery of another will by Hok (see at [359]-[360] above).
2. Katrina contends that the primary judge erred in not allowing her claim for indemnity in respect of this matter because the costs were incurred by her in defending or protecting the Burwood Trust. Katrina contends that it did not matter that she had joined the proceedings merely in her status as administrator of George's estate. That is because she says that this status gave her control over the assets of the Burwood Trust as embedded in the totality of George's estate, the GT Trust and the Oninama Charitable Foundation.
3. I do not accept those contentions.
4. The proceedings to which this claim for indemnity relates are proceedings which were commenced in the Supreme Court in 2011 by Soei. As noted above at [359], Soei contended that in mid-July 2009 she had found an alternative will by Hok. The proceedings were discontinued and White J gave reasons for judgment on costs on 23 December 2011 (Chang v Tjiong; Estate of Hok Njan Tjiong [2011] NSWSC 1614).
5. In my view, the primary judge correctly rejected Claim 3. The legal costs incurred by Katrina, having elected to be joined as a defendant to the proceedings in her capacity as executor (more correctly, administrator) of George's estate, occurred in circumstances where she was an equal beneficiary with Lindsay under George's 2001 will. Accordingly, she had a personal interest in resisting Soei's application for letters of administration with the Torn Will annexed, which would have made Soei's mother, Kwat, the primary beneficiary of Hok's estate (the assets of which likely would have included the Burwood Unit), from which Soei stood to benefit upon Kwat's intestacy. Significantly, as White J found at [9], Katrina had elected to be joined as a defendant and entered her appearance in the proceedings in her capacity as administrator of George's estate and not as trustee of the Burwood Trust. Any benefit to the Burwood Trust flowing from Katrina's participation in the proceedings is too remote (see at [429] above).
6. As to the primary judge's statement at PJ2[141] concerning Katrina's failure to seek judicial advice in her capacity as trustee of the Burwood Trust before joining the proceedings, her Honour should not be understood as saying that a trustee must always obtain judicial advice before commencing or defending proceedings. Rather, her Honour was simply stating that the failure to obtain judicial advice placed Katrina at risk of not recovering her costs. That statement is consistent with authorities such as Ludwig v Jeffery (No 4) [2021] NSWCA 256; (2021) 394 ALR 360 at [84] per Emmett AJA, with Meagher and Brereton JJA agreeing. As Emmett AJA explained there, there is no legal obligation on a trustee to seek judicial advice before commencing or defending proceedings, but it is prudent to do so, so as to avoid an argument as to whether it was reasonable to commence or defend those proceedings.

Claim 6: Fees paid to Nevett Ford, Lawyers of Ballarat for advice about the Burwood Trust: $5,569.30 (ground 4(h))

1. For the following reasons, I would uphold this ground of appeal. Nevett Ford's written legal advice was in evidence in the form of a letter dated 16 March 2015. The advice summarises the proceedings before Palmer J in 2009, including his Honour's findings concerning the existence and terms of the Burwood Trust. It notes that the question whether George had exercised his power of appointment in favour of either Katrina or Lindsay was not explored in those proceedings. The advice then addresses whether or not there is evidence that George breached his duties as trustee and whether he exercised his power of appointment before his death. In evident response to Katrina's request as to her options as administrator of George's estate and trustee of the Burwood Trust, the advice then addresses whether or not Katrina should seek a judicial opinion. The advice was that this option should not be pursued for various reasons, including that any such application by Katrina would amount to a concession on her part that the trust moneys remained intermingled with George's personal assets when he died and she might be required to pay out the full amount of the trust funds without being able to argue that George had exercised his power of appointment.
2. I do not consider that the advice was, in substance, for Katrina's personal benefit and not for the benefit of the Burwood Trust in circumstances where, at the time the advice was provided, she did not deny that she was the bare trustee of the Burwood Trust, a position which she only subsequently asserted. The advice is not dissimilar to the legal advice Katrina subsequently obtained in 2016 which is the subject of Claim 7. The primary judge allowed that claim and, for reasons which I will give below, the cross-appellants' challenge to that ruling should be rejected.
3. In my respectful view, claims 6 and 7 stand or fall together. Accordingly, I would uphold Katrina's challenge to claim 6.
4. Katrina's success in respect of ground 4(h) will require an adjustment to be made to the amount she must pay to the trustees of the Burwood Trust.

