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[2025] NSWSC 1199
Supreme Court of NSW
2025-10-13
Pike J
Original judgment source is linked above.
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: JM World Au Pty Ltd (in liq) v Kim (No 2) [2025] NSWSC 1199
Hearing dates: On the papers
Date of orders: 13 October 2025
Decision date: 13 October 2025
Jurisdiction: Equity - Real Property List
Before: Pike J
Decision: See orders at [71]
Catchwords: COSTS – Party/Party – Bases of quantification – Indemnity basis – no question of principle
EQUITY – Equitable remedies – Receivers – whether a receiver should be appointed – no question of principle
JUDGMENTS AND ORDERS – Interest – Pre-judgment interest – Rate applicable – whether to award simple or compound interest – no question of principle – no question of principle
JUDGMENTS AND ORDERS – Stay of execution – whether to order a stay on a monetary judgment
Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW), rr 20.26 and 42.14(2)(b)(i)
Cases Cited: Directed Electronics OE Pty Ltd v OE Solutions Pty Ltd (No 9) [2023] FCA 462
Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298; [2003] NSWCA 10
Jaeger v Bowden (No 2) [2016] NSWSC 897
JM World AU Pty Ltd (in liq) v Kim [2025] NSWSC 995
Khattar v Hills Shoppingtown Pty Ltd (subject to a deed of company arrangement) [2024] NSWSC 1552
Thomas v SMP (International) No 6 [2010] NSWSC 1311
Texts Cited: Nil
Category: Costs
Parties: JM World Au Pty Ltd (in liquidation) ACN 124 797 629 (first plaintiff)
Barry Anthony Taylor in his capacity as liquidator of JM World Au Ply Ltd (in liquidation) ACN 124 797 619 (second plaintiff)
Eun Hee Kim (first defendant)
Yeong Jeen Bak (second defendant)
Representation: Counsel:
S Golledge SC / J Baird (plaintiffs)
A Maroya (first defendant)
J Young (second defendant)
Solicitors:
Duggan Legal (plaintiffs)
Tsavdaridis Lawyers (first defendant)
Kim & Associates (second defendant)
File Number(s): 2022/00282297
Publication restriction: Nil
I delivered my primary judgment in these proceedings on 3 September 2025: see JM World AU Pty Ltd (in liq) v Kim [2025] NSWSC 995 (PJ or Primary Judgment). These reasons assume familiarity with, and maintain the same definitions as in my Primary Judgment.
For the reasons set out in the Primary Judgment, the claims advanced by the plaintiffs against both defendants succeeded, although not entirely. At PJ [276] I made directions for the parties to seek to agree orders to give effect to the PJ, including as to costs, failing which I would determine any remaining issues on the papers.
A measure of agreement was reached between the parties. These reasons resolve the issues in dispute.
It is convenient to address the issues by reference to the orders proposed by the plaintiffs.
Order 1 proposed by the plaintiffs sought a declaration that the first plaintiff is indebted to SDC in the sum of $519,473.41.
The defendants opposed such a declaration, whereas the plaintiffs contended that there would be practical utility in the making of the declaration in order to assist the Liquidator in his administration.
I do not propose to make the declaration sought. It is not necessary to give effect to the reasons in the PJ, nor was any such declaration sought by the plaintiffs in the pleadings.
Further, SDC is not a party to these proceedings.
Order 2 sought a declaration as to the breaches by the defendants in relation to the building contract for the Killara Property, and orders 3 to 5 were consequential.
There was no substantive dispute between the parties, only minor points of drafting. I prefer the drafting of the defendants. (See orders 1 to 4 below)
Order 6 sought leave for the plaintiffs to lodge a request form 11R with Land Registry Services NSW, in order to register the charge on title to the Killara Property.
The plaintiffs contended there was practical utility in the grant of leave for this purpose in order to expedite registration of the Court’s order on the title to the Killara Property. The defendants opposed this order on the grounds that no order was sought in the pleadings or is dealt with in the judgment.
