These reasons concern the final orders to be made to give effect to my reasons for judgment published on 26 March 2021 (Re Hoju Jobs Pty Ltd [2021] NSWSC 302 - the principal judgment), including whether interest should be awarded on an amount payable by the third defendant (Mr Goo) to the plaintiff (Mr Kim) pursuant to an order for specific performance, and the costs of the proceedings. These reasons assume familiarity with the principal judgment.
Mr Kim submitted that the following orders should be made to give effect to the principal judgment:
"1. An order that the contract between the plaintiff and the third defendant referred to at [80] of the judgment of the Court in Re Hoju Jobs Pty Ltd [2021] NSWSC 302 be specifically performed in the following manner:
Within 14 days from the date of these orders, the third defendant is to provide all instruments it reasonably requires the plaintiff to execute to give effect to the transfer of the plaintiff's G class shares in the first defendant to the third defendant or any nominee of the third defendant notified to the plaintiff in writing.
If the third defendant does not comply with order 1(a), the plaintiff may execute the instruments annexed and marked "A" to these short minutes.
The third defendant is to pay the plaintiff the sum of $300,000 within 28 days from the date of this order.
The plaintiff is to deliver to the third defendant documents executed in accordance with order 1(a), or 1(b), within 28 days from the date of this order.
2. The proceedings against the First and Third Defendant are otherwise dismissed.
3. The Third Defendant is to pay the Plaintiff's costs:
On an ordinary basis until 27 January 2021; and
From 28 January 2021 on an indemnity basis.
4. The First Defendant is to bear its own costs of these proceedings.
5. The Second Defendant is to bear his own costs of these proceedings.
6. The Third Defendant is to pay interest from the 9th June 2017 to 26 March 2021 in accordance with s 100 of the Civil Procedure Act 2005 and Practice Note SC Gen 16 - Supreme Court - pre-judgment interest rates, in the amount of $59,294.53.
7. Liberty to apply to the parties on 5 days' notice to address any issues of non-compliance with order 1."
Order 1 was not the subject of dispute between the parties. However, Annexure A to order 1(b) contained a share transfer form for the transfer of Mr Kim's 50 G Class shares in the first defendant (Hoju Australia) to Mr Goo (or his nominee) and also a Form 484 to be lodged with the Australian Securities and Investments Commission notifying that change in the company's membership. I am content to make order 1 only on the basis that Annexure A does not include the Form 484. That form is required to be signed by a current office holder of Hoju Australia. Mr Kim is not a current officer holder and is therefore not authorised to sign that form as contemplated in order 1(b).
Order 2 was not the subject of dispute and will be made.
Orders 3 and 4 are the subject of dispute. I will return to the question of costs as between Mr Kim, Mr Goo and Hoju Australia below.
Order 5 is unnecessary and will not be made. Orders concerning the second defendant's costs of the proceedings were made on 4 February 2021 at the time when Mr Kim discontinued the proceedings as against the second defendant.
In relation to order 6, the relevant claim that was pressed by Mr Kim at the final hearing was a claim for the recovery of $300,000 by way of specific performance of the contract that was found to have been entered into by Mr Kim and Mr Goo: see principal judgment at [80]. It was submitted on behalf of Mr Goo, without reference to authority, that the order for payment of interest should not be made because the order for specific performance "involved a quid pro quo in the return of the G Class Shares and is not therefore the type of order for specific performance which is primarily compensatory in nature".
There is nothing in the terms of s 100 of the Civil Procedure Act 2005 (NSW) which suggests that the proceedings in respect of which interest can be awarded under that section exclude proceedings in which money is sought to be recovered by an order for specific performance of a contractual obligation to pay a sum of money.
Whilst the purpose of an award of pre-judgment interest under s 100 is compensatory, it does not follow in my opinion that an order under s 100 can only be made if the cause of action in respect of which the money is required to be paid by one party to the other is a cause of action for compensatory damages. An order for payment of a liquidated sum as a debt is not compensatory in nature, yet s 100(1) expressly includes a debt as one instance of recovery of money in respect of which an award of pre-judgment interest may be made.
Mr Kim referred to Wong v Van Vlymen [2021] NSWSC 841, in which Sackar J made an order for interest under s 100 of the Civil Procedure Act on various amounts, including amounts payable under earlier orders made in favour of the plaintiffs for specific performance of various agreements and deeds. No submission was made on behalf of Mr Goo that the order for specific performance in Wong v Van Vlymen (supra) was distinguishable from the order for specific performance in this case in some way that excluded the potential operation of s 100 to the $300,000 payable by Mr Goo to Mr Kim.
Mr Goo's failure to perform the contract has deprived Mr Kim of the $300,000 in the period prior to judgment. Under the contract referred to in the principal judgment at [80], Mr Kim was entitled to the repayment of his $300,000 from approximately 9 June 2017, being the date on which the plaintiff lost his 50 ordinary shares in Hoju Jobs Pty Ltd following the plaintiff's failure to secure an investment of 2 billion Korean Won. The fact that Mr Kim failed to enter into a different contract with Mr Goo by accepting Mr Goo's offer made in June 2017 to pay $400,000 has some consequences in relation to the costs orders to be made in these proceedings, as will become apparent below. However, I do not consider that it detracts from Mr Goo's continuing failure to perform the contract referred to at [80] of the principal judgment at all times up to judgment in these proceedings. I therefore do not consider that the June 2017 offer is a reason for the Court to decline to make an order for interest under s 100 of the Civil Procedure Act. Indeed, no submission to this effect was made on behalf of Mr Goo.
For those reasons, an order in terms of order 6 proposed by Mr Kim will be made. I note that there was no dispute concerning Mr Kim's calculation of the amount of interest.
Order 7 was not the subject of dispute and will be made.
It remains for me to address the question of costs as between Mr Kim, Mr Goo and Hoju Australia.
Mr Kim did not accept Mr Goo's June 2017 offer that I have referred to above: principal judgment at [109]. These proceedings were then commenced in November 2017. Mr Goo and Hoju Australia had common legal representation throughout the proceedings.
During the course of the proceedings, Mr Kim made an offer to Mr Goo and Hoju Australia on 15 May 2020 pursuant to Uniform Civil Procedure Rules (UCPR) r 20.26 on the following terms:
1. judgment for Mr Kim against Mr Goo and Hoju Australia;
2. Mr Goo and Hoju Australia to pay Mr Kim $250,000 within 28 days from the date of acceptance of the offer; and
3. the balance of the proceedings to be pursued by Mr Kim (being Mr Kim's claims against the second and fourth defendants that were subsequently discontinued).
On 28 January 2021, Mr Kim made a Calderbank offer to Mr Goo and Hoju Australia to settle the proceedings on the following terms:
1. Mr Goo to pay $300,000 to Mr Kim;
2. Mr Kim to facilitate the forfeiture or cancellation of his G Class shares in Hoju Australia;
3. Mr Kim to resign as a director of Hoju Korea and, if necessary, appoint Mr Goo's nominee as director of Hoju Korea;
4. Mr Kim to facilitate the transfer of the shares held by him in Hoju Korea to Mr Goo's nominee;
5. Mr Kim to facilitate the return of control of the bank accounts of Hoju Korea to Mr Goo's nominee;
6. the parties are to discontinue the proceedings in South Korea concerning Hoju Korea.
The matters referred to in (3) to (6) of that offer were beyond the scope of these proceedings.
The offer remained open for acceptance until 4pm on 1 February 2021. The final hearing of these proceedings commenced on 2 February 2021.
Mr Kim submitted that, as he had succeeded against Mr Goo, Mr Goo should pay his costs.
Mr Kim further submitted that his costs payable by Mr Goo should be paid on an indemnity basis from 15 May 2020 (relying on the offer of compromise) or alternatively from 28 January 2021 (relying on the Calderbank offer made on that date).
Although he did not succeed against Hoju Australia, Mr Kim submitted that the Hoju Australia should bear its own costs for the following reasons:
1. it was reasonable for Mr Kim to join Hoju Australia to the proceedings because the orders that he sought would affect the structure of Hoju Australia;
2. Hoju Australia had unsuccessfully submitted throughout the proceedings that it was a party to the contract in respect of which the order for specific performance was made (the contract was ultimately to held to be a contract between Mr Kim and Mr Goo only); and
3. Hoju Australia and Mr Goo were represented by the same solicitors and counsel, and Hoju Australia would therefore have incurred very little costs over and above the costs incurred by Mr Goo.
Mr Goo and Hoju Australia submitted that Mr Kim should pay their costs of the proceedings on the ordinary basis because:
1. Mr Kim unreasonably failed to accept Mr Goo's offer of $400,000 made in June 2017, relying on Lowe v Lowe (No. 3) [2015] NSWSC 1800 as to the relevance of a genuine offer made prior to the commencement proceedings; and
2. most of the relief claimed by Mr Kim against Hoju Australia was not pressed at the hearing and the claim that Mr Kim did press failed.
Alternatively, Mr Goo and Hoju Australia submitted that the parties should bear their own costs of the proceedings in light of the matters referred to immediately above.
If Mr Goo is ordered to pay Mr Kim's costs (contrary to Mr Goo's submissions above), then it was submitted that:
1. Mr Kim should nevertheless pay a proportion of the common costs of Mr Goo and Hoju Australia to reflect the failure of its claims against Hoju Australia: King Network Group Pty Ltd v Club of Clubs Pty Ltd (No. 2) [2009] NSWCA 204 at [25]-[26]; or
2. alternatively, Hoju Australia should bear its own costs.
It was also submitted on behalf of Mr Goo and Hoju Australia that the following existing interlocutory costs orders should be taken into account in determining the orders now to be made concerning the costs of the proceedings:
1. the defendants' costs thrown away by reason of Mr Kim's amendments to his pleading in June 2018, which Mr Kim was ordered to pay; and
2. the defendants' costs thrown away by reason of further amendments to Mr Kim's pleadings in December 2020, which Mr Kim was also ordered to pay. Those amendments included the claims to wind up Hoju Australia which Mr Kim did not press at the final hearing in February 2021.
Costs are at the discretion of the Court pursuant to s 98(1) of the Civil Procedure Act. The discretion must be exercised rationally and consistently with its purpose in accordance with the provisions of Part 42 of the UCPR and by reference to s 56 of the Civil Procedure Act: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11; see also Lowe v Lowe (No. 3) (supra) at [19]-[22] and the authorities there referred to.
Mr Goo's offer made in June 2017 was a clear offer capable of acceptance: see principal judgment at [22]-[23], [70]-[71]. It was also a genuine offer of compromise, offering Mr Kim the $300,000 he was entitled to under the contract referred to at [80] of the principal judgment plus an additional $100,000 to settle the dispute between Mr Goo and Mr Kim. As counsel for Mr Goo and Hoju Australia acknowledged, Mr Goo did not expressly or impliedly communicate when making the offer that it would be relied on in relation to the costs of proceedings not yet commenced. The offer is therefore not to be treated as equivalent to a Calderbank offer. However, the offer may nevertheless be taken into account in exercising the discretion in relation to costs and considering whether some order should be made other than an order that costs follow the event: see Lowe v Lowe (No. 3) (supra) at [24]-[33] and [39] and the authorities there referred to, including Ziliotto v Hakim [2013] NSWSC 359 at [134].
In my opinion, Mr Kim acted unreasonably in not accepting Mr Goo's offer when or shortly after it was made. The evidence discloses that Mr Kim initially said that he would take time to consider the offer, and Mr Goo did not object to Mr Kim taking that time. However, Mr Kim did not subsequently accept the offer: principal judgment at [70]-[72] and [109]. It appears that, at that time, Mr Kim was focussed on having the ordinary shares in Hoju Australia restored to him. That was the primary relief sought by Mr Kim when these proceedings were commenced in November 2017: see principal judgment at [72]. It was unreasonable for Mr Kim not accept Mr Goo's offer, which was even more favourable to Mr Kim than the oral agreement they had earlier made: see principal judgment at [80].
In my opinion, the commencement and prosecution of these proceedings in circumstances where Mr Kim had failed to accept the $400,000 offer that was open for acceptance in June 2017 is a sound reason to depart from the ordinary position under UCPR, r 42.1 that costs follow the event as between Mr Kim and Mr Goo.
The offer of compromise made by Mr Kim on 15 May 2020 does not enliven the operation of UCPR, r 42.14, in my opinion. The offer was made to Mr Goo and Hoju Australia jointly and was not capable of acceptance by only one of them. Mr Kim has succeeded only against Mr Goo. Acceptance of the offer would have involved Mr Goo and Hoju Australia suffering judgment being entered against them. In any event, the outcome that Mr Kim has achieved against Mr Goo is less favourable than the offer of compromise even if that offer had been directed to Mr Goo only, because the order for specific performance will require Mr Kim to transfer his 50 G Class shares in Hoju Australia to Mr Goo or his nominee. Acceptance of the offer would have meant that Hoju Australia and Mr Goo would have had to continue to live with Mr Kim holding 50 G Class shares in Hoju Australia.
The Calderbank offer made by Mr Kim on 28 January 2021 does not warrant an order that Mr Goo pay Mr Kim's costs of the proceedings on an indemnity basis thereafter. As counsel for Mr Kim acknowledged, a Calderbank offer must represent a genuine compromise which the recipient unreasonably failed to accept, taking into account all the relevant circumstances of the case, for the offer to trigger indemnity costs consequences: see Ziegler as trustee for the Doris Gayst Testamentary Trust v Cenric Group Pty Ltd [2020] NSWCA 85 at [68]-[70]. It is questionable whether the offer constituted a genuine compromise insofar as the proceedings in this Court are concerned. Acceptance of the offer would have involved Mr Goo capitulating to Mr Kim's claims, save for those claims that Mr Kim elected not to press at the final hearing in any event.
Even if the Calderbank offer did involve a genuine compromise of the proceedings in this Court, it was conditional on the discontinuance of proceedings between Mr Goo and Mr Kim in South Korea after certain steps had been taken in relation to Hoju Korea. In the proceedings in this Court, there were frequent references to the South Korean proceedings. It was plain from Mr Goo's evidence that he considers that Mr Kim's conduct in relation to Hoju Korea has been damaging to Hoju Korea. The evidence did not establish that the claims for relief of Hoju Korea and/or Mr Goo in the South Korean proceedings are limited to the matters in (3) to (6) of the Calderbank offer. The evidence does not show what Mr Goo would have been giving up or causing Hoju Korea to give up if he had agreed to the discontinuance of the South Korean proceedings. There is therefore insufficient evidence before this Court to support a conclusion that it was unreasonable for Mr Goo not to accept the Calderbank offer.
Looking at the circumstances overall, Mr Kim put all parties to considerable cost by commencing and prosecuting these proceedings after unreasonably failing to accept Mr Goo's June 2017 offer of $400,000. He has ultimately succeeded in his claims against Mr Goo, but failed in his claims against Hoju Australia. The contract claim against Hoju Australia failed on the basis that it was not a party to the contract, although Hoju Australia itself contended during the final hearing that it was a party to the contract.
The costs incurred by Hoju Australia in defending the proceedings would include the costs of preparing to defend the winding up application and other claims against Hoju Australia that were abandoned immediately before the final hearing, in addition to the costs of its successful defence of the contract claim.
Having regard to the nature of the evidence adduced in relation to the contract claim (principally, the parties' competing versions of the conversations comprising the oral contract that were equally relevant to the contract claims against Mr Goo and against Hoju Australia) and the manner in which the final hearing was conducted, I consider it most unlikely that Hoju Australia would have incurred any material costs in relation to the contract claim that would not have been incurred in Mr Goo's unsuccessful defence of the contract claim in any event. The only exception to this is that Hoju Australia may have incurred costs in relation to its set off defence of the contract claim, but it abandoned that defence on the final day of the hearing after prolonging the hearing somewhat by cross-examination of witnesses on matters directed to the set off defence.
Taking all of the above circumstances into account, I consider that the appropriate exercise of the discretion under s 98 of the Civil Procedure Act and UCPR, r 42.1 is to order that each of Mr Kim, Mr Goo and Hoju Australia pay their own costs of the proceedings, save for those costs that are the subject of previous orders made by the Court. Those previous costs orders stand.
The effect of that order is that:
1. Mr Kim's failure to accept the June 2017 offer deprives him of the order that would otherwise ordinarily be made under UCPR, r 42.1 for Mr Goo to pay Mr Kim's costs, bearing in mind that such order would be limited to Mr Kim's costs of the claims against Mr Goo and, to the extent that those costs were directed to the contract claims against both Mr Goo and Hoju Australia, a proportion of those costs; and
2. Hoju Australia, of which Mr Goo is the shadow director and controlling mind, will pay its own costs notwithstanding that it successfully defended the contract claim, bearing in mind that:
1. if costs followed the event, Hoju Australia would only be entitled to a proportion of its costs incurred with Mr Goo in their common defence of the contract claims, for the reasons I have referred to at [34] above: see King Network Group Pty Ltd v Club of the Clubs Pty Ltd (No. 2) (supra);
2. if costs followed the event, Hoju Australia would also be entitled to the costs of defending the other claims against it that did not proceed to final hearing, but these claims received very little attention in the evidence and submissions filed prior to hearing and it is therefore unlikely that significant costs were incurred by Hoju Australia in relation to these claims; and
1. Hoju Australia will retain the benefit of the costs orders previously made in relation to Mr Kim's amendments introducing the non-contract claims against it, including the claims for winding up.
In my opinion, this is a rational outcome that is consistent with the purpose of the Court's discretion in relation to costs in all the circumstances of this case.
For those reasons, I make the following orders:
1. Order that the contract between the plaintiff and the third defendant referred to at [80] of the judgment of the Court in Re Hoju Jobs Pty Ltd [2021] NSWSC 302 be specifically performed in the following manner:
1. Within 14 days from the date of these orders, the third defendant is to provide all instruments it reasonably requires the plaintiff to execute to give effect to the transfer of the plaintiff's G class shares in the first defendant to the third defendant or any nominee of the third defendant notified to the plaintiff in writing.
2. If the third defendant does not comply with order 1(a), the plaintiff may execute the instruments annexed and marked "A" to these short minutes.
3. The third defendant is to pay the plaintiff the sum of $300,000 within 28 days from the date of this order.
4. The plaintiff is to deliver to the third defendant documents executed in accordance with order 1(a), or 1(b), within 28 days from the date of this order.
1. The proceedings against the First and Third Defendant are otherwise dismissed.
2. Subject to order (4) below, order that each of the plaintiff, the first defendant and third defendant pay their own costs of these proceedings.
3. Order (3) above does not affect the costs orders previously made in these proceedings on 4 June 2018 and 9 December 2020.
4. The Third Defendant is to pay interest to the Plaintiff on the sum in order 1(c) above from the 9th June 2017 to 26 March 2021 in accordance with s 100 of the Civil Procedure Act 2005 and Practice Note SC Gen 16 - Supreme Court - pre-judgment interest rates, in the amount of $58,294.53.
5. Liberty to apply to the parties on 5 days' notice to address any issues of non-compliance with order 1.
[2]
Annexure A
TRANSFER OF SHARES
I, Jaykoo Kim of 29 Crestview Avenue, Kellyville NSW 2155 in accordance with orders made by the Supreme Court of New South Wales in proceedings 2017/316224, do hereby transfer to Mr Jin Seoung Goo or his nominee, 50 G Class shares in the company known as Hoju Jobs Pty Ltd.
Jay Koo Kim
Date:
Witness Name:
Witness Address:
Date:
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 21 April 2021