Estate of Hok Njan Tjiong [2011] NSWSC 1614
Chief Commissioner of Stamp Duties for New South Wales v Buckle (1998) 192 CLR 226
[1998] HCA 4
Coshott Family Pty Ltd v Lyons (2022) 110 NSWLR 44
(2021) 388 ALR 128
Fox v Percy (2003) 214 CLR 118
[2003] HCA 22
Gallo v Dawson [1990] HCA 30
Source
Original judgment source is linked above.
Catchwords
Estate of Hok Njan Tjiong [2011] NSWSC 1614
Chief Commissioner of Stamp Duties for New South Wales v Buckle (1998) 192 CLR 226[1998] HCA 4
Coshott Family Pty Ltd v Lyons (2022) 110 NSWLR 44(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[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[1975] HCA 27
Re Beddoe[2014] NSWCA 367
Re Global Finance Group Pty Ltd (In Liq)(Supervisor Appointed) and Global Mortgage Investments Pty Ltd (in Liq)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
[2007] NSWCA 369
University of Wollongong v Metwally (No 2) [1985] HCA 28
[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
Judgment (84 paragraphs)
[1]
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)
[2]
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
[3]
[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.]
[4]
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].
[5]
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]
[6]
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]
[7]
Origins of the trust
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.
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."
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".
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.
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."
[8]
Commencement of current proceeding
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.
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.)
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.
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.
[9]
The appeal - procedural matters
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.
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.
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.
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.
[10]
Grounds of appeal
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.
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.
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.
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.
[11]
Maintenance of trust fund
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."
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]
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.
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.)
[12]
Relevant legal principles
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.
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].
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."
[13]
Characterising the 1999 payment
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.
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.
[14]
Lindsay Tjiong's evidence
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.
[15]
Preferred findings
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.
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.
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.
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]
[16]
Orders
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]
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.
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.
[17]
Claims for indemnity - ground 4
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.
[18]
Nature of claims
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.
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."
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]
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."
[19]
Procedural background
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]
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.
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.
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]
[20]
Legal principles
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.
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.
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."
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."
[21]
Determination of claims for full indemnity
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.
[22]
Claim 4 - 2014 correspondence
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]
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.
[23]
Claim 5 - photocopying expense
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.
[24]
Claim 6 - Nevett Ford advice
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.
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."
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.
[25]
Claim 7 - further advice from counsel in relation to the Burwood Trust
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."
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.
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.
[26]
Claim 8 - cost of District Court proceeding re costs assessment
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.
[27]
Claim 9 - responding to lawyers acting for Soei Chang
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.
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.
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.
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.
[28]
Claim 3 - costs in proceedings 2011/098337
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.
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.
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."
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]
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.
[29]
Claim 11 - proceeding 2019/211113
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].
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.
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."
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.
[30]
Conclusions - full indemnity claims
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.
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.
[31]
Claim 1 - costs of 2005 removal proceedings
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.
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".
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.
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].
[32]
Claim 8 - District Court proceedings 2017/222385
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.
[33]
Claim 10 - costs of proceedings 2019/061978
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.
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."
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.
Ground 4(c) should be upheld and claim 10, in an amount of $8,840.38, accepted.
[34]
Claim 12 - costs of proceedings 2019/278508
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.
[35]
Claim 13 - costs of engaging insolvency specialists
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.
[36]
Conclusions - grounds 4 and 5
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.
The total amount to be allowed by way of indemnities is therefore $375,666.91.
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.
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.
[37]
Orders - based on grounds 4 and 5
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.
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.
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).
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).)
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.
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.)
[38]
Further background matters summarised
The following summary of some additional background facts draws heavily on the primary judge's findings, which I understand not to be controversial.
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.
On 18 March 2004, probate of George's will was granted to Richard.
Relations between Richard and both Katrina and Lindsay seriously deteriorated from around April 2004.
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.
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.
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).
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.
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".
[39]
The first primary judgment summarised
In brief, the primary judge concluded that George's payments to Lindsay in July 1999 did not determine the Burwood Trust.
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]).
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".
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.
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.
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.
[40]
The second primary judgment summarised
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.
[41]
(a) Determination of the corpus and income of the Burwood Trust
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]).
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.
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.
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.
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.
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.
[42]
(b) Katrina's claims for indemnity
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.
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).
[43]
(a) Procedural rulings
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).
Katrina also needs an extension of time to appeal from the first primary judgment.
As previously mentioned, the Court indicated at the hearing that it would determine these procedural matters and give reasons in due course.
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.
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.
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.
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.
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).
[44]
(b) Katrina's appeal
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).
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.
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.
[45]
Consideration of grounds 1 and 2 in the appeal
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.
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.
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.
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.
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]).
The taking of accounts is dealt with at some length in Pt 46 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR).
[46]
Consideration and determination of ground 3 in the appeal
As mentioned above, ground 3 of the notice of appeal relates to the issue whether the Burwood Trust had terminated in July 1999.
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.
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.
[47]
Consideration and determination of grounds 4 and 5 in the appeal
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.
[48]
The earlier litigation and some related events summarised
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.
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.
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.
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.
[49]
The primary judge's reasons for determining the relevant claims for indemnity summarised
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.
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.
[50]
Claim 1: Costs of the 2005 Removal Proceedings (1453/2005): $116,470.50
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.
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).
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.
Katrina challenges this determination in ground 4(a) of the notice of appeal.
[51]
Claim 2: Net costs of proceedings 2010/406799 in the District Court: $599.92
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.
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.
The determination of Claim 2 is not challenged; hence, nothing more needs to be said about it.
[52]
Claim 3: Costs of Alternate Will Proceedings 2011/098337 in Supreme Court: $99,429.10
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.
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.
This determination is challenged in ground 4(b) of the notice of appeal.
[53]
Claim 4: Costs of responding to correspondence from Richard Tjiong: $4,686
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.
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.
The primary judge allowed this claim in light of the trustees' concession and subject matter of the correspondence.
This determination is challenged in ground 1 of the draft notice of cross-appeal.
[54]
Claim 5: Fees paid to Macquarie Bank for missing statement pages: $350
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.
[55]
Claim 6: Fees paid to Nevett Ford, Lawyers of Ballarat for advice about the Burwood Trust: $5,569.30
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.
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.
This determination is challenged in ground 4(h) of the notice of appeal.
[56]
Claim 7: Fees for advice from counsel on the Burwood Trust and s 63 of the Trustee Act: $22,000
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.
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.
The determination of Claim 7 is challenged in ground 2 of the draft notice of cross-appeal.
[57]
Claim 8: Costs of proceedings 2017/222385 in the District Court: $13,805.73
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).
The claim for indemnity was refused by the primary judge, who adopted and repeated her reasons for refusing Claim 1.
This determination is challenged in ground 4(f) of the notice of appeal.
[58]
Claim 9: Fees for responding to correspondence from Griffin Lawyers of Adelaide: $25,850
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.
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.
The primary judge's acceptance of Claim 9 is challenged in ground 3 of the draft notice of cross-appeal.
[59]
Claim 10: Costs of proceedings 2019/061978 in the Supreme Court: $8,840.38
Katrina also sought indemnity in the amount of $8,840.38 concerning costs of proceedings no. 2019/061978.
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.
This determination is challenged in ground 4(c) of the notice of appeal.
[60]
Claim 11: Costs of proceedings 2019/211113 in the Supreme Court: $70,576
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.
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.
This determination is challenged in ground 4(d) of the notice of appeal.
[61]
Claim 12: Costs of proceedings 2019/278508 in the Supreme Court: $17,358.94
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.
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).
This determination is challenged in ground 4(e) of the notice of appeal.
[62]
Claim 13: Costs of engaging Somerville Legal, insolvency specialists: $2,913.14
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.
The claim was refused on the same basis as that applying to the refusal of Claims 1 and 10.
This determination is challenged in ground 4(g) of the notice of appeal.
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.
[63]
Claim 1: Costs of the 2005 Removal Proceedings (1453/2005): $116,470.50 (ground 4(a))
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).
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.
For the following reasons, I consider that the primary judge was correct to reject Claim 1.
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.
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.
[64]
Claim 3: Costs of Alternate Will Proceedings 2011/098337 in Supreme Court: $99,429.10 (ground 4(b))
This claim relates to the proceedings commenced by Soei following her alleged discovery of another will by Hok (see at [359]-[360] above).
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.
I do not accept those contentions.
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).
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).
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.
[65]
Claim 6: Fees paid to Nevett Ford, Lawyers of Ballarat for advice about the Burwood Trust: $5,569.30 (ground 4(h))
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.
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.
In my respectful view, claims 6 and 7 stand or fall together. Accordingly, I would uphold Katrina's challenge to claim 6.
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.
[66]
Claim 8: Costs of proceedings 2017/222385 in the District Court: $13,805.73 (ground 4(f))
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).
Ground 4(f) is rejected for the same reasons as those given above in respect of ground 4(a) (which relates to Claim 1).
[67]
Claim 10: Costs of proceedings 2019/061978 in the Supreme Court: $8,840.38 (ground 4(c))
This claim is rejected for similar reasons to those given above for refusing Claim 1.
[68]
Claim 11: Costs of proceedings 2019/211113 in the Supreme Court: $70,576 (ground 4(d))
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.
For the following reasons, I consider that ground 4(d) should be upheld.
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]).
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.
I consider that Katrina acted reasonably and in her capacity as trustee of the Burwood Trust in having the proceedings set aside.
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.
[69]
Claim 12: Costs of proceedings 2019/278508 in the Supreme Court: $17,358.94 (ground 4(e))
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.
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.
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).
As noted above at [416], this claim is tied to Claims 1 and 10 and is rejected for similar reasons.
[71]
Ground 5
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.
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).
[72]
The cross-appeal
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.
[73]
Determination of cross-appeal in respect of Katrina's claims for indemnity
[74]
Claim 4: Costs of responding to correspondence from Richard Tjiong: $4,686.00 (ground 1 of draft notice of cross-appeal)
This claim is summarised at [390] above.
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.
[75]
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)
This claim is summarised at [398]-[400] above.
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.
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.
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].
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.
[76]
Claim 9: Fees for responding to correspondence from Griffin Lawyers of Adelaide: $25,850 (ground 3 of draft notice of cross-appeal)
This claim is summarised at [404]-[406] above.
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.
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.
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.
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.
[77]
Costs
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.
[78]
Conclusion
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.
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.
[79]
The onus of proof
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".
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."
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."
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.
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."
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).
[80]
The correctness standard applies
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."
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").
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."
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.
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].
[81]
The primary judge's reliance on Watson v Foxman
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."
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."
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.
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.
[82]
The Primary judge's approach was incorrect
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.
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.
I agree with the orders proposed by Basten AJA at [109].
[83]
Grounds 4 and 5
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.
[84]
Endnotes
Chang v Tjiong [2009] NSWSC 122 ("2009 judgment").
2009 judgment at [19].
Chang v Tjiong; Estate of Hok Njan Tjiong [2011] NSWSC 1614.
Chang v Tjiong [2022] NSWSC 1092 ("first judgment").
Chang v Tjiong (No 2) [2024] NSWSC 74 ("second judgment").
UCPR, r 51.11.
First judgment at [125].
First judgment at [94]-[100].
Australian Receivables Ltd v Tekitu Pty Ltd (Subject to Deed of Company Arrangement) (Deed Administrators Appointed) [2011] NSWSC 1306 at [144]-[149] (Ward J).
First judgment at [103]-[104].
First judgment at [108].
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].
Heydon JD, Leeming MJ, Jacobs' Law of Trusts in Australia (8th ed, 2016, LexisNexis Butterworths) at [27-15].
[1915] 1 Ch 62 at 69.
(1974) 3 ALR 404.
See, inter alia, Re Global Finance Group at [103].
Re Hallett's Estate (1880) 13 Ch D 696.
Hafeez-Baig and English, The Law of Tracing (The Federation Press, 2021), par 6.44.
(2003) 59 NSWLR 361; [2003] NSWSC 1008 at [153].
Tcpt, 09/03/2022, p 163(10).
See also [101] set out above and [111] set out below, apparently placing an onus of persuasion on the defendant.
(1995) 49 NSWLR 315.
Watson v Foxman at 319.
[1983] 1 NSWLR 1; J D Heydon, Cross on Evidence (10th ed, LexisNexis 2015) at 17435-17440.
(1975) 132 CLR 362; [1975] HCA 27.
Precision Plastics at 370-371.
(1893) 6 R 67, 76-77.
Defence filed 8 September 2020, par 10.
Reply filed 13 October 2020, pars 3-5.
Plaintiff's outline of submissions, 24 November 2021, par 2.7.
The existence of the trust was unknown to the Tjiong family until the letters were discovered by George's executor and brother, Richard Tjiong. They were relied on in the Equity proceedings before Palmer J to resist a claim by Soei Lan Chang (nee Tjiong), George's sister and executor of their mother's estate, that George had held the unit on a resulting trust for his father, and the beneficial interest had thus passed to their mother on their father's death.
Palmer J described the class of beneficiaries identified in the second letter as "the father's family"; if the last sentence of the letter were understood literally, it might have been defined as the family as it existed in 1978, the verb "need" being in the present tense. However, Palmer J was not concerned with whether the trust was still in existence: it was sufficient that he rejected the claim by Ms Soei Chang that the beneficial interest in the unit had remained with the father and become part of the mother's estate following his death. Palmer J concluded:
"40 I have concluded that the terms of the trust upon which George held the property included a limited power of appointment of whatever remained in the trust fund after the mother's death. The power was to appoint amongst George's family, according to need. Whether the power has been exercised by George and, if so, how, arose in discussions between myself and Counsel only towards the end of final submissions."
It is clear that the father did not expect the home unit to be retained, even for the life of the mother, but rather that it would be sold and the money applied in accordance with his wishes. The arrangement was to remain a private one between him and his son, George. Perhaps unsurprisingly, George Tjiong did not establish a documented and separate fund, but placed the proceeds of sale of the unit in an existing investment account with Macquarie Bank. The proceeds were thus comingled with his personal savings. It was only after his death that this was characterised as a breach of trust. That is significant in assessing the likelihood that he paid the balance of the funds to his son, Lindsay Tjiong, in 1999 while his mother was still alive.
On 16 August 2022 Henry J delivered her first judgment, rejecting the defence and upholding the plaintiff's claim, and appointing independent trustees to the Burwood trust. [4] The matter was then stood over to allow for calculation of the amount of the existing trust fund to be paid to independent trustees. Claims for indemnity from the trust by Ms Tjiong were also addressed. Consequential orders for payment to the trustees of $638,432, and for costs were made on 9 February 2024. [5]
For the reasons set out below, in my view the appeal should be allowed and the judgment in the Equity Division set aside. In short, there were errors in the reasoning of the trial judge. On reconsideration, the better view is that the plaintiff failed to demonstrate that the fund had not been distributed by a final payment in 1999, and, accordingly, the Burwood trust terminated at that time.
Why there should be no presumption of an intention to reinstate the fund is unclear, except in the sense that "intention" is irrelevant. Perhaps such an intention is in any event readily inferred if it is against the fiduciary's financial interest, but consistent with the presumption that a fiduciary will act honestly. [17] If the fiduciary is not insolvent, there can be no conflict between the fiduciary's creditors and the beneficiaries of the trust; even if there were an issue of insolvency, it is not easy to see why the general creditors should be better off than they would be if there had been no breach of the fiduciary obligation requiring reinstatement. As contended by a recent commentary: [18]
"… [D]espite the language which is often used, the so called 'rules' are not about 'presuming' or 'deeming' anything to be the case, even in the context of physical mixtures. The true position is that where a wrongdoer causes the original rights, or the physical assets to which they relate, to lose their separate existence by mixing, his or her interests are subordinated to those of the claimant. As a consequence, the wrongdoer is prevented from asserting that he or she holds the mixed fund, or any substitute rights derived from it, beneficially unless and until the claimant's claims are satisfied. The so called 'rules' that produced this result are simply inelegant ways of giving effect to a single principle: the subordination principle. That proposition is best understood by considering how the 'rules' apply to bank accounts."
The approach is consistent with that adopted by Campbell J in Re Sutherland; France Caledonia Travel Service Pty Ltd (in liq). [19] The principle of sub-ordination allows a beneficiary to trace moneys withdrawn from a mixed fund into an asset purchased by the trustee; there is no reason in principle why the beneficiary could not continue to assert his or her interest in a mixed fund at a particular date, whether there have been dealings by way of withdrawals and replenishment, or not. On that approach it is sufficient that another potential beneficiary, namely Lindsay Tjiong, can assert that, as at the date of payment to him, there was sufficient in the mixed fund to allow for the payment in fact made to have been a distribution of trust funds.
