Supreme Court New South Wales Medium Neutral Citation: Application of Lin Tang t/as Lin Tang & Co Lawyers [2014] NSWSC 1877 Hearing dates: 2 May 2014 Decision date: 02 May 2014 Jurisdiction: Equity Division Before: Brereton J Decision: Orders made for payment out of funds in court, plaintiff paying funds in entitled to costs. Catchwords: PROCEDURE – miscellaneous procedural matters – funds in court – whether reasonable for plaintiff to pay funds into court – where plaintiff on notice of multiple interests – where instructions not clearly unanimous Cases Cited: In re Elliot's Trust (1873) LR 15 Eq 194 In re Woodburns Trusts (1857) 26 LJ (ns) Ch 522 Re Brocklesby (1861) 29 Beav 652 Re Wylly's Trusts (1860) 28 Beav 458 Category: Procedural and other rulings Parties: Jing Sun (applicant) Lin Tang trading as Lin Tang & Co Lawyers (first respondent) Yingjie Wang (second respondent) Representation: Counsel: M Gorrick (applicant) A Kuklik (first respondent) A Norrie (second respondent) Solicitors: Teece Hodgson & Ward (applicant) Lin Tang & Co Lawyers (first respondent) Wang & Associates (second respondent) File Number(s): 2013/272647 Judgment (ex tempore) 1. HIS HONOUR: By notice of motion filed on 17 December 2013, the applicant Jing Sun sought payment to her (or by direct deposit into an account nominated by her) of the sum of $293,417.92 paid into Court to the credit of these proceedings by the first respondent/plaintiff Lin Tang (trading as Lin Tang & Company Lawyers) pursuant to a summons filed on 9 September 2013. The second respondent Yingjie Wang, who also has an interest in the funds paid into Court, consents in substance to orders which, after discussion, all parties' interests appear to agree are appropriate; I will come to them in due course. However, there remains outstanding a question of costs, as the applicant and the second respondent contend that it was unreasonable for the plaintiff to pay the funds into Court at all, and seek an order that he pay the costs occasioned by having adopted that course. 2. All the parties to these proceedings are solicitors. The applicant Jing Sun was formerly an employed solicitor in the practice of the first respondent/plaintiff Lin Tang. She is the administratrix of the Estate of the Late Ling Mao, pursuant to a grant made on 29 April 2011 to her in her capacity as attorney of Jinquan Tan and Chenghu Mao, the parents of Ling Mao and the next of kin of Ling Mao entitled on intestacy. 3. Lin Tang & Co Lawyers were originally retained by Jinquan Tan and Chenghu Mao to apply for administration of the estate and, so far as can be ascertained from the material before the Court and the course of events, it was in her capacity as Lin Tang's employed solicitor that Jing Sun became the attorney of Jinquan Tan and Chenghu Mao and obtained a grant of administration on their behalf. Lin Tang & Co continued to act for Jing Sun in her capacity as administratrix until late 2013, in circumstances to which I shall come. 4. The second respondent Yingjie Wang is the administrator of the Estate of the late Huan Sun pursuant to a grant of administration made on 4 April 2012 to him in his capacity as attorney of the parents of the deceased and that deceased's next of kin entitled on intestacy. 5. The two estates are connected because Huan Sun and Ling Mao were husband and wife. Huan Sun murdered Ling Mao. They had two parcels of jointly owned real property, and also a jointly held safety deposit box. 6. On 7 May 2012, in proceedings 2011/407378 between Jing Sun (in her capacity as administratrix of the Estate of Ling Mao) and Yingjie Wang (in his capacity as administrator of the Estate of Huan Sun) orders were made by consent (1) that the forfeiture rule apply with respect to the murder of the late Ling Mao by the late Huan Sun (who himself committed suicide shortly after he was convicted of the murder); (2) declaring that Yingjie Wang as administrator of the Estate of the late Huan Sun held on trust for Jing Sun as administrator of the Estate of the late Ling Mao, a one half interest as tenant in common with the plaintiff of certain real property and, in particular, Albert Road, Strathfield, and Conie Avenue, Baulkham Hills, and also of the contents of the safety deposit box; and (3) appointing Jing Sun and Yingjie Wang as trustees of the two parcels of land concerned upon the statutory trust for sale under (NSW) Conveyancing Act 1919, Pt 4, Div 6; (4) that the trustees sell the property and deduct from the proceeds the commission and other expenses of sale and distribute the balance in equal shares as tenants in common between the two estates; (5) reserving liberty to apply to seek the advice of the Court in the event that any difficulties arose in relation to the sale; and (6) noting an agreement that Jing Sun would have conduct of the sale of the Baulkham Hills property and Yingjie Wang of the Strathfield property. 