Tjiong v Chang

[2025] NSWCA 25

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

Tjiong v Chang [2025] NSWCA 25

Hearing dates:

16 August 2024

Date of orders:

28 February 2025

Decision date:

28 February 2025

Before:

Basten AJA at [1];
Griffiths AJA at [199];
Price AJA [480]

Decision:

1   Grant the appellant an extension of time to appeal from the first judgment delivered on 16 August 2022 and to the extent necessary leave to appeal from the second judgment delivered on 9 February 2024.

2   Allow the appeal and set aside orders (1)-(11), (14), (15) and (17) made by the trial judge on 16 August 2022 and orders (1)- (3) made on 9 February 2024.

3   Declare that the trust created by Hok Njan Tjiong upheld by Palmer J in Chang v Tjiong [2009] NSWSC 122 was determined by a distribution by the then trustee George Tjiong to his son Lindsay Tjiong on 19 July 1999.

4   Order that the plaintiff/cross-defendant pay the first defendant/cross-claimant’s costs of the trial.

5   Order that the first respondent pay the appellant’s costs of the appeal.

6   Direct that, within seven days hereof,

(a) the proposed cross-appellants file and serve an amended summons seeking leave to cross-appeal naming the first respondent in the appeal as an applicant for leave to cross-appeal; and

(b)   a notice of cross-appeal naming the first respondent in the appeal as a cross-appellant.

7   Grant leave to cross-appeal in respect of grounds 1, 2 and 3 of the draft notice of cross-appeal.

8   Dismiss the cross-appeal.

9   Direct that any party seeking an order as to the trustees’ costs of the trial, or in this Court file and serve a notice of motion,   affidavit and written submissions within 28 days hereof.

Catchwords:

TRUSTS – existence of trust – funds comingled with personal funds of trustee – intended beneficiaries were wife of settlor and other members of settlor’s family in need – whether payment to trustee’s son during life of settlor’s wife constituted distribution of corpus of trust – evidence of trustee’s intention – original trustee deceased and administrator of estate new trustee – burden of proof that trust existed

TRUSTS – trustee replaced by court order – retiring trustee’s claims for indemnity for costs incurred in protecting comingled funds – relevance of trustee’s subjective belief that trust no longer existed – whether indemnity available where trust obtained material benefit from expenditure – whether apportionment of costs appropriate according to ratio of trust funds to the general estate under administration

Legislation Cited:

Limitation Act 1969 (NSW), s 54

Supreme Court Act 1970 (NSW), s 101

Trustee Act 1925 (NSW), ss 59, 63

Uniform Civil Procedure Rules 2005 (NSW), rr 42.25, 51.11 51.16; Pt 46

Cases Cited:

Allied Pastoral Holdings Pty Ltd v Federal Commissioner of Taxation [1983] 1 NSWLR 1

Application of Uncle’s Joint Pty Ltd [2014] NSWSC 321

Australian Receivables Ltd v Tekitu Pty Ltd (Subject to Deed of Company Arrangement) (Deed Administrators Appointed) [2011] NSWSC 1306

Browne v Dunn (1893) 6 R 67

Chang v Tjiong [2009] NSWSC 122

Chang v Tjiong; Estate of HokNjanTjiong [2011] NSWSC 1614

Chief Commissioner of Stamp Duties for New South Wales v Buckle (1998) 192 CLR 226; [1998] HCA 4

Coshott Family Pty Ltd v Lyons (2022) 110 NSWLR 44; [2022] NSWCA 216

Currie v Dempsey (1967) 69 SR (NSW) 116

Derrawee Pastoral Company Pty Limited v McConochie [1995] NSWCA 123

ET-China.com International Holdings Ltd v Cheung [2021] NSWCA 24; (2021) 388 ALR 128

Fox v Percy (2003) 214 CLR 118; [2003] HCA 22

Gallo v Dawson [1990] HCA 30; (1990) 64 ALJR 458

Jackamarra v Krakouer (1998) 195 CLR 516; [1998] HCA 27

James Roscoe (Bolton) Ltd v Winder [1915] 1 Ch 62

Kara Kar Holdings Pty Ltd v Brookton Holdings [1997] NSWCA 171

Kara Kar Holdings Pty Ltd v Brookton Holdings Pty Ltd [1996] NSWCA 292

Kramer v Stone (2023) 112 NSWLR 564; [2023] NSWCA 270

Lee v Lee (2019) 266 CLR 129; [2019] HCA 28

Lewis v Nortex Pty Ltd (In Liq); Lamru Pty Ltd v Kation Pty Ltd [2004] NSWSC 1143; (2004) 214 ALR 634

Lofts v MacDonald (1974) 3 ALR 404

Ludwigv Jeffery (No 4) [2021] NSWCA 256; (2021) 394 ALR 360

Macdonald v Horn [1995] 1 All ER 961

Meehan v Glazier Holdings Pty Ltd (2002) 54 NSWLR 146; [2002] NSWCA 22

Miller v Cameron (1936) 54 CLR 572; [1936] HCA 13

Moore (a pseudonym) v The King [2024] HCA 30; (2024) 419 ALR 169

Murdocca v Murdocca (No 2) [2002] NSWSC 505

Naaman v Jaken Properties Australia Pty Ltd [2025] HCA 1

Nelson v Campbell (1928) VLR 364

Nowell v Palmer (1993) 32 NSWLR 574

Oshlack v Richmond River Council (1998) 193 CLR 72

Precision Plastics Pty Ltd v Demir (1975) 132 CLR 362; [1975] HCA 27

Re Beddoe; Downes v Cottam [1893] 1 Ch 547

Re Buckton, Buckton v Buckton [1907] 2 Ch 406

Re Dargie, Miller v Thornton-Jones [1953] 2 All ER 577

Re Dion Investments (2014) 87 NSWLR 753; [2014] NSWCA 367

Re Global Finance Group Pty Ltd (In Liq)(Supervisor Appointed) and Global Mortgage Investments Pty Ltd (in Liq); Ex parte Read and Herbert (as Liquidators of Global Mortgage Investments Pty Ltd and as Liquidators of Global Finance Group Pty Ltd) [2002] WASC 63

Re Grimthorpe [1958] Ch 615

Re Hallett’s Estate; Knatchbull v Hallett (1880) 13 Ch D 696

Re Sutherland; France Caledonia Travel Service Pty Ltd (in liq) (2003) 59 NSWLR 361; [2003] NSWSC 1008

Sons of Gwalia Ltd v Margaretic [2006] FCAFC 92; (2006) 232 ALR 119

Tjiong v Tjiong [2010] NSWSC 578

Tjiong v Tjiong [2012] NSWCA 201

Tjiong v Tjiong [2021] NSWSC 1389

Tomko v Palasty (No 2) (2007) 71 NSWLR 61; [2007] NSWCA 369

University of Wollongong v Metwally (No 2) [1985] HCA 28; (1985) 59 ALJR 481

Warren v Coombes (1979) 142 CLR 531; [1979] HCA 9

Water Board v Moustakas (1988) 180 CLR 491; [1988] HCA 12

Watson v Foxman (1995) 59 NSWLR 315

Wentworth v Rogers (2006) 66 NSWLR 474; [2006] NSWCA 145

Whittingham v Proudfoot [1861-72] Mac 457   

Young v Queensland Trustees Ltd (1956) 99 CLR 560; [1956] HCA 51

Texts Cited:

CR Williams, “Burdens and Standards in Civil Litigation” (2003) 25 Syd Law Review 165

Hafeez-Baig and English, The Law of Tracing (The Federation Press, 2021)

JD Heydon, Cross on Evidence (10th ed, 2015, LexisNexis)

JD Heydon and MJ Leeming, Jacobs’ Law of Trusts in Australia (8th ed, 2016, LexisNexis Butterworths)

Category:

Principal judgment

Parties:

Katrina May Lan Tjiong (Appellant / Cross-Respondent)
Tzer Chin Chang (First Respondent)
Timothy Paul Heesh and Mark Kenneth John Everingham (Second and Third Respondents / First and Second Cross-Applicants)

Representation:

Counsel:
R Wilson SC / M Evans / T Ross (Appellant/Cross-Respondent)
T Harris-Roxas (First Respondent)
D Barlin (Second and Third Respondents/First and Second Cross-Applicants)

Solicitors:
O’Brien Lawyers (Appellant / Cross-Respondent)
Commlex Pty Ltd (First Respondent)
Albus Legal (Second and Third Respondents / First and Second Cross-Applicants)

File Number(s):

2024/61464

Publication restriction:

Nil

 Decision under appeal 

Court or tribunal:

Supreme Court

Jurisdiction:

Equity

Citation:

[2022] NSWSC 1092; [2024] NSWSC 74

Date of Decision:

16 August 2022

Before:

Henry J

File Number(s):

2020/217303

HEADNOTE

[This headnote is not to be read as part of the judgment]

On 15 March 1976, Hok Njan Tjiong sent a letter to his son George Tjiong, which was held by Palmer J in 2009 (2009 judgment) to have created a trust with respect to a Burwood unit purchased in the name of his son for $25,000 (Burwood Trust). The terms of the Burwood Trust were amended by a subsequent letter written on 10 October 1978. The amended terms provided that the unit was to be sold (upon Hok Tjiong’s death) in order to provide funds for his wife, and after her death, for his son from an extramarital relationship if in need, but otherwise for family in need. The unit was sold by George Tjiong in 1996, with the net proceeds (some $168,000) deposited in an existing bank account and comingled with personal funds. As a result, the Burwood Trust formed part of his estate upon his death in 2004.

George Tjiong appointed his brother Richard Tjiong as his executor and left his estate to his daughter Katrina Tjiong and his son Lindsay Tjiong in equal shares. In June 2009 Katrina Tjiong replaced Richard Tjiong as administrator of the estate. The present proceedings were commenced by Tzer Chang (the plaintiff), a grandson of Hok Tjiong and an eligible beneficiary under the Burwood Trust (if it still existed), seeking an account and appointment of new trustees. Katrina Tjiong, as administrator of George Tjiong’s estate and, in that capacity, trustee of the Burwood Trust, was the defendant. Katrina Tjiong contended that the Burwood Trust had been terminated by a distribution of $199,000 made by George Tjiong to his son Lindsay Tjiong in 1999.

