SANG CHEOL WOO v. YOO SHIN CHOI (naturalized name CHARLES C. SPACKMAN)

CACV 226/2022, [2023] HKCA 601

On Appeal From [2022] HKCFI 1163 &

[2020] HKCFI 2706

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 226 OF 2022

(ON APPEAL FROM HCA NO 1586 OF 2016)

________________________

________________________

________________

J U D G M E N T

________________

Hon Chow JA (giving the Judgment of the Court):

1.  This is the Plaintiff’s application for security for costs in respect of the Defendant’s appeal (“the Appeal”) against the judgment of Ng J dated 6 May 2022 declaring that the Plaintiff is entitled to enforce a judgment entered by the Seoul High Court on 29 September 2011 (“Seoul High Court Judgment”) in his favour against the Defendant, and ordering the Defendant to pay forthwith to the Plaintiff the sum of KRW5,207,884,800 together with interest thereon at 5% per annum from 5 June 2001 to 29 September 2011 and at 20% per annum thereafter until payment together with the costs of the action below (to be taxed if not agreed).

2.  Having read the evidence and submissions filed by the Plaintiff in support of the application (the Defendant having failed to file any evidence or submissions in opposition), we consider that it is appropriate to determine the Plaintiff’s application on paper without an oral hearing pursuant to Order 59 rule 14A(1) of the Rules of the High Court, Cap 4A.

BACKGROUND FACTS

3.  For the purpose of disposing of the present application, the following brief summary of the basic facts of this case, taken largely from the written judgment of Ng J dated 6 May 2022 (“the Judgment”) and an earlier judgment of Deputy High Court Judge Le Pichon dated 20 October 2020, should suffice.

(i)  The Korean Proceedings

4.  The Plaintiff is a citizen and resident of the Republic of Korea.

5.  The Defendant is a US citizen and a permanent resident of the HKSAR.

6.  On 25 July 2003, the Plaintiff started proceedings in the Seoul Central District Court against 10 defendants including the Defendant as the 2^nd defendant for damages for his loss arising from an alleged securities fraud jointly committed on him by those defendants.

7.  On 5 November 2008, the Seoul Central District Court dismissed the Plaintiff’s claims.

8.  On 2 December 2008, the Plaintiff lodged an appeal to the Seoul High Court against the Seoul Central District Court judgment. On 1 September 2011, the appeal hearing was held before the Seoul High Court. The Defendant did not attend that hearing. On 29 September 2011, the Seoul High Court Judgment was handed down allowing the Plaintiff’s appeal in respect of his claims against the Defendant and 4 other defendants.

9.  On 28 October 2011, the Defendant lodged an appeal to the Supreme Court of Korea against the Seoul High Court Judgment.

10.  On 31 October 2013, the Supreme Court of Korea handed down a judgment dismissing the Defendant’s appeal.

11.  On 31 March 2016, the Seoul Central District Court entered a Writ of Execution ordering the enforcement of the Seoul High Court Judgment against the Defendant.

12.  On 26 April 2017, the Defendant made a retrial application with the Seoul High Court. On 21 December 2017, the Seoul High Court dismissed the Defendant’s retrial application. The Defendant then appealed to the Supreme Court of Korea against that decision. On 30 May 2018, the Supreme Court of Korea dismissed the Defendant’s appeal against the Seoul High Court’s dismissal of his retrial application.

(ii)  Enforcement proceedings in Hong Kong

13.  On 15 June 2016, the Plaintiff commenced HCA 1586/2016 in Hong Kong (“the Hong Kong Action”) to enforce the Seoul High Court Judgment.

14.  On 3 June 2019, the Plaintiff obtained an ex parte worldwide Mareva injunction (“the HK Injunction”) against, inter alia, the Defendant to restrain him from disposing of his assets up to the value of KRW15,886,902,275.51 (equivalent to approximately US$13.66 million). The HK Injunction was continued by Deputy High Court Judge Le Pichon on 20 October 2020 after a contested hearing, and is still in place.

15.  The Hong Kong Action was tried by Ng J on various dates in September 2021. The Defendant’s defence was that the Seoul High Court Judgment offended and/or its enforcement would offend Hong Kong notions of substantial justice and/or public policy based on 4 grounds mentioned in §42 of the Judgment which it is not necessary to set out here. On 6 May 2022, Ng J handed down the Judgment rejecting the Defendant’s defence, and made the order mentioned at the beginning of this judgment in favour of the Plaintiff.

16.  On 2 June 2022, the Defendant filed and served a Notice of Appeal against the Judgment, essentially maintaining the 4 grounds of defence rejected by Ng J.

(iii)  Enforcement proceedings in other jurisdictions

17.  The Plaintiff commenced proceedings in the State of New York on 23 May 2017 for summary judgment in recognition of the Seoul High Court Judgment which the Defendant opposed. On 10 July 2018[1], the Supreme Court of the State of New York entered judgment in favour of the Plaintiff in the sum of approximately US$13.8 million. In July 2020, the Defendant was adjudged to be in contempt “for violation of and wilful non-compliance with a subpoena” and fined US$500 per day until his contempt was purged.

18.  The Plaintiff commenced proceedings to recognise and enforce the Seoul High Court Judgment in the BVI on 18 April 2019. On 4 June 2020, the BVI Commercial Court entered judgment against the Defendant in recognition of the Seoul High Court Judgment. The Defendant failed to appear for a debtor’s examination before the BVI High Court, and now has a contempt and committal order and bench warrant for his arrest in the BVI.

