Ying Mui Pty Ltd v Hoh (No 3)

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT

S CI 2012 06147

YING MUI PTY LTD (ACN 009 992 449) AND OTHERS	First Plaintiff/First Defendant by Counterclaim
AMORE CORPORATION PTY LTD (ACN 097 964 175)	Second Plaintiff/Second Defendant by Counterclaim
KIANG PO HOH (ALSO KNOWN AS GEORGE HOH)	Third Plaintiff/Third Defendant by Counterclaim
HAN KEYET HOH	Fourth Plaintiff/Fourth Defendant by Counterclaim
and
SHARIKAT YING MUI SDN BHD	Fifth Defendant by Counterclaim
v
FRANK KIANG NGAN HOH	First Defendant/First Plaintiff by Counterclaim
POOI YOKE LIM HOH	Second Defendant/Second Plaintiff by Counterclaim
LYNN YOOK LIEN HOH	Third Defendant/Third Plaintiff by Counterclaim
IAN HAN LOK HOH	Fourth Defendant/Fourth Plaintiff by Counterclaim
LOKIT INVESTMENTS PTY LTD (ACN 006 855 741)	Fifth Defendant
LUMARKYE PTY LTD (ACN 131 575 785)	Sixth Defendant
FROSTHOLLOW PTY LTD (ACN 151 816 401)	Seventh Defendant/Sixth Defendant by Counterclaim
OLREY PTY LTD (ACN 140 494 319)	Eighth Defendant/Seventh Defendant by Counterclaim

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JUDGE:	VICKERY J
WHERE HELD:	MELBOURNE
DATES OF HEARING:	22–25, 29–31 AUGUST; 1, 5–7 SEPTEMBER; 24–28 OCTOBER 2016
DATE OF JUDGMENT:	8 FEBRUARY 2017
CASE MAY BE CITED AS:	YING MUI & ORS v FRANK KIANG NGAN HOH & ORS (No 3)
MEDIUM NEUTRAL CITATION:	[2017] VSC 29	1^st Revision: 30 May 2017

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CONTRACT — Principles for inferring a contract from conduct – Conduct relied upon not capable of giving rise to a contract — No intention to enter into any agreement enforceable at law as a binding contract.

CONSTRUCTIVE TRUST — Muschinski v Dodds (1985) 160 CLR 583 constructive trust considered — Common intention constructive trust considered — Onus of proof — Onus not discharged by party asserting constructive trust.

CORPORATIONS — Duties of directors to company — Content of conflict of interest rule and the profit rule — Application to a corporate trustee holding trust property — Evidentiary value of company financial statements — Corporations Act 2001 (Cth) ss 295, 296, 297, 1308 and 1309 — ASIC v Hellicar 247 CLR 345, 381 discussed and applied.

EQUITY — Fiduciaries — Director of corporate trustee arranged for sale of assets of the trust — Motivated in significant part by personal advantage to himself — No loss or damage sustained to trust — Whether breach of fiduciary duties — Content of fiduciary duties of conflict of interest and acting for personal interest considered — Liability of recipient company for knowing receipt of property in breach of trust — First limb of Barnes v Addy (1874) LR 9 Ch App 244, 251–252 considered and applied — Persons considered to be the ‘mind’ of the recipient company.

EVIDENCE — Evidentiary Value of the Financial Statements — Assessed in context of Corporations Act 2001 (Cth) — Requirements on companies and their directors in relation to the accuracy of financial reports and statements — ASIC v Hellicar 247 CLR 345, 381 applied.

PRACTICE AND PROCEDURE — Very large number of issues to be determined — Trial of first tranche questions determined in a sequential trial — Ying Mui & Ors v Frank Kiang Ngan Hoh & Ors (Ruling No 1) (‘Ruling No 1’) [2016] VSC 519 applied.

RESULTING TRUST — Whether resulting trust arose in favour of family company — Principles applicable to formation of a resulting trust when real estate purchased — Purchase money in part supplied, not as capital for the purchases, but as loan funds — No resulting trust found.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr M Osborne QC with Mr P Creighton-Selvay	Strongman & Crouch
For the First to Fifth Defendants	Mr P Bick QC with Mr C Truong	Arnold Bloch Leibler
For the Sixth Defendant	Mr M G R Gronow	Tribeca Legal
For the Seventh and Eighth Defendants	Mr C E Shaw	Norton Gledhill
For the Fifth Defendant by Counterclaim	Mr T J F McEvoy	Herbert Smith Freehills

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TABLE OF CONTENTS

Introduction......................................................................................................................................... 1

Sequential trial approach.................................................................................................................. 1

Approach to this proceeding............................................................................................................ 3

The Hoh family................................................................................................................................... 6

The seven children.............................................................................................................. 6
Family factions..................................................................................................................... 7

Origins of the Hoh wealth and SYM.............................................................................................. 7

The ‘Benevolent Purpose’................................................................................................................. 8

The ‘Red House’............................................................................................................................... 16

Corporate and trust entities............................................................................................................ 16

Ying Mui............................................................................................................................. 17
Amore.................................................................................................................................. 17
Lokit.. 17
Lumarkye............................................................................................................................ 17
Frosthollow......................................................................................................................... 17
Olrey. 18
FRG... 18
Trust entities....................................................................................................................... 18
Other entities...................................................................................................................... 20

Disputes with Richard and Derek................................................................................................ 21

Death of Robert and Artimax litigation....................................................................................... 22

Summary of Plaintiffs’ case in the proceeding........................................................................... 23

Summary of First to Fifth Defendants’ case in the proceeding............................................... 25

Summary of Sixth Defendant’s case in the proceeding............................................................ 26

Summary of Seventh Defendant’s case in the proceeding...................................................... 28

Summary of Eighth Defendant’s case in the proceeding......................................................... 29

First Tranche Question 1................................................................................................................. 30

Pleaded case of the Plaintiffs........................................................................................... 30
First to Fifth Defendants’ submissions on the significance of the purported JI Agreement 31
The Importance of the JI Agreement to determination of the proceeding................ 33
Whether the JI Agreement existed and, if so, its terms................................................ 34
Legal Principles — Contract inferred from conduct.................................................... 34
Entry into the purported JI Agreement.......................................................................... 36
Death of Robert.................................................................................................................. 38
Investment in Australia (October 2001 – February 2002)............................................ 38
Change to structure of Ying Mui..................................................................................... 39
Further investment in Australia (August 2002 – early 2010)...................................... 40
Plaintiffs’ case evidencing the JI Agreement................................................................. 41
Conclusion as to the existence of the JI Agreement...................................................... 42

Findings as to First Tranche Question 1...................................................................................... 43

First Tranche Question 2................................................................................................................. 44

Whether Australian investments undertaken for the benefit of the Hoh family company, SYM? 44

Sources and character of monies for investment in Australia................................................. 52

Seed money from the Red House................................................................................... 53
Bank borrowings................................................................................................................ 53
Funds remitted from overseas — whether loans or capital........................................ 54
Financial statements.......................................................................................................... 55
Evidentiary value of the financial statements............................................................... 56
Deeds of postponement.................................................................................................... 58
Minute of meeting of 9 April 2003.................................................................................. 60
Letter of 23 July 1010......................................................................................................... 60
Conduct in arranging for monies from Malaysia......................................................... 61
Sources of funds from Malaysia...................................................................................... 62
Tracing of Malaysian funds into the Australian investment companies.................. 68
Evidence of Mr Hill as to source of funds derived from Malaysia........................... 70
Evidence of Mr Tam as to source of funds derived from Malaysia.......................... 71
Evidence of Mr Keun as to source of funds derived from Malaysia......................... 73
Conclusion as to whether Australian investments paid for by capital advanced by SYM or by loan funds............................................................................................................... 74
Conclusion as to investment for and on behalf of SYM............................................... 74
Whether the Australian investments undertaken pursuant to the Benevolent Purpose 74

Should any and what assets be held wholly or partly on a resulting trust for SYM?........ 77

Legal principles — resulting trust.................................................................................. 77
Factual findings — resulting trust.................................................................................. 78

Should any and what assets be held wholly or partly on a constructive trust for SYM?... 79

Legal principles — constructive trust............................................................................ 79
Factual findings — constructive trust........................................................................... 80

Findings as to First Tranche Questions 2..................................................................................... 81

First Tranche Questions 3............................................................................................................... 81

Summary of Plaintiffs’ case.............................................................................................. 82
Summary of Lumarkye’s case.......................................................................................... 83

Fiduciary duty — legal principles................................................................................................. 85

Trust property held or controlled subject to a fiduciary obligation......................... 85
Who owed the alleged fiduciary duties?....................................................................... 85
To whom the alleged duties owed................................................................................. 87
Content of the duties......................................................................................................... 90
No loss or damage necessary for breach of fiduciary duty........................................ 92
Approach to determination of conflict of interest........................................................ 95
Steps taken to avoid a conflict......................................................................................... 97

Barnes v Addy – legal principles................................................................................................... 97

Recipient knowledge — Barnes v Addy...................................................................................... 99

Knowledge of a corporation.......................................................................................... 100
Required knowledge...................................................................................................... 101

Breach of fiduciary duty – factual analysis............................................................................... 104

Background conduct to sales of Sydenham Property and Lot 202.......................... 104

Whether Sydenham Property and Lot 202 transferred to Lumarkye in breach of fiduciary duty? 116

Submissions of Sixth Defendant.................................................................................... 117
Submissions of First to Fourth Defendants................................................................. 118
Conclusions as to breach of fiduciary duty on the part of Frank............................. 119
Conclusions as to breach of fiduciary duty on the part of Ian.................................. 120
The Lokit payments........................................................................................................ 121

Whether Lumarkye had requisite knowledge.......................................................................... 124

Plaintiffs’ contentions...................................................................................................... 124
Submissions of Lumarkye.............................................................................................. 124
Whether Lynn the ‘controlling mind’ of Lumarkye in relation to the sale of the two properties................................................................................................................................ 125
Lynn’s qualifications and experience........................................................................... 126
Lynn’s actual knowledge of, and participation in, the sale transactions................ 127
Dominic’s deference to Lynn......................................................................................... 131
Vgene’s delegation to Lynn........................................................................................... 134
Conclusion as to whether Lynn the ‘controlling mind’ of Lumarkye in the two sale transactions................................................................................................................................ 135
Conclusion as to knowledge of Ian............................................................................... 136

Findings as to First Tranche Questions 3................................................................................... 137

HIS HONOUR:

Introduction

This proceeding arises from the management of investments in Australia undertaken by the Hoh family, or parts of the Hoh family. The investments were property investments made in Victoria, Australia, over a period of some nine years, between 2001 and 2010.

Questions as to the beneficial ownership of the property investments is a principal subject matter of the litigation.

The proceeding, for the most part, concerns the creation and management of, and control over, two Australian family discretionary trusts established by elements of the Hoh family — the Ying Mui Trust and the Amore Trust. Sharikat Ying Mui Sendirian Berhad (‘SYM’), the Fifth Defendant to a counterclaim in the proceeding, is a central participant. SYM is a private limited company incorporated in Malaysia in which various members of the Hoh family are shareholders. It has been the primary vehicle through which the broader Hoh family business has operated.

Sequential trial approach

The trial has been conducted pursuant to a ‘sequential trial’ model described and ordered in Ying Mui & Ors v Frank Kiang Ngan Hoh & Ors (Ruling No 1) (‘Ruling No 1’).[1]
[1]Ying Mui & Ors v Frank Kiang Ngan Hoh & Ors (Ruling No 1) [2016] VSC 519.

The relevant pleadings are as follows:

(a)The Plaintiffs’ second further amended statement of claim dated 23 March 2016 (statement of claim);
(b)The First to Fifth Defendants’ defence and counterclaim dated 1 April 2016 (defence and counterclaim); and
(c)The Plaintiffs’ reply and defence to counterclaim dated 25 January 2016 (reply and defence to counterclaim).