Claim 8: Costs of proceedings 2017/222385 in the District Court: $13,805.73 (ground 4(f))

1. Katrina's written submissions in the appeal did not address ground 4(f). In oral submissions, Katrina's senior counsel acknowledged this omission and simply said that Claim 8 relates to proceedings in the District Court in respect of the 2005 Removal Proceedings and that the claim ought to be upheld (without further elaboration).
2. Ground 4(f) is rejected for the same reasons as those given above in respect of ground 4(a) (which relates to Claim 1).

Claim 10: Costs of proceedings 2019/061978 in the Supreme Court: $8,840.38 (ground 4(c))

1. This claim is rejected for similar reasons to those given above for refusing Claim 1.

Claim 11: Costs of proceedings 2019/211113 in the Supreme Court: $70,576 (ground 4(d))

1. Katrina contended on the appeal that the primary judge erred in not accepting Claim 11 in circumstances where she applied to the Federal Circuit Court to have the proceedings dismissed because Richard had declared himself bankrupt. It was further contended that Katrina was entitled to an indemnity from the assets of the Burwood Trust, notwithstanding that her actions in having Richard's proceedings dismissed were done without her first having obtained judicial advice.
2. For the following reasons, I consider that ground 4(d) should be upheld.
3. As noted above, there is no absolute rule that a trustee must seek judicial advice if their conduct as a trustee is to be assessed as reasonable (see Ludwig at [84]).
4. The amount of $70,576 the subject of Claim 11 is supported by a bill of costs and tax invoice dated 10 December 2021 which Katrina received from her solicitor. That represents the total amount of legal fees incurred by Katrina in respect of Richard's Supreme Court proceedings no. 2019/211113 and covers the period from 8 July 2019 to 13 August 2020, on which day Parker J heard and determined Katrina's motion to have the proceedings dismissed because Richard was a bankrupt. Parker J dismissed Richard's proceedings and made no order as to costs. Katrina may not have sought judicial advice before moving to have Richard's proceedings dismissed, but it is self-evident from the lengthy Bill of Costs and tax invoice dated 10 December 2021 that she sought and obtained advice from her legal representative on the matter.
5. I consider that Katrina acted reasonably and in her capacity as trustee of the Burwood Trust in having the proceedings set aside.
6. I respectfully disagree with the primary judge that Katrina's costs in those proceedings were not incurred in connection with the proper performance of her duties or exercise of her powers as trustee of the Burwood Trust because her primary position at that time was that the Burwood Trust had been determined by the July 1999 payments. Richard's statement of claim, as summarised at [410] above, was squarely directed to the Burwood Trust and to Katrina's conduct in her capacity as trustee of that Trust. Notwithstanding that Katrina's "primary position" was that the Burwood Trust had been determined by the July 1999 payments, it was reasonable for her, as a defendant to the proceedings, to take legal advice and then seek, successfully, to have Richard's proceedings dismissed. I consider that her conduct was in connection with the proper performance of her duties and powers as trustee of the Burwood Trust.

Claim 12: Costs of proceedings 2019/278508 in the Supreme Court: $17,358.94 (ground 4(e))

1. As noted above, this claim for indemnity relates to the third set of proceedings brought by Richard against Katrina and Lindsay in 2019. Richard again sought to have various orders made by Palmer J in the 2005 Removal Proceedings set aside.
2. Katrina correctly acknowledged that Richard's proceedings were brought against her and Lindsay in their personal capacities. Moreover, in oral address on the appeal, Katrina's senior counsel accepted that there was "some force" in the primary judge's reasoning in respect of Claim 12, namely that Katrina's claim for an indemnity as trustee was inconsistent with her primary position that the Burwood Trust no longer existed.
3. In circumstances where Richard's proceedings were directed exclusively to the 2005 Removal Proceedings, I reject ground 4(e) for the same reasons given above in respect of ground 4(a) (Claim 1).

Claim 13: Costs of engaging Somerville Legal, insolvency specialists: $2,913.14 (ground 4(g))

1. As noted above at [416], this claim is tied to Claims 1 and 10 and is rejected for similar reasons.

Ground 5

1. Ground 5 simply asserts that the primary judge should have accepted Katrina's claims for indemnity in the total amount of $334,961.17, which is the total sum of the amounts claimed by her by way of indemnity in the appeal.
2. In circumstances where Katrina has succeeded in her appeal only on grounds 4(d) and (h), ground 5 should be upheld to the extent that the total amount to which Katrina is entitled to by way of indemnity is $129,031.30 (ie, $52,886 plus $76,145.30).