On 16 August 2022, Henry J (the trial judge), rejected Katrina Tjiong’s submission and upheld the plaintiff’s claim that the Burwood Trust was extant. New trustees were appointed and directed to prepare a report as to the assets of the Burwood Trust and to identify any claims Katrina Tjiong, as the retiring trustee, for indemnity from the Burwood Trust. On 9 February 2024, the trial judge ordered Katrina Tjiong to pay $638,432 to the new trustees.

Both parties appealed; the primary issues for determination on appeal were whether:

1. the Burwood Trust was terminated in 1999; and

2. the trial judge erred in determining the claims for indemnity.

The Court (Basten AJA, Price AJA agreeing; Griffiths AJA dissenting) held:

As to issue (i) (existence of the trust)

by Basten AJA (Price AJA agreeing)

1. The plaintiff bore the burden of demonstrating that there was a trust fund, which had not been fully distributed. There was no evidence that Hok Tjiong’s wife was in need at the time of the payment to Lindsay Tjiong, nor any dispute that he was an eligible beneficiary of the Burwood Trust: [34], [36].

2. The unchallenged evidence given by Lindsay Tjiong as to his conversation with his father, and George Tjiong’s letter to his son, supported an inference that the payment to him had been a distribution from the Burwood Trust. The trial judge erred in diminishing the value of his evidence, which was not inconsistent with, but rather supported, by contemporary documents, namely his father’s letter to Lindsay: [43]-[44]; [504].

   Watson v Foxman (1995) 49 NSWLR 315 distinguished.

3. The fact that George Tjiong had earlier promised to help his son did not undermine the available inference that George Tjiong considered that his father’s instructions as to the Burwood Trust permitted him to use the fund to assist in providing a home for his son, who was at the time in need and struggling. The effect of the payment was to exhaust the corpus of the available funds; the plaintiff therefore failed to demonstrate that the Burwood Trust existed at the time of George Tjiong’s death: [105], [106]; [506].

by Price AJA

1. The defendant bore the onus of establishing that the Burwood Trust had been terminated by the payment to Lindsay Tjiong: [493].

by Griffiths AJA (in dissent)

1. The trial judge did not reverse the onus of proof in her analysis of the 1999 payments, rather she was simply responding to the prominence given to the issue of determination as raised by Katrina Tjiong in her defence: [340]. Nor did she err in placing greater weight on the contemporaneous documents than on Lindsay Tjiong’s evidence of conversations with his father: [314]-[325].

   Watson v Foxman (1995) 49 NSWLR 315 applied.

2. The trial judge provided cogent and valid reasons for not accepting that the Burwood Trust had been determined by distribution by the payments to Lindsay Tjiong: [325]. She did not err in her treatment of the letter sent to Lindsay Tjiong by his father by inferring that it referred to his earlier promise to assist him in 1993: [328]. Further, she did not err in failing to infer from George Tjiong’s failure to alter his will after the 1999 payments that the payments came from the Trust: [332]. No error was demonstrated in the weight given to George Tjiong’s statements in the letter, as the evidence demonstrated he had other funds available to him apart from the Burwood Trust moneys: [335].

As to issue (ii) (claims for indemnity)

by Basten AJA (Price AJA not deciding)

1. If the Burwood Trust was determined in 1999, the claims of Ms Tjiong as the retiring trustee to indemnity are irrelevant: [110]; (Price AJA at [508]).

2. The trial judge erred in rejecting Ms Tjiong’s submission that where legal costs were incurred to preserve the estate, an indemnity should be available against the trust funds in accordance with the proportion which the trust funds bore to the general estate: [111]. Ms Tjiong’s subjective belief that the Trust no longer existed did not disentitle her to indemnification for costs resulting in a material benefit test to the Trust. Where fiduciary duty and personal interest coincided, the trustee did not have to establish that the fiduciary duty was the effective subjective motivation for incurring the costs: [115]-[116].

3. Applying those principles the claims for indemnity should have been allowed in an amount of $375,667, leaving a balance of $315,651 in the Trust: [191]-[192].

by Griffiths AJA

1. The trial judge was correct to reject claims 1, 3, 8, 10, 12 and 13 brought by Katrina Tjiong for indemnity, as they related to costs incurred, not for the benefit of the Burwood Trust, but for her personal benefit: [436]-[437], [442], [450], [451], [461], [462].

2. The trial judge erred in rejecting claims 6 and 11 brought by Katrina Tjiong for indemnity, as the costs incurred were not, in substance, for her personal benefit but rather for the benefit of the Burwood Trust in her capacity as trustee: [446], [456].

3. The claims made by the plaintiff in his cross-appeal ought be rejected, as the trial judge correctly held that the amounts were costs incurred by Katrina Tjiong in her capacity as trustee of the Burwood Trust: [466]-[477].

JUDGMENT

table of contents

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

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

Background

1. Chang v Tjiong [2009] NSWSC 122 (“2009 judgment”).

Origins of the trust

2. The letter, translated from a mixture of Indonesian, Dutch and English, was set out in Palmer J’s judgment at [13]. The home unit was to be registered in George Tjiong’s name for three reasons. First, it was said to be “without caveat of my interests, to avoid death duty”. Secondly, it was said that, “[a]fter I go, [my wife] is better to live in the home of a child. The money in Belmore Street is for [her] needs”. Thirdly, the remainder of the fund, after her death, was to go to Hok Tjiong’s mistress, Kazuko Nikaido, in Yokohama.

2. Two and a half years after the first letter, on 10 October 1978, Hok Tjiong wrote to George Tjiong again, noting that he had terminated the relationship with his mistress, but wished to provide for his son of that relationship, Roy Grant. Palmer J held that this was an effective amendment to the terms of the trust; it is convenient that the change be set out verbatim:^[2]

“My son, Roy Grant, is finishing his higher degree; he wants to do more specialist study. My spirit will rest when you and the rest of the family accept him. I cannot expect that from Mum. Take care of this child’s needs. He is very clever ….

My ways have offended and upset Mum. Look after her after I am gone. It is better that she live with a child. Use the money from the home unit for her. If there is any left over after she is gone, use it for Roy if he still needs it. There are also others in the family who need the money for their studies.”

2. 2009 judgment at [19].

4. The unit in Belmore Street, Burwood, was in fact registered in the name of Hok Tjiong’s son, George Tjiong. Hok Tjiong died in 1981. After Hok Tjiong’s death, his wife, Kwat Nio Tjiong, (George Tjiong’s mother) continued to live there until about 1994, when she moved in with one of her daughters, as her husband had anticipated. The unit was sold in 1996 with net proceeds of $168,331. In the course of the later proceedings it was labelled the “Burwood trust”.

5. By the time the proceedings were commenced in the Equity Division, all three parties to this arrangement had died, Hok Tjiong in 1981, his wife, not until December 2006, and their son George, on 30 January 2004.

6. In an affidavit sworn on 14 May 1984, in divorce proceedings involving George Tjiong and his then wife, in terms accepted by Palmer J, George Tjiong stated:

“I do not have any beneficial interest in [the unit].

I am the registered proprietor of [the unit]. I hold this property on trust for my mother and I do not hold any beneficial interest in the property.”

7. The existence of the trust was unknown to the Tjiong family until the letters were discovered by George’s executor and brother, Richard Tjiong. They were relied on in the Equity proceedings before Palmer J to resist a claim by Soei Lan Chang (nee Tjiong), George’s sister and executor of their mother’s estate, that George had held the unit on a resulting trust for his father, and the beneficial interest had thus passed to their mother on their father’s death.

8. Palmer J described the class of beneficiaries identified in the second letter as “the father’s family”; if the last sentence of the letter were understood literally, it might have been defined as the family as it existed in 1978, the verb “need” being in the present tense. However, Palmer J was not concerned with whether the trust was still in existence: it was sufficient that he rejected the claim by Ms Soei Chang that the beneficial interest in the unit had remained with the father and become part of the mother’s estate following his death. Palmer J concluded:

“40   I have concluded that the terms of the trust upon which George held the property included a limited power of appointment of whatever remained in the trust fund after the mother’s death. The power was to appoint amongst George’s family, according to need. Whether the power has been exercised by George and, if so, how, arose in discussions between myself and Counsel only towards the end of final submissions.”

9. It is clear that the father did not expect the home unit to be retained, even for the life of the mother, but rather that it would be sold and the money applied in accordance with his wishes. The arrangement was to remain a private one between him and his son, George. Perhaps unsurprisingly, George Tjiong did not establish a documented and separate fund, but placed the proceeds of sale of the unit in an existing investment account with Macquarie Bank. The proceeds were thus comingled with his personal savings. It was only after his death that this was characterised as a breach of trust. That is significant in assessing the likelihood that he paid the balance of the funds to his son, Lindsay Tjiong, in 1999 while his mother was still alive.

Commencement of current proceeding

10. George Tjiong had two offspring, Katrina May Lan Tjiong (Ms Tjiong) and Lindsay Kuang Djin Tjiong, to whom he left his estate in equal shares. He appointed his brother Richard Tat Tjhien Tjiong to be his executor. Since December 2001 George had been incapacitated; his affairs were administered by Richard Tjiong under an enduring power of attorney by which George had appointed Richard Tjiong and Ms Tjiong jointly and severally. Before George’s death Richard, with Katrina’s consent, had established a trust (the George Tjiong or “GT” trust) and transferred $1.3m of George’s property into that trust. In 2005, Katrina and Lindsay Tjiong commenced proceedings against Richard, seeking to set aside the GT trust and remove him as executor of George’s will. On 7 June 2010, Palmer J delivered a second judgment, setting aside the GT trust on the basis that Ms Tjiong’s consent had been obtained by a fraudulent misrepresentation, supported by evidence fabricated by Richard Tjiong.

11. In 2011, Ms Soei Chang commenced a fresh proceeding against Ms Tjiong alleging that she, Soei Chang, had discovered in mid-July 2009, a will executed by her father, Hok Njan Tjiong in December 1980, revoking his earlier wills and also terminating the Burwood Trust, so that the “full value of the property at … Belmore Street, Burwood, is to revert back to my estate”. There was no plausible explanation as to why, if true, it had not been brought forward in her 2006 claim. A report by a forensic examiner, of 9 September 2011 concluded that the signature attributed to George Tjiong was probably a forgery. Ms Soei Chang withdrew the proceedings, leaving only the issue of costs to be resolved. By a judgment delivered on 23 December 2011, White J gave leave to the plaintiff to discontinue the proceedings and ordered that each party bear her own costs. ^[3] (White J was not affirmatively persuaded that Soei Chang was responsible for the forgery.)

