Case: Henjo Investments Pty Limited v Collins Marrickville Pty Limited (1988) 79 ALR 83
Outcome: referred to
(a) Whilst the possibility of a transfer of shares from Mr Ku to Ji Song had been the subject of prior discussion, in the context of a possible settlement of the trade mark proceedings, it was raised by Mr Ku for the first time at the Avillion Hotel on 19 October 2006. (b) Mr Ku indicated his intention to transfer the shares to Ji Song with a view to effecting a gift inter vivos of those shares. (c) On 23 October 2006 Mr Ku executed a 'Change to company details' form (see Schedule 1) which he believed would, upon being recorded by ASIC, have the effect of validly transferring the shares to Ji Song. (d) On 24 October 2006 Mr Ku gave the original of the 'Change to company details' form signed by him and dated 23 October 2006 to Mr Kim so that Mr Kim might forward it to ASIC. (e) Mr Kim never forwarded the signed document to ASIC. On or about 9 November 2006 he threw it into his rubbish bin. (f) No proper instrument of transfer of the one share in Kjun International Pty Limited that was held by him as at 23 October 2006 or of any other shares, as required by s 1071B(2) of the Corporations Act , was ever executed by Mr Ku, delivered by him to Ji Song or delivered by him to Kjun International Pty Limited for registration. (g) In accordance with clause 32 of Kjun International Limited's constitution, Mr Ku remained the holder of whatever shares he may have held in Kjun International Pty Limited, notwithstanding his electronic lodgement on 9 November 2006 of the 'Change to company details' form with ASIC (see Schedule 2). The prima facie evidence of a transfer from Mr Ku to Ji Song (under s 1274B(2)) was negated by the evidence that no transfer was ever executed or delivered. This is now common ground. (h) Mr Ku never did everything that was necessary to be done in order to transfer any shares in Kjun International Pty Limited to Ji Song and render himself bound by his intended gift inter vivos. (i) No question of an implied resulting trust or any other form of trust or of a collateral contract to constitute a trust, arises. (j) No mention of Mr Ku's intended gift of the shares or any other shares was made in either form of agreement as signed by Luke Song and Mr Ku on 25 October 2006, even though the common understanding of the parties at that time was that the 'Change to company details' form (Schedule 1) had not been received or recorded by ASIC at that stage. (k) When at the Avillion Hotel on 25 October 2006, Luke Song and Mr Ku considered in detail the terms of the longer form of agreement with a view to effecting a settlement of the trade mark proceedings. (l) They then proceeded to execute the longer form of agreement and also inadvertently signed the shorter form of agreement. Neither party was under the influence of alcohol or unable to read and approve the terms of the agreements which were executed. (m) The parties intended that their execution of the longer form of agreement, but not the shorter form, should give rise to legal relations. (n) At the time of the execution of the longer form of agreement, the proper parties to the trade mark proceedings were: Song interests LSU Pty Limited as trustee of the Nirvana Investment Trust Su-shi World Australia Pty Limited Sue Song Luke Song Ku interests Kjun International Pty Limited Sushi Nara Australia Pty Limited (o) When Luke Song executed the longer form of agreement he intended to bind not only Su-shi World Australia Pty Limited, Sue Song and Luke Song, but also LSU Pty Limited as trustee of the Nirvana Investment Trust. (p) When Mr Ku executed the longer form of agreement he intended to bind not only Kjun International Pty Limited but also Sushi Nara Australia Pty Limited. (q) It is clear from paragraphs B, D, D [the second D], F and G in the longer form of agreement that Luke Song and Mr Ku intended the party described as 'A' to include all the respondents in the trade mark proceedings and by the party described as 'B' in that form of agreement to include all the applicants in those proceedings. (r) As at 25 October 2006 Luke Song was the sole director of Su-shi World Australia Pty Limited and he, together with Sue Song, were the directors of LSU Pty Limited. (s) In my opinion, it may be inferred that Sue Song authorised Luke Song to enter into a settlement agreement at some time between 19 and 25 October 2006 on her own behalf and also on behalf of LSU Pty Limited and that the longer form of agreement contained terms which were within the scope of Luke Song's authority. (t) As at 25 October 2006 Mr Ku was the sole director of Kjun International Pty Limited and also Sushi Nara Australia Pty Limited. As such, he had authority to bind both of those companies to a settlement agreement. (u) The longer form of agreement was not void for uncertainty. Its terms may be ascertained from the words used in the longer form of agreement and the relevant surrounding circumstances. (v) The reference in clause G of the settlement agreement to the parties' agreement to 'solve all problems harmoniously through a mutual talk and agreement, and help and cooperate with each other for mutual development without slandering each other' did not constitute an agreement to agree. Rather the words were indicative of a promise by the parties to use their respective best endeavours to resolve future disputes that may arise between them by negotiation, bringing to bear goodwill in so doing. (w) The settlement agreement provided for the applicants in the trade mark proceedings to refrain from continuing those proceedings and to refrain from bringing any further claims against the respondents