Supreme Court New South Wales Medium Neutral Citation: Chang v Tjiong [2023] NSWSC 823 Hearing dates: 11 July 2023 Date of orders: 11 July 2023 Decision date: 11 July 2023 Jurisdiction: Equity Before: Meek J Decision: Notice of motion dismissed Catchwords: ORDERS — Construction of orders — Reasons for Judgment address the question as to whether a trust had been determined by certain payments — Reasons conclude trust not so determined — Specific orders crafted with a view to trustees being appointed and reporting regarding the corpus and income of the trust and any claims for indemnity — Trustees issue interim report with qualifications — Process of issuance of interim report(s) contrary to the regime envisaged by Court's orders and apt to give rise to unwieldy process of disputation — Queries of trustees to be addressed not by issuing interim report but by invoking liberty to apply for the Court's direction prior to issuing of a final report TRUSTS — Report to Court directed to be provided — Interim report provided raising qualifications such as (1) which of differing approaches in identifying corpus and income of trust is appropriate and (2) what assumptions are appropriate — Court orders do not envisage issuance of an interim report but rather for the trustees to seek direction on matters relating to the report prior to production of one final report Cases Cited: Chang v Tjiong [2022] NSWSC 1092 Category: Procedural rulings Parties: Tzer Chin Chang (Plaintiff) Katrina May Lan Tjiong (First Defendant) Timothy Paul Heesh (Second Defendant) Mark Kenneth John Everingham (Third Defendant) Representation: Counsel: D Barlin (Plaintiff / Respondent) Solicitors: Commlex Pty Ltd (Plaintiff / Respondent) O'Brien Lawyers (First Defendant / Applicant) Carroll & O'Dea Lawyers (Second and Third Defendants) File Number(s): 2020/217303 ex tempore JUDGMENT (revised) 1. HIS HONOUR: The application before the Court is a notice of motion filed by the first defendant seeking orders in relation to a report prepared by the second and third defendants who have been appointed as trustees of a trust described as the "Burwood Trust" and further for leave to issue subpoenas to the trustees and to others seeking production of documents. 2. The application, at least in part, has its genesis in reasons for judgment delivered by Henry J on 16 August 2022 in respect of proceedings concerning the Burwood Trust: Chang v Tjiong [2022] NSWSC 1092. Her Honour in those reasons dealt with a question as to whether or not the Burwood Trust had been determined by certain payments. Her Honour concluded that it was not so determined. 3. Her Honour made a number of orders as follows: 1. Declare that the income and corpus of the trust (Burwood Trust) that was identified by Justice Palmer in the decision of 4 March 2009 in Chang v Tjiong [2009] NSWSC 122 (Decision) has been held by: (a) George Tat Loek Tjiong (Deceased) from 1976 until the Deceased's death on 30 January 2004, noting that the Deceased lost capacity on or about 24 December 2001, after which time Richard Tjiong (Richard) and the Defendant were joint and several attorneys under an enduring Power of Attorney dated 29 March 1996 which had effect until the Deceased's death; (b) Richard as bare trustee from 18 March 2004, being the date he was granted Probate over the estate of George Tjiong, until 16 June 2009; and (c) the Defendant as bare trustee since her appointment as the administrator of the estate of George Tjiong on 16 June 2009. 2. Declare that the objects of the power to appoint the income and corpus of the Burwood Trust (Objects) are the persons living and identified in Annexure "A" of these orders, with such power to be exercised having regard to the needs of the Objects, as found by Justice Palmer in the Decision at [36]. 3. Order pursuant to section 70 of the Trustee Act 1925 (NSW) that Stephen Neville Hall and Timothy Paul Heesh (Trustees) be appointed as trustees of the Burwood Trust. 4. The Court notes that upon the appointment of the Trustees pursuant to Order 3, the Trustees are active trustees of the Burwood Trust. 5. Order pursuant to section 71 of the Trustee Act 1925 (NSW) that all of the property (whether income or corpus, including any choses in action) of the Burwood Trust be vested in the Trustees (for the avoidance of doubt, including all of the books and records) of the Burwood Trust: (a) with the Trustees to provide an inventory of property (including any book and record) to the Plaintiff and the Defendant within 30 days of receipt by the Trustees; and (b) subject to the proviso that in the event that any such "book or record" or other "property" is also a book or record or property of the Estate of the Deceased or of the trustee of the George Tat Loek Tjiong Family Trust, then the Defendant shall be entitled to obtain a photocopy of the said book or record or property from the Trustees at her request as needed, and at her expense as to photocopying. 