7. Both properties were subsequently sold. For reasons which do not emerge from the evidence, the proceeds of sale of both properties were paid into the trust account of Lin Tang and credited to a ledger in that account in the name of Jinquan Tan and Chenghu Mao Number 2 the Estate of Ling Mao (jointly owned properties). As at 18 June 2013, a balance of $268,378.45 stood to the credit of that ledger account in Lin Tang's trust account, representing - in addition to the proceeds of sale of the two properties - rents which had been derived from them in the meantime. 8. However, it is very clear from the orders made in the forfeiture proceedings, to which I have referred, that the Estate of Huan Sun had a substantial interest in those moneys. Moreover, it is very clear that, on first principles of trust law, the second respondent Yingjie Wang was entitled, if not obliged, to have those funds held in her name jointly with Jing Sun, as the joint trustees appointed under the orders in the forfeiture proceedings. 9. There remained outstanding between the two estates some dispute as to the precise apportionment of that fund. Lin Tang had in his trust account another account ledger, named Jinquan Tan and Chenghu Mao Number 1 - the Estate of Ling Mao. As at 19 June 2013, $25,039.47 stood to the credit of that account and appears to have been solely referable to the Estate of Ling Mao. 10. Jing Sun left the employ of Lin Tang's firm on 20 July 2012. She continued to act as administratrix of the Estate of Ling Mao, and Lin Tang continued to act as solicitor for that Estate, until 23 July 2013, when Jing Sun directed Lin Tang to transfer the files to Teece Hodgson & Ward. 11. In addition, Lin Tang continued to act for Chenghu Mao and Jinquan Tan, and sometimes communicated with them and received instruction from them through an agent in respect of whom Lin Tang held a letter of authority provided by Chenghu Mao and Jinquan Tan dated 24 August 2011, authorising their niece Jun Yu "to act and communicate with Lin Tang & Co Lawyers on our behalf in all manners relating to the Estate of the Late Ling Mao (our daughter) and all acts carried out by Jun Yu will have the same effects as acts of our own". It will be observed that that letter of authority postdates the grant of administration to Jing Sun on 29 April 2011. 12. As at 9 August 2013, Lin Tang knew that Yingjie Wang, as well as Jing Sun, had an interest in the fund that I will call the $268,000 fund, and that the respective entitlements between them had not been agreed. Lin Tang anticipated that Jing Sun would request the transfer of the funds held in his trust account or, at least, direct payment of those funds to third parties. In those circumstances, on 9 August, he, with an employee, consulted the Law Society of New South Wales, and was advised to pay the funds into Court in order to avoid risking personal liability for inappropriately dealing with those funds. Although there was criticism in the Court of submissions of the completeness of the evidence of the consultation with the Law Society and the absence of an affidavit from the relevant officer of the Law Society, it seems to me that Lin Tang's evidence was corroborated by that of his employee Matthew Jaukovic, and was not the subject of any challenge, and there is not the slightest reason why I should not accept it. 13. After Lin Tang had obtained that advice, on 12 August, Jing Sun instructed Lin Tang to transfer the funds held on trust for the Estate of Ling Mao to Teece Hodgson & Ward. 14. On 23 August, Lin Tang's employee Matthew Jaukovic sent two emails. One was to the second respondent Yingjie Wang. It was in the following terms, relevantly: We wish to inform you that we have been requested by the administrator of the Estate of the Late Ling Mao to hand over this matter to Teece Hodgson & Ward Solicitors. We were also requested to transfer the estate related funds which are in our trust account to Teece Hodgson & Ward. We kindly invite your view on the issue of the transfer of funds noting that the Estate of the Late Huan Sun is beneficially entitled to some of those funds currently held by us. 1. No response was ever received to that email. 2. The second email was sent to Jun Yu, the niece of Chenghu Mao and Jinquan Tan, in respect of whom the letter of authority was held. That email was in very similar terms as follows: We wish to inform you that we have been requested by the administrator of the Estate of the Late Ling Mao to hand over this matter to another law firm, Teece Hodgson & Ward Solicitors. We were also requested to transfer the estate related funds, which are in our trust account, to Teece Hodgson & Ward. We kindly ask for the beneficiaries' views and instructions of the transfer of funds to Teece Hodgson & Ward. 1. On 26 August, Lin Tang had a conversation on the telephone with Jun Yu in which, in response to his informing her of the request to transfer the money in the trust account to Teece Hodgson & Ward, Jun Yu said: I support that the money be transferred to the Supreme Court of New South Wales, as I think that the money will be better protected and the Court can decide on the distribution. 1. Following that, on 9 September 2013, Lin Tang paid the moneys in question into Court, and subsequently served the summons under which the moneys were paid in in compliance with the rules. 