Tjiong v Tjiong

Principal judgment Parties: Richard Tat Tjhien Tjiong (Appellant)

Katrina May Lan Tjiong (First Respondent) Lindsay Kuang Djin Tjiong (Second Respondent) Representation: Counsel: I Barker QC, M R Pesman (Appellant) M B Evans, C A Lambert (Respondents) Solicitors: Peter Kennedy Lawyers (Appellant) O'Brien Lawyers (Respondents) File Number(s): 2005/257959 Decision under appeal Citation: [2010] NSWSC 578 Date of Decision: 2010-06-04 00:00:00 Before: Palmer J File Number(s): 2005/257959

Judgment 1WHEALY JA: I agree with Meagher JA. 2MEAGHER JA: The respondents to this appeal, Katrina and Lindsay Tjiong, are the only children of the late Dr George Tjiong, the second of nine children and eldest brother of the appellant, Dr Richard Tjiong. It is convenient to refer to the respondents by their first names and to the appellant as Dr Tjiong. 3In February 2005 Katrina and Lindsay commenced proceedings against Dr Tjiong to set aside a discretionary trust (the George Tjiong Family Trust) to which assets of their father had been transferred. They sought orders removing Dr Tjiong as trustee and appointor of that trust and revoking a grant of probate of their father's will to Dr Tjiong. The essence of their case was that in consenting in December 2003 to the establishment of that trust and transfer of their father's assets to the trustee, Maroka Pty Ltd (Maroka), Katrina and Lindsay had acted on fraudulent misstatements made by Dr Tjiong. The misstatements included that if their father died, his estate would incur a significant tax liability which could be avoided by transferring assets to a trust whilst he was still alive. 4Katrina and Lindsay also sought orders that Dr Tjiong compensate the trust for legal costs incurred in dealing with a fabricated medical negligence claim made against their father's estate on behalf of a Kevin Reeves on the basis that the claim had been fabricated by Dr Tjiong. In addition, they sought repayment to the trust of an amount of $134,945.78 paid in January 2005 by Dr Tjiong as trustee to the Oninama Charitable Foundation. That was a discretionary trust for the benefit of Dr Tjiong's mother and grandchildren. 5The hearing before Palmer J (primary judge) commenced on 1 June 2009. On 16 June, orders were made by consent that Katrina be appointed trustee of the George Tjiong Family Trust and Oninama Charitable Foundation, that the grant of probate to Dr Tjiong be revoked and that Katrina be appointed administrator of her father's estate. Those orders were made at a time after Dr Tjiong's cross-examination had commenced but before it had concluded because he had fallen ill. The hearing was adjourned and recommenced on 15 December 2009 with further cross-examination of Dr Tjiong. 6In his judgment delivered on 4 June 2010, the primary judge held that Katrina and Lindsay's consent to the establishment of the George Tjiong Family Trust had been procured by Dr Tjiong's fraud. As it was not contested that the January 2005 payment was made in breach of trust, Katrina and Lindsay were entitled to the declarations and orders they sought: Tjiong v Tjiong [2010] NSWSC 578 esp at [21], [135], [137], [138]. 7The making of those declarations and orders depended upon the primary judge's findings as to the fraudulent misstatements and the fabricated Kevin Reeves claim. In the course of the trial a number of other factual issues arose which were relevant to an assessment of the credibility of Dr Tjiong. The primary judge decided those issues adversely to him. 8In relation to the making of the misstatements, the primary judge preferred the evidence of Katrina and Lindsay to that of Dr Tjiong and his wife, Kathryn: esp at [131], [132], [134]. As to Dr Tjiong's reasons for establishing the trust, the primary judge held at [133]: "The whole of the evidence in this case suggests that by December 2003 [Dr Tjiong] had formed the firm intention of taking control of George's estate and administering it between Katrina and Lindsay on the one hand and George's other siblings on the other as [he] thought best in his own discretion. [Dr Tjiong] seems to have an unshakeable belief that by reason of superior intellect, superior professional qualifications and superior business experience, he is best suited to control and direct the fortunes in life of his entire extended family to their own best advantage, whether or not they agree. This appears to have been [his] overpowering motive to do whatever was necessary to ensure that he retained control over the disposition of George's estate."