Chow v Chow (No 3) [2016] NSWSC 1156

Supreme Court New South Wales

Medium Neutral Citation: Chow v Chow (No 3) [2016] NSWSC 1156 Hearing dates: 18 August 2016 Date of orders: 19 August 2016 Decision date: 19 August 2016 Jurisdiction: Equity Before: Robb J Decision: No order made Catchwords: PRACTICE AND PROCEDURE – explanation of effect of order requiring plaintiffs to serve points of claim and defendants to serve points of defence – no issue of principle Legislation Cited: Civil Procedure Act 2005 (NSW) Cases Cited: Chow v Chow [2016] NSWSC 908 Chow v Chow (No 2) [2016] NSWSC 994 Category: Procedural and other rulings Parties: Selwyn Sai-Him Chow (first plaintiff) Jacqueline Wai Ying Chow (second plaintiff) Evan Sai-Yiu Chow (third plaintiff) Chow Kwok Chi (fourth plaintiff)

Chow Kwork Ching (as executor of the estate of Chow Cho Poon & co-trustee of the testamentary trust of the residuary estate of Chow Cho Poon) (first defendant) Chan Pik Yun Peggy Chow (as co-trustee of the testamentary trust of the residuary estate of Chow Cho Poon) (second defendant) Representation: Counsel: PH Blackburn-Hart SC/DM Tucker M Walton SC/MW Sneddon (defendants)

Solicitors: Arnold Bloch Leibler (plaintiffs) Minter Ellison (defendants) File Number(s): 13/190172 Publication restriction: None

Judgment 1. On 18 August 2016, I conducted a directions hearing in this matter for the purpose of determining the orders that should be made for the further preparation of the matter for the hearing of the real issues that are in dispute between the parties. 2. On 1 July 2016, I published reasons for judgment on an application by the defendants for an order reversing a determination made by a registrar of the court concerning the adequacy of the form of accounts prepared on behalf of the defendants for the passing of those accounts in probate: see Chow v Chow [2016] NSWSC 908. In substance, I took the view that the court should make directions to facilitate the ascertainment of the real issues that may be in dispute between the parties concerning the way the defendants have conducted the affairs of a testamentary trust. 3. Following a further directions hearing on 15 July 2016, at which I heard a dispute between the parties as to the directions that ought to be made, I published a further interlocutory judgment on 18 July 2016, in which at [35] I suggested an appropriate form of orders, but left it to the parties to formulate the final form of the orders: see Chow v Chow (No 2) [2016] NSWSC 994. 4. The parties were unable to agree on the precise form of the orders that should be made, so it was necessary to conduct the further directions hearing on 18 August 2016. At that hearing, I determined that I should make orders substantially in the form of those set out at [35] of my 18 July 2016 judgment. I have made orders today, after the parties have agreed to the dates by which the steps required to be taken by the orders should be done. 5. Orders 7 and 8 require the plaintiffs to file points of claim and the defendants to file points of defence. Order 7 requires that the points of claim identify all transactions in the annual financial statements prepared for the defendants that the plaintiffs challenge. Upon reflection, I have decided that for more abundant precaution I should make it clear that the object of this aspect of order 7 was to require the plaintiffs, after they have received the additional information that the orders permit the plaintiffs to request, to decide in accordance with their obligations under s 56(3) of the Civil Procedure Act 2005 (NSW) which transactions disclosed in the accounts prepared on behalf of the defendants they wish to challenge. 6. The objective of requiring the plaintiffs to identify the transactions they wish to challenge was to facilitate the future efficient conduct of these proceedings. It is a procedural step, and is not intended to affect the substantive rights of the parties; including in particular, the right of the plaintiffs as beneficiaries to identify transactions undertaken by the defendants as trustees, which the plaintiffs wish to challenge. The requirement that the plaintiffs serve points of claim is not meant to impose upon the plaintiffs any burden to prove that any transactions engaged in by the defendants were improper or unauthorised. 7. Accordingly, it may be a proper compliance with order 7 for the plaintiffs to identify transactions, and to state in respect of those transactions that they require the defendants to justify those transactions. It would be helpful if the plaintiffs could give particulars, albeit they could only be expected to give an indication in general terms of the reasons why they are not prepared on the information provided to them to accept the legitimacy of the particular transactions. 8. It will remain the burden of the defendants to justify the transactions, as they are required to do as trustees. It may therefore be that the real factual issues in dispute will be identified in the points of defence to be served by the defendants. That may have the effect that points in reply by the plaintiffs will be required, although that step has not been provided for in the orders that I have made. 9. Order 7 also provides for the possibility that the plaintiffs may seek an order against the defendants that they give an accounting on a wilful default basis, and the grounds upon which the plaintiffs seek that order. I do not propose to comment in these reasons about what will be required of the points of claim, if the plaintiffs decide to seek an order that the defendants account on a wilful default basis. I will only observe that it will probably be necessary for the plaintiffs to propound a case more in line with a pleading in their points of claim, if they decide to take that course. 10. It is not necessary that I make any further order at this time.