Yoo v Toppro Pty Ltd

[2016] NSWSC 734

Supreme Court

New South Wales

Medium Neutral Citation:	Yoo v Toppro Pty Ltd & Ors [2016] NSWSC 734
Hearing dates:	3 June 2016
Decision date:	03 June 2016
Jurisdiction:	Equity - Corporations List
Before:	Black J
Decision:	Order that Notice of Motion filed 1 June 2016 be dismissed. Second and Fourth Defendants to pay costs of motion as agreed or as assessed. Order that on undertakings as to damages provided by Second Defendant, the orders of Black J dismissing the stay application be stayed for 14 days pending appeal from this decision. The Court notes the undertakings provided by the Plaintiff
Catchwords:	PROCEDURE — Judgments and orders — Application for stay of orders pending proposed appeal – whether there are reasonably arguable questions for determination of appellate court – whether applicant will suffer irreparable harm is a stay is refused.
Cases Cited:	- Alexander v Cambridge Credit Corp Ltd (1985) 2 NSWLR 685 - Anning v Anning [1907] HCA 13; (1907) 4 CLR 1049 - Aquaqueen International Pty Ltd v Titan National Pty Ltd [2015] NSWCA 9 - Comptroller of Stamps (Vic) v Howard-Smith [1936] HCA 12; (1936) 54 CLR 614 - Kalifair Pty Ltd v Digi-Tech (Australia) Ltd [2002] - NSWCA 383; (2002) 55 NSWLR 737 - Noonan v Martin (1987) 10 NSWLR 402 - NSW Bar Association v Stevens [2003] NSWCA 95
Texts Cited:	- JD Heydon et al, Meagher, Gummow & Lehane’s Equity Doctrines and Remedies (5th ed 2015, LexisNexis Butterworths)
Category:	Procedural and other rulings
Parties:	Il Nam Yoo (Plaintiff/First Cross-Defendant on First and Second Cross-Claims) Toppro Pty Ltd (First Defendant) Ok Ja Joo (Second Defendant/Cross-Claimant on First Cross-Claim) Jae Joo Kim (Third Defendant) Wealth Wisdom Investments Limited (Fourth Defendant/Cross-Claimant on Second Cross-Claim) Jin Hee Hong (Second Cross-Defendant on First and Second Cross-Claims)
Representation:	Counsel: J R Young (Plaintiff/First Cross Defendant) M Neil SC/S O’Brien (Defendants/Cross-Claimants)   Solicitors: Kim & Associates (Plaintiff/First Cross-Defendant) Alpha Lawyers (Defendants/Cross-Claimants)
File Number(s):	2014/186025

Judgment – ex tempore (revised 6.6.2016)

1. By Notice of Motion filed on 1 June 2016, the Defendants, or at least some of them, seek an order that orders which I have made today, to give effect to my judgment, be stayed until further order, pending determination by the Court of Appeal of any application for leave to appeal, or an appeal from those orders.

2. Mr Neil, who appeared with Mr O'Brien for the Defendants, also put an alternative submission that the Court could simply grant a stay, for example, for 28 days to allow the matter to be determined in the Court of Appeal. That course may well be tempting to a trial judge, and tempting to a party that is bring an appeal, so far as it allows the trial judge to avoid the task of passing on the prospects of an appeal from his or her own judgment and shift that question to the Court of Appeal. That course does, however, have the difficulty that the Court of Appeal is then deprived of the trial judge's judgment as to whether a basis for a stay is established. It seems to me that I am bound to consider the prospects of the stay, in a substantive way, in order that the Court of Appeal should have the benefit of the trial judge's views, notwithstanding that an appeal would ultimately be available against any decision that I reach, one way or the other, and there may then be a compelling case for a stay to allow an appeal to be brought from that decision.

The principles applicable to a stay application

3. I now turn to the issues raised by the stay application. Mr Neil provides a fair outline, which I understand to be largely or entirely common ground between the parties, of the principles applicable in determining whether a stay should be granted. Mr Neil notes that a relevant question is whether the status quo should be preserved, by reference to the subject matter of the proceedings, pending an appeal, and whether the refusal of the stay would impose irreparable harm in the event the appeal was successful. Mr Neil also notes that it is relevant to determine whether there are reasonably arguable grounds for the appeal and refers, in that respect, to Alexander v Cambridge Credit Corp Ltd (1985) 2 NSWLR 685 at 695 (“Alexander”).

4. I should, perhaps, add to those observations that, first, it seems to me that the Court should logically start with the question whether there are reasonably arguable grounds for the appeal, and only then turn to the question of damage, and, second, that the risk of damage may well not support a stay unless reasonably arguable grounds for the appeal are established. I would also add that the overriding principle to apply when determining an application for a stay is to ask what the interests of justice require: NSW Bar Association v Stevens [2003] NSWCA 95 at [83]. I also proceed on the basis that special or exceptional circumstances need not be made out, and it is sufficient that the defendants demonstrate a reason or appropriate case to warrant the exercise of discretion in their favour: Alexander above at 694. The Court must make a preliminary assessment about whether an arguable case exists, requiring that there be reasonably arguable questions for the determination of the appellate court: Alexander at 695; Kalifair Pty Ltd v Digi-Tech (Australia) Ltd (2002) NSWCA 383; [2002] 55 NSWLR 737 (“Kalifair”) at [18]; Aquaqueen International Pty Ltd v Titan National Pty Ltd [2015] NSWCA 9 (“Aquaqueen”) per McColl JA at [46].

5. I also note that it is also relevant, in considering a stay application, that an appeal would be rendered nugatory if a stay were not granted: Kalifair at [18]. However, as McColl JA noted in Aquaqueen above, it is not sufficient to order a stay that otherwise the appeal would be rendered nugatory, and it is first necessary that the appellant does demonstrate that the appeal raises serious issues for the determination of the appellate court: Aquaqueen at [48].

Whether reasonably arguable questions are raised by the appeal

6. I approach the issues in the opposite order to those in which Mr Neil approaches them, by turning first to the question of whether, in the language of Kalifair and Aquaqueen, reasonably arguable questions for the determination of the appellate court have been established. In doing so, I am conscious of course, of the fact that a trial judge may be in a worse position to determine that question than an appellate court, which has had no involvement in the hearing below. I bear that in mind, in expressing the views which follow.

7. I have had the benefit of being provided with a draft Summons seeking Leave to Appeal and a draft Notice of Appeal, which is comprehensive, identifying 18 grounds of appeal and, within the 18th ground of appeal, some eight factual findings which are sought to be reversed on appeal. I have regard to those matters in determining the question whether reasonably arguable questions for the determination of the appellate court have been established. I note, however, that Mr Neil places primary weight, in submissions, upon two grounds of appeal, which raise issues that may properly be characterised as matters of principle, rather than challenges only to factual findings.

8. Mr Neil recognises, in submissions, that leave may be required for an appeal because the sale consideration for the relevant shares was US$12,000, and also recognised that it may be necessary, in order to establish grounds for leave, to show more than that the trial judge was arguably wrong in the conclusion arrived at. He submits that, in the present case, the case involves matters of principle or questions of general public importance, and to that extent his submission raises the issues as to the identified grounds of appeal.

9. The first matter which is emphasised by Mr Neil, in identifying the questions for appeal, is the correct test to be applied by the Court when determining whether or not there has been an effective equitable assignment of an equitable interest in shares. Mr Neil submits that the test applicable to determine whether there has been an equitable assignment of an equitable interest in shares, and presumably also an equitable interest in other property, is that identified by Griffith CJ in Anning v Anning [1907] HCA 13; (1907) 4 CLR 1049 at 1507–1508, which Mr Neil submits was there applied in respect of an equitable interest in a partnership assigned by way of deed, in coming to the conclusion that the assignment was effective because the donor had done all that was necessary to be done to effect the disposition of that equitable interest. Mr Neil submits that I wrongly took the view, in my judgment, that that test was applicable only to equitable assignments of legal interests and failed to apply the correct test to the transfer of an equitable interest in shares in Toppro which was alleged to have occurred on or about 1 May 2012.

