Hong v Kim

[2023] NZHC 2045

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2022-485-331

[2023] NZHC 2045

BETWEEN

JUNHEE HONG

Plaintiff

AND

SOON-SOOK KIM and

A B LAWYERS TRUSTEE SERVICES LIMITED

Defendants

CIV-2022-485-538

BETWEEN

JUNHEE HONG
Plaintiff

AND

SOON-SOOK KIM and

A B LAWYERS TRUSTEE SERVICES

LIMITED as trustees of the Kim Soon-Sook Family Trust

Defendants

Hearing:	On the papers
Appearances:	S Wroe and T Ashley for Plaintiff C Bibbey for Defendants
Judgment:	2 August 2023

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

[Leave to appeal]

[1]                 This case involves a dispute between the plaintiff, Junhee Hong, and the defendants, Soon-Sook Kim and A B Lawyers Trustee Services Ltd as the trustees of the Kim Soon-Sook Family Trust, concerning a document executed in April 2019 by Ms Kim, apparently as vendor, and Ms Hong, apparently as purchaser, in which it is

HONG v KIM [2023] NZHC 2045 [2 August 2023]

contended, by Ms Hong, that the trustees agreed to sell and Ms Hong agreed to purchase an interest in a property owned by the former on the Kāpiti Coast.

[2]                 Ms Hong says that the document constituted an enforceable contract for sale and purchase. The trustees do not accept that. Ms Hong applied for summary judgment seeking an order for specific performance. In my judgment dated 26 April 2023 I dismissed her application.1 The net result is that the matter will have to go to trial.

[3]                 Now Ms Hong seeks leave to appeal. She needs leave by reason of s 56(3) of the Senior Courts Act 2016. This provides that interlocutory judgments may only be appealed with leave from this Court or the Court of Appeal.

[4]                 In my judgment, I concluded that, all things being equal, the terms of the agreement were sufficiently clear to constitute an enforceable agreement, and that the signatories to the same — Ms Kim and Ms Hong — had intended to create legal relations. However, I did not accept that Ms Hong had established that the trustees had no arguable defence or defences to the claim.

[5]                 The defence that I concluded was available, at least to the point of being arguable, was that the contract was unenforceable against the owners, the two trustees, because it had not been executed by or on behalf of both and that A B Lawyers Trustee Services Ltd was not a party to the same.

[6]                 Ms Wroe on behalf of the plaintiff submits that I was wrong to reach that conclusion, and that is the primary basis for the proposed appeal.

[7]                 As Ms Wroe submits,  the  principles  applying  to  applications  pursuant  to s 56(3) are well settled. She cites the Court of Appeal’s judgment in Greendrake v District Court of New Zealand, where, citing Finewood Upholstery Ltd v Vaughan,2 the Court articulated those principles as follows:3

1      Hong v Kim [2023] NZHC 927.

2      Finewood Upholstery Ltd v Vaughan [2017] NZHC 679.

3      Greendrake v District Court of New Zealand [2020] NZCA 122 at [6].

(a)a high threshold exists:

(b)the applicant must identify an arguable error of law or fact;

(c)the alleged error should be of general or public importance warranting determination or otherwise of sufficient importance to the applicant to outweigh the lack of general or precedential value;

(d)the circumstances must warrant incurring further delay; and

(e)the ultimate question is whether the interests of justice are served by granting leave.

[8]                 Self-evidently those principles invite a brief judgment dealing with any application for leave. The purpose of the leave requirement is to act as a filter to ensure that only matters that are properly the subject of appeal are able to proceed. The obvious overarching objective is efficiency to avoid wasted resources and time.

[9]                 Ms Wroe has filed and served helpful and focussed submissions. On behalf of the trustees, Ms Bibbey too has filed and served submissions. I also had the opportunity of discussing procedural matters with counsel at a telephone conference on 28 July 2023.

[10]             Ms Wroe’s primary submission is that, in my judgment, I failed correctly to analyse the law relating to contractual commitments entered into by trustees and, had I approached this issue correctly, she submits, I would have been obliged to conclude that the plaintiff was entitled to the order sought. Ultimately, this argument addresses my treatment of the evidence as to the actions of Mr Yong Sun Lim who was Ms Kim’s solicitor, the solicitor who acted for the trustees and, as I understand it, the director of A B Lawyers Trustee Services Ltd.

[11]             It will be apparent from that summary that the focus of the proposed appeal against my judgment are my conclusions concerning factual evidence.

[12]             Let me try and summarise the key factual circumstances so as to focus the debate.

