Ying Mui Pty Ltd v Hoh (No 6) - [2017] VSC 730

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT

S CI 2012 06147

YING MUI PTY LTD (ACN 009 992 449)	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
DATE OF HEARING:	11, 12, 15 and 16 MAY 2017
DATE OF JUDGMENT:	15 DECEMBER 2017
CASE MAY BE CITED AS:	YING MUI & ORS v FRANK KIANG NGAN HOH & ORS (No 6)
MEDIUM NEUTRAL CITATION:	[2017] VSC 730

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CORPORATIONS — Duties of director of corporate trustee — Whether director breached fiduciary duties to corporate trustee — Director breached his duty by failing to exercise his relevant powers for a proper purpose and failing to act in good faith in the best interests of the relevant companies — Directors of trust company failed to act honestly – Directors ought not be excused pursuant to s 1318 Corporations Act 2001 (Cth) — Knowing assistance and involvement in contraventions under s 79 Corporations Act — Elements considered.

EQUITY — Defaulting fiduciary — Whether allowance should be made for fiduciary’s work in managing the business of trusts — Principles in Robert Deutsch & Ors v Erwin Deutsch & Ors [2012] VSC 227 at [170] applied — Whether under a trust a director of the trustee breached the No Conflict Rule by purporting to appoint himself to the office of appointor — No breach on this basis found — Equitable jurisdiction as to entitlement to fair and reasonable remuneration for management services irrespective of breaches of duty by claimant parties.

REAL PROPERTY — Section 42 of the Transfer of Land Act1958 (Vic) — Whether proprietary relief available — Meaning of ‘fraud’ in s 42 considered — Fraud under s 42 found — Indefeasibility of title not established — Constructive trusts to be declared.

TRUSTS — Duties of trustee — Whether fiduciaries breached duties — Possessing the power to do something enables a power to be exercised by a trustee — Existence of power does not of itself legitimise the exercise of that power if done improperly — Breach of trust arising from entry into an asset sale and distribution programme of trust assets — Whether persons in breach entitled to fair and reasonable remuneration for management services irrespective of breaches of…

Grounds of appeal

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

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

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

Consideration

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

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

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Details

Case: [2017] VSC 730
Decision Date: 15 DECEMBER 2017

CaseChat Overview and Summary

Ying Mui Pty Ltd brought proceedings against Hoh, involving disputes over the management and administration of trust assets. The case was heard by the Supreme Court of Victoria. The primary issues revolved around whether the directors of the trustee company breached their fiduciary duties and whether they were entitled to remuneration despite their breaches.

The court examined whether the directors breached their fiduciary duties by exercising their powers improperly and not acting in the best interests of the companies. It also considered if the directors could be excused under section 1318 of the Corporations Act 2001 (Cth) and if they knowingly assisted in contraventions under section 79 of the same Act. The court found that the directors had failed to act honestly and did not qualify for any relief under the statute.

The reasoning of the court included a detailed analysis of the principles established in Robert Deutsch & Ors v Erwin Deutsch & Ors, where it was held that equitable jurisdiction exists to award fair and reasonable remuneration for management services, despite breaches of duty. The court concluded that while no breach of the No Conflict Rule was found, the directors were not entitled to remuneration due to their improper conduct. Furthermore, the court declared constructive trusts due to fraud under section 42 of the Transfer of Land Act 1958 (Vic), finding that indefeasibility of title was not established.

The final orders included the setting aside of the appointment of a new trustee, declaring the appointment invalid, and recommending the appointment of an independent trustee for the relevant trust. The court's decision underscored the importance of proper management and adherence to fiduciary duties in the administration of trusts.

Orders