Further, the Plaintiffs provided two sets of further and better particulars on 7 August 2015 and on 26 August 2015.

The statement of claim contains 464 paragraphs, 56 prayers for relief, together with 8 schedules of particulars. It consolidates the allegations in a first proceeding with those in a second proceeding.

As noted by the Court in relation to case management in Ruling No 1:[2]

This [consolidated] proceeding has extraordinary breadth and has generated a very large number of issues to be determined. Factually, the issues span more than fifteen years of complex commercial activity, and involve numerous actors and commercial entities. Many documents have been generated by these activities for the Court to consider, contained in the Court Books and Supplementary Court Books. Further, a considerable number of causes of action have been pleaded which call for close analysis and determination. …
…
Whilst it is appreciated that the approach reflected in these management orders is somewhat novel, and involves a novel use of Order 47.04, nevertheless the extraordinary breadth and number of issues generated by this case, which span more than fifteen years of complex commercial activity, and involve numerous actors and commercial entities and many documents to consider, all call for special management of the trial in order for the overarching purpose of the CPA [Civil Procedure Act 2010 (Vic)] to be achieved as best as it is possible to achieve it.

[2] Ruling No 1 [2016] VSC 519 [42], [57].

The Court, having identified the fundamental issues in the proceeding, made orders during the trial in respect of the following questions (referred to forthwith as the ‘First Tranche Questions’):

(1)In or about April 2001, or at any other and what time, was the alleged Joint Investment Agreement (the ‘JI Agreement’) formed between George, Frank and Robert Hoh to undertake property investment in Victoria through the vehicle of Ying Mui Pty Ltd, and if so:
(a) what were the terms of the JI Agreement?
(b)was property investment in Victoria subsequently undertaken by George, Frank and Robert Hoh pursuant to the JI Agreement?

(2)If not, in and after April 2001, was any or all property investment in Victoria undertaken by the Hoh family:

(a)       for and on behalf of the family company, SYM; and/or
(b)       pursuant the alleged benevolent purpose; and/or
(c)       paid for by capital advanced by SYM, and not by loan funds;
(d)and if so, should any and what assets be held wholly or partly on a resulting and/or a constructive trust for SYM?

(3)Did Lumarkye, in receiving the Sydenham Property and Lot 202 from Ying Mui, knowingly receive trust property? If so, is Lumarkye a constructive trustee with respect to the Sydenham Property and Lot 202 or is required to pay compensation to Ying Mui?

These are the reasons for the determination of the first tranche of questions in the trial.

The First Tranche Questions were ordered to ensure the efficient and timely resolution of issues in the proceeding consistent with the Civil Procedure Act 2010 (Vic). The Court accepted that answers to those questions would not resolve the entire proceeding but were ’pivotal to its ultimate disposition and the determination of the real issues in dispute in the proceeding overall’.[3]
[3]Ibid [53].

The orders also provided that issues of quantum be determined separately from liability. That meant that a significant body of valuation and quantum evidence was not tendered during the trial.

Approach to this proceeding

Having regard to the lengthy period which has elapsed since the occurrence of so many of the events in question, the only safe course is to place primary emphasis on the objective factual surrounding material and the inherent commercial probabilities, together with the documentation tendered in evidence. In this context, the subjective interpretation the parties placed on the meaning, significance and effect of the objective evidence, must be approached with caution.

The conclusion described in these reasons for judgment in respect of this phase of the trial has been considered accepting counsel's final addresses as identifying the issues and the central relevant materials. In arriving at these reasons and the solutions to the questions which have arisen, I have read and considered, subsequent to their making, all that counsel have said in final addresses, both oral and written, and in their opening addresses, as well as the evidence of the witnesses. However, in order to make these reasons a workable document, not every element in the considerable array of material considered will be included or expressly referred to.

The case has invited a consideration of a body of circumstantial evidence in addition to direct evidence of events and transactions. In this regard, reference is made to the decision of the Court of Appeal in Nolan v Nolan where Chernov and Eames JJA said as to the accepted approach:[4]
[4][2004] VSCA 109 [119]–[121] (citations omitted).

The approach that is to be adopted in determining whether the ultimate fact, of which there is no direct evidence, can be inferred from other established facts, has been examined in a number of recent cases which re-state principles as to which there was little controversy before us. The principal debate before us centred on whether her Honour's analysis of the evidence was in accordance with the accepted approach. Thus, for example, in Chamberlain v. The Queen (No.2) Gibbs CJ and Mason J said:
"In a case depending on circumstantial evidence, the jury should not reject one circumstance because, considered alone, no inference of guilt can be drawn from it" and "that the jury should decide whether they accept the evidence of a particular fact, not by considering the evidence directly relating to that fact in isolation, but in light of the whole evidence, and that they can draw an inference of guilt from a combination of facts, none of which viewed alone would support that inference."

And in Shepherd v The Queen Dawson J, who delivered the principal judgment, after referring to Chamberlain (No. 2) said:
"Circumstantial evidence is evidence of a basic fact or facts from which the jury is asked to infer a further fact or facts. It is traditionally contrasted with direct or testimonial evidence, which is the evidence of a person who witnessed the event sought to be proved. The inference which the jury may actually be asked to make in a case turning upon circumstantial evidence may simply be that of the guilt of the accused. However, in most, if not all, cases, that ultimate inference must be drawn from some intermediate factual conclusion, whether identified expressly or not. Proof of an intermediate fact will depend upon the evidence, usually a body of individual items of evidence, and it may itself be a matter of inference. More than one intermediate fact may be identifiable; indeed the number will depend to some extent upon how minutely the elements of the crime in question are dissected, bearing in mind that the ultimate burden which lies upon the prosecution is the proof of those elements. For example, with most crimes it is a necessary fact that the accused was present when the crime was committed. But it may be possible for a jury to conclude that the accused was guilty as a matter of inference beyond reasonable doubt from evidence of opportunity, capacity and motive without expressly identifying the intermediate fact that the accused was present when the crime was committed."

A little later, his Honour said that "evidence may have a cumulative effect" and that it is incumbent upon the arbiter of fact "to consider all the facts together at the conclusion of the case".
Although the observations made by the High Court in Chamberlain (No. 2) and Shepherd were expressed in the context of criminal proceedings, the principles also have application in civil cases. Indeed, Tadgell JA explained in Longmuir that, both in the civil and criminal law context, the evidence in question must be evaluated as a whole and that the object of the exercise in a case such as the present, where direct proof of the disposition contended for is not available, is to ascertain "whether the evidence paints a picture to be derived from an accumulation of detail. The overall effect of the detailed picture can sometimes be best appreciated by standing back and viewing it from a distance, making an informed, considered, qualitative appreciation of the whole. The overall effect of the detail is not necessarily the same as the sum total of the individual details." Thus, it seems plain enough that, when a court is asked to infer a fact from various items of indirect evidence, it must consider the combined or cumulative effect of the evidence. This Court in Longmuir concluded that the trial judge had erred because he considered each item of circumstantial evidence in isolation from the other material and sought to determine whether the ultimate fact could be inferred from each such item of evidence. In that case, the respondent's house was damaged in a fire that was deliberately lit and there was a large body of circumstantial evidence which pointed to the respondent having set the property alight. The trial judge found for the respondent notwithstanding the evidence that implicated him in the lighting of the fire, his Honour reasoning that there was a possibility that someone else had set fire to the respondent's residence. In upholding the appeal on the basis that the judge had erred in the manner in which he assessed the evidence, the President observed:
"[H]is Honour deprived himself of the opportunity of assessing the full impact of [the] evidentiary facts by engaging in a false process of reasoning. Rather than considering what inferences flowed from the combination of evidentiary facts which were not in contest, the learned judge appears to have treated each of the individual evidentiary facts as if it were the ultimate factum probandum; in the sense that unless, when analysed, it was capable by itself of supporting the inference that the respondent was responsible for lighting the fire, it should be discarded without regard to the support which such fact might have received from the other facts."

Reference should also be made to the observation of Buchanan JA (with whom Phillips CJ and Charles JA agreed) in R v Huisman & Shiells that "the distinction between the evidence founding a chain of sequential reasoning and an accumulation of circumstances from which a fact may be inferred was explained metaphorically in Wigmore on Evidence, vol. 9 para. 2487, as the distinction between links in a chain and strands in a cable. See Shepherd v R" and in R v Ng the Court of Appeal held: "It is the very essence of a circumstantial case that the items of evidence should not be examined in isolation, but must be considered in their totality."

Consistently with the above statements of principle, I have approached the task of assessing the items of evidence and arriving at the conclusions expressed in these reasons by considering the evidence in its totality.

The Hoh family

The structure of the Hoh family is outlined here.[5]
[5]See also Ruling No 1 [2016] VSC 519 [2]–[6].

The Hoh Family was headed by Hoh Ying Chye (‘Hoh Senior’) who was married to Madam Yow Mui (‘Madam Yow’). They are both now deceased. They had seven children.

The seven children

The seven children of Hoh Senior and Madam Yow were:

(1) Robert Hoh Kiang Chan (‘Robert’), who passed away on 24 December 2007;
(2) Linda Hoh Yuet Ngo (‘Linda’), who passed away in 1959;
(3)Maureen Yuet Ming Oborn (nee Hoh) (‘Maureen’, also nicknamed ‘Binky’);

(4)       Derek Hoh Kiang Howe (‘Derek’);
(5)       George Hoh Kiang Po (‘George’) (the ‘Third Plaintiff’);
(6)       Frank Hoh Kiang Ngan (‘Frank’) (the ‘First Defendant’); and
(7)       Richard Hoh Kiang Seong (‘Richard’).

Frank married Pooi Yoke Lim Hoh (‘Pooi’, also nicknamed ‘Kit’), the Second Defendant. They had two children, Lynn Yook Lien Hon (‘Lynn’) and Ian Han Lok Hoh (‘Ian’), whom are the Third and Fourth Defendants respectively. In late 1987, Frank, his wife and their children migrated to Australia.

Family factions

Disputes have divided the Hoh family into three factions.

In the period spanning from the late 1990s to the early 2000s, Derek and Richard split from the Hoh family following a series of commercial disputes which developed. These matters are dealt with in more detail below.

The Hoh family has since divided into two further factions.

On the one side is the faction led by George (the ‘George Faction’), supported by Maureen and his nephew Han Kayet Hoh (‘Han’) (the Fourth Plaintiff), who is the son of Robert. Han stepped into the shoes of Robert upon his death.

On the other side is the faction led by Frank (the ‘Frank Faction’), supported by his wife Pooi and their children, Lynn and Ian, as well as Dominic Weng Khong Low (‘Dominic’), who is Lynn’s husband.

Thus we have in essence two opposing factions represented as follows:

George Frank

Maureen (George and Frank’s sister) Pooi (Frank’s wife)

Han (Robert’s son and George’s nephew) Lynn (Frank’s daughter)

Dominic (Lynn’s husband)

Ian (Frank’s son)

Origins of the Hoh wealth and SYM

Hoh Senior was a successful businessman in Malaysia. He made various investments in Malaysia, primarily through SYM, a company which he founded. The business interests of SYM included acting as a financier to four pawnbroking businesses, investments in shares in those pawnbroking businesses, and property investments in commercial, industrial and retail properties throughout Malaysia, combined with trading in gold and jewellery, and general trading.

SYM is a private limited company incorporated in Malaysia on 26 September 1968. The original subscribers of SYM’s shares were Hoh Senior and Madam Yow, each holding one share.