The cross-appeal

1. As noted above, by way of cross-appeal, the determination of Claims 4, 7 and 9 in Katrina's favour are challenged, together with the primary judge's conclusion at PJ2[192] and [193] regarding the amount in the sum of $52,886 which her Honour found that Katrina was entitled to by way of indemnity.

Determination of cross-appeal in respect of Katrina's claims for indemnity

Claim 4: Costs of responding to correspondence from Richard Tjiong: $4,686.00 (ground 1 of draft notice of cross-appeal)

1. This claim is summarised at [390] above.
2. Putting to one side the trustees' unexplained change of position concerning this claim, I reject the challenge to Claim 4. The bill of costs dated 14 December 2015 was adduced in evidence. It expressly relates to the legal fees of both Katrina's solicitor and counsel "in relation to the so called Burwood Trust" and is sufficient evidence of her liability.

Claim 7: Fees for advice from counsel on the Burwood Trust and s 63 of the Trustee Act: $22,000 (ground 2 of draft notice of cross-appeal)

1. This claim is summarised at [398]-[400] above.
2. The cross-appellants contended that the primary judge erred in accepting Claim 7 because Katrina had not established that there was a present liability to pay counsel's invoice. They contended that production of the tax invoice is not evidence of the obligation to pay and that, in any event, the tax invoice was addressed to Katrina's solicitors and not to Katrina herself. They added that there was no evidence that Katrina's solicitors had issued a corresponding tax invoice to Katrina. They also contended that for liability to be established it was necessary to produce the relevant costs agreement pursuant to which a costs invoice was issued so as to determine the liability. Finally, they contended that counsel's advice to Katrina was for her benefit in her personal capacity and not in her capacity as trustee.
3. For the following reasons, I reject this ground. Katrina sought advice from counsel on the question whether or not she should seek judicial advice in relation to the Burwood Trust and regarding the current status of the Burwood Trust. Counsel issued a tax invoice for $27,500 inclusive of GST on 10 June 2016 in respect of his advice on these matters.
4. It is unclear why Katrina's claim for indemnity is in the amount of only $22,000 and not $27,500, which is the total amount of counsel's tax invoice. Having regard to the terms of PJ2[153] and [154], the primary judge was aware of this discrepancy and allowed the claim in the amount of $22,000 for reasons given by her Honour at PJ2[158].
5. No error has been established in respect of her Honour's determination of Claim 7. I respectfully agree with the primary judge that counsel's tax invoice was sufficient to establish a current liability, and it was unnecessary for Katrina also to produce a costs agreement for that amount. It is also evident from the terms of the tax invoice that the advice related to Katrina's performance of her duties as trustee of the Burwood Trust. For these reasons, I reject this ground of the cross-appeal.

Claim 9: Fees for responding to correspondence from Griffin Lawyers of Adelaide: $25,850 (ground 3 of draft notice of cross-appeal)

1. This claim is summarised at [404]-[406] above.
2. The cross-appellants challenged the primary judge's determination on similar grounds to those relating to Claims 1 and 7. In brief, they contended that Claim 9 should be rejected because no costs agreement or proof of payment of the tax invoice was adduced in evidence. They also contended that Katrina's claim was inconsistent with her primary position that the Burwood Trust had been determined by the July 1999 payments.
3. I do not accept those submissions. The primary judge did not err in granting Claim 9 on the basis that, despite Katrina's primary position, she had accepted that she had an obligation as bare trustee of the Burwood Trust to investigate the Trust.
4. As to the contentions concerning the absence of a costs agreement or proof of payment, I repeat what is set out above in respect of these matters under Claim 7. Katrina's liability to pay the amount of $25,850 is adequately established by the terms of Katrina's solicitor's Bill of Costs dated 28 January 2018, most of which relates to fees claimed by Katrina's counsel for legal advice.
5. Having regard to the cross-appellants' failure to disturb any of the three claims challenged by them in the cross-appeal, there is no basis for disturbing the primary judge's conclusion that Katrina was entitled to the sum of $52,886 by way of indemnity, adding, however, the amount of $76,145.30 in light of Katrina's success on grounds 4(d) and (h) of her appeal.

