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Kinnon v Hong

Kinnon v Hong

Case [2023] NZHC 1052 5 May 2023

Civil Litigation & Procedure

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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-0030

[2023] NZHC 1052

BETWEEN DOUGLAS MURRAY KINNON and AVRYL MARGARET KINNON as
trustees of the CEDAR LODGE TRUST Plaintiffs/counterclaim defendants

AND

BOON GUNN HONG

First defendant/counterclaim plaintiff

NOMINEES AND TRUSTEES LIMITED
Second defendant

DOUGLAS MURRAY KINNON
First counterclaim defendant

JAALA FERNANDE DYER

Second counterclaim defendant

Hearing: 24 April 2023 and 26-27 April 2023

Appearances:

M C Nicholls for plaintiffs/counterclaim defendants First defendant/counterclaim plaintiff in person

Date of judgment:

5 May 2023

JUDGMENT OF JAGOSE J

This judgment was delivered by me on 5 May 2023 at 11.00am.
Pursuant to Rule 11.5 of the High Court Rules.

………………………… Registrar/Deputy Registrar

Solicitors:
Martin Nicholls Limited, Kerikeri

Copy to:
B G Hong, Auckland

KINNON v HONG [2023] NZHC 1052 [5 May 2023]

[1] This judgment concerns Mr Hong’s 25 March 2021 counterclaim against the present trustees of Cedar Lodge Trust (the trust) and Ms Dyer and Mr Kinnon, the trust’s beneficiaries, to recover their alleged indebtedness and other contended liabilities to him.

Preamble

[2] In this proceeding, the trustees claimed to recover from Mr Hong as a former trustee and legal advisor — and Nominees and Trustees Ltd, a company of which he is sole director and shareholder — a Kerikeri property of which he is alleged to have defrauded the trust. The claim awaits this Court’s determination of its formal proof, heard in September 2022.

[3] Mr Hong’s unorthodox combined pleading of his defence to that claim and counterclaim includes for relief a declaration the trustees and Ms Dyer and Mr Kinnon “no longer had any interest in the Kerikeri property” and an order their caveat over it therefore lapse. That is relief referrable only to the trustees’ claim. Pursuit of such now as relief on Mr Hong’s counterclaim would be an abuse of process: “improper use of [the court’s] machinery”;1 use of that process “for a purpose or in a way significantly different from its ordinary and proper use”.2 Duplicative proceedings in themselves are abusive, even if the former proceeding remains undetermined.3

[4] This judgment therefore addresses only the separate relief sought by Mr Hong, on grounds the trustees, Ms Dyer and Mr Kinnon fraudulently obtained advances from him to acquire the Kerikeri property, and unconscionably have not repaid those advances or paid rent due on the property. Given the trustees’ claim remains

1      Simon Goulding, DB Casson and William Blake Odgers Odgers on Civil Court Actions (24th ed, Sweet & Maxwell, London 1996) at [10.15] as cited in Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2013] NZCA 53, [2013] 2 NZLR 679 at [87].
2      Attorney-General v Barker [2000] 1 FLR 759 (QB) at 764.
3      Mahon v Waimauri Ltd [2022] NZCA 96 at [65]–[66]; Paul Finance Ltd v Commissioner of Inland Revenue HC Auckland CP65-SD00, 17 August 2000 at [35], citing Buckland v Palmer [1984] 1 WLR 1109 (CA), Otis Elevator Co Ltd v Linnell Builders Ltd (1991)…

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 Kinnon v Hong

Details

AGLC: Kinnon v Hong [2023] NZHC 1052
Case: [2023] NZHC 1052
Decision Date: 5 May 2023

CaseChat Overview and Summary

In the case of Kinnon v Hong, the High Court of New Zealand was required to determine the validity of a counterclaim brought by Boon Gunn Hong against the trustees of the Cedar Lodge Trust, along with the beneficiaries, regarding the acquisition of a Kerikeri property. Mr Hong's counterclaim sought the return of alleged indebtedness and other liabilities, claiming that the trustees and beneficiaries fraudulently obtained advances from him and had not repaid these advances or paid due rent. The court was tasked with deciding whether Mr Hong's counterclaim was valid and whether the trustees, Ms Dyer and Mr Kinnon, had indeed defrauded him in relation to the property's acquisition.

The court examined the factual background of the property's acquisition, noting that the trustees had agreed to purchase the property in 2005, with a deposit paid by Ms Dyer and Mr Kinnon to Mr Hong. Despite delays and complications, including a caveat on the property, the trustees eventually took possession of the property in 2006. Mr Hong, who was initially a trustee, was replaced by BGH Trusteeship Limited in 2007. The court also considered the professional disciplinary charges against Mr Hong, finding that he had conflicts of interest and failed to protect the interests of the beneficiaries.

In dismissing Mr Hong's counterclaim, the court found that there was no factual basis for his claims of perjury and equitable fraud. The court held that Mr Hong had not advanced any funds to the trustees or the beneficiaries as a loan but rather made payments to the vendors of the property, which was consistent with the trustees' obligations. Additionally, payments made by Ms Dyer and Mr Kinnon to Mr Hong were considered accounting for their use of the trust property rather than repayment of a loan. Consequently, the court found that Mr Hong had not made any advance to the trustees or beneficiaries and dismissed the counterclaim.

The court also noted the complexity of the proceedings and expressed the opinion that the case could have been managed more efficiently. The court reserved the decision on costs, suggesting that Mr Hong should pay costs as the unsuccessful party in the proceeding.

Orders