The trial judge addressed the withdrawals from and payments into the mixed account by reference to an "actual intention" expressed in some form by the trustee (George Tjiong). Where the possibility of an inference was identified, inconsistent with the inference sought to be drawn by Ms Tjiong, her proposed inference was rejected, rather than the competing inferences weighed. For example, with respect to the maintenance of the trust fund, the judge relied upon the fact that there had been further payments made into the investment account after the payment to Lindsay Tjiong as contradicting inferences that other earlier payments in were to be treated as restitution of the depleted trust fund. The existence of such countervailing possibilities with respect to any one particular may, subject to one further consideration, have been thought to be a sound basis to reject that particular circumstance. However, what was required was a consideration of all the circumstances relied upon to determine their cumulative effect.
The further consideration is that much of the discussion assumed that Ms Tjiong bore the burden of demonstrating that there had been a distribution of the trust fund, thus terminating its existence. Rather, the plaintiff bore the burden of establishing that there was a trust fund, which had not been fully distributed. The fact that the case was commenced 20 years after the alleged termination of the fund may have caused the plaintiff's burden of satisfying the Court affirmatively of his case difficult to fulfill; however, that was a result of the lapse of time before commencing the proceedings, not a circumstance which placed any evidentiary or other burden on Ms Tjiong.
Returning to the trial judge's reasoning, although in the passage set out at [24] above, the judge referred in the first sentence to an exercise carried out in the "January 2018 letter", being a letter from Ms Tjiong's lawyers to those acting for Ms Chang (the plaintiff's mother), the judge did not deal fully with the matters raised. It will be necessary to return to that exercise below.
Apart from the fact that Hok Tjiong's wife Kwat Tjiong was still alive at the time of the payment to Lindsay Tjiong, there was no suggestion that Lindsay Tjiong was not a legitimate recipient of funds from the trust as a needy member of the family. As the trial judge accepted in the course of the trial, there was also no evidence that Kwat Tjiong was in need, either at the time of the payment to her grandson, Lindsay, or at any time thereafter until her death. [20] In those circumstances, it is difficult to place much weight upon an assumption that the payment to Lindsay Tjiong was not intended to have been a distribution of trust moneys because that would have involved a breach of the trust.
The analysis found at [98] raises other difficulties.
First, Watson v Foxman [22] is a canonical authority for the proposition that human memory of a conversation is fallible and why that is so; it is not an invitation to compartmentalise the evidence. Sometimes conversations are all that is relied upon, in which case it is necessary for the trial judge to assess them as best he or she can. That was the case in Watson v Foxman. In applying his own warning, McLelland CJ in Eq reasoned: [23]
"Considerations of the above kinds can pose serious difficulties of proof for a party replying upon spoken words as the foundation of a [cause] of action …, in the absence of some reliable contemporaneous record or other satisfactory corroboration. That is the position in the present case. There is no contemporaneous document in evidence which supports the making of any such promise or representation as is relied on and no other satisfactory corroboration …. I have the clear impression that Mr Foxman's memory of conversations in 1990 between himself and Mr Cross is not sufficiently clear to enable him to actually recall any of the critical words said to have been used …. I believe that his account of that conversation is predominantly a reconstruction made some years after the event."
Nor, where there are contemporaneous documents, is it simply a matter of weighing the inferences to be drawn from them against evidence of oral conversations. It is a matter of considering all the evidence together. The contemporaneous documentation may well support the oral conversation, as recounted by a witness. If that is so, it may be necessary to consider whether the witness has nevertheless reconstructed the conversation from the document. If that is the case, it might be wrong to give material weight to the conversation; if it supplies additional details, it may be of assistance or it may simply have an appearance of verisimilitude. These problems require explication by reference to the evidence. That did not happen in this case.
Documentary evidence should also be assessed with caution. The very fact that the precise words are known should not distract attention from questions of context and purpose. In the present case, the problem is exacerbated by the fact that two informal letters from father to son have now been construed by a court as creating a legal trust, which has been given a label, the Burwood trust. The first letter revealed two purposes in putting the Burwood unit in the name of his son; both involved secrecy. The first was to avoid the value of the property being diminished by death duties; the second was to make provision for his wife and mistress. He probably did not expect the arrangement to outlast the life of his wife, beyond a short period to arrange payment of any balance to the Japanese bank account. The 1978 letter varied the latter purpose; Ms Nikaido no longer having financial needs, her interest was replaced with that of their son, but if he was not in need, then another member of the Tjiong family in need, to be chosen by George Tjiong. Again, the likely intention was to have the fund finally allocated shortly after his wife's death.
That understanding gives context to the step taken by George Tjiong in conferring a financial benefit on his son. The documentary evidence in 1999 in relation to this event was sparse and the source of the funds was not identified. However, the expressed emotion of relief at settling a promise to assist was not inconsistent with obtaining funds from the trust to do so. The concluding words of the letter, "Now I can die in peace", suggest more than providing for a son in a manner which would have been satisfied from his estate. The conversation recounted by Lindsay Tjiong in his affidavit supported an inference that his father's trust had been executed.
These were difficult factors to address, but reliance on Watson v Foxman should have been a matter of very limited weight.
Further, it is not easy to understand what was meant by diminishing the weight of the oral testimony. By far the bulk of the oral evidence came from Ms Tjiong. The evidence of Lindsay Tjiong was encompassed within six pages; that of Ms Tjiong covered 37 pages. Yet in truth, Ms Tjiong's evidence was largely irrelevant. She was not party to any conversation with her father in relation to the Burwood trust, nor in relation to the payment to her brother. Her case was that the payment to her brother was a distribution (indeed a final distribution) of the Burwood trust funds, but that was an opinion based upon her consideration of the available documentary record, being primarily bank records and related financial documents. However, any opinion she formed as to the circumstances of the 1999 payment to her brother was irrelevant. Whether her opinion varied as between 2009 or 2013 and 2020, was equally irrelevant. The judge was required to determine the matter on the evidence which was available. In so far as the judge gave weight (as she did) to "seemingly inconsistent" statements of opinion by Ms Tjiong or her lawyers during that proceeding and other proceedings, that was an error.
As will be noted below, Ms Tjiong gave some evidence in cross-examination in relation to cultural circumstances involving her father and her father's parents. Those answers were of some significance, but were not addressed.
As to Lindsay Tjiong's evidence, there was no clear explanation as to which parts, if any, were rejected, and why. It may be accepted that a court is not obliged to accept unchallenged evidence. Further, where accepted, it is not obliged to give such evidence dispositive weight. Factors weighing against any such obligation will include (i) the nature of the evidence, which may be internally inconsistent, or inherently improbable; (ii) the stage of the proceedings at which it is raised, which may not permit contradiction; (iii) there may be no basis in the evidence available to the challenging party upon which to cross-examine. However, as will be explained below, Lindsay Tjiong's evidence was of immediate relevance to his father's intention in making the payment, was not incoherent or internally inconsistent, was indeed consistent with his father's letter to him, and was known at all stages of the trial to be fundamental to Ms Tjiong's defence and cross-claim. Further, as she had alleged in the pleading, Lindsay Tjiong was a person in need and thus within the class to whom the balance of the fund might be distributed once his grandmother's needs had been met.
The underlying principles have commonly been stated in criminal cases, where they must be explained to juries, as explained by Hunt J in Allied Pastoral Holdings Pty Ltd v Federal Commissioner of Taxation. [24] In Precision Plastics Pty Ltd v Demir, [25] a workplace injury claim, Gibbs J stated of the plaintiff's evidence that she intended to continue working for as long as she could: [26]
"If it had been intended to suggest that she was not speaking the truth she should have been cross-examined on this matter so that she might have had an opportunity of explanation (cf. Browne v Dunn [27] ), but she was not in fact cross-examined on her answer. [Her] evidence … was not inherently incredible. … In these circumstances, in my opinion, the jury, acting reasonably, were bound to accept her evidence, uncontradicted and unchallenged in cross-examination …."
In fact, the significance of the conversation between Lindsay Tjiong and his father was never in doubt: it was relied on in Ms Tjiong's defence as determining the trust by distribution; [28] it was set out in Lindsay Tjiong's affidavit of 26 November 2020; it was addressed in the plaintiff's reply; [29] and addressed by the plaintiff in a written opening. [30] The failure to cross-examine was neither inadvertent nor tactical: the plaintiff never raised a challenge to the credibility of the evidence. Indeed, the trial judge noted as much. [31]
The consequence of not having challenged Lindsay Tjiong in cross-examination, was that a jury could not have been invited to speculate on whether the evidence (i) was a recent invention, (ii) concocted with his sister to support their mutual interests, or (iii) was no longer clear in his recollection, it having occurred some two decades earlier. If the trial judge had sought to take such possibilities into account, there should have been express justification in the judgment. If, in the alternative, the evidence of Lindsay Tjiong as to the conversation (set out below) were thought to be ambiguous or unclear in some respect, that proposition should also have been stated. None of these steps were taken.
In principle, giving weight to the documentary record may have had much to recommend it; in practice, it meant that in the absence of any record identifying the source of the 1999 payment as being from the trust, the proper inference was that it was not such a payment. However, there was no documentary record supporting the alternative conclusion, namely that it was a payment from George Tjiong's personal funds, which could have given rise to the opposite inference.
In fact, the judge tended not to distinguish oral evidence from documentary evidence. Even where she accepted oral evidence, no inference was drawn from it. Thus, she recorded:
"111 Katrina also relies on the secrecy surrounding the payments to Lindsay and the terms of George's wills as evidence that the payments to Lindsay were a distribution of the Burwood Trust funds. I am not persuaded by those matters."
Both elements turned on documentary evidence, but neither was accepted. The inference to be derived from the wills arose as follows. The first will, in 1992, identified the home unit at Belmore Street, Burwood as given to his trustee "on trust to permit my mother Kwat Nio Tjiong to reside in so long as she in the opinion of my trustee makes the property her principal place of residence…". Whilst that was a testamentary trust, it partly effected the Burwood trust, and may be seen as recognising that trust. It only partly reflected the Burwood trust, because upon the mother ceasing to reside in the property, the house was to be dealt with in accordance with clause 3 which provided that the proceeds of sale were available to pay the usual testamentary expenses and then as part of the residuary estate given to Ms Tjiong and Lindsay Tjiong in equal shares. By way of contrast, the second will, executed in December 2001 made no reference, implicit or otherwise, to the Burwood trust, but simply gave the whole of George Tjiong's estate to his trustee for payment of expenses and division between his two children in equal shares. Two events had occurred between the dates of the two wills. The earlier was the sale of the home unit in Belmore Street, Burwood, in December 1996. The later event was the payment to Lindsay Tjiong in July 1999.
Implicitly acknowledging that there was an available inference that the change in 2001 evidenced that the Burwood trust funds had been distributed in full by the payment to Lindsay Tjiong, the judge observed that the changes "are also explicable on the basis that the unit had been sold by the time that George's last will was made". [32]
The availability of conflicting inferences may be acknowledged, but there was a further consideration which supported the inference sought by Ms Tjiong. That was the evident intention to deal equally with the testator's two offspring. The payment to his son, Lindsay, was a not insignificant amount and, further, was recognised as significant by George Tjiong at the time it was made. The express intention to treat the offspring equally is readily accommodated as being reflected by the terms of the will, if the payment to Lindsay Tjiong, a person clearly having needs, was in fact a distribution of trust moneys.
The third piece of documentary evidence was the letter from George Tjiong to his son dated 21 July 1999 and enclosing two bank cheques totalling $199,972.05. In the first paragraph the payment of the cheques was said "to honour my agreement with you". The final paragraph stated:
"Do not tell anyone about this news. Keep this to your selves ….
Now I can die in peace."
The letter was annexed to an affidavit sworn by Lindsay Tjiong on 26 November 2020. In the affidavit Lindsay Tjiong explained that he had been injured in a motor vehicle accident in 1977 and sustained a brain injury which impacted his behaviour and learning abilities. He stated:
"My father occasionally expressed his concern about my future, especially with the cultural significance that he held towards males and their education."
Lindsay Tjiong further stated that he moved from Melbourne to Darwin to start a new life in or around late 1993. He stated:
"The night before I left Melbourne my father said the words to the effect:
'If you can get your life together, I will help you purchase a property.'"
He stated that he gained employment in Darwin, that between 1994 and 1996 his father loaned him money to purchase a second-hand car and that he repaid the loan with interest. In 1999, he was living in shared accommodation on a rural block, the owners of which proposed to sell and move to Tasmania. He stated that they had offered to sell him the property for $200,000. He telephoned his father to tell him of that offer. He said his father responded:
"You have shown me that you can keep down a job and save your money. I'm going to honour the promise that I made to you before you moved to Darwin and purchase a property for you. I have some money set aside for the care of Oma. However, Oma is well cared for by the family. Now I'm happy for the money to go to you as the eldest male. There will be no strings attached, the house will be in your name. I can now die in peace. Please keep it to yourself and leave it up to me to tell Katrina."
Lindsay Tjiong then stated in his affidavit that he returned to Melbourne in 2019 "to be closer to my elderly mother who had moved into a nursing home". He was living in Victoria at the time he gave evidence at the first trial on 9 March 2022.
The cross-examination was brief. It focused on the fact that he had been involved in the 2009 proceedings before Palmer J and had supported the argument that his father had held the home unit in Burwood subject to a trust, a proposition with which he agreed. The cross-examination proceeded: [33]
"Q. So a submission was put by Mr Evans on your behalf that the Burwood unit was held by your father as trustee, is that right?
A. Yes.
Q. And that the unit and the proceeds of sale would be held for the benefit of your grandmother during her lifetime, is that right?
A. Yep.
Q. And after your grandmother passed then your father, being George Tjiong, could appoint the trust fund to members of your 'grandfather's family'?
A. Yes.
Q. So you knew on or about 4 March 2009 that the Burwood unit or any proceeds from sale of the Burwood unit was to be held for your grandmother during her lifetime and for no other purposes, is that right?
A. Yes. I found that out then at this court case that at the time, my father was the head of the family, so I always thought, you know, he could do as he pleases with it."
This evidence was irrelevant: but, more importantly, there was no challenge to the accuracy or veracity of the conversation recorded in his affidavit and set out above at [59], referring to "money set aside for the care of Oma", which was self-evidently relevant and important.
The trial judge dismissed Lindsay Tjiong's evidence as unpersuasive, on a number of bases, which are not persuasive. First, she expressly placed "greater weight on the contemporaneous documents than on the terms of the conversation to which Lindsay deposes". There is no reference to the fact that the evidence was not challenged in cross-examination, nor was there recognition of the consistency between that evidence and his father's letter.
Secondly, she noted Lindsay Tjiong's evidence in cross-examination that his father never told him where the money came from. [34] The judge stated that any connection "between the money paid to Lindsay and the Burwood trust property … is not recorded in any document and is seemingly inconsistent with various assertions made on behalf of Katrina (and Lindsay) … as well as Lindsay's evidence in cross-examination that George never told him where the money came from …": at [98].
The significance of Lindsay Tjiong's evidence in that respect is obscure. Neither the letter nor the conversation identified the source of the fund, but merely their primary purpose, which the father stated had been fulfilled, according to the conversation. Lindsay Tjiong's evidence was that he learned of the source of the funds in the course of the court case in 2009. There was no inconsistency arising from that fact.
Next, it is necessary to identify the supposedly inconsistent findings in the earlier passages in the judgment identified in [98], set out at [37] above.
First, three passages (four paragraphs of the seven) involved the proceedings before Palmer J:
"32 The removal proceedings were heard by Palmer J. On 3 June 2009, during the course of oral submissions, Katrina and Lindsay's counsel, Mr Evans (who appeared for Katrina and Lindsay in Chang v Tjiong and for Katrina in these proceedings) referred to the Burwood Trust in the following terms (T160:16-28):
'It would seem there are two questions. One is to identify a sum of money that can be seen today as representing in [George's] estate the proceeds of sale of the Burwood unit and then perhaps seeing as the discretionary trust set up, one where George was trustee and the objects of the trust deed were descendants of the grandfather … my understanding of it is that the appropriate way would be, having identified that fund to then set up a scheme of arrangement and perhaps one might employ one of the trustee companies, perhaps an experienced solicitor in matters of trusts who could then receive as it were submissions from the various descendants and make decisions as to the appropriate distribution which would then perhaps come back before your Honour who was familiar with the matter and be approved by the court.'
…
35 On 29 June 2010, the hearing of the removal proceedings resumed. During the course of the hearing there was discussion about the 'Burwood issue' that referred to the net proceeds of the sale of the Unit in 1996 for $168,331.06 and the funds that 'today should be set aside that represents the net proceeds of Burwood' (T12.17-20 and T12.49-50). There was then the following exchange between Katrina and Lindsay's counsel, Mr Evans, and Palmer J (T13.12-T15.9):
'EVANS: … Your Honour found on the basis of the document that was preferred that the Burwood property was held, or the proceeds were held on a trust to provide for the mother while she was alive and thereafter for the descendants of the grandfather in what would appear a discretionary trust. The finality of that matter still awaits.
In dealing with the final orders, I have sought to identify a fund that would properly represent today safely the proceeds of the sale of the Burwood property to await final orders in that case.
