Australian Executor Trustees Limited v Lokit Investments Pty Ltd

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST

S ECI 2022 01783

AUSTRALIAN EXECUTOR TRUSTEES LIMITED as trustee of THE YING MUI TRUST, THE AMORE TRUST and THE FRG INVESTMENTS TRUST	Plaintiff
v
LOKIT INVESTMENTS PTY LTD (ACN 006 855 741) and others (according to the schedule attached)	Defendants

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JUDGE:	LYONS J
WHERE HELD:	Melbourne
DATE OF HEARING:	14 March 2023
DATE OF JUDGMENT:	31 March 2023
CASE MAY BE CITED AS:	Australian Executor Trustees Limited v Lokit Investments Pty Ltd & Ors
MEDIUM NEUTRAL CITATION:	[2023] VSC 141

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LIMITATION OF ACTIONS – Loan repayable on demand – Whether statute-barred – Nature of acknowledgment for the purposes of the Limitation of Actions Act 1958 (Vic) ss 24(3) and 25 – VL FinancePty Ltd v Legudi (2003) 54 ATR 221 considered – Loan statute-barred.

ESTOPPEL – Anshun estoppel – Relevant principles – Onus on party seeking to establish Anshun estoppel – Anshun estoppel only established in clearest of cases and after scrupulous examination of all circumstances – Relevance of likelihood of conflicting judgments – Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; Rogers v The Queen (1994) 181 CLR 251 considered.

EQUITY – Judicial advice – Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 54.02 – Trustee power to vest trust without consent – Trust deed provides power for trustee to vest without consent – Not improper for trustee to vest in circumstances where trust no longer serves commercial purpose for which it was established – Advice provided.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr T P Mitchell	Gilbert + Tobin
For the First and Second Defendants	Mr A L Ounapuu	Dimos Lawyers
For the Third to Fifth Defendants	Mr D McAloon	Strongman & Crouch
For the Sixth Defendant	No appearance

HIS HONOUR:

1. INTRODUCTION AND SUMMARY

The plaintiff, Australian Executor Trustees Limited (AET), was appointed the trustee of three trusts by a judge of this Court in the course of protracted litigation between members of the Hoh family. The three trusts are the Ying Mui Trust (the YM Trust or YMT), the Amore Trust and the FRG Investments Trust (the FRG Trust).

There are a number of issues which require determination or judicial advice in respect of AET’s administration of the three trusts. I will address them in summary.

First, there is a contested claim which AET seeks that the Court determine. This claim relates to whether the former trustee of the YM Trust (the third defendant, Ying Mui Pty Ltd, YMPL) is liable to repay on demand to the first defendant (Lokit) a loan in the sum of $1,076,749 (the Third Lokit Loan). This is the subject of paragraph A.1 of the prayer for relief in the amended originating motion dated 18 October 2022 (the AOM and the A.1 issue). There was no dispute that this loan was advanced to YMPL. The issues before me are whether the Third Lokit Loan is statute-barred and/or whether any such claim is the subject of an Anshun estoppel.[1] All the relevant parties to that contested claim are parties to this proceeding and filed evidence and made submissions before me.
[1]Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 (‘Anshun’).

Second, if YMPL is liable to repay the Third Lokit Loan on demand, AET seeks judicial advice as to whether YMPL is entitled to an indemnity for that loan from the YM Trust. This is the subject of paragraph A.2 of the prayer for relief in the AOM (the A.2 issue). AET submits that there is no right to an indemnity. All other relevant parties to this proceeding agree that, if the Third Lokit Loan is payable by YMPL, then YMPL is entitled to an indemnity.

Third, AET seeks judicial advice in relation to the accounts of the YM Trust in relation to the Third Lokit Loan and the subsequent treatment in the accounts of the YM Trust of a loan allegedly owed to Artimax Investments Limited (Artimax and the Artimax Loan). This is the subject of paragraph B.3 of the prayer for relief in the AOM (the B.3 issue). This issue is related to the A.1 and A.2 issues.

Fourth, AET also seeks judicial advice to the effect that it is justified in vesting each of the three trusts and distributing their net assets to the respective beneficiaries. This is the subject of paragraphs B.4 to B.6 of the prayer for relief in the AOM (the vesting issue). This is consented to by the relevant parties to this proceeding who include beneficiaries of the three trusts.

Fifth, AET seeks orders in respect of the costs of this proceeding, including that its costs in this proceeding be paid on an indemnity basis from the assets of the three trusts. This is the subject of paragraph B.7 of the prayer for relief in the AOM.

For the reasons that follow, I have concluded that:

(1) as to the A.1 issue, YMPL is not liable to repay the Third Lokit Loan upon demand as it is statute-barred;

(2) as a result, it is not necessary to determine the A.2 issue relating to an indemnity in respect of Third Lokit Loan;

(3) as to the B.3 issue, AET is justified in making entries in the financial accounts of the YM Trust to record that the Third Lokit Loan (and the related Artimax Loan) are not payable from trust assets; and

(4) as to the vesting issue, AET is justified in vesting the YM Trust, the Amore Trust and the FRG Trust and distributing the net assets to the respective beneficiaries in accordance with the terms of each trust.

I will address the costs of this proceeding after the parties have had the opportunity to consider these reasons.

2. BACKGROUND
2.1 The Hoh Family

The YM Trust, the Amore Trust and the FRG Trust are Australian family discretionary trusts associated with the Hoh family and entities associated with members of the Hoh family.

Hoh Ying Chye and his wife had seven children including George, Maureen, Robert (who died in 2007) and Frank. From 2001, members of the Hoh family (relevantly George, Robert and Frank) made investments in Australia through the three trusts.

From about 2010, the family has been divided into two factions, namely, the George faction and the Frank faction. The George faction comprises George, his nephew Han (who is Robert’s son) and Maureen. The Frank faction comprises Frank, his wife Pooi, his son Ian, his daughter Lynn and her husband Dominic.

The YM Trust was established on 6 July 2001. The trustee of the YM Trust from:

(1) 6 July 2001 to 18 November 2011 was YMPL;

(2) 18 November 2011 until 4 May 2018 was Frosthollow Pty Ltd (Frosthollow); and

(3) 4 May 2018 has been AET.

I note that Frank exercised his power as the Appointor of the YM Trust to replace YMPL as trustee of the YM Trust with Frosthollow. At all relevant times, Lynn (part of the Frank faction) was the sole director and shareholder of Frosthollow. Since on or around 21 December 2011, YMPL has been controlled by the George faction.

The Amore Trust was established on 26 June 2002. The trustee of the Amore Trust from:

(1) 26 June 2002 to 8 December 2011 was the Amore Corporation Pty Ltd (Amore);

(2) 8 December 2011 until 4 May 2018 was Frosthollow;

(3) 4 May 2018 has been AET.

The FRG Trust was created on 23 December 2009. The trustee of the FRG Trust from 23 December 2009 until 4 May 2018 was Olrey Pty Ltd (Olrey). From 4 May 2018, the trustee has been AET. Lynn was appointed a director of Olrey on 18 July 2011 and is currently the sole director of Olrey.

2.2 The relationship between this proceeding and the previous proceeding

Frank’s company is Lokit, the first defendant in this proceeding. Lynn is the executor of Frank’s estate (Frank died on 3 July 2019) and is the second defendant in this proceeding. YMPL is the third defendant. George and Han are the fourth and fifth defendants respectively. For convenience, I will refer to Lokit and Lynn as the Frank parties and YMPL, George and Han as the George parties.

In this proceeding:

(1) AET relied upon the affidavit of Rakesh Lal, a Trust Manager employed by AET, affirmed 12 May 2022;

(2) the Frank parties relied upon the affidavits of Lynn affirmed 30 June 2022 and 17 February 2023; and

(3) the George parties relied upon the affidavits of George affirmed 19 August 2022 and 24 February 2023 and of Han sworn 27 October 2022.

As noted above, there has been protracted litigation between the George faction and the Frank faction and companies associated with each faction. On 31 October 2012, George and Han commenced a proceeding in this Court against Frosthollow, Frank, Lynn, Lokit and Olrey, amongst others. On 5 December 2014, YMPL and Amore also commenced a proceeding in this Court against Frank, Lynn, Lokit, Frosthollow and Olrey, among others. These proceedings were consolidated by orders made on 15 June 2015 into Supreme Court proceeding S CI 2012 06147 (previous proceeding).

In summary, in the previous proceeding, the George faction made a number of allegations about the establishment and administration of the three trusts. These include allegations:

(1) as to the basis of the arrangement pursuant to which the three trusts were established, including whether they were funded by capital advances or loan; and

(2) that the Frank faction had administered the affairs of the three trusts in breach of trust and in their own interests, in particular, since 2011 when Lynn controlled each trustee.

Further, in the previous proceeding, YMPL, as the former trustee of the YM Trust, sought an indemnity from the assets of the YM Trust for loans advanced by George and Robert to YMPL as trustee of the YM Trust (the First George Loan and the Second Robert Loan). In these reasons, I will refer to:

(1) the First George Loan and the Second Robert Loan collectively as the First Two Loans; and

(2) the First George Loan, the Second Robert Loan and the Third Lokit Loan collectively as the YMT Shareholder Loans.

As noted above, the A.1 and the A.2 issues relate to whether YMPL is liable upon demand to repay the Third Lokit Loan (as one of the YMT Shareholder Loans) to Lokit and whether YMPL is entitled to be indemnified out of the assets of the YM Trust for that liability. These two issues are related to issues raised in the previous proceeding, namely, whether advances were made by way of capital advances or loans to the three trusts and whether YMPL was entitled to an indemnity in respect of the First Two Loans.

The issues raised or not raised in the previous proceeding form the basis of the submissions in this proceeding:

(1) of the George parties that any right to now claim a right to repayment of the Third Lokit Loan is the subject of an Anshun estoppel; and

(2) of the Frank parties that there has been an acknowledgement of the Third Lokit within the last six years.

I will address the previous proceeding and the reasons for judgment in the previous proceeding later in these reasons. However, I wish to note that the parties prepared an Agreed List of Facts (the Agreed Facts) and an Agreed List of Findings made in the previous proceeding (the Agreed Findings) to assist in determining the A.1, A.2 and B.3 issues. In light of these documents, I will now turn to the evidence in relation to the YMT Shareholder Loans.

2.3 The YMT Shareholder Loans in the YM Trust accounts

As noted above, in this proceeding, the Court is asked to determine a dispute as to whether AET as trustee of the YM Trust is liable to pay on demand the Third Lokit Loan. This issue is related to issues raised in the previous proceeding, namely, whether advances were made by way of capital advances or loans to the three trusts.