2. Once the notice of motion for payment out was filed, Lin Tang, on 31 January, indicated his consent to the order sought for payment out, but not to the orders sought in respect of costs. Since then, his involvement in the proceedings has only been to resist the application for a costs order against him. 3. When the matter was first referred to me, then sitting as duty judge, by the registrar, for the making of consent orders, I was not prepared to make the orders sought as, amongst other reasons, evidence of the consent of Chenghu Mao and Jinquan Tan to that course was unsatisfactory, as what purported to be a translation was uncertified. There was no evidence of the position or attitude of Jun Yu - who, on behalf of Chenghu Mao and Jinquan Tan, had apparently conveyed the instructions to pay the moneys into Court. 4. Following an adjournment, the evidence now adequately establishes that Jing Sun and Yingjie Wang, and Chenghu Mao and Jinquan Tan, all consent to the payment out of the funds to Teece Hodgson & Ward subject to notations that the moneys would be held by Teece Hodgson & Ward on trust for Jing Sun "in her joint capacity" as trustee of the trusts for sale of the jointly held properties, on the one hand, and as administratrix of the estate, on the other, and, in due course, allot the funds to two separate accounts and not deal with them without the agreement of Yingjie Wang. 5. Nonetheless, given the position and legal obligations of Yingjie Wang, as a joint trustee of the $268,000 fund, I did not consider that to be an appropriate course for a Court of Equity with responsibility for the supervision of the administration of trusts to sanction. It would effectively have sanctioned a course in which one of the trustees was not performing his responsibility of getting into his control, at least jointly with the other trustee, funds of the trust. 6. Ultimately, after discussions between the bench and the parties, it was agreed that the fund could be apportioned between two payments out, with that proportion representing the proceeds of the $268,000 fund to be paid out to Jing Sun and Yingjie Wang jointly as trustees pursuant to the trust for sale, and the $25,000 fund to Teece Hodgson & Ward to be held upon trust for Jing Sun in her capacity as administratrix of the Estate of the Late Ling Mao. 7. The registrar has certified that the funds now in Court, with interest accrued to 31 December 2013 of $1,798.91, amount to $295,216.83, and that there are no stop orders. 8. Jing Sun and Yingjie Wang seek an order that Lin Tang pay the costs of the application for payment out on the basis that it was unreasonable for him to pay the moneys into Court "peremptorily" and without notice to them of his intention to do so. In substance, they submit that there was no necessity or requirement to pay the funds into Court, no warning of the intention to do so, and that had they been advised of the intention to do so they would have been able to resolve any outstanding disagreement and avoided that consequence and associated costs. It was also implicit, if not explicit, in Jing Sun's submissions that Lin Tang should have acted on her instructions as the administratrix of the Estate of Ling Mao and not taken into account instructions from Jun Yu. 9. As it seems to me, as at 9 September 2013, the position in which Lin Tang found himself was as follows. First, he had been instructed by Jing Sun to transfer the funds in his trust account to her solicitors Teece Hodgson & Ward. Secondly, he knew that Yingjie Wang, as well as Jing Sun, had an interest in, and was entitled to a portion of, the $268,000 fund and, in very approximate terms, roughly 50 percent of that fund. Thirdly, he had sought Yingjie Wang's attitude to the request, but he had not responded or given any indication of his attitude. Fourthly, he had sought to elicit the attitude of his original clients and the persons on whose behalf Jing Sun held her grant of administration - namely, Chenghu Mao and Jinquan Tan - via their nominated agent Jun Yu, and their instructions communicated in that way were to pay the money into Court. 10. I readily accept that there was not a high level of disputation between the two estates as to their respective entitlement to the $268,000 fund. In suggesting that that was approximately 50/50, I do not for a moment purport to resolve that question, but that simply reflects the terms of the trusts for sale. No doubt, some adjustments to that result may well be required. But the fact that there was not a high level of disputation as to that entitlement is not to the point. Even if there was no disputation as to the respective entitlements at all, the second respondent Yingjie Wang still had a substantial interest, of which Lin Tang had notice. 