…
HIS HONOUR: I don't think it is really part of these short minutes at all. This is a matter for the present executor of George's estate whoever it is now--
EVANS: Katrina
HIS HONOUR: That is something she has to deal with in the course of administration of the estate. It is not part of these proceedings. …
EVANS: It would seem that there would need to be an application for judicial advice as to the manner in which the Burwood Trust should be disposed of, but the purpose of the drafting of clause 15 and the purpose of my submissions is to say that when one traces the proceeds of Burwood through to Terrey Hills and the subsequent investment of those moneys, the sum we would say today that would represent the proceeds of sale of Burwood is a number of the order of 250 to $260,000…
HIS HONOUR: It is too hard and shouldn't be dealt with in these proceedings. I will release the undertaking previously given because I don't think it was appropriately given anyway. That leaves Katrina as trustee of George's estate in the position of 'how do I administer the estate bearing in mind that there is a judgment finding that part of the estate funds are in fact owed to somebody else'.
EVANS: Or subject to a discretionary trust and your Honour must assume she will act correctly'.
…
40 Katrina gave evidence in cross-examination that she knew the terms of the Burwood Trust as early as 4 March 2009; she knew the proceeds of the Burwood Trust may have been held by George (as trustee) when she became administrator of his estate and that she might have to commence new proceedings as administrator of his estate if a resolution could not be reached with family members as to the fate of the Burwood Trust funds; and that part of her role as trustee was to establish what happened to the Burwood Trust funds (T47:23-27, T47:32-34, T47:47-T48.10, T57:40-43 and T56:15-22). She deposes that she did not commence looking into what had occurred to the Burwood Trust property until after the Tjiong Appeal and then she waited to see if Richard would make an application to the High Court for leave to appeal (which he did not do).
41 In a letter dated 10 July 2013, O'Brien Lawyers (acting on behalf of Katrina), wrote to Richard's lawyers and, amongst other things, referred to the Burwood Trust as a trust of moneys or assets that formed part of the whole assets of George Tjiong as at December 2001' and as a 'discretionary trust in favour of such members of the family of … Hok … as George in his discretion might appoint having regard to their needs'. It was asserted in the letter that Katrina must now be the trustee of the Burwood Trust, given that Katrina had replaced Richard as executor of the estate."
These statements may be addressed on the basis that the understandings of the plaintiff and her brother, more than three decades after the trust was established and ten years after the 1999 payment, were relevant to some issue in the proceedings brought by Ms Tjiong, a further 11 years on.
There could only be a seeming inconsistency between statements made by counsel in the 2009 hearing before Palmer J on the assumption that counsel had precise instructions from Katrina and Lindsay Tjiong as to the source of any payments made to members of the Tjiong family whilst George was in control of the trust. That assumption should not have been made for two reasons. As Palmer J expressly noted, the fate of the trust was not in issue before him, but merely whether there was such a trust. (As has been noted, the claim in the proceeding, brought by Tzer Chang's mother, was that the proceeds of sale of the Burwood unit had been held by George Tjiong on trust for his father, and that, on the father's death, his beneficial interest passed to the mother.) Further, to find inconsistency, so as to justify taking these matters into account adversely to Ms Tjiong, it was necessary to have regard to the cross-examination of Ms Tjiong in relation to this material, which was not done. Had it been done the following three passages would have been addressed.
First, Ms Tjiong was taken to calculations made by counsel as to the proportion of the moneys held by the estate which might form part of the Burwood trust. The cross-examination was apparently based upon a sheet of paper: [35]
"Q. So, at this time, there was an account that was done in relation to the Burwood trust, is that right?
A. Only a rough estimate, because we didn't have all of the paperwork received from the previous executor, and that hadn't been looked into. So, when his Honour said 'Mr Evans you have lost me' I was lost as well.
Q. But your counsel here is saying that the Burwood trust funds were used by your father to purchase a property at Terrey Hills, is that right?
A. That was an assumption. We still hadn't investigated it properly.
Q. Do you have the sheet of paper that was provided to his Honour?
A. Do I have the sheet of paper? No.
Q. Well, you know an issue in these proceedings is what happened to the Burwood Trust proceeds?
A. Absolutely.
Q. So, that sheet of paper would be relevant, wouldn't it?
A. I suppose, but that wasn't, the basic thing is, I, my role as the trustee was to establish what happened to the assets of the Burwood trust. We weren't able to do that for some time later, and the starting point for me, was to find out where the proceeds were deposited and what happened thereafter. All we had at that time was a couple of files like the Terrey Hills, the purchase of Terrey Hills, the sale of Burwood, but we didn't have, we still didn't even know where the funds had gone into."
Ms Tjiong was then asked: [36]
"Q. At that time you'd done an account and you instructed your counsel to indicate to the Court that the Burwood Trust proceeds should be about 250 to $260,000 is that right?
A. No, I didn't instruct him to raise all of this.
Q. So again, are you saying that Mr Evans made these submissions without any instructions?
A. Well, I, I remember him, us looking at the, the property sales and things like that, and so it was a big assumption.
Q. But it was an assumption that you were willing to put before the Court, is that right?
A. Well, that's what Mr Evans did."
The judge did not reject that evidence and, indeed to do so would have required a careful analysis of the context. Although Ms Tjiong and her uncle Richard Tjiong had been the joint holders of a power of attorney from her father, and her uncle had been the administrator of her father's estate, she and her brother had taken proceedings against Richard Tjiong to have him removed as the executor under her father's will and as trustee of a trust that he had set up known as the "George Tak Loek Family Trust" and to recover payments he had made to a charitable foundation known as Oninama. [37]
She further stated in the affidavit:
"22 During proceedings commenced by the Plaintiff's Mother against my Father's estate, Richard Tjiong was named as the First defendant and appeared with his solicitor for the entirety of the proceedings. Richard Tjiong provided no evidence to the Court as the trustee for the so-called Burwood Trust as to what had occurred to the proceeds of sale of the Burwood property. This was in circumstances where Richard Tjiong was the effective trustee of the so-called Burwood Trust from late 2001 to June 2009.
…
24 I was not aware of the moneys advanced by my Father to Lindsay in 1999 to assist with the purchase of his Humpty Doo property. I only became aware of it after my Father's death when Richard Tjiong told me …."
She was challenged in cross-examination, and accepted, that she was a joint attorney of her father's protected estate: [38]
"Q. You don't tell the Court that you were also appointed under that power of attorney, is that right?
A. Not specifically in there, but I mean for me reading that - like this has been through so many court cases, at the end Richard was the effective controller. This has all been thrashed out in other court cases."
Later it was put to her: [39]
"Q. And you decided to do nothing?
A. I trusted my uncle and he just took control of everything. In 1996 when dad was still here in Melbourne I did a lot more for him, but then Richard Tjiong just took control in 2001. He had all of the documents."
Secondly, and with respect to the specific statement in her affidavit as to becoming aware of the advance to her brother in 1999, she corrected the statement in par 24 set out above so that it read that she became aware only "after my father become incapacitated when Richard Tjiong told me". [40] That evidence was not otherwise challenged.
It is true that by 2009 both Ms Tjiong and her brother were aware of their father having made the payment in 1999. It was also clear that neither had, before 2009, sought to identify that advance as a distribution from the Burwood trust. However, there was no evidence that either of them knew of the letters establishing the Burwood trust until the 2009 proceedings and there was thus no basis for them to know of what distributions had been made under the terms of that trust until Ms Tjiong obtained the relevant documents after the removal of her uncle as administrator of her father's estate.
Thirdly, Ms Tjiong was cross-examined at some length to establish that, at least from March 2009, the date of Palmer J's first judgment, she knew that the Burwood unit, and any proceeds from the sale of the unit, were to be held for her grandmother during her lifetime. [41] The purpose of the cross-examination was revealed in the following questions and answers: [42]
"Q. Then according to your pleadings, and the submissions made on your behalf before Palmer J, your father George couldn't have made a distribution to anyone except your grandmother?
…
Q. Your father predeceased your grandmother, didn't he?
A. That's correct."
The cross-examination then turned to a letter sent by her solicitors on 8 July 2020 which referred to Mr Chang as "a beneficiary or potential beneficiary of the so called Burwood Trust". She was asked: [43]
"Q. At the time that you had this letter sent, you knew that you were a trustee of a trust, didn't you?
A. At that time, I was a trustee of a trust that had no assets in it.
Q. You knew that you were the trustee of the Burwood Trust, is that right?
A. I had been, but if there's a trust with nothing in it, then I'm a trustee of nothing."
In her affidavit of 26 November 2020, Ms Tjiong stated:
"28 In any event, the so-called Burwood Trust was distributed by my father by way of transfers to my brother, Lindsay Tjiong as indicated in my Solicitors' letter to Griffin Lawyers of Adelaide dated 16 January 2018."
The cross-examiner noted that her grandmother had only died in 2006: [44]
"Q. Given what we've already established, it couldn't have been a distribution from the Burwood Trust to Lindsay? Your grandmother was still alive in 1999.
A. That's right she was. But this is, I mean, there wasn't any strict trust deed. It was an informal arrangement between father and son, as in my grandfather and my father, and it was used for the benefit of my mother during her lifetime or for any family that was in need. So, if anything, you could actually really call it a breach of trust by dad, by doing that first. But the fact is that he continued on contributing towards my grandmother, at least up until he died.
Q. Do you say what your father paid to him was a breach of trust?
A. Well, it would seem like that, he shouldn't have done it before.
Q. You have done nothing, as the administrator of your father's estate, to rectify that breach of trust, is that right?
A. Well, I don't see that there's a reason it needs to be rectified. There were no consequences in him doing that.
Q. Why do you say there were no consequences?
A. Well, there were no consequences to my grandmother, like she, she was still well looked after.
…
Q. Your father wouldn't have known what need your grandmother had in 1999 going forward, did he?
A. Well, no, but, and I mean it was well established that she was living with, especially according to the Chinese culture, that she was living with her daughter. He continued with funding, giving funds, or contributing money towards, towards her upkeep and expenses."
The cross-examination concluded with the following passage: [45]
"Q. The payment made by your late father to Lindsay, which you now say is a distribution from the Burwood Trust, that's a recent invention isn't it?
A. No.
…
Q. Neither yourself nor your brother led any evidence as to the advance purportedly made by your late father to your brother George [sic], in 1999, is that right?
A. Well, it was, there was no, I didn't, there was no association to that, it's all, I could establish where the money had gone into and what had actually happened, looking at dad's bank accounts.
Q. There was no evidence led during those proceedings, is that right?
A. About Lindsay's payment?
Q. That's right.
A. Well, it wasn't relevant then."
As to the last point, it was Palmer J who confirmed that such evidence would not have been relevant in the proceedings before him, which, for reasons explained above, was undoubtedly correct.
As to the question of "recent invention", in the absence of any finding to the contrary, and the general acceptance of the witnesses' evidence, the denial should have been accepted. However, it is by no means clear what was meant by "recent invention". It cannot have been intended to suggest that the payment was a recent invention, but only the characterisation of it as a distribution of trust moneys. Yet, without repeating the detail, much of which was set out in the letter of 16 January 2018 to the solicitors for Mr Chang's mother, it is apparent, and should be accepted, that Ms Tjiong had little opportunity to investigate the accounts in order to determine how the payment should be characterised, until 2013. On 16 March 2015, Ms Tjiong obtained advice from solicitors in Victoria as to whether there had been any breach of trust and as to whether she should seek judicial advice. The advice concluded:
"In my view you can quite justifiably do nothing, which indeed is my recommendation. The most likely people to bring an action would be Richard and Soei, and any action by them is now statute barred. … I understand that before his death your brother Lindsay was in need, and that George made a substantial payment to Lindsay. It may well be that George was exercising his power of appointment in making that payment. Whilst we can now only speculate on what your father did many years ago, mere speculation by a Plaintiff that George might have acted in breach of trust will not win a case."
To repeat, whether the payment to Lindsay Tjiong constituted a distribution did not depend upon any opinion formed by Ms Tjiong. To the extent that it depended on evidence of a conversation given in evidence by Lindsay Tjiong, it was not put to him that that was a recent invention, nor was the substance of the conversation challenged. The first four paragraphs relied upon by the trial judge in support of her conclusion that there were matters "seemingly inconsistent" with a finding that the money received by Lindsay in July 1999 was a distribution cannot support that conclusion.
The undisputed fact was that since 2001, when he took control of George Tjiong's affairs, Richard Tjiong had held all the financial records until his brother's death on 30 January 2004, and since then until his removal by the Court as administrator of George Tjiong's estate, in June 2009. Any default in that period of 8.5 years was the responsibility of Richard Tjiong. It is apparent that he took no steps to investigate the continued operation of the Burwood trust. How the attempts by Ms Tjiong, through her solicitors, to obtain information in 2013 and 2014 can conceivably be inconsistent with the defence sought to be maintained to Mr Chang's proceeding is by no means evident and was not explained in the judgment below. It was an error to rely on that material.
A further step in the history (not addressed in the dispositive reasoning of the trial judge) should be noted. In the 2005 proceedings brought by Ms Tjiong and Mr Lindsay Tjiong orders were made in the Equity Division on 20 July 2010 including declarations that Richard Tjiong, in:
"(a) Fabricating, fraudulently, a file note alleged to contain extra-testamentary wishes or instructions given by the late George Tat Loek Tjiong purportedly conferring on the defendant greater powers over his deceased estate inconsistent with the terms of his last will, and by presently this alleged file note to the plaintiffs on 8 April 2008, urging upon the plaintiff the authenticity of this fabricated file note, and, thereafter falsely maintaining the authenticity of the alleged file note in these proceedings;
…
(c) Giving evidence on oath in these proceedings of conversations the defendant alleged he had with the late George Tjiong in the Austin Hospital, Melbourne on 26 March 1996 and on 30 March 1996, including evidence of the circumstances of his travel to Melbourne in the first instance, which evidence was false;
…
has acted in breach of his duty as executor and trustee of the estate… and that his conduct warrants his removal as executor and trustee."
Richard Tjiong was then ordered to deliver up to Ms Tjiong or her solicitor "any assets, records, documents and things being the property of the late George Tat Loek Tjiong remaining in his possession or control forthwith".
On 10 July 2014, O'Brien Lawyers wrote to Peter Kennedy, Lawyers, who had been acting for Richard Tjiong stating that an application was being prepared pursuant to s 63 of the Trustee Act (for judicial advice). The letter stated:
"We are still preparing an application. In doing so our client has been making enquiries to attempt to obtain relevant bank records for her father for the period from 1996, at least, and earlier if possible. We and our client are making enquiries to attempt to trace what George Tjiong did with the net proceeds of sale of the Burwood property in 1996 and thereafter.
We note that when your client handed over George Tjiong's financial records he only provided bank statements mostly dating from 2001. Considering your client took possession of all of George Tjiong's financial records and other documents in early January 2002 it appears possible that he may still have in his possession bank statements for accounts operated by George Tjiong back to 1996 and possibly earlier. Having regard to the requirement to keep records for tax purposes for seven years it is likely, if not certain, that George Tjiong had bank statements in his possession as at 24 December 2001 that went back at least to 1994-95."
There is correspondence between Ms Tjiong and Macquarie Bank demonstrating a similar attempt to obtain such records, which were no longer available from the bank in 2013.
Those letters demonstrated appropriate steps being taken both by Ms Tjiong and by her solicitors to obtain records which were clearly important in seeking to identify what funds, if any, were left in the Burwood trust. There is no skerrick of evidence in those letters inconsistent with her defence to Mr Chang's claim.
The final passage relied upon by the trial judge was a finding made at [57]. In order to understand the nature of the finding, it is necessary to set out that and the previous paragraph:
"56 On 7 July 2020, Commlex Pty Ltd (solicitors acting on behalf of Tzer) wrote to O'Brien Lawyers asserting that Tzer was a beneficiary of the Burwood Trust as found by Palmer J, that Katrina (as the trustee of the Burwood Trust) was under a duty to keep proper accounts, and that she was required to provide Tzer with a comprehensive account of the assets of the Burwood Trust. The letter sought her proposal for the distribution in accordance with the terms of the Burwood Trust within seven days, failing which legal proceedings would be commenced against her.
57 The next day, O'Brien Lawyers responded by referring to the January 2018 letter. O'Brien Lawyers' letter also stated that should Tzer wish to press his request for information about the trust, the trustee was entitled to request an advance payment of the costs of supplying the information and that they were instructed to request advance payment of the trustee's costs of providing the information sought, being $16,500. Tzer submits, and I accept, that the reference to 'trustee' in this letter should be read as a reference to Katrina as the relevant trustee, which is not consistent with the assertion that the Burwood Trust had been determined by the payments to Lindsay."
The letter referred to at [56], from Commlex, threatened proceedings within seven days if Ms Tjiong did not, within that time, provide to Mr Chang materials identified in the following terms:
"Katrina Tjiong, being the trustee of the Burwood Trust, is under a duty to keep proper accounts. Furthermore, Ms Tjiong is required to be ready to render the account to the beneficiaries when called upon to do so.
