Worldtel NZ Limited v Kim no.2 HC Auckland CIV-2009-404-001158

[2011] NZHC 2026

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2009-404-001158

BETWEEN  WORLDTEL NZ LIMITED Plaintiff

ANDJAE KAP KIM First Defendant

ANDSEONG HEE HAN Second Defendant

Hearing:         On the papers

Judgment:      21 December 2011 at 2:00 PM

JUDGMENT (2) OF COURTNEY J

This judgment was delivered by Justice Courtney on 21 December 2011 at 2:00 pm

pursuant to R 11.5 of the High Court Rules.

Registrar / Deputy Registrar

Date....................................

Solicitors:           A E Liew, P O Box 60306, Titirangi, Waitakere 0642

Fax: [phone]

David Rooke Law, P O Box 64342, Botany Downs, Manukau 2142

Fax: [phone]

WORLDTEL NZ LTD V KIM HC AK CIV-2009-404-001158 21 December 2011

(a)      In conversion for the wholesale value of the converted $5, $10, $20, and $50 I-Phone cards; and

(b)In  knowing  receipt  to  the  extent  that  money  traceable  to  the conversion of phone cards and failure to account for top-up charges are still in her hands (whether in money or assets) as at 6 March 2009.

[2]      Because of difficulties identifying the quantum of these losses I made an order for an account to be undertaken by Mr McCullagh in which he was to identify the following:

(a)       The loss to Worldel from the supply to retailers of stolen I-Phone $5,

$10, $20 and $50 cards;

(b)The extent to which monies derived from the sale of I-Phone cards and top-up charges are still held in any bank account controlled by Ms Han; and

(c)      The extent to which monies from I-Phone cards and top-up charges have been used to acquire assets in which Ms Han has an interest or are under her control.

[3]      I received Mr McCullagh’s report on 28 November 2011 and a memorandum from Worldtel’s counsel, Mr Liew, seeking orders in accordance with the report.  By minute 15 December 2011 I requested advice from Ms Han’s solicitor, Mr Rooke, whether a reply to Mr McCullagh’s report was intended.  I indicated that if I did not receive advice by 5 pm, 16 December 2011 I would proceed to make orders on the basis of Mr McCullagh’s report.

[4]      As at 21 December 2011 I had still not received any advice from Mr Rooke.

I therefore proceed to make orders in accordance with Mr McCullagh’s report.

[5]      Mr McCullagh identified a total of 50,337 cards supplied to EzyTel Ltd (the company operated by Mr Kim and Ms Han) which had a total wholesale value of

$785,438.50.  In addition to the face value of the cards, Mr McCullagh assessed the value of top-up charges associated with those cards at $195,206.88.   In addition, there was $163,583.43 in funds received by EzyTel but unaccounted for.  The total that  should  have  been  paid  by  EzyTel  to  Worldtel  was  $1,144,228.81  but Mr McCullagh has identified total payments of only $701,220, leaving the balance for which Ms Han is liable of $443,008.81.

Bank accounts under Ms Han’s control

[6]      Mr McCullagh has identified two bank accounts under Ms Han’s control in which funds derived from the sale of I-Phone cards and top-up charges are still held. However, these accounts (with the ASB and ANZ) have been significantly depleted with respective balances of $156.11 and $626.40.

Assets acquired with proceeds from I-Phone cards and top-up charges

[7]      Mr McCullagh has identified two properties that were purchased with funds that  should  have  been  accounted  for  to  Worldtel.    These  were  110  Bradbury Crescent, Highland Park, Auckland and 8 Solstone Place, Flat Bush, Auckland.  The property at Bradbury crescent was sold in 2005 and the proceeds used to reduce the loan owing under an ASB Bank mortgage in respect of Solstone Place.

[8]      Solstone Place was purchased in June 2008 for $781,000.  The purchase price was funded partly by a loan of $650,000 from the ASB Bank and partly by two cash payments totalling $132,357.94 from monies that should have been paid to Worldtel. Mr McCullagh has assessed the total amount of Worldtel’s funds applied towards Solstone Place as $592,795.01.  Ms Han and her husband, Mr Kim, are registered jointly as the owners of the property.

[9]      I am satisfied as to the matters contained in Mr McCullagh’s report as the basis for granting the relief sought.  I therefore make the following orders:

(a)       Judgment against Ms Han in the sum of $443,008.81;

(b)Interest at a rate of 5% from 5 March 2009, the date of filing of the statement of claim;

(c)       A declaration that Ms Han holds her one-half undivided share in 8

Solstone  Place,  Flat  Bush,  Auckland  as  constructive  trustee  for

Worldtell to the extent of $443,008.81;

(d)The  costs  of Anthony  McCullagh  in  undertaking  the  account  and preparing his report.

[10]     There will also be costs arising out of and incidental to this proceeding on a

2B basis with disbursements as certified by the Registrar.

P Courtney J