The financial statements for the YM Trust for the financial years ended 30 June 2004 to 2009, which are signed by Frank in his capacity as a director of YMPL, record the following shareholder loans:

(1) the sums of $3,243,290 in each of the years 2004 and 2005;

(2) the sum of $3,243,748 in the year 2006; and

(3) the sums of $3,230,249 in the years 2007, 2008 and 2009.[2]

[2]Ying Mui Pty Ltd v Hoh (No 3) (2017) 349 ALR 296, 334 [234]; Agreed Facts 3, 4 and 5; Agreed Finding 4.

The YM Trust’s financial statements for 2010 (2010 YMT financial statements), which are signed by Frank in his capacity as a director of YMPL, record a ‘Loan - Shareholders – Unsecured’ of $1,359,903.40. The notes to the 2010 YMT financial statements record that each of George, Han and Lokit were owed approximately $453,301 as at 30 June 2010 and approximately $1,076,749 as at 30 June 2009.[3] However, the argument before me proceeded on the agreed basis that the 2010 YMT financial statements were incorrect and the shareholder loans for YMT for the year 2010 totalled $3,230,249 (with approximately $1,076,749 owed to each of George, Han and Lokit). For the purpose of this proceeding, the amount owed to each of George, Han and Lokit as at 30 June 2010 was approximately $1,076,749.
[3]Agreed Fact 6.

The YM Trust financial statements for the financial year ending 30 June 2011 (the 2011 YMT financial statements) do not record the YMT Shareholder Loans owing to George, Han or Lokit. Rather, the 2011 YMT financial statements do not record any shareholder loans at all. They refer to a ‘Loan – Unsecured’ in the sum of $3,230,250 owing as at 30 June 2011 to Artimax.[4] They also refer to a loan owed to Artimax in the sum of $3,230,249 as at 30 June 2010. All of the YM Trust’s financial statements from 30 June 2011 until 2017 include the loan owing to Artimax in the sum of approximately $3,230,249.
[4]Agreed Fact 10.

There are two things to note about the financial statements of the YM Trust for and from financial year 2011. First, they were signed by Lynn in her capacity as a director of the new trustee, Frosthollow. Second, Artimax was incorporated in Hong Kong in October 1999. At the time of Artimax’s incorporation Robert, George and Frank were its shareholders and directors. Upon Robert’s death on 24 December 2007, George and Frank became the only directors.

As noted above, in 2018 AET was appointed as the trustee of the YM Trust. Mr Rakesh Lal, a Trust Manager employed by AET, has deposed that neither Frosthollow, nor the accountants for the YM Trust have been able to provide copies or confirm the existence of the signed copies of the YM Trust’s 2017 financial statements (2017 YMT financial statements). Mr Lal deposed that, as a result, AET has been unable to finalise financial statements in respect of the YM Trust for any financial year after 2017 as it cannot do so until the issues raised in this application have been dealt with.

3. THE PREVIOUS PROCEEDING
3.1 The parties and issues in the previous proceeding

In the previous proceeding, YMPL, Amore, George and Han were the first to fourth plaintiffs, respectively. Further and relevantly, Frank, Pooi, Lynn, Ian and Lokit were the first to fifth defendants respectively (the previous proceeding defendants) and Frosthollow was the seventh defendant.

I have set out above in section 2.2 the general nature of the previous proceeding. YMPL’s claim for an indemnity from the assets of the YM Trust for the First Two Loans advanced to YMPL (YMPL’s indemnity claim) was central to the A.1 and A.2 issues. YMPL’s indemnity claim was included in section DD of the consolidated statement of claim filed in about late June 2015 (CSOC).

The form of the statement of claim to which I was referred in argument was the third further amended statement of claim filed 17 March 2017 (TFASOC). It was not materially different to YMPL’s indemnity claim in in the CSOC. As a result, for convenience, I will only refer to the allegations in the TFASOC. Section DD of the TFASOC provided as follows:

DD. YING MUI’S RIGHT OF INDEMNITY
363. Prior to 2005, George provided Ying Mui with a total of $1,076,749.67, by way of an interest free loan which was to be repaid upon demand by George.
[The particulars referred to funds remitted by George, Robert and Frank which were set out in sch 5 to the TFASOC]

364. Prior to 2005, Robert provided Ying Mui with a total of $1,076,749.66, by way of an interest free loan which was to be repaid upon demand by Han.
[The particulars also referred to sch 5 to the TFASOC]
365. Prior to 2005, Lokit provided Ying Mui with a total of $1,076,749.66, by way of an interest free loan which was to be repaid upon demand by Lokit.
[The particulars also referred to sch 5 of the TFASOC]
366. Ying Mui incurred its liability to George in respect of the First [George] Loan, Han in respect of the Second [Robert] Loan, and Lokit in respect of the Third [Lokit] Loan, in its capacity as trustee of the YMT and for the benefit of the YMT.
[The particulars referred to financial statements of YMT for the years ended 30 June 2005 to 30 June 2009]

367 Ying Mui’s liability to George in respect of the First [George] Loan and Han in respect of the Second [Robert] Loan has not been discharged.

…
370In September 2014, Ying Mui sought confirmation from Frosthollow that Ying Mui would be indemnified out of the assets of the YMT in respect of any and all liabilities it incurred whilst trustee of the YMT, including:
(a) its liability to George in respect of the First [George] Loan; and
(b) its liability to Han in respect of the Second [Robert] Loan.
[The particulars referred to a letter from YMPL’s solicitors to Frosthollow dated September 2014. That letter was in evidence before me and is dated September 2014 (September 2014 letter)]
371On or around 30 October 2014, Frosthollow wrongfully denied that Ying Mui was entitled to an indemnity out of the assets of the YMT in respect of the First [George] Loan and the Second [Robert] Loan.

In paragraph UU of the prayer for relief, YMPL sought a declaration that it was entitled to an indemnity out of the assets of the YM Trust in respect of the First Two Loans.

The previous proceeding defendants filed a defence and counterclaim. I do not have in evidence the form of any defence and counterclaim filed in 2015. However, I have in evidence the form of their defence to the TFASOC and counterclaim dated 22 March 2017 (TFADC) which marks up the changes to their defence (to the second further amended statement of claim) and counterclaim dated 1 April 2016 (SFADC). There was no material difference between the TFADC and the SFADC. As a result, for convenience, I will only refer to the allegations in the TFADC.

In summary, in the TFADC the previous proceeding defendants:

(1) denied the allegations in [363]–[366] of the TFASOC in relation to the advance of the YMT Shareholder Loans prior to 2005; and

(2) contended advances to the three trusts prior to 2005 (including the YMT Shareholder Loans) were in fact capital advances made by Sharikat Ying Mui Sdn Bhd (SYM), a Malaysian company established by Mr Hoh Ying Chye for the Hoh family.

Further, in the TFADC, SYM (as a plaintiff by counterclaim) alleged that all assets of the three trusts were held on constructive or resulting trust for SYM in light of its alleged capital contributions. The counterclaim also sought declarations that the appointment of Frosthollow as trustee of the YM and Amore Trusts was valid.

3.2. The three hearings and the three Reasons

The trial judge ordered the previous proceeding be conducted in stages or ‘tranches’. In summary:

(1) the first tranche (involving three questions) dealt with the nature of the arrangement between the George faction and the Frank faction from 2001 for the purpose of property investment in Victoria and the contribution made by each of those factions;

(2) the second tranche (involving 23 questions) dealt with issues of breach of trust, knowing receipt, the removal of YMPL as trustee of the YM and Amore Trusts and of YMPL’s entitlement to an indemnity from trust assets for the First Two Loans;

(3) the third tranche dealt with issues of the form of relief.

The questions in the first tranche included whether, in or about April 2001, there was an alleged joint investment agreement formed between George, Frank and Robert to undertake property investment in Victoria (question 1). Question 2 was:

In and after April 2001, was any or all property investment in Victoria undertaken by the Hoh family:
(a) for and on behalf of the family company, SYM; and/or
…
(c) paid for by capital advanced by SYM, and not by loan funds;
(d)and if so, should any and what assets be held wholly or partly on a resulting and/or a constructive trust for SYM?

The trial of the first tranche questions took place over a number of days in August, September and October 2016. The judgment in relation to them was delivered on 8 February 2017: Ying Mui Pty Ltd v Hoh(No 3) (2017) 349 ALR 296 (First Reasons).

In summary, in the First Reasons, the trial judge concluded that:

(1) in relation to question 1, no legally binding joint investment agreement came into existence but an arrangement or understanding for a joint venture arose and operated between Frank, Robert and George between October 2001 and early 2010 for investment in property in Australia governed by the trust deeds of the three trusts;

(2) in relation to question 2, the 21 advances for property investments made by the three trusts were funded by loans from George, Robert and Frank and not by capital contributions from SYM.

In reaching this conclusion, the trial judge considered the financial statements of the YM Trust at [233]-[293] of the First Reasons. In summary, the trial judge:

(1) referred to the financial statements to 30 June 2010 which he accepted accurately reflected the transactions that were actually undertaken at the time, namely, ‘individual loans of $1,076,749 had been owed to each of George, Han (having succeeded Robert) and Frank’s company, Lokit’;[5]

(2) as a result, he concluded that the funds in each case were in fact loan funds advanced as loans to the YM Trust by the relevant shareholders, being Frank, Robert and George.[6]

[5]First Reasons, [235].

[6]Ibid [236].

After reviewing other relevant evidence (including the source of the transfers from Malaysia) the trial judge concluded:

...the evidence establishes, on the balance of probabilities, that when the 21 fund transfers were remitted to Australia and at the time when they were paid to the Ying Mui Trust, the Amore Trust and the FRG Investment Trust, the funds were:
(a) under the control of Frank, Robert and George;
(b) the subject of loans advanced to Frank, Robert and George by various entities; and
(c) in turn were on-leant by Frank, Robert and George as loans from themselves to the Ying Mui Trust, the Amore Trust and the FRG Investments Trust.[7]

[7]Ibid [293].

On this basis, among others, the trial judge determined that there could be no resulting or constructive trust in favour of SYM.[8] Further, even if this was incorrect, the trial judge held that the Frank faction did not have standing to seek declarations on behalf of SYM.[9]
[8]Ibid [341]-[344], [356]-[359].
[9]Ibid [345].

It is evident from this summary of the issues in the first tranche and the First Reasons, that, while the trial judge considered advances to the YM Trust in the context of the 21 advances to the three trusts, the trial judge was addressing whether all those advances were by way of capital or loan, not whether those advances were repayable or subject to any indemnity from the assets of each trust.

After the First Reasons had been delivered, on 6 March 2017, the trial judge ordered that the plaintiffs file the TFASOC which was filed on 17 March 2017. As noted above, section DD was in substantially the same form as in the CSOC. Further, as set out above, the previous proceeding defendants filed a TFADC disputing that the YMT Shareholder Loans were made prior to 2005.

