Pt Ltd v YKH International Pty Ltd

[2010] NSWADT 96

CITATION:

PT Ltd v YKH International Pty Ltd [2010] NSWADT 96

DIVISION:

Retail Leases Division

PARTIES:

APPLICANT
P.T. Limited

FIRST REPSONDENT
YKH International Pty Limited

SECOND RESPONDENT
Youn Kwa Kim

THIRD RESPONDENT
Myung Se Kim

FILE NUMBER:

095109

HEARING DATES:

12 March 2010

SUBMISSIONS CLOSED:

12 March 2010

 
DATE OF DECISION: 

16 April 2010

BEFORE:

Fox R - Judicial Member

LEGISLATION CITED:

Retail Leases Act 1994
Administrative Decisions Tribunal Act 1997

REPRESENTATION:

APPLICANT
N Sharp, solicitor

RESPONDENT
Mr Kim, solicitor

ORDERS:

1. Application dismissed
2. No order for costs.

REASONS FOR DECISION

The Facts

1 The Applicant, a company which owns Westfield Shopping Town, Tuggerah issued these proceedings against three Respondents being the company YHK International Pty Limited, Youn Kwa Kim and Myung Se Kim, the latter two having been, in 2007, Directors of YHK International Pty Limited. On 1 July 2007 the company entered into a Lease of lock up shop 2008 in Westfield Tuggerah, for the sale of homewares, giftware, kitchenware, furniture and associated items. The Lease bore the signatures of Youn Kwa Kim and Myung Se Kim as Directors and both signed personally as guarantors. It was for a term of three years and called for an annual base rent of $162,500.00 plus promotion contribution of $8,150.00 per annum. A Bank Guarantee of $40,423.70 was also required.

2 Trading apparently commenced, but by 28 March 2008 the rent was $42,361.46 in arrear and the occupancy was terminated. The premises were subsequently re-let, at a lower rent, and the Applicant seeks to recover the difference between the two, computed to an amount of $194,606.27 plus interest.

3 The First Respondent, YHK International Pty Limited, has been placed in receivership, and the Third Respondent has long disappeared. That left the Second Respondent (who I will call “Ms Kim”) alleged to be liable on her personal guarantee, and that is now in issue before me.

The Law

4 The matter is obviously a retail tenancy claim within s70(a)(1) of the Retail Leases Act 1994, the premises being within a retail shopping centre, let for the purpose of a business which is identified in the Schedule to the Act. Ms Kim is joined as guarantor, and is caught by the s63 definition:-

“"party" or "former party" to a retail shop lease or former retail shop lease includes a person who is a guarantor or covenantor under a lease or former lease.”

5 The Applicant was represented by Naomi Sharp who relied on the Affidavit of Cameron Tynan sworn 26 August 2009 to establish the Lease, and the debt, and the Affidavit of Zoe Bojanac sworn 12 March 2010 to bring the debt claim up to date.

6 Ms Kim appeared by her solicitor Mr Kim. I digress to observe that “Kim” appears to be a very common Korean surname, and that none of the Kims in this matter are in any way related. It was Ms Kim’s contention, as established by her Affidavit of 1 December 2009, that she had not signed the Lease either as Director or as guarantor.

Evidence for Applicant given by Mr Yoo

7 Oral evidence was given on behalf of the Applicant by Jacob Song-Man Yoo, the solicitor whose signature appears on the Lease as witnessing the signatures of Ms Kim and the Third Respondent. Ms Kim also gave oral evidence in support of her Affidavit dated 1 December 2009. Her facility in English was said to be extremely limited, and so she gave evidence through her interpreter.

8 Mr Yoo’s evidence established that the Third Respondent was an existing client, who sought oral advice from him in conference in relation to three Leases which the Third Respondent had negotiated with Westfield, and which were to be executed by the company YHK, of which he and Ms Kim were Directors, and by them both personally as guarantors. As the negotiations for the Leases had been carried out by the Third Respondent personally, all Mr Yoo was asked to do was to confirm that the documents reflected these negotiations. It appeared that the Third Respondent wanted to execute the documents then and there, but as the other guarantor was not present, Mr Yoo refused, and another appointment was made about a week later. At that later appointment Lease documents were signed (for all three shops) and the guarantor’s obligations were explained to the Korean lady who attended with the Third Respondent and one other man who took no part in the signing.

9 By way of explanation of the relatively short time engaged, Mr Yoo indicated that the lady said that she knew all about guarantees, and was in a hurry to sign and be on her way.

10 Mr Yoo had taken no filenote and so was reliant entirely on his memory, as aided by the fact that his signature appeared on the three Leases, both as witness and as the solicitor who had explained the implications of s16 of the Retail Leases Act 2004.