    3. Chang v Tjiong; Estate of Hok Njan Tjiong [2011] NSWSC 1614.

12. Finally, on 14 December 2017, solicitors for Ms Chang wrote to Ms Tjiong’s solicitors alleging “a clear case of breach of fiduciary duties owed by your client as the Administrator of her father’s estate and as the Administrator of the trust”. It was that letter to which Ms Tjiong’s solicitors provided a lengthy response of 16 January 2018 to which reference will be made below.

13. The present proceedings were commenced in 2020 by Ms Chang’s son, Tzer Chin Chang (the plaintiff), who sought relief under s 70 of the Trustee Act 1925 (NSW) on the basis that he was a beneficiary of the Burwood trust. The defendant was Katrina Tjiong as administrator of George Tjiong’s estate and, in that capacity, trustee of the Burwood trust, if still extant. Ms Tjiong contended that the trust had been terminated by her father’s payment to her brother, Lindsay Tjiong, of an amount in the order of $200,000 in August 1999.

14. On 16 August 2022 Henry J delivered her first judgment, rejecting the defence and upholding the plaintiff’s claim, and appointing independent trustees to the Burwood trust. ^[4] The matter was then stood over to allow for calculation of the amount of the existing trust fund to be paid to independent trustees. Claims for indemnity from the trust by Ms Tjiong were also addressed. Consequential orders for payment to the trustees of $638,432, and for costs were made on 9 February 2024. ^[5]

    4. Chang v Tjiong [2022] NSWSC 1092 (“first judgment”).

    5. Chang v Tjiong (No 2) [2024] NSWSC 74 (“second judgment”).

The appeal – procedural matters

15. The present appeal challenges the orders made in both the first judgment and the second judgment. As explained by Griffiths AJA, although the first judgment left certain matters undetermined, it was itself a final judgment (not an interlocutory judgment), so that the purported notice of intention to appeal, served on 19 February 2024, was ineffective. Ms Tjiong required an extension of time of some 20 months. The second judgment was an interlocutory judgment and required leave for that reason.

16. If, as appears to have been assumed by those acting for Ms Tjiong, the second judgment had been the final judgment, it would have been open to Ms Tjiong to challenge the 2022 orders, as interlocutory orders, without a requirement for leave. On that basis, a brief extension was required with respect to the second judgment as, despite the effectiveness of the notice of intention to appeal, the notice of appeal was not filed until 20 days after expiry of the three-month period permitted by the Uniform Civil Procedure Rules 2005 (NSW), (UCPR) r 51.10.

17. Although that understanding of the status of the two judgments was erroneous, the hearing of a timely appeal from the first judgment might well have awaited the calculation of the payments due, so that all issues could have been determined together. In that situation, it cannot be said the respondents were prejudiced by the delay; indeed, on 12 June 2024, apparently relying on the validity of the appeal, the trustees sought leave to cross-appeal. ^[6] Therefore, and subject to one possible qualification, Ms Tjiong should have an extension of time within which to appeal from the first judgment. The qualification relates to grounds 1 and 2(a) in the notice of appeal which challenged the appointment of the independent trustees and the basis upon which they were directed to identify the fund the subject of the trust. The appointment of independent trustees had been accepted by the parties as an appropriate step,^[7] and the report ordered was prepared. However, as it has been concluded below that the Trust has been determined, the orders will be set aside as nugatory.

    6. UCPR, r 51.11.

    7. First judgment at [125].

18. So far as Ms Tjiong required leave to appeal from the consequential interlocutory judgment, and a brief extension of time within which to do so, subject to the filing of the appropriate summons, that leave should also be granted, as should the extension of time.

19. For the reasons set out below, in my view the appeal should be allowed and the judgment in the Equity Division set aside. In short, there were errors in the reasoning of the trial judge. On reconsideration, the better view is that the plaintiff failed to demonstrate that the fund had not been distributed by a final payment in 1999, and, accordingly, the Burwood trust terminated at that time.

Grounds of appeal

20. Grounds 1 and 2(a) related to the orders appointing the trustees and the nature of the report they were required to prepare. For reasons noted above, to the extent that an extension of time was required to permit that challenge, it should be refused.

21. Ground 2(b) merely asserted error on the part of the trial judge in ordering the payment of the amount assessed in the second judgment. That amount was erroneous if any one of grounds 3, 4 and 5 were to be upheld; it requires no separate consideration.

22. Grounds 4 and 5 related to the claim by Ms Tjiong for an indemnity from the Burwood Trust and assume that the trust is extant. They may be put to one side for present purposes, as may the trustees’ cross-appeal which concerned claims for indemnity which the trial judge had allowed.

23. There remains ground 3 which addressed the fundamental findings made by the trial judge in concluding that the Burwood trust had not been determined by a payment to Lindsay Tjiong in July 1999. It is that matter which will be addressed first below.

Ground 3 – termination of trust

Maintenance of trust fund

24. It was not in dispute that when George Tjiong received the proceeds of sale of the Burwood unit he paid the full amount into an existing investment account in his own name which contained his personal funds. At times the mixed funds were reduced below the amount of the trust moneys; but then increased to a greater sum. The trial judge stated:

“91   Katrina places emphasis on the tracing exercise in relation to the funds in the MacBank Account, as set out in the January 2018 letter. She submits that the Court should infer that on each occasion the credit balance in the MacBank Account went below $168,331.06 (being the sum of the Unit sale proceeds) George intended to, and did in fact, restore the Burwood Trust funds until 19 July 1999, when George made the payments to Lindsay, arguing that the MacBank Account was a trust account, not a general trading account.”

25. The judge then identified the relevant legal principles before addressing the question whether the payment to Lindsay Tjiong was an exercise of George Tjiong’s power of appointment. ^[8] Returning to Ms Tjiong’s submissions as to “tracing”, the trial judge accepted the reasoning of Ward J in Australian Receivables Ltd v Tekitu Pty Ltd ^[9] that there was “no presumption that the further payments into the fund replaced the lost moneys of the beneficiary” and that, while an intention to restore the depleted fund cannot be ignored, proof of an “express intention” is required. ^[10] She was not satisfied that the such an intention had been established. ^[11]

    8. First judgment at [94]-[100].

    9. Australian Receivables Ltd v Tekitu Pty Ltd (Subject to Deed of Company Arrangement) (Deed Administrators Appointed) [2011] NSWSC 1306 at [144]-[149] (Ward J).

    10. First judgment at [103]-[104].

    11. First judgment at [108].

26. It is not clear how this reasoning fitted with the conclusion that the payment out to Lindsay Tjiong was not intended to be a payment of trust funds. In principle, an intention to maintain a sufficient balance in an investment account (albeit not a trust account) to maintain an ability to apply the trust funds properly might be thought to support a conclusion that a payment which would have qualified as a distribution of trust funds was intended to be such. On the other hand, if there were other reasons to think that the 1999 payment was a distribution of trust funds, that would support an inference that George Tjiong had been intending to maintain the full amount of the trust funds in his investment account prior to that payment. There are two separate intentions at play, but they are not entirely independent.

27. The judge left the matter on the following basis:

“101   … In that context, I do not consider that the Court is required to make a positive finding as to what has happened to the Burwood Trust funds. Nor it is appropriate to seek to do so based on the limited evidence before the court and in circumstances where I have concluded that Katrina has not established that the Burwood Trust has been terminated by distribution to Lindsay and orders should be made for the appointment of independent trustees.”

(The final sentence is one of a number of statements apparently reversing the onus of proof.)

Relevant legal principles

28. McLure J observed in Re Global Finance Group ^[12] that “[t]here are a number of general rules relating to tracing into a mixed fund. The rules are complex and not invariably applied.” That is not because of uncertainty as to the law, but a recognition that circumstances vary. The underlying concern is to protect the interests of beneficiaries from breaches of duty by fiduciaries.

    12. Re Global Finance Group Pty Ltd (In Liq)(Supervisor Appointed) and Global Mortgage Investments Pty Ltd (in Liq); Ex parte Read and Herbert (as Liquidators of Global Mortgage Investments Pty Ltd and as Liquidators of Global Finance Group Pty Ltd) [2002] WASC 63 at [99].

29. The reference to “tracing” is inapt in relation to consideration of whether, where a comingled fund has been depleted, later payments in by the trustee should be treated as making good any deficiency in the trust funds. By way of contrast, had the plaintiff’s case been that trust funds were wrongly distributed to Lindsay Tjiong, the plaintiff could have brought proceedings (if not statute-barred) to trace those funds into the property owned by Mr Tjiong. Replenishment of the trust fund by the trustee is an entirely separate question, as recognised by the trial judge at [101].

30. The issue of replenishment is often discussed in the context of tracing because it arises in cases dealing with comingled funds. Jacobs’ Law of Trusts in Australia states: ^[13]

“Where the fiduciary’s breach of duty involves withdrawals from a fund in which the moneys of the beneficiary have been blended with those of the fiduciary, the principle laid down in Hallett’s case treats the fiduciary as bound by a presumption of honest intention, which may also be expressed as an irrebuttable presumption of intention. This will mean that the result will be no different if the fiduciary expressly manifested an intention of drawing out the beneficiary’s money first. However, where the fiduciary, after depleting the mixed fund, pays into it further moneys of his or her own, there is, it seems from the decisions in James Roscoe (Bolton) Ltd v Winder ^[14] and Lofts v MacDonald,^[15] no presumption, and certainly no irrebuttable presumption, that the further payments in replace the lost moneys of the beneficiary. That is not to say, as the judgment in James Roscoe … itself makes plain, that an intention of the fiduciary to restore the depleted fund with the later payments is to be ignored if it exists. It is to say that there is no presumption as to the existence of that intention. If the fiduciary pays money into the fund with the intention of effecting restitution, then the interest of the beneficiary in the fund will be the same as if the sum represented by the later payment in had never been withdrawn by the fiduciary. ^[16] The existence of such an actual intention may be inferred from the facts, even if not manifested by direct evidence.”

13. Heydon JD, Leeming MJ, Jacobs’ Law of Trusts in Australia (8th ed, 2016, LexisNexis Butterworths) at [27-15].

14. [1915] 1 Ch 62 at 69.

15. (1974) 3 ALR 404.

16. See, inter alia, Re Global Finance Group at [103].

31. Why there should be no presumption of an intention to reinstate the fund is unclear, except in the sense that “intention” is irrelevant. Perhaps such an intention is in any event readily inferred if it is against the fiduciary’s financial interest, but consistent with the presumption that a fiduciary will act honestly. ^[17] If the fiduciary is not insolvent, there can be no conflict between the fiduciary’s creditors and the beneficiaries of the trust; even if there were an issue of insolvency, it is not easy to see why the general creditors should be better off than they would be if there had been no breach of the fiduciary obligation requiring reinstatement. As contended by a recent commentary: ^[18]

“… [D]espite the language which is often used, the so called ‘rules’ are not about ‘presuming’ or ‘deeming’ anything to be the case, even in the context of physical mixtures. The true position is that where a wrongdoer causes the original rights, or the physical assets to which they relate, to lose their separate existence by mixing, his or her interests are subordinated to those of the claimant. As a consequence, the wrongdoer is prevented from asserting that he or she holds the mixed fund, or any substitute rights derived from it, beneficially unless and until the claimant’s claims are satisfied. The so called ‘rules’ that produced this result are simply inelegant ways of giving effect to a single principle: the subordination principle. That proposition is best understood by considering how the ‘rules’ apply to bank accounts.”

17. Re Hallett’s Estate (1880) 13 Ch D 696.

18. Hafeez-Baig and English, The Law of Tracing (The Federation Press, 2021), par 6.44.

32. The approach is consistent with that adopted by Campbell J in Re Sutherland; France Caledonia Travel Service Pty Ltd (in liq). ^[19] The principle of sub-ordination allows a beneficiary to trace moneys withdrawn from a mixed fund into an asset purchased by the trustee; there is no reason in principle why the beneficiary could not continue to assert his or her interest in a mixed fund at a particular date, whether there have been dealings by way of withdrawals and replenishment, or not. On that approach it is sufficient that another potential beneficiary, namely Lindsay Tjiong, can assert that, as at the date of payment to him, there was sufficient in the mixed fund to allow for the payment in fact made to have been a distribution of trust funds.

    19. (2003) 59 NSWLR 361; [2003] NSWSC 1008 at [153].

32. The trial judge addressed the withdrawals from and payments into the mixed account by reference to an “actual intention” expressed in some form by the trustee (George Tjiong). Where the possibility of an inference was identified, inconsistent with the inference sought to be drawn by Ms Tjiong, her proposed inference was rejected, rather than the competing inferences weighed. For example, with respect to the maintenance of the trust fund, the judge relied upon the fact that there had been further payments made into the investment account after the payment to Lindsay Tjiong as contradicting inferences that other earlier payments in were to be treated as restitution of the depleted trust fund. The existence of such countervailing possibilities with respect to any one particular may, subject to one further consideration, have been thought to be a sound basis to reject that particular circumstance. However, what was required was a consideration of all the circumstances relied upon to determine their cumulative effect.

33. The further consideration is that much of the discussion assumed that Ms Tjiong bore the burden of demonstrating that there had been a distribution of the trust fund, thus terminating its existence. Rather, the plaintiff bore the burden of establishing that there was a trust fund, which had not been fully distributed. The fact that the case was commenced 20 years after the alleged termination of the fund may have caused the plaintiff’s burden of satisfying the Court affirmatively of his case difficult to fulfill; however, that was a result of the lapse of time before commencing the proceedings, not a circumstance which placed any evidentiary or other burden on Ms Tjiong.

34. Returning to the trial judge’s reasoning, although in the passage set out at [24] above, the judge referred in the first sentence to an exercise carried out in the “January 2018 letter”, being a letter from Ms Tjiong’s lawyers to those acting for Ms Chang (the plaintiff’s mother), the judge did not deal fully with the matters raised. It will be necessary to return to that exercise below.

35. Apart from the fact that Hok Tjiong’s wife Kwat Tjiong was still alive at the time of the payment to Lindsay Tjiong, there was no suggestion that Lindsay Tjiong was not a legitimate recipient of funds from the trust as a needy member of the family. As the trial judge accepted in the course of the trial, there was also no evidence that Kwat Tjiong was in need, either at the time of the payment to her grandson, Lindsay, or at any time thereafter until her death. ^[20] In those circumstances, it is difficult to place much weight upon an assumption that the payment to Lindsay Tjiong was not intended to have been a distribution of trust moneys because that would have involved a breach of the trust.

    20. Tcpt, 09/03/2022, p 163(10).

Characterising the 1999 payment

37. Apart from the issue of reinstating the funds disbursed for personal needs, the trial judge approached the characterisation of the 1999 payment on the following basis:

“94   Tzer submits that the evidence, particularly that from Lindsay, is insufficient to establish that the payments made to Lindsay by George in 1999 constituted an exercise of the power of appointment conferred on George under the terms of the Burwood Trust. I agree.

…

97   In my view, the evidence overall falls short of establishing that George intended to, and did in fact, distribute the Burwood Trust property to Lindsay pursuant to George’s power of appointment when he made the payments to Lindsay in July 1999.

98   Having regard to the almost 20 years that have passed and the frailty of human memory, I place greater weight on the contemporaneous documents than on the terms of the conversation to which Lindsay deposes (as referred to at [21]-[22]), which is relied on as contemporaneous evidence that suggests that the money Lindsay received in July 1999 was from the Burwood Trust funds held by George: Watson v Foxman (1995) 49 NSWLR 315 at 319. A connection between the money paid to Lindsay and the Burwood Trust property or funds held by George for the benefit of Kwat is not recorded in any document and is seemingly inconsistent with various assertions made on behalf of Katrina (and Lindsay) in legal proceedings and correspondence to which I have referred above (see in particular at [32], [35], [40], [41], [46], [47] and [57]), as well as Lindsay’s evidence in cross-examination that George never told him where the money came from (T125:32-33).

…

113   In conclusion, Katrina has failed to satisfy me that the payments made to Lindsay on 19 July 1999 constituted an exercise by George of the power of appointment conferred on him by Hok and effectively terminated the Burwood Trust by distribution. Based on the evidence overall, I am persuaded by Tzer’s submission that, on the balance of probabilities, the payments to Lindsay were most likely a gift from George from his personal funds and were not a distribution of or from the corpus of the Burwood Trust.

38. As noted above, [94] and [97] appear to reverse the onus of proof, as does the first sentence in the conclusion at [113]. ^[21] Although the second sentence may be understood as correcting that approach, the reasoning as a whole reveals ambivalence.

    21. See also [101] set out above and [111] set out below, apparently placing an onus of persuasion on the defendant.

39. The analysis found at [98] raises other difficulties.

40. First, Watson v Foxman ^[22] is a canonical authority for the proposition that human memory of a conversation is fallible and why that is so; it is not an invitation to compartmentalise the evidence. Sometimes conversations are all that is relied upon, in which case it is necessary for the trial judge to assess them as best he or she can. That was the case in Watson v Foxman. In applying his own warning, McLelland CJ in Eq reasoned: ^[23]

“Considerations of the above kinds can pose serious difficulties of proof for a party replying upon spoken words as the foundation of a [cause] of action …, in the absence of some reliable contemporaneous record or other satisfactory corroboration. That is the position in the present case. There is no contemporaneous document in evidence which supports the making of any such promise or representation as is relied on and no other satisfactory corroboration …. I have the clear impression that Mr Foxman’s memory of conversations in 1990 between himself and Mr Cross is not sufficiently clear to enable him to actually recall any of the critical words said to have been used …. I believe that his account of that conversation is predominantly a reconstruction made some years after the event.”

22. (1995) 49 NSWLR 315.

23. Watson v Foxman at 319.

41. Nor, where there are contemporaneous documents, is it simply a matter of weighing the inferences to be drawn from them against evidence of oral conversations. It is a matter of considering all the evidence together. The contemporaneous documentation may well support the oral conversation, as recounted by a witness. If that is so, it may be necessary to consider whether the witness has nevertheless reconstructed the conversation from the document. If that is the case, it might be wrong to give material weight to the conversation; if it supplies additional details, it may be of assistance or it may simply have an appearance of verisimilitude. These problems require explication by reference to the evidence. That did not happen in this case.

42. Documentary evidence should also be assessed with caution. The very fact that the precise words are known should not distract attention from questions of context and purpose. In the present case, the problem is exacerbated by the fact that two informal letters from father to son have now been construed by a court as creating a legal trust, which has been given a label, the Burwood trust. The first letter revealed two purposes in putting the Burwood unit in the name of his son; both involved secrecy. The first was to avoid the value of the property being diminished by death duties; the second was to make provision for his wife and mistress. He probably did not expect the arrangement to outlast the life of his wife, beyond a short period to arrange payment of any balance to the Japanese bank account. The 1978 letter varied the latter purpose; Ms Nikaido no longer having financial needs, her interest was replaced with that of their son, but if he was not in need, then another member of the Tjiong family in need, to be chosen by George Tjiong. Again, the likely intention was to have the fund finally allocated shortly after his wife’s death.

43. That understanding gives context to the step taken by George Tjiong in conferring a financial benefit on his son. The documentary evidence in 1999 in relation to this event was sparse and the source of the funds was not identified. However, the expressed emotion of relief at settling a promise to assist was not inconsistent with obtaining funds from the trust to do so. The concluding words of the letter, “Now I can die in peace”, suggest more than providing for a son in a manner which would have been satisfied from his estate. The conversation recounted by Lindsay Tjiong in his affidavit supported an inference that his father’s trust had been executed.

44. These were difficult factors to address, but reliance on Watson v Foxman should have been a matter of very limited weight.

45. Further, it is not easy to understand what was meant by diminishing the weight of the oral testimony. By far the bulk of the oral evidence came from Ms Tjiong. The evidence of Lindsay Tjiong was encompassed within six pages; that of Ms Tjiong covered 37 pages. Yet in truth, Ms Tjiong’s evidence was largely irrelevant. She was not party to any conversation with her father in relation to the Burwood trust, nor in relation to the payment to her brother. Her case was that the payment to her brother was a distribution (indeed a final distribution) of the Burwood trust funds, but that was an opinion based upon her consideration of the available documentary record, being primarily bank records and related financial documents. However, any opinion she formed as to the circumstances of the 1999 payment to her brother was irrelevant. Whether her opinion varied as between 2009 or 2013 and 2020, was equally irrelevant. The judge was required to determine the matter on the evidence which was available. In so far as the judge gave weight (as she did) to “seemingly inconsistent” statements of opinion by Ms Tjiong or her lawyers during that proceeding and other proceedings, that was an error.

