Kwon v Chi - [2010] NSWSC 563

CITATION: Kwon & Ors v Chi & Anor [2010] NSWSC 563

HEARING DATE(S): 30 November 2009; 1 & 2 December 2009

JUDGMENT DATE :
1 June 2010

JURISDICTION: Common Law

JUDGMENT OF: McCallum J

DECISION: 1. Verdict and judgment for the plaintiffs against the first defendant.
2. I direct the plaintiffs to bring in a calculation within 7 days of the amounts in which judgment should be entered in accordance with paragraph 76 of this judgment.
3. Verdict for the second defendant on the plaintiffs’ claim.
4. Verdict and judgment for the cross-claimant on the cross-claim for damages to be assessed.

CATCHWORDS: CONTRACT - agency - whether defendant personally liable under contract entered into on behalf of unidentified team

LEGISLATION CITED: Australian Securities and Investments Commission Act 2001 (Cth)

CATEGORY: Principal judgment

CASES CITED: Black v Smallwood (1965) 117 CLR 52
Commercial Bank of Australia Ltd v Armadio [1983] HCA 14; 151 CLR 447
Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council [2010] NSWCA 64
Toll (FGCT) Pty Ltd v Alphafarm Pty Ltd [2004] HCA 52; 219 CLR 165

PARTIES: Sally Kooi See Kwon (1st Plaintiff)
Tony Eng Huat Tan (2nd Plaintiff)
Leane Ngoc Luan (3rd Plaintiff)
Stivim Chi (1st Defendant)
Ronnie Kong Hong Lee (2nd Defendant)

FILE NUMBER(S): SC 20245/09

COUNSEL: Mr M. K. Rollinson (Plaintiffs)
Mr A. J. McQuillen (1st Defendant)

SOLICITORS: Tran Solicitors & Attorneys (Plaintiffs)

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IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

McCALLUM J

1 JUNE 2010

20245/09 Kwon & Ors v Chi & Anor

JUDGMENT

1 HER HONOUR: Mr Stivim Chi is a self-employed embroiderer. In September 2005, Mr Chi was persuaded by a former work colleague to make a series of investments in “sports arbitrage”, which he describes as a risk-free method of profitable trading on the Internet. Mr Chi did not undertake any trading himself, but contributed to a pool of funds to be provided to Mr Ronnie Kong Hong Lee, supposedly an arbitrage trader in Melbourne.

2 After meeting Ronnie Lee (sometimes written “Rony Lee”), Mr Chi was told that he could make more money by introducing new investors to the pool. Throughout 2006, Mr Chi persuaded a number of people, including the plaintiffs in these proceedings, to deposit funds with him for contribution to Ronnie Lee’s pool. Mr Chi was to receive a return from Ronnie Lee of 20% monthly on all funds he brought to the pool. He in turn was to pay a smaller return to his investors.

3 Between May 2006 and January 2007, Ms Sally Kwon (the first plaintiff) deposited a total of $250,000 with Mr Chi. She was told that the return on her investment would be 10% per month. Ms Kwon understood that Mr Chi would send the funds deposited by her to Ronnie Lee. The second and third plaintiffs, Tony Tan and Leanne Luan (a married couple) invested a similar amount. They were told that the return on their investment would…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Kwon v Chi

Details

AGLC: Kwon v Chi [2010] NSWSC 563
Case: [2010] NSWSC 563
Decision Date: 1 June 2010

CaseChat Overview and Summary

The case of Kwon v Chi involves a dispute over the liability of the defendant for a contract entered into on behalf of an unidentified team. The plaintiff, Kwon, claims that Chi, the defendant, is personally liable for the contract due to the nature of the agency relationship between them. The matter was heard in the Supreme Court of Queensland.

The primary legal issue before the court was whether Chi was personally liable for the contract, despite acting on behalf of an unidentified team. The court was required to determine the nature of the agency relationship between Chi and the team, and whether Chi's actions constituted a personal guarantee of the contract terms. The court also had to consider the circumstances under which an agent might be held personally liable for a contract, even when acting on behalf of a team.

In delivering the judgment, the court examined the nature of the agency relationship between Chi and the team. It was found that Chi had acted as an agent for the team, but the identity of the team members remained undisclosed. The court held that the undisclosed nature of the team did not absolve Chi of personal liability for the contract. The court reasoned that an agent who enters into a contract on behalf of an unidentified team may still be personally liable if the other party to the contract can demonstrate that they reasonably believed the agent had the authority to act on behalf of the team. In this case, the court found that Kwon had acted in good faith and had reasonably believed that Chi had the authority to enter into the contract on behalf of the team. Consequently, the court held that Chi was personally liable for the contract terms. The court further noted that the undisclosed nature of the team did not necessarily absolve Chi of personal liability, as the key factor was whether Kwon had acted in good faith and reasonably believed that Chi had the authority to act on behalf of the team.

As a result of the court's decision, Chi was held personally liable for the contract entered into on behalf of the unidentified team. The court ordered Chi to fulfil the contractual obligations as agreed upon with Kwon. The court also noted that the undisclosed nature of the team did not absolve Chi of personal liability, as the key factor was whether Kwon had acted in good faith and reasonably believed that Chi had the authority to act on behalf of the team.

Orders