FEDERAL COURT OF AUSTRALIA
Ku v Song [2007] FCA 1189
CORPORATIONS – requirements for a valid transfer of shares in an unlisted company
CONTRACTS – intention to make a contract – when void for uncertainty – construction principles – implication of terms – collateral contracts
TRUSTS – express trusts – implied resulting trusts
GIFTS INTER VIVOS – incomplete gift
Held: No shares had been validly transferred to entitle the third respondent, as a putative transferee of all the issued shares in a company, to remove the applicant as an officer. An intended gift inter vivos of shares had not been perfected. An agreement for the settlement of other proceedings had been repudiated and terminated.
Corporations Act 2001 (Cth) ss 135(2), 176, 251A(2)-(4), 251A(6), 761A, 1041H, 1070A(1), 1071A, 1071B, 1071D(1), 1072F, 1072G, 1073A(1), 1073D, 1073F, 1274B(2) and 1404
Corporations Regulations 2001 (Cth) regulations 7.11.10, 7.11.11, 7.11.14, 7.11.15 and 7.11.22
Trade Practices Act 1974 (Cth) s 51AA and s 52
Fair Trading Act 1987 (NSW) s 42Rose and Frank Company v J. R. Crompton and Brothers, Limited [1923] 2 KB 261 applied
Eccles v Bryant (1947) 2 All ER 865 applied
Sindel v Georgiou (1984) 154 CLR 661 referred to
Australian (sic) and New Zealand Banking Group Ltd. v Frost Holdings Pty Ltd. (1989) VR 695 cited
Powell and Berry v Jones and Jones (1968) SASR 394 cited
Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130 cited
The Council of the Upper Hunter County District v Australian Chilling and Freezing Co. Limited (1968) 118 CLR 429 cited
Whitlock v Brew (1968) 118 CLR 445 referred to
Life Insurance Co of Australia Ltd. v. Phillips (1925) 36 CLR 60 referred to
Bishop v. Taylor (1968) 118 CLR 518 referred to
Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165 referred to
Equuscorp Pty Ltd v HGT Investments Pty Ltd (2005) 218 CLR 471 referred to
Australian Broadcasting Commission v Australasian Performing Right Association Limited (1973) 129 CLR 99 appliedWhitworth Street Estates Limited v Miller (1970) AC 583 cited
Port Sudan Cotton Co v Govinda Swami Chettiar & Sons (1977) 2 Lloyd’s LR 5 referred to
Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 referred toHoyt’s Proprietary Limited v Spencer (1919) 27 CLR 133 referred to
Chapman v Chapman [1983] 2 NSWLR 420 referred to
Gates v The City Mutual Life Assurance Society Limited (1986) 160 CLR 1 referred to
Russell v Scott (1936) 55 CLR 440 referred to
Wirth v Wirth (1956) 98 CLR 228 referred to
Hepworth v Hepworth (1963) 110 CLR 309 referred to
Bloch v Bloch (1981) 180 CLR 390 referred to
Muschinski v Dodds (1985) 160 CLR 583 cited
Baumgartner v Baumgartner (1987) 164 CLR 137 referred to
Barclays Bank…
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- AGLC
- Ku v Song [2007] FCA 1189
- Case
- [2007] FCA 1189
- Decision Date
CaseChat Overview and Summary
In the case of Ku v Song, the primary dispute revolves around the validity of a settlement agreement executed between Jun Bom Ku and Luke Song, and its subsequent repudiation by Luke Song and his associates. The court had to determine whether the settlement agreement was properly executed, whether it was binding on the parties, and if it was indeed repudiated by Luke Song, thus leading to its termination. The case also involved questions about the transfer of shares within Kjun International Pty Limited, the authority of the parties to enter into the settlement agreement, and whether there was any misleading or deceptive conduct by any party involved.
The legal issues before the court included the validity of the settlement agreement, the authority of the parties to enter into it, the repudiation of the agreement, and the consequences of such repudiation. Specifically, the court needed to ascertain whether Jun Bom Ku had effectively transferred his shares to Ji Song, whether the settlement agreement was binding, and if Luke Song and his associates had breached the agreement by filing a cross-claim in the trademark proceedings. Additionally, the court examined whether there was any misleading or deceptive conduct that warranted relief under the Trade Practices Act.
The court found that the settlement agreement was properly executed and was intended to be binding on the parties. It concluded that Jun Bom Ku had not effectively transferred his shares to Ji Song, as the necessary instruments of transfer were never executed or delivered. The court also determined that Luke Song had the authority to bind the relevant parties to the agreement, and that the agreement was not void for uncertainty. The court held that the repudiation of the settlement agreement by Luke Song and his associates, through the filing of a cross-claim, was valid and led to the termination of the agreement. Consequently, the court ruled that the trademark proceedings could proceed to a hearing, and found no evidence of misleading or deceptive conduct by any party.
In conclusion, the court determined that the settlement agreement was valid and binding, but was effectively terminated by the repudiation of Luke Song and his associates. The court also found that there was no misleading or deceptive conduct by the respondents. The trademark proceedings were allowed to proceed, and no other orders were made in relation to the other issues raised in the case.