The hearings in respect of the second tranche of questions took place between 11 and 16 May 2017, approximately three months after the First Reasons were delivered. The judgment in relation to the second stage was delivered on 15 December 2017: Ying Mui v Hoh (No 6) [2017] VSC 730 (Second Reasons).

Question 19 of the 23 second tranche questions, headed ‘Miscellaneous issues’ was:

Is Ying Mui entitled to an indemnity out of the assets of the [YM Trust] in respect of the First [George] Loan and the Second [Robert] Loan? (question 19)

Significantly, the previous proceeding defendants submitted that the issue of an indemnity in respect of question 19 was properly a matter for Frosthollow to address.

Nevertheless, in their submissions dated 3 May 2017, the previous proceeding defendants submitted that, notwithstanding the First Reasons, the Court could not be satisfied there were in fact loans from George and Robert to YMPL as the description and amounts in the loan entries in the financial statements were ‘inconsistent, uncertain, ambiguous and unreliable’. As a result, YMPL could not establish the First George Loan or the Second Robert Loan which were the subject of the indemnity claim. Further, they submitted that:

[e]ven if there were loans, the [previous proceeding] defendants submit that any loan claim is statute-barred and therefore [YMPL]…as presently constituted, ought properly have denied any claim for payment if made by the putative lenders.

Frosthollow filed separate submissions in which it contended that:

(1) it should only be required to indemnify YMPL for the First Two Loans if those loans were properly payable by YMPL;

(2) the First Two Loans are alleged to be payable on demand but ‘no claim has been made for repayment in this proceeding’;

(3) as a result, the First Two Loans were statute-barred by reason of s 5 of the Limitation of Actions Act 1958 (Vic) (Limitation Act) because:

(a) a lender’s cause of action arises in respect of a loan payable on demand on the receipt of the money; and

(b) the cause of action becomes statute-barred at the expiration of six years after receipt, unless there is any relevant acknowledgement;

(4) Frosthollow conceded that ‘the last arguable acknowledgement’ of the First Two Loans was in the 2010 YMT financial statements, with the result that those loans were statute-barred at that time; and

(5) Frosthollow accepted that it had not pleaded any defence based upon the Limitation Act but this was because at the time defences were filed the First George and Second Robert Loans had not become statute-barred.

In summary, in the Second Reasons the trial judge found that Frank and other members of the Frank faction had breached their fiduciary duties and acted contrary to the interests of the George faction. As to question 19, the trial judge noted:

(1) by reference to paragraphs [363] and [364] of the TFASOC, that the answer to question 19 raised two subsidiary questions, namely, whether the loans were lent by George, Han and Lokit or by Artimax and whether YMPL borrowed those moneys as trustee of the YM Trust;[10] and

(2) that ‘[t]he Court has already determined that the funds remitted by Frank, Robert and George were loans to [YMPL] and made by those persons. Further, the Court has found that [YMPL] had an obligation to repay the amounts borrowed from Frank, Robert and George…’.[11]

[10]Second Reasons, [600].

[11]Ibid [601].

I note that the findings set out in [52](2) above were made in the context of whether the advances made to the three trusts were capital or loans. The conclusion of the trial judge that YMPL ‘had an obligation to repay’ the amounts lent by Frank, Robert and George did not expressly arise in question 19. Question 19, consistent with the TFASOC, only sought indemnity in respect of the First Two Loans but not the Third Lokit Loan.

The trial judge concluded that, as Frosthollow neither pleaded the Limitation Act by way of defence nor applied for leave to amend, he should not consider the Limitation Act defence.[12] In any event, he considered it was ‘irrelevant’ that the First Two Loans had not become statute-barred at the time Frosthollow filed its defence.[13]
[12]Ibid [615]-[616].
[13]Ibid [617].

The trial judge then noted the difference between the 2010 YMT financial statements and the 2011 YMT financial statements. He concluded that:

(1) Lynn had acted unilaterally to change the identity of the creditors in respect of the loans totalling $3,230,249 in the accounts of YMPL, without making any contact with the previously recorded creditors George and Han, or the directors of Artimax and without any re-payments being made of the First George Loan or the Second Robert Loan;[14]
[14]Ibid [620]-[621].

(2) this scheme was designed to maintain the asset base of the YM Trust for the benefit of the Frank faction and to the exclusion of the George faction without the repayment to George or Han to which they had become entitled;[15]

(3) YMPL was indebted to George and Han in respect of the First Two Loans;[16] and

(4) YMPL was entitled to an indemnity out of the assets of the YM Trust in respect of this liability.[17]

[15]Ibid [624].

[16]Ibid [625].

[17]Ibid [627].

I note that in the part of the executive summary concerning question 19 at the conclusion of the Second Reasons, the trial judge stated that YMPL was ‘entitled to an indemnity… in respect of its liability to repay the [First Two Loans], upon demand’.[18] I am unsure how that finding (i.e. ‘upon demand’) was reached in light of the pleadings, the evidence, the issues raised in, or the conduct of the hearing of, the previous proceeding (including how the second tranche was conducted). It was not the subject of question 19. I will comment on this further in [58] below.
[18]Ibid [724].

On 9 April 2018, the trial judge heard oral argument in relation to the third tranche. On 4 May 2018, the trial judge handed down reasons for decision concerning the third tranche: Ying Mui Pty Ltd v Kiang Ngan Hoh [2018] VSC 214 (Third Reasons). The Third Reasons concern, among other things, the form of orders that should be made consequent upon the First and Second Reasons.

Relevantly, the trial judge noted that he had already answered question 19 to the effect that YMPL was ‘entitled to an indemnity … in respect of its liability to repay [the First Two Loans], upon demand’.[19] This appears to be based upon [724] of the Second Reasons. I refer to my comments in [56] above. However, it would appear that the George faction did not seek a declaration in that form.[20] It was not explained to me why this conclusion was reached in light of the pleadings, the evidence, the issues raised in, or the conduct of, the previous proceeding.
[19]Third Reasons, [119].
[20]Ibid [117].

The trial judge noted that the previous proceeding defendants submitted that having answered question 19 in this way, the making of a declaration would serve no useful purpose. The trial judge disagreed, stating that:

In my opinion, it is appropriate in the circumstances of the case to make a declaratory order in support of the finding made in answer to question 19. The issue was strongly contested at trial. Two subsidiary questions raised themselves for determination, namely: (i) whether loan funds were lent by George, Han and Lokit to Ying Mui or whether those funds were lent (or indeed otherwise provided) by Artimax Investments Ltd, and (ii) whether Ying Mui borrowed those monies whilst acting as trustee. Both of these questions were determined by the Court in favour of the Plaintiffs. However, this involved a very detailed tracing analysis of the money trail and character of funds remitted from Malaysia to Australia and invested in the Ying Mui Trust over the relevant period of time. The findings made resulted in the conclusion that Ying Mui is entitled to an indemnity out of the assets of the Ying Mui Trust in respect of its liability to repay the loans comprising the First Loan and the Second Loan. The purpose in making this declaration is to produce a state of finality in relation to the issue such that it will give rise to a res judicata (subject to a right to appeal) and bind the parties. The utility in granting relief of this kind is that the declaration will also assist the newly appointed trustee in preparing financial statements.[21]

[21]Ibid [121].

As a result, the trial judge declared that:

[YMPL] is entitled to an indemnity out of the assets of the [YM Trust] in respect of its liability to repay the loans comprising the First [George] Loan and the Second [Robert] Loan upon demand.

3.3 The Appeal

The previous proceeding defendants appealed. The appeal was heard on 15 and 16 May 2019. It involved an appeal from the findings in the First Reasons, the Second Reasons and the Third Reasons. However, given the overlap between the subject matter of all these reasons, 10 separate questions were identified for determination by the Court of Appeal. The Court of Appeal delivered reasons for judgment on 18 September 2019: Hoh v Ying Mui Pty Ltd [2019] VSCA 203 (Appeal Reasons).

Question 2 of the questions before the Court of Appeal related to question 2 of the first tranche questions and question 19 of the second tranche questions. The Appeal Reasons record the question and the answer:

[60] Question 2: Were the Malaysian advances to [YMPL] loans or capital contributions from SYM? If the advances were loans, is [YMPL] entitled to an indemnity from the assets of the [YM Trust] in respect of its liability to repay those loans? If the advances were capital contributions from SYM, did the Frank faction have standing to seek a declaration of a resulting or constructive trust in SYM’s favour?
[61] Answer to Question 2: The Malaysian advances were shareholder loans advanced by Frank, George and Robert to [YMPL]. As the loans were made to [YMPL] in its capacity as trustee, it is entitled to be indemnified from the assets of the [YM Trust] in respect of its liability to repay the loans from George and Robert (Frank making no claim). If the advances had been capital contributions from SYM, the Frank faction had no standing to seek relief in SYM’s favour.[22]

[22]Appeal Reasons, [60]-[61] (citations and definitions omitted).

In respect of the YMT Shareholder Loans, the Court of Appeal found that:

[187] Lynn explained in her evidence that she was responsible for making the changes in the 2011 financial statements, to alter the historical position. She said she did so because she did not regard the previous recording of loans from shareholders to be accurate. We note, however, that this approach was adopted by Lynn after this dispute had taken hold, and involved re-writing the financial statements for the year ended 30 June 2010.…
[188] This attempt to re-write this historical accounts was an obvious attempt to further the Frank faction’s position in the dispute, in circumstances where Frank had already taken more than the amount of his loan (as recorded in 2009 financial statements) for his ‘fighting fund’ - which has since been exhausted in funding the Frank faction’s defence of this proceeding. Frank had also taken his management fees by this time.
…
[190] As can be seen, although there was some ambiguities in the earlier financial statements, by the financial years 2009 and 2010 there was no ambiguity. Shareholder loans were recorded as being payable by Ying Mui to George, Han and Lokit, respectively, for the amounts stated. In circumstances where Frank had signed a director’s declaration in each year, declaring that the financial statements and notes presented the financial position of the Ying Mui Trust ‘fairly’, the judge was right to place reliance on the financial statements as containing evidence of the loans on which he could act in making the loans finding….[23]

[23]Ibid [187]-[188], [190].

In light of these findings, the Court of Appeal concluded that the trial judge was correct to conclude in the Second Reasons that YMPL was entitled to an indemnity from the assets of the YM Trust in respect of its liability to repay the First Two Loans to George and Robert/Han.