46. As will be noted below, Ms Tjiong gave some evidence in cross-examination in relation to cultural circumstances involving her father and her father’s parents. Those answers were of some significance, but were not addressed.

47. As to Lindsay Tjiong’s evidence, there was no clear explanation as to which parts, if any, were rejected, and why. It may be accepted that a court is not obliged to accept unchallenged evidence. Further, where accepted, it is not obliged to give such evidence dispositive weight. Factors weighing against any such obligation will include (i) the nature of the evidence, which may be internally inconsistent, or inherently improbable; (ii) the stage of the proceedings at which it is raised, which may not permit contradiction; (iii) there may be no basis in the evidence available to the challenging party upon which to cross-examine. However, as will be explained below, Lindsay Tjiong’s evidence was of immediate relevance to his father’s intention in making the payment, was not incoherent or internally inconsistent, was indeed consistent with his father’s letter to him, and was known at all stages of the trial to be fundamental to Ms Tjiong’s defence and cross-claim. Further, as she had alleged in the pleading, Lindsay Tjiong was a person in need and thus within the class to whom the balance of the fund might be distributed once his grandmother’s needs had been met.

48. The underlying principles have commonly been stated in criminal cases, where they must be explained to juries, as explained by Hunt J in Allied Pastoral Holdings Pty Ltd v Federal Commissioner of Taxation. ^[24] In Precision Plastics Pty Ltd v Demir,^[25] a workplace injury claim, Gibbs J stated of the plaintiff’s evidence that she intended to continue working for as long as she could: ^[26]

“If it had been intended to suggest that she was not speaking the truth she should have been cross-examined on this matter so that she might have had an opportunity of explanation (cf. Browne v Dunn ^[27] ), but she was not in fact cross-examined on her answer. [Her] evidence … was not inherently incredible. … In these circumstances, in my opinion, the jury, acting reasonably, were bound to accept her evidence, uncontradicted and unchallenged in cross-examination ….”

24. [1983] 1 NSWLR 1; J D Heydon, Cross on Evidence (10th ed, LexisNexis 2015) at 17435-17440.

25. (1975) 132 CLR 362; [1975] HCA 27.

26. Precision Plastics at 370-371.

27. (1893) 6 R 67, 76-77.

49. In fact, the significance of the conversation between Lindsay Tjiong and his father was never in doubt: it was relied on in Ms Tjiong’s defence as determining the trust by distribution; ^[28] it was set out in Lindsay Tjiong’s affidavit of 26 November 2020; it was addressed in the plaintiff’s reply; ^[29] and addressed by the plaintiff in a written opening. ^[30] The failure to cross-examine was neither inadvertent nor tactical: the plaintiff never raised a challenge to the credibility of the evidence. Indeed, the trial judge noted as much. ^[31]

    28. Defence filed 8 September 2020, par 10.

    29. Reply filed 13 October 2020, pars 3-5.

    30. Plaintiff’s outline of submissions, 24 November 2021, par 2.7.

    31. Judgment at [12].

50. The consequence of not having challenged Lindsay Tjiong in cross-examination, was that a jury could not have been invited to speculate on whether the evidence (i) was a recent invention, (ii) concocted with his sister to support their mutual interests, or (iii) was no longer clear in his recollection, it having occurred some two decades earlier. If the trial judge had sought to take such possibilities into account, there should have been express justification in the judgment. If, in the alternative, the evidence of Lindsay Tjiong as to the conversation (set out below) were thought to be ambiguous or unclear in some respect, that proposition should also have been stated. None of these steps were taken.

51. In principle, giving weight to the documentary record may have had much to recommend it; in practice, it meant that in the absence of any record identifying the source of the 1999 payment as being from the trust, the proper inference was that it was not such a payment. However, there was no documentary record supporting the alternative conclusion, namely that it was a payment from George Tjiong’s personal funds, which could have given rise to the opposite inference.

52. In fact, the judge tended not to distinguish oral evidence from documentary evidence. Even where she accepted oral evidence, no inference was drawn from it. Thus, she recorded:

“111   Katrina also relies on the secrecy surrounding the payments to Lindsay and the terms of George’s wills as evidence that the payments to Lindsay were a distribution of the Burwood Trust funds. I am not persuaded by those matters.”

53. Both elements turned on documentary evidence, but neither was accepted. The inference to be derived from the wills arose as follows. The first will, in 1992, identified the home unit at Belmore Street, Burwood as given to his trustee “on trust to permit my mother Kwat Nio Tjiong to reside in so long as she in the opinion of my trustee makes the property her principal place of residence…”. Whilst that was a testamentary trust, it partly effected the Burwood trust, and may be seen as recognising that trust. It only partly reflected the Burwood trust, because upon the mother ceasing to reside in the property, the house was to be dealt with in accordance with clause 3 which provided that the proceeds of sale were available to pay the usual testamentary expenses and then as part of the residuary estate given to Ms Tjiong and Lindsay Tjiong in equal shares. By way of contrast, the second will, executed in December 2001 made no reference, implicit or otherwise, to the Burwood trust, but simply gave the whole of George Tjiong’s estate to his trustee for payment of expenses and division between his two children in equal shares. Two events had occurred between the dates of the two wills. The earlier was the sale of the home unit in Belmore Street, Burwood, in December 1996. The later event was the payment to Lindsay Tjiong in July 1999.

54. Implicitly acknowledging that there was an available inference that the change in 2001 evidenced that the Burwood trust funds had been distributed in full by the payment to Lindsay Tjiong, the judge observed that the changes “are also explicable on the basis that the unit had been sold by the time that George’s last will was made”. ^[32]

    32. First judgment at [112].

55. The availability of conflicting inferences may be acknowledged, but there was a further consideration which supported the inference sought by Ms Tjiong. That was the evident intention to deal equally with the testator’s two offspring. The payment to his son, Lindsay, was a not insignificant amount and, further, was recognised as significant by George Tjiong at the time it was made. The express intention to treat the offspring equally is readily accommodated as being reflected by the terms of the will, if the payment to Lindsay Tjiong, a person clearly having needs, was in fact a distribution of trust moneys.

56. The third piece of documentary evidence was the letter from George Tjiong to his son dated 21 July 1999 and enclosing two bank cheques totalling $199,972.05. In the first paragraph the payment of the cheques was said “to honour my agreement with you”. The final paragraph stated:

“Do not tell anyone about this news. Keep this to your selves ….

Now I can die in peace.”

57. The letter was annexed to an affidavit sworn by Lindsay Tjiong on 26 November 2020. In the affidavit Lindsay Tjiong explained that he had been injured in a motor vehicle accident in 1977 and sustained a brain injury which impacted his behaviour and learning abilities. He stated:

“My father occasionally expressed his concern about my future, especially with the cultural significance that he held towards males and their education.”

58. Lindsay Tjiong further stated that he moved from Melbourne to Darwin to start a new life in or around late 1993. He stated:

“The night before I left Melbourne my father said the words to the effect:

‘If you can get your life together, I will help you purchase a property.’”

59. He stated that he gained employment in Darwin, that between 1994 and 1996 his father loaned him money to purchase a second-hand car and that he repaid the loan with interest. In 1999, he was living in shared accommodation on a rural block, the owners of which proposed to sell and move to Tasmania. He stated that they had offered to sell him the property for $200,000. He telephoned his father to tell him of that offer. He said his father responded:

“You have shown me that you can keep down a job and save your money. I’m going to honour the promise that I made to you before you moved to Darwin and purchase a property for you. I have some money set aside for the care of Oma. However, Oma is well cared for by the family. Now I’m happy for the money to go to you as the eldest male. There will be no strings attached, the house will be in your name. I can now die in peace. Please keep it to yourself and leave it up to me to tell Katrina.”

60. Lindsay Tjiong then stated in his affidavit that he returned to Melbourne in 2019 “to be closer to my elderly mother who had moved into a nursing home”. He was living in Victoria at the time he gave evidence at the first trial on 9 March 2022.

60. The cross-examination was brief. It focused on the fact that he had been involved in the 2009 proceedings before Palmer J and had supported the argument that his father had held the home unit in Burwood subject to a trust, a proposition with which he agreed. The cross-examination proceeded: ^[33]

    33. Tcpt, 09/03/22, p 126(40).

“Q.   So a submission was put by Mr Evans on your behalf that the Burwood unit was held by your father as trustee, is that right?

A.   Yes.

Q.   And that the unit and the proceeds of sale would be held for the benefit of your grandmother during her lifetime, is that right?

A.   Yep.

Q.   And after your grandmother passed then your father, being George Tjiong, could appoint the trust fund to members of your ‘grandfather’s family’?

A.   Yes.

Q.   So you knew on or about 4 March 2009 that the Burwood unit or any proceeds from sale of the Burwood unit was to be held for your grandmother during her lifetime and for no other purposes, is that right?

A.   Yes. I found that out then at this court case that at the time, my father was the head of the family, so I always thought, you know, he could do as he pleases with it.”

62. This evidence was irrelevant: but, more importantly, there was no challenge to the accuracy or veracity of the conversation recorded in his affidavit and set out above at [59], referring to “money set aside for the care of Oma”, which was self-evidently relevant and important.

63. The trial judge dismissed Lindsay Tjiong’s evidence as unpersuasive, on a number of bases, which are not persuasive. First, she expressly placed “greater weight on the contemporaneous documents than on the terms of the conversation to which Lindsay deposes”. There is no reference to the fact that the evidence was not challenged in cross-examination, nor was there recognition of the consistency between that evidence and his father’s letter.

64. Secondly, she noted Lindsay Tjiong’s evidence in cross-examination that his father never told him where the money came from. ^[34] The judge stated that any connection “between the money paid to Lindsay and the Burwood trust property … is not recorded in any document and is seemingly inconsistent with various assertions made on behalf of Katrina (and Lindsay) … as well as Lindsay’s evidence in cross-examination that George never told him where the money came from …”: at [98].

    34. First judgment at [98]; Trial Tcpt, p 125(32)-(33).

65. The significance of Lindsay Tjiong’s evidence in that respect is obscure. Neither the letter nor the conversation identified the source of the fund, but merely their primary purpose, which the father stated had been fulfilled, according to the conversation. Lindsay Tjiong’s evidence was that he learned of the source of the funds in the course of the court case in 2009. There was no inconsistency arising from that fact.

66. Next, it is necessary to identify the supposedly inconsistent findings in the earlier passages in the judgment identified in [98], set out at [37] above.

