Tjiong & Anor v Tjiong [2010] NSWSC 578

New South Wales Supreme Court

CITATION : Tjiong & Anor v Tjiong [2010] NSWSC 578

HEARING DATE(S) : 1 to 16 June and 14 to 18 December 2009

JUDGMENT DATE : 4 June 2010

JURISDICTION : Equity Division

JUDGMENT OF : Palmer J

DECISION : Declaration that Plaintiffs' consent to establishment of trust procured by fraudulent misrepresentation; finding that Defendant fabricated evidence; costs to be argued.

CATCHWORDS : TRUSTS – FRAUD – PERJURY – Whether Plaintiffs' consent to establishment of trust under control of Defendant procured by Defendant's misrepresentation – whether Defendant fabricated evidence in support of his case.

- Civil Aviation Act 1988 (Cth) – s 8 LEGISLATION CITED : - Crimes Act 1900 (NSW) – Pt 7 Div 4 - Trustee Act 1925 (NSW) – s 70, s 85 - Wills Probate and Administration Act 1898 (NSW) – s 93

CATEGORY : Principal judgment

CASES CITED : - Black v Lipovac (1998) 217 ALR 386 - Briginshaw v Briginshaw (1938) 60 CLR 336

Katrina May Lan Tjiong (First Plaintiff, First Cross Defendant) PARTIES : Lindsay Kuang Djin Tjiong (Second Plaintiff, Second Cross Defendant) Richard Tat Tjhien Tjiong (Defendant, Cross Claimant)

FILE NUMBER(S) : SC 2005/257959

COUNSEL : M.B. Evans, C. Lambert (Plaintiffs, Cross Defendants) P. Hallen SC, J. Millar (Defendant, Cross Claimant)

SOLICITORS : O'Brien Lawyers (Plaintiffs, Cross Defendants) Diamond Conway (Defendant, Cross Claimant)

2005/257959 Tjiong & Anor v Tjiong

JUDGMENT

4 June, 2010

Introduction

1 The Plaintiffs, Katrina and Lindsay Tjiong, are the only children of the late Dr George Tjiong, the brother of the Defendant, Dr Richard Tjiong. For the sake of convenience and without intending disrespect, I will refer to members of the Tjiong family by their first names. 2 On 23 December 2001 George, who was seriously ill with cancer, executed a will appointing Richard as his executor and leaving the whole of his estate equally to Katrina and Lindsay. Two days later, George suffered a massive stroke during surgery. He survived but was seriously incapacitated and was unable to deal with his financial affairs. Pursuant to an enduring power of attorney which had been executed by George on 29 March 1996 in favour of Richard and Katrina jointly and severally, Richard took over management of George's investments. 3 On 15 December 2003, a trust deed was executed between Richard Tjiong's wife, Kathryn, as settlor and Maroka Pty Ltd ("Maroka") as trustee establishing the George Tjiong Family Trust as a discretionary trust ("Family Trust"). The directors of Maroka were Richard, Katrina and Lindsay. Using the power of attorney executed in 1996, Richard transferred assets of George into the Family Trust. The value of those assets was about $1.3M. Those assets would have formed part of George's deceased estate, and would have passed under George's will to Katrina and Lindsay. The assets left in George's estate were worth between $700,000 and $1M. Katrina and Lindsay gave their consent to the transfer of assets into the Family Trust and they executed the Trust Deed as directors of Maroka. The beneficiaries of the Family Trust were George, Katrina and Lindsay and three sisters and one brother of George, Harry. The trustee had a discretion to appoint capital and income between the discretionary beneficiaries. 4 On 30 January 2004 George died. 5 By early April 2004, discord began to arise between Katrina and Lindsay on the one hand and Richard on the other as to the management and distribution of funds in the Family Trust. Richard wanted George's brother and sisters to receive part of the capital because, he said, they had helped care for George during his last illness. Richard referred to the brother and sisters as "carers". Katrina and Lindsay were not convinced that the carers had rendered any particular services to George worthy of financial recognition and they wished to have the Trust Fund distributed to them alone. 6 The discord escalated into open hostility. Katrina and Lindsay insisted on receiving money from the Family Trust. On 9 April 2004, with great reluctance, Richard gave each of them a cheque for $100,000 drawn by Maroka but post-dated to 22 April 2004. 7 On 14 April 2004 Richard, in exercise of the powers conferred upon him as appointor under the Family Trust Deed, removed Maroka as trustee and appointed himself as sole trustee. On the same day Katrina and Lindsay were requested to return the cheques for $100,000 given to them on 9 April. Katrina and Lindsay sought legal advice. 8 On 21 April 2004, according to Richard, he received a telephone call from a Mr Johnson who foreshadowed a large medical negligence claim against George's estate. On 30 April 2004, Richard's solicitor, Mr Peter Thornton, then a partner of Ebsworth & Ebsworth, received a letter from Rod Johnson foreshadowing a medical negligence claim against George made on behalf of Mr Johnson's fourteen year old stepson, Kevin. Richard took the position that no distribution to Katrina and Lindsay could be made from George's estate or from the Family Trust until the medical negligence claim by Mr Johnson on behalf of Kevin had been finally resolved. 9 Between 30 April 2004 and 29 May 2009 a further six letters were received by Richard's solicitor or Katrina sent by Rod Johnson or Sharon Reeves, the mother of Kevin, vacillating as to whether the medical negligence claim would proceed. The foreshadowed claim was completely bogus – as Richard now concedes. There never was a Rod Johnson, Sharon Reeves or Kevin Reeves. 10 On 11 February 2005, Katrina and Lindsay commenced these proceedings. They sought: