FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Goo v Kim [2021] FedCFamC2G 108
File number(s): SYG 1128 of 2021 Judgment of: JUDGE MANOUSARIDIS Date of judgment: 1 October 2021 Catchwords: BANKRUPTCY – application to set aside bankruptcy notice – whether bankruptcy notice incorrectly names debtor – whether the amount the bankruptcy notice states is owed by the debtor exceeds the amount the debtor in fact owes the creditor – whether claim debtor filed in the District Court of New South Wales for damages based on causes of action in defamation is a counter-claim, set-off or cross demand the debtor could not have set up in the proceeding out of which the judgment referred to in the bankruptcy notice arose – whether such counter-claim, set-off or cross demand is bona fide – whether there is a tangible prospect that, if the debtor succeeds in such counter-claim, set-off or cross demand, the debtor would be awarded damages equal to or greater than the amount of the judgment – whether creditor applied for the issue of the bankruptcy notice for an improper purpose – application adjourned to a date for the purpose of making an order dismissing the application and an order for costs Legislation: Bankruptcy Act 1966 (Cth), ss 40(1)(g), 41, 306
Civil Procedure Act 2005 (Cth), ss 100, 101
Federal Circuit and Family Court of Australia Act 2021 (Cth), s 8
Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth), r 3.02
District Court Act 1973 (NSW), ss 83A, 85
Interpretation Act 1987 (NSW), s 36
Cases cited: Coshott v Prentice, in the matter of Coshott (No 2) [2016] FCA 1531
Glew v Harrowell, in the matter of Glew [2003] FCA 373
Grant v Green & Associates Pty Ltd [2021] FCA 934
In the matter of Hoju Jobs Pty Ltd [2021] NSWSC 302
In the matter of Hoju Jobs Pty Ltd (No 2) [2021] NSWSC 407
Kleinwort Benson Australia Ltd v Crowl [1988] HCA 34; (1988) 165 CLR 71
Nobarani v Mariconte [2021] FCAFC 96
Re Brink; Ex parte The Commercial Banking Company of Sydney Ltd [1980] FCA 78; (1980) 44 FLR 135
Re Jackson; Conway v Conway [2000] FCA 1530
Re Trevor Peter McSwiney Ex Parte: Mark Sidney Davies [1986] FCA 405
Royal v Nazloomian, in the matter of Royal [2019] FCA 555
Short v Crawley (No. 39) [2008] NSWSC 1353
Walsh v Deputy Federal Commissioner of Taxation [1984] HCA 33; (1984) 156 CLR 337
Division:
Division 2 General Federal Law
Number of paragraphs: 67 Date of hearing: 1 September 2021 Place: Sydney Counsel for the Applicant: Ms M Hall, by video Solicitor for the Applicant: Rays Lawyer Counsel for the Respondent: Mr D Eardley, by video Solicitor for the Respondent: Praxis Lawyers ORDERS
SYG 1128 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: SEOUNGJIN GOO
Applicant
AND: JAY KOO KIM
Respondent
ORDER MADE BY:
JUDGE MANOUSARIDIS
DATE OF ORDER:
1 OCTOBER 2021
THE COURT ORDERS THAT:
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- Goo v Kim [2021] FedCFamC2G 108
- Case
- [2021] FedCFamC2G 108
- Decision Date
CaseChat Overview and Summary
Goo v Kim is a case where Mr Goo, the applicant, applied to the Court to set aside a bankruptcy notice issued by Mr Kim, the respondent. The dispute arose from a contractual agreement between Mr Goo and Mr Kim regarding a payment of $300,000 made by Mr Kim to Mr Goo’s company, Hoju Jobs Pty Ltd, in January 2017. Mr Goo argued that the bankruptcy notice was invalid on three grounds: the amount stated in the notice exceeded the amount owed, Mr Goo had a counter-claim equal to or exceeding the amount stated in the notice, and Mr Kim applied for the bankruptcy notice for an improper purpose.
The primary legal issue before the Court was whether Mr Goo could successfully challenge the validity of the bankruptcy notice based on the arguments presented. The Court had to determine if the bankruptcy notice contained factual inaccuracies regarding the amount owed, whether Mr Goo's counter-claim in a different court could be considered in this proceeding, and if Mr Kim had an improper motive in applying for the bankruptcy notice.