67. First, three passages (four paragraphs of the seven) involved the proceedings before Palmer J:

“32   The removal proceedings were heard by Palmer J. On 3 June 2009, during the course of oral submissions, Katrina and Lindsay’s counsel, Mr Evans (who appeared for Katrina and Lindsay in Chang v Tjiong and for Katrina in these proceedings) referred to the Burwood Trust in the following terms (T160:16-28):

‘It would seem there are two questions. One is to identify a sum of money that can be seen today as representing in [George’s] estate the proceeds of sale of the Burwood unit and then perhaps seeing as the discretionary trust set up, one where George was trustee and the objects of the trust deed were descendants of the grandfather … my understanding of it is that the appropriate way would be, having identified that fund to then set up a scheme of arrangement and perhaps one might employ one of the trustee companies, perhaps an experienced solicitor in matters of trusts who could then receive as it were submissions from the various descendants and make decisions as to the appropriate distribution which would then perhaps come back before your Honour who was familiar with the matter and be approved by the court.’

…

35   On 29 June 2010, the hearing of the removal proceedings resumed. During the course of the hearing there was discussion about the ‘Burwood issue’ that referred to the net proceeds of the sale of the Unit in 1996 for $168,331.06 and the funds that ‘today should be set aside that represents the net proceeds of Burwood’ (T12.17-20 and T12.49-50). There was then the following exchange between Katrina and Lindsay’s counsel, Mr Evans, and Palmer J (T13.12-T15.9):

‘EVANS: … Your Honour found on the basis of the document that was preferred that the Burwood property was held, or the proceeds were held on a trust to provide for the mother while she was alive and thereafter for the descendants of the grandfather in what would appear a discretionary trust. The finality of that matter still awaits.

In dealing with the final orders, I have sought to identify a fund that would properly represent today safely the proceeds of the sale of the Burwood property to await final orders in that case.

…

HIS HONOUR: I don’t think it is really part of these short minutes at all. This is a matter for the present executor of George’s estate whoever it is now--

EVANS: Katrina

HIS HONOUR: That is something she has to deal with in the course of administration of the estate. It is not part of these proceedings. …

EVANS: It would seem that there would need to be an application for judicial advice as to the manner in which the Burwood Trust should be disposed of, but the purpose of the drafting of clause 15 and the purpose of my submissions is to say that when one traces the proceeds of Burwood through to Terrey Hills and the subsequent investment of those moneys, the sum we would say today that would represent the proceeds of sale of Burwood is a number of the order of 250 to $260,000…

HIS HONOUR: It is too hard and shouldn’t be dealt with in these proceedings. I will release the undertaking previously given because I don’t think it was appropriately given anyway. That leaves Katrina as trustee of George’s estate in the position of ‘how do I administer the estate bearing in mind that there is a judgment finding that part of the estate funds are in fact owed to somebody else’.

EVANS: Or subject to a discretionary trust and your Honour must assume she will act correctly’.

…

40   Katrina gave evidence in cross-examination that she knew the terms of the Burwood Trust as early as 4 March 2009; she knew the proceeds of the Burwood Trust may have been held by George (as trustee) when she became administrator of his estate and that she might have to commence new proceedings as administrator of his estate if a resolution could not be reached with family members as to the fate of the Burwood Trust funds; and that part of her role as trustee was to establish what happened to the Burwood Trust funds (T47:23-27, T47:32-34, T47:47-T48.10, T57:40-43 and T56:15-22). She deposes that she did not commence looking into what had occurred to the Burwood Trust property until after the Tjiong Appeal and then she waited to see if Richard would make an application to the High Court for leave to appeal (which he did not do).

41   In a letter dated 10 July 2013, O’Brien Lawyers (acting on behalf of Katrina), wrote to Richard’s lawyers and, amongst other things, referred to the Burwood Trust as a trust  of moneys or assets that formed part of the whole assets of George Tjiong as at December 2001’ and as a ‘discretionary trust in favour of such members of the family of … Hok … as George in his discretion might appoint having regard to their needs’. It was asserted in the letter that Katrina must now be the trustee of the Burwood Trust, given that Katrina had replaced Richard as executor of the estate.”

68. These statements may be addressed on the basis that the understandings of the plaintiff and her brother, more than three decades after the trust was established and ten years after the 1999 payment, were relevant to some issue in the proceedings brought by Ms Tjiong, a further 11 years on.

69. There could only be a seeming inconsistency between statements made by counsel in the 2009 hearing before Palmer J on the assumption that counsel had precise instructions from Katrina and Lindsay Tjiong as to the source of any payments made to members of the Tjiong family whilst George was in control of the trust. That assumption should not have been made for two reasons. As Palmer J expressly noted, the fate of the trust was not in issue before him, but merely whether there was such a trust. (As has been noted, the claim in the proceeding, brought by Tzer Chang’s mother, was that the proceeds of sale of the Burwood unit had been held by George Tjiong on trust for his father, and that, on the father’s death, his beneficial interest passed to the mother.) Further, to find inconsistency, so as to justify taking these matters into account adversely to Ms Tjiong, it was necessary to have regard to the cross-examination of Ms Tjiong in relation to this material, which was not done. Had it been done the following three passages would have been addressed.

70. First, Ms Tjiong was taken to calculations made by counsel as to the proportion of the moneys held by the estate which might form part of the Burwood trust. The cross-examination was apparently based upon a sheet of paper: ^[35]

    35. Tcpt, 29/11/21, p 55(48)-56(22).

“Q.   So, at this time, there was an account that was done in relation to the Burwood trust, is that right?

A.   Only a rough estimate, because we didn’t have all of the paperwork received from the previous executor, and that hadn’t been looked into. So, when his Honour said ‘Mr Evans you have lost me’ I was lost as well.

Q.   But your counsel here is saying that the Burwood trust funds were used by your father to purchase a property at Terrey Hills, is that right?

A.   That was an assumption. We still hadn’t investigated it properly.

Q.   Do you have the sheet of paper that was provided to his Honour?

A.   Do I have the sheet of paper? No.

Q.   Well, you know an issue in these proceedings is what happened to the Burwood Trust proceeds?

A.   Absolutely.

Q.   So, that sheet of paper would be relevant, wouldn’t it?

A.   I suppose, but that wasn’t, the basic thing is, I, my role as the trustee was to establish what happened to the assets of the Burwood trust. We weren’t able to do that for some time later, and the starting point for me, was to find out where the proceeds were deposited and what happened thereafter. All we had at that time was a couple of files like the Terrey Hills, the purchase of Terrey Hills, the sale of Burwood, but we didn’t have, we still didn’t even know where the funds had gone into.”

71. Ms Tjiong was then asked: ^[36]

“Q.   At that time you’d done an account and you instructed your counsel to indicate to the Court that the Burwood Trust proceeds should be about 250 to $260,000 is that right?

A.   No, I didn’t instruct him to raise all of this.

Q.   So again, are you saying that Mr Evans made these submissions without any instructions?

A.    Well, I, I remember him, us looking at the, the property sales and things like that, and so it was a big assumption.

Q.   But it was an assumption that you were willing to put before the Court, is that right?

A.   Well, that’s what Mr Evans did.”

36. Tcpt, p 56(46).

72. The judge did not reject that evidence and, indeed to do so would have required a careful analysis of the context. Although Ms Tjiong and her uncle Richard Tjiong had been the joint holders of a power of attorney from her father, and her uncle had been the administrator of her father’s estate, she and her brother had taken proceedings against Richard Tjiong to have him removed as the executor under her father’s will and as trustee of a trust that he had set up known as the “George Tak Loek Family Trust” and to recover payments he had made to a charitable foundation known as Oninama. ^[37]

    37. Affidavit, Katrina Tjiong, 26 November 2020, par 3; Tjiong v Tjiong [2012 NSWCA 201 at [4].

73. She further stated in the affidavit:

“22   During proceedings commenced by the Plaintiff’s Mother against my Father’s estate, Richard Tjiong was named as the First defendant and appeared with his solicitor for the entirety of the proceedings. Richard Tjiong provided no evidence to the Court as the trustee for the so-called Burwood Trust as to what had occurred to the proceeds of sale of the Burwood property. This was in circumstances where Richard Tjiong was the effective trustee of the so-called Burwood Trust from late 2001 to June 2009.

…

24   I was not aware of the moneys advanced by my Father to Lindsay in 1999 to assist with the purchase of his Humpty Doo property. I only became aware of it after my Father’s death when Richard Tjiong told me ….”

74. She was challenged in cross-examination, and accepted, that she was a joint attorney of her father’s protected estate: ^[38]

“Q.   You don’t tell the Court that you were also appointed under that power of attorney, is that right?

A.   Not specifically in there, but I mean for me reading that – like this has been through so many court cases, at the end Richard was the effective controller. This has all been thrashed out in other court cases.”

38. Tcpt, p 66(39).

75. Later it was put to her: ^[39]

“Q.   And you decided to do nothing?

A.   I trusted my uncle and he just took control of everything. In 1996 when dad was still here in Melbourne I did a lot more for him, but then Richard Tjiong just took control in 2001. He had all of the documents.”

39. Tcpt, p 68(3).

76. Secondly, and with respect to the specific statement in her affidavit as to becoming aware of the advance to her brother in 1999, she corrected the statement in par 24 set out above so that it read that she became aware only “after my father become incapacitated when Richard Tjiong told me”. ^[40] That evidence was not otherwise challenged.

    40. Tcpt, p 66(15).

77. It is true that by 2009 both Ms Tjiong and her brother were aware of their father having made the payment in 1999. It was also clear that neither had, before 2009, sought to identify that advance as a distribution from the Burwood trust. However, there was no evidence that either of them knew of the letters establishing the Burwood trust until the 2009 proceedings and there was thus no basis for them to know of what distributions had been made under the terms of that trust until Ms Tjiong obtained the relevant documents after the removal of her uncle as administrator of her father’s estate.

78. Thirdly, Ms Tjiong was cross-examined at some length to establish that, at least from March 2009, the date of Palmer J’s first judgment, she knew that the Burwood unit, and any proceeds from the sale of the unit, were to be held for her grandmother during her lifetime. ^[41] The purpose of the cross-examination was revealed in the following questions and answers: ^[42]

“Q.   Then according to your pleadings, and the submissions made on your behalf before Palmer J, your father George couldn’t have made a distribution to anyone except your grandmother?