Costs

1. The parties should seek to agree costs of the appeal and the proceedings below in the light of the reasons above. If agreement cannot be reached within 14 days hereof, each party should within that time file and serve a brief outline of submissions not exceeding five pages, together with any supporting material. Costs will then be determined by the Court on the papers.

Conclusion

1. For all these reasons, I propose the following orders: 1. Allow the first respondent's notice of motion filed on 1 August 2024 in relation to its objection to the competency of grounds 1 and 2 of the notice of appeal filed on 8 May 2024, but otherwise dismiss the notice of motion. 2. Refuse an extension of time to the appellant to appeal those parts of the judgment in Chang v Tjiong [2022] NSWSC 1092 to which grounds 1 and 2 of the notice of appeal filed on 8 May 2024 relate, but grant an extension of time in respect of ground 3 of the notice of appeal. 3. Grant leave to the appellant to appeal in respect of grounds 4 and 5. 4. Allow the appeal in respect of grounds 4(d) and (h), and ground 5 in part, but otherwise dismiss the appeal. 5. Set aside order 1 dated 9 February 2024 and in lieu thereof make the following order: 1. Order that that the first defendant pay to the second and third defendants as the trustees of the Burwood Trust the amount of $562,286.81 (Amount), representing the corpus and income of the Burwood Trust from the date of the receipt of the proceeds of sale of xx Street, Burwood in the State of New South Wales (Burwood Unit) being 31 December 1996 (the date of receipt of the final payment with respect to the proceeds of sale of the Burwood Unit) to 12 December 2023 after deduction of the first defendant's indemnity claims as determined by this Court. 1. Direct that, within seven days hereof, 1. the proposed cross-appellants file and serve an amended summons seeking leave to cross-appeal naming the first respondent in the appeal as an applicant for leave to cross-appeal; and 2. a notice of cross-appeal naming the first respondent in the appeal as a cross-appellant. 1. Grant leave to cross-appeal in respect of grounds 1, 2, and 3 of the draft notice of cross-appeal. 2. Dismiss the cross-appeal. 3. Within 14 days hereof, the parties should seek to agree costs of the appeal and the proceedings below in the light of the reasons above. If they cannot reach agreement, within that time each party should file and serve a brief outline of submissions not exceeding five pages, together with any supporting material. Costs will then be determined by the Court on the papers and without a further oral hearing.
2. PRICE AJA: I have read the reasons for Basten AJA and Griffiths AJA. I am grateful for their comprehensive review of the evidence and the background to the controversy. I will refrain from any unnecessary repetition of that material.

The onus of proof

1. Before venturing further, it is necessary to say something about the onus of proof. Basten AJA appears at [34] above to be of the opinion that the primary judge reversed that onus. Rather than the defendant bearing the onus of establishing the defence pleaded in paragraph 10 of her defence that there had been a distribution, Basten AJA is of the opinion that "the plaintiff bore the burden of establishing that there was a trust fund which had not been fully distributed." Griffiths AJA does not agree that the primary judge reversed the onus of proof but considers at [340(e)] above that "her Honour was simply responding to the prominence given to the issue of termination".
2. In PJ1, it seems to me that the primary judge acted on the basis that the defendant bore the onus of proving the defence. Her Honour said at PJ1 [113]: "In conclusion, Katrina has failed to satisfy me that the payments made to Lindsay on 19 July 1999 constituted an exercise by George of the power of appointment conferred on him by Hok and effectively terminated the Burwood Trust by distribution."
3. Her Honour had earlier said at PJ1 [97]: "In my view, the evidence overall falls short of establishing that George intended to, and did in fact, distribute the Burwood Trust property to Lindsay pursuant to George's power of appointment when he made the payments to Lindsay in July 1999."
4. In written submissions, the appellant advanced nine contentions in support of the claim of error in ground 3 which are set out by Griffiths AJA at [312] above. The appellants did not contend that the primary judge erred by incorrectly applying the onus of proof.
5. A basal statement concerning the onus of proof is found in the judgment of Walsh JA in Currie v Dempsey (1967) 69 SR (NSW) 116 ("Currie") at 125: "In my opinion, [the legal burden of proof] lies on a plaintiff, if the fact alleged (whether affirmative or negative in form) is an essential element in his cause of action, eg, if its existence is a condition precedent to his right to maintain the action. The onus is on the defendant, if the allegation is not a denial of an essential ingredient in the cause of action, but is one which, if established, will constitute a good defence, that is, an "avoidance" of the claim which, prima facie, the plaintiff has."
6. It has often been said that the difficulty with the test in Currie is that it is sometimes difficult to distinguish between an "essential element" and a matter "avoiding" the prima facie claim of the plaintiff. The following observation on the onus of proof appears in an article by CR Williams, "Burdens and Standards in Civil Litigation" (2003) 25 Syd Law Review 165 (that has been cited by this Court in a number of decisions see, eg, Coshott Family Pty Ltd v Lyons (2022) 110 NSWLR 44; [2022] NSWCA 216 at [18]) at 171: "What then determines where the burden of proof lies? Often the question will turn on the form in which a legal rule is traditionally stated. If an issue is commonly listed among the constituent elements of a cause of action, the burden of proof will be said to be on the plaintiff. If the issue is commonly referred to as a factor leading to the avoidance of liability, the burden of proof will be on the defendant." (citation omitted).