SYM owned shares in the following pawnbroking companies incorporated and operating in Malaysia (collectively the ‘Pawnshops’):

(1) Choong Teck Pawnshop Sdn Bhd (incorporated on 8 May 1998);
(2) Cheong Fatt Pawnshop Sdn Bhd (incorporated on 9 May 1998);
(3)Choong Thye Pawnshop Sdn Bhd (incorporated on 28 January 2004); and

(4) Choong Yee Pawnshop Sdn Bhd (incorporated on 11 June 1997).

The commercial activities of SYM generated wealth and prosperity for the Hoh family.

Hoh Senior gave each of his children shares in SYM.

In 1986, George took over the management of SYM, as Hoh Senior was 84 years old and had suffered a series of strokes. Hoh Senior passed away two years later.

The ‘Benevolent Purpose’

The First to Fifth Defendants sought to establish the existence of a benevolent purpose put in place by Hoh Senior for the benefit of present and future generations of the broader Hoh family (the ‘Benevolent Purpose’).

The First to Fifth Defendants contended that the objective evidence establishes that the all property investment in Australia in and after April 2001 was undertaken by the Hoh family pursuant to this Benevolent Purpose. They pointed to a large body of uncontroverted evidence concerning Hoh Senior’s legacy and the role of SYM.

There was no dispute that Hoh Senior worked hard, accumulated wealth during his lifetime and had a clearly expressed wish in relation to SYM and its role in helping current and future descendants within the Hoh family.

Frank’s evidence on this issue, which was unchallenged, was as follows:

My late father, Hoh Ying Chye (“my father”), and my late mother, Yow Mui (“my mother”), had seven children … [including] Robert, born in 1930, who passed away on 24 December 2007, … whose only son is Hoh Han Keyet … Maureen, born in 1933, Derek Hoh Kiang Howe (“Derek”), born in 1935 … George, born in 1943 … Frank … born in 1944; and Richard Hoh Kiang Seong (“Richard”), born in 1946 …
My father was a very determined and very strict man. He was very strong willed. …
My father had an English education and spoke English. When I was young my father was a maths teacher. He was a teacher for about 35 years before his retirement from teaching when I was in my teens. Even while he was a teacher my father had other interests, which he always took very seriously. When he did something, he (to my observation) did it well. One of those interests was to collect stamps which he thought were of value. He did it as an investment as well as a hobby and established the Malaysian Stamp Company. As children we would help by cutting out the stamps from envelopes and washing them. From time to time, stamp collectors (including some from the UK) came to visit him in Malaysia. Stamp trading was a good source of income for my father, which income he used to educate his children in the UK and, to a lesser extent, in Australia. My father often said he had a strong belief in education. Robert, Maureen and Derek were educated in the UK, while Richard and I were educated in Australia. George initially went to the UK to study but did not graduate and later studied computer science in the ANU. I assisted him to settle in Australia.
For as long as I can remember my father was in the pawnshop business. He was involved, together with his cousins, in establishing the family run pawnshops in 1947.
My mother, a Malaysian-Chinese, was a devoted housewife. She came from a large family of 11 siblings. Family and family values were to my observation very important to my mother and my father. This was instilled in me from a very young age. My father was the son of a Chinese immigrant. Living in a foreign country, where all we had in terms of a support was family, my parents were very supportive of their wider family. For example, my father’s brother was shot and killed during the Japanese occupation of what was then Malaya. His brother had three boys and two girls. My father took in and raised three of my cousins, Fook Yoong, Foong Yoong, and for a short period, Kiang Ming.
The broader Hoh family business

The broader Hoh family business was and is primarily run through the company called SYM. SYM is a Malaysian company founded and incorporated by my father on 26 September 1968. My father gave his children shares in SYM. SYM’s ownership structure was and is as follows:
(a)In or around 1979 my mother and the children (excluding Linda, who had already passed away) each held 250,000 shares in SYM. Han, being the first and eldest grandson, held 100,000 shares, and the rest of my father’s grandchildren each held 50,000 shares. To the best of my knowledge, my father retained no shares in SYM in his own name.
(b)In 1980 Maureen was required by my father to give up 150,000 of her 250,000 SYM shares following a dispute with my father. Those shares were transferred to my mother, Richard and me, who each received 50,000 shares.
I subsequently transferred 50,000 shares to my son, Ian, while my mother and Richard each transferred 50,000 shares to his two children, Leonard and Samantha.
(c)Thereafter, broadly speaking, the shares in SYM have been roughly equally divided five ways between the respective families of my father’s five, with Maureen holding a smaller number of shares.

My father’s requirement was that only the men in the family could be directors of SYM, and that they would control the company. When I finished my studies in Australia and returned to Malaysia I spoke with my father about the SYM ownership structure. My father told me that he intended that the future generations of the family would be provided for, regardless of their gender, but that his sons should have control of SYM. I considered that the same intention could be achieved under a fairer and more tax efficient structure. After discussing this with my father he changed SYM’s share structure, to make two classes of shares, being ordinary shares and “non-director” shares.[6] The male family member had ordinary shares that made them eligible to be directors but, other than my mother, the female family members’ shares did not entire the shareholder to be a director of SYM. The Hoh family companies also became entitled to hold “non-director” shares. All shares carried the same voting rights.
[6]This occurred in 1986 through alterations to SYM’s Articles of Association.
…
The pawnshop business

Shortly after the end of World War II, my father started the pawnbroking business in a family style “partnership” with two of his cousins, Ho Patt (born in 1909) and Hoh Chiap (born in 1911) (collectively, the “Pawnshop Owners”). There was no formal documentation to reflect the arrangements between them.
In around 1947, the Pawnshop Owners established the Choong Teck Pawnshop and Choong Fatt Pawnshop. …
My father often referred to the Pawnshops as a “poor person’s bank” because they operated in effect as an informal bank, offering loans to the public on the security of chattels where the banks were not interested in lending.
In addition to the profits generated by the Pawnshops’ business, which the Pawnshop Owners (i.e. our partners) divided among themselves, the Pawnshop Owners also profited from interest income from funds “deposited” with the Pawnshops in the following manner:
(a)From time to time, when the Pawnshops required working capital, the Pawnshop Owners who had sufficient funds at the time would advance loans (which were often referred to as “deposits”, likened to deposits with a bank), to the Pawnshops.
(b)the Pawnshop Owners did not necessarily advance loans to the Pawnshops in equal shares, but rather, whoever had sufficient “spare” funds at the time would advance the loans required.
(c)At various times, the Pawnshops also took deposits from third parties (i.e. people other than the Pawnshop Owners). These people were primarily relatives and friends of the Pawnshop Owners). However, these third parties received a lower interest rate on their loans than the Pawnshop Owners and their immediate families did on their loans.

The Pawnshop Owners were assisted in the day-to-day operations of the Pawnshops by a distant relative, Ho Tee Chai who was an employee and earned a wage. He was not entitled to preferential interest rates on funds deposited with the Pawnshops.

In 1968 my father incorporated SYM and transferred his interest in the Pawnshops into SYM.
Between 1969 and the early 1970s the other Pawnshop Owners cease to be involved in the Pawnshop business and received full repayment of their loans (with interest) to the Pawnshops. Thereafter, my father become the sole owner of the Pawnshops.
At around that time Ho Tee Chai reached an agreement with my father and became a part-owner of the Choong Teck and Choong Fatt Pawnshops. Pursuant to the agreement Ho Tee Chai became entitled to 3% of the Pawnshops’ profits.
Over the years Ho Tee Chai and his family have gradually increased their shareholdings in the Pawnshops.
Management of SYM prior to my father’s death in 1988

Since the 1970s, at my father’s direction, all six of his surviving children were appointed as directors of SYM. Maureen later resigned as a director in 1980 following a dispute with my father. Although my father was not a formal director of SYM, he remained the directing mind of SYM and solely in charge of running its business, with the assistance of SYM’s staff.
My understanding is that my father set up SYM as his “living will”. He often said to me that SYM was intended to be his legacy for future generations of the broader Hoh family (the “Benevolent Purpose”). I discuss the Benevolent Purpose further below, but in short, the income generated from SYM’s business and investments was to be used to provide financial assistance and support to members of the broader Hoh family.
My father did not make any particular effort to groom any of his children to take over SYM’s business. My father saw to it that we received a university education overseas. After that, he said he expected that we pursue own careers, which we did. None of us were therefore heavily involved in SYM’s business when my father was alive and well, even though his sons were directors in name. We would, however, occasionally provide some assistance to SYM’s business on a temporary basis upon my father’s request.
In 1986, when my father was 84 years old and had suffered a series of strokes, George began to increase his involvement in SYM. At or around this time I was preparing to migrate with my family to Australia and did so in December 1987. At the time only three of the sons (being Robert, Derek and George) were living in Malaysia and, of the three, George was the only one who did not have children).
…
My parents always placed great importance on family gatherings. While my parents were alive and I was living in Malaysia with my family, we would have regular family dinners on Fridays. My family would also come together for important occasions like birthdays and festivals … My father and mother, and my siblings and I, expected that all family members would attend these events.
As a young man, I wanted to get into business like my father. My father and I would talk about business generally and also about the family business, in particular. Similarly, family lunches and dinners invariably involved talking about the family business. I really enjoyed it and found business fascinating. Through these discussions, and family life generally, I came to understand the family business and my father’s desires for it.
Before my father’s death, whenever my siblings or I needed money, we asked father for a loan. …
As mentioned above, my understanding is that my father set up SYM as his “living will” and that SYM was intended to be his legacy for future generations of the broader Hoh family. When he died, he had very little to give in his will. Instead, he had placed the substantial majority of his assets and wealth into SYM and prepared a document entitled “Final instructions and Supplement to My Will”. I understand that, in this way, my father’s will was effectively dealt with through SYM and the shares issued to his children, informed by his written wishes. …
After my father’s passing Robert and my mother said on many occasions (often at family meetings) that if a family member was in need financially, whether it be the result of a health problem, disability or some other cause, the family business would be there to support them.

George conceded much of this evidence in his cross-examination.

Lynn and Kit provided similar evidence of Hoh Senior’s legacy. Lynn recalls the following in relation to SYM and her grandfather:

At the family dinners the members of the extended Hoh family would regularly talk about the family business, which was operated through [SYM]. With the exception of my grandmother, the business was the responsibility of the men in the family. While Frank would regularly talk at home to my mother and, later as I got older, to me about the family business, as a woman, I understood that I would never be in a position to “run the company”. I later learned that as a female shareholder, I was not eligible to be a director of SYM …
As a child I was told by my grandfather and father that the extended Hoh family would be there for me if I ever needed support, financial or otherwise. My father always told me that, in times of need, I could count on my family.
…
Through my conversations with my grandfather Ying Chye and my father Frank and interactions with Hoh family members when I was young I was told by them that the extended Hoh family would support its members. The concept of filial duty is deeply rooted in our family culture. As I got older and began to learn about the extended Hoh family business, I always knew that I could approach the board of SYM (made up of Frank and my uncles) and ask for money, if I needed it. While I never had a reason to ask for money, I always knew that it was there as a safety net available to the whole family.