10. With all respect to the subtlety of Mr Neil's submission, I am presently unable to see that this question raises a reasonably arguable question for the determination of the appellate court, where, as I will note below, the decision I reached was in accordance with well-established authorities, including decisions of the High Court on which the Defendants had relied in submissions. I referred to Anning v Anning above in paragraph 35 of my judgment in noting that the Defendants had submitted that equitable title to the relevant shares had passed irrevocably on 30 April or 1 May and had referred to authorities that dealt with the equitable assignment of a legal interest rather than the equitable assignment of an equitable interest in that respect. It was not surprising that the Defendants took that course when they then understood Mr Yeo’s interest in the shares to be a legal interest rather than an equitable interest. Two of the authorities to which I there referred dealt with equitable assignments of legal property. The third was Anning v Anning above, which, in respect of the large part of the property that was assigned also amounted to property assignable at law, although Mr Neil correctly points out that one of the items of property involved in that case was an equitable interest in a partnership.

11. It should be noted, first, that Anning v Anning above is regularly cited as authority as to the test to be applied to the disposition of an equitable assignment of property assignable at law, including in the authoritative discussion of that case in Meagher, Gummow and Lehane’s Equity Doctrines and Remedies, (5th ed 2015, LexisNexis Butterworths) at [6.090]. While Mr Neil submits that Griffith CJ was there setting down the test to be applied to a disposition of an equitable interest in equitable property, it seems to me that his Honour was not there distinguishing between the bulk of the property that was assigned in that case, which was assignable at law, and the equitable interest in the partnership which was also in issue in that case, and the statement of principle to which Mr Neil refers, and which is often cited from his Honour's judgment, is expressly directed to the voluntary assignment of a legal chose in action.

12. It seems to me that two further difficulties arise in respect of this ground of appeal, which, at least from my perspective, suggests that it does not raise a reasonably arguable question for the determination of the Court of Appeal. The first is that the test formulated by Griffith CJ, when applied to an assignment of legal property, has reference to what is required to assign that property in law: so, for example, his Honour refers to what is required to transfer shares in a company which can be transferred by, his Honour notes, an instrument of transfer lodged with the company. That test cannot be applied where, as in this case, share certificates have not been issued and no register on which a transfer of interest could be recorded existed at the relevant time. When that test is applied to the equitable assignment of equitable property, it would require the question to be asked what must the donor do to bring about the equitable assignment of the equitable interest in property, but that is the question which I determined in my Judgment by reference to the authorities that directly address that question. In the case of the assignment of an equitable interest in property, it is obviously not possible to point to the requirements which are applicable to the transfer of the legal interest in the property, as to which the donor may have performed some or all of them, because no such legal interest in the property exists.

13. That leads to the second difficulty with the submission. I had referred, in determining this question, to several decisions of English and Australian courts, including the decision of the High Court in Comptroller of Stamps (Vic) v Howard-Smith [1936] HCA 12; (1936) 54 CLR 614 (“Howard-Smith”), on which the Defendants had relied in their closing submissions, and the decision of Bryson J in Noonan v Martin (1987) 10 NSWLR 402, which I understand to reflect well established principles. Mr Neil accepts, in the course of submissions in respect of the stay, that the success of his submission in appeal that an equitable interest in property was assigned, at the moment the transfer was signed and handed over and delivered, requires either that the transferor's conduct then binds his or her conscience in equity without consideration or alternatively that such a transfer can take effect in equity although the transferor's conscience is not bound. Those propositions seem to me to be contrary to well established authority, which has been settled for a significant period, and it seems to me highly unlikely that the Court of Appeal will reverse that line of authority, even if it were open to it to do so given the High Court’s decision in Howard-Smith above.