11 It was Mr Yoo’s usual practice to check photo identity for persons who he did not know. He was shown a passport because the lady did not have a driver’s licence. He was unable to indicate that he recognised Ms Kim from his recollection, and when he was shown the passport, which is the document produced to me in evidence, issued to Youn Kwa Kim, he was unable to say whether it was or was not the lady he saw at that time, or in Court before me.

12 It seems appropriate to observe that the passport shown to me in evidence was issued in February 2002. It showed a photograph of an Asian lady who, in my view, was not readily recognisable as the person in Court. It also seems relevant to indicate that the document before me expired on 1 February 2007, some 4 months before the Lease was signed. That fact appears to have evinced no comment from anyone, either at the time of execution of the Lease, or at the hearing. It was, however, eventually, Ms Kim’s evidence that she had not left Australia for many years (and so I assume that she may not have needed a more up to date passport document).

13 I asked Mr Yoo to remain in Court so that he might observe Ms Kim give her evidence. When I informally recalled him, towards the end of Ms Kim’s evidence, having had an opportunity to see and hear her for approximately 2 hours, he said he was not able to say one way or the other. He could neither confirm or deny that Ms Kim was the lady who had signed in his presence in June 2007.

Evidence given by Ms Kim

14 Ms Kim gave evidence for some two hours and in that time struck me as a remarkably poor witness, even after making due allowance for the “filtering” effect of the evidence being given through an interpreter. Her answers were sometimes given very reluctantly, and were often unresponsive, either because they were unintelligible in the context, or amounted to no answer at all, or were a statement which she apparently thought relevant to the matter without regard to the question actually asked.

15 Her evidence was based on an Affidavit which, it soon transpired, she could not read because she averred that she could not read English. I eventually accepted that the document had been composed by her solicitor from her instructions given to him in Korean, and that she swore it after it had been explained to her. A substantial amount of excruciating cross examination might have been avoided had Ms Kim’s solicitor taken a more appropriate course with the paperwork.

16 Be that as it may, I accept that Ms Kim, having previously lived in Australia on a student visa, gained entry on a four year business visa in 2003, having for the preceding 10 years operated a successful sports equipment business in Seoul. She arrived without husband but with two daughters and one son then aged 18, 15 and 12. The eldest daughter is a very talented golfer indeed, the boy (who is the youngest) is a very talented swimmer, whilst the middle daughter is a committed dancer. Fostering these talents apparently kept Ms Kim so busy that she was unable to pursue her business ambitions, to the point where she had still not set up any business by the beginning of 2007. In February 2007 she incorporated YHK International Pty Limited, leaving all of the paperwork to her accountant. ASIC records before me, although not placed in evidence, establish that Ms Kim was the only Shareholder and Director from February until late May when the Third Respondent came onto the scene as both Director, Secretary and Shareholder.

17 The Third Respondent was introduced to Ms Kim during a round of golf. He was said to be a successful owner of a kitchenware business in Westfield Burwood. Ms Kim indicated that she was still looking around to start a business. The Third Respondent then asked Ms Kim to “lend” him her company to start a similar business in another Westfield’s shopping centre and also to invest $50,000.00 in the venture. That is exactly what she did, because he said that he could arrange a permanent residency for her.

18 Earlier in these reasons I have been critical of Ms Kim’s evidence. She first said that she had met the Third Respondent only once, then twice, and then four times, and in the end I drew the conclusion that she had been with him at least twice more, one of which was probably at Bendigo Bank to open the YHK International bank account into which Ms Kim paid her $50,000.00 which she obtained from Korea. Earlier in her evidence she had said that she had paid the money into a St George Bank.

19 In her Affidavit she said that the Third Respondent had asked for a loan for 3 months, but in oral evidence that became 6 months interest free. Yet another aspect of the evidence which stretches credulity was her assertion that, in response to a question of mine to ask whether she had ever been to the Burwood operation conducted by the Third Respondent, she said that the Third Respondent had forbidden her to attend at that store, or the store that was being opened.

20 Be these contradictions what they may, I am satisfied that Ms Kim told the truth when she said that the Third Respondent called her in June 2007, again while she was playing golf, to arrange an urgent meeting with her, which took place in the Ryde/Parramatta Golf Club House. There, the Third Respondent, in the presence of another man who was not named and did not speak, asked Ms Kim to sign some papers which she did not understand, because they were in English, but she was told that they were the contract with Westfield. It was at this time that there was mention of there being only two permanent residency places available, and so she signed the papers, partly because of the promise of residence, and partly because in any event she was in a hurry. It was also at this point that her becoming an employee of YHK International Pty Limited to assist with her residency application first arose.

21 Ms Kim met with the Third Respondent one more time, again at a golf club when he asked her for $200,000.00 and indicated that he was unable to repay her the $50,000.00 she had lent him. She refused.