In its decision, the Court found that even if Mr Goo's defamation claims in the Korean proceeding were successful, there was no tangible prospect that he would be awarded damages equal to or exceeding the amount stated in the bankruptcy notice. The Court also noted that Mr Goo had not provided sufficient evidence to support his claim of an improper purpose behind Mr Kim’s application for the bankruptcy notice. The Court concluded that Mr Goo had not demonstrated a viable basis for setting aside the bankruptcy notice. Consequently, the Court adjourned the application to dismiss it and order costs.
The primary legal issue before the Court was whether Mr Goo could successfully challenge the validity of the bankruptcy notice based on the arguments presented. The Court had to determine if the bankruptcy notice contained factual inaccuracies regarding the amount owed, whether Mr Goo's counter-claim in a different court could be considered in this proceeding, and if Mr Kim had an improper motive in applying for the bankruptcy notice.
In its decision, the Court found that even if Mr Goo's defamation claims in the Korean proceeding were successful, there was no tangible prospect that he would be awarded damages equal to or exceeding the amount stated in the bankruptcy notice. The Court also noted that Mr Goo had not provided sufficient evidence to support his claim of an improper purpose behind Mr Kim’s application for the bankruptcy notice. The Court concluded that Mr Goo had not demonstrated a viable basis for setting aside the bankruptcy notice. Consequently, the Court adjourned the application to dismiss it and order costs.
Orders
Orders of the court
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Background
Background to the litigation
Mr Goo contends the bankruptcy notice should be set aside on any one of three grounds: the bankruptcy notice overstates the amount payable under the Orders, and contains a number of other defects; Mr Goo has a counter-claim, set-off, or cross demand equal to or exceeding the amount payable under the Orders; and Mr Kim’s applying for the issue of a bankruptcy notice is an abuse of process.BACKGROUND In June 2016 Mr Goo formed a company named Hoju Jobs Pty Ltd (Hoju Australia) to conduct a business that facilitates the transfer of funds from Australia to South Korea.[1] Mr Choi was the sole director, secretary, and shareholder of Hoju Australia; but he held his shares in Hoju Australia in trust for Mr Goo. [1] I have relied on the findings made by Williams J in In the matter of Hoju Jobs Pty Ltd [2021] NSWSC 302. On 23 January 2017 Mr Kim paid $300,000 to Hoju Australia. Mr Goo and Mr Kim entered into a dispute about the terms of the agreement pursuant to which Mr Kim paid the $300,000. In June 2017 Mr Goo offered to pay $300,000 to Mr Kim immediately, and $100,000 by instalments over 36 months. A dispute also arose about whether Mr Kim accepted the offer, with Mr Kim claiming, and Mr Goo denying, that Mr Kim accepted the offer. In 2017 Mr Kim commenced a proceeding in the SCNSW (SC proceeding) seeking a declaration that Hoju Australia and Mr Goo (or alternatively, Mr Goo) breached the agreement they made in January 2017, and an order for specific performance of that agreement. Further, in March 2018 Mr Kim commenced a proceeding in the Seoul Northern District Court (Korean proceeding) in which Mr Kim claimed he owns the shares Mr Goo and Ms Park hold in a company named Hoju Jobs Ltd (Hoju Korea). On 4 February 2020 the Seoul Northern District Court gave judgment in favour of Mr Goo and Ms Park, and on 17 February 2020 Mr Kim lodged an appeal against that judgment. The appeal has not been determined. The SC proceeding was heard by Williams J on 2, 3, and 4 February 2021; and, on 26 March 2021, her Honour delivered judgment in which her Honour made the following findings:[2][2] In the matter of Hoju Jobs Pty Ltd [2021] NSWSC 302, [80], [101]For the reasons explained below, I find that the oral contract between Mr Goo and Mr Kim was formed over a period of time between 23 January 2017 (or shortly before that date) and 29 March 2017, in the context of the changing circumstances in which an investment of KRW 2 billion promised by Mr Kim in January 2017 did not materialise and Mr Kim began instead to put forward proposed third party investors. As at 29 March 2017, the terms of the contract were:(1)Mr Kim would invest KRW 2 billion in return for 49 ordinary shares in each of Hoju Australia and Hoju Korea; (2)Mr Kim’s payment of $300,000 to Hoju Australia on 23 January 2017 was a deposit for that promised investment of KRW 2 billion;(3)Mr Goo would refund Mr Kim’s payment of $300,000 in the event that Mr Kim’s promised investment of KRW 2 billion did not proceed;(4)Mr Kim held the 50 ordinary shares in Hoju Australia issued to him on 28 March 2017 on the condition that they would be transferred to Mr Choi (to be held on behalf of Mr Goo) if Mr Kim failed to attract the proposed third party investment of KRW 3.5 billion before the end of April 2017; and(5)Mr Goo was entitled to give effect to the escrow documents in order to cause those 50 ordinary shares to be transferred to Mr Choi if: (a) Mr Kim failed to attract the proposed KRW 3.5 billion investment; or(b) Mr Kim committed a crime or fraud,(c)provided that Mr Kim would be issued with 50 G Class shares in those circumstances as security for the return of his $300,000 payment made on 23 January 2017 (in circumstances where Mr Kim’s promised KRW 2 billion investment had not materialised).. . . . .For those reasons, I have concluded that the contract entitles Mr Kim to repayment of his $300,000 in circumstances where he failed to invest the KRW 2 billion promised in January 2017 and he forfeited the 50 ordinary shares issued to him on 28 March 2017 by reason of his failure to secure the KRW 3.5 billion investment from a third party. As I have already mentioned, Mr Kim acknowledges that he must relinquish the G Class shares in Hoju Australia on repayment of his $300,000.