…

Q.   Your father predeceased your grandmother, didn’t he?

A.   That’s correct.”

41. Tcpt, p 44(3), 45(36)-46(9).

42. Tcpt, p 46(35)-(41).

79. The cross-examination then turned to a letter sent by her solicitors on 8 July 2020 which referred to Mr Chang as “a beneficiary or potential beneficiary of the so called Burwood Trust”. She was asked: ^[43]

“Q.   At the time that you had this letter sent, you knew that you were a trustee of a trust, didn’t you?

A.   At that time, I was a trustee of a trust that had no assets in it.

Q.   You knew that you were the trustee of the Burwood Trust, is that right?

A.   I had been, but if there’s a trust with nothing in it, then I’m a trustee of nothing.”

43. Tcpt, p 59(1).

80. In her affidavit of 26 November 2020, Ms Tjiong stated:

“28   In any event, the so-called Burwood Trust was distributed by my father by way of transfers to my brother, Lindsay Tjiong as indicated in my Solicitors’ letter to Griffin Lawyers of Adelaide dated 16 January 2018.”

81. The cross-examiner noted that her grandmother had only died in 2006: ^[44]

    44. Tcpt, p 61(44).

“Q.   Given what we’ve already established, it couldn’t have been a distribution from the Burwood Trust to Lindsay? Your grandmother was still alive in 1999.

A.   That’s right she was. But this is, I mean, there wasn’t any strict trust deed. It was an informal arrangement between father and son, as in my grandfather and my father, and it was used for the benefit of my mother during her lifetime or for any family that was in need. So, if anything, you could actually really call it a breach of trust by dad, by doing that first. But the fact is that he continued on contributing towards my grandmother, at least up until he died.

Q.   Do you say what your father paid to him was a breach of trust?

A.   Well, it would seem like that, he shouldn’t have done it before.

Q.   You have done nothing, as the administrator of your father’s estate, to rectify that breach of trust, is that right?

A.   Well, I don’t see that there’s a reason it needs to be rectified. There were no consequences in him doing that.

Q.   Why do you say there were no consequences?

A.   Well, there were no consequences to my grandmother, like she, she was still well looked after.

…

Q.   Your father wouldn’t have known what need your grandmother had in 1999 going forward, did he?

A.   Well, no, but, and I mean it was well established that she was living with, especially according to the Chinese culture, that she was living with her daughter. He continued with funding, giving funds, or contributing money towards, towards her upkeep and expenses.”

82. The cross-examination concluded with the following passage: ^[45]

    45. Tcpt, p 70(15).

“Q.   The payment made by your late father to Lindsay, which you now say is a distribution from the Burwood Trust, that’s a recent invention isn’t it?

A.   No.

…

Q.   Neither yourself nor your brother led any evidence as to the advance purportedly made by your late father to your brother George [sic], in 1999, is that right?

A.   Well, it was, there was no, I didn’t, there was no association to that, it’s all, I could establish where the money had gone into and what had actually happened, looking at dad’s bank accounts.

Q.   There was no evidence led during those proceedings, is that right?

A.   About Lindsay’s payment?

Q.   That’s right.

A.   Well, it wasn’t relevant then.”

83. As to the last point, it was Palmer J who confirmed that such evidence would not have been relevant in the proceedings before him, which, for reasons explained above, was undoubtedly correct.

84. As to the question of “recent invention”, in the absence of any finding to the contrary, and the general acceptance of the witnesses’ evidence, the denial should have been accepted. However, it is by no means clear what was meant by “recent invention”. It cannot have been intended to suggest that the payment was a recent invention, but only the characterisation of it as a distribution of trust moneys. Yet, without repeating the detail, much of which was set out in the letter of 16 January 2018 to the solicitors for Mr Chang’s mother, it is apparent, and should be accepted, that Ms Tjiong had little opportunity to investigate the accounts in order to determine how the payment should be characterised, until 2013. On 16 March 2015, Ms Tjiong obtained advice from solicitors in Victoria as to whether there had been any breach of trust and as to whether she should seek judicial advice. The advice concluded:

“In my view you can quite justifiably do nothing, which indeed is my recommendation. The most likely people to bring an action would be Richard and Soei, and any action by them is now statute barred. … I understand that before his death your brother Lindsay was in need, and that George made a substantial payment to Lindsay. It may well be that George was exercising his power of appointment in making that payment. Whilst we can now only speculate on what your father did many years ago, mere speculation by a Plaintiff that George might have acted in breach of trust will not win a case.”

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

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

466. This claim is summarised at [390] above.

467. Putting to one side the trustees’ unexplained change of position concerning this claim, I reject the challenge to Claim 4. The bill of costs dated 14 December 2015 was adduced in evidence. It expressly relates to the legal fees of both Katrina’s solicitor and counsel “in relation to the so called Burwood Trust” and is sufficient evidence of her liability.

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

468. This claim is summarised at [398]-[400] above.

469. The cross-appellants contended that the primary judge erred in accepting Claim 7 because Katrina had not established that there was a present liability to pay counsel’s invoice. They contended that production of the tax invoice is not evidence of the obligation to pay and that, in any event, the tax invoice was addressed to Katrina’s solicitors and not to Katrina herself. They added that there was no evidence that Katrina’s solicitors had issued a corresponding tax invoice to Katrina. They also contended that for liability to be established it was necessary to produce the relevant costs agreement pursuant to which a costs invoice was issued so as to determine the liability. Finally, they contended that counsel’s advice to Katrina was for her benefit in her personal capacity and not in her capacity as trustee.

470. For the following reasons, I reject this ground. Katrina sought advice from counsel on the question whether or not she should seek judicial advice in relation to the Burwood Trust and regarding the current status of the Burwood Trust. Counsel issued a tax invoice for $27,500 inclusive of GST on 10 June 2016 in respect of his advice on these matters.

471. It is unclear why Katrina’s claim for indemnity is in the amount of only $22,000 and not $27,500, which is the total amount of counsel’s tax invoice. Having regard to the terms of PJ2[153] and [154], the primary judge was aware of this discrepancy and allowed the claim in the amount of $22,000 for reasons given by her Honour at PJ2[158].

472. No error has been established in respect of her Honour’s determination of Claim 7. I respectfully agree with the primary judge that counsel’s tax invoice was sufficient to establish a current liability, and it was unnecessary for Katrina also to produce a costs agreement for that amount. It is also evident from the terms of the tax invoice that the advice related to Katrina’s performance of her duties as trustee of the Burwood Trust. For these reasons, I reject this ground of the cross-appeal.

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

473. This claim is summarised at [404]-[406] above.

474. The cross-appellants challenged the primary judge’s determination on similar grounds to those relating to Claims 1 and 7. In brief, they contended that Claim 9 should be rejected because no costs agreement or proof of payment of the tax invoice was adduced in evidence. They also contended that Katrina’s claim was inconsistent with her primary position that the Burwood Trust had been determined by the July 1999 payments.

475. I do not accept those submissions. The primary judge did not err in granting Claim 9 on the basis that, despite Katrina’s primary position, she had accepted that she had an obligation as bare trustee of the Burwood Trust to investigate the Trust.

476. As to the contentions concerning the absence of a costs agreement or proof of payment, I repeat what is set out above in respect of these matters under Claim 7. Katrina’s liability to pay the amount of $25,850 is adequately established by the terms of Katrina’s solicitor’s Bill of Costs dated 28 January 2018, most of which relates to fees claimed by Katrina’s counsel for legal advice.

477. Having regard to the cross-appellants’ failure to disturb any of the three claims challenged by them in the cross-appeal, there is no basis for disturbing the primary judge’s conclusion that Katrina was entitled to the sum of $52,886 by way of indemnity, adding, however, the amount of $76,145.30 in light of Katrina’s success on grounds 4(d) and (h) of her appeal.

Costs

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

Conclusion

479. For all these reasons, I propose the following orders:

1. Allow the first respondent’s notice of motion filed on 1 August 2024 in relation to its objection to the competency of grounds 1 and 2 of the notice of appeal filed on 8 May 2024, but otherwise dismiss the notice of motion.

2. Refuse an extension of time to the appellant to appeal those parts of the judgment in Chang v Tjiong [2022] NSWSC 1092 to which grounds 1 and 2 of the notice of appeal filed on 8 May 2024 relate, but grant an extension of time in respect of ground 3 of the notice of appeal.

3. Grant leave to the appellant to appeal in respect of grounds 4 and 5.

4. Allow the appeal in respect of grounds 4(d) and (h), and ground 5 in part, but otherwise dismiss the appeal.

5. Set aside order 1 dated 9 February 2024 and in lieu thereof make the following order:

1. Order that that the first defendant pay to the second and third defendants as the trustees of the Burwood Trust the amount of $562,286.81 (Amount), representing the corpus and income of the Burwood Trust from the date of the receipt of the proceeds of sale of xx Street, Burwood in the State of New South Wales (Burwood Unit) being 31 December 1996 (the date of receipt of the final payment with respect to the proceeds of sale of the Burwood Unit) to 12 December 2023 after deduction of the first defendant’s indemnity claims as determined by this Court.

6. Direct that, within seven days hereof,

1. the proposed cross-appellants file and serve an amended summons seeking leave to cross-appeal naming the first respondent in the appeal as an applicant for leave to cross-appeal; and

2. a notice of cross-appeal naming the first respondent in the appeal as a cross-appellant.

7. Grant leave to cross-appeal in respect of grounds 1, 2, and 3 of the draft notice of cross-appeal.

8. Dismiss the cross-appeal.

9. Within 14 days hereof, the parties should seek to agree costs of the appeal and the proceedings below in the light of the reasons above. If they cannot reach agreement, within that time each party should file and serve a brief outline of submissions not exceeding five pages, together with any supporting material. Costs will then be determined by the Court on the papers and without a further oral hearing.

480. PRICE AJA: I have read the reasons for Basten AJA and Griffiths AJA. I am grateful for their comprehensive review of the evidence and the background to the controversy. I will refrain from any unnecessary repetition of that material.

481. The primary issue before the primary judge in PJ1 was whether the Burwood Trust (“the Trust”) was determined by the payments made by George to his son Lindsay in July 1999.

482. Ground 3 of the appeal challenges her Honour’s conclusion that the appellant failed to satisfy the Court that the payments effectively terminated the Trust by distribution.

483. Basten AJA has concluded that Ground 3 should be upheld whereas Griffiths AJA concludes that her Honour did not err. Their Honours provide extensive reasons for the conclusions reached.