Hoh Senior’s wishes were reflected in the provisions of SYM’s Memorandum and Articles of Association. For example, the membership provisions of SYM’s Articles of Associate state:

3.The membership of the Company shall be restricted to the natural male descendants of the members with the exception of Madam Yow Mui and private limited companies controlled by the members of their natural male descendants. For the purpose of this Article an adopted son, save as hereinafter provided, and a step-son whether by a former or a polygamous marriage, shall not be regarded as a natural descendant provided that the adopted son is the natural son of a brother or a male cousin of a nature descent of patrilineal lineage. An unmarried daughter of a member may be accepted as a member of the Company but her shares shall not be transferred except to members of the Company. At her death, her shares must be transferred to members of the Company within six months. …

Further, the final instructions and supplement to Hoh Senior’s will dated 1 September 1981 are of note. Relevantly, they provide:

FINAL INSTRUCTIONS AND SUPPLEMENT TO MY WILL
These are my last instructions to my children, grand-children and their descendants and it is my sincere wish that they will be faithfully carried out.
…
According to the Articles of Association of our family Company, under Clause No. 3 (amended on 1-1-1981) the membership shall be restricted to the natural male descendants, but any unmarried daughter of a member may be accepted and may hold shares as long as she lives. However if she married, she can still hold her shares and collect any dividends due to her. At her death, her shares must be transferred within six months as a present or gift to any one or more of the members of the Company as she wishes, or sell at a price not less than the par value of the shares.
…
The Assets of the Company consist of Immovable Properties including the three built-up blocks of Buildings – two at Pudu and one at Jalan Ipoh known as Bangunan Ying Mui … Two blocks of three-storeyed buildings, each containing twelve flats will soon be erected on this land. All my grand-children and daughters-in-law will each be given a life-time lease on one flat the nominal rent of one ringgit a year and pay the annual Government charges of Assessment and Quit rent. These five lots are not to be sold under any circumstance. Beside these lots, there other immovable properties shares and cash deposits in Pawnshops.
The Penthouse in Jalan Badak at Pudu is to be offered for occupation free of rent, assessment, water and electricity supply to my eldest son. If he does not accept, then it is to be offered to the other sons in order of seniority and thereafter to my grandsons with the following conditions:-
…
(d)On Chinese New Year Eve he will prepare at the Company’s expense a Reunion Dinner to all members of the family who are all expected to attend. Twice a year on Chinese New Year and “Ching Ming” all members must meet in the Penthouse at an appointed time in the morning and gather at the Ancestral Memorial to pay respect to our Ancestors and ask for their blessings and guidance.

…
After deducting all expenses, income tax etc. the net income of each year will be distributed as follows: A dividend of 10% is to be paid to all the shareholders according to the number of shares held by each person. If your mother survives me, each shareholder will contribute to her 5% or one-half of the dividend for her own use. A sum equivalent to about 1% of the total gross dividend will be paid to each of the 5 Directors as Directors’ fees (Each son will appoint a Director). The final balance will be retained by the Company as Reserve Fund for future developments and purchase of shares of other companies. If the Company is not in debt a suitable sum may be kept aside to be used as charitable donations as the Company will think fit. …
A sum of money for each of my grand-children has been paid into the pawnshops as fixed deposits bearing interest at 1.2% per month compounded monthly. These deposits are to be provide her or University Education to the grand-children who may withdraw the money when he or she is admitted into a University and needs the money. If the child is unable to obtain admission into a University or does not require the money, he or she may withdraw the cash when he or she attains the age of not less than twenty-five (25) years. If the pawnshops are not operating the cash will be withdrawn and deposited in the Banks in the name of the Company who will hold the cash and accounts in trust for the children.
It is my deepest and dearest wish that my children and descendants will continue to love and help each other when I am gone. Take heed of the old saying “Harmony within the Family promotes prosperity”. The way to achieve such harmony as taught by ancient sages is to cultivate the virtues of filial piety and brotherly love.
It has been our good fortune to be born and bred in this Country which has a great future. This is our home and country and we must be loyal and patriotic and defend it as best we can when necessity requires us to do so. …
The ethical teachings of Ancient China are well worth mentioning here and should be passed on to future generations. Our ancient sage said that one must first of all cultivate himself by character building and then regulate his family. …

George was familiar with those instructions and it was his, Frank’s and Robert’s intention to carry out Hoh Senior’s instructions, at least until the departure of Derek and Richard from the family enterprise in relation to the Australian investments. George gave evidence that he understood that his father wished to leave SYM for future generations and that it was his intention to give effect to those wishes (a view he shared with Frank and Robert). However, the situation changed following the change of position adopted by Derek and Richard. The following exchange between counsel and George is referred to:

You’re [sic] understanding of your father’s wishes is what I’m asking you about. You understood he wished to leave SYM for future generations didn’t you? --- Yes
You and your brothers, Frank and Robert, all agreed that that should be the case didn’t you? --- Yes. It was Derek and Richard who appeared not to be keen on that idea? --- Yes.

For the subsequent ten years following Hoh Senior’s passing in March 1988, the directors of SYM remained unchanged, with all six branches of the Hoh family holding shares, and each receiving dividends in accordance with their shareholding.

I accept that Hoh Senior intended to set up SYM as his ‘living will’ and legacy. In short, Hoh Senior intended that the income generated from SYM’s business and investments was to be used to provide financial assistance and support to members of the broader Hoh family.

However, since Hoh Senior passed away, and following the split of Derek and Richard from the Hoh family after a series of commercial disputes which occurred during the period between late 1990s and early 2000s, I am not satisfied that the Benevolent Purpose of Hoh Senior was able to be put into effect as he had intended, or at all.

To the extent that witnesses called on behalf of the Frank Faction made reference to the Benevolent Purpose continuing as a purpose governing the investments made in Australia, I find this evidence to be a self-serving personal interpretation of the facts. Although strongly conveyed in the witness box, the beliefs of these witnesses are not founded on any legal or factual basis which can safely be relied upon as an expression of an ongoing common intention of the Frank Faction on the one hand and the George Faction on the other, which served to regulate the property investments made in Australia.

The ‘Red House’

In 1986, Hoh Senior and his wife Madam Yow purchased a property in Longueville, Sydney. This property was known as the ‘Red House’.

The Red House was purchased by a company, Vielass Pty Ltd, which later changed its name to Ying Mui Pty Ltd (‘Ying Mui’), the First Plaintiff.

The initial directors of Ying Mui were Madam Yow and Richard, together with Richard’s wife, Chor Jee Tan.

Richard and his wife had, by this time, moved to Australia.

Corporate and trust entities

Tables A–N annexed to these reasons set out the structure, including shareholdings and directorships, of each of the relevant corporate actors in this proceeding.

Tables O-S additionally set out the structure of each of the relevant trusts, including the trustees and beneficiaries, of each of the relevant trusts in this proceeding.

Below is a brief description of the principal entities in the proceeding, in addition to SYM.

Ying Mui

The shareholders of Ying Mui are presently George and Han. George is also a director of Ying Mui.

Ying Mui was originally incorporated to purchase and hold a property in the Sydney suburb of Longueville called the ‘Red House’. The Red House was sold in the period from 1997 to 1998.

From about 6 July 2001 until 18 November 2011 Ying Mui carried on the business of trustee, initially as trustee for the Hoh Family Trust, which after 16 February 2002, became the Ying Mui Trust.

Amore

Amore Corporation Pty Ltd (‘Amore’) is the Second Plaintiff.

Lokit

Lokit Investments Pty Ltd (‘Lokit’) is the Fifth Defendant. Frank along with Frank’s wife Pooi and his son Ian are directors of Lokit and the 12 shares are held equally by Frank and Pooi.

Lumarkye

Lumarkye Pty Ltd (‘Lumarkye’) is the Sixth Defendant. The directors of Lumarkye are Dominic and You Keun Hoo (known as ‘Vgene’ or ‘Aunty You’).

Frosthollow

Frosthollow Pty Ltd (‘Frosthollow’) is the Seventh Defendant. The sole director and shareholder of Frosthollow is Lynn.

Frosthollow is presently the trustee of two family discretionary trusts, the Ying Mui Trust and the Amore Trust, which are also central actors in the case. The First Plaintiff is the former trustee of Ying Mui Trust and the Second Plaintiff is the former trustee of the Amore Trust.

Olrey

Olrey Pty Ltd (‘Olrey’) is the Eighth Defendant. It was incorporated on 11 November 2009.

Frank Hoh was appointed a director, along with his wife Pooi, and both served its directors between 3 December 2009 until 1 March 2013.

Lynn Hoh was appointed a director of Olrey on 18 July 2011, and is currently the sole director.

FRG

FRG Investments Ltd (‘FRG’), is a company incorporated in the British Virgin Islands in December 2004.

From the outset, and currently, its directors and shareholders have remained as George, Frank and Robert Hoh (replaced by his son Han after Robert’s death on 24 December 2007).

Trust entities

The central trust entities in the proceeding are:

The Ying Mui Trust

The Ying Mui Trust was established on 6 July 2001. It was and remains a discretionary trust.

The former trustee was Ying Mui (from 6 July 2001 to 18 November 2011), when it was replaced by the current trustee, Frosthollow (appointed 18 November 2011).

The appointer at all material times is and has been Frank.

The specified beneficiaries defined in the trust deed of the Ying Mui Trust are and at all material times have been: Frank and Lokit Investments Pty Ltd; George and Beaustate Sdn Bhd; Robert and Rohandaren Holdings Sdn Bhd and Maureen.

The schedule to the trust deed provides that the general beneficiaries include the specified beneficiaries and the:

Spouse, Grandparents, Parents, Brothers, Sisters, Aunts, Uncles, Nieces, Nephews, Cousins, Children, Grandchildren of the said Specified Beneficiaries whether natural relatives or adopted relatives and all subsequent issue of any of the above mentioned persons.

The Amore Trust

The Amore Trust was established the following year on 20 June 2002. It was and remains a discretionary trust.

Amore was appointed the trustee from 20 June 2002. The trustee remained as Amore until 8 December 2011 when it was replaced by Frosthollow, again at the behest of Frank.

The appointer is and has at all material times been Frank.

The specified beneficiaries defined in the trust deed of the Amore Trust are and at all material times have been: Frank, Pooi, Lynn, Ian, and Lokit Investments Pty Ltd; George and Beaustate Sdn Bhd; Robert and Rohandaren Holdings Sdn Bhd and Maureen Oborn.

The schedule to the trust deed provides that the general beneficiaries include the specified beneficiaries and the:

Spouse, Grandparents, Parents, Brothers, Sisters, Aunts, Uncles, Nieces, Nephews, Cousins, Children, Grandchildren of the said Specified Beneficiaries whether natural relatives or adopted relatives and all subsequent issue of any of the above mentioned persons.

The FRG Investments Trust

The FRG Investments Trust, a discretionary trust of which Olrey is the trustee.

‘FRG’ is an acronym for ‘Frank, Robert & George’.

The appointer is Frank.

The nominated beneficiaries are: Frank, Lynn, Ian, Lokit Investments Pty Ltd and Linjoshan Pty Ltd; George, Braden Hoh and Beaustate Sdn Bhd; Han and Rohandaren Holdings Sdn Bhd; Maureen Oborn; and Ying Mui Pty Ltd.

The General beneficiaries of the FRG Investments Trust were as defined in clauses 2.1 and 2.2 of the FRG Investments Trust deed to mean, inter alia, the Nominated Beneficiaries and:

the parents brothers sisters spouses … of the Nominated Beneficiary or Nominated Beneficiaries and the spouses widows widowers children and grandchildren of such brothers sisters spouses children and … any charity … etc.

Other entities

Other entities of relevance include:

(a) Hever Group Ltd;
(b)Opesco Investments Pty Ltd (‘Opesco’), which was incorporated in Hong Kong in 1988;
(c)Artimax Investment Ltd (‘Artimax’), was incorporated in Hong Kong as a limited company on 22 October 1999. At the time of incorporation, the registered shareholders and directors were Robert, George and Frank. Upon Robert’s death on 24 December 2007, George and Frank became the only directors. A conflict has arisen as to the present shareholding of Artimax as described below;[7]

(d)      FKIL Pty Ltd;
(e)       River Ventures Pty Ltd;
(f)       The Woolshed Unit Trust, of which Lumarkye is the trustee;
(g)The River Venture Unit Trust, of which River Ventures is the trustee; and
[7]See [91]–[95] of these reasons.