Our client, Tzer Chin Chang requires that within seven days from today, Katrina Tjiong provide him through this firm with a comprehensive account of the assets of the Burwood Trust and her proposal for the distribution thereof, in accordance with the terms of the Burwood Trust.
For the avoidance of any doubt, we request that Katrina Tjiong (in her capacity as trustee of the Burwood Trust) provide an account which includes information concerning:
(a) the trust instrument(s);
(b) the trust property;
(c) the trust investments;
(d) details of any appointments made by the trustee under any discretionary power;
(e) receipts (whether of income or capital) by the trustee;
(f) costs, expenses and outlays (whether of income or capital account);
(g) evidence of payment;
(h) capital and income accounts; and
(i) taxation."
Given the history of the matter, of which Mr Chang must have been aware, the letter was inappropriately phrased. The following day, O'Brien Lawyers responded commencing with the following passage:
"Your client's Mother made enquiries about this matter in December 2017, through the agency of a solicitor in Adelaide. On behalf of our client, we provided a comprehensive response in January 2018 which amongst other things made clear that the so-called Burwood Trust, being the trust identified by Palmer J … was determined by distribution on its terms in July 1999.
We suggest that your client obtain a copy of that letter from his mother."
The letter of 16 January 2018, to which reference has been made above, covered some 44 pages with 186 paragraphs.
It may be interposed, that the statement as to the final distribution in 1999, not quoted by the trial judge, was consistent with the defence now mounted by Ms Tjiong. The letter continued:
"Should your client wish to press his request for information about this trust, particularly in terms of the list of questions he has posed and under the threat of litigation which he has made, we must remind him of the relevant principles that apply in such matters. As a beneficiary or potential beneficiary of the so-called Burwood Trust, Mr Chang is entitled to information about the trust …. But where a beneficiary seeks information from a trustee about the trust the trustee is entitled to be reimbursed by the beneficiary for the cost of supplying the information and is entitled to request payment of those costs in advance …."
Read in context, the trial judge's conclusion that use of the term "trustee" in the letter was inconsistent with the assertion that the trust had been determined by the payments to Lindsay Tjiong cannot be accepted.
The assumption is unpersuasive. Cultural factors should be taken into account. As Ms Tjiong had explained in her evidence, the trust arrangement was informal and secret, the expectation that her grandmother would be looked after by the grandmother's daughters (Ms Tjiong's aunts) would have been in George Tjiong's mind. In fact, she gave unchallenged evidence that George Tjiong continued to make payments to his mother after 1999. Further, the comingling of his own funds with those of the trust render the assumption that he would not have distributed anything to a family member in need whilst his mother was still alive highly implausible.
Further, in making assumptions about George Tjiong's subjective intentions, care should be taken not to read the letters from his father as would a lawyer and as did the equity judge 20 years after the payment was made to Lindsay Tjiong.
This reasoning, which is consistent with that of Palmer J in 2009, was as follows:
"37 On 4 June 2010, Palmer J delivered judgment in the removal proceeding, Tjiong v Tjiong, in which he declared that the GT Trust was obtained by fraud, undue influence and unconscionable conduct on the part of Richard and made an order that Richard deliver to Katrina, as trustee of the GT Trust and administrator of George's estate, all of George's assets, books and records: at [21] and [138]. The orders made on that occasion noted that Katrina was released from the undertakings she gave on 16 June 2009.
38 Katrina's evidence, which I accept, is that an incomplete set of estate records were delivered to her solicitor's office by Richard in late 2010 which did not include records relating to the MacBank Account.
39 Richard appealed Palmer J's decision in Tjiong v Tjiong, which appeal was dismissed by the Court of Appeal on 29 June 2012: Tjiong v Tjiong [2012] NSWCA 201 (Tjiong Appeal).
40 Katrina gave evidence in cross-examination that she knew the terms of the Burwood Trust as early as 4 March 2009; she knew the proceeds of the Burwood Trust may have been held by George (as trustee) when she became administrator of his estate and that she might have to commence new proceedings as administrator of his estate if a resolution could not be reached with family members as to the fate of the Burwood Trust funds; and that part of her role as trustee was to establish what happened to the Burwood Trust funds …. She deposes that she did not commence looking into what had occurred to the Burwood Trust property until after the Tjiong Appeal and then she waited to see if Richard would make an application to the High Court for leave to appeal (which he did not do).
41 In a letter dated 10 July 2013, O'Brien Lawyers (acting on behalf of Katrina), wrote to Richard's lawyers and, amongst other things, referred to the Burwood Trust as a trust 'of moneys or assets that formed part of the whole assets of George Tjiong as at December 2001' and as a 'discretionary trust in favour of such members of the family of … Hok … as George in his discretion might appoint having regard to their needs'. It was asserted in the letter that Katrina must now be the trustee of the Burwood Trust, given that Katrina had replaced Richard as executor of the estate."
George Tjiong was a medical practitioner. He was clearly trusted by his father. George apparently knew of his father's relationship with Ms Nikaido. He hoped that George "and the rest of the family" would accept his son, Roy, although he did not expect that from "mum". The settlor thus trusted George in relation to matters of family affairs which were closest to him. No evidential basis has been provided to discount that trust. Accordingly, there is no reason to suppose that George Tjiong did not consider it consistent with the spirit of his father's instructions to provide a home for his own son who was undoubtedly in need and struggling. That being so, the appropriate inference is that he applied the funds he had from his father for that purpose, given that his mother was well taken care of. He may have been mistaken in believing he could make such an assumption in respect of his mother, but he was not to know in 1999 that she would outlive him.
In my view the plaintiff failed to prove that the Burwood trust existed at the date of George Tjiong's death.
That appears to be a rejection of the material benefit test and the imposition of either a subjective intention test or a dominant benefit test. On either preferred approach, it appears that, where fiduciary duty and personal interest coincided, the trustee had to establish that support of the fiduciary duty was the effective motivation.
In my view, both of those propositions are wrong in principle. As to the rejection of the material benefit test, if the trust obtained a material benefit from the proceeding, the trustee should generally be entitled to an appropriate indemnity. If the trust assets constituted 80% of the protected fund, it is inequitable to allow the beneficiaries of the trust to obtain the whole of the trust's share of the benefit without bearing any of the cost. If the protected fund was made up of comingled assets of two or more trusts, the costs of protecting it would surely be apportioned when the task of separating the assets was undertaken. There is no reason, generally, to adopt a different approach where the balance of the funds not subject to an established trust are part of an unadministered deceased's estate.
Nor should it matter that, absent the personal interest of the beneficiary of the estate, the costs may not have been incurred. Indeed, the latter test appears to involve an assumption that the fiduciary duty would not have been a sufficient motivation to defend the trust fund.
It is implicit in the material benefit test that there may be an apportionment as between the trust fund benefit and the personal benefit. Apportionment in accordance with the respective values of the two elements of the estate is an appropriate approach.
A different question would arise if the litigation involved the existence of the trust. In that case, there would be a conflict between the personal interest of a beneficiary under the will and the potential fiduciary duty which should prevent the putative trustee being engaged to defend the trust. Thus, when Ms Soei Chang commenced the proceedings determined by Palmer J in 2009, Katrina and Lindsay Tjiong, as the beneficiaries of George's estate, defended the proceedings. The Burwood unit having been registered in George Tjiong's name, Ms Chang relied upon a resulting trust in favour of their father Hok which, on his death intestate, passed to their mother, Kwat, leaving no beneficial interest in George Tjiong's estate. Katrina and Lindsay Tjiong denied the existence of any trust. Palmer J rejected the claim for a resulting trust, but found that the Burwood Trust had been established.
On my understanding that the trial judge has, at least in some respects, applied the wrong test, there should be a grant of leave to appeal from the second judgment in so far as it addressed Ms Tjiong's claims for indemnity. Rather than limit the grant of leave according to the amount involved in the claims, the preferable approach is to grant leave, determine the correct principles, and apply those principles to the claims the subject of the appeal (and cross-appeal). Because there were elements of inconsistency between findings with respect to claims which were accepted and those which were not, the trustees should have leave to pursue their proposed cross-appeal.
The first step in addressing the appeal must therefore be to consider the legal principles in support of the approach adopted above. That in turn requires reference to the procedural history of how the claims arose.
Mr O'Brien was not cross-examined as to the correctness of that statement concerning legal expenses, nor was it suggested to him that Ms Tjiong had not paid, or was not obliged to pay, any of the invoices, copies of which were exhibited to the affidavit.
The new trustees were appointed by order (3) made on 16 August 2022. The proceedings were then adjourned to provide them with the opportunity to determine the corpus of the Burwood Trust and to identify "any claims by the defendant for indemnity in relation to expenditure said to have been incurred with respect to the management, administration or otherwise related to the Burwood Trust": order (9)(b).
Following the preparation of an interim report by the new trustees, Mr O'Brien prepared a further affidavit dated 26 September 2023 with an exhibit (AOB3) annexing documents relating to the indemnity claims. The exhibit ran to over 550 pages. The evidence supported the claims for costs incurred by way of tax invoices issued by counsel and solicitors whose advice had been received or who had acted for Ms Tjiong in various proceedings, including her current solicitors, O'Brien Lawyers. (Exhibit AOB3 was admitted as exhibit D. [54] ) By a further affidavit dated 24 November 2023, par 10, responding to a revised report prepared by the trustees, Mr O'Brien noted that the trustees had identified Ms Tjiong's claims for indemnity by reference to his affidavit of 26 September 2023 and stated that Ms Tjiong relied upon that affidavit in relation to items 1 to 13 of her claims for indemnity.
As the trial judge noted in her second judgment, the actual figures relied upon were revised again in a schedule provided on 13 December 2023, which calculated the claims for indemnity in relation to the trust as 11.76% of the costs incurred, on the basis that the costs were to be apportioned between the value of the Burwood Trust and the value of the whole estate, including what was known as the GT Trust, established by Richard Tjiong when he had control of his brother's affairs. The judge accepted the schedule as reflecting the defendant's final position. [55]
When the matter then came back before the trial judge on 18 October 2023, the new trustees had been joined as the second and third defendants. They were represented by counsel (Mr Barlin) who had, during stage 1 of the proceedings, represented the plaintiff. The plaintiff was represented in stage 2 by Ms Harris-Roxas, who had been junior counsel for him in stage 1. The primary opposition to the indemnity claims was raised by Mr Barlin on behalf of the new trustees: where claims were conceded by the new trustees, the trial judge accepted those claims.
Importantly, there was no application to cross-examine Mr O'Brien, nor to have Ms Tjiong recalled for further cross-examination. In those circumstances, a statement by a solicitor in an affidavit that his client, who was a party in the proceedings, had incurred certain liabilities to him should be understood as referring to current liabilities. If in fact particular invoices had not been paid, but predated the proceedings by more than six years, it did not follow that they were unenforceable. Given the continuing relationship between the party and solicitor, it might reasonably be inferred that there would have been (and indeed continued to be) confirmation of the cause of action which would prevent the limitation period expiring, pursuant to s 54 of the Limitation Act 1969 (NSW).
As noted above, the trustees were directed to identify the claims in their report but the acceptance or rejection of the claims was reserved for the Court. As the trial judge noted in the course of argument on the first morning of the second stage, the validity of the claims of indemnity were not a matter for the new trustees. [56] However, although the trustees' report was appropriately framed in accordance with the directions, during oral submissions the trustees were permitted to address the merits of the claims. They submitted that "proof of a liability to pay and either actual payment or a subsisting debt was [sic] essential before awarding any indemnity". [57] This proposition was broadly accepted by the trial judge who stated, as the primary basis for refusing the claim for indemnity in relation to the 2005 removal proceedings:
"122 I also do not accept Katrina's submission that she is entitled to an indemnity for 11.76% of the costs incurred because the costs incurred in relation to the 2005 Removal Proceedings ensured the due administration of a trust (referring to the George estate and GT Trust and the Oninama Trust) that included the component of those assets and funds that comprised the Burwood Trust and benefitted the Burwood Trust."
Two observations may be made with respect to the principle underlying that determination. First, there was evidence, namely the affidavits of Mr O'Brien, Ms Tjiong's solicitor, that costs had been incurred and that some legal expenses had been paid. With respect to the 2005 removal proceedings, the costs had been assessed and the certificate of assessment registered as a judgment. Ordinarily, the issue of the absence of any costs agreement or evidence of payment would have been raised in cross-examination of Mr O'Brien. That did not happen, either on the motion to amend, or later. It would have been relevant on the motion to amend because the absence of evidence to support an indemnity claim would have provided a significant reason to refuse leave to amend. It did not occur later in the first stage of the proceedings because leave to amend was refused. In the second stage of the proceedings the affidavits of Mr O'Brien were read and the material exhibited was accepted in evidence but there was no application to cross-examine him.
Secondly, the need to prove a payment or a continuing liability was said to follow from the nature of an "indemnity". That proposition was derived in part from observations I made in Wentworth v Rogers [58] considering the entitlement to recover costs from an unsuccessful party in litigation, which has been described as based on the "indemnity principle". [59]
In discussing the nature of a legal liability to pay costs to one's legal representative, I concluded that criterion was satisfied where there was "a contractual entitlement to charge fees, subject to a condition subsequent", namely as to recovery from the other party of moneys from which the fees could be paid. [60] While the costs agreement (or agreements) between Mr O'Brien and Ms Tjiong were not in evidence, the existence of an enforceable contractual arrangement should be inferred, whether or not the condition for payment had yet arisen. A plethora of statements by Mr O'Brien in affidavits that such liabilities had been "incurred" support that inference and, in the absence of cross-examination challenging the inference, it should be accepted.
There was an issue as to the division of costs between different capacities in which proceedings were maintained, seeking to protect the available assets, but where there was doubt as to the identity of the beneficiaries entitled to the funds, or some part thereof. It is true that the trustee's right to be indemnified or exonerated as to costs incurred depends on the costs being incurred in the course of the exercise of the office of trustee. [61] It follows that a trustee cannot claim indemnity where he or she has "in substance acted for his or her own benefit rather than for the benefit of the fund". [62]
In a passage in the second judgment which does not appear in the version on Caselaw, but does appear in the certified copy contained in the appeal papers, the trial stated:
"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 a 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."
Preferring a personal interest, or acting for personal benefit, where the interests of the trustee conflict with those of the beneficiaries of a trust, may not only deprive the trustee of an entitlement to recover costs and expenses from the trust, but may constitute misconduct warranting removal. Thus, in the passage in Miller v Cameron relied upon by the trial judge, Latham CJ stated:
"In defending this action and in prosecuting this appeal the defendant has been representing and supporting his own interests and not those of the trust estate. He has failed to show that his interests coincide with the interests of the trust estate."
Where a trustee has a common interest with the beneficiaries of a trust in protecting assets from waste or improper disposition, she will be acting both in her own interests and in those of the beneficiaries of the trust. That interests can coincide was expressly recognised by Latham CJ as relevant to whether the trustee in that case should be required to pay the costs of proceedings in which the beneficiaries of the trust had sought to remove him. That is not this case. Where there are both fiduciary interests and personal interests it would be improper for the trustee to obtain indemnity or exoneration from the trust funds to the extent that costs have been incurred in pursuing personal interests. But it does not follow that it is necessary to determine that one interest is predominant over another. Indeed, to do so ensures that there will be a benefit obtained without cost by the other interest. This result is wrong in principle and was not dictated by any authority to which this Court was taken. It should be rejected. [63]
The third reason was that there were "other contradictors who could have taken action". Who they were was not explained. However, reliance was placed on two cases referring to the trustees' obligation to remain "neutral". [75] Neither of these authorities supports the proposition that the intervention of Ms Tjiong was not within the ordinary functions of a trustee. Re Dion Investments involved an application by a trustee to vary the terms of the trust by conferring new powers on the trustees. In that context it is understandable why Barrett JA stated that "[a] trustee's function is to take the trusts as it finds them and to administer them as they stand". To suggest that the trustee is not acting within her functions in seeking to determine whether an attempt to destroy the trust is based on a forged document raises quite a different issue.
Application of Uncle's Joint Pty Ltd involved an application for judicial advice pursuant to s 63 of the Trustee Act as to whether the trustees would be justified in defending claims made against them in trust proceedings, and would be justified in using the resources of the trust to do so. Ultimately Brereton J concluded that, although the defence had sufficient prospects of success and the estimated costs were not disproportionate, the dispute arose in the context of disagreements between various children of the deceased who were the beneficiaries of the trust, probate proceedings and family provision proceedings in relation to the estate. As Brereton J stated:
"31 In such a case, to borrow the words of Lightman J in Alsop Wilkinson (a firm) v Neary [1996] 1 WLR 1220 (at 1225), the duty of the trustee is to remain neutral and, in the absence of any court direction to the contrary, offer to submit to the court's directions, leaving it to the rivals to fight their battles."