The correctness standard applies

1. Although there was some debate in written submissions about the appropriate standard of appellate review, the correctness standard applies. As the High Court recently explained in Moore (a pseudonym) v The King [2024] HCA 30; (2024) 419 ALR 169 at [14] (Gageler CJ, Edelman, Steward, Gleeson and Beech-Jones JJ): "Under the correctness standard, the appellate court determines for itself the correct outcome while making due allowance for such "advantages" as may have been enjoyed by the judge who conducted the trial or hearing."
2. The advantages enjoyed by the primary judge over this Court include seeing and hearing the witnesses who were Tzer, Katrina, and Lindsay. The need for appellate respect especially arises where the trial judge's decision "might be affected by their impression about the credibility of witnesses whom the trial judge sees but the appellate court does not": Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [26] (Gleeson CJ, Gummow and Kirby JJ) ("Fox").
3. In the present case, there is nothing to suggest in her Honour's reasons that her decision might have been affected by her impression about the reliability of the plaintiff, the defendant and Lindsay. Her Honour did not make any adverse credibility findings. Her Honour said at PJ1 [12]: "Tzer, Katrina and Lindsay were each cross-examined. I did not form an adverse view of the credit of any of the witnesses and note that no submissions were advanced that adverse credit findings should be made."
4. The primary judge did not express any other view about the impression her Honour had of the witnesses. Whatever impression a witness made, her Honour does not reveal that in her judgment.
5. It appears to me that there are no factual findings "which are likely to have been affected by impressions about the credibility and reliability of witnesses formed by the trial judge as a result of seeing and hearing them give their evidence": Lee v Lee (2019) 266 CLR 129; [2019] HCA 28 at [55] (Bell, Gageler (as his Honour then was), Nettle and Edelman JJ, Kiefel CJ agreeing) ("Lee"). This is not a case where the appellate court must identify matters which are "glaringly improbable" or "contrary to compelling inferences". This Court "is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge": Warren v Coombes (1979) 142 CLR 531 at 551 (Gibbs ACJ, Jacobs and Murphy JJ); [1979] HCA 9, see also Fox at [25] (Gleeson CJ, Gummow and Kirby JJ); Lee at [55].

The primary judge's reliance on Watson v Foxman

1. A matter of contention raised by Katrina was that the primary judge erroneously discounted the telephone conversation which Lindsay had with his father in 1999: see [312(a)] above. The contents of this conversation are recounted by Griffiths AJA at [221] above. Of particular importance to Katrina's case was Lindsay's recollection of this conversation with George which included George saying to him: "I have some money set aside for the care of Oma. However, Oma is well cared for by the family. Now I am happy for the money to go to you as the eldest male."
2. In her judgment at PJ1 [98] which is more fully quoted by Basten AJA at [37] above, her Honour said that: "Having regard to the almost 20 years that have passed and the frailty of human memory, I place greater weight on the contemporaneous documents than on the terms of the conversation to which Lindsay deposes … which is relied on as contemporaneous evidence that suggests that the money Lindsay received in July 1999 was from the Burwood Trust funds held by George: Watson v Foxman (1995) 49 NSWLR 315 at 319."
3. Whilst the quality and accuracy of oral recollections of actual conversations should be treated with care and caution given the frailty of human memory, this does not mean that the value and importance of that oral testimony may be lightly disregarded. In the present case, Lindsay's recollection was not subject to cross-examination nor did the primary judge say anything about her impression of Lindsay's memory of the conversation. He was not found to be unreliable, rather her Honour found Lindsay to be a credible witness.
4. Care must be taken to ensure that the weight given to contemporaneous documents is justified. Much will depend on the quality and context of the documentary evidence. Bell P (as the Chief Justice then was, and with whom Bathurst CJ and Leeming JA agreed) said in ET-China.com International Holdings Ltd v Cheung [2021] NSWCA 24; (2021) 388 ALR 128, at [28]: "Documents and events have to be understood in their context, and evidence of context will often be furnished by witnesses in their oral evidence. Documents, moreover, will not always present a complete picture of events. Indeed it would be rare that they do. Nor do contemporaneous documents necessarily or invariably convey or record the background or context in which events took place. That background or context will be familiar to the actors at the time of those events but may not always emerge from documents." While his Honour said the above in the context of a commercial dispute, I see no reason why it would not be applicable to the present case.

