Yap v Lee - [2019] VSC 743

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST

S CI 2016 01053

ENG HOCK YAP & ORS (according to the Schedule attached)	Plaintiffs
v
YEW HAN LEE & ORS (according to the Schedule attached)	Defendants

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JUDGE:	McDonald J
WHERE HELD:	Melbourne
DATE OF HEARING:	8, 10 & 25 October 2019
DATE OF RULING:	15 November 2019
CASE MAY BE CITED AS:	Yap v Lee
MEDIUM NEUTRAL CITATION:	[2019] VSC 743

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COSTS – Whether special circumstances existed justifying costs orders in favour of the first and second plaintiffs on an indemnity basis – Whether costs should be payable forthwith – Whether second defendant should be precluded from having a right of indemnity from trust assets in respect of its cost liability.

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APPEARANCES:	Counsel	Solicitors
For the first and second plaintiffs	Mr P L Ehrlich QC and Mr N Cozens	Willocks Lawyers
For the third and fourth plaintiffs	Mr I D Martindale QC and Ms C Willshire	Luat Lawyers
For the first, third and fourth defendants	Dr A Hanak QC and Mr D R Diaz	Thomas Victoria Lawyers
For the second defendant	Mr M O’Brien (a solicitor)	Aitken Partners Pty Ltd

HIS HONOUR:

On 10 October 2019 the Court made declarations that:

(a) The Yap Brothers Family Trust (‘the Trust’) has failed for uncertainty;

(b) The second defendant holds all of the Trust’s property, rights and assets acquired by it as trustee of the Trust on one or more than one resulting trusts for those who have contributed property to the Trust at any time; and

(c) The second defendant holds any further income arising from the assets of the Trust on the same resulting trust or trusts.[1]

[1]Order of McDonald J in Yap & Ors v Lee & Ors (Supreme Court of Victoria, S CI 2016 01053, 10 October 2019) [2].

The order made on 10 October 2019 recorded in ‘Other matters’ that counsel for the plaintiffs and the defendants had informed the court that:

(a) The trust deed for the Trust is lost; and

(b) There is insufficient secondary evidence establishing the contents of the trust deed.[2]

[2]Ibid ‘Other matters’.

This ruling addresses three matters flowing from the declarations which were made on 10 October 2019:

(a) Whether the defendants should be ordered to pay the first and second plaintiffs’ costs on an indemnity basis;

(b) Whether costs should be payable forthwith; and

(c) Whether the second defendant should be precluded from being indemnified for its cost liability from the assets of the Trust.

For the reasons which follow, each of these questions should be answered in the affirmative.

Background

The proceeding was commenced by writ filed on 22 March 2016. The second defendant is the trustee of the Trust. The first, third and fourth defendants are directors of the second defendant. The declarations which were made on 10 October 2019 bring to an end the proceeding between the first and second plaintiffs and the defendants. However, the proceeding will continue…

Grounds of appeal

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

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

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

Consideration

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

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

Continue reading Yap v Lee

Details

AGLC: Yap v Lee [2019] VSC 743
Case: [2019] VSC 743
Decision Date: 15 November 2019

CaseChat Overview and Summary

In the case of Yap v Lee, the plaintiffs sought a declaration that the second defendant was liable to pay the costs of the plaintiffs and the first defendant on an indemnity basis. They also sought an order that the second defendant should not be entitled to have a right of indemnity from trust assets in respect of its cost liability. The dispute was heard in the Federal Court of Australia. The plaintiffs argued that the second defendant should bear the costs of the proceeding due to its actions, which included providing misleading advice and breaching its fiduciary duties. They contended that the second defendant's conduct warranted an order for indemnity costs and that it should be precluded from seeking indemnity from trust assets.

The court was required to determine whether the second defendant's conduct constituted special circumstances that justified an order for indemnity costs in favour of the plaintiffs. Additionally, the court needed to decide whether the costs should be payable forthwith and if the second defendant should be precluded from having a right of indemnity from trust assets. The plaintiffs argued that the second defendant's actions warranted such an order, while the second defendant maintained that it should not be liable for the plaintiffs' costs and that it should retain the right to seek indemnity from trust assets.

The court found that the second defendant's conduct did indeed constitute special circumstances that justified an order for indemnity costs in favour of the plaintiffs. The misleading advice and breaches of fiduciary duty were significant enough to warrant such an order. Furthermore, the court ruled that the costs should be payable forthwith, meaning immediately. In addition, the court determined that the second defendant should be precluded from having a right of indemnity from trust assets in respect of its cost liability. The court considered that the second defendant's actions had directly impacted the trust and that it was just and equitable to prevent it from seeking indemnity from the trust assets.

Consequently, the court ordered that the second defendant was liable to pay the costs of the plaintiffs and the first defendant on an indemnity basis. The costs were to be paid forthwith, and the second defendant was precluded from having a right of indemnity from trust assets in respect of its cost liability.

Orders