Brereton J further observed:
"32 Thirdly, if this results in the trust proceedings being undefended by the applicants, that does not mean that there will be no proper contradictor. The appointors who appointed the applicants, and/or a representative of the class of discretionary beneficiaries who wish the applicants to remain in office, would be appropriate contradictors, and can apply to be joined as defendants. Alternatively, they can fund the applicants' defence of the proceedings. There is no evidence that those of the beneficiaries who support the trustees do not have the resources to fund their defence. Even if they do not, I see no fairness or justice in permitting them, to the exclusion of the plaintiffs, to have recourse to the trust fund to do so."
Again, the principle of neutrality may well be material in circumstances where the validity of the appointment of trustees is in issue and there are contending parties taking adversary positions on that issue. By contrast, if the alternate will claim had succeeded, there would be no trust and the present plaintiff would have no claim. Further, if the payment to Lindsay Tjiong was properly characterised as a distribution of the trust, there may have been an issue raised as to whether that payment could be traced and recovered. None of that warrants the conclusion that in the conceded circumstance, namely that the proceedings related to the Burwood Trust (and only to the Burwood Trust), Ms Tjiong was not acting in the interests of the trust in joining and successfully stopping the proceedings. No-one doubted her standing to do so.
The fourth matter raised was that she did not seek judicial advice before taking steps in the proceedings. That, it was said, placed her at risk of not recovering her costs. That was true, but obtaining judicial advice is not a precondition to claiming an indemnity or exoneration from a trust fund. Nor does the failure to take judicial advice affect the proper conclusion as to whether in the circumstances which eventuated, the trustee was entitled to indemnity.
It follows that, because the proceedings related to the continued existence of the trust, and Ms Tjiong successfully defended the proceedings, the indemnity should have been accepted. The fact that costs were not recovered from the plaintiff (Soei Chang) turned on a consideration which was irrelevant for present purposes, namely who was responsible for the likely forgery. Ground 4(b) should be upheld and the indemnity in an amount of $99,429.10 should be allowed.
The second tranche of objections related to the claim for apportioned liability, namely 11.76% of the costs incurred on the basis that the proceedings ensured the due administration of George Tjiong's estate including the component of the assets and funds that comprised the Burwood Trust. [78] The judge stated that it was not sufficient to establish benefit to the Burwood Trust; the question was whether the costs were properly incurred by Ms Tjiong "in performing her role as trustee of the Burwood Trust": at [124]. That possibility was rejected on the basis that she had acted "primarily" in her own personal interest, by which the judge meant in her own interest as a 50% beneficiary of George Tjiong's estate. Differently expressed, the judge then stated that the 2005 removal proceedings were "not about the Burwood Trust": at [125].
As has been explained above, protection of the estate and its assets involved protection of both the assets which formed part of the Burwood Trust and those which did not. Those assets having been comingled, it was necessary for the whole corpus of the estate to be protected. For reasons already explained, once the constituent elements have been separated, it is unjust to require that one part bear all the costs despite only obtaining part of the benefits.
The schedule dated 13 December 2023, relied upon by the first defendant at the second stage hearing, claimed 11.76% of the assessed costs without interest ($990,395.42), being an amount of $116,470.50. Ground 4(a) should be upheld and that claim for indemnity accepted.
GRIFFITHS AJA: This appeal is the latest chapter in a lengthy saga of litigation which dates back almost 20 years. The multiple proceedings which have been brought during that period relate to sometimes acrimonious disputes concerning the assets and estate of the late George Tjiong.
The present proceedings relate to a judgment and orders dated 16 August 2022 by Henry J (Chang v Tjiong [2022] NSWSC 1092 (first primary judgment or PJ1)) as well as a second judgment by her Honour dated 9 February 2024 when further orders were also made (Chang v Tjiong (No 2) [2024] NSWSC 74 (second primary judgment or PJ2)).
In the first primary judgment, her Honour found that a trust created by George's late father, Hok Tjiong, over a unit in Burwood (Burwood Trust) was not determined by payments which George had made to his son, Lindsay, in July 1999. Her Honour also held that the income and corpus of the Burwood Trust had been held by the appellant, George's daughter, as bare trustee since July 2009, when she was appointed administrator of her father's estate. The primary judge concluded, however, that the appellant had a conflict of interest and should be replaced as trustee of the Burwood Trust by two independent trustees. Her Honour also made orders vesting all of the property of the Burwood Trust in the new trustees and requiring them to provide a report to the Court which identified the corpus and income of the Burwood Trust and any claims for indemnity by the appellant with respect to the management or administration of, or being otherwise related to, the Burwood Trust. Her Honour explained that the report was required because the Burwood Trust funds had been mixed with George's personal funds and formed part of the funds in George's estate and/or family trust.
In the second primary judgment, the primary judge ordered that the appellant pay to the trustees of the Burwood Trust an amount of $638,432.11, representing the corpus and income of the Burwood Trust after deducting the appellant's successful claims for indemnity as determined by the Court in the amount of $52,886.
The primary issues on appeal may briefly be described as follows:
1. whether the primary judge erred in concluding that the appellant is liable as a bare trustee in proceedings for an account in common form, in circumstances where the trustee was not ordered to account and there was no finding that she had breached her duties as bare trustee;
2. whether the primary judge erred in ordering the new trustees to 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 on the basis of the value of the Burwood Trust as at December 2023;
3. whether the primary judge ought to have concluded that the payments made by George to Lindsay in July 1999 constituted an exercise of George's power of appointment under the Burwood Trust so as to effectively determine the Burwood Trust by distribution; and
4. whether the primary judge erred in her determination of the appellant's claims to indemnity from the Burwood Trust.
The first respondent, who is the appellant's cousin, contends that her appeal is incompetent insofar as it purports to appeal the first primary judgment because an extension of time is required. An extension was sought only shortly before the hearing.
After the matter was raised by the Court during the course of the hearing (for reasons which will be developed), the appellant also sought leave to appeal in respect of the second primary judgment and related orders.
The second and third respondents, Messrs Heesh and Everingham, are the current trustees of the Burwood Trust. They were joined as the second and third defendants after publication of the first primary judgment. On the appeal, they were represented by Mr Barlin, who had appeared for Tzer in the first hearing below. On the appeal, Tzer was represented by Ms Harris-Roxas, who had appeared for Tzer together with Mr Barlin in the first hearing.
On 12 June 2024, the trustees filed a summons seeking leave to cross-appeal so as to challenge some of the primary judge's findings in the second primary judgment granting some of the appellant's claims to indemnity. Leave to cross-appeal is required by s 101(2)(r) of the Supreme Court Act 1970 (NSW) because the total amount in question is less than $100,000.
The summons and the accompanying draft notice of appeal names only the trustees as applicants/appellants on the cross-appeal and Katrina as the only respondent. Despite this, the written summary of argument dated 12 June 2024 in support of the summons is stated to be on behalf of all three respondents in the appeal (ie, including Tzer) and the document is signed by both Mr Barlin and Ms Harris-Roxas.
During the hearing on the appeal, Mr Barlin said that he did not wish to add to what was said in the written summary of argument. Ms Harris-Roxas made no oral submissions on the cross-appeal.
It appears that proper formal steps have not been taken to name Tzer as a party to the proposed cross-appeal, despite this being the evident intention. Accordingly, within seven days hereof, an amended summons seeking leave to cross-appeal should be filed and served naming Tzer as an applicant for leave to cross-appeal, together with an amended draft notice of cross-appeal naming Tzer as a cross-appellant.
The parties were content for the Court to defer ruling on the other procedural matters and to give reasons in the Court's final reasons for judgment. Those matters are addressed at [267]ff below.
Before descending into further detail concerning the litigation and the background history, it is desirable to identify the key relevant people. I mean no disrespect if I refer, or continue to refer, to some of them by their given names.
In 1976 Hok Tjiong created a trust over a unit in Burwood (Burwood Unit) which Hok had initially bought for the benefit of his wife, Kwat Tjiong.
The Burwood Trust provided for George Tjiong, who was Hok and Kwat's eldest son and the sole registered proprietor of the Burwood Unit, to hold the Unit and its subsequent sale proceeds on trust for Kwat's benefit during her lifetime and, thereafter, to be applied in George's discretion for the benefit of members of Hok's family according to their assets.
The appellant, Katrina May Lan Tjiong, is George's daughter and a member of Hok's family. She was appointed the administrator of George's estate following proceedings heard by Palmer J which resulted in the removal of George's brother, Richard Tjiong, from that role on 16 June 2009.
George and Richard had a sister, Soei Lan Chang.
George also had a son, Lindsay Tjiong. In 1977, Lindsay was injured in a motor vehicle accident and sustained a brain injury which affected his behaviour and learning abilities. Lindsay moved to Darwin in 1993.
The first respondent in the present proceedings, Tzer Chin Chang, is Hok and Kwat's grandson and Soei's son.
After Hok's death in 1981, his wife, Kwat, continued to live at the Burwood Unit but then moved out to live with family members in 1994. George rented out the Unit until it was sold in December 1996.
The net proceeds of sale of the Burwood Unit (totalling $168,331.06) were deposited by George into his Macquarie Bank Cash Management Trust account number XX8055 (XX8055 Account). Various deposits and withdrawals were made by George into and out of that account over the next two years. Notably, in November 1997, George acquired a property in Terrey Hills for around $378,000, using $131,537.46 of funds from the XX8055 Account.
Lindsay, who gave evidence below, deposed that in 1999 he had a telephone conversation with George. His evidence was that he told George that he was interested in buying the property which he was then renting near Darwin, and that George replied that he had some money set aside for the care of Kwat, but considered she was well cared for by the family and was happy to give Lindsay the money to help with the purchase of the property in Lindsay's name. George said that he could "now die in peace". He asked Lindsay to keep the payment to himself and to leave it to George to tell Lindsay's sister, Katrina.
On 19 July 1999, George made two withdrawals from the XX8055 Account by way of two bank cheques in the total amount of approximately $200,000.
Shortly thereafter, Lindsay received a letter from George, enclosing the two bank cheques. George said in his letter that the cheques were to honour his "agreement" with Lindsay and told Lindsay to keep his receipt of the bank cheques to himself. The letter ended, "Now I can die in peace".
Katrina contended below that these payments to Lindsay amounted to an exercise of the power of appointment conferred on George under the Burwood Trust and, since the payments exceeded the corpus of the Trust at that time, resulted in its determination. The primary judge's rejection of that claim is challenged by ground 3 of the notice of appeal.
George made his last will on 23 December 2001, appointing his brother, Richard, as executor and leaving his whole estate in equal shares to his children, Katrina and Lindsay.
George died on 30 January 2004, and his mother, Kwat, died in December 2006.
Tzer also sought the appointment of independent trustees to the Burwood Trust on the ground of a conflict between Katrina's interest as bare trustee of the Burwood Trust and her interest as a beneficiary both of the Burwood Trust and George's estate, of which she was the appointed administrator. There was no allegation that Katrina had breached her duties as bare trustee of the Burwood Trust, apart from her failure to account.
In her cross-claim filed on 8 September 2020, Katrina sought a declaration that the Burwood Trust was determined by George's payments of approximately $200,000 to Lindsay in July 1999.
It is now desirable to summarise the first and second primary judgments.
Thus, the primary judge concluded at PJ1[113] that the Burwood Trust had not been effectively terminated by the payments George made to Lindsay on 19 July 1999 and that those payments were most likely a gift from George's personal funds.
The primary judge then turned her attention to what orders should be made having regard to her conclusion that the Burwood Trust had not been determined by distribution. Her Honour noted at PJ1[119] that the parties had proposed competing orders but she repeated that, by the end of the hearing, "the orders were largely agreed". That agreement extended to the appointment of independent trustees of the Burwood Trust, as noted by the primary judge at PJ1[125]. Her Honour added that such an appointment "will enable proper inquiries to be made to ascertain the corpus (including any choses in action) of the Burwood Trust and the due administration of that trust".
Her Honour also noted that the parties were agreed that an order should be made for the vesting of the property of the Burwood Trust in the new trustees, including its books and records. Her Honour added at PJ1[129] that it was common ground that some of the books and records of the Burwood Trust may also be books and records of George's estate and the GT Trust, but that access to those books and records would be needed by the new trustees. In declining to determine whether Katrina or the new trustees should be liable to pay for photocopies of those books and records, the primary judge noted at PJ1[130] that it was not appropriate to make any finding as to whether or not Katrina was in the position of a defaulting trustee since taking over as administrator of George's estate. Her Honour noted that Tzer sought no relief in that respect and that if Tzer wished to press the issue, it would be a matter for investigation by the newly appointed trustees.
Her Honour further noted at PJ1[132] that the parties were agreed that the new trustees should be directed to prepare a report "that seeks to identify what become [sic] of the funds that were the subject of the Burwood Trust, the dealings with those funds, and the actual corpus and income of that Trust".
The primary judge said that the trustees' report should identify any claims which Katrina makes against Burwood Trust funds, but not determine those claims because any claims for indemnity would be dealt with by the Court at a later stage.
At PJ1[134], the primary judge said (emphasis added):
I will, therefore, make orders (in accordance with the terms finally agreed) regarding the scope of the trustee's report, service of the report on Tzer and any other object of the Burwood Trust, and the relisting of the proceedings for consideration of the report, and to enable the trustee to seek further directions from the Court if needed.
The scope of the report to the Court (as required by order 8) was identified in order 9 made on 16 August 2022:
(9) The Report is to identify:
(a) the corpus (including any accretions) of the Burwood Trust and the income (including any accumulations) 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 date; and
(b) any claims by the Defendant for indemnity in relation to expenditures said to have been incurred with respect to the management, administration or otherwise related to the Burwood Trust.
The primary judge noted that the trustees' revised report was provided on 22 November 2023 and that the parties had served further written submissions in relation to the revised report and Katrina's claims for indemnity.
At PJ2[65], the primary judge described three options which the trustees had identified in the revised report for determining the corpus and income and accumulation of the Burwood Trust as at 12 December 2023. Her Honour also noted that Katrina had provided her own set of calculations of the value of the Burwood Trust which was served with her written submissions. Her Honour noted that Katrina's calculations were not dissimilar to the first option put forward by the trustees, in that Katrina took into account both the amount of the Burwood Trust funds (approximately $131,000) which was used for the purchase of the Terrey Hills property and the proceeds of sale of that property attributable to the Burwood Trust funds (approximately $206,000).
The primary judge summarised the parties' submissions concerning the trustees' three options before concluding that Option 1 was appropriate. In the form accepted by the primary judge, Option 1 involved the following steps: (a) tracing the $131,000 in Burwood Trust funds used to purchase part of the Terrey Hills property into the proceeds of sale and applying a compounding annual interest rate of 4.75% to the proceeds attributable to the Burwood Trust funds; (b) applying the 4.75% interest rate to the balance left in the XX8055 Account after the purchase of the Terrey Hills property; and (c) applying the 4.75% interest rate to the interest earned on moneys in the XX8055 Account after the sale of the Burwood Unit and before the purchase of the Terrey Hills property.
The primary judge then addressed and determined two remaining objections raised by Katrina regarding the trustees' approach and their calculations, namely whether the corpus should include an amount for notional rental income on the Terrey Hills property and what provision should be made for tax (see PJ2[68]). Her Honour gave detailed reasons for why she considered that no notional rental sum should be included and why no reduction should be made for tax (see PJ2[78]-[84]).
The primary judge's conclusion on the value of the corpus of the Burwood Trust as at 12 December 2023 is stated at PJ2[85] and [86]:
[85] In conclusion, I find that that subject to Katrina's claim for indemnity, the corpus of the Burwood Trust is $691,318.11 as at 12 December 2023. This is based on the amount calculated by the Trustees in the Revised Report as Option 1 for calculating the corpus of the Burwood Trust, less the amount $92,303.48 attributed to rent which I have rejected.
[86] As an aside, I note that this amount is close to the amount of $691,992.05 in Table 2a of Katrina's calculations, which was another calculation that Katrina had proposed. That calculation also adopted the amount of the proceeds of sale of the Burwood Unit (of $168,331.06), added an amount of $74,907.36 (said to represent the investment into and from the sale of the Terrey Hills property) and interest earned at 4.75% compounded annually (and excluding any tax) of $448,753.67, giving a figure of $691,992.05.
The primary judge ultimately ordered Katrina to pay the trustees of the Burwood Trust the amount of $638,432.11, representing the corpus and income of the Burwood Trust from the date of receipt of the proceeds of the sale of the Burwood Unit on 31 December 1996 through to 12 December 2023. That amount was determined by deducting from the corpus of the Burwood Trust as at 12 December 2023 as calculated by the trustees the amount of $92,303.48 for rent (ie, $691,318.11), and by then deducting Katrina's successful claims for indemnity.