There is one matter to address. The CSOC and the TFASOC referred to the September 2014 letter from YMPL to Frosthollow. It is signed by George, Han and Maureen on behalf of YMPL. It relevantly provides :

YM entered into numerous obligations as trustee of the [YM Trust]. Those obligations include the executory liability to repay various unsecured loans, including but not limited to:
*         $1,076,749.67 borrowed from [George];
*         $1,076,649.66 borrowed from [Han]; and
*         $1,076,649.66 borrowed from [Lokit].
The purpose of this letter is to seek your confirmation that you will indemnify YM out of the assets of the [YM Trust] for the obligations it incurred for the benefit of that trust, and whilst it was the trustee thereof.

4. THE ISSUES IN THIS PROCEEDING

This proceeding originally started as an application for judicial advice. However, as is evident from the introduction to these reasons, the A.1 issue and the A.2 issue require determination of whether YMPL is liable to repay upon demand the Third Lokit Loan and, if so, whether YMPL is entitled to an indemnity from the assets of the YM Trust for any such liability. These issues are to be determined inter partes with the Frank parties (Lokit and Lynn), and the George parties (YMPL, George and Han) joined for this purpose. The remaining issues (save for costs of this proceeding) are applications for judicial advice.

It is appropriate that I now deal with the A.1 issue, the A.2 issue and the related B.3 issue.

5. THE A.1, A.2 and B.3 ISSUES

The principal issue for determination is the A.1 issue. Paragraph A.1 of the prayer for relief in the AOM provides:

Is YMPL (in its capacity as former trustee of the Ying Mui Trust) liable to repay upon demand the amount of the Alleged YMT Advance to the estate of Frank Hoh or Lokit?

As defined above and for the avoidance of doubt, a reference to the Third Lokit Loan in these reasons is a reference the ‘Alleged YMT Advance’. Further, it was not in dispute before me that Lokit was, or is, the only person to whom the Third Lokit Loan is owed. As a result, for consistency and simplicity, I will proceed on the basis that the relevant question posed by paragraph A.1 is:

Is YMPL, in its capacity as the former trustee of the YM Trust, liable to repay upon demand the amount of the Third Lokit Loan to Lokit?

Paragraph A.2 of the prayer for relief in the AOM provides:

If the answer to question 1 is “yes”, is YMPL (in its capacity as former trustee of the [YM Trust]) entitled to be indemnified by way of exoneration (or otherwise) out of the assets of the [YM Trust] in respect of the [Third Lokit Loan]?

Paragraph B.3 of the prayer for relief in the AOM provides:

Would AET be justified in making such entries in the financial accounts of the [YM Trust] as are necessary and appropriate to record that the Artimax Loan and/or the [Third Lokit Loan] is not payable from trust assets?

I note in passing that that the basis of the original judicial advice application was that AET had formed the view that it had a good basis to defend any claim brought by Lokit for the Third Lokit Loan on the grounds that:

(1) such claim is statute-barred under the Limitation Act; and/or

(2) Lokit is estopped from making such a claim, relevantly, under the principles of Anshun estoppel.

Further, AET formed the view it had a good basis to defend a claim by Artimax for the repayment of the Artimax Loan on the grounds that:

(1) in the previous proceeding, the Court found that Artimax was improperly recorded as the lender of the Artimax Loan with the result that Artimax has no legal entitlement to recover it; and

(2) in any event, any such claim is statute-barred under the Limitation Act;

In this context, I will deal first with the Limitation Act issue and the Anshun estoppel issue for the purpose of determining the A.1 issue.

5.1 The first A.1 issue – The Limitation Act
5.1.1 The submissions of AET

In its submissions, AET noted that:

(1) the cause of action to make a claim in respect of a loan repayable on demand accrues at the time that the money is advanced to the borrower;

(2) thus, under s 5 of the Limitation Act, no action can be brought after six years from such an advance; and

(3) the position in (2) is subject to s 24(3) of the Limitation Act which relevantly provides, in summary, that where the person liable ‘acknowledges the claim’, the right of action ‘…shall be deemed to have accrued on and not before the date of the acknowledgement…’.

As to the meaning of an acknowledgement for the purposes of s 24(3) of the Limitation Act, AET relied upon the decision of Nettle J in VL Finance Pty Ltd v Legudi[24] (VL Finance) and submitted that:
[24](2003) 54 ATR 221 (‘VL Finance’).

(1) any acknowledgement must be in writing, signed by the debtor (or the debtor’s agent) and ‘given to the creditor’;[25]
[25]Limitation Act, s 25; VL Finance (n 24) 232 [60].

(2) a pleading could constitute such an acknowledgement, but the ordinary requirements of it being signed by the debtor and delivered to the creditor needed to be met;

(3) in any event, on the evidence before the Court, there is no basis upon which the Court could conclude that the TFASOC read as a whole constitutes an admission by YMPL that it remained liable to repay the Third Lokit Loan to Lokit.

5.1.2 The submissions of the Frank parties

The Frank parties submitted that there was an ‘unbroken chain of acknowledgments leading from the very first financial statements [of the YM Trust] in evidence up to the present day’ whereby YMPL acknowledged that the Third Lokit Loan was owed to Lokit. The ‘present day’ was limited to the TFASOC dated 17 March 2017 such that the right of Lokit to claim the Third Lokit Loan in this proceeding was made within the six year period.

As to the documents constituting an acknowledgment, the Frank parties relied upon:

(1) the YMT financial statements up to the 2010 YMT financial statements which included the Third Lokit Loan, being one of the YMT Shareholder Loans, owing to Lokit, noting that the 2010 YMT financial statements were signed on 29 April 2011 by Frank;

(2) the September 2014 letter from YMPL to Frosthollow; and

(3) the TFASOC and previous versions of that document.

As to the relevant principles, the Frank parties submitted that a court pleading may contain the relevant acknowledgement and that it was necessary to construe the alleged acknowledgement in the context of the pleading as a whole. In this regard, they submitted that [365]-[366] of the TFASOC must be read in the context of section DD and the TFASOC as a whole. Further, they relied upon YMPL’s indemnity claim for the First George Loan and the Second Robert Loan, noting that YMPL was controlled by George and Han at the time of the previous proceeding.

As to the TFASOC, the Frank parties submitted that:

(1) the TFASOC is in writing, signed by YMPL’s agent and delivered to Lokit;

(2) it contains ‘an express pleaded allegation made on behalf of, inter alia, YMPL, that YMPL was indebted to Lokit for $1,076,749.66’;

(3) no issue arises as to whether the acknowledgement binds AET as the successor trustee of the YM Trust; and

(4) AET’s liability arises because YMPL is entitled to be indemnified as former trustee.

It is important to note at this stage that, based upon section DD of the TFASOC to which I was referred, in my view, the TFASOC did not contain any allegation that YMPL was liable to Lokit in any amount. Rather, it referred to the YMT Shareholder Loans, including the Third Lokit Loan, having been advanced prior to 2005. It also alleged that the First Two Loans had not been discharged, but no such allegation was made in respect of the Third Lokit Loan. I will comment on this further below.

In their written submissions, the Frank parties asserted that AET had breached its duty to keep proper accounts (in light of the findings of the trial judge and the Court of Appeal) by failing to update the YMT financial statements from the financial years ended 2011 to 2016 to delete the Artimax Loan and to reinstate the YMT Shareholder Loans. This submission was made in support of an argument that, had AET updated the 2011 to 2016 YMT financial statements in or about 2018 to accurately record the liability to George, Han and Lokit (i.e. the YMT Shareholder Loans), there could be no suggestion that these liabilities were statute-barred. This was in a context where the Frank parties had repeatedly requested that AET provide copies of these updated statements but none had been provided.

It is appropriate to note at this stage that AET disputed any obligation to ‘update’ the financial statements of YMT prior to its appointment. AET noted that the Frank parties’ contention to the effect that AET should be ordered to render accounts is not the subject of a claim for any relief in this proceeding. In any event, AET submitted that it has sought judicial advice in this proceeding as to what would be proper to be recorded in the financial statements for the very purpose of preparing final accounts and vesting the YM Trust. It submitted that it had every right to seek the Court’s advice for preparing accounts that may have the effect of altering the asset position of the YM Trust by reviving a statute-barred liability.

In short, I agree with these submissions of AET and do not intend to address this issue any further.

The Frank parties also submitted that, even if I concluded that the Third Lokit Loan was statute-barred, it did not necessarily follow that AET should not pay that debt to Lokit given that the First Two Loans have been repaid by AET. Counsel referred to this as his ‘fallback position’.

5.1.3 The submissions of the George parties

In summary, the George parties disputed that there has been an ‘unbroken chain of acknowledgments’ from the YM Trust financial statements up to the TFASOC. To the contrary, they submitted that:

(1) the acknowledgement in the 2010 YMT financial statements became statute-barred, at the latest, by 29 April 2017, being six years after they were signed by Frank;

(2) the September 2014 letter is not an acknowledgment for the purposes of s 24 of the Limitation Act and, even if it were, any claim based upon that letter was statute-barred by, at the latest, September 2020.

The George parties referred to the requirements in s 25 of the Limitation Act, namely, that an acknowledgement must be in writing, signed by the debtor (or their agent) and made to the creditor. Further, relying upon VL Finance, the George parties contended that the question of whether a document constitutes an acknowledgement depends upon the construction of the document.[26]
[26]VL Finance (n 24) 232 [60].

As to the TFASOC, the George parties submitted that the text of [365] of the TFASOC either alone, or in the context of the TFASOC as a whole, did not constitute an acknowledgement of a liability in respect of the Third Lokit Loan but a description of an historical fact. They submitted the language did not connote present indebtedness or a present obligation to make payment, so as to be properly be categorised as an acknowledgement for the purposes of s 24 of the Limitation Act. In this regard, counsel relied upon the comments of Gibbs CJ in Stage Club Ltd v Millers Hotels Pty Ltd[27] (Stage Club) that ‘one does not acknowledge a debt by admitting that it was due at some time in the past…The admission must be that the debt is due at the time when the admission is made’.[28]
[27](1981) 150 CLR 535 (‘Stage Club’).
[28]Ibid 547. See also 573 (Brennan J).

The George parties also noted that in the TFASOC:

(1) it is not alleged that the Third Lokit Loan has not been discharged, comparing [367] in respect of the First George Loan and the Second Robert Loan; and

(2) it is not alleged that YMPL is entitled to an indemnity from the assets of the YM Trust in respect of the Third Lokit Loan.

As a result, the George parties submitted that the TFASOC is not in substance expressive of YMPL’s intention to admit any present liability in respect of the Third Lokit Loan or to produce and use the TFASOC for the purpose of such an acknowledgement.[29]
[29]VL Finance (n 24) 233-34 [63].