11. I do not see how Lin Tang could possibly have safely transferred the funds to Teece Hodgson & Ward with that notice without the concurrence of Yingjie Wang. Yingjie Wang's apparent ignorance or disregard of his duty to be recorded as one of the persons entitled to the funds does not detract from the impact that notice would have on Lin Tang. A prudent solicitor would not have transferred the moneys to Teece Hodgson & Ward without Yingjie Wang's concurrence, and such concurrence, having been sought, had not been forthcoming. Simultaneously, a prudent solicitor would not disregard the instructions of Jing Sun and continue to retain the funds and not pay them over. It was suggested that it was unreasonable for Lin Tang to pay the funds into Court without following up his request to Yingjie Wang for express instructions or concurrence, but failing to follow up that request could be no more unreasonable than failing to answer it in the first place. 12. The foregoing analysis does not apply directly to the $25,000 fund, to which different considerations apply. In that case, Lin Tang had an instruction from the administratrix to pay the funds to Teece Hodgson & Ward, but a different instruction from Jinquan Mao and Chenghu Mao communicated through a different agent. Jing Sun says, as I have said implicitly, if not explicitly, that Lin Tang should simply have followed her direction as administratrix and not consulted the interests of Chenghu Mao and Jinquan Tan, and that it is not apparent why he preferred the instruction sourced through Jun Yu. 13. There are, I think, at least two answers to that. The first is that, whereas a payment into Court incurs no risk of liability, complying with the instruction of Jing Sun, contrary to the instruction communicated by his client's other authorised agent, may well have risked incurring personal liability. Secondly, in so far as it was suggested that this was a conflict of Lin Tang's own making, I completely reject that submission. Lin Tang was originally retained by Chenghu Mao and Jinquan Tan. His original retainer is with them. So far as the evidence shows, Jing Sun became involved only because she was an employee of Lin Tang. When she left the firm, she retained the grant of administration which she had first obtained because she was an employee of Lin Tang. Even so, it was not - contrary to what was urged - an absolute grant: in its terms, it was a grant to her not in her own right but as "attorney of Jinquan Tan and Chenghu Mao ... for their use and benefit". In other words, she was administratrix not in her own right, but as an agent for Jinquan Tan and Chenghu Mao as principals. 14. Because of the consensual position that has now been reached, it is not necessary to resolve, in any detail, the complexities that potentially arise, but the relationship was sufficiently complex that, in my view - in particular, where Lin Tang had originally been retained by Chenghu Mao and Jinquan Tan, and express instructions conveyed from them were to the contrary - it was entirely reasonable for him to consult their interests, through their nominated agent and, subsequently, to adopt the course which involved least risk - namely, payment into Court. 15. It may well be that, in an ideal world, notice would have been given to Jing Sun and Yingyie Wang of his intention to pay the moneys into Court, but failure to do that does not, in the context which I have described, make the course that was adopted unreasonable. While it is true that where a payment into Court is made by a trustee that is capricious, vexatious or oppressive, the Court will order the trustee to bear the costs occasioned by that course [see In re Woodburns Trusts (1857) 26 LJ (ns) Ch 522], it is also well established that the Court does not apply that rule "too strictly" or too stringently [see Re Wylly's Trusts (1860) 28 Beav 458 and Re Brocklesby (1861) 29 Beav 652]. The applicant and the second respondent invoked In re Elliot's Trust (1873) LR 15 Eq 194 but, in my judgment, that is far removed from the present case, as in that case there was simply no live dispute and no need whatsoever for the trustee to do anything other than retain the money until the claimant returned to England and proved his identity. 16. Accordingly, in my view, it was not at all unreasonable for Lin Tang to pay the funds into Court. There is no reason why he should be ordered to pay the costs of the proceedings for payment out. As his involvement in the proceedings since 31 January has been exclusively because he has been a respondent to a costs application, he is entitled to his costs of resisting that application which, unless the parties convince me otherwise, I propose to assess in the sum of $7,500. 17. On that basis, subject to the parties having anything to say about the form of the orders, I propose to make the following orders: 1. Order that the funds in Court to the credit of these proceedings be paid out of Court as follows: 1. the sum of $7,500 to the plaintiff for his costs; 2. as to the balance: 1. 91.47 percent to Jing Sun and Yingjie Wang as trustees pursuant to order 4 made on 7 May 2012 in proceedings 2011/407378; and 2. 8.53 percent to Teece Hodgson & Ward, the solicitors for the applicant Jing Sun in her capacity as administratrix of the Estate of the Late Ling Mao. 1. The applicant's costs of the motion be paid on the indemnity basis out of the Estate of Ling Mao. 2. The second respondent's costs of the motion be paid on the indemnity basis out of the Estate of Huan Sun. ********** 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: 12 January 2015