Evidence
Evidence Before The Court
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Decision
Reasons for decision
Even if I were to assume Mr Goo would succeed on his defamation claims, there is no evidence on the basis of which I could conclude there is a tangible prospect that Mr Goo, if he succeeds, would be awarded damages equal to or exceeding the amount demanded in the bankruptcy notice. Mr Goo has given no evidence, for example, about the impact the publication of the matters complained have had on him. All that is before me is evidence that shows that it was only on around 22 June 2021, some 11 months after the matters complained of were first published, that Mr Goo first gave notice to Mr Kim that he believed that by that publication Mr Kim defamed him. Conclusion This ground for setting aside the bankruptcy notice fails.GROUND 3 – ABUSE OF PROCESS In his counsel’s written submissions Mr Goo refers to his having raised in his affidavit of 22 June 2021 “an allegation of improper purpose”, and his affidavit “did this in some detail”.[27] That is a reference to paragraphs 11-16 of Mr Goo’s affidavit of 22 June 2021. Mr Goo there refers to Mr Kim having commenced the Korean proceeding, and on 4 February 2020 Mr Kim having lodged an appeal against the decision given in that proceeding. Mr Goo then deposes to a belief that Mr Kim issued the bankruptcy notice “with an improper purpose and in order to negatively affect and compromise my position of [sic] defence against the appeal by Mr Kim in South Korea”.[28] Mr Goo also deposes that “to date, I have not received any demand from Mr Kim or his lawyers seeking payment of the amount of the judgment”.[29] Mr Goo, in his counsel’s written submissions, then submits that Mr Kim “has chosen not to go into evidence to counter that allegation”, and, relying on Royal v Nazloomian, in the matter of Royal,[30] submits that an inference of improper purpose should be drawn from the following matters:[31](a)Mr Kim did not demand Mr Goo pay the amount demanded in the bankruptcy notice before Mr Kim applied for the issue of the bankruptcy notice, noting Mr Kim so applied “a mere day after Mr Kim alleges the debt and interest became owing”.(b)Mr Kim did not raise or pursue any alternatives to issuing a bankruptcy notice.(c)Mr Kim and Mr Goo have a history of litigation against each other.(d)There is a “bona fide cross demand”.(e)The making of a sequestration order would vest the “defence” Mr Goo has raised in the Korean proceeding as “property” under the Act.[27] Applicant’s Written Submissions, [56][28] Affidavit of S Goo 22.06.2021, [15][29] Affidavit of S Goo 22.06.2021, [16][30] Royal v Nazloomian, in the matter of Royal [2019] FCA 555[31] Applicant’s Written Submissions, [58] On the basis of these matters, Mr Goo submits the Court “can and should infer that at the time the Bankruptcy Notice was issued, Mr Kim did so to put pressure on Mr Goo to pay a debt, rather than to invoke the Court’s jurisdiction in relation to insolvency, and to threaten Mr Goo’s ability to continue to defend Mr Kim’s appeal in the South Korean proceedings”.[32][32] Applicant’s Written Submissions, [58]
Ratio Decidendi
Legal Principle Established
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