22 It is a fair summary of other things said in evidence to say that this was not the first time that Ms Kim had been swindled, the other occasions also apparently somehow or other being related to her or her daughter partaking in golf.

23 Both in her Affidavit and orally Ms Kim contended that the papers signed at the Ryde/Parramatta Golf Club were not the Lease shown to her in Court because it was not such a thick bundle of paper. She stridently denied that the three ideographs appearing on the documents were her signature. Cross examination only served to have the same assertion more positively repeated – that she had “lent” the company to the Third Respondent, that she had lent him $50,000.00 interest free for six months, that she had not signed such a thick bundle of paper, that all she had signed were a few pages in the Ryde/Parramatta Golf Club, that she had never been to the office of Mr Yoo, that she had never seen Mr Yoo or any other solicitor and that the writing on the Leases were not her signature.

24 In this regard it was also her evidence that she had concluded that other Koreans could quite easily write her signature, and so she had changed it and used a quite different form of signature (being an attempt at running writing rather than ideographs). It was this new signature which she used to swear her Affidavit.

25 I previously commented on the fact that the photograph of the 2002 passport did not immediately appear to be an image of the lady in Court. I was shown a NSW driver licence issued to her on 26 July 2008 which bore an image which was clearly that of Ms Kim. Both the passport and the driver licence had signatures on them which appeared to be the three ideographs.

Conclusion

26 I accept, without reservation, the evidence given by Mr Yoo, and note it to be inconclusive. I also accept, despite all the contradictions and evasions, that Ms Kim told the truth when she said that she had never been at the office of Mr Yoo and that the ideographs on the Leases shown to her in Court were not hers. Although I do not believe that I was told the whole story in relation to the “lending” of the Company and the purpose of the payment of the $50,000.00, I do accept that there was a meeting in the Ryde/Parramatta Golf Club at which some pages were signed but that these were not the Lease document now in issue. The only conclusion which follows, on the balance of probabilities, is that the Korean lady who signed the Lease was not Ms Kim. That means that the Applicant fails, having failed to establish that the Second Respondent was the person who signed the guarantee parts of the Lease.

27 Ms Sharpe properly placed the issue of non est factum before me, in relation to the document signed in the Ryde/Parramatta Golf Club. However, that issue is only relevant to those documents which Ms Kim admitted to signing without being able to read them. Those papers were not the Lease documents which were signed in the presence of Mr Yoo and so, strictly speaking, the conventional issue of non est factum does not arise, because Ms Kim satisfied me that it is more likely than not that she did not sign either the Lease, as Director, or personally as guarantor.

28 I was offered no expert evidence in relation to the handwriting on the Leases as compared with that on the passport (or the driver licence for that matter) but must say that, to me, as a layman not unused to examining signatures, the ideographs on the Leases (which were all quite consistent from one document to the other) did not particularly resemble those upon the licence, and certainly were clearly nothing like the signature on the passport. I make that observation by way of secondary support, my primary conclusion was drawn from the oral evidence given by Ms Kim, and the manner in which she gave those parts of it which did not directly relate to her arrangements with the Third Respondent, or the money she paid him.

29 I am of the view that, except in matters where the criminal standard of proof applies, it does not necessarily follow that just because a witness has given untruthful evidence in respect of one aspect, all of the evidence given by that witness is tainted. Obviously, the evidence of such a witness must be examined very carefully, and I have done that in drawing the conclusion that Ms Kim told the truth in respect of the two critical issues, being the denial of attendance at Mr Yoo’s office and the denial of the signatures.

Costs

30 On the question of costs s88 of the Administrative Decisions Tribunal Act says:-

“(1) Each party to proceedings before the Tribunal is to bear the party’s own costs in the proceedings, except as provided by this section.
(1A) Subject to the rules of the Tribunal and any other Act or law, the Tribunal may award costs in relation to proceedings before it, but only if it is satisfied that it is fair to do so having regard to the following:

(a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings by conduct such as:

(i) failing to comply with an order or direction of the Tribunal without reasonable excuse, or

(ii) failing to comply with this Act, the regulations, the rules of the Tribunal or any relevant provision of the enactment under which the Tribunal has jurisdiction in relation to the proceedings, or

(iii) asking for an adjournment as a result of a failure referred to in subparagraph (i) or (ii), or

(iv) causing an adjournment, or

(v) attempting to deceive another party or the Tribunal, or

(vi) vexatiously conducting the proceedings,

(b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings,

(c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law,

(d) the nature and complexity of the proceedings,

(e) any other matter that the Tribunal considers relevant.”

31 I cannot see any reason why the exercise of my discretion should arise. This was, in the end, an issue of fact, the resolution of which followed the usual trial process, once the Applicant’s initial difficulties in serving the application had been overcome.