14. The next issue raised, or specifically relied on, in order to establish a serious question for the Court of Appeal's determination, is that an injustice is identified where the Court came to a conclusion, which is said to be determinative of the case, based on evidence of Mrs Joo which it is said to have expressly rejected elsewhere. The third ground of appeal in turn refers to my having relied on evidence of Mrs Joo in respect of this question which I had declined to accept elsewhere. It is correct that I had declined to accept certain evidence of Mrs Joo in respect of a conversation with Mr Choi, in paragraph 25 of my Judgment, although I there made particular reference to her evidence concerning her lack of inquiry as to the circumstances in which she accepted an interest in two British Virgin Islands companies. When I dealt with this matter in the passage of which the Defendants complained, at paragraph 49 of my Judgment, I expressly made an assumption, which was favourable to Mrs Joo, that her evidence as to that matter might have been accepted (I interpolate, contrary to the view which I had previously expressed) and noted that that evidence would have assisted the Defendants’ case. It does not seem to me that there is any principle of law, or any principle of procedural fairness, that has the consequence that a judge who has not accepted evidence of a witness as to part of a conversation, or all of a conversation, may not test what the effect of that conversation would have been upon the decision which he or she reached, had the evidence of that conversation been accepted.

15. I also note that numerous other grounds of appeal are identified, although Mr Neil largely did not refer to them in support of the stay. The first, to which Mr Young, who appears for Mr Yoo referred, is that the evidence did not support my conclusion that Mr Yoo's intention was not to make a gift at the time he handed over the relevant share certificate. With the greatest of respect, it seems to me that it is almost impossible to suggest that a party who proposed to sell shares for US$12,000 intended to make a gift of them without consideration, and I find it difficult, to say the least, to see a basis on which a reasonably arguable question for the determination of the Court of Appeal is established as to that matter. A number of other paragraphs of the draft Notice of Appeal amount, in effect, to assertions that I should have determined the opposite of what I determined, in respect of legal issues or factual matters, without identifying the particular matters which are said to lead to that result. I do not consider it necessary or appropriate to deal with those matters, where they were not addressed by either party in submissions in respect of the stay.

16. The consequence of these matters is that I am not presently satisfied that a reasonably arguable question to be determined by the Court of Appeal is established, or that the Court of Appeal is likely, in the relevant circumstances, to grant leave to appeal in respect of a matter which involves a claim in respect of shares for US$12,000. I recognise, of course, that the mystery of why the parties have devoted several days of a hearing before me, and now propose to devote further costs to appeal, in respect of property that is valued at US$12,000, and ownership of shares in a company which is purportedly loss making, remains unexplained. The lack of explanation for that matter maybe relevant to whether leave to appeal should be granted. However, I also recognise that that is ultimately a question for the Court of Appeal and not for me.

Whether the Defendants will suffer irreparable harm if a stay is refused

17. The question also arises whether irreparable damage would be done, by reason of the defeat of the status quo, or depriving the Defendants of the opportunity to appeal, if a stay was not granted. As I read the relevant case law, such damage alone would not support the grant of a stay, unless a reasonably arguable question is established for the Court of Appeal's determination. I should nevertheless address this question, in case the Court of Appeal, in an appeal from this decision, reaches a different view from mine as to the existence of a serious question for its consideration.

18. Three matters were identified by the Defendants as giving rise to potential damage. The first and second relate to dealings between Toppro, the First Defendant, and Topfield Korea, and the suggestion that, if Toppro is returned to Mr Yoo's control, he will terminate commercial relationships with Topfield Korea. There is some evidence to support that proposition, in other proceedings between the parties, and that position was also addressed in evidence before me to which the Defendants refer. It is also likely, as the Defendants point out, that the orders that have been made, when effective, would displace Mrs Joo from her present position in respect of conducting regular liaison with Topfield Korea. It is by no means apparent to me that these matters will cause irreparable damage to Toppro, or would deprive the Defendants of any aspect of the fruits of an appeal, which would be a confirmation that Mrs Joo or WWIL are owners of the relevant shares. Where Mr Yoo’s and Mrs Joo’s perceptions as to what is in Toppro’s interests are different, it seems to me that either leaving Mrs Joo in control of the Company, or restoring Mr Yoo to control of Toppro, is not a neutral step. That position is exacerbated where, in the course of this application, it was suggested that Toppro, which I had held should be returned to Mr Yoo's control, would itself appeal against my Judgment while it remains under Mrs Joo’s control, so that the stay that is sought by Mrs Joo would allow her to cause Toppro to seek to advance her position on appeal, contrary to the position of Mr Yoo who I have held should properly be in control of it. This emphasises that the determination of who is in control of Toppro, one way or the other, is plainly adverse to the person who is excluded from control.

17. In present case, it is not necessary for me to determine these matters, other than to note that this seems to me to be a relatively weak source of damage, where what is in Toppro's interest is a matter of perception, and who determines that matter is the matter in dispute, which has now been determined in Mr Yoo's favour at first instance. I note, in any event, that any detriment in that respect would be limited by an undertaking offered by Mr Yoo, which would preserve the subject matter of the appeal, that he would not without leave of the Court dispose of or encumber the shares in Toppro pending the determination of any appeal.

18. It seems to me that the Defendants had a significantly stronger case for detriment so far as the effect of any return of Toppro to Mr Yoo's control upon proceedings that are reserved for judgment before Brereton J is concerned. There could have been real, and potentially irreparable, damage to the Defendants if those proceedings were compromised or settled, prior to a delivery of a judgment by Brereton J in them, if an appellate court might later find that Mrs Joo should have been left in control of Toppro. However, that matter will be addressed by an undertaking offered by Mr Yoo that he will not seek to compromise or settle the proceedings in which judgment has been reserved before Brereton J prior to the delivery of judgment in that case. If a question arises as to the position after delivery of judgment in that case, it will be open to Mrs Joo or the other Defendants to raise that matter before Brereton J, or in a further application before me, or in an application to the Court of Appeal at that point, if they are concerned that some step then taken would prejudice an ongoing appeal.

19. Finally, the Defendants point to the issue of costs as potentially relevant to the exercise of the Court of Appeal's discretion to grant leave, and point to the fact that significant costs have been incurred in these proceedings, notwithstanding the relatively small value of the shares that is in issue in them. I accept that the extent of those costs may support the grant of leave, although it again draws attention to the lack of any real explanation of the commercial purpose of the proceedings before me, or indeed, the commercial purpose of any appeal, where the apparent value of the shares in issue appears to be disproportionate to the efforts and costs which the parties are incurring in respect of the dispute as to who owns them.

20. In these circumstances, I am not satisfied that I should grant a stay of the judgment, pending appeal, on the basis that I will note the two undertakings offered by Mr Yoo in that respect.

Stay pending an appeal of this decision

23. However, I am also conscious that these are matters as to which minds may differ, and I have referred above to the fact that a trial judge is, in one respect, in a weaker position than an appellate court to determine the question of prospects of appeal from his or her own judgment. In those circumstances I would, subject to hearing any submission from Mr Young in opposition, propose to grant a stay of my order dismissing the application for the stay for 14 days, to allow the Defendants, or such of them as may properly pursue an appeal, to seek leave to appeal from the Court of Appeal and to seek a stay from the Court of Appeal, or indeed to appeal from this judgment if they are so advised. I would order that stay on the basis of the undertaking as to damages offered by Mrs Joo, subject to Counsels' confirmation that it is offered in that context.

24. I make the following orders.

1.   Dismiss the Notice of Motion filed 1 June 2016 seeking a stay of the final orders made by Black J today.

2   Mrs Joo and Wealth Wisdom Investments Limited jointly and severally pay the costs of the motion, as agreed or as assessed.

3.   On the undertaking as to damages given by Mrs Joo, by her Counsel, stay the orders made in the principal proceedings today for 14 days, and stay Black J’s order dismissing the stay application for 14 days, to permit any appeal by the Defendants, or any of them, from Black J’s order dismissing the stay application to be brought to the Court of Appeal.

4.   Note the undertakings of Mr Yoo, by his Counsel, that he will not compromise or settle proceedings relating to Toppro Pty Limited in which judgment is reserved before Brereton J prior to the delivery of judgment in those proceedings, and that he will not, without leave of the Court, dispose of or encumber the shares in Toppro Pty Ltd pending the determination of any appeal.

**********

Decision last updated: 08 June 2016