KR & C Co Ltd v Soon Ok Hwang

[2021] NSWSC 551

Supreme Court of NSW|2021-04-29

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2021-04-29

Catchwords

(1995) 13 ACLC 437 First Property Holdings Pte Ltd v Nyunt [2019] NSWSC 249 Kok v Resorts World at Sentosa Pte Ltd [2017] WASCA 150

Source

Original judgment source is linked above.

Catchwords

(1995) 13 ACLC 437 First Property Holdings Pte Ltd v Nyunt [2019] NSWSC 249 Kok v Resorts World at Sentosa Pte Ltd [2017] WASCA 150

Judgment (29 paragraphs)

[1]

Judgment

HER HONOUR: This is an application for security for costs relating to the costs of an application to set aside a registered South Korean judgment.
By notice of motion filed 18 December 2020, the defendant relevantly seeks orders that: 1. The plaintiff is to provide security for the defendant's costs by paying into court the sum of $33,000 or by otherwise providing security for that amount in a manner satisfactory to the defendant. Until that security is provided, there will be a stay of the proceedings and other consequential orders.
The plaintiff is KR & C Co Ltd. Ms Cha solicitor appeared for the plaintiff. The defendant is Soon Ok Hwang. Mr Berg of counsel appeared for the defendant. The parties relied upon a joint court book.
At the outset, counsel for the defendant objected to the affidavit of Kyung-IL (Kenneth) Hong sworn 3 September 2020 on the basis that it was served on the solicitor for the defendant 10 days prior to this hearing. It was argued that this did not allow enough time to check the accuracy of the translation of the legal terms of the South Korean judgment. That affidavit was relied upon to support the registration of the South Korean judgment. I allowed this affidavit to be relied upon but take into account that there may be some inconsistency in the translation of the legal terms.

[2]

The defendant's evidence

The defendant relied upon her affidavit dated 2 March 2021. She was not required for cross examination.
In 1997 she migrated from South Korea to Australia. In 2000, she settled in Australia on a permanent basis.
In early May 2019, she received a letter from the plaintiff's solicitor claiming that on 21 November 2018 the plaintiff obtained a judgment against her in the Seoul Central District Court that ordered her to pay KRW114,767,049 to the plaintiff. The judgment sum comprised the principal sum of KRW20,000,000 Korean Won and Interest of KRW90,164,384 Korean Won, accrued from 14 May 1997.
The defendant says that she did not receive any notice of the proceedings which led to the Seoul Central District Court judgment dated 21 November 2018 (the 2018 judgment) that occurred during her Australian residence.
Later in May 2019, she found out that the plaintiff had obtained a judgment against her in the Seoul Central District Court on 11 November 2011 (the 2011 judgment) with same cause of action as the 2018 judgment.
The proceedings which led to the 2018 judgment were for the purpose of extending the plaintiff's right to claim against the defendant under the 2011 judgment. She did not receive any notice of the proceedings which led to the 2011 judgment.
The defendant denies owing any money to the plaintiff, either from 14 May 1997 or any other date.
In May 2019, the defendant retained Mr Seung Jin Ahn, a South Korean lawyer. He appealed the 2011 judgment on her behalf to Seoul Central District Court. The appeal was based on the ground that she did not receive any notice of the proceedings which led to the 2011 judgment. The notice had been served by way of public notice while she was in Australia.
On 26 November 2019, the Seoul Central District Court dismissed her appeal (the 2019 judgment) on the basis that the appeal grounds should have been argued to the Seoul Central District Court in 2011 and not at a later time, including the time of her appeal. The 2019 judgment held that service by public notice confirmed that she had been served under a Korean law.
The 2019 South Korean judgment included the following paragraph: "(C) Then, the lawsuit of this case should be deemed to have been filed for the purpose of interrupting the extinctive prescription of the claims under the Previous Final and Conclusive Judgment. Therefore, the Defendant's claim regarding the lack of supporting materials for the cause for claims of this case is baseless; such a claim constitutes a defence that occurred and was available before the closing of argument for the fact-finding proceedings in the previous case, and cannot be forward in this case because it would conflict with the excluding effect of the previous judgment."
On 12 December 2019, the defendant appealed the 2019 judgment to the Supreme Court of Korea. On 9 April 2020, the Supreme Court of Korea dismissed her appeal and reaffirmed the 2019 judgment.
The 2019 judgment ordered the defendant to pay interest on the principal sum owing. The Interest accrues from 14 May 1997. The interest is at the rate of 6% per annum for the period from 14 May 1997 to 21 April 2001 and 25% per annum for the period from 22 April 2001 to date. She submitted that the total interest accrued is more than the principal owing by a factor of 5.