6. Order that all documents, including instructions given and advice(s) obtained by the Defendant with respect to the matters deposed to in [41] of the affidavit of Andrew Michael O'Brien affirmed on 4 March 2022 be delivered up to the Trustees within 14 days of these Orders. 7. Note that the Plaintiff is to pay the amount of $30,000 (Fund), to be held by the Plaintiff's solicitor on trust, on account of the Trustees' fees and costs (Fees). 8. Order that Mr Hall is to provide a report to the Court (Report) with respect to the Burwood Trust from 20 December 1996 by 16 November 2022. 9. The Report is to identify: (a) the corpus (including any accretions) of the Burwood Trust and the income (including any accumulations) of the Burwood Trust from the date of the receipt of the proceeds of sale of xx Street, Burwood in the state of New South Wales (Burwood Unit) being 31 December 1996 (the date of receipt of the final payment with respect to the proceeds of sale of the Burwood Unit) to date; and (b) any claims by the Defendant for indemnity in relation to expenditures said to have been incurred with respect to the management, administration or otherwise related to the Burwood Trust. 10. The Court notes that the Report will be served by the Trustees on the parties of these proceedings as well as any Object who wishes to receive the Report. 11. The Trustees be given liberty to apply on three (3) days' notice to the Court and to the parties prior to delivery of the Report to seek directions with respect to any matter relating to the Report. 12. The matter be relisted before the Equity Registrar for further directions on 7 December 2022, with the intent that the directions to be made will facilitate a further hearing to consider the determination of the amount (if any) to be paid to the Trustees (Amount) and which is to be held by the Trustees subject to the terms of the Burwood Trust. 13. The Court notes that the Amount is to be determined by the Court after delivery of the Report and that in arriving at its determination, the Court may decide any matter relevant, being questions concerning the corpus, income and any claims for indemnity out of the Burwood Trust funds. 14. Order that the Plaintiff be entitled to be indemnified from the Amount with respect to the Fees paid to the Trustees from the Fund. 15. Order that the Trustees be indemnified for their costs from the Amount on the trustee basis. 16. Order that the Statement of Claim filed 24 July 2020 be otherwise adjourned to 7 December 2022. 17. Unless the Defendant makes an application for a different costs order by no later than 7 October 2022, order that the Defendant pay the Plaintiff's costs of the proceedings to date on the ordinary basis, with the Defendant having no right of indemnity or exoneration from the income and/or capital of the Burwood Trust. 18. Order that the Defendant pay the Plaintiff's costs of the Notice of Motion filed by the Defendant on 4 March 2022 on the ordinary basis. 19. The parties have liberty to apply on three (3) days' notice. 1. Her Honour, pursuant to the orders, appointed Mr Hall and Mr Heesh as trustees of the Burwood Trust. Mr Hall did not continue as a trustee, and he was replaced by Mr Everingham. 2. On 7 February 2023, Mr Heesh prepared a report which is described as an interim report, and it was reviewed or there was some other input by Mr Everingham. 3. On 13 February 2023, Mr Heesh and Everingham were made second and third defendants to the proceedings. 4. On 28 February 2023, there was a listing before Registrar Walton and certain directions were made in relation to that report. 5. Between 17 March 2023 and 12 May 2023, there were other listings and interlocutory matters, including in relation to a notice to produce. 6. On the hearing of the notice of motion, I raised with the parties the question of the character of the interim report in light of the fact that the proposed orders did not appear to envisage anything other than a form of final report. 7. Relevantly, the procedures envisaged by the orders are that: 1. Mr Hall would provide a report to the Court by a certain time: Order 8. 2. The report was to identify a number of matters including the corpus and income of the trust from a certain date and any claims by the first defendant for indemnity: Order 9. 3. The report would be served by the trustees on the parties to the proceedings, including any objects of the Burwood Trust who wished to receive the report: Order 10. 4. In the event that the trustees had questions in relation to preparation of the report the orders envisaged that the trustees have liberty to apply on three days' notice to the Court and the parties prior to the delivery of the report to seek directions with respect to any matter relating to the report: Order 11. 