(h) Linjoshan Pty Ltd (‘Linjoshan’).
Disputes with Richard and Derek

In the late 1990s to early 2000s, disputes developed between Frank, Robert and George, on the one side, and Richard and Derek, on the other side. Issues which were the subject of these disputes included the following:

a)In late 1997, Richard and Derek refused to sign personal guarantees in support of SYM. They also requested ‘a lump sum of money’ from SYM so that they could ‘make use of the money now instead of giving the future generations benefit from it’;
b)In mid-1998, Richard procured the sale of the ‘Red House’ without advising, or seeking the consent of, his siblings. Frank engaged solicitors to recover the proceeds of the sale; and
c)In 2000, Derek (with the support of Richard) filed a petition in the High Court of Malaysia seeking to wind up SYM. This was opposed by George, Robert and Frank. The dispute continued for over 10 years, before a settlement was reached in 2010.

These disputes have generated considerable animosity between Richard and Derek on the one hand, and Frank, Robert and George on the other.

As a result of these disputes, Frank, Robert and George sought to exclude Richard and Derek from any further involvement in the commercial activities of the family as far as it was possible to do so. They sought to have legal title to all of the shares in Ying Mui transferred to them and for Derek and Richard to cease as shareholders of Ying Mui.

Discussions between Frank, Robert and George were undertaken with a view to restructuring Ying Mui. Any further investments in Australia were put on hold until after Richard and Derek had been removed as shareholders.

In due course, Richard settled the issue with the execution of a deed of release, which resulted in a payout to him of $52,853. This represented Richard’s proportionate share of the profits held in Ying Mui resulting from the sale of the Red House. In return Richard agreed to transfer his shareholding in Ying Mui and this was effected in August 2000.

Derek surrendered his shares in Ying Mui in April 2001, at which time he was also paid out his share of the proceeds of the Red House.

As a result, by April 2001, the shareholding of Ying Mui was confined to Frank, Robert, George and Maureen, who each took 83 shares.

Further, Frank, Maureen and Lynn (all being residents in Australia) were appointed as the directors of Ying Mui.

Death of Robert and Artimax litigation

Robert was married to Daisy Sui Keng Hoh (‘Daisy’). Their son Han is the Fourth Plaintiff.

As earlier noted, Robert passed away on 24 December 2007.

By his will dated November 1964, Daisy was appointed to be the sole executrix of Robert’s estate (the ‘Estate’), and was bequeathed and devised all of Robert’s property absolutely. On 12 October 2012, probate in respect of the estate was granted to Daisy in Hong Kong. The estate included Robert’s one share in Artimax.

By an instrument of transfer dated 17 December 2012, Daisy elected to register Han as the holder of Robert’s share and transferred it to him as a gift. By a letter dated 17 December 2012, Daisy requested that Artimax’s board of directors effect the transfer.

A legal dispute subsequently emerged over the beneficial ownership of Robert’s single share, specifically whether it was the subject of a trust in favour of SYM.[8] On 30 June 2016, the Hong Kong Court of First Instance held, inter alia, that Han was the legal and beneficial owner of the share.[9] The judgment is presently the subject of an appeal.
[8]Hoh Han Keyet v Artimax Investment Ltd and Others [2016] HKCFI 1105.
[9]Ibid [78]–[79].

Summary of Plaintiffs’ case in the proceeding

Briefly stated, the Plaintiffs’ case against the First to Fifth Defendants is that they are each liable for certain misconduct in connection with the property investments undertaken in Australia through three corporate trustees — Ying Mui, Amore and Olrey.

Ying Mui and Amore bring claims as the former trustees of the Ying Mui Trust and the Amore Trust, respectively.

The Plaintiffs allege, in essence, that the purpose of the property investments in Australia was to benefit Frank, Robert and George (and their immediate families), but not Richard or Derek (or their immediate families).

The investments undertaken in Australia followed disputes between Frank, Robert and George on the one hand, and Richard and Derek on the other hand, as earlier referred to.

Over the ensuing years, numerous investments in real estate were made principally using the Ying Mui Trust, the Amore Trust and the FRG Investments Trust (of which the Eighth Defendant, Olrey, was the trustee). These investments were said to be undertaken pursuant to a purported joint investment agreement reached between Frank, Robert and George (the ‘JI Agreement’) in about April 2001. Pursuant to this JI Agreement, Frank, Robert (succeeded by Han) and George invested funds derived from Malaysia which they ‘arranged’ to be transferred to Australia.

The Plaintiffs claim that the ‘seed money’ for the property investments in Australia comprised the funds remaining from the sale of the ‘Red House’, which Frank, Robert, George and Maureen decided to reinvest rather than cash out, following resolution of their dispute with Richard and Derek.

In addition, the investments were funded, in part, by loan funds derived from Malaysia loaned by Frank, Robert and George to Ying Mui and Amore, with the balance of the funding provided by external lenders, primarily the Australia & New Zealand Banking Group Ltd (‘ANZ’).

The Plaintiffs contend that although the funds remitted from overseas were sourced from a number of different accounts, as between Ying Mui and Amore and the provider(s) of those funds, those funds were remitted to Ying Mui and Amore as loans from Frank, Robert or George.

The loans were claimed to have been recorded in numerous contemporaneous documents, including the accounts of Ying Mui, deeds of postponement between Ying Mui, ANZ and George, Frank and Robert, minutes of family meetings and contemporaneous payment vouchers.

The Plaintiffs say that this arrangement worked until mid-2010, at which time the relationship between Frank and George collapsed.

It is then alleged that Frank, with varying levels of assistance from his wife Pooi, and children, Lynn and Ian, exercised his powers as a director of Ying Mui and Amore to procure the sale of numbers of the Australian property investments (the ‘asset sale and distribution decision’).

Frank, with assistance from the other defendants, as part of the asset sale and distribution decision, is alleged to have effectively appropriated the assets of the Ying Mui Trust, the Amore Trust and the FRG Investments Trust for the benefit of both himself and members of the Hoh family aligned with him, to the exclusion of George, Han and Maureen.

In other words, reduced to its most simple analysis, Frank and his family are alleged to have sold relevant trust assets comprised by the property investments in Australia and in effect have made distributions to themselves. This conduct is alleged to have been undertaken by Frank and his co-director and son, Ian, and allied family members, in breach of the duties he owed as a director, appointor and fiduciary, and Ian owed as a director and fiduciary.

The principal claim against Lumarkye is that by purchasing the two Australian investment properties namely those situated at:

(a)530 Melton Highway, Sydenham, Victoria (the ‘Sydenham Property’); and
(b)Lot 202, 440A Hampton Street, Hampton, Victoria (‘Lot 202’)

it was a ‘knowing recipient’ of trust property wrongfully transferred from the First Plaintiff in breach of fiduciary duty owed to it by Frank and Ian.

Alternatively, it is said by the Plaintiffs against Lumarkye that it:

(a)wilfully shut its eyes to the obvious fact that each property was sold by Ying Mui in circumstances where the defendants Frank and Ian had caused the sale to occur in breach of their fiduciary duties, or
(b)wilfully and recklessly failed to make such enquiries as an honest and reasonable person would make as to the circumstances of the sales, or
(c)had knowledge of the circumstances which would have indicated to an honest and reasonable person that Frank and Ian had caused the properties to be sold to Lumarkye by breaching their fiduciary duties owed to Ying Mui.

It is also alleged that, in acquiring the Sydenham Property and Lot 202 in late 2011, Lumarkye and its director Dominic received financial assistance from Lokit and Frank, again in breach of fiduciary duty.

Summary of First to Fifth Defendants’ case in the proceeding

The First to Fifth Defendants position in relation to the First Tranche Questions is set out below.

Firstly, they contend that there was no JI Agreement at any time in relation to the Australian investments. They assert that the arguments advanced by the Plaintiffs in support of such an agreement do not withstand scrutiny and are inconsistent with the contemporaneous documents. Rather the evidence shows that the investments were always intended to benefit the broader Hoh family (including George and Han) pursuant to the Benevolent Purpose and as an extension of SYM in Malaysia.

The Australian investments were funded partly by bank borrowings, secured by mortgages provided by the relevant trustee companies and personal guarantees provided by Frank and Pooi and cross-collateralised against Frank’s personal investments, and partly by funds remitted from Malaysia belonging to SYM, not the three brothers.

The funds advanced from Malaysia for investment in the Australian properties were from SYM and were by way of capital, not loans.

By reason of SYM’s funding and backing of the Australian investments, the remaining Australian assets should be held on a resulting or constructive trust for SYM.

The sales of Lot 202 and the Sydenham Property by Ying Mui did not involve any breach of duty by Frank or Ian because they acted bona fide and did not act in conflict of interest or for an ulterior purpose. The substantial purpose of the sales was to pay down debt of Ying Mui. There is therefore no need to consider whether Lumarkye knowingly received trust property in acquiring those properties because there was no breach of any fiduciary duty.

Summary of Sixth Defendant’s case in the proceeding

In order to make out their claim against it, Lumarkye contends that the Plaintiffs need to first establish that the Sydenham Property and Lot 202 were transferred to Lumarkye in breach of fiduciary duty.

The purpose and effect of the sale of these two properties to Lumarkye in late 2011 was to reduce debt which Ying Mui had previously incurred in financing property purchases in its capacity as trustee of the Ying Mui Trust.

Specifically, the purchase monies received from Lumarkye were paid directly to the trust’s bankers, ANZ, and used by them to repay a commercial bill facility for a total sum of $2,700,000, which was due to be rolled over in December 2011.

This conduct, it was said, cannot be in breach of trust, where the properties were sold at full market value, and there was no other conduct which was wrongful or fraudulent which could amount to any breach of trust.

Further, on the facts, it was put that Lumarkye did not have the requisite degree of knowledge required for liability under either limb of Barnes v Addy.[10]
[10](1874) LR 9 Ch App 244, 251–252.

It was also put that the knowledge of Lynn (the wife of Dominic, one of the directors of Lumarkye) cannot be imputed to Lumarkye.

Further, although it was alleged by the Plaintiffs that Lumarkye should also be fixed with the knowledge and activities of Ian, no evidence was led to the effect that he was, or could have been, Lumarkye’s controlling or guiding mind, nor its agent for any purpose.

Lumarkye further contends that, in any event, no loss or damage has been proven to have been sustained by the conduct alleged against it, and, in these circumstances, no relief can be granted, even if a breach of duty is able to be established.

Lumarkye maintains that the First Plaintiff has neither made out any:

(a)case for obtaining equitable compensation from Lumarkye (because it has suffered no loss by reason of Lumarkye having purchased the properties at their then full market value); or
(b)basis for return of the properties (again since they were purchased at full market value, and Lumarkye cannot be fixed with knowledge of, nor participation in, any relevant breach of duty).

Summary of Seventh Defendant’s case in the proceeding

There are two claims made by the Plaintiffs against the Seventh Defendant, Frosthollow. The claims may be distilled as follows:

(a)a claim that Frosthollow indemnify the First Plaintiff (Ying Mui) for the alleged loans made by the Third Plaintiff (George), Robert and the Fifth Defendant (Lokit) (the ‘indemnity claim’); and
(b)a claim that distributions made by Frosthollow to beneficiaries in 2012, 2013 and 2014 were made in breach of trust (the ‘distribution claim’).

Frosthollow contends that the allegation made by the Plaintiffs, that the funds from Malaysia were remitted to Ying Mui and Amore as loans from Frank, Robert or George, is wrongfully made.

It does so, not for the purpose of contesting the existence of the JI Agreement (about which it makes no submissions), but for the purpose of contesting the indemnity claim made against it.

Frosthollow adopts the position of the First to Fifth Defendants that the money the subject of the indemnity claims comprised capital advances by SYM. Frosthollow says that the Plaintiffs have not satisfied the Court that George or Robert (or Lokit) lent the money. It says that the money did not originate from them, nor is there is any evidence that the money was ever lent to them, or otherwise became theirs to pay to Ying Mui or Amore on the condition that at some future time the loan monies would be repaid.