As to the September 2014 letter, the George parties submitted that it did not constitute an acknowledgment of indebtedness for similar reasons as to why the TFASOC was not an acknowledgement. Further, it contended that the September 2014 letter did not satisfy section s 25(2) of the Limitation Act as it was not ‘made to the person, or to an agent of the person, whose title or claim is being acknowledged…’. This is because that letter was addressed to Frosthollow and not Lokit. Finally, as noted above, they contended that any right of action based on the September 2014 letter was statute-barred well before the issues raised in this proceeding.

5.1.4 AET reply submissions

In reply AET noted that, at the time of the TFASOC, YMPL had ceased to be the trustee of the YM Trust and was not exercising any power as trustee under the YM Trust deed. Rather, it was acting in a private capacity and the consequences of its actions should be confined to YMPL and not visited upon beneficiaries of the YM Trust by permitting recourse to trust assets. Of course, that argument would apply with equal force to the September 2014 letter.

In this regard, AET referred to the right of indemnity of a trustee contained in cl 12.3 of the YM Trust deed. It provides, in substance, that a trustee of the YM Trust is entitled to be indemnified in respect of all liabilities incurred by the trustee ‘relating to the execution of any powers duties authorities or discretions vested in the Trustee under the provision of this Deed and in respect of all actions proceedings costs claims and demands in relation to any matter or thing done or omitted to be done concerning the Trust Fund’.

5.1.5 Consideration

I have formed the view that YMPL is not liable to repay the Third Lokit Loan as that loan is statute-barred. In summary, this is because I have formed the view that:

(1) the TFASOC is not an ‘acknowledgement’ for the purposes of s 24(3) of the Limitation Act; and

(2) any limitation period based upon an acknowledgment in the September 2014 letter expired on September 2020, well before the issues relating to the liability of YMPL for the Third Lokit Loan were raised in this proceeding.

Relevantly, s 24(3) of the Limitation Act provides that:

(3) Where—
(a) any right of action has accrued to recover any debt or other liquidated pecuniary claim or any claim to the personal estate of a deceased person or to any share or interest therein; and
(b) the person liable or accountable therefor acknowledges the claim or makes any payment in respect thereof—

the right shall be deemed to have accrued on and not before the date of the acknowledgment or the last payment:
Provided that a payment of a part of the rent or interest due at any time shall not extend the period for claiming the remainder then due, but any payment of interest shall be treated as a payment in respect of the principal debt.

Further, s 25 of the Limitation Act provides that:

(1) Every such acknowledgment as aforesaid shall be in writing and signed by the person making the acknowledgment.
(2) Any such acknowledgment or payment as aforesaid may be made by the agent of the person by whom it is required to be made under the last preceding section, and shall be made to the person, or to an agent of the person, whose title or claim is being acknowledged or, as the case may be, in respect of whose claim the payment is being made.

In accordance with s 25, an acknowledgement needs to be:

(1) ‘in writing’;

(2) ‘signed by the person making the acknowledgement’ or that person’s agent; and

(3) ‘made to the person, or to an agent of the person, whose title or claim is being acknowledged…’.

As to the relevant principles to be applied in determining whether a document constitutes an acknowledgment for the purposes of s 24(3) of the Limitation Act, Nettle J in VL Finance made plain that:

(1) the question of what amounts to an acknowledgement is a question of construction with each case turning on its own facts;[30]

(2) facts stated in pleadings in previous proceedings between debtor and creditor can constitute an acknowledgement because, although they are made to the Court, they are implicitly addressed to the creditor;[31]

(3) nevertheless, a document does not constitute an acknowledgement ‘unless it is in substance expressive of the debtor’s intention to admit the debt and to have the document produced and used for that purpose’.[32]

[30]Ibid 232 [60].

[31]Ibid 233 [61].

[32]Ibid 234 [63].

I note in passing that his Honour makes some observations as to whether the acknowledgment needs to be given to the creditor which are not of direct relevance to this proceeding.

Further, I would add that:

(1) in considering whether a pleading does in fact contain an acknowledgement, one has to read the document as a whole and construe it in accordance with the ordinary rules of construction to see what its language means;[33] and

(2) the acknowledgement must be an admission that a debt is currently or may be prospectively due (e.g. due upon demand) at the time when the acknowledgment is made, not that it was due at some time in the past.[34]

[33]Flynn v Flynn [1969] 2 Ch 403, 411.

[34]Stage Club (n 27) 547 (Gibbs CJ), 573 (Brennan J).

I note that the formulation in [100](2) is slightly different from the expression in Stage Club. However, in my view, it must be true that an acknowledgement of a debt due on demand may also be an acknowledgement for the purposes of s 24 of the Limitation Act.

Reading [363]-[371] of the TFASOC in the context of section DD and the TFASOC as a whole, I am not satisfied that it constitutes an acknowledgement for the purposes of s 24(3) of the Limitation Act.

The only reference to the Third Lokit Loan in the TFASOC is in [365] and [366]. Those paragraphs allege, in substance, that:

(1) prior to 2005, Lokit provided YMPL with an interest free loan totalling $1,076,749.66 which was to be repaid on demand by Lokit; and

(2) YMPL incurred its liability to Lokit in respect of the Third Lokit Loan in its capacity as the trustee of the YM Trust and for the benefit of that trust.

Significantly, there is no statement (express or implied) in the TFASOC to the effect that the Third Lokit Loan was currently or may be prospectively due on demand and/or that that liability had not been discharged. This is in contrast to the express allegation in [367] that YMPL’s liability in respect of the First Two Loans ‘has not been discharged’. YMPL then alleges in [370]-[371] that it has a right of indemnity from the assets of the YM Trust only in respect of its liability relating to the First Two Loans. This is confirmed by paragraph UU of the prayer for relief.

In these circumstances, I am not satisfied that there is any admission in these paragraphs that the Third Lokit Loan was currently or may be prospectively due (in this, case due upon demand) at the time the TFASOC was filed. As a result, I have concluded that there is no acknowledgement for the purposes of s 24(3) of the Limitation Act.

Further and relatedly, I am not satisfied that these paragraphs of the TFASOC, in substance, express YMPL’s intention:

(1) to admit that the Third Lokit Loan currently or may be prospectively due; and

(2) to have this part of the TFAOSC produced and used for the purpose of an acknowledgement of such a liability to pay the Third Lokit Loan.

As to the first point, I refer to paragraphs [102] to [105] above.

As to the second point, I have concluded that, viewed objectively, the intention or purpose of section DD of the TFASOC is to claim an indemnity from the assets of the YM Trust in respect of the First Two Loans and to thereby impliedly acknowledge that those loans were currently or may be prospectively due. By contrast, it was neither the intention nor the purpose of this part of the TFASOC to claim an indemnity in respect of the Third Lokit Loan and/or to acknowledge that the Third Lokit Loan was currently or may be prospectively due.

For completeness, based on these conclusions, I reject the submissions of the Frank parties that there is an ‘unbroken chain of acknowledgements’ from the first financial statements in evidence to the present time. Further, I reject the submission of the Frank parties that paragraphs [363]-[371] of the TFASOC contain an ‘express pleaded allegation made on behalf of, inter alia, YMPL, that YMPL was indebted to Lokit for $1,076,749.66’. Put simply, for the reasons set out above, those paragraphs do not contain such an allegation either expressly or impliedly.

In all the circumstances, I am not satisfied that these paragraphs in section DD of the TFASOC constitute an acknowledgement for the purposes of s 24(3) of the Limitation Act.

Further, it is unnecessary to form any view as to whether the September 2014 letter was an acknowledgement for the purposes s 24(3) of the Limitation Act. This is because any limitation period in respect of any acknowledgement in the September 2014 letter expired at the latest in September 2020, well before these issues were raised in this proceeding. However, I note that the September 2014 letter was addressed to Frosthollow and that the express purpose of the September 2014 letter was ‘to seek [Frosthollow’s] confirmation that [Frosthollow] will indemnify [YMPL] out of the assets of the [YM Trust]’. Thus, it seems inconsistent with the requirements set out in VL Finance referred to in [98](3) above.

As a result, I consider that the answer to the A.1 issue is ‘no’ as YMPL is not liable to repay upon demand the amount of the Third Lokit Loan to Lokit as the limitation period in respect of the loan has expired and no relevant acknowledgment of the loan was provided or was intended to be provided in the TFASOC.

5.2 The second A.1 issue - Anshun estoppel

As a result of my conclusion in the last section, it is not necessary for me to determine whether there is an Anshun estoppel which prevents Lokit from asserting that YMPL is liable for the Third Lokit Loan. Nevertheless, I wish to record that I have formed the view that the George parties have not satisfied me that there is an Anshun estoppel which prevents Lokit from making such a claim.

5.2.1 The submissions of AET

As noted above, AET formed the view that it was justified in defending any claim for the Third Lokit Loan based on an Anshun estoppel. AET noted the parties to the previous proceeding with YMPL as the first plaintiff and Frank, Lokit and Frosthollow as the first, fifth and seventh defendants, respectively. In this context, AET submitted that:

(1) ‘George and Han sought repayment of their loans which (comprised two-thirds of the falsely recorded Artimax loan) while Lokit and Frank made no such claim’;

(2) a considerable body of evidence in the previous proceeding was directed to the genesis of the ‘loans’ (i.e. the YMT Shareholder Loans) which is set out in the Second Reasons;[35]
[35]Second Reasons, [601]. While the passage relied upon related to the YMT Shareholder Loans, in fact, the considerable body of evidence in the previous proceeding was directed to the genesis of the 21 advances to the three trusts which the trial judge concluded were loans.

(3) the trial judge:

(a) recognised that the First Two Loans were not statute-barred at the time Frosthollow filed its defence;[36] and
[36]Ibid [617].

(b) upheld ‘George and Han’s claims and YMPL’s claim to indemnity for repayment of those loans’;[37]

(4) notwithstanding all these matters, neither Lokit nor Frank made a claim for repayment of the Third Lokit Loan: rather, they made a forensic decision to allege (unsuccessfully) that the funds received by the three trusts were capital advances made by SYM.

[37]Ibid [627].

As a result, AET submitted that the Court should conclude that the claim now made is one that Lokit chose not to make in the previous proceeding such that it would be unreasonable to permit them to make a claim for the Third Lokit Loan in this proceeding.

I wish not note at this time that:

(1) George and Han did not claim or seek payment of the First Two Loans in the previous proceeding. Rather, YMPL sought an indemnity in respect of them; and

(2) based upon my reading of [607]-[608] and [615]-[617] of the Second Reasons to which I was referred:

(a) the trial judge did not recognise that the First Two Loans were statute-barred: rather, he recorded what Frosthollow conceded;[38]

(b) the trial judge did not determine whether the First Two Loans were statute-barred as the Limitation Act was not pleaded.[39]

5.2.2 The submissions of the George parties

[38]Ibid [607]-[608].