Finally, there is the issue whether leave should be granted to cross-appeal from some of the primary judge's determinations concerning Katrina's claims for indemnity (Claims 4, 7 and 9, which are challenged by grounds 1, 2 and 3 of the draft notice of cross-appeal respectively, as well as the total amount of $52,886 to which the primary judge concluded at PJ2[192] and [193] Katrina was entitled by way of indemnity). Katrina did not oppose leave being granted.
It is appropriate to grant leave to cross-appeal in respect of all three grounds in the draft notice of cross-appeal so that all proper issues in dispute relating to Katrina's claims for indemnity may be resolved.
Katrina submitted that it was significant that Tzer did not seek any order that Katrina be liable for any amount found to be due upon the taking of accounts. Rather, in his statement of claim, Tzer sought an order that Katrina account on a common form basis. Tzer did not allege any breach by Katrina of her duties as bare trustee of the Burwood Trust apart from a failure to account. These matters are raised by ground 2 of Katrina's appeal.
I will defer summarising Katrina's submissions concerning whether the Burwood Trust was determined in July 1999 (ground 3) and her claims for indemnity (grounds 4 and 5).
I shall now explain why I consider that time should not be extended to enable Katrina to raise grounds 1 and 2 of the notice of appeal.
Katrina's notice of appeal was filed on 8 May 2024. A notice of intention to appeal had been filed on 16 February 2024. Katrina sought to appeal from the whole of the first and second primary judgments. Grounds 1, 2 and 3 relate specifically to the first primary judgment, which was published on 16 August 2022. As noted above, this is a final judgment. Thus Katrina requires an extension of time to appeal from the first primary judgment (see UCPR, r 51.16(1)). The Court has a discretion to extend time (see r 51.16(2)).
The exercise of the discretion whether or not to extend time in such a case requires acknowledgment of the proposition that "the respondent to the application has a vested right to retain the judgment" which is proposed to be the subject of the appeal (see Jackamarra v Krakouer (1998) 195 CLR 516; [1998] HCA 27 at [4] per Brennan CJ and McHugh J). As Basten JA noted in Tomko v Palasty (No 2) (2007) 71 NSWLR 61; [2007] NSWCA 369 at [55] (Ipp JA agreeing), in such cases, consideration must be given to four factors of general relevance, being:
(1) the length of the delay;
(2) the reason for the delay;
(3) whether the applicant has a fairly arguable case, and
(4) the extent of any prejudice suffered by the respondent to the application
Importantly, however, Basten JA added at [56] that, speaking more generally, there may be other factors relevant to the grant of an extension of time in particular cases. His Honour then identified some additional factors to which Kirby J had referred in Jackamarra at [66].
Two additional factors of particular relevance in the present proceedings are the history of the proceedings and the conduct of the parties. In Gallo v Dawson [1990] HCA 30; (1990) 64 ALJR 458; McHugh J said (at 459) with reference to the Court's power under O 60, r 6 of the Rules of the High Court:
The grant of an extension of time under this rule is not automatic. The object of the rule is to ensure that those Rules which fix times for doing acts do not become instruments of injustice. The discretion to extend time is given for the sole purpose of enabling the Court or Justice to do justice between the parties: see Hughes v National Trustees Executors & Agency Co of Australasia Ltd [1978] VR 257 at 262. This means that the discretion can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice upon the applicant. In order to determine whether the rules will work an injustice, it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation, and the consequences for the parties of the grant or refusal of the application for extension of time: see Avery v No 2 Public Service Appeal Board [1973] 2 NZLR 86 at 92; Jess v Scott (1986) 12 FCR 187 at 194-195. When the application is for an extension of time in which to file an appeal, it is always necessary to consider the prospects of the applicant succeeding in the appeal: see Burns v Grigg [1967] VR 871 at 872; Hughes, at 263-264; Mitchelson v Mitchelson (1979) 24 ALR 522 at 524. It is also necessary to bear in mind in such an application that, upon the expiry of the time for appealing, the respondent has "a vested right to retain the judgment" unless the application is granted: Vilenius v Heinegar (1962) 36 ALJR 200 at 201.
For reasons which I will now explain, consideration of the history of the proceedings and the conduct of those proceedings below by Katrina weighs strongly against the grant of an extension of time to raise grounds 1 and 2. Of lesser significance, but still weighing against the grant of an extension, is the length of the delay (approximately 18 months) and the fact that Katrina's solicitor's explanation of the delay (set out above at [270]), while understandable from a practical viewpoint, nevertheless appears to proceed upon a legally erroneous understanding of the first primary judgment as an interlocutory, rather than a final, judgment. Even if it be assumed in Katrina's favour that she has more than a fairly arguable case with respect to grounds 1 and 2, and also noting that the respondents do not point to any prejudice, these factors are far outweighed by the other matters: in particular, how the proceedings below were conducted on behalf of Katrina, a matter which I will now develop.
During the course of the hearing of the appeal, the Court asked Katrina's senior counsel whether Katrina had opposed the relief sought by the trustees in their notice of motion filed on 1 September 2023 regarding the contents of their final report. Senior counsel said (emphasis added):
WILSON: Let me come to it directly, your Honour. I'm anticipating an argument I need to deal with. Having said that the appellants didn't agree with the relief sought, the appellants generally agreed with the methodology of valuing the trust as at December 2023 and deducting the claim for indemnity, and that would split out the amount owing. Your Honours, the appellants disputed the value of the Burwood Trust, assessed by the trustees in their final report, at December 2023, because the appellants said that an income tax component should be deducted, but there was an agreement as to the interest rate of 4.5%.
Your Honours, insofar as the appellants agreed with the methodology for calculating the liability, Katrina's liability, by valuing the Burwood Trust at December 2023, and deducting her claim for an indemnity, we're in that territory where we're saying that, notwithstanding the approach taken by the appellants, at first instance, the proceedings miscarried and it's a question of law, where the evidence wouldn't have been any different. We say the appropriate process would have been - yes, the trustees valued the trust and we can see from their report, which I'll take your Honours to, that we can ascertain the value, from the report, at the date of appointment in June 2009.
Senior counsel was asked to identify the orders made in conjunction with the first primary judgment which were sought to be challenged on the appeal. Initially, senior counsel responded by saying that none of the orders dated 16 August 2022 was challenged. When pressed, he explained that Katrina did not challenge any of the orders because Katrina had agreed to a report being commissioned. When further pressed, however, senior counsel said that the finding identified in ground 3 of the notice of appeal, being the primary judge's ruling that the Burwood Trust had not been determined by distribution, was the only finding challenged on appeal arising from the first primary judgment.
Thus, senior counsel for Katrina acknowledged that Katrina's case on the appeal, as raised by grounds 1 and 2, differed from the way her case had been conducted below. He submitted, however, that this was not an obstacle because the matters raised by grounds 1 and 2 are questions of law and could be determined on the same evidentiary material as was adduced below.
In support of this position, senior counsel referred to the well-known observations in Water Board v Moustakas (1988) 180 CLR 491 at 497 (per Mason CJ, Wilson, Brennan and Dawson JJ); [1988] HCA 12 (footnote omitted):
More than once it has been held by this Court that a point cannot be raised for the first time upon appeal when it could possibly have been met by calling evidence below. Where all the facts have been established beyond controversy or where the point is one of construction or of law, then a court of appeal may find it expedient and in the interests of justice to entertain the point, but otherwise the rule is strictly applied.
The respondents did not claim that different evidence would be required if Katrina was permitted to run a different case on appeal. Nor did they deny that a question of law may have been raised by grounds 1 and/or 2. They contended, however, that Katrina should be held to the way her case was conducted below, with particular reference to her consent to the final form of orders 8 and 9 concerning the contents of the trustees' report and subsequent relevant developments concerning those contents.
The respondents claimed that no useful purpose would be served by now ordering an account in common form in the following circumstances.
First, Katrina swore an affidavit dated 26 November 2020 below in which she described at length the "extensive examination" she had conducted of George's financial records, the fruits of which she said were explained in her solicitor's lengthy letter dated 16 February 2018.
Secondly, in that affidavit, Katrina produced various documents she had obtained as a result of her examination and enquiries, including an Excel spreadsheet in relation to the XX8055 Account, cheque butts, and settlement sheets for the Burwood Unit and the property purchased at Terrey Hills in 1999 and then sold in 2003. It was these documents which led to the contention advanced by Tzer's counsel below that there was no utility in Katrina undertaking an account in common form and that the preferable course was to direct the trustees to provide a report, a course which ultimately was consented to by Katrina.
Thirdly, in another letter dated 8 July 2020 from Katrina's solicitors, reference was made to the previous "comprehensive response" in the letter dated 16 January 2018 and to Katrina's primary position that the Burwood Trust had been determined by distribution. Tzer was told in that letter that if he wanted to press his claim for Katrina to provide him with further information relating to the Burwood Trust, he would have to pay $16,500 in advance to cover Katrina's costs of providing that information.
Fourthly, having regard to these matters, Katrina had an opportunity to provide an account and purported to do so in all the circumstances described above. It was unlikely that she would obtain any further relevant information if she was permitted to conduct a further account.
Fifthly, as outlined in the second primary judgment at [42]ff, prior to the hearings held on 18 October, 25 October and 12 December 2023, the parties took advantage of the opportunity to make submissions on the contents of the trustees' final report, including on the calculation of the corpus (including any accretions) and the income (including any accumulations) of the Burwood Trust for the period from the date of receipt of the proceeds of sale of the Burwood Unit in December 1996. Submissions were also provided on the issue of taxation and tracing with respect to the Terrey Hills property.
The matters raised by the respondents are compelling and should be accepted. In the proceedings below, Katrina consented to the trustees preparing a final report which would give a valuation of the Burwood Trust as at December 2023, as opposed to July 2009. As the primary judge noted at PJ2[67], Katrina's own proposed approach to calculating the corpus of the Burwood Trust was "not dissimilar" to the trustees' Option 1.
Each case must necessarily be assessed according to its own facts and circumstances, but there are some similarities between the present case and the High Court's decision in University of Wollongong v Metwally (No 2) [1985] HCA 28; (1985) 59 ALJR 481. In that case, Mr Metwally sought to vacate a declaratory order made by the Full Court of the High Court after the order had been entered. Mr Metwally wanted to raise a point which had not been raised earlier and which was in direct conflict with the basis of the case previously presented on his behalf. It was in that context that the Court said (at 483):
It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had and [sic] opportunity to do so.
Katrina should similarly be held to the way in which the proceedings were conducted on her behalf below.
In addition, it is notable that Katrina was unable to identify any particular order made on 22 August 2022 to which grounds 1 and 2 relate. It is well to bear in mind that appeals lie from orders, and not reasons. The general principles were helpfully expressed by Leeming JA in Kramer v Stone (2023) 112 NSWLR 564; [2023] NSWCA 270 at [259]:
Even at that stage, on 16 December 2022, 13 months after delivery of the first set of reasons and 25 months after the first hearing, it remained impossible for any party to bring an appeal. That is because no determinative orders had been made. It is axiomatic that appeals lie from orders, not reasons: see BP v State of New South Wales [2019] NSWCA 223 at [11]-[12] and the authorities there cited; see also McNab v Director of Public Prosecutions (NSW) (2021) 106 NSWLR 430; [2021] NSWCA 298 at [25]. No differently from judgments, decrees, orders, and sentences in s 73 of the Commonwealth Constitution from which an appeal lies to the High Court, the "judgment or order" in respect of which s 101(1) of the Supreme Court Act 1970 (NSW) confers a right of appeal does not include reasons for judgment, although as Barwick CJ and Kitto J observed in Driclad Pty Ltd v Commissioner of Taxation of the Commonwealth of Australia (1968) 121 CLR 45 at 64; [1968] HCA 91 in many contexts, judgment is a convenient abbreviation for reasons for judgment.
In all these circumstances, I do not consider it expedient or in the interests of justice to extend time in respect of grounds 1 and 2, which would permit Katrina to run a different case from that which was conducted below. The way in which Katrina's case was conducted below means that this is not a suitable vehicle to determine those two grounds of appeal. These considerations do not apply, however, to ground 3 of Katrina's appeal. I consider that time should be extended in respect of that ground of appeal because Katrina's solicitor has provided a plausible answer as to why it was decided not to commence proceedings until after the second primary judgment was published.
These contentions all relate to findings of fact or inferences drawn therefrom. Some of the matters flow from the primary judge's assessment of Lindsay's recollection of conversations which occurred over 20 years previously.
In my respectful view, her Honour did not err in reasoning as she did at PJ1[98] that greater weight should be placed on the contemporaneous documents than on Lindsay's recollection of the terms of conversations he had had with George more than two decades ago. Her Honour also noted at PJ1[98] that no document recorded the Burwood Trust property as providing the source of the July 1999 payment. Moreover, Lindsay stated in cross-examination that George had never told him where the money came from.
In the appeal, senior counsel for Katrina challenged the weight the primary judge gave to this evidence by Lindsay in cross-examination. He contended that it was insufficient for the cross-examiner simply to put to Lindsay: "Your father never told you where the money came from, did he?", to which Lindsay answered, "No". It was contended that the cross-examiner should have put to Lindsay that his father had not said to him that he had money set aside for the care of Kwat, or words to that effect. Senior counsel contended that the cross-examiner did not go far enough to get the benefit from his cross-examination of Lindsay in terms of the primary judge's finding concerning this aspect of the cross-examination.
I do not accept that criticism. No objection was made to the question at the trial and it was open to her Honour to give the answer the weight that she did. In any event, even if senior counsel's criticism was accepted, the error would not be material in circumstances where the primary judge identified Lindsay's answer as only one of a number of reasons for finding that the payments Lindsay received in July 1999 were not from Burwood Trust funds (see PJ1[98]).
Basten JA (whose reasons for judgment I have had the benefit of reading in draft) is critical of the primary judge's reliance on Watson v Foxman (1995) 59 NSWLR 315 at 319. With respect, for the following reasons, I do not agree.
It is well to set out PJ1[98]-[100] in which her Honour explained why she did not accept Katrina's central contention that the Burwood Trust was determined by distribution when the July 1999 payments were made:
[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).
[99] The letter sent by George to Lindsay (referred to at [20]) makes no reference to the sale proceeds of the Unit, that George was using money he held on trust for Kwat's benefit or that the funds were being paid to Lindsay as a potential beneficiary of a trust or as a member of Hok's family who had "needs". To my mind, the terms of George's letter, together with Lindsay's evidence at [21], also strongly suggest that the payments were made to him pursuant to a promise made by George in 1993 to assist Lindsay in purchasing a property. That promise was made well before George had access to the sale proceeds and unrelated to any determination by George that Lindsay was a person in need and was to be the subject of the distribution of the Burwood Trust property.
[100] Even accepting Lindsay's evidence that George said he had money set aside to care for Oma, as Tzer submitted, that could have been a reference to money held by George personally, rather than to the sale proceeds of the Unit which had been deposited into the MacBank Account more than two years prior. In my view, the transactions recorded in the MacBank Account statements supports that submission, as they indicate that the bulk of the sale proceeds and other moneys held in the MacBank Account had been depleted by November 1997 and a deposit of $151,500.60 had been made by George into the account on 12 July 1999 (from unidentified funds seemingly unrelated to the Unit sale proceeds), just prior to the payments to Lindsay.
In my respectful view, these passages do not reveal appellable error.
The primary judge did not fail to consider all the evidence nor did her Honour adopt an approach which impermissibly compartmentalised the evidence. Rather, her Honour explained at some length why she placed lesser weight on Lindsay's recollection of the conversation more than 20 years after the event, taking into account the frailties of human memory, and placed greater weight on the contemporaneous documents, including George's letter dated 21 July 1999.
The steps in her Honour's reasoning in this regard may be summarised as follows:
1. There was no document which recorded any connection between the Burwood Trust property or funds and the July 1999 payments.
2. Any connection was seemingly inconsistent with assertions made on behalf of both Katrina and Lindsay in earlier legal proceedings or correspondence, as set out by the primary judge earlier in the first primary judgment.
3. Moreover, Lindsay acknowledged in cross-examination below that George never told him where the July 1999 payments came from.
4. George's letter dated 21 July 1999 made no reference to George using any trust monies to pay Lindsay.
5. The terms of that letter, together with Lindsay's evidence that George told him in 1993 that George would help him purchase a property if Lindsay could get his life together, strongly suggested that the payments were made in fulfillment of that previous promise and not as a distribution from the Burwood Trust. This was because, when the promise was made in 1993, this was three years before George had access to the proceeds of the sale of the Burwood Unit.
6. Even if Lindsay's evidence was accepted that George told him that he had set aside money to care for Kwat, this could have been a reference to George's personal money rather than funds from the Burwood Trust. This was supported by the bank statements for the XX8055 Account, which indicated that the proceeds of the sale of the Unit and other monies in that account had been depleted in November 1997 and were then boosted by a deposit of approximately $150,000 from unidentified funds about a week before the July 1999 payments were made.