Frosthollow also submitted in relation to the distribution claim that, insofar as these distributions may be regarded as relevant background facts in respect of the First Tranche Questions (specifically question 3), they ought not be considered in some way as part of any alleged asset sale and distribution decision or motivated by any such decision. It says that it has not been established, and indeed there is no evidence to support the proposition that the distributions by Frosthollow to beneficiaries in 2012, 2013 and 2014 were made to give effect to any asset sale and distribution decision and ought not be considered or treated as such.

Summary of Eighth Defendant’s case in the proceeding

The Eighth Defendant (Olrey) is the trustee of a family discretionary trust, being the FRG Investments Trust, and is sued in its capacity as trustee. The sole director of Olrey is the Third Defendant (Lynn). The nominated beneficiaries of the FRG Investments Trust include George, Han, Frank, Ian and Lokit.

The FRG Investments Trust was established by a deed of settlement dated 23 December 2009 and Olrey has been the trustee since that time.

Subsequent to the establishment of the FRG Investments Trust, on 8 March 2011, Olrey, as trustee of the FRG Investments Trust, entered into an agreement with Frank and Lokit in relation to the management of the business of the trust (the ‘Olrey Management Agreement’).

The Plaintiffs seek the removal of Olrey as trustee of the FRG Investments Trust and allege that Olrey acted in breach of trust by entering into the Olrey Management Agreement.

By way of counterclaim, Frank, Lynn, Pooi and Ian claim that the assets comprised in the FRG Investments Trust are held on a constructive or alternatively, a resulting trust, for SYM.

Olrey has elected to play no active role in the proceeding and will abide the Court’s judgment in respect of the claims made against it. However, in the event that it is to be removed as trustee of the FRG Investments Trust or the assets of the FRG Investments Trust are to be transferred to SYM, Olrey will address the Court seeking orders that the vesting or transfer of the assets of the FRG Investments Trust be contingent upon the liabilities Olrey has incurred in its capacity as trustee of the FRG Investments Trust first being discharged.

Olrey made no submissions to the Court on the First Tranche Questions.

First Tranche Question 1

Questions answered in this part are:

In or about April 2001, or at any other and what time, was the alleged Joint Investment Agreement (the “JI Agreement”) formed between George, Frank and Robert Hoh to undertake property investment in Victoria through the vehicle of Ying Mui Pty Ltd, and if so:
(a) what were the terms of the JI Agreement?
(b)was property investment in Victoria subsequently undertaken by George, Frank and Robert Hoh pursuant to the JI Agreement?

Pleaded case of the Plaintiffs

In essence, the Plaintiffs plead that in about April 2001, there was an agreement (the ‘JI Agreement’) between Frank, Robert (succeeded by Han) and George to invest Malaysian funds they ‘arranged’ to be transferred to Australia.

In relation to the JI Agreement, the Plaintiffs plead:

In or about April 2001, Robert, Frank and George (the Joint Investors, subject to the Variation pleaded in part P below) agreed to pursue joint investments in Australia […] for the benefit of the Joint Investors.
Particulars
Particulars of the [JI] Agreement are contained in Schedule 3.

The Plaintiffs allege that terms of the JI Agreement were partly in writing, partly oral and partly to be implied. Reliance is placed on written communications dated November 1999 and subsequent conduct, including allegations regarding the ownership of funds transferred to undertake the joint investments. The oral component of the alleged agreement is as follows:

Insofar as the Joint Investment Agreement was oral, it arises from the discussions that took place during a meeting held in Malaysia on or about 11 April 2001 attended by Robert, George and Frank (among others). During that meeting, there were conversations (among others) to the following effect:
(a)Frank proposed that Ying Mui be used as the vehicle for investments in Australia and George and Robert said that they agreed with Frank
(b)Frank proposed that he identify and propose joint investments in Australia and George and Robert said that they agreed with Frank;
(c)Frank proposed that he would make the investments in Australia and then manage them through Ying Mui and George and Robert said that they agreed with Frank;
(d)George proposed that decisions to be made as to the joint investments should be made by consensus as he and Robert were too far away and they could not allow Frank to buy or sell without consultation and Frank and Robert agreed with George; and
(e)Robert proposed that Frank be required to provide a schedule of the application of funds and borrowings or cash flow statements on request and Frank and George said that they agreed with Robert.

However, no breach of the JI Agreement is pleaded by the Plaintiffs, and no relief arising directly from any breach of the JI Agreement is sought. Rather, the Plaintiffs advanced their case on the JI Agreement being, principally, it appears, relevant as background to their pleaded causes of action in the Second Further Amended Statement of Claim.

They assert that the existence and terms of the JI Agreement provide some context to the their allegations that the First to Fourth Defendants acted in breach of the fiduciary and statutory duties they owed to Ying Mui and Amore, and the allegations of breach of trust on the part of the relevant trustee, and the conduct of the First to Fourth Defendants in procuring those breaches.

First to Fifth Defendants’ submissions on the significance of the purported JI Agreement

The First to Fifth Defendants contend that the existence of the JI Agreement is fundamental to the way in which the Plaintiffs advance their claims.

(k)On 30 September 2011 Lynn was aware that Frank executed a contract of sale in respect of the Sydenham Property on behalf of Ying Mui;
(l)On 20 November 2011 Lynn was aware that Frank signed a transfer of land in respect of the Sydenham Property on behalf of Ying Mui;
(m)On 30 November 2011 Lynn was also aware that settlement of the Sydenham Property took place;
(n)On 3 October 2011 Lynn sent an email to the various investors in the Woolshed Unit Trust updating them on the purchase of the Sydenham Property. The email read:
CONGRATULATIONS - Sydenham
From: Lynn Hoh
Sent: Monday, 3 October 2011 6:18:22 PM
To:Choong Xin Pawnshop; You Keun Hoo; Chok Keun Hoo; Teck Keun Hoo; Cheng Keun Ho; Pei Leng Siew

Cc: Frank Hih; Dominic Low 2 attachments Sydenham Contract of Sale 30 Sep 2011.pdf (4.5 MB), Sydenham Valuation Report 20 Sep 2011.pdf (1333.4 KB)
Hi all
Re: Purchase of 530 Melton Highway, Sydenham
Please find attached for your reference the executed Contract of Sale for the abovenamed property. Dom has signed the contract as nominee for the Woolshed Unit Trust (River Ventures Pty Ltd holds 50% of the units of this Trust).
Also attached is a recent valuation report which values the property at $980,000. After negotiation with the vendor, we agreed on a sale price of $990,000. At the current net rent of approx. $85,400, this purchase price reflects an 8.6% return on our investment. The tenant has agreed to a 4% rental increase effective from mid-December 2011, so out return will increase to approx. 9%.
Funding
At the time of executing the Contract for Sale, a 10% deposit was made - $49,500 from River Ventures Pty Ltd and $49,500 from Dominic Low.
Settlement is scheduled to take place on 29 November 2011. Please ensure that sufficient funds are available in River Ventures’ bank account by 15 November for your 50% share of the settlement amount ($445,500), stamp duty (approx. $23,000), legal costs (approx. $2,000). As you should be aware, the Australian Dollar is currently relatively weak and therefore it may be a good time for you to transfer funds to Australia. Note also that the Australian Reserve Bank is due to meet tomorrow and there is an expectation that interest rates will be reduced which should also likely further weaken the strength of the Australian Dollar.
If you have any questions about this, please let me know.
Best regards
Lynn.

(o) On 18 October 2011, Lynn received a valuation of Lot 202;
(p)On the basis of that valuation Frank and Lynn agreed that Ying Mui should revise the reserve for Lot 202. It was clear that prospective purchasers, as confirmed by an independent valuer, did not believe, as they initially did, that the market values for Lot 201 and Lot 202 were identical. It appeared that potential purchasers felt that the investment risk associated with Lot 202 was slightly higher, and therefore placed a lesser value on Lot 202 than on Lot 201;
(q)Lynn advised Dominic and Vgene that Ying Mui was prepared to sell Lot 202 for not less than $1,670,000. Shortly after that, Lumarkye made an offer to buy Lot 202 for $1,680,000;
(r)On 28 October 2011 Lynn attended a board meeting of Ying Mui. Frank and Ian also attended. Because Dominic is Lynn’s husband, she abstained from voting on the proposed sale of Lot 202. Frank and Ian resolved to sell Lot 202 to Dominic (and/or his nominee) for $1,680,000;
(s)Lynn was aware that on 28 October 2011 Frank executed a contract of sale in respect of Lot 202 on behalf of Ying Mui;
(t)Lynn also was aware that on 13 December 2011 Frank and Ian signed a transfer of land in respect of Lot 202 on behalf of Ying Mui, and on 13 December 2011 settlement took place.

Dominic’s deference to Lynn

I am satisfied that Dominic, who was Lynn’s husband, and one of the two directors of Lumarkye, respected, trusted and indeed deferred to Lynn’s business acumen and experience which made her well-equipped to manage property transactions of the type involved with the sales of the two properties. In effect, Dominic delegated the property sale transactions of the Sydenham Property and Lot 202 and the detailed implementation of the transactions to Lynn. He took this approach in relation to all key aspects of the transactions, including delegating to Lynn the planning, organisation and implementation of:

(a) the participants in the purchases;
(b)the legal structure to provide the vehicle for the purchases, including establishing Lumarkye specifically for this purpose, and the Woolshed Unit Trust, of which Lumarkye was the trustee;
(c)negotiation of the sale contracts;
(d)structuring and arranging finance for the purchase;
(e)instructing accountants and solicitors for these purposes;
(f)co-ordinating all sales of property in Australia by Ying Mui and Amore; and

(g) general management of the two sales.

The following passages from the cross-examination of Dominic evidence these findings:

Participants
It was your wife Lynn who identified the Malaysian extended family members as being persons who might potentially be interested in the acquisition of the two properties?---Yes. She did, Your Honour.
So the sequence of events is that Lynn has made you aware of the fact that lot 202 and Sydenham were available for sale. That's so, is it not?---Yes. She did, Your Honour.
Lynn then identified that some extended family members, based in Malaysia, may be willing to join in the acquisition of the two properties with you and Lynn. That's fair’, isn't it?---Yes. That's fair, Your Honour.
…
And she also sought to interest some other friends of yours in joining you in acquiring the investment didn't she? You recall that?---Ah, yes, she tried to, um, I mean as I explained before, we couldn't afford the property by yourselves, so we had to go through a process of finding other investors, Your Honour.
…
And similarly she was also communicating with the Malaysian distant relatives, that was s’ wasn't it?---Excuse me. Ah, yes, she was communicating with the Malaysian investors Your Honour.
…
Yes, because Lynn was co-ordinating the acquisition investment group wasn't she?---Um, yes she was co-ordinating with um Vgene and her siblings, yes Your Honour.
…
Yes. All right, and Lynn was attaching some proposed structures for the two property investments that our families will be making together, do you see that?---Ah yes I do see that Your Honour.
…
Is that again because it was your wife that was hands on in relation to putting this buying group together?---Ah yes she was definitely hands on Your Honour.
Legal structure
Not only was it your wife Lynn who identified the extended family members who may be willing to participate in the acquisition of the two properties; it was also Lynn who put together the trust structure by which the properties were to be acquired wasn't it?---Yes. She did put together the structure, Your Honour.
…
It was Lynn that did indeed coordinate the execution of the documents didn't she? Not you?---Yes, Lynn coordinated documents, not me.
…
Now similarly in relation to the establishment of the Woolshed Unit Trust, Lynn was involved wasn't she, in instructing solicitors to prepare the relevant trust documents? That was so wasn't it?---Yes, I believe so Your Honour.
You weren't involved were you?---No, it's not something that I get involved in Your Honour.
Negotiation of the sale contracts