[39]Ibid [615]-[617].

The George parties also submitted that the Court should find that Anshun estoppel operates to bar Lokit’s claim to payment in respect of the Third Lokit Loan. They submitted that the position now advanced by the Frank parties was not merely ‘closely connected’ with the issues in the previous proceeding. Rather, the same parties addressed the same issues in the previous proceeding and the Frank parties adopted a contrary position to that for which they now advocate.

As to the close connection with the issues in the previous proceeding, the George parties relied upon the pleadings, evidence and reasons for judgment in the previous proceeding. As to the pleadings, they relied, in substance, upon the allegations in section DD and paragraph UU in the prayer for relief of the TFASOC, namely, that:

(1) the YMT Shareholder Loans were advanced to YMPL in its capacity as trustee of the YM Trust prior to 2005;

(2) YMPL’s liability for the First George Loan and Second Robert Loan had not been discharged but there was no equivalent allegation made by Lokit in respect of the Third Lokit Loan; and

(3) YMPL’s indemnity claim was in respect of the First Two Loans but not the Third Lokit loan.

As to the relevant findings, the George parties submitted that the determination of these allegations in the previous proceeding entailed consideration and findings as to:

(1) the identity of the lenders;

(2) whether the loans were repayable on demand; and

(3) whether the loans were statute-barred.

In support of these submissions, the George parties referred to findings made by the trial judge which were set out in the Agreed Findings, namely:

(1) Agreed Finding 4 that the 2010 YMT financial statements recorded individual loans of $1,076,749 which had been owed to each of George, Han (having succeeded Robert) and Lokit and that those records accurately reflect the transactions that were actually undertaken at the time;[40]

(2) Agreed Finding 17 that the ‘alleged “shareholder loans” were each “a loan … repayable at call [in respect of which] the lender’s cause of action arises on the receipt of the money. Therefore, the cause of action becomes statute-barred at the expiration of six years after receipt”’;[41]

(3) Agreed Finding 18 that ‘“… the last arguable acknowledgement was in the accounts for 30 June 2010 and accordingly on any view the [shareholder] loans are now statute-barred.”’[42]

[40]Agreed Finding 4 relied on the First Reasons, [233]-[236].

[41]Agreed Finding 17 relied on the Second Reasons, [606].

[42]Agreed Finding 18 relied on the Second Reasons, [608].

I have some reservations about the accuracy of Agreed Findings 17 and 18. In respect of Agreed Finding 17, it appears that the reference to ‘shareholder loans’ is a reference to the loans which I have defined as the YMT Shareholder Loans. However, that is not made express in the Second Reasons at [606]. As to Agreed Finding 18 (which is more relevant to these reasons), I am not satisfied that it is an accurate reflection of the findings of the trial judge. Paragraph [608] of the Second Reasons records that: ‘Frosthollow further concedes that the last arguable acknowledgement was in the accounts for 30 June 2010 and accordingly on any view the loans are now statute barred’. In my view, the trial judge did not make any findings in respect of this concession. To the contrary, his Honour later determined that he would not have regard to the Limitation Act in determining the claims before him as the Limitation Act was not pleaded.[43] I refer to my comments in [116](2).
[43]Second Reasons, [615]-[616].

The George parties also relied upon the following matters:

(1) the Frank parties filed a defence in the previous proceeding in which they denied that Lokit provided YMPL with funds by way of an interest free loan i.e. the allegation that the Frank parties say they did not need to raise in the previous proceeding was positively denied by them in the previous proceeding;

(2) the Frank parties filed closing submissions in the previous proceeding dated 3 May 2017 which stated that ‘… any loan claim is statute-barred and therefore Ying Mui … as presently constituted, ought properly have denied any claim for repayment if made by the putative lenders’. The George parties submitted that this submission would have applied with equal force to the Third Lokit Loan which the Frank parties now allege is recoverable; and

(3) at the time of the previous proceeding, Lynn was the sole director and shareholder of Frosthollow which was also a defendant in the previous proceeding. Frosthollow also submitted/conceded that the First Two Loans were statute-barred.

In these circumstances, the George parties submitted that it was unreasonable for the Frank parties to now assert that YMPL is liable for the Third Lokit loan. However, I wish to point out:

(1) the fact that the trial judge may have concluded that the ‘loans’ (which I have assumed to be a reference to the YMT Shareholder Loans) were payable on demand did not mean that YMPL’s liability had not be discharged. This is in circumstances where YMPL pleaded only that the First Two Loans had not been discharged; and

(2) my comments above that the trial judge did not determine whether the First Two Loans were statute-barred as the Limitation Act was not pleaded in the previous proceeding.

Further, the George parties submitted that for the Frank parties to now assert that YMPL is liable for the Third Lokit Loan offended the principle of finality in litigation. In this context, they relied upon a passage in Anshun in which the majority stated:

The likelihood that the omission to plead a defence will contribute to the existence of conflicting judgements is obviously an important factor to be taken into account in deciding whether the omission to plead can found an estoppel against the assertion of the same matter as a foundation for a cause of action in the second proceeding. By “conflicting” judgements we include judgements which are contradictory, though they may not be pronounced on the same cause of action. It is enough that they appear to declare rights which are inconsistent in respect of the same transaction.[44]

[44]Anshun (n 1) 603-4 (Gibbs CJ, Mason and Aickin JJ).

The George parties also referred to the comments of Kenny JA in Gibbs v Kinna[45] (Gibbs) to the effect that, where there was no risk of inconsistent judgments, it was necessary to consider all the relevant facts of the previous proceeding, including the length and complexity of the trial of previous proceeding.[46]
[45][1999] 2 VR 19 (‘Gibbs’).
[46]Ibid 28 [28] (Ormiston and Phillps JJA agreeing).

In this regard, the George parties relied upon the comments of the trial judge in the Third Reasons at [121] set out above at [59]. Further, they relied upon the comments of the trial judge made in an interlocutory ruling in the previous proceeding:

This proceeding has extraordinary breadth and has generated a very large number of issues to be determined. Factually, the issues span more than fifteen years of complex commercial activity, and involve numerous actors and commercial entities. Many documents have been generated by these activities for the Court to consider, contained in the Court Books and Supplementary Court Books. Further, a considerable number of causes of action have been pleaded which call for close analysis and determination. ...[47]

5.2.3 The submissions of the Frank parties

[47]Ying Mui Pty Ltd v Hoh (Ruling No 1) [2016] VSC 519, [42].

The Frank parties submitted that simply because a claim or issue could have been raised in an earlier proceeding, this was not sufficient to establish Anshun estoppel. Rather:

(1) the test is whether that claim or issue now sought to be raised was ‘so relevant to’ the subject matter of the previous proceeding as to have made it ‘unreasonable’ for the claim not to have been made or the issue not to have been raised in the previous proceeding;[48]

(2) the onus was on the party asserting the Anshun estoppel to satisfy the Court that this test had been satisfied.[49]

[48]Relying on Anshun (n 1) 602 (Gibbs CJ, Mason and Aickin JJ).

[49]Relying on Clayton v Bant (2020) 272 CLR 1, 12 [30] (‘Clayton').

The Frank parties submitted that:

(1) they did not need to raise YMPL’s liability for the Third Lokit Loan in the previous proceeding because YMPL in that proceeding did so by alleging the Third Lokit Loan of 1,076,749.66 in [365] of the TFASOC;

(2) in any event, there was nothing unreasonable in Lokit now asserting in the context of the decisions in the previous proceeding (including the Appeal Reasons) that YMPL is liable for the Third Lokit Loan.

In oral argument, counsel conceded that, while it is true that Lokit could have made a claim for the Third Lokit Loan in the previous proceeding, that was not sufficient to establish the relevant unreasonableness. Counsel noted the comments in Anshun to the effect that there might be variety of circumstances why a party may justifiably refrain from litigating an issue in a previous proceeding.[50]
[50]Anshun (n 1) 602-3 (Gibbs CJ, Mason and Aickin JJ).

Counsel relied, in particular, upon the sequential model of the hearings in the previous proceeding (i.e. the tranches), as justifying the failure to raise whether YMPL was liable for the Third Lokit Loan in the previous proceeding. Counsel also referred to the fact that George and Han (who were plaintiffs in the previous proceeding) also controlled YMPL which brought the claim for indemnity in the previous proceeding only in respect of the First Two Loans.

In these circumstances, counsel submitted that the George parties had not discharged the onus of satisfying the Court that in the circumstances of the previous proceeding it was unreasonable for Lokit to have refrained from raising YMPL’s liability for the Third Lokit loan.

Counsel submitted that the only occasion on which it might be said that Lokit acted unreasonably was after the First Reasons were delivered by not including a counterclaim for repayment of the Third Lokit Loan and/or a claim for indemnity in the TFADC which was filed approximately one month after the First Reasons were delivered. However, counsel submitted that there was no material to assist the Court to determine whether this failure was truly unreasonable in the circumstances of the previous proceeding, particularly having regard to the fact that the second tranche was heard in mid-2017, approximately three months after the delivery of the First Reasons.

As to the comments of the majority in Anshun concerning conflicting judgments relied upon by the George parties, counsel submitted that there was no such inconsistency in this case. This is because Lokit’s claim to be repaid the amount of the Third Lokit Loan is consistent with and consequent upon the findings in the First Reasons.

5.2.4 Oral submissions of the George parties

It is appropriate that I address submissions made by the George parties in oral argument in response to the submissions of the Frank parties.

First, counsel noted that after the Second Reasons were delivered, on 6 March 2017, the trial judge ordered the filing of the TFASOC (which included the claim for indemnity in respect of the First Two Loans). Counsel submitted that the appropriate time to raise any liability of YMPL to Lokit for the repayment of the Third Lokit Loan was in TFADC filed on 22 March 2017. However, as set out above:

(1) the TFADC expressly denied that prior to 2005, any of the YMT Shareholder Loans had been advanced to YMPL; and

(2) the previous proceeding defendants (i.e. including the Frank parties) submitted an outline of submissions stating that, even if there were loans, they were statute-barred and therefore YMPL ought properly have denied any claim for repayment.

Thus, when presented with an opportunity to make a claim in respect of the Third Lokit Loan and in light of the First Reasons, Lokit failed to do so and expressly denied that the YMT Shareholder Loans were made.

Second and relatedly, counsel for the George parties submitted that the sequential trial process made it more appropriate for any such claim to be raised in the previous proceeding given that the parties had the benefit of the First Reasons by the time of filing the TFADC.

Third, further to the submission in [124] above, counsel referred to the finding forming the basis of Agreed Finding 18 and submitted that to consider again whether the YMT Shareholder Loans were statute-barred could displace this finding and conflict in a relevant sense with the findings in the previous proceeding. As to this submission, I refer to my comments and conclusions in [116](2) and [121] above.