arising out of the disputes between them in relation to the trade mark. It may be inferred that the applicants in the trade mark proceedings agreed to file a notice of discontinuance with the consent of the respondents. (x) The agreement also provided for no claims to be brought by the respondents against the applicants in the trade mark proceedings arising out of those disputes. Whilst the second clause D speaks of ' If "B" withdraws the lawsuit against "A" brought in the Federal Court of Australia New South Wales District Registry, "A" accepts it without reservation and agrees that there will not be any legal proceedings against "B" from "A"' (emphasis added), it is clear from the terms of the agreement and, in particular, the preamble to clause G that by the agreement the parties mutually agreed that they would 'not continue' with their respective claims so that no right was reserved to the respondents in the trade mark proceedings to institute their cross-claim as they did on 9 November 2006, in the absence of a formal notice of discontinuance to be filed by the applicants with the consent of the respondents in the trade mark proceedings. (y) The settlement agreement recognised the rights of Kjun International Pty Limited to the trade mark 'Su-shi World' and the continuation of the licensing arrangement, such as it was, whereby Sushi Nara Australia Pty Limited acted as a franchisor of the 'Sushi World' name. It provided for a recognition of the rights of the parties presently using the 'Sushi World' name in respect of shops, to continue to do so, and it conferred a right on the respondents in the trade mark proceedings to 'open new Sushi World' shops. (z) Notwithstanding the settlement agreement which had been concluded, the respondents, including JHJ Brothers Holdings Pty Limited, filed their cross-claim in the trade mark proceedings on 9 November 2006 and proceeded to serve same on 13 November 2006 (see [27]-[28] above). Furthermore, Ji Song purported to remove Mr Ku as a director, secretary and public officer of Kjun International Pty Limited, replacing him with Sue Song (see Edwin Davey's letter of 15 December 2006). Needless to say, the purported removal and replacement of Mr Ku by Sue Song was of no force and effect given that Ji Song never became the holder of any shares in Kjun International Pty Limited. (aa) By their conduct in filing and serving the cross-claim as they did, the respondents in the trade mark proceedings repudiated the settlement agreement reached on 25 October 2006. That repudiation was accepted by the applicants in the trade mark proceedings on 18 December 2006 thereby terminating the settlement agreement. (bb) In the circumstances, the restraints imposed upon the parties in relation to continuing the trade mark proceedings, whether as applicants or cross-claimants, came to an end with the consequence that the trade mark proceedings may now proceed to a hearing. (cc) None of the conduct engaged in by any of the Songs or Su-shi World Australia Pty Limited whether by action or omission constituted misleading and deceptive conduct or conduct likely to mislead or deceive. The circumstances which prevailed between 25 October and 9 November 2006 did not give rise to an obligation on the part of the Songs or any of them to disclose any intention that they may have had to file a cross-claim on 9 November 2006 nor did the circumstances give rise to an obligation upon them or any of them to disclose the fact that the cross-claim had been filed following its filing on 9 November 2006 and before its service on 13 November 2006 (see Henjo Investments Pty Limited v Collins Marrickville Pty Limited (1988) 79 ALR 83 at 94-5). (dd) Su-shi World Australia Pty Limited did not engage in any unconscionable conduct within the meaning of s 51AA of the Trade Practices Act . 203 In the foregoing circumstances, the applicant in the current proceedings has failed in respect of the claims as articulated in paragraphs 1 4 and 5 8 of the Second Further Amended Application filed on 6 August 2007. However, he is entitled to a declaration that the third respondent has no right, title or interest in any shares in the fourth respondent and also a declaration that the purported removal of the applicant as a director, secretary and public officer of the fourth respondent and the purported replacement of the applicant as a director, secretary and public officer of the fourth respondent by the first respondent, by the third respondent's resolution signed and dated 15 December 2006, was of no force and effect. 204 Given the basis upon which the case has been decided and the late emergence of evidence, which, if addressed prior to the commencement of the proceedings, may have obviated the need for the proceedings, the question of costs should be reserved for later decision. I propose to direct that the parties file and serve written submissions thereon within 7 days. Schedule 1 Schedule 2 I certify that the preceding two hundred and four (204) numbered paragraphs and two (2) Schedules are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham. Associate: Dated: 8 August 2007 Counsel for the Applicant: R J Webb SC and S Fendekian Solicitor for the Applicant: Darryl Barlow &amp; Company Counsel for the First, Second, Third and Fifth Respondents: R K Weaver and S Chrysanthou Solicitor for the First, Second, Third and Fifth Respondents: Edwin Davey Commercial &amp; Litigation Lawyers The Fourth Respondent submitted to such orders as the Court may seem fit. Dates of Hearing: 12, 13, 14, 15, 18, 19 June, 10 July and 6 August 2007 Date of Judgment: 8 August 2007 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2007/1189.html