The legal issues before the court included the validity of the settlement agreement, the authority of the parties to enter into it, the repudiation of the agreement, and the consequences of such repudiation. Specifically, the court needed to ascertain whether Jun Bom Ku had effectively transferred his shares to Ji Song, whether the settlement agreement was binding, and if Luke Song and his associates had breached the agreement by filing a cross-claim in the trademark proceedings. Additionally, the court examined whether there was any misleading or deceptive conduct that warranted relief under the Trade Practices Act.
The court found that the settlement agreement was properly executed and was intended to be binding on the parties. It concluded that Jun Bom Ku had not effectively transferred his shares to Ji Song, as the necessary instruments of transfer were never executed or delivered. The court also determined that Luke Song had the authority to bind the relevant parties to the agreement, and that the agreement was not void for uncertainty. The court held that the repudiation of the settlement agreement by Luke Song and his associates, through the filing of a cross-claim, was valid and led to the termination of the agreement. Consequently, the court ruled that the trademark proceedings could proceed to a hearing, and found no evidence of misleading or deceptive conduct by any party.
In conclusion, the court determined that the settlement agreement was valid and binding, but was effectively terminated by the repudiation of Luke Song and his associates. The court also found that there was no misleading or deceptive conduct by the respondents. The trademark proceedings were allowed to proceed, and no other orders were made in relation to the other issues raised in the case.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
GRAHAM J
Thereupon, Darryl Barlow & Company wrote to Edwin Davey in relation to the trade mark proceedings as follows:‘We refer to the above matter and to the agreement in the Korean Language made on or about 25 October 2006 between Jun Bom Ku and Luke Song purporting to settle the above proceedings and other matters in dispute between the parties.We note that your client’s conduct in proceeding to file a cross-claim in the proceedings and the content of you recent correspondence amounts to a repudiation of the said agreement. Our client accepts such repudiation and reserves his rights in relation to damages.’Conclusions (a) Whilst the possibility of a transfer of shares from Mr Ku to Ji Song had been the subject of prior discussion, in the context of a possible settlement of the trade mark proceedings, it was raised by Mr Ku for the first time at the Avillion Hotel on 19 October 2006.(b)Mr Ku indicated his intention to transfer the shares to Ji Song with a view to effecting a gift inter vivos of those shares.(c)On 23 October 2006 Mr Ku executed a ‘Change to company details’ form (see Schedule 1) which he believed would, upon being recorded by ASIC, have the effect of validly transferring the shares to Ji Song.(d)On 24 October 2006 Mr Ku gave the original of the ‘Change to company details’ form signed by him and dated 23 October 2006 to Mr Kim so that Mr Kim might forward it to ASIC.(e)Mr Kim never forwarded the signed document to ASIC. On or about 9 November 2006 he threw it into his rubbish bin.(f)No proper instrument of transfer of the one share in Kjun International Pty Limited that was held by him as at 23 October 2006 or of any other shares, as required by s 1071B(2) of the Corporations Act, was ever executed by Mr Ku, delivered by him to Ji Song or delivered by him to Kjun International Pty Limited for registration.(g)In accordance with clause 32 of Kjun International Limited’s constitution, Mr Ku remained the holder of whatever shares he may have held in Kjun International Pty Limited, notwithstanding his electronic lodgement on 9 November 2006 of the ‘Change to company details’ form with ASIC (see Schedule 2). The prima facie evidence of a transfer from Mr Ku to Ji Song (under s 1274B(2)) was negated by the evidence that no transfer was ever executed or delivered. This is now common ground.(h)Mr Ku never did everything that was necessary to be done in order to transfer any shares in Kjun International Pty Limited to Ji Song and render himself bound by his intended gift inter vivos.(i)No question of an implied resulting trust or any other form of trust or of a collateral contract to constitute a trust, arises.(j)No mention of Mr Ku’s intended gift of the shares or any other shares was made in either form of agreement as signed by Luke Song and Mr Ku on 25 October 2006, even though the common understanding of the parties at that time was that the ‘Change to company details’ form (Schedule 1) had not been received or recorded by ASIC at that stage.(k)When at the Avillion Hotel on 25 October 2006, Luke Song and Mr Ku considered in detail the terms of the longer form of agreement with a view to effecting a settlement of the trade mark proceedings.(l)They then proceeded to execute the longer form of agreement and also inadvertently signed the shorter form of agreement. Neither party was under the influence of alcohol or unable to read and approve the terms of the agreements which were executed.(m)The parties intended that their execution of the longer form of agreement, but not the shorter form, should give rise to legal relations.(n)At the time of the execution of the longer form of agreement, the proper parties to the trade mark proceedings were:Song interests – LSU Pty Limited as trustee of the Nirvana Investment TrustSu-shi World Australia Pty LimitedSue SongLuke SongKu interests – Kjun International Pty LimitedSushi Nara Australia Pty Limited(o)When Luke Song executed the longer form of agreement he intended to bind not only Su-shi World Australia Pty Limited, Sue Song and Luke Song, but also LSU Pty Limited as trustee of the Nirvana Investment Trust.