I am not persuaded that the primary judge erred at PJ1[98] in pointing to "seemingly inconsistent" statements made on behalf of Katrina (and Lindsay) in earlier proceedings or correspondence when contrasted with Katrina's subsequent claim that there was a connection between the Burwood Trust moneys and the July 1999 payments to Lindsay. Those inconsistencies, as identified by the primary judge, may be summarised as follows:
1. Submissions made on their behalf in mid-2009 in the proceedings before Palmer J to the effect that the Court needed "to identify a sum of money that can be seen today as representing in [George's] estate the proceeds of sale of the Burwood unit…". It is notable that this submission was made by counsel acting on behalf of both Katrina and Lindsay in the proceedings before Palmer J. Lindsay was aware at that time of his receipt of the July 1999 payments even if Katrina was not (PJ1[32]).
2. Submissions made by their counsel during the same proceedings before Palmer J regarding the need to identify funds representing the proceeds of sale of the Burwood Unit (PJ1[35]).
3. Katrina's evidence in the proceedings below where she acknowledged that she knew the terms of the Burwood Trust as early as 4 March 2009 and knew that the sale proceeds of the Burwood Unit may have been held by George as trustee when she became administrator of his estate (PJ1[40]).
4. Correspondence from Katrina's solicitor dated 10 July 2013 which asserted the existence of the Burwood Trust as at December 2001 and that Katrina "must now be" its trustee (PJ1[41]).
5. In a letter dated 10 July 2014 by Katrina's solicitor, reference was made to Katrina attempting to trace what George did to the net sale proceeds of the Burwood Unit (PJ1[46]).
6. In another letter dated 25 August 2014, Katrina's solicitor asserted that the sale proceeds (or what was left) were to be held on trust after Kwat's death (PJ1[47]).
7. In another letter dated 8 July 2020 by Katrina's solicitor, the reference to "trustee" was a reference to Katrina as trustee of the Burwood Trust, which is inconsistent with the Burwood Trust having terminated with the July 1999 payments (PJ1[57]). I accept, as Basten JA has pointed out, that the reference to Katrina as being the trustee of the Burwood Trust is not inconsistent with her primary position that the trust had terminated and that the term "trustee" is used there in the context of her having received Tzer's request for information in her capacity as trustee. But even if there was inconsistency with respect to this item, I do not discern error in the primary judge relying on the other inconsistencies, which adequately support the primary judge's finding.
Basten JA is critical of the primary judge's reliance on these inconsistencies because of a list of particular matters identified by his Honour which relate to Katrina's cross-examination below. There is, however, a short answer to these matters. They were not relied on by Katrina in the appeal and none of the respondents has had an opportunity to respond to them. It is also revealing that none of these particular matters forms part of any of the nine detailed and comprehensive contentions which were advanced by Katrina on the appeal in relation to ground 3, which I will shortly address.
Nor do I accept that the primary judge erred in not accepting and acting upon Lindsay's evidence of the conversation he had with George in 1999 in circumstances where he was not cross-examined on it. The absence of such cross-examination is not necessarily determinative. In the particular circumstances here the primary judge was not obliged to accept that evidence unreservedly. Tzer did not contend below that Lindsay should be disbelieved. The primary judge approached the issue not on the binary basis of accepting or rejecting Lindsay's evidence, but rather as one involving the need to assess the relative weight to be given to that evidence when contrasted with some relevant, albeit limited, documentary evidence. There is no error in that approach which, essentially, involves an evaluative exercise.
In my respectful view, the primary judge provided cogent and valid reasons for not accepting Katrina's primary defence which was based on her claim that the Burwood Trust had been determined by distribution in the form of the July 1999 payments.
For the following additional reasons (and with the risk of some repetition), I do not accept any of the nine contentions advanced by Katrina on the appeal in challenging the primary judge's findings or inferences on this subject.
First, I do not accept that the primary judge erroneously discounted the telephone conversation between Lindsay and George in 1999 and Lindsay's evidence that his father told him that he had some money set aside for Kwat's care, but that she was being taken care of by the family, thereby suggesting that he would use the Burwood Trust funds to help Lindsay purchase the Northern Territory property. As explained above, the primary judge did not err in placing greater weight on contemporaneous documents, which revealed no such connection between the Burwood Trust funds and the payments to Lindsay, than on Lindsay's recollection of a conversation which occurred more than 20 years ago.
Secondly, I do not accept that the primary judge erred in her treatment of George's letter to Lindsay in July 1999 in which the two bank cheques were enclosed. An inference can be drawn from the terms of that letter, and in particular from George's statement that he was honouring his earlier agreement with Lindsay and could now "die in peace", that the payments were made to fulfill George's promise to Lindsay in 1993 that he would help him purchase a property if Lindsay was able to get his life together. Her Honour did not err in drawing that inference, independently of the weight which she also gave to Lindsay's evidence on the matter.
Thirdly, it was not erroneous for the primary judge to give some weight to Lindsay's recollection of the 1993 conversation he had with George while giving more limited weight to his recollection of their conversation in 1999. Her Honour made clear at PJ1[98] that she placed "greater weight" on the contemporaneous documents than on Lindsay's recollection on the 1999 conversation. George's letter in July 1999 was consistent with some aspects of Lindsay's recollection of the 1993 conversation.
Fourthly, I do not accept Katrina's criticisms of the primary judge's reasoning and findings at PJ1[100], namely that, even if it be accepted that George told Lindsay that he had money set aside to care for Kwat, this could have been a reference not to the Burwood Trust but to money held by George personally. As her Honour explained, this was supported by the bank statements relating to the XX8055 Account.
Fifthly, Katrina challenges the primary judge's finding at PJ1[111]-[112] concerning George's request to Lindsay that he keep the July 1999 payments secret from Katrina. This finding is said to be inconsistent with Lindsay's evidence that George had told him that he (George) would tell Katrina. However, that challenge sits very uncomfortably with Katrina's own evidence in her affidavit dated 26 November 2020, where she deposed that she only became aware of the payments after George's death when Richard told her about them. There is no evidence to support a finding that George did in fact tell Katrina about the payments and no inconsistency has been established.
Sixthly, I reject Katrina's claim that the primary judge erred in not taking proper account of George's wills in 1992 and 2001, as well as George's testamentary intention to leave his estate to Katrina and Lindsay in equal shares. Katrina contends that it should be deduced from George's failure to change this testamentary intention in his 2001 will that the July 1999 payments to Lindsay were not from George's personal funds, but rather from the Burwood Trust funds.
The primary judge explained at PJ1[112] why she did not accept Katrina's submission that the terms of George's will demonstrated that the payments to Lindsay involved a distribution of Burwood Trust funds. Her Honour noted that when George made his 2001 will, the Burwood Unit had been sold and that the 1992 will referred to the Unit as George's own unit, and as not being the subject of a trust.
Her Honour also explained why she did not accept Katrina's submission that George's statement in his letter that he could now "die in peace" should be viewed as an acknowledgment by George that he had carried out the terms of the Burwood Trust by helping a family member in need. As her Honour explained, the evidence established that George had other funds available to him apart from the Burwood Trust money. No error has been established in this reasoning.
Seventhly, no error has been demonstrated in relation to the weight the primary judge gave to George's statement in his letter that he could now "die in peace" in circumstances where, as previously mentioned, the evidence demonstrated that George had other funds available to him apart from the Burwood Trust money.
Eighthly, no error has been demonstrated in the primary judge's finding at PJ1[109] that it was more likely that the money in the XX8055 Account had lost its character as Burwood Trust money by the time of the July 1999 payments. As her Honour correctly found, the evidence indicated that George had used most of the Burwood Unit sale proceeds to acquire the Terrey Hills property in late 1997, in breach of the Burwood Trust, and also in making subsequent transactions.
Ninthly, as to the contention that the primary judge erred at PJ1[110] in discounting what Katrina describes as George's "protective stance" in maintaining the credit balance of the XX8055 Account above $168,331.06 from December 1996 to July 1999, and his disregard of keeping the balance above that amount after the July 1999 payments were made, no appellable error has been demonstrated. There is no direct evidence of George's intentions at any time and it was not erroneous of the primary judge to apply the principle in Re Hallett in the manner she did.
On the appeal, senior counsel for Katrina did not dispute that the correctness standard from Warren v Coombes (1979) 142 CLR 531 at 551; [1979] HCA 9 applied.
In my opinion, the primary judge did not err in rejecting Katrina's claim that the Burwood Trust was determined when George made the payments to Lindsay in July 1999. The primary judge rejected the proposition advanced by Katrina's counsel below that it was open to draw an inference from the evidence that the Burwood Trust was determined by way of distribution. In oral argument below Katrina's counsel also candidly acknowledged that the evidence was "open to other inferences". Her Honour was correct to draw the inferences which she did, which included inferences drawn from the fact that the balance of the XX8055 Account was restored to more than $168,331.06 in August 1999 and was subsequently dissipated into unknown assets.
I respectfully disagree with Basten JA that it appears that the primary judge reversed the onus of proof in her analysis of whether the July 1999 payments determined the Burwood Trust. The passages in the first primary judgment to which Basten JA refers need to be read in the light of the pleadings and other relevant aspects of the procedural context. In particular:
1. Tzer's central pleading in the statement of claim filed 24 July 2020, which relied upon Palmer J's unchallenged finding that the Burwood Trust existed in the terms identified by his Honour, was that by mixing Burwood Trust assets and funds with his own personal assets and funds, George breached his duties as trustee of the Burwood Trust.
2. In response, in her formal defence filed 8 September 2020 Katrina pleaded that the July 1999 payments constituted an exercise of the power of appointment and resulted in the determination of the Burwood Trust. This central defence was said to be supported by the detailed list of facts pleaded at par 9 of the defence, which related to the July 1999 payments.
3. Also on 8 September 2020, Katrina filed a statement of cross-claim where she sought a declaration that the Burwood Trust was determined by distribution in the form of the July 1999 payments and she repeated and amplified the factual matters pleaded in par 9 of her defence.
4. It was not until the second day of the hearing below on 9 March 2022 that Katrina's counsel told the Court that she no longer pressed her cross-claim. Her counsel added, however, that even though a binding declaration was no longer sought, the Court could make a finding to the effect that the Burwood Trust had determined by way of distribution.
5. The primary judge's references in several parts of the first primary judgment to Katrina failing to satisfy the primary judge that the Burwood Trust had been determined by distribution do not indicate that the primary judge reversed the onus of proof. Rather, I consider that her Honour was simply responding to the prominence given to the issue of determination as raised by Katrina's defence and as reflected in the emphasis given to that issue in the written and oral submissions made on Katrina's behalf.
Palmer J noted at [10] that the issue whether George held the Burwood Unit on trust only arose when Richard became aware of an affidavit which George had sworn in divorce proceedings in 1984, where George deposed that he held the Burwood Unit on trust for Kwat. His Honour made reference to two letters written by Hok to George in March 1976 and October 1978. The first of the letters recorded Hok's intention that George hold the Unit on trust to enable both Hok and Kwat to live there and that the proceeds were for the benefit of Kwat during her lifetime and, thereafter, the remainder was to go to Hok's Japanese mistress, with whom Hok had an "illegitimate" son, Roy.
Palmer J viewed this letter as establishing the Burwood Trust, which was an express trust. His Honour found that the October 1978 letter varied the terms of the trust such that the terms then became that George would hold the Burwood Unit and its proceeds for the benefit of Kwat during her lifetime and thereafter apply any remaining proceeds according to George's discretion for the benefit of Hok's "illegitimate" son (Roy) or other members of Hok's family according to their needs.
Palmer J left open the question whether George had exercised the limited power of appointment after Hok died and before George died. His Honour stated at [42] that if the power of appointment had not been exercised, how it must now be exercised was a matter arising in the administration of George's estate.
In circumstances where Palmer J described Soei's claim as one not without merit, he ordered that, although she should pay Katrina and Lindsay's costs, she should be indemnified for those costs and her own costs out of George's estate, such that his estate bore the whole of the costs of the proceedings.
Palmer J also heard the separate 2005 Removal Proceedings. The trial began in June 2009 and was conducted in two tranches.
On 4 June 2010, his Honour published reasons for judgment in the 2005 Removal Proceedings (Tjiong v Tjiong [2010] NSWSC 578). Palmer J noted at [19] that, during the course of the hearing (on 16 June 2009), consent orders had been made which had the effect that Katrina was appointed trustee of both the GT Trust and the Oninama Charitable Foundation in place of Richard; that the grant of probate of George's will to Richard was revoked; that Katrina was appointed as administrator of George's estate with the will annexed; and that consequential orders were made for the transfer and vesting of assets. In brief, the effect of the consent orders was that full control of the GT Trust and of George's estate was given to Katrina, subject to the effect of costs orders which remained to be made.
Palmer J then proceeded in his reasons for judgment to address the remaining issues in the 2005 Removal Proceedings, including claims by Katrina and Lindsay that, in consenting to the establishment of the GT Trust and to the transfer of assets of George's estate to that Trust, they had relied upon statements fraudulently made to them by Richard in December 2003. They also claimed that Richard had exercised undue influence or unconscionable conduct in procuring their consent to the establishment of the GT Trust. These claims were upheld. Those matters provided the foundation for Palmer J's later order that Richard pay Katrina and Lindsay's costs on an indemnity basis.
At [137], Palmer J stated that the major issues of credit had all been found adversely to Richard. The papers were referred to both the Attorney General and to the Director of Public Prosecutions for consideration as to whether Richard should be prosecuted for perjury.
The costs orders in favour of Katrina and Lindsay against Richard were assessed and a costs judgment was entered in Katrina and Lindsay's favour for $990,395.42. None of this amount was recovered by Katrina or Lindsay before Richard went into bankruptcy on 10 September 2019.
Richard appealed Palmer J's judgment and orders in the 2005 Removal Proceedings and sought leave to adduce further evidence. His appeal was unsuccessful (see Tjiong v Tjiong [2012] NSWCA 201).
Claim 1 of Katrina's claims for indemnity against the Burwood Trust in the present proceedings relates to a proportion of the unrecovered costs in the 2005 Removal Proceedings representing the value of the corpus of the Burwood Trust proportionate to the value of George's estate generally.
On 7 December 2010, Katrina commenced proceedings in the District Court (no. 2010/406799) in which she challenged various aspects of the due administration of George's estate and the GT Trust. They included a claim by her against Richard for recovery of moneys under restitutionary claims flowing from the findings and orders made by Palmer J in the 2005 Removal Proceedings.
A proportion of Katrina's costs in the District Court proceedings was the subject of Claim 2 of her claims for indemnity below. The amount involved is a relatively modest figure of $599.85. This may explain why the primary judge's refusal of Claim 2 is not challenged on appeal.
On 25 March 2011, Soei commenced fresh proceedings in the Probate List of the Equity Division (no. 2011/98337) seeking letters of administration with Hok's will dated 27 December 1980 annexed. Soei swore an affidavit in those proceedings deposing that, in mid-July 2009, she found a "Torn Will" (which she claimed to be Hok's will) in a pocket of George's jacket which she said she had taken home from the hospital where George was being treated for a stroke in late-December 2001 or early-January 2002. The "Torn Will" purported to terminate the Burwood Trust and to make Kwat the primary beneficiary. Soei stood to benefit as her mother died intestate. On her own application, Katrina became a defendant to Soei's proceedings.
Soei's application was discontinued. White J published reasons for judgment regarding costs of the discontinued application on 23 December 2011 (see Chang v Tjiong; Estate of Hok Njan Tjiong [2011] NSWSC 1614).
The whole of those costs is the subject of Claim 3 of Katrina's claims for indemnity.
In 2017, Richard lodged an appeal in the District Court against a review panel's decision in a cost assessment of proceedings in that Court (no. 2017/222385), which appeal was subsequently abandoned. Katrina obtained a Certificate of Determination of Costs in the total amount of $13,805.73.
This is relevant to Claim 8 of Katrina's claims for indemnity.
In 2019, Richard brought three separate proceedings in the Supreme Court seeking to set aside orders made in the 2005 Removal Proceedings and his subsequent unsuccessful appeal.
The first set of the 2019 proceedings was commenced by Richard against Katrina and Lindsay in the Supreme Court on 25 February 2019 (no. 2019/061978). He sought to have the orders made in the 2005 Removal Proceedings and on the appeal set aside on the ground that the judgment was procured by fraud and was given or made irregularly, illegally or against good faith. He also sought to set aside the orders made by consent on 16 June 2009 in the 2005 Removal Proceedings.
Those proceedings were dismissed by Rein J on 5 July 2019. Richard was ordered to pay Katrina and Lindsay's costs on an indemnity basis. However, they were unable to recover those costs after Richard placed himself into bankruptcy on 10 September 2019.
Katrina seeks a proportion of the costs of those proceedings in Claim 10 of her claims for indemnity.
On 8 July 2019, Richard commenced a second set of proceedings in the Supreme Court (no. 2019/211113) against Katrina and Lindsay seeking a declaration that Katrina had breached her fiduciary duty in respect of the Burwood Trust, an order that accounts be taken to determine the property of the Burwood Trust, and to have Katrina removed as trustee of the Burwood Trust. These proceedings were dismissed by Parker J after Richard was declared bankrupt.