[3]

The history of the South Korean proceedings

The plaintiff has referred to and helpfully summarised the South Korean proceedings. I accept that the plaintiff's summary is correct.
On 3 July 2001, the Daegu District Court of South Korea ordered that the defendant pay Hanareum Mutual Savings and Finance Company (Han Bank) a debt owing of KRW155,000,000 (approximately AU$177,777) plus statutory interest at the rate of 6% per annum and statutory interest at the rate of 25% per annum from 22 April 2001 until the date of full repayment (first instance judgment).
The first instance judgment was made in similar circumstances to that of a default judgment when the Daegu District Court was satisfied that personal service was made and effected on the defendant, and the defendant did not ask to be heard. On 7 August 2011, the first instance judgment became final and enforceable.
In South Korea, the plaintiff had 10 years to enforce the first instance judgment and after the 10 year period had expired the time could be extended. Between August 2001 and June 2011, Korean Deposit Insurance Corporation conducted investigations to ascertain the defendant's assets and financial circumstances in South Korea through other Korean governmental departments and agency, but could not enforce the first instance judgment against the defendant as it could not establish any meaningful assets in South Korea belonging to the defendant.
On 8 June 2011, the plaintiff filed an application in the Seoul Central District Court seeking to extend the time to enforce the first instance judgment. As the plaintiff was not able to identify any assets of the defendant in South Korea, the plaintiff reduced its original debt claim from KRW155,000,000 (approximately AU$177,777) to KRW20,000,000 (equivalent to approx. $22,969), being only 12.9% of the original amount of the debt. This application for extension of the time for service was served on the defendant by way of public notice.
On 11 November 2011, the Seoul Central District Court, in Case No 2011 GaSo 1706241, granted the extension of the enforcement right and ordered that the defendant pay to the plaintiff the debt of KRW20,000,000 (approximately AU$22,969) plus statutory interest at the rate of 6% per annum and statutory interest at the rate of 25% per annum from 22 April 2001 until the date of full repayment (2011 judgment). This judgment was also served on the defendant by way of public notice.
Between November 2011 and 2018, Korean Deposit Insurance Corporation continued to investigate the defendant's assets in South Korea. In about March 2018, Korean Deposit Insurance Corporation ascertained that the defendant owned three properties in Sydney, including a property in Lidcombe in which the defendant was the sole registered proprietor.
On 3 May 2019, H & H Lawyers, the plaintiff's legal representatives in Australia, issued a letter of demand to the defendant seeking the amount owing under the 2011 judgment.
On 20 June 2019, the defendant filed an appeal in respect of the 2011 judgment in the Seoul Central District Court in case No 2019 Na 32407. At this appeal, the defendant admitted the underlying facts as to the debts arising under the first instance judgment. The defendant never contested as to the amount of debt owing nor the effectiveness of personal service.
On 26 November 2019, the Seoul Central District Court rejected all four grounds of appeal which were raised by the defendant, and affirmed the 2011 judgment (second Korean judgment).
On 12 December 2019, the defendant appealed the second Korean judgment to the Supreme Court of Korea, the highest court in Korea.
On 9 April 2020, the Supreme Court of Korea dismissed the appeal, ultimately affirming the 2011 judgment in favour of the plaintiff (third Korean judgment).

[6]

UCPR 53.4

UCPR 53.4 reads: 53.4 Security for costs For the purposes of proceedings under the Foreign Judgments Act 1991 of the Commonwealth, the Supreme Court may make an order under rule 42.21 otherwise than on the application of the judgment debtor.
In the transcript dated 25 February 2021, counsel for the defendant drew Campbell J's attention to UCPR 53.4. The following exchange took place: BERG: One other thing, your Honour. In the interests of further disposal of the proceedings, I draw your Honour's attention to UCPR rule 53.4. … BERG: I am not entirely clear what that means, your Honour, but, as I understand it, it allows the Court to make a security for costs order of its own motion. Today's motion might be an appropriate time for your Honour to consider an order under that rule. HIS HONOUR: I don't think it has that effect. All that rule is doing is making it clear, according anyway to the commentary in Ritchie's, is making it clear that it is not only the judgment debtor who might make an application for security to the effect that the judgment creditor in appropriate circumstances may make an application for security. I don't think it is conferring some power on the Court to proceed of its own motion in relation to such a matter. And it would be a very unusual case for a Court, of its own motion, to delve into a question about security for costs."
I disagree with Richie's commentary.
In Raffaele Viscardi SRL v Qualify Centre Food Services Pty Limited (No 2) [2013] NSWSC 2055 ("Vicardi"), Adams J expressed the view, which I accept it is obiter dicta at [11]: "[11] Though awkwardly drafted, this (being r 53.4) appears to prevent a judgment debtor, though a defendant, from making an application under r 42.21."
Adams J did not determine this issue because the defendant was not able to demonstrate that the plaintiff, being a foreign company, was impecunious.
The plaintiff, in these current proceedings, submitted that, while security for costs under UCPR 42.21 is limited to applications made by a defendant in the proceeding, UCPR 53.4 is intended to preclude a judgment debtor from making an application for security as it used a distinct terminology to refer to a defendant as a "judgment debtor".
As stated above, my preliminary view is that UCPR 53.4 precludes a defendant from seeking security for costs and I agree with Adams J in Vicardi. But for reasons that appear below, I am satisfied that the plaintiff is not impecunious, so it is not necessary for me to decide this issue.