[13]             Ms Kim and Ms Hong signed the alleged contract in April 2019. The document itself made no reference to the fact that the property in question was owned by Ms Kim

and A B Lawyers Trustee Services Ltd as the trustees of the Kim Soon-Sook Family Trust. It is common ground that A B Lawyers Trustee Services Ltd and the company’s director, Mr Lim, were unaware of the existence of the purported agreement until March 2022 when Mr Lim was consulted by Ms Kim. There is no evidence as to the capacity in which Mr Lim was consulted, and it seems therefore to be an open question whether he was initially consulted as Ms Kim’s solicitor, as the solicitor to the Trust or as the director of A B Lawyers Trustee Services Ltd. Having been consulted, and indeed having had some discussions with Ms Hong (and her mother), Mr Lim entered into correspondence first with Ms Hong and then with solicitors engaged by her. The relevance of that correspondence is that,  as is  contended on behalf of Ms Hong,   Mr Lim’s first letter dated 14 March 2022 and second letter dated 4 April 2022 both appear to have proceeded on the assumption that there was an agreement between Ms Hong and the trustees.

[14]             Ms Wroe’s argument acknowledges, at least implicitly, that there could have been no enforceable contract between Ms Hong and the trustee owners of the property between April 2019 and March 2022, precisely because A B Lawyers Trustee Services Ltd was unaware of its existence. In short, the contract was void from the outset. In her submissions, Ms Bibbey focusses on my use of the term “void ab initio” and seems to regard the term as having been infelicitous. It is not obvious to me that Ms Bibbey entirely appreciates Ms Wroe’s argument, or indeed that the term simply means unenforceable from the outset. That is one point that does not seem to be in question. At least in the absence of an express agency arrangement, cannot be the law that the trustees of a trust can be contractually bound when one of them is entirely unaware of the alleged contract. It follows that, from the outset, the instrument could not have been enforceable as a contract.

[15]             The issue therefore comes down to whether the Court should have inferred from the correspondence I have referred to that when Ms Kim appraised Mr Lim of the existence of the agreement Mr Lim retrospectively ratified the agreement on behalf of his trustee company.

[16]             I do not accept the submission that Ms Hong can establish that the trustees have no arguable defence to such a contention.

[17]             I am satisfied that the trustees have available to them a series of respectable arguments, focusing on issues such as:

(a)whether, as a matter of law, the instrument agreement originally entered into by Ms Kim in her own name (and not purportedly on behalf of the trustees) was capable of subsequent ratification by the other trustee;

(b)whether Mr Lim, in the correspondence in which he is said to have ratified the contract, was acting in the capacity as the director of       A B Lawyers Trustee Services Ltd; and

(c)whether the fact the correspondence is capable of being interpreted as a ratification.

[18]             In my view, such mixed questions of fact and law can only be resolved after a full trial and are not matters which lend themselves to resolution in summary judgment proceedings.

[19]Ms Wroe raises several additional points.

[20]             She argues that there is an issue of general or public importance in this case. There is a  certain  awkwardness  in  that  argument.  Earlier  in  her  submissions  Ms Wroe’s contention was that the legal position is entirely clear. Yet this component of her argument suggests that there is a need for clarification as to the law concerning contractual commitments by trustees. In the end this point has not influenced me simply because I see the primary point as concerning factual issues rather than matters of law.

[21]             The next point raised by Ms Wroe concerns the importance of the matter to the plaintiff. There is no doubt that the matter is important from the perspective of the parties, either they are committed to a contractual arrangement whereby the trustees have sold a 40 per cent interest in a valuable property to the plaintiff or they are not. But the same can be said of virtually every case, and it is not obvious to me that the

importance of the matter to the parties outweighs the lack of any general or public importance in this case.

[22]             Ms Wroe also raises an issue about delay and makes the point that, if the plaintiff were to be successful in her appeal, and secure summary judgment, that would in all probability be a quicker process than the matter going to trial. That proposition assumes first, that the plaintiff is likely to be successful. It also assumes that there would then be no further steps taken. It also takes no account of the prospect of the plaintiff being unsuccessful in which case the appeal on the application would simply be another time-consuming loop in getting the matter to trial. In the end, I do not accept this contention takes the plaintiff any further.

[23]             Finally, Ms Wroe addresses the discretionary point and suggests that granting leave to appeal is consistent with the interests of justice. I do not accept that. As I made clear in my original judgment, and have reiterated here, the view I take is that there is sufficient latitude for the plaintiff’s claim to be defended, so that the matter ought to go to trial where all the evidence can be considered and tested appropriately. The view I take is that it would be inconsistent with the interests of justice for the matter to be disposed of summarily as the plaintiff seeks.

[24]             The plaintiff’s application for leave to appeal is dismissed. My preliminary view is that the defendant is entitled to a costs award in relation to the application on a 2B basis. However, as I have not heard from counsel as to costs I reserve them. My expectation is that counsel will in any event be able to resolve them without further judicial input.

Associate Judge Johnston

Solicitors:

Law.NZ Lawyers, Auckland for plaintiff Alpers & Co, Christchurch for defendants