5.2.5 Consideration

As to the relevant principles concerning Anshun estoppel:

(1) an Anshun estoppel should only be established ‘in the clearest of cases and after “a scrupulous examination of all the circumstances”’;[51]
[51]Angeleska (known as Slaveska) v State of Victoria (2015) 49 VR 131, 185 [199] (Warren CJ, Tate JA, Ginnane AJA).

(2) Anshun estoppel ‘operates to preclude the assertion of a claim, or the raising of an issue of fact or law, if that claim or issue was so connected with the subject matter of the first proceeding as to have made it unreasonable in the context of that first proceeding for the claim not to have been made or the issue not to have been raised in that proceeding’;[52]
[52]Tomlinson v Ramsey Food Proceessing Pty Ltd (2015) 256 CLR 507, 517-18 [22] (French CJ, Bell, Gageler and Keane JJ) (citations omitted) (‘Tomlinson’).

(3) thus, the determination of unreasonableness involves at least two related assessments, namely, ‘was the matter so relevant [i.e. so connected] that it can be said to have been unreasonable not to rely upon it in the first proceeding?’.[53] This determination involves a broad merits-based or value judgment;[54]
[53]Champerslife Pty Ltd v Manojlovski (2010) 75 NSWLR 245, 246 [3] (Allsop P).
[54]Sheehy v Nuix Pty Ltd [2023] FCA 56, [146] (Halley J) (‘Sheehy’).

(4) it is not enough that the party could have raised the claim or issue in the first proceeding: the question is whether is it was unreasonable not to have done so;[55]

(5) the onus of establishing an Anshun estoppel is on the party asserting the Anshun estoppel to prove that the other party’s failure to raise a claim or issue in the first proceeding was unreasonable;[56]

(6) however, there are a ‘variety of circumstances…why a party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings e.g. expense, importance of the particular issue, motives extraneous to the actual litigation, to mention but a few.’[57]

[55]Clayton (n 49) 12-13 [31] (Keifel CJ, Bell and Gageler JJ).

[56]Ibid 12 [30].

[57]Anshun (n 1) 603.

I would only add that:

(1) the question of unreasonableness focuses attention on the circumstances that existed at the time of the first proceeding having regard to claims or issues raised in the second proceeding; and

(2) while the onus of proving the Anshun estoppel lies with the party asserting it, there appears an evidential onus on the party alleging particular circumstances which may justify that party’s decision to refrain from raising the issue in the first proceeding.

In my view, the George parties have not discharged the onus of establishing that Lokit’s failure to raise YMPL’s liability to it in relation to the Third Lokit Loan was so connected with the subject matter of the previous proceeding with the result that it was unreasonable for Lokit to have not made such a claim at that time.

This is for two reasons. First, I am not satisfied that I have been directed to all the relevant facts relating to the pleadings, evidence, and the issues raised in, and conduct of, the previous proceeding to form a concluded view as to whether there has been an Anshun estoppel.

Secondly and in any event, based on the material to which I was directed to, while I have determined that the claims/issues raised in this proceeding (to the effect that YMPL is liable to repay the Third Lokit Loan on demand) were related to the previous proceeding, I am not satisfied that they were so connected with the subject matter of the previous proceeding as to have made it unreasonable in the context of the previous proceeding not to raise them.

As to the first basis, I am conscious that a finding of Anshun estoppel should only be reached in the in the clearest of cases and after a scrupulous examination of all the circumstances. In this case, I have been referred to some aspects of pleadings and extracts from the First, Second and Third Reasons and the Appeal Reasons. However, I have not been referred in any detail to the course of the evidence or the circumstances leading to the determination or hearing of the issues in three tranches or of the questions to be asked and answered in each tranche said to be relevant to the issues in this proceeding.

Further and relatedly, for my part, I have found it difficult to identify and understand the true nature and extent of the issues raised and determined in the previous proceeding in light of the issues raised and the arguments presented. As is evident from these reasons (and without any criticism of the trial judge), I have the found extracts from the judgments of the previous proceeding to which I have referred in parts unclear, particularly in light of the issues raised and arguments presented. I refer to my comments in [53], [56] and [58].

In my view, the difficulty in identifying and understanding the true nature and extent of the issues in the previous proceeding is understandable given the range of issues raised, the differing position of the parties, the fact that the trial was heard in tranches and that some issues were relevant to more than one tranche. In this regard, I note the comments of the Court of Appeal in the Appeal Reasons at [389]-[402]. My views in this regard are confirmed by the submissions of the parties to this application which seem inconsistent with my understanding of the issues raised and the findings made in the previous proceeding. I refer to my comments at [81], [116] and [121].

As a result, I do not consider that I have been able to undertake a scrupulous examination of all the circumstances of the previous proceeding of the kind required in order to conclude that an Anshun estoppel has arisen.

As to the second basis, on the material I have been referred to and considered, while there is a relationship between the issues in this proceeding and some of the issues in the previous proceeding, I am not satisfied that they were so closely connected with the issues in the previous proceeding such that it was unreasonable for Lokit not to have raised them.

Based on the material relating to the previous proceeding before me, the first tranche of the previous proceeding related primarily to the characterisation of 21 advances to the three trusts as either capital or loans.

Further, the previous proceeding did not relate expressly to whether YMPL had a liability for the First George Loan, the Second Robert Loan and the Third Lokit Loan. This is for two reasons. First, as set out above, George and Robert did not allege that YMPL had a liability in respect of the Frist Two Loans. Rather, YMPL sought indemnity in respect of them. Second, YMPL did not seek an indemnity in respect of any liability for the Third Lokit Loan.

Even if I am wrong, and the previous proceeding involved some implied allegation that YMPL had a liability for the First Two Loans (by reason of the YMPL’s claim for indemnity in relation to them), in my view, there was no such allegation in respect of the Third Lokit Loan. This is because, based upon the material to which I was referred, there was no allegation in the previous proceeding that YMPL had a current liability or a prospective liability (i.e. upon demand) in relation to the Third Lokit Loan. The only allegations in relation to the Third Lokit Loan was that it:

(1) was advanced by Lokit to YMPL prior to 2005; and

(2) was made to YMPL in its capacity as trustee of the YM Trust.

Significantly, and unlike the First Two Loans, YMPL did not:

(1) allege that YMPL’s liability for the Third Lokit Loan had not been discharged;

(2) claim an indemnity in respect of the Third Lokit loan.

I note in passing that it seems likely that the reason for this decision was because, at the time of the previous proceeding, George and Han (as Robert’s successor) controlled YMPL.

I am conscious that Lokit could have made a counterclaim seeking repayment of the Third Lokit Loan or for an indemnity in relation to it in the previous proceeding but did not do so. However, as set out above, that is not a sufficient basis to conclude an Anshun estoppel.

I am also conscious that the Court of Appeal noted in the Appeal Reasons that Frank made no claim in respect of the Third Lokit Loan in the previous proceeding.[58] However, that statement, while of some relevance, is not determinative as to whether Lokit or Frank acted unreasonably in not making any claim in respect of the Third Lokit Loan in the previous proceeding.
[58]Appeal Reasons, [61].

In this context I wish to note again my comments in [116](2) and [121] above.

I note the comments of the majority in Anshun relating to importance of the likelihood of inconsistent or conflicting judgments in deciding whether an Anshun estoppel has arisen. Of course, the likelihood of conflicting judgments will not be present in every claim for Anshun estoppel. This was recognised by Kenny JA in Gibbs.[59]
[59]Gibbs (n 45) 28 [28].

However, I am not satisfied that in this case the likelihood of inconsistent or conflicting judgments arises. This is because much of the argument was directed to the inconsistency between the position of the Frank faction in the previous proceeding (namely, that all funds advanced to the three trusts were advanced by way of capital and not loan) and the Frank parties in this proceeding (namely, that YMPL continues to have a liability to Lokit for the Third Lokit Loan)

In my view, the inconsistency between the positions adopted by the same or similar parties in different proceedings is not the kind of inconsistency referred to by the majority in Anshun. Rather, it is the likelihood of inconsistencies between the findings in the previous proceeding and any subsequent proceeding. In any event, I am not satisfied that there is the risk of any such inconsistency in this case. The liability of YMPL for the Third Lokit loan seems consistent with the findings in the previous proceeding.

Further, as to alleged inconsistency between the position of the Frank faction in the previous proceeding and this proceeding, as noted above, in my view, the trial judge did not make any finding to the effect that the YMT Shareholder Loans were or were not statute-barred. I refer to my comments in [116](2) and [121] above. Thus, I am not satisfied that there is any relevant inconsistency in this regard.

As set out above, Kenny JA in Gibbs concluded that, in cases where there was no risk of inconsistent judgments, it was necessary to consider all the relevant facts in the previous proceeding including the length and complexity of any trial.[60] I am conscious of the length and complexity of the trials of the previous proceeding. However, in light of the summary of the previous proceeding set out above, and my comments in [145]-[146] above, the complexity of the previous proceeding reinforces my view that it was not unreasonable for Lokit not to raise YMPL’s liability for the Third Lokit Loan and/or bring a claim in respect of YMPL’s liability for it.
[60]Ibid.

Further and for completeness, I consider that the comments of the trial judge at [121] of the Third Reasons relating to the need to make a declaration to produce a state of finality, when read in their context, including that paragraph itself and the pleadings/issues in the previous proceeding, in particular that a declaration was only sought in relation to the First Two Loans, relate only to the First Two Loans and not the Third Lokit Loan.

As a result, based on my review of the material I have been referred to and considered, while I have determined that the claims/issues raised in this proceeding (to the effect that YMPL is liable to repay the Third Lokit Loan on demand) were related to the previous proceeding, I am not satisfied that they were so connected with the subject matter of the previous proceeding as to have made it unreasonable in the context of the previous proceeding not to raise them. In any event, I consider that this is far from the ‘clearest of cases’.

While in these reasons I have considered the likelihood of conflicting judgments in the context of Anshun estoppel, I wish to record that I agree with the views of Deane and Gaudron JJ in Rogers v The Queen[61] (Rogers) to the effect that Anshun ‘estoppel is separate and distinct from the principles which secure the final, binding and conclusive nature of judicial determinations and their conflation can only result in confusion’.[62] I note this discussion in Rogers appears to have been approved by the majority in Tomlinson.[63]
[61](1994) 181 CLR 251.
[62]Ibid 275, adopted in Sheehy (n 54) [178].
[63]Tomlinson (n 52) 518 [22] (French CJ, Bell, Gageler and Keane JJ).