It was Lynn that presumably engaged in that negotiation on behalf of the purchasing group with the vendor?---Yes, it appears so Your Honour.
…
In relation to the contracts they reflected arrangements that had been negotiated on Lumarkye's behalf by Lynn, that's so is it not?---Yes, of course. Lynn is in a better position with her occupation to do that, but I just add through discussion with me and instruction from me.
…
I suggest that Lynn had full authority on behalf of Lumarkye to arrange those sales contracts, that’s so isn't it?---Yeah, per my instructions to do so.
Structuring and arranging finance
That's an email that Lynn sent to Kevin Sait from the ANZ Bank providing information to Mr Sait in connection with your loan application. Do you see that?---Yes, I do see that Your Honour.
Lynn also copied your father-in-law Frank in on this email? ---Yes, I can see Frank's name on the email, yeah.
Lynn offered to Kevin Sait that Frank and Kit, which is your mother-in-law, also known as Pooi, would guarantee the loan to you and provided apartment 7 as collateral for the loan?---Yes, I see that Your Honour.
That was a matter that Lynn arranged was it not?---Appears so, Your Honour, yes.
…
I suggest to you that the finance arrangements were all negotiated by the bank by Lynn?---I - I wouldn't - I wouldn't say that there was a furious amount of negotiation for the loan. Lynn kept me updated on the status of the financing and the settlement.
Instructing accountants and solicitors
The board minutes that you were asked to sign from time to time they were all produced by Lynn as well weren't they?---Yes, the board minutes were produced by Lynn and in consultation with our accountants. The details are pretty rudimentary.
Lynn would just get you to sign documents wouldn’t'’ she?---She'd ask me to review and sign the documents Your Honour.
Co-ordination of Australian property sales
You knew, didn't you, that your wife Lynn was co-ordinating the sales of those properties. Did you know that?---Yes. I did, and I knew that she was co-ordinating the sale of probably all the properties.
…
General management of the two sales
Because she was really running the whole acquisition process on behalf of you and her wasn't she?---Um, I would say she was facilitating our investment objectives.
She was much more hands on than you wasn't she?---Ah, yes, she was much more hands on as that's what she does for a living, Your Honour.
…

Although the decision to invest, in addition to some other key decisions, ultimately lay with Dominic, both in his capacity as an investor and a director of the investment vehicle Lumarkye, I am satisfied that he was guided and influenced by Lynn’s proposals and competent administration to such a degree, that for the purposes of the transactions, Lynn should be treated as the controlling mind of Lumarkye.

There was another factor which to my mind embedded Lynn’s influence with Lumarkye for the purposes of the two sale transactions, such that she became its controlling mind for these purposes. It was known to both directors that Lynn had a strong indirect interest in Lumarkye. As already noted, her husband Dominic held a 50 per cent shareholding in Lumarkye, and was a 50 per cent specified unit holder in the Woolshed Unit Trust, of which it was a trustee. By these means Dominic gained a 50 per cent interest in the two properties to be held as assets of the Woolshed trust. Lynn’s position would itself have been a reason for the directors of Lumarkye to defer to her investment plans.

Vgene’s delegation to Lynn

Vgene, the other of the two directors of Lumarkye, I am satisfied, took a similar approach to that of Dominic in relation to participation in the sale of the two properties to Lumarkye and, in effect, the delegation of all key aspects of the transactions to Lynn, including the planning and organisation of the transactions and the detailed implementation of them.

Although the decision to invest, in addition to some other key decisions, ultimately lay with Vgene, both in her capacity as an investor and a director of the investment vehicle Lumarkye, I am satisfied that she was guided and influenced by Lynn’s proposals and competent administration to such a high degree, that for the purposes of the transactions, Lynn should be treated as the controlling mind of Lumarkye for these purposes.

Vgene said in her evidence, which I accept, that:

(a)[She] knew that Lynn was a qualified chartered accountant and had worked in senior accounting roles overseas. She trusted Lynn’s advice in financial matters.
(b)Lynn’s general approach in dealing with [her] and the other investors of the two Australian properties was to provide [them] with regular and detailed information and to answer any questions which [she] may have had in relation to this information.
(c)Lynn would provide guidance and advice in relation to properties and matters relating to them. , however, she at no stage sought to make any decisions for [her] or to impose her will on [her].
(d)[She] knew Dominic as the husband of Lynn Hoh. Dominic and [her] had no direct discussion during the period of purchase.

Conclusion as to whether Lynn the ‘controlling mind’ of Lumarkye in the two sale transactions

It will be recalled that the transactions took place on 30 September 2011 (Sydenham Property) and 28 October 2011 (Lot 202) respectively.

Although Lumarkye was incorporated on 12 June 2008, the current directors (Dominic and Vgene) and shareholders River Ventures Pty Ltd (in which Vgene and Dominic held shares as of 50 per cent each), were appointed and took up their shareholdings on 9 September 2011.

Thus when the relevant transactions occurred, the structure of the transactions had already been well advanced by Lynn. It was on 17 June 2011, that the other investors and Vgene had earlier agreed to invest in the two properties.

After reviewing the evidence, I am satisfied and infer that, although Dominic and Vgene had been appointed as directors of Lumarkye and, by reason of holding office as directors, had formal control of the company, they in fact had a very limited role in the two sale transactions. At least until completion of those transactions, Lynn was the controlling mind of Lumarkye when the company received benefits of the transfers of the two properties to it.

In the present case it is clear that Lynn had actual knowledge of three critical matters (the ‘critical facts’):

(a)Her parents had a personal interest in selling the two properties to reduce their liabilities under their personal guarantees in relation to the Australian property holdings;
(b)Her father’s personal interest in establishing a fighting fund to be used by him to protect his family assets. Lynn also knew details of the transactions involving the sale of the Sydenham Property and Lot 202 by Ying Mui to Lumarkye, including the fact that monies realised from the sales had been paid to Frank’s company Lockit and formed part of the fighting fund established by her father; and
(c)The first three Lockit payments, which were sourced from the property sales, were received by her father as remuneration for management fees he claimed.

It was not put to Lynn in cross-examination that she had actual knowledge that any of the conduct found against Frank or Ian as directors of Ying Mui constituted any breach of fiduciary duty on their part, or that she had actual knowledge of this being the case.

Nevertheless, given her actual knowledge of the critical facts as I have found them, I am satisfied that Lynn had actual knowledge of sufficient of the circumstances which would indicate to an honest and reasonable person that the conduct of Frank in selling the two properties because he wanted to reduce the liabilities under his personal guarantees, establish a fighting fund for his personal use and use part of the monies to pay management fees to him for his personal use, placed him in a clear conflict of interest which, in turn, constituted breach of fiduciary duty owed to Ying Mui.

This disposes of the Plaintiffs’ knowing receipt claim in their favour.

Conclusion as to knowledge of Ian

Although it has been alleged by the Plaintiffs in their pleadings that Lumarkye should also be fixed with the knowledge of Ian, no evidence has been led to the effect that he was, or could have been, Lumarkye’s controlling or guiding mind, nor its agent for any purpose. Nor have the plaintiffs put any submission to this effect.

Accordingly, it is not open to find that Lumarkye can be fixed with any of the knowledge of Ian.

Findings as to First Tranche Questions 3

The third question to be determined by the Court in this part of the proceeding is:

Did Lumarkye, in receiving the Sydenham Property and Lot 202 from Ying Mui, knowingly receive trust property?
If so, is Lumarkye a constructive trustee with respect to the Sydenham Property and Lot 202 or is it required to pay compensation to Ying Mui?

In answer to the First Tranche Question 3: Did Lumarkye, in receiving the Sydenham Property and Lot 202 from Ying Mui, knowingly receive trust property? The answer is: Yes.[125]
[125]See Ying Mui & Ors v Frank Kiang Ngan Hoh & Ors (Ruling No 5) (Slip Rule) [2017] VSC 211.

In answer to the First Tranche Question 3: Is Lumarkye a constructive trustee with respect to the Sydenham Property and Lot 202 or is it required to pay compensation to Ying Mui? The answer is that the Court is presently unable to answer this question in the light of the submissions that have been made.

It is a matter of note that, although the two properties comprised real estate which was, in all likelihood, subject to the Torrens system of land registration in Victoria, no defence of indefeasibility of title was either pleaded by Lumarkye or contended for in submissions. In Farah Constructions, the High Court held that the recipient of the real estate there in question had obtained indefeasible title to the properties transferred upon registration under the Torrens system. For this reason, it was held that the recipients could not be liable for knowing receipt, even if they had received the properties with notice of the breach of fiduciary duty. With some exceptions, indefeasibility of title protects registered proprietors from adverse claims to land in the absence of actual fraud on their part or on the part of their agents. The breach of fiduciary duty on the part of the fiduciary in Farah Constructions even if it had occurred, was held not to be of such an order that it could be described as ‘actual fraud’. For this reason, the recipients, who became the registered proprietors of the properties in question, could not be guilty of fraud, even if they had received the properties with actual knowledge of the fiduciary’s breach.

However, no such case was pleaded or at this point pressed in submissions.

The Court will need to hear further from the parties as to whether any and what amendment to the pleadings and further submissions should be entertained before determining this part of the First Tranche Question 3.

I will hear the parties on these matters, and what further questions need to be addressed, if any, in the next tranche of questions to be dealt with in this sequential trial.

TABLES A – G

RELEVANT CORPORATE ENTITIES – PARTIES

Ying Mui Pty Ltd (the first named plaintiff)
Incorporated:	09/09/1985 (initially called Vielass Pty Ltd, named changed on 28/02/1986)
Current directors:	George Hoh (appointed 21/12/2011) Han Hoh (appointed 21/12/2011) Maureen Oborn (appointed 21/12/2011) Frank Hoh (appointed 17/07/1998)
Former directors:	Ian Hoh (from 27/04/2009 until 21/12/2011) Lynn Hoh (from 17/07/1998 until 21/12/2011) Pooi Lim – alternate director (from 04/04/2001 until 21/12/2011) Maureen Oborn (from 17/07/1998 until 06/12/2001) Richard Hoh (from 24/09/1985 until 13/10/1998) Chor Jee Tan (from 13/10/1987 until 13/10/1998) Yow Mui Yow (from 24/09/1985 until 05/07/2000)
Current shareholders:	George Hoh – 83 shares (from 30/06/1998, with varying quantities since 31/03/1988) Han Hoh – 83 shares (from 27/04/2009, which were transferred from Robert Hoh) Lokit Investments Pty Ltd – 83 shares (from 01/01/2002, which were transferred from Frank Hoh)
Former shareholders relevantly include:	Richard Hoh – varying quantities (from 24/09/1985 until 03/08/2000), including at times shares held on trust for other siblings Derek Hoh – 83 shares (from 17/07/1998 until 04/04/2001) Maureen Oborn – 83 shares (from 17/07/1998 until 30/12/2002) Robert Hoh – 83 shares (from 17/07/1998 until 27/04/2009) Frank Hoh – 83 shares (from 17/07/1998 until 01/01/2002) Yow Mui Yow – varying quantities (from 24/09/1985 until 04/04/2001) Ying Chye Hoh – 24 shares (from 24/09/1985 until 31/03/1988)

Amore Corporation Pty Ltd (the second named plaintiff)
Incorporated:	27/08/2001
Current directors:	George Hoh (appointed 17/04/2012) Han Hoh (appointed 17/04/2012) Maureen Oborn (appointed 17/04/2012) Frank Hoh (appointed 27/08/2001)
Former directors relevantly include:	Lynn Hoh (from 01/07/2011 until 17/04/2012) Pooi Lim (from 11/09/2007 until 17/04/2012)
Current shareholders:	Beaustate Sdn Bhd – 1 share (since 11/09/2007) Pooi Lim – 1 share (since 11/09/2007) Ying Mui Pty Ltd – 1 share (since 27/08/2001)
Former shareholders relevantly include:	Prior to 11/09/2007, the sole shareholder of Amore Corporation Pty Ltd was Ying Mui Pty Ltd.