19.  On 25 February 2019, the Plaintiff commenced an action in Singapore to recognise the Seoul High Court Judgment. In April 2019, the Plaintiff obtained ex parte worldwide Mareva injunctions restraining the Defendant and his friend (Richard Lee) from disposing of assets up to the value of the Seoul High Court Judgment. The enforcement proceedings were tried in September 2022. As at the date of the Affidavit of Cheung Hang (7 November 2022) filed in support of the present application, judgment in the Singapore action was still pending.

THE PRESENT APPLICATION FOR SECURITY FOR COSTS

20.  On 7 November 2022, the Plaintiff took out the present summons for security for costs of the Appeal. As can be seen from the Plaintiff’s Skeleton Submissions dated 5 December 2022, the Plaintiff contends that the following special circumstances exist in the present case which justify an order for security for his costs of the Appeal being made against the Defendant:

(1)  the Plaintiff will be put to undue delay or expense to enforce any order for costs in the Appeal;

(2)  the Defendant is unable to pay the costs of the Appeal;

(3)  the Defendant’s true whereabouts are unknown; and

(4)  the Appeal is apparently without merit.

21.  The Defendant has not filed any evidence in opposition to the Plaintiff’s application. Further, contrary to the directions of the Registrar of Civil Appeals given on 9 November 2022 and an unless order on 21 December 2022, the Defendant has failed to lodge any written submissions in opposition to the application. He is accordingly deemed to have abandoned his rights to rely on written submissions in opposition to the Plaintiff’s application.

DISCUSSION

22.  Under Order 59, r 10(5) of the Rules of the High Court, the Court of Appeal may, in special circumstances, order that such security shall be given of the costs of an appeal as may be just. The principles for the exercise of this jurisdiction are well settled. For this purpose, “special circumstances” include cases of insolvency or impecuniosity, and difficulty or expense in enforcing costs order. However, even in such cases, the court retains a discretion not to order security if the appellant can demonstrate sufficient countervailing factors which would militate against such order being made (see Hong Kong Civil Procedure 2023, at §§59/10/26 and 59/10/27).

23.  In contending that the Plaintiff will be put to undue delay or expense to enforce any order for costs in the Appeal, the Plaintiff relies on the following matters:

(1)  the Defendant has demonstrated a pattern of low commercial morality and refusal to abide by court orders; and

(2)  the Defendant’s conduct indicates a high likelihood of not voluntarily abiding by any costs orders and of resisting enforcement of any costs order[2].

24.  There is ample evidence to support these contentions, which have not been answered by the Defendant.

25.  The Plaintiff further submits that the Defendant is unable to pay the costs of the Appeal, based on his own admission of impecuniosity in his 10^th Affirmation filed on 3 September 2020 to set aside, and to resist the continuation of, the HK Injunction. Further, in his 11^th Affirmation filed on 12 November 2020 in purported compliance with the disclosure obligation pursuant to §§6 and 7 of the HK Injunction, the Defendant disclosed very limited assets worldwide (totalling HK$334,436.53 and SGD40,660). On the other hand, the Defendant is indebted to the Plaintiff for a very substantial judgment in the Hong Kong Action, and also in respect of costs incurred in relation to the injunction applications (HK$1,300,000) and in another set of unsuccessful defamation proceedings brought by him against the Plaintiff in Hong Kong (HK$780,000)[3].

26.  On the materials before the court, we are satisfied that the Plaintiff has demonstrated that the Defendant is impecunious, and/or the Plaintiff will likely encounter difficulties or delay in recovering his costs of the Appeal from the Defendant if the Appeal were to be dismissed. We conclude that the Plaintiff has made out a case of special circumstances for requiring security for costs to be provided.

27.  It is unnecessary to consider the Plaintiff’s further ground in support of the application for security for costs, namely, that the Defendant’s true whereabouts are unknown[4].

28.  In general, it is up to the party resisting an application for security for costs to demonstrate countervailing factors militating against an order being made (see Chung Kau v Hong Kong Housing Authority [2004] 2 HKLRD 650, at §14(2), per Ma CJHC (as he then was)). In the present case, the Defendant has not filed any evidence or submissions in opposition to the Plaintiff’s application for security for costs. In any event, we cannot see any, or any sufficient, countervailing factors which would militate against an order for security for costs being made against the Defendant. In particular, we have considered the merits of the Appeal. It would not be appropriate for us to express any firm view on the merits of the Appeal, suffice it for us to say that, having considered the Notice of Appeal and the other materials before us, we are not satisfied that the merits are such that they should be given significant weight in the court’s exercise of its discretion whether to make an order for security, certainly not in the Defendant’s favour. We also do not see that an order for security for costs in the present case will likely stifle the Defendant’s appeal, in view of the fact that, according to the Defendant, he has been funded in his litigations by his wife, his brother-in-law, his father and/or his friend (Richard Lee), who are said to be (very) successful businessmen and/or come from a wealthy family, over the years[5].

DISPOSITION

29.  We allow the Plaintiff’s application for security for costs, and fix the amount of the security (including the costs of the present application) at HK$500,000.

30.  The following orders are made:

(1)  The Defendant do provide security for the Plaintiff’s costs of the Appeal by making payment into court the sum of HK$500,000 within 28 days from the date of this order;

(2)  Until such payment into court be made and notice thereof given by the Defendant to the Registrar of Civil Appeals and to the solicitors for the Plaintiff, all proceedings in the Appeal herein be stayed;

(3)  In default of making such payment into court within the time aforesaid, upon the solicitors for the Plaintiff certifying such default to the Registrar of Civil Appeals, the Appeal do stand dismissed without further order of the court with costs to be paid by the Defendant to the Plaintiff, such costs to be taxed if not agreed.

31.  The Defendant shall pay the costs of the Plaintiff in respect of the present application, which we summarily assess in the amount of $100,000. We also give liberty to the Plaintiff to apply for payment out of the amount of HK$100,000 upon payment into court of the security ordered to be given by the Defendant.