5.3 The A.2 and B.3 issues

In light of my answer to the A.1 issue it is not necessary for me to address the A.2 issue.

I am conscious of the ‘fallback’ position of the Frank parties relevant to the B.3 issue, namely, that even if the answer to the A.1 issue is ’no’ because the Third Lokit Loan is statute-barred, the Court should nevertheless refuse to give the advice sought as the trustee would be justified in repaying the Third Lokit Loan because the First Two Loans had been repaid.

The Frank faction did not refer me to any authorities in support of this argument. However, counsel for AET referred to an exception acknowledged in the United Kingdom that a trustee may be indemnified from the trust estate in respect of a debt paid notwithstanding that the debt may have been statute-barred at the time.[64]
[64]Coombs v Coombs [1866] LR 1 PD 288 (‘Coombs’); Budgett v Budgett [1895] 1 Ch 202.

I have two comments to make. First, the exception applies to loans which have been paid. That is not this case. Second, this exception was not applied by McMillan J in Re Mayes who declined to follow Coombs on the basis that the reasoning behind the exception was unpersuasive and that there was no binding authority for such an ‘anomalous exception’ in Victoria.[65]
[65]Re Mayes (2015) 15 ASTLR 376, 390 [77]-[79].

Further, in the course of argument, I referred to the findings in the Appeal Reasons that Frank took out more funds from one or more of the three trusts than the amount of money that was contributed by him or on his behalf.[66] Counsel for the Frank parties responded that the Frank faction had repaid those funds which formed the basis of the orders against him in the previous proceeding. However, as I said to counsel in the course of argument, I have no evidence that these amounts had been repaid.
[66]Appeal Reasons, [188].

Further, I note that the question posed in paragraph A.2 of the AOM is premised on the basis that the answer to question A.1 was ‘yes’. As set out above, my answer to that question is ‘no’ in all these circumstances. Thus, I am not satisfied that the Frank parties’ ‘fallback’ position is properly raised for determination.

In all the circumstances, the Frank parties have not persuaded me that there is a proper basis upon which AET ought to pay the Third Lokit Loan, notwithstanding my answer to the A.1 issue.

As to the B.3 issue, in substance, it relates to whether AET would be justified in making such entries in the financial accounts of the YM Trust as are necessary and appropriate to record that the Artimax Loan and/or the Third Lokit Loan is not payable from trust assets.

As to the circumstances in which the Court will provide judicial advice, I refer to the comments in section 3 of my judgment in Re Care Super Pty Ltd (Care Super).[67]
[67][2021] VSC 805, [21]-[33].

In my view, the answer to the B.3 issue is ‘yes’. This is because I am satisfied that AET has the power to prepare the accounts of the YM Trust. This is also because I am satisfied that it is proper for AET to prepare accounts of the YM Trust in respect of the treatment of the Third Lokit Loan and the Artimax Loan in light of:

(1) the findings by the trial judge and the Court of Appeal in respect of the Artimax Loan; and

(2) my findings in these reasons in respect of the A.1 issue.

6. THE VESTING ISSUE

As noted above, AET also seeks judicial advice to the effect that it is justified in vesting each of the three trusts and distributing the net assets thereof to the beneficiaries of each of them. This is the subject of paragraphs B.4 to B.6 in the prayer for relief in the AOM.

The trust deeds for each of the YM Trust, The Amore trust and the FRG Trust are in evidence.

The YM Trust deed is dated 6 July 2001. Under the YM Trust deed:

(1) the Vesting Day is relevantly defined to mean the day specified in the Schedule (which is specified as 79 years from the date of the signing of the YMT trust deed) or ‘the day appointed by the Trustee with the consent of the Guardian if there is any Guardian in office at the time of the said appointment but otherwise without any consent’;

(2) the trustee may at any time prior to the expiration of any Accounting Period which ends before or upon the Vesting Day determine with respect to all or any of the net income of the trust fund for such Accounting Period ‘to pay apply or set aside the same for any one or more of the General Beneficiaries living or in existence at the time of the determination’;

(3) as from the Vesting Day, the trustee shall stand possessed of the trust fund and the income thereof in trust for such beneficiaries and for such charitable purposes as the trustee may by instrument in writing before the Vesting Day appoint; and

(4) there are two kinds of beneficiaries under the YM Trust deed:

(a) Specified Beneficiaries, being the persons specified in the Schedule, namely, Frank, George, Robert, Maureen, Lokit, Rohandaren Holdings Sdn Bhd and Beaustate Sdn Bhd; and

(b) General Beneficiaries, including Specified Beneficiaries and any spouse, grandparent, parent, brother, sister, aunt, uncle, niece, nephew, cousin, child or grandchild of the Specified Beneficiaries.

The Amore Trust deed which was executed on 26 June 2002 contains the same terms as those set out above relating to the YM Trust, save that the Specified Beneficiaries also include other members of Frank’s family, namely, Pooi, Lynn and Ian and a company called ‘Rohan Darren Holdings Sdn Bhd’.

The FRG Trust deed was executed on 23 December 2009. The terms of this trust deed are different to those set out above but not materially so. Under the FRG Trust deed:

(1) the Vesting Day is relevantly defined to mean the first to occur of either the day specified in the Schedule (which is specified as 79 years from the date of the execution of the trust deed) or ‘the day appointed by the Trustee’;

(2) the trustee may at any time prior to the end of an accounting period which ends before or upon the Vesting Day, determine with respect to all or any of the net income of the trust fund for such accounting period to pay, apply or set aside income for one or more of the General Beneficiaries living or in existence at the time of the decision;

(3) as and from the Vesting Day, the trustee shall stand possessed of the trust fund and the income thereof in trust for such of the General Beneficiaries and such interests as the trustee may by instrument in writing before the Vesting Day appoint;

(4) there are two kinds of beneficiaries under the FRG Trust deed:

(a) Nominated Beneficiaries, being the persons specified in the Schedule, namely, Frank, George, Maureen, Lokit, Han, Braden Han Lyam Hoh, Ian, Lynn, Linjoshan Pty Ltd, YMPL, Rohandaren Sdn Bhd and Beaustate Sdn Bhd;

(b) General Beneficiaries, including the Nominated Beneficiaries and any parent, brother, sister, spouse, widower, widow, child or next of kin of the Nominated Beneficiaries and other specified persons.

I note in passing that the Guardian under each of the YM Trust and Amore Trust deeds was Frank (who was also the Appointor). As noted above, Frank died in 2019. To the knowledge of AET, no other Guardian has been appointed. No party in this proceeding before me suggested to the contrary.

The reasons advanced for the vesting of the trusts are set out in Mr Lal’s affidavit and the written submission of AET. In summary, this material provides that:

(1) if the trusts are not vested, they will subsist for until 6 July 2080 for the YM Trust, 26 June 2081 for the Amore Trust and 23 December 2088 for the FRG Trust;

(2) with the falling out of the factions of the Hoh family and the appointment of an independent trustee after litigation, the trusts no longer serve the commercial purposes for which they were established;

(3) if the trust assets are distributed amongst beneficiaries, each of the members of the Hoh family can embark upon their individual investment paths without the need to pay AET for its stewardship of the assets;

(4) it is proposed that the net assets will be divided equally among the Frank faction and the George faction. In fact, it is proposed that they will be divided equally three ways - between members of or entities associated with the Frank family, the George family and the Han family. In this regard, AET then proposes to further invite representations as to how each one third share should be apportioned within each of these factions;

(5) no beneficiary has indicated any objection to the vesting of the trusts.

The defendants in this proceeding consented or, at least , did not oppose, the vesting of the trusts in the way proposed. Further, AET submitted at the hearing that all of the Specified and/or Nominated Beneficiaries under the three trusts deeds had been contacted and they either agreed to or did not oppose a vesting order being made. As a result, I arranged for an email to be sent requesting copies of the relevant correspondence to support AET’s submission. In short, I am not satisfied that the response I received makes good AET’s submission in respect of all of the Specified and/or Nominated Beneficiaries under the three trusts. Nevertheless, I accept that the defendants to this proceeding and other members of the Frank faction, namely Pooi and Ian, at the very least, do not oppose the vesting of the three trusts.

However, as noted from the summary of the trust deeds for the three trusts above, the beneficiaries of each trust, in particular, the Nominated or Specified Beneficiaries are not required to consent to the proposed vesting of the relevant trust by the trustee. Rather, that is a decision for the trustee and, in the case of the YM Trust and the Amore Trust, the Guardian (if there is a Guardian in office). I refer to my comments in [180] above to the effect that there is no current Guardian of the YM Trust or Amore Trust.

I refer again to my comments in section 3 of Care Super. I am satisfied that AET has power under each of the trust deeds to vest the three trusts. I am also satisfied that it is proper for AET to vest the trusts, particularly in circumstances where the trusts no longer serve the commercial purposes for which they were established.

In all the circumstances, I am satisfied that AET is justified in doing all things necessary to vest each of the YM Trust, the Amore Trust and the FRG Trust and to distribute the net assets thereof to the beneficiaries in accordance with terms of each trust. As a result, the answer to each of paragraphs B.4 to B.6 in the prayer for relief in the AOM is ‘yes’.

7. COSTS

I will deal with the question of costs after the parties have had the opportunity to read these reasons. As a result, I will order that the parties confer as to the orders to be made in this proceeding (including as to costs) and that, in the absence of agreement, the matter be listed for mention.

SCHEDULE OF PARTIES

S ECI 2022 01783

BETWEEN:
AUSTRALIAN EXECUTOR TRUSTEES LIMITED as trustee of THE YING MUI TRUST, THE AMORE TRUST and THE FRG INVESTMENTS TRUST	Plaintiff
- and -
LOKIT INVESTMENTS PTY LTD (ACN 006 855 741)	First Defendant
LYNN YOOK LIEN HOH in her capacity as executor of the estate of the late FRANK KIANG NGAN HOH	Second Defendant
YING MUI PTY LTD (ACN 002 992 449)	Third Defendant
KIANG PO HOH (GEORGE HOH)	Fourth Defendant
HAN KEYET HOH	Fifth Defendant
AMORE CORPORATION PTY LTD (ACN 097 964 175)	Sixth Defendant

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Citations

Australian Executor Trustees Limited v Lokit Investments Pty Ltd [2023] VSC 141

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Australian Executor Trustees Limited v Lokit Investments Pty Ltd (No 2) [2023] VSC 307

Cases Citing This Decision

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Zhang v Streeter [2024] VSC 816

Australian Executor Trustees Limited v Lokit Investments Pty Ltd (No 2) [2023] VSC 307

Cases Cited

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Keet v Ward [2011] WASCA 139

Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45

Ying Mui Pty Ltd v Hoh (No 3) [2017] VSC 29

[2023] VSC 141

31 March 2023