I do not propose to make this order. In addition to the points raised by the defendants, nothing of substance was said to found the need for expedition of registration of the charge.
- The first defendant pay the sum of $1,036,000.00 to the plaintiffs.
I assume the reference to “$1,036,000” was in error and was meant to be $1,034,096. On this basis there was no dispute. (See order 11).
This leaves the question of interest which I deal with separately below and the question of whether the amounts are payable to the first plaintiff or both plaintiffs. No submissions were directed at this. In my view, the moneys are payable to the first plaintiff.
These orders concerned interest. The plaintiffs sought compound interest whereas the defendants contended that only the second defendant should be liable for simple interest.
The plaintiff referred to cases where compound interest has been awarded, including Thomas v SMP (International) No 6 [2010] NSWSC 1311 (Thomas) at [1]-[4], [15]-[24]; and Jaeger v Bowden (No 2) [2016] NSWSC 897 (Jaeger) at [710]-[750].
The principles in relation to the circumstances in which compound interest will be awarded were comprehensively set out by Robb J in Jaeger at [710]-[730]. At [717], Robb J referred to what was said by Heydon JA in Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298; [2003] NSWCA 10 at [303] to the effect that the award of the higher rate of interest in cases of gross misapplication of trust funds rests not on ideas of punishment or penalty, but on two other bases. First on the footing that the defendant is estopped from denying that he received interest at such a rate which he ought to have received. The second is that the award ensures that the fiduciary retains no profit.
At [715], Robb J referred to what was said by Pembroke J in Thomas as to whether equity should always order interest on a compound basis. Neither Robb J or Pembroke J determined this point.
Pembroke J also considered whether fraud or serious misconduct was a necessary pre-condition to the award of compound interest. Robb J at [716] appears to suggest that it will not be necessary to prove fraud or misconduct when the defendant has used the money for his or her own commercial purposes.
More recently, in Directed Electronics OE Pty Ltd v OE Solutions Pty Ltd (No 9) [2023] FCA 462, Beach J stated at [26] to [34] (my emphasis in bold):
[26] I should say here that the context for considering compound interest concerns equitable compensation rather than a plain vanilla common law claim of the type dealt with in Hungerfords v Walker (1989) 171 CLR 125. I am only dealing with the prophylactic jurisdiction of equity and her protection of innocent parties affected by the wrongful conduct of fiduciaries and knowing assisters. And no one should doubt the malleability of her remedies.
[27] Now an award of compound interest may be made in equity against a trustee or other fiduciary for breach of an equitable obligation. But it is not limited to the situation where funds have been withheld or misappropriated by a trustee or other fiduciary or where a trustee is under a duty or direction to accumulate income. The over-arching consideration is what justice demands in the particular circumstances. In other words, what is equitable?
[28] Now it must be borne in mind that such an award is compensatory in nature. It is not designed to be punitive in purpose or effect. Such an award is designed to make good what the innocent party may have lost by reason of the breach of the equitable obligation.
[29] It is not necessary to demonstrate fraud, dishonesty or other serious misconduct to justify an award of compound interest, although such a finding is not unhelpful as it may justify a more robust approach to drawing inferences in favour of the innocent party and against the miscreant fiduciary concerning use by the latter or loss by the former.
[30] **Further, for such an award, it is not strictly necessary to demonstrate that the recalcitrant or defaulting fiduciary has made a gain whether by the use of the innocent party’**s money or in some other way, but of course if that is the case or it can reasonably be inferred, then any claim for compound interest would be fortified.
[31] Further, in a modern mercantile setting, an award of compound interest is more likely to be consistent with commercial reality. Simple interest usually under-compensates, and the longer the period of the calculation, the greater the magnitude and magnification of such under-compensation. Is there any such thing as a lender or borrower who does not expect to receive or be charged respectively interest utilising periodic rests and thereby permitting or envisaging some level of compounding? I doubt it. Of course, setting a higher rate with simple interest may give you nearly arithmetic equivalence with otherwise setting a lower rate with compound interest. But assuming that the setting of the rate has not been massaged to achieve that end or to implicitly so reflect such an allowance, one would expect that some level of compounding should be the norm.
[32] Now Directed says that the present case falls within the class of cases where the application of compound interest is appropriate to approximate the profit made from the use of the proceeds; see Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296 at [547] to [552] per Finn, Stone and Perram JJ.
[33] And of course one of the circumstances in which compound interest is awarded with periodic rests, for example, weekly, monthly, quarterly or yearly, is where trust money is misused by a trustee or fiduciary in his or her own trade or business. And the informing principles may reflect those employed in accounting for profits, including presuming that the party against whom relief is sought has made that amount of profit which persons ordinarily would in analogous circumstances make in trade.
[34] In such a class of case, the object of a compound interest award and the use of periodic rests is to reflect in the award a crude approximation of the profit likely to have been made by the fiduciary or trustee from the money misused where that profit could reasonably be supposed to exceed in value a simple interest award.
No detailed submissions were advanced by the plaintiffs as to why compound interest should be awarded, beyond referring to the authorities “in a case of breach of fiduciary duty”. Nothing was said as to how those authorities apply to the present case.
In his reply submissions, Mr Bak contended that in now seeking compound interest the plaintiffs are seeking a form of unjust enrichment because “the money” – presumably a reference to the amounts to be ordered – “is not needed to pay the debts of the first plaintiff”. It was also submitted that to suggest that Ms Kim has been guilty of something in the nature of fraud is “grotesque”.
I am not satisfied that it has been established that an award of compound interest is necessary or appropriate in the circumstances in relation to the Building Works Claims. Justice does not demand such an outcome. Compound interest is, however, appropriate in relation to the Payment and Retention Claims.
Insofar as it is necessary to establish fraud or misconduct, I am not satisfied that this has been demonstrated in the case of either Ms Kim or Mr Bak.
As regards the Building Work Claims, no company funds have in fact been paid away in the sense that the funds of the first plaintiff have been paid to SDC and thus no longer available to the first plaintiff. The first plaintiff has a liability to SDC which has not yet been satisfied.
The position in relation to the Payment and Retention claims is different. The funds of the first plaintiff have been paid away to third parties, two of which are companies controlled by Mr Bak. It is appropriate for compound interest to be calculated at annual rests as sought by the plaintiffs.
Simple interest will be awarded against both defendants on the Building Works Claims and compound interest on the Payment and Retention Claims.
The interest calculations put forward by the plaintiffs commenced on 1 December 2021. No submissions were advanced as to why this was the appropriate date.
In my view this is not the appropriate commencement date.
In relation to the Building Work Claims, the appropriate commencement date I have chosen is 23 December 2020, being the date of the registration of the District Court judgment consequent upon the SOPA Adjudication. This date roughly approximates when the money was payable by the first plaintiff to SDC and thus provides a reasonable date for the commencement of pre-judgment interest.
Simple interest will therefore be payable at court rates on $519,473.41 from 23 December 2020 to the date of this judgment.
In relation to the Payment and Retention claims, the appropriate starting date is 5 May 2021, being the date the first plaintiff’s funds were paid away.
Compound interest at court rates, compounding at yearly rates will therefore be payable from 5 May 2021 until the date of this judgment.
There is no reason why the first defendant should not also be liable to pay interest. I calculate the interest as follows:
Simple interest on the Building Work Claims to be: $161,221.71.
Compound interest for Payment Claims to be: $325,864.36.
Compound interest for Retention Claims to be: $16,556.53.
Compound interest for Payment and Retention Claims to be: $342,420.89.
As set out above, interest has been included in the judgment amounts.
Proposed order 16 deals with costs. The plaintiff sought costs on the ordinary basis up to three alternative dates and on the indemnity basis thereafter.
The defendants contended that they should pay only 50% of the plaintiffs’ costs and only on the ordinary basis.
The first date from which indemnity costs is sought is 22 June 2023.
This is based on the non-acceptance of a Calderbank offer made on 24 May 2023 to the defendants offering to accept the sum of $1,435,764.34 inclusive of interest and costs which were stated to then be estimated at $184,087.88 and $69,739.33 respectively. The letter contains a detailed explanation as to why the plaintiffs contended they would do better than the offer at final hearing. The offer was open for a period of 28 days and was not accepted.
The second date from which indemnity costs is sought is 26 October 2023 based on the failure to accept an offer of compromise made under Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 20.26 dated 25 October 2023 offering to compromise on the basis that the defendants pay the plaintiffs $1.4 million in full and final settlement of the whole of the plaintiffs’ claims.
The third date is 1 April 2025 based on a Calderbank letter sent by the plaintiff to the defendants dated 21 March 2025, originally open for acceptance until 28 March 2025 but extended by request to 31 March 2025 (bearing in mind the hearing was to commence on 7 April 2025) offers to accept $1,350,000 inclusive of interest and costs.
Mr Bak opposed indemnity costs on the following basis:
(a) in relation to the first offer of 24 May 2023 required that the defendants not prove in the winding up of JM World in circumstances where it is contended that the PJ makes it clear that the defendants will be entitled to prove in the winding up of JM World; (b) as to the offer of compromise dated 25 September 2023, it was said not to be a valid offer because it required both defendants to pay the amount specified and it was not possible for either defendant to pay the amount and thereby have the other defendant released; (c) the third offer was invalid in that it could only be accepted by both defendants. It is said that as the defendants were separately represented and Ms Kim had strong grounds on which to defend the proceedings, the plaintiffs well knew that this was an impossible condition.
The contention that the plaintiffs should only receive 50% of their costs was based on the submission that the plaintiffs “failed on a matter which took a considerable part of the hearing and was insulting to both of the Defendants, and in particular, Ms Kim”. Although not stated, I assume the issue referred to was the cash proposition (see PJ [153]).
The plaintiffs contended that this was not an appropriate case to apportion or discount costs. It was said that any lack of success on that single issue “cannot detract from the overall success the plaintiffs otherwise achieved”. Further, it was contended that the 50% reduction grossly overstated the significance, both forensically and financially of that issue.
I deal first with the indemnity costs application.
The first offer can be put to one side because of the condition attached to it that the defendants not prove in the winding up of JM World. This was something outside the case.
As for the offer of compromise dated 25 September 2023, I do not agree it was not a valid offer. It did not require each defendant to pay $1.4 million, but rather for the defendants together to pay the $1.4 million. So much is clear on the face of the offer.
No other reason was put forward for the Court not to give effect to the offer of compromise. Indemnity costs should thus be paid from 26 September 2023 (and not 26 October 2023 as sought – see UCPR r 42.14(2)(b)(i)).
In these circumstances it is not strictly necessary for me to consider the third offer. I do not accept, however, the assertion that the condition of acceptance by both defendants was unreasonable in the circumstances. The plaintiffs obviously wanted to bring to an end the entirety of the proceedings.
In relation to the contention that the plaintiffs should only receive 50% of their costs, I am satisfied that the plaintiffs’ lack of success on the cash proposition should be reflected in a reduction in the costs payable by the defendants. The issue was a substantial one in the case where it was obvious that considerable work had been done in seeking to prove the contention. Both Ms Kim and Mr Bak were cross-examined at some length in relation to the proposition. In what I accept is essentially an impressionistic and broad brush approach, I assess that the plaintiffs’ costs should be reduced by 20% on account of the failure to prove the cash proposition.
The costs order will therefore be that the defendants pay 80% of the plaintiffs’ costs of the proceedings on the ordinary basis up to and including 25 September 2023 and on the indemnity basis thereafter. (See order 12)
Order 17 is a declaration to the effect, as I have found, that the first defendant ought not be excused from liability under ss 1317S or 1318 of the Act.
Although not agreed to, no reason was advanced by the first defendant as to why such a declaration should not be made. It should. (See order 13).
By orders 18 to 23, the plaintiffs sought the appointment of a receiver over the Killara Property with consequential orders in relation to the powers of the receiver. The plaintiffs contended that this was an orthodox way of giving effect to the equitable relief of a charge over the Killara Property.
The defendants opposed any such relief.
The appointment of a receiver is discretionary: see Khattar v Hills Shoppingtown Pty Ltd (subject to a deed of company arrangement) [2024] NSWSC 1552 at [21] per Kunc J.
I am not satisfied that any proper basis for the appointment of a receiver has been established at this stage. The property is the family home of the defendants. There is at least a prospect that the judgment amounts will be paid by the defendants.
I will grant liberty to apply which can be exercised if a receiver is subsequently sought.
By proposed order 24, the defendants seek a stay of the substantive orders for a period of 28 days.
The plaintiffs oppose such a stay.
The possibility of a stay was raised at the time that PJ was handed down on 3 September 2025. As no substantive orders had been made at that stage, I suggested to counsel for the second defendant that he discuss the question of a stay with the plaintiffs.
No agreement was obviously able to be reached.
The primary basis for seeking a stay appears to be a concern that an appeal would be rendered nugatory if a receiver was appointed to sell the Killara Property – being the family home of the defendants.
As set out above, I am not minded to appoint a receiver.
What remains will therefore be a money judgment, supported in part by a charge over the Killara Property. In these circumstances, I do not propose to grant any stay of my orders. An application for a stay is best made to the Court of Appeal armed with the actual grounds of appeal.
In any event, I propose to grant liberty to apply if any issue arises.
Whilst, in these circumstances there is no need for me to consider the matters relied on in the submissions of the defendants as raising arguable grounds of appeal – the issue of the certificate of insurance is dealt with at PJ [136] and [144]. Insofar as reference is also made to s 127 of the Corporations Act, there was no real dispute that Mr Bak was the managing director of JM World, running every aspect of its operations. This was a matter relied on by both Mr Bak and Ms Kim in contending either that Ms Kim had no liability or should be relieved from any which she otherwise had.
The Court orders that:
Declare that both the first and second defendant each breached respectively her and his duties as directors of the first plaintiff in causing or permitting the first plaintiff to enter into a building contract with Sustainable Design and Construction Pty Ltd in relation to the property comprised in Folio Identifier 4/12794 known as 27 Lynwood Avenue, Killara in the state of New South Wales (the Killara Property) being a property in which it has no interest.
Declare that both the first defendant and the second defendant are liable to the first plaintiff for breach of duty in the sum of $680,695.12 inclusive of pre-judgment interest.
Declare that both the first defendant and the second defendant pay the sum of $680,695.12 to the first plaintiff.
Declare that the Killara Property is subject to an equitable charge in favour of the first plaintiff to secure the amount of $680,695.12.
Declare that each of the payments made by the first plaintiff on 5 May 2021 to JM World Co Ltd of $610,472.00, to Skin + Co Ltd $231,052.00 and to Aster Biyou Co Ltd of $142,572.00 respectively (in total $984,096.00 and collectively “the Payment****s”) is:
(a) an uncommercial transaction within the meaning of s 588FB Corporations Act (Cth) 2001 (Corporations Act); (b) an unreasonable director-related disposition within the meaning of s 588FDA of the Corporations Act; (c) a creditor defeating disposition within the meaning of s 588FDB of the Corporations Act; (d) an insolvent transaction within the meaning of s F88FC of the Corporations Act; and (e) a voidable disposition within the meaning of s 588FE of the Corporations Act.
(a) an unreasonable director-related disposition within the meaning of s 588FDA of the Corporations Act; (b) an unfair preference within the meaning of s 588FA of the Corporations Act; (c) an insolvent transaction within the meaning of s 588FC of the Corporations Act; and (d) a voidable disposition within the meaning of s 588FE of the Corporations Act.
**********
JM World Au Pty Ltd (in liq)
Kim
(2003) 56 NSWLR 298
(1989) 171 CLR 125
(2012) 200 FCR 296