The Primary judge's approach was incorrect

1. In Basten AJA's judgment, his Honour at [40]-[97] provides extensive reasons for the conclusion that the approach adopted by the primary judge was in material respects erroneous. With those reasons I agree save for the onus of proof.
2. I agree with Basten AJA's finding at [105]. In my opinion, the defendant established on the balance of probabilities the defence that the payments made to Lindsay on 19 July 1999 effectively terminated the Trust by distribution.
3. I agree with the orders proposed by Basten AJA at [109].

Grounds 4 and 5

1. As Basten AJA points out at [110] above, if the Trust was determined in 1999, Katrina's indemnity claims are irrelevant. Katrina's entitlement to indemnity out of the assets or funds of the Trust was pleaded as a defence in the alternative. In view of my agreement with Basten AJA on ground 3, it is unnecessary for me to consider these grounds.

Endnotes

1. Chang v Tjiong [2009] NSWSC 122 ("2009 judgment").
2. 2009 judgment at [19].
3. Chang v Tjiong; Estate of Hok Njan Tjiong [2011] NSWSC 1614.
4. Chang v Tjiong [2022] NSWSC 1092 ("first judgment").
5. Chang v Tjiong (No 2) [2024] NSWSC 74 ("second judgment").
6. UCPR, r 51.11.
7. First judgment at [125].
8. First judgment at [94]-[100].
9. Australian Receivables Ltd v Tekitu Pty Ltd (Subject to Deed of Company Arrangement) (Deed Administrators Appointed) [2011] NSWSC 1306 at [144]-[149] (Ward J).
10. First judgment at [103]-[104].
11. First judgment at [108].
12. Re Global Finance Group Pty Ltd (In Liq)(Supervisor Appointed) and Global Mortgage Investments Pty Ltd (in Liq); Ex parte Read and Herbert (as Liquidators of Global Mortgage Investments Pty Ltd and as Liquidators of Global Finance Group Pty Ltd) [2002] WASC 63 at [99].
13. Heydon JD, Leeming MJ, Jacobs' Law of Trusts in Australia (8th ed, 2016, LexisNexis Butterworths) at [27-15].
14. [1915] 1 Ch 62 at 69.
15. (1974) 3 ALR 404.
16. See, inter alia, Re Global Finance Group at [103].
17. Re Hallett's Estate (1880) 13 Ch D 696.
18. Hafeez-Baig and English, The Law of Tracing (The Federation Press, 2021), par 6.44.
19. (2003) 59 NSWLR 361; [2003] NSWSC 1008 at [153].
20. Tcpt, 09/03/2022, p 163(10).
21. See also [101] set out above and [111] set out below, apparently placing an onus of persuasion on the defendant.
22. (1995) 49 NSWLR 315.
23. Watson v Foxman at 319.
24. [1983] 1 NSWLR 1; J D Heydon, Cross on Evidence (10th ed, LexisNexis 2015) at 17435-17440.
25. (1975) 132 CLR 362; [1975] HCA 27.
26. Precision Plastics at 370-371.
27. (1893) 6 R 67, 76-77.
28. Defence filed 8 September 2020, par 10.
29. Reply filed 13 October 2020, pars 3-5.
30. Plaintiff's outline of submissions, 24 November 2021, par 2.7.
31. Judgment at [12].
32. First judgment at [112].