5. Consequent upon the receipt of the report, the Court would make a determination of the amount to be paid to the trustees, the amount being evidently an identification of the property of the trust, being the corpus and income: Order 12. 1. The orders appear to have further contemplated that there may be certain directions once the report was provided and that then a determination would be made by the Court on questions concerning the corpus, income and any claims for indemnity out of the Burwood Trust funds: Orders 12 and 13. 2. It appears to me that the orders of the Court did not contemplate the provision of an interim report, nor did they contemplate that there would be opportunity for disputation over any interim report issued. 3. It appears evident from the interim report that the trustees had a number of queries in relation to their task. This appears at least from the executive summary and other parts of the report. 4. I am of the view that what ought to have happened is that in respect of any queries that the trustees had on which they considered they should seek the Court's direction, that, in accordance with Order 11, they should not have issued an interim report but rather invoked the liberty to apply in Order 11 to seek the direction of the Court with respect to the queries, being any matter relating to the report. 5. It is clear from the terms of Order 11 that the exercise of the liberty to apply (which may be availed of, generally speaking, by the filing of a notice of motion in the proceedings) was to take place prior to the delivery of the report. 6. It may well be the case that, ultimately, if and when a final report is issued there is disputation by one or more of the parties in relation to it. 7. However, the process would become unwieldy if interim reports were issued (which, in any event, are not contemplated by the orders) and there was disputation over interim reports even prior to the Court receiving the final report. 8. For the above reasons, I am of the view that the notice of motion is arguably misconceived, but in any event premature. 9. I consider what ought to happen is that the trustees should be given an opportunity to formulate questions on which they seek the Court's direction as contemplated by Order 11 of Henry J's orders and to avail themselves of the liberty to apply pursuant to Order 11. 10. I do not propose to be descriptive about how the liberty to apply should be invoked. However, possibilities include the notice of motion setting out questions within the body of the motion or, alternatively, the motion seeking (in the terms of Order 11) the direction of the Court with respect to identified questions set out in a schedule to the motion. 11. My sense of the matter is that potentially some of the questions of the trustees which appear to be raised within the interim report or embedded in the interim report at various places may well be matters which may be more appropriately dealt with by Henry J. 12. It is not entirely necessary for me to form any concluded view about that, certainly without seeing questions as formulated. However, it occurs to me that it may be helpful in the first instance that once the trustees have formulated questions and availed themselves of the procedure under Order 11 of the orders that in the first instance the matter ought be listed before Henry J so that her Honour can make an assessment of whether the character of the questions are such that it is appropriate for her Honour to deal with them or whether some other course should be taken. 13. I raised with the parties the question of the costs of the notice of motion. Following discussion with the legal representatives, I proposed that the costs of the notice of motion be the plaintiff's costs in the cause. I understood that Mr Barlin (counsel for the plaintiffs) was content with that course and that Mr O'Brien (solicitor for the first defendant) did not or could not say anything in particular against that. 14. The orders of the Court are as follows: 1. Order that the notice of motion filed by the first defendant on 12 May 2023 is dismissed. 2. Order that the costs of and incidental to the notice of motion be the plaintiff's costs in the cause. 3. Stand the matter over to Wednesday, 9 August 2023 before the Equity Registrar. 4. Order that the parties have liberty to approach the Associate to Henry J with a view to listing before her Honour any such notice of motion as the trustees may be advised to file to avail themselves of the liberty to apply pursuant to Order 11 of the orders of Henry J made on 16 August 2022. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 13 July 2023