Chang v Tjiong (No 2) - [2024] NSWSC 74

Supreme Court

New South Wales

Medium Neutral Citation: Chang v Tjiong (No 2) [2024] NSWSC 74
Hearing dates: 18, 25 October and 12 December 2023
Date of orders: 9 February 2024
Decision date: 09 February 2024
Jurisdiction: Equity
Before: Henry J
Decision:
See at [196]

Catchwords:
EQUITY – Trusts and trustees – Express trusts – Reconstituting trust fund – Determining corpus of trust – tracing – where trust funds used to buy real property which was later sold – whether trust funds should be traced into sale proceeds and how far – whether trust funds should include figure for notional rent – whether income taxation should be deducted from trust funds
EQUITY – Trusts and trustees – Trustee’s indemnity for expenses properly incurred in administration of trust – indemnity to be deducted from corpus of reconstituted trust – whether claimed expenses were in connection with administration of trust – where trustee denied existence of trust at the time some expenses incurred

Legislation Cited:
Trustee Act 1925 (NSW) ss 59(4), 63
Uniform Civil Procedure Rules 2005 (NSW) r 42.25

Cases Cited:
Adsett v Berlouis (1992) 37 FCR 201
Associated Alloys Pty Ltd v CAN 001 452 106 Pty Ltd (2000) 202 CLR 588; [2000] HCA 25
Australian Receivables Ltd v Tekitu [2010] NSWSC 823
Chang v Tjiong [2009] NSWSC 122
Chang v Tjiong [2022] NSWSC 1092
Chang v Tjong; Estate of HokNjianTjiong [2011] NSWSC 1614
Chief Commission of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226; [1998] HCA 4
Devaynes v Noble (1816) 1 Mer 529; 35 ER 781
Fane v fane (1870) 13 Ch D 228
Gatsios Holdings v Kritharas Holdings (in Liquidation) [2002] NSWCA 29
Hardoon v Belilios [1901] AC 118
In Re Beddoe; Downes v Cottam [1893] 1 Ch 547
James Roscoe (Bolton) Ltd v Winder [1915] 1 Ch 62
King v King [2012] QCA 81
Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar (2008) 237 CLR 66; [2008] HCA 42
Miller v Cameron (1936) 54 CLR 572
Nolan v Collie (2003) 7 VR 287; [2003] VSCA 39
O’Keeffe v Hayes Knight GTO Pty Ltd [2005] FCA 389
Re Doolan [2023] NSWSC 320
Re Estate Late Chow Cho-Poon [2013] NSWSC 844
Re Global Finance Group Pty Ltd [2002] WASC 63
Re Grimthorpe [1958] Ch 615
Re Hallett’s Estate (1879) 13 Ch D 696; [1874-80] All ER Rep 793
Tjiong v Tjiong [2010] NSWSC 578
Tjiong v Tjiong [2012] NSWCA 201.
Vacuum Oil Co Pty Ltd v Wiltshire (1945) 72 CLR 319
Wentworth v Rogers (2006) 66 NSWLR 474; [2006] NSWCA 145

Texts Cited:
Jacobs’ Law of Trusts in Australia (8th ed, 2016, LexisNexis)

Category: Principal judgment
Parties: Tzer Chin Chang (Plaintiff)
Katrina May Lan Tjiong (First Defendant)
Timothy Paul Heesh and Mark Kenneth John Everingham (Second and Third Defendants)
Representation:
Counsel:
T Harris-Roxas (Plaintiff)
M B Evans (First Defendant)
D Barlin (Second and Third Defendants)
Solicitors:
Commlex Pty Ltd (Plaintiff)
O’Brien Lawyers (First Defendant)
Carroll &…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2024] NSWSC 74
Decision Date: 09 February 2024

CaseChat Overview and Summary

In the case of Chang v Tjiong (No 2), the matter involved a dispute concerning the reconstitution of an express trust fund. The court was tasked with determining the corpus of the trust, including whether trust funds could be traced into the sale proceeds of real property that was purchased with those funds and subsequently sold. Additionally, the court had to consider whether the figure for notional rent should be included in the trust funds and whether income tax deductions should be made from the trust funds.

The primary legal issues before the court were whether the trust funds could be traced into the sale proceeds of the real property and, if so, to what extent. The court also had to determine whether the notional rent should be included in the trust funds and if any income tax deductions should be made from those funds. Furthermore, the court needed to assess whether certain expenses claimed by the trustee were properly incurred in the administration of the trust and, if so, whether they should be deducted from the corpus of the trust.

The court held that the trust funds could indeed be traced into the sale proceeds of the real property, but only to the extent of the remaining balance after accounting for the expenses of sale and any other deductions. The court ruled that the notional rent should not be included in the trust funds, and any income tax deductions should be made from the trust funds. Regarding the trustee's expenses, the court determined that only those expenses properly incurred in the administration of the trust should be deducted from the corpus of the trust. The court found that some of the claimed expenses were not connected with the administration of the trust and therefore should not be deducted.

The court ordered that the trust fund be reconstituted with the remaining balance of the sale proceeds, after deducting the expenses of sale and other allowable deductions. The court also directed that the trustee's properly incurred expenses be deducted from the corpus of the trust. The court's decision provided clarity on the tracing of trust funds, the inclusion of notional rent, income tax deductions, and the proper deduction of trustee expenses.

Orders