Lokit Investments Pty Ltd (the fifth named defendant)
Incorporated:	01/10/1987
Current directors:	Frank Hoh (appointed 01/10/1987) Pooi Lim (appointed 01/10/1987) Lynn Hoh (appointed (21/01/2003) Ian Hoh (appointed 29/06/2001)
Former directors:	Not relevant
Current shareholders:	Frank Hoh – 6 shares Pooi Lim – 6 shares
Former shareholders:	None

Lumarkye Pty Ltd (the sixth named defendant)
Incorporated:	12/06/2008
Current directors:	Dominic Low (appointed 09/09/2011) You Keun Hoo (Vgene) (appointed 09/09/2011)
Former directors:	Not relevant
Current shareholders:	River Ventures Pty Ltd – 100 shares (since 09/09/2011) Dominic Low – 100 shares (since 09/09/2011)
Former shareholders relevantly include:	FKIL Pty Ltd – 25 shares (ceased 09/09/2011) Linjoshan Pty Ltd – 25 shares (ceased 09/09/2011)

Frosthollow Pty Ltd (the seventh named defendant)
Incorporated:	30/06/2011
Current director:	Lynn Hoh (appointed 27/10/2011)
Former directors:	Not relevant
Current shareholder:	Lynn Hoh – 2 shares (since 01/11/2011)
Former shareholders:	Not relevant

Olrey Pty Ltd (the eighth named defendant)
Incorporated:	11/11/2009
Current director:	Lynn Hoh (appointed 18/07/2011)
Former directors relevantly include:	Frank Hoh (from 03/12/2009 until 1/03/2013) Pooi Lim (from 03/12/2009 until 01/03/2013)
Current shareholders:	Frank Hoh – 10 shares (since 3/12/2009) Linjoshan Pty Ltd – 10 shares (since 3/12/2009) Beaustate Snd Bhd – 10 shares (since 3/12/2009)
Former shareholders:	Not relevant

Sharikat Ying Mui Sdn Bhd (SYM) (the fifth named defendant by counterclaim)
Incorporated:	26/09/1968
Current directors:	George Hoh (appointed 30/07/1998) Frank Hoh (appointed 30/07/1998) Han Hoh (appointed 27/09/2004) [NB: subsequently removed and then reinstated] Leonard Hoh (appointed 01/08/2012) Jonathan Hoh (appointed 01/08/2012) Gloria Hoh, as an alternative director to Leonard Hoh (appointed 03/09/2012) Cordelia Hoh, as an alternative director to Jonathan Hoh (appointed 03/09/2012) Richard Hoh, as an alternative director to Frank Hoh (appointed 03/09/2012)
Former directors:	There have been numerous changes to the directors of SYM over time.
Current shareholders:	George Hoh – 433,500 shares Maureen Oborn – 105,000 shares Braden Hoh – 50,000 shares Han Hoh – 294,500 shares Richard Hoh – 5,000 shares Cordelia Hoh – 390,000 shares Yook Yung Sdh Bhd – 379,000 shares Leonard Hoh – 5,000 shares Jonathan Hoh – 49,000 shares Ian Hoh – 5,000 shares Frank Hoh – 5,000 shares Linlok Enterprises Sdn Bhd – 379,000 shares
Former shareholders:	There have been numerous changes to the shareholders of SYM over time. By agreement dated 11 July 2011, Linlok Enterprises Sdn Bhd, Lynn Hoh and Ian Hoh purported to sell a total of 344,000 shares to Cordelia Hoh.

TABLES H – N

RELEVANT CORPORATE ENTITIES - OTHER

FKIL Pty Ltd
Incorporated:	16/08/2010
Current directors:	Frank Hoh (appointed 16/08/2010) Pooi Lim (appointed 16/08/2010)
Former directors:	None
Current shareholder:	Frank Hoh – 10 shares (from 16/08/2010) Pooi Lim – 10 shares (from 16/08/2010) Lynn Hoh – 10 shares (from 16/08/2010) Ian Hoh – 10 shares (from 16/08/2010)
Former shareholders:	None

Linjoshan Pty Ltd
Incorporated:	12/11/2007
Current directors:	Frank Hoh (appointed 12/11/2007) Lynn Hoh (appointed 12/11/2007) Ian Hoh (appointed 12/11/2007)
Former directors:	None
Current shareholders:	Frank Hoh – 1 share (from 12/11/2007) Lynn Hoh – 1 share (from 12/11/2007) Ian Hoh – 1 share (from 12/11/2007)
Former shareholders:	None

River Ventures Pty Ltd
Incorporated:	29/06/2011
Current director:	Frank Hoh (appointed 29/06/2011)
Former directors:	None
Current shareholders:	Teck Keun Ho – 100 shares (from 29/06/2011) Chok Keun Hoo – 150 shares (from 29/06/2011) You Keun Hoo (Vgene) – 150 shares (from 29/06/2011) Pei Leng Siew – 100 shares (from 29/06/2011)
Former shareholders:	None

Hever Group Ltd
Incorporated:	29/09/1997
Current directors:	Han Hoh (from 29/09/97 until 02/03/2000, and then re-appointed on 08/07/2008) Karen Hoh (appointed 18/03/2014)
Former directors relevantly include:	Robert Hoh (from 29/09/1997 until 24/12/2007) Daisy Hoh (from 28/11/2008 until 18/03/2014)
Current shareholders:	Han Hoh – 1 share Karen Hoh – 1 share
Former shareholders relevantly include:	Robert Hoh (from 29/09/1997 until his death on 24/12/2007)

FRG Investments Ltd
Incorporated:	26/10/2004
Current directors:	George Hoh (appointed 30/12/2004) Frank Hoh (appointed 30/12/2004) Han Hoh (appointed 06/04/2012)
Former directors:	None
Current shareholders:	George Hoh – 1 share (from 30/12/2004) Frank Hoh – 1 share (from 30/12/2004) Han Hoh – 1 share (from 26/03/2012))
Former shareholder:	Robert Hoh – 1 share (from 01/06/2005 until his death on 24/12/2007)

Artimax Investment Ltd
Incorporated:	22/10/1999
Current directors:	George Hoh (appointed 21/01/2000) Frank Hoh (appointed 21/01/2000)
Former directors:	Robert Hoh (appointed 21/01/2000 until his death on 24/12/2007)
Current shareholder:	George Hoh (from 27/01/2000) Frank Hoh (from 28/01/2000) Han Hoh (from 30/06/2016)[126]
Former shareholders:	Robert Hoh (from 27/01/2000 until his death)

[126]There are ongoing legal proceedings concerning the transfer of Robert Hoh’s share to his son.

Other relevant entities
Beaustate Snd Bhd	This is a company controlled by George Hoh: T532.25
Rohandaren Holdings Snd Bhd	This is a company that was controlled by Robert Hoh: T532.27

TABLES O – S

RELEVANT TRUSTS

Ying Mui Trust
Established:	06/07/2001
Current trustee:	Frosthollow Pty Ltd (appointed 18/11/2011)
Former trustee:	Ying Mui Pty Ltd (from 06/07/2001 until 18/11/2011)
Appointor:	Frank Hoh
Specified beneficiaries:	Frank Hoh and Lokit Investments Pty Ltd George Hoh and Beaustate Sdn Bhd Robert Hoh and Rohandaren Holdings Sdn Bhd Maureen Oborn
General beneficiaries:	As defined in clause 1.2 of the trust deed to mean, inter alia, the Specified Beneficiaries and: “the parents, brothers, sisters, spouses, widows, widowers … children and next of kin of the Specified Beneficiary or Specified Beneficiaries and the spouses, widows, widowers, children and grandchildren of such brothers, sisters, spouses children … Any charity, or charitable, educational, benevolent, sporting or religious institution person or persons, corporations or associations howsoever constituted whom the Trustee in the Trustee’s absolute discretion considers worthy of receipt of funds either for charitable, educational, benevolent, sporting or religious purposes or for the relief of poverty or for scientific or public educational purposes …” (clause 1.2) The Schedule specifically provides General Beneficiaries: “As specified in Clause 1.2, including the Spouse, Grandparents, Parents, Brothers, Sisters, Aunts, Uncles, Nieces, Nephews, Cousins, Children, Grandchildren of the said Specified Beneficiaries whether natural relatives or adopted relatives and all subsequent issue of any of the above mentioned persons”.

Amore Trust
Established:	20/06/2002
Current trustee:	Frosthollow Pty Ltd (appointed 08/12/2011)
Former trustee:	Amore Corporation Pty Ltd (from 20/06/2002 until 08/12/2011)
Appointor:	Frank Hoh
Specified beneficiaries:	Frank Hoh, Pooi Lim, Lynn Hoh, Ian Hoh and Lokit Investments Pty Ltd George Hoh and Beaustate Sdn Bhd Robert Hoh and Rohandaren Holdings Sdn Bhd Maureen Oborn
General beneficiaries:	As defined in clause 1.2 of the trust deed to mean, inter alia, the Specified Beneficiaries and: “the parents, brothers, sisters, spouses, widows, widowers … children and next of kin of the Specified Beneficiary or Specified Beneficiaries and the spouses, widows, widowers, children and grandchildren of such brothers, sisters, spouses children … Any charity, or charitable, educational, benevolent, sporting or religious institution person or persons, corporations or associations howsoever constituted whom the Trustee in the Trustee’s absolute discretion considers worthy of receipt of funds either for charitable, educational, benevolent, sporting or religious purposes or for the relief of poverty or for scientific or public educational purposes …” (clause 1.2) The Schedule specifically provides General Beneficiaries: “As specified in Clause 1.2, including the Spouse, Grandparents, Parents, Brothers, Sisters, Aunts, Uncles, Nieces, Nephews, Cousins, Children, Grandchildren of the Said Specified Beneficiaries whether natural relatives or adopted relatives and all subsequent issue of any of the above mentioned persons.”

FRG Investments Trust
Established:	23/12/2009
Current trustee:	Olrey Pty Ltd
Former trustee:	None
Appointor:	Frank Hoh
Nominated beneficiaries:	Frank Hoh, Lynn Hoh, Ian Hoh, Lokit Investments Pty Ltd and Linjoshan Pty Ltd George Hoh, Braden Hoh and Beaustate Sdn Bhd Han Hoh and Rohandaren Holdings Sdn Bhd Maureen Oborn Ying Mui Pty Ltd
General beneficiaries:	As defined in clauses 2.1 and 2.2 of the trust deed to mean, inter alia, the Nominated Beneficiaries and: “the parents brothers sisters spouses … of the Nominated Beneficiary or Nominated Beneficiaries and the spouses widows widowers children and grandchildren of such brothers sisters spouses children and … Any charity or charitable, educational, benevolent, sporting, religious institution person or persons, corporation, corporations, association or associations, howsoever constituted whom the Trustee in the Trustee’s absolute discretion considers worthy of receipt of funds either for charitable, educational, benevolent, sporting or religious purpose or for the relief of poverty or for scientific or public educational purposes …”

Woolshed Unit Trust
Established:	16/09/2011
Current trustee:	Lumarkye Pty Ltd
Former trustee:	None
Appointor:	None
Specified unit holders:	River Ventures Pty Ltd – 100 units Dominic Low – 100 units

FKN Hoh Family Trust
Current trustee:	Lokit Investments Pty Ltd
Beneficiaries:	This trust the “family trust” of Frank, Pooi, Lynn and Ian

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George	Frank
Maureen (George and Frank’s sister)	Pooi (Frank’s wife)
Han (Robert’s son and George’s nephew)	Lynn (Frank’s daughter)
Dominic (Lynn’s husband)
Ian (Frank’s son)

[2017] VSC 29

8 FEBRUARY 2017