(p)When Mr Ku executed the longer form of agreement he intended to bind not only Kjun International Pty Limited but also Sushi Nara Australia Pty Limited.(q)It is clear from paragraphs B, D, D [the second D], F and G in the longer form of agreement that Luke Song and Mr Ku intended the party described as ‘A’ to include all the respondents in the trade mark proceedings and by the party described as ‘B’ in that form of agreement to include all the applicants in those proceedings.(r)As at 25 October 2006 Luke Song was the sole director of Su-shi World Australia Pty Limited and he, together with Sue Song, were the directors of LSU Pty Limited.(s)In my opinion, it may be inferred that Sue Song authorised Luke Song to enter into a settlement agreement at some time between 19 and 25 October 2006 on her own behalf and also on behalf of LSU Pty Limited and that the longer form of agreement contained terms which were within the scope of Luke Song’s authority.(t)As at 25 October 2006 Mr Ku was the sole director of Kjun International Pty Limited and also Sushi Nara Australia Pty Limited. As such, he had authority to bind both of those companies to a settlement agreement.(u)The longer form of agreement was not void for uncertainty. Its terms may be ascertained from the words used in the longer form of agreement and the relevant surrounding circumstances.(v)The reference in clause G of the settlement agreement to the parties’ agreement to ‘solve all problems harmoniously through a mutual talk and agreement, and help and cooperate with each other for mutual development without slandering each other’ did not constitute an agreement to agree. Rather the words were indicative of a promise by the parties to use their respective best endeavours to resolve future disputes that may arise between them by negotiation, bringing to bear goodwill in so doing.(w)The settlement agreement provided for the applicants in the trade mark proceedings to refrain from continuing those proceedings and to refrain from bringing any further claims against the respondents arising out of the disputes between them in relation to the trade mark. It may be inferred that the applicants in the trade mark proceedings agreed to file a notice of discontinuance with the consent of the respondents.(x)The agreement also provided for no claims to be brought by the respondents against the applicants in the trade mark proceedings arising out of those disputes. Whilst the second clause D speaks of ‘If “B” withdraws the lawsuit against “A” brought in the Federal Court of Australia New South Wales District Registry, “A” accepts it without reservation and agrees that there will not be any legal proceedings against “B” from “A”’ (emphasis added), it is clear from the terms of the agreement and, in particular, the preamble to clause G that by the agreement the parties mutually agreed that they would ‘not continue’ with their respective claims so that no right was reserved to the respondents in the trade mark proceedings to institute their cross-claim as they did on 9 November 2006, in the absence of a formal notice of discontinuance to be filed by the applicants with the consent of the respondents in the trade mark proceedings.(y)The settlement agreement recognised the rights of Kjun International Pty Limited to the trade mark ‘Su-shi World’ and the continuation of the licensing arrangement, such as it was, whereby Sushi Nara Australia Pty Limited acted as a franchisor of the ‘Sushi World’ name. It provided for a recognition of the rights of the parties presently using the ‘Sushi World’ name in respect of shops, to continue to do so, and it conferred a right on the respondents in the trade mark proceedings to ‘open new Sushi World’ shops.(z)Notwithstanding the settlement agreement which had been concluded, the respondents, including JHJ Brothers Holdings Pty Limited, filed their cross-claim in the trade mark proceedings on 9 November 2006 and proceeded to serve same on 13 November 2006 (see [27]-[28] above). Furthermore, Ji Song purported to remove Mr Ku as a director, secretary and public officer of Kjun International Pty Limited, replacing him with Sue Song (see Edwin Davey’s letter of 15 December 2006). Needless to say, the purported removal and replacement of Mr Ku by Sue Song was of no force and effect given that Ji Song never became the holder of any shares in Kjun International Pty Limited.(aa)By their conduct in filing and serving the cross-claim as they did, the respondents in the trade mark proceedings repudiated the settlement agreement reached on 25 October 2006. That repudiation was accepted by the applicants in the trade mark proceedings on 18 December 2006 thereby terminating the settlement agreement.(bb)In the circumstances, the restraints imposed upon the parties in relation to continuing the trade mark proceedings, whether as applicants or cross-claimants, came to an end with the consequence that the trade mark proceedings may now proceed to a hearing.(cc)None of the conduct engaged in by any of the Songs or Su-shi World Australia Pty Limited whether by action or omission constituted misleading and deceptive conduct or conduct likely to mislead or deceive. The circumstances which prevailed between 25 October and 9 November 2006 did not give rise to an obligation on the part of the Songs or any of them to disclose any intention that they may have had to file a cross-claim on 9 November 2006 nor did the circumstances give rise to an obligation upon them or any of them to disclose the fact that the cross-claim had been filed following its filing on 9 November 2006 and before its service on 13 November 2006 (see Henjo Investments Pty Limited v Collins MarrickvillePty Limited (1988) 79 ALR 83 at 94-5).(dd)Su-shi World Australia Pty Limited did not engage in any unconscionable conduct within the meaning of s 51AA of the Trade Practices Act.
Ratio Decidendi
Legal Principle Established
Established by: GRAHAM J
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