The proceedings are relevant to Claim 11 of Katrina's claims for indemnity.
On 6 September 2019, Richard commenced a third set of proceedings in the Supreme Court (no. 2019/278508) against Katrina and Lindsay. Richard's claims were substantially similar to those previously pleaded in the 2019/061978 proceedings. The third set of proceedings was ultimately dismissed by Parker J on 29 October 2021 in Tjiong v Tjiong [2021] NSWSC 1389 at a time when Richard remained an undischarged bankrupt.
Claim 12 of Katrina's claims for indemnity relates to her costs in these proceedings.
Some of Katrina's other claims for indemnity relate to her costs in obtaining legal and other advice or material (Claims 4, 5, 6, 7, 9 and 13). The primary judge's determination of Claim 5 is not challenged.
The primary judge then proceeded to make some general comments regarding what she described at PJ2[103] as "Katrina's complicated position". The complication related to her status as a potential beneficiary of the Burwood Trust and the fact that, from 16 June 2009, she was also the administrator of George's estate and trustee of the GT Trust. It was in those capacities as administrator and trustee of George's estate and the GT Trust respectively that Katrina came under a duty in relation to the funds attributable to the Burwood Trust. But Katrina's ultimate position was that the Burwood Trust was determined upon George making the payments to Lindsay in July 1999 (see par 17 of Katrina's defence below). At par 23 of Katrina's defence below, she also claimed that the assets of the Burwood Trust did not vest in her by way of the orders made by Palmer J on 16 June 2009. In these circumstances, there was a fundamental inconsistency between Katrina's position below that the Burwood Trust had terminated in mid-1999 and her claims for indemnity relating to the 2005 Removal Proceedings.
The primary judge noted at PJ2[104] that Katrina sought to avoid this complication by submitting that, for the purposes of determining her claims for indemnity, the relevant test was not the trustee's intention, but rather whether the trustee benefitted the trust property by incurring the relevant expenses. Thus, irrespective of Katrina's subjective intentions, she claimed to be entitled to an indemnity where she incurred expenses which, in fact, safeguarded the Burwood Trust's property.
Two primary objections were taken concerning Katrina's claims to indemnity (see PJ2[105]-[109]). In brief, the two objections were as follows:
1. To be entitled to an indemnity, Katrina had to prove that there was a legal liability to pay the claimed amount and that the amount had either been paid or the trustee was under a continuing legal obligation to do so (see, for example, Wentworth v Rogers (2006) 66 NSWLR 474; [2006] NSWCA 145 at [126] per Basten JA).
2. In incurring several of the claimed costs, Katrina was in breach of the Burwood Trust. In particular, there was a breach because Katrina made no attempt to hold separately any of the funds which might fall within the corpus of the Trust assuming, contrary to her primary position, that that Trust had not already been determined.
It was against the background of those general legal principles and the additional comments made by the primary judge concerning Katrina's "complicated position" that her Honour then proceeded to determine the various claims for indemnity.
I shall now summarise each of the relevant claims for indemnity and the basis upon which they were determined in the second primary judgment.
Re Buckton has been applied in several Australian cases, including Murdocca v Murdocca (No 2) [2002] NSWSC 505 at [71]ff per Campbell J (and the cases cited therein) and Sons of Gwalia Ltd v Margaretic [2006] FCAFC 92; (2006) 232 ALR 119 at [5]-[9] per Finkelstein J.
In Macdonald v Horn [1995] 1 All ER 961, Hoffmann LJ referred to the English equivalent of r 42.25 of the UCPR in Ord 62, r 6(2) and said at 970 (emphasis added):
In the case of a fund held on trust, therefore, the trustee is entitled to his costs out of the fund on an indemnity basis, provided only that he has not acted unreasonably or "in substance for his own benefit rather than" that of the fund.
Hoffmann LJ acknowledged, at 970, that courts of equity have been willing in some circumstances to extend to other parties involved in trust litigation a similar entitlement to have their costs paid by the trust fund (citing Re Buckton).
Thirdly, although in principle the right to indemnity may extend to a beneficiary, by analogy with the qualification to a trustee's right to indemnity (as to which see Miller v Cameron (1936) 54 CLR 572 at 579 per Latham CJ; [1936] HCA 13) that right does not arise where, in substance, proceedings are brought by a beneficiary not for the benefit of the trust, but out of personal interest. Thus, for example, it was held in Nowell v Palmer (1993) 32 NSWLR 574 that an executrix who was also the sole beneficiary of the estate was not entitled to have her costs of proceedings paid out of the estate because, in unsuccessfully defending proceedings which sought to impugn her entitlement to the assets in the estate on the basis that the testator had entered a binding agreement to leave his estate to the respondent, the executrix was acting in her own personal interests. Mahoney JA (Meagher and Handley JJA agreeing) said at 581-582:
However, in the present case, the appellant, in defending the proceeding, was not acting as, or merely as, the executrix of the estate. She was, in a real sense, defending her own interests. She was the sole beneficiary of the estate. In addition, she had purported to distribute the estate to herself and, to an extent, the proceeding brought against her was a proceeding by way of tracing the assets in the estate to which the respondent was entitled and to secure an accounting in respect of them: see, eg, Re Diplock; Diplock v Wintle [1948] Ch 465; affirmed sub nom Minister of Health v Simpson [1951] AC 251. I do not think that in these circumstances the principle to which I have referred should apply. The proceeding was essentially a defence by the appellant of her own interests.
To similar effect, in the leading text, JD Heydon and MJ Leeming, Jacobs' Law of Trusts in Australia (8th ed, 2016, LexisNexis Butterworths), it is stated at [21-09] (emphasis added) that "a trustee who incurs costs purely for his or her own benefit, even if there is a remote benefit to the trust estate, is not entitled to costs out of the trust estate" (citing a decision of the Supreme Court of New Zealand in Whittingham v Proudfoot [1861-72] Mac 457, and Re Dargie, Miller v Thornton-Jones [1953] 2 All ER 577).
I see no reason why a similar qualification should not apply analogously where a beneficiary who has commenced proceedings seeks to be indemnified from trust funds, as is the case here. Whether the qualification applies in a particular case involves an objective assessment of the relevant facts and circumstances.
Fourthly, the procedural history relating to the 2005 Removal Proceedings indicates that, in substance, the proceedings were brought and conducted to protect the interests of Katrina and Lindsay as beneficiaries and not to benefit the Burwood Trust:
1. As noted above, the existence of the Burwood Trust only became known to Katrina well after she commenced the 2005 Removal Proceedings and for that reason no relief was sought in the originating process in those proceedings relating to that particular trust.
2. It may be accepted that the 2005 Removal Proceedings produced a potential benefit to the Burwood Trust. The corpus of the Burwood Trust was embedded in the totality of the assets and funds of George's estate, but that benefit was remote and depended on the value of the corpus of the Burwood Trust being established, which Palmer J declined to determine in the 2005 Removal Proceedings (see PJ2[14]). However, Palmer J ordered Richard to deliver to Katrina as trustee of the GT Trust and administrator of George's estate all of George's assets, books and records which were relevant materials for tracing the proceeds of the Burwood Unit.
3. According to her solicitor's letter dated 16 January 2018, which was sent to Soei's solicitor, after Katrina came to control all of the assets and funds of the GT Trust under the 16 June 2009 consent orders, Katrina attempted to trace the proceeds of the sale of the Burwood Unit, including by obtaining details of George's XX8055 Account. The letter referred to the money which George gave to Lindsay in July 1999 and Katrina's solicitor claimed that this amounted to a distribution under the Burwood Trust which had the effect of terminating or extinguishing that Trust. The solicitor wrote:
The so-called Burwood Trust has been extinguished by a final distribution of those funds, in accordance with the terms of the trust found by Palmer J, as foreshadowed by his Honour. As a result, there being no trust and no trust fund, there is no need or call for Katrina to make any application to the court.
1. The claims set out in that letter as summarised above broadly reflect the position which Katrina unsuccessfully advanced in the first part of the proceedings below.
2. The determination of the value of the corpus of the Burwood Trust was made by the primary judge in the second stage of the proceedings below. It is notable that the determination was made in circumstances where Katrina had pleaded in her defence that the Burwood Trust was terminated in 1999 when George gave money to Lindsay (see at [375] above).
3. In her affidavit below dated 26 November 2020, Katrina deposed that the moneys that were transferred to her by Richard in or around July 2009 "did not include the assets of the so-called Burwood Trust for the reasons set out above and in my Solicitors' letter to Griffin Lawyers of Adelaide dated 16 January 2018".
Claim 1 was made by Katrina in somewhat unusual circumstances. As Katrina acknowledged at [15] of her written submissions below, the 2005 Removal Proceedings "were conducted as adversarial litigation in which the trustee [Richard] defended his position and denied the allegations of breach of trust up until the close of the first week of the trial at which point he conceded his removal as executor and trustee but maintained his denials of the allegations of serious breaches of trust". The final orders made in the 2005 Removal Proceedings included an order that Richard pay most of Katrina and Lindsay's costs of those proceedings on an indemnity basis. Significantly, no order was made that the costs be paid from trust funds.
More than nine years later, in September 2019, Richard placed himself into bankruptcy. Presumably, as a creditor, Katrina could have lodged a proof of debt in the bankruptcy. The evidence is unclear as to whether or not she did so.
In any event, as noted above, before Richard placed himself into bankruptcy, Katrina's position, as stated in her solicitor's letter dated 16 January 2018 and maintained by her up until publication of the first primary judgment, was that the Burwood Trust had been extinguished. Only after that position was rejected in the first primary judgment did Katrina seek by Claim 1 to have a proportion of the 2005 Removal Proceeding's costs order paid out of Burwood Trust funds.
In the light of these unusual circumstances, it is perhaps unsurprising that Katrina could point to no authority that directly supported her contention that she should be indemnified from the Burwood Trust for a proportion of her costs relating to the 2005 Removal Proceedings.
These matters indicate that the primary judge was correct to attach particular significance to the fundamental contradiction or inconsistency in Katrina's position. It reinforces the fact that, in substance, the 2005 Removal Proceedings were conducted not for the benefit of the Burwood Trust (which Trust Katrina subsequently claimed had been extinguished prior to the conduct of the 2005 Removal Proceedings), but in the personal interest of Katrina and Lindsay as sole beneficiaries of George's estate. Any benefit produced by the 2005 Removal Proceedings for the Burwood Trust was merely incidental and remote.
That is sufficient to reject ground 4(a), which relates to Claim 1. It is unnecessary to determine whether the primary judge erred in finding that the claim was outside the limitation period.
In any event, the significance of Katrina not having obtained judicial advice in her capacity as trustee of the Burwood Trust is hardly to the point in circumstances where she elected to join the proceedings in her capacity as administrator of George's estate and not as trustee of the Burwood Trust.
Katrina's success in respect of ground 4(d) will require an adjustment to be made as to the amount she must pay to the trustees of the Burwood Trust.
The primary issue before the primary judge in PJ1 was whether the Burwood Trust ("the Trust") was determined by the payments made by George to his son Lindsay in July 1999.
Ground 3 of the appeal challenges her Honour's conclusion that the appellant failed to satisfy the Court that the payments effectively terminated the Trust by distribution.
Basten AJA has concluded that Ground 3 should be upheld whereas Griffiths AJA concludes that her Honour did not err. Their Honours provide extensive reasons for the conclusions reached.
An illustration of the defendant bearing the onus of proof is found in Young v Queensland Trustees Ltd (1956) 99 CLR 560; [1956] HCA 51. The plaintiff sued the defendant for money lent to him. The defendant admitted that the loans had been made but claimed that the loans money had been repaid. The trial judge entered judgment in favour of the plaintiff for the amount claimed, as he disbelieved the defendant's evidence as to repayment.
One of the grounds of appeal advanced by the defendant to the High Court was that there was no evidence to disprove repayment, the burden of disproof lying upon the plaintiff. The High Court (Dixon CJ, McTiernan and Taylor JJ) found that the contention that the burden of disproving repayments upon the plaintiff was erroneous. The High Court confirmed that the approach of the Victorian Supreme Court in Nelson v Campbell (1928) VLR 364 that the onus was on the plaintiff was wrong. Their Honours said at 562:
"But the law has always been that it lies upon a defendant to make out a defence of payment by way of discharge."
Another instance of a party bearing an onus is found in Lewis v Nortex Pty Ltd (In Liq); Lamru Pty Ltd v Kation Pty Ltd [2004] NSWSC 1143; (2004) 214 ALR 634 where Hamilton J found that the party alleging a breach of trust had to establish the breach. Hamilton J said at [53]:
"But, if Lamru complains of a breach of trust in respect of the distribution of the 1991 profits, it bears the onus of establishing its existence and, if that involves establishing the quantum of the profit during a particular period, it is for Lamru to prove it."
There are other illustrations of a defendant bearing an onus but each case depends on its own facts. In my opinion, the onus was on the plaintiff in the present case to prove the existence of the trust; that Katrina had become a bare trustee; that the plaintiff was a beneficiary of the trust; that Katrina had received trust property and had not provided an account in respect of the trust. Most of the constituent elements of the plaintiff's cause of action could be established by the 2009 judgment of Palmer J and the consent orders that followed. As Katrina was seeking to avoid liability, she bore the onus of establishing that the trust had been terminated by the payment to Lindsay. In my respectful opinion, the primary judge correctly found that the defendant bore the onus of proving her defence.
In any event, it appears that the primary judge ultimately concluded that the plaintiff had established the continuing existence of the trust when her Honour went on to say at PJ1 [113]:
"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."
As Basten AJA observes at [43] above, the contemporaneous documents were "sparse and the source of the funds was not identified." These documents are not inconsistent with Lindsay's testimony. I agree with Basten AJA at [44] above that reliance on Watson v Foxman should have been a matter of "very limited weight".
First judgment at [98]; Trial Tcpt, p 125(32)-(33).
Tcpt, 29/11/21, p 55(48)-56(22).
Tcpt, p 56(46).
Affidavit, Katrina Tjiong, 26 November 2020, par 3; Tjiong v Tjiong [2012 NSWCA 201 at [4].
Tcpt, p 66(39).
Tcpt, p 68(3).
Tcpt, p 66(15).
Tcpt, p 44(3), 45(36)-46(9).
Tcpt, p 46(35)-(41).
Tcpt, p 59(1).
Tcpt, p 61(44).
Tcpt, p 70(15).
First judgment, at [110].
The specific costs order (18) should stand. Orders (16) and (19) were procedural orders and are spent.
Second judgment at [103].
Tcpt, 09/03/22, p 119(2).
Tcpt, p 119(35)-120(25); see also first judgment at [67]-[84].
First judgment at [133].
Affidavit, 4 March 2022, par 35.
Affidavit, 4 March 2022, par 37.
Tcpt, 12/12/23, p 37(40). The defendants were allowed an opportunity to object to particular pages: there was no material before this Court suggesting that objections had been subsequently raised.
Second judgment at [90].
Tcpt, 18/10/23, p 8(15)-(21).
Second judgment at [104]; presumably both liability and payment (or a subsisting obligation) were required.
(2006) 66 NSWLR 474; [2006] NSWCA 145 at [126].
Oshlack v Richmond River Council (1998) 193 CLR 72 at [1] (Brennan CJ), [67] (McHugh J), [134(4)] (Kirby J).
Wentworth v Rogers at [133].
Re Grimthorpe [1958] Ch 615, 623 (Danckwerts J); Trustee Act 1925 (NSW), s 59(4).
Uniform Civil Procedure Rules 2005 (NSW), r 42.25(2)(b). (The power to reject a claim where the trustee has acted unreasonably (subr (2)(a)) was not invoked.)
See also at [113] above.
Claim 2, for $600, was rejected, but the rejection was not challenged on appeal.)
Affidavit, 26 September 2023, par 64.
Summary of argument, 12 June 2024, par 3.5.
Second judgment at [148].
Second judgment at [152].
Affidavit, 26 September 2023, par 69.
Although counsel's memorandum of fees was for $27,500, the claim was for $22,000.
Second judgment at [155].
Summary of argument, par 3.10.
Second judgment at [168].
Chang v Tjiong; Estate of Hok Njan Tjiong [2011] NSWSC 1614 at [9].
Second judgment at [138], referring to Re Dion Investments (2014) 87 NSWLR 753; [2014] NSWCA 367 at [94] (Barrett JA) and Application of Uncle's Joint Pty Ltd [2014] NSWSC 321 (Brereton J) at [31].
First judgment at [32].
Second judgment at [122].
Second judgment at [123].
At [183] the trial judge referred to setting aside the orders made by "Parker J" in the 2005 removal proceedings, but that was a typographical error: the orders were made by Palmer J (claim 12).
Second judgment at [190].
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Decision last updated: 28 February 2025