[8]

UCPR 42.21

UCPR 42.21 relevantly reads: "42.21 Security for costs (1) If, in any proceedings, it appears to the court on the application of a defendant: (a) that a plaintiff is ordinarily resident outside of Australia, … (d) that there is reason to believe that a plaintiff, being a corporation, will be unable to pay the costs of the defendant if ordered to do so, or … the court may order the plaintiff to give such security as the court thinks fit, in such manner as the court directs, for the defendant's costs of the proceedings and that the proceedings be stayed until the security is given. … (2) Security for costs is to be given in such manner, at such time and on such terms (if any) as the court may by order direct. (3) If the plaintiff fails to comply with an order under this rule, the court may order that the proceeding on the plaintiff's claim for relief in the proceedings be dismissed. ,…"
It is common ground that the plaintiff is a corporation in South Korea, ordinarily resident outside Australia. Thus, the threshold issue in UCPR 42.2(1)(a) has been enlivened. The law is now settled that the discretion to order security for costs is unfettered and should be exercised having regard to all the circumstances of the case without any predisposition in favour of the award of security. The factors that the Court may order have regard to in determining an application for security for costs are set out in UCPR R 42.21(1).
UCPR 42.21(1A) relevantly reads: "(1A) In determining whether it is appropriate to make an order that a plaintiff referred to in subrule (1) give security for costs, the court may have regard to the following matters and such other matters as it considers relevant - (a) the prospects of success or merits of the proceedings, … (f) whether an order for security for costs would stifle the proceedings, … (l) the timing of the application for security for costs, (m) whether an order for costs made against the plaintiff would be enforceable within Australia, (n) the ease and convenience or otherwise of enforcing a New South Wales court judgment or order in the country of a non-resident plaintiff."
In KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 at 196-98C, Beazley J identified the guidelines which the Court typically takes into account in determining the application. The relevant guidelines applicable in this application are: "1. That such applications should be brought promptly... 2. That regard is to be had to the strength and bona fides of the applicant's case are relevant considerations...As a general rule, where a claim is prima facie regular on its face and discloses a cause of action, in the absence of evidence to the contrary, the court should proceed on the basis that the claim is bona fide with a reasonable prospect of success. … 7. Security will only ordinarily be ordered against a party who is in substance a plaintiff, and an order ought not to be made against parties who are defending themselves and thus forced to litigate."
The defendant bears the onus of establishing a basis for ordering security for costs. The defendant has not adduced any evidence establishing that the plaintiff is impecunious or will be unable to meet any adverse costs order.
It is common ground that this application for security for costs has been brought promptly and the plaintiff, a corporation in South Korea, has no assets in Australia. The plaintiff is a wholly owned subsidiary company of Korea Deposit Insurance Corporation which is a statutory authority in Korea established under the Korean Depositor Protection Act (Korea) which is similar to that of the Australian Prudential Regulation Authority (also known as APRA). The primary role of the plaintiff is to take over business or contracts of insolvent financial institutions and conduct a resolution process, including engaging court processes or debt recovery, to save such financial institutions from failing. The government of South Korea stands behind the plaintiff and there is no evidence to show the government of South Korea would be unable to pay the security for costs in the amount sought, or any adverse costs order ordered to do so.

[10]

The setting aside registration of a foreign judgment

While I am determining an application for security for costs, I must consider whether there are reasonable prospects of success of the defendant's application to set aside the registered judgment.
The approach of the Court in determining whether or not to set aside the registration of foreign judgment was described by McCallum J in First Property Holdings Pte Ltd v Nyunt [2019] NSWSC 249. At [9] her Honour said: "The circumstances in which the registration of a foreign judgment is liable to be set aside are stated, apparently exhaustively, in s 7(2) of the Act. An application to set aside registration of a foreign judgment is not an occasion for this Court to review the merits of the foreign decision: Kok v Resorts World at Sentosa Pte Ltd [2017] WASCA 150 at [16] per Martin CJ; Murphy and Beach JJA agreeing at [49] and [50]. Even if a mistake as to fact or law appears on the face of the proceedings before the foreign court, assuming any such mistake to have been made within jurisdiction, the merits of the judgment cannot be reviewed in this Court: Benefit Strategies Group Inc v Prider (2005) 91 SASR 544; [2005] SASC 194 at [77]-[80]. It follows that the proper approach is to confine attention to the grounds stated in s 7(2)."
When the ground of public policy is relied upon for the purpose of setting aside the registration of foreign judgment, the Court has regard to considerations of comity. In Kok v Resorts World at Sentosa Pte Ltd [2017] WASCA 150, Martin CJ stated at [17]: "[17] The legal principles in this area reflect the interests of comity in the respect and recognition of the institutions of other sovereign states which are considered to provide 'substantial reciprocity of treatment for Australian judgments'. That is why the authorities reveal few instances in which a foreign judgment has not been enforced or registered on the ground of public policy."
I shall now address the defendant's submissions on public policy.

KR & C Co Ltd v Soon Ok Hwang

At a glance

Court

Decision date

Catchwords

Source

Catchwords

Judgment (29 paragraphs)

Parties

Legislation Cited (4)

Cases Cited (7)

Cited By (2)