The onus of proof

484. Before venturing further, it is necessary to say something about the onus of proof. Basten AJA appears at [34] above to be of the opinion that the primary judge reversed that onus. Rather than the defendant bearing the onus of establishing the defence pleaded in paragraph 10 of her defence that there had been a distribution, Basten AJA is of the opinion that “the plaintiff bore the burden of establishing that there was a trust fund which had not been fully distributed.” Griffiths AJA does not agree that the primary judge reversed the onus of proof but considers at [340(e)] above that “her Honour was simply responding to the prominence given to the issue of termination”.

485. In PJ1, it seems to me that the primary judge acted on the basis that the defendant bore the onus of proving the defence. Her Honour said at PJ1 [113]:

“In conclusion, Katrina has failed to satisfy me that the payments made to Lindsay on 19 July 1999 constituted an exercise by George of the power of appointment conferred on him by Hok and effectively terminated the Burwood Trust by distribution.”

486. Her Honour had earlier said at PJ1 [97]:

“In my view, the evidence overall falls short of establishing that George intended to, and did in fact, distribute the Burwood Trust property to Lindsay pursuant to George’s power of appointment when he made the payments to Lindsay in July 1999.”

487. In written submissions, the appellant advanced nine contentions in support of the claim of error in ground 3 which are set out by Griffiths AJA at [312] above. The appellants did not contend that the primary judge erred by incorrectly applying the onus of proof.

488. A basal statement concerning the onus of proof is found in the judgment of Walsh JA in Currie v Dempsey (1967) 69 SR (NSW) 116 (“Currie”) at 125:

“In my opinion, [the legal burden of proof] lies on a plaintiff, if the fact alleged (whether affirmative or negative in form) is an essential element in his cause of action, eg, if its existence is a condition precedent to his right to maintain the action. The onus is on the defendant, if the allegation is not a denial of an essential ingredient in the cause of action, but is one which, if established, will constitute a good defence, that is, an “avoidance” of the claim which, prima facie, the plaintiff has.”

489. It has often been said that the difficulty with the test in Currie is that it is sometimes difficult to distinguish between an “essential element” and a matter “avoiding” the prima facie claim of the plaintiff. The following observation on the onus of proof appears in an article by CR Williams, “Burdens and Standards in Civil Litigation” (2003) 25 Syd Law Review 165 (that has been cited by this Court in a number of decisions see, eg, Coshott Family Pty Ltd v Lyons (2022) 110 NSWLR 44; [2022] NSWCA 216 at [18]) at 171:

“What then determines where the burden of proof lies? Often the question will turn on the form in which a legal rule is traditionally stated. If an issue is commonly listed among the constituent elements of a cause of action, the burden of proof will be said to be on the plaintiff. If the issue is commonly referred to as a factor leading to the avoidance of liability, the burden of proof will be on the defendant.” (citation omitted).

490. An illustration of the defendant bearing the onus of proof is found in Young v Queensland Trustees Ltd (1956) 99 CLR 560; [1956] HCA 51. The plaintiff sued the defendant for money lent to him. The defendant admitted that the loans had been made but claimed that the loans money had been repaid. The trial judge entered judgment in favour of the plaintiff for the amount claimed, as he disbelieved the defendant’s evidence as to repayment.

491. One of the grounds of appeal advanced by the defendant to the High Court was that there was no evidence to disprove repayment, the burden of disproof lying upon the plaintiff. The High Court (Dixon CJ, McTiernan and Taylor JJ) found that the contention that the burden of disproving repayments upon the plaintiff was erroneous. The High Court confirmed that the approach of the Victorian Supreme Court in Nelson v Campbell (1928) VLR 364 that the onus was on the plaintiff was wrong. Their Honours said at 562:

“But the law has always been that it lies upon a defendant to make out a defence of payment by way of discharge.”

492. Another instance of a party bearing an onus is found in Lewis v Nortex Pty Ltd (In Liq); Lamru Pty Ltd v Kation Pty Ltd [2004] NSWSC 1143; (2004) 214 ALR 634 where Hamilton J found that the party alleging a breach of trust had to establish the breach. Hamilton J said at [53]:

“But, if Lamru complains of a breach of trust in respect of the distribution of the 1991 profits, it bears the onus of establishing its existence and, if that involves establishing the quantum of the profit during a particular period, it is for Lamru to prove it.”

493. There are other illustrations of a defendant bearing an onus but each case depends on its own facts. In my opinion, the onus was on the plaintiff in the present case to prove the existence of the trust; that Katrina had become a bare trustee; that the plaintiff was a beneficiary of the trust; that Katrina had received trust property and had not provided an account in respect of the trust. Most of the constituent elements of the plaintiff’s cause of action could be established by the 2009 judgment of Palmer J and the consent orders that followed. As Katrina was seeking to avoid liability, she bore the onus of establishing that the trust had been terminated by the payment to Lindsay. In my respectful opinion, the primary judge correctly found that the defendant bore the onus of proving her defence.

494. In any event, it appears that the primary judge ultimately concluded that the plaintiff had established the continuing existence of the trust when her Honour went on to say at PJ1 [113]:

“Based on the evidence overall, I am persuaded by Tzer’s submission that, on the balance of probabilities, the payments to Lindsay were most likely a gift from George from his personal funds and were not a distribution of or from the corpus of the Burwood Trust.”

The correctness standard applies

495. Although there was some debate in written submissions about the appropriate standard of appellate review, the correctness standard applies. As the High Court recently explained in Moore (a pseudonym) v The King [2024] HCA 30; (2024) 419 ALR 169 at [14] (Gageler CJ, Edelman, Steward, Gleeson and Beech-Jones JJ):

“Under the correctness standard, the appellate court determines for itself the correct outcome while making due allowance for such “advantages” as may have been enjoyed by the judge who conducted the trial or hearing.”

496. The advantages enjoyed by the primary judge over this Court include seeing and hearing the witnesses who were Tzer, Katrina, and Lindsay. The need for appellate respect especially arises where the trial judge’s decision “might be affected by their impression about the credibility of witnesses whom the trial judge sees but the appellate court does not”: Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [26] (Gleeson CJ, Gummow and Kirby JJ) (“Fox”).

497. In the present case, there is nothing to suggest in her Honour’s reasons that her decision might have been affected by her impression about the reliability of the plaintiff, the defendant and Lindsay. Her Honour did not make any adverse credibility findings. Her Honour said at PJ1 [12]:

“Tzer, Katrina and Lindsay were each cross-examined. I did not form an adverse view of the credit of any of the witnesses and note that no submissions were advanced that adverse credit findings should be made.”

498. The primary judge did not express any other view about the impression her Honour had of the witnesses. Whatever impression a witness made, her Honour does not reveal that in her judgment.

499. It appears to me that there are no factual findings “which are likely to have been affected by impressions about the credibility and reliability of witnesses formed by the trial judge as a result of seeing and hearing them give their evidence”: Lee v Lee (2019) 266 CLR 129; [2019] HCA 28 at [55] (Bell, Gageler (as his Honour then was), Nettle and Edelman JJ, Kiefel CJ agreeing) (“Lee”). This is not a case where the appellate court must identify matters which are “glaringly improbable” or “contrary to compelling inferences”. This Court “is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge”: Warren v Coombes (1979) 142 CLR 531 at 551 (Gibbs ACJ, Jacobs and Murphy JJ); [1979] HCA 9, see also Fox at [25] (Gleeson CJ, Gummow and Kirby JJ); Lee at [55].

The primary judge’s reliance on Watson v Foxman

500. A matter of contention raised by Katrina was that the primary judge erroneously discounted the telephone conversation which Lindsay had with his father in 1999: see [312(a)] above. The contents of this conversation are recounted by Griffiths AJA at [221] above. Of particular importance to Katrina’s case was Lindsay’s recollection of this conversation with George which included George saying to him:

“I have some money set aside for the care of Oma. However, Oma is well cared for by the family. Now I am happy for the money to go to you as the eldest male.”

501. In her judgment at PJ1 [98] which is more fully quoted by Basten AJA at [37] above, her Honour said that:

“Having regard to the almost 20 years that have passed and the frailty of human memory, I place greater weight on the contemporaneous documents than on the terms of the conversation to which Lindsay deposes … which is relied on as contemporaneous evidence that suggests that the money Lindsay received in July 1999 was from the Burwood Trust funds held by George: Watson v Foxman (1995) 49 NSWLR 315 at 319.”

502. Whilst the quality and accuracy of oral recollections of actual conversations should be treated with care and caution given the frailty of human memory, this does not mean that the value and importance of that oral testimony may be lightly disregarded. In the present case, Lindsay’s recollection was not subject to cross-examination nor did the primary judge say anything about her impression of Lindsay’s memory of the conversation. He was not found to be unreliable, rather her Honour found Lindsay to be a credible witness.

503. Care must be taken to ensure that the weight given to contemporaneous documents is justified. Much will depend on the quality and context of the documentary evidence. Bell P (as the Chief Justice then was, and with whom Bathurst CJ and Leeming JA agreed) said in ET-China.com International Holdings Ltd v Cheung [2021] NSWCA 24; (2021) 388 ALR 128, at [28]:

“Documents and events have to be understood in their context, and evidence of context will often be furnished by witnesses in their oral evidence. Documents, moreover, will not always present a complete picture of events. Indeed it would be rare that they do. Nor do contemporaneous documents necessarily or invariably convey or record the background or context in which events took place. That background or context will be familiar to the actors at the time of those events but may not always emerge from documents.”

While his Honour said the above in the context of a commercial dispute, I see no reason why it would not be applicable to the present case.

504. As Basten AJA observes at [43] above, the contemporaneous documents were “sparse and the source of the funds was not identified.” These documents are not inconsistent with Lindsay’s testimony. I agree with Basten AJA at [44] above that reliance on Watson v Foxman should have been a matter of “very limited weight”.

The Primary judge’s approach was incorrect

505. In Basten AJA’s judgment, his Honour at [40]-[97] provides extensive reasons for the conclusion that the approach adopted by the primary judge was in material respects erroneous. With those reasons I agree save for the onus of proof.

506. I agree with Basten AJA’s finding at [105]. In my opinion, the defendant established on the balance of probabilities the defence that the payments made to Lindsay on 19 July 1999 effectively terminated the Trust by distribution.

505. I agree with the orders proposed by Basten AJA at [109].

Grounds 4 and 5

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

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Endnotes

Decision last updated: 28 February 2025