Choi v Hong - [2014] NZHC 1883

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-003035 [2014] NZHC 1883

BETWEEN
JAE HOON CHOI

Plaintiff

AND

IL LIB HONG Defendant

Hearing: On the papers

Appearances:

B Gustafson for the Plaintiff
R M Dillon for the Defendant

Judgment:

11 August 2014

JUDGMENT OF WOOLFORD J [As to Costs]

This judgment was delivered by me on Monday, 11 August 2014 at 2.30 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

CHOI v HONG [2014] NZHC 1883 [11 August 2014]

[1] The plaintiff, Mr Choi, has discontinued this proceeding. The first defendant, Mr Hong, seeks costs.1 The plaintiff argues that no costs order should be made in favour of the first defendant, and submits that costs should lie where they fall.

Background

[2] The factual background is unclear and at points disputed. Broadly put the proceedings concerned the control of a company, Twin Oaks Gold Ranges Limited (Twin Oaks). The primary asset of Twin Oaks was a property styled as a golf range and café at 99C, State Highway 22, Paerata Road, Pukekohe.

[3] Mr Hong or interests associated with him initially controlled the shares in Twin Oaks. On 14 November 2011 the parties entered into an agreement whereby Mr Hong would transfer the shares in Twin Oaks to Mr Choi as security for a loan from Mr Choi to Mr Hong of 580 million Korean Won (approximately NZD $665,000). It was agreed that Mr Park, the second defendant, would be appointed as a representative director of Twin Oaks. The agreement further provided that Mr Choi would transfer back the property to Mr Hong upon repayment of
300 million Korean Won (approximately NZD $344,000).

[4] The parties and another company, GWM Limited, entered into a second agreement on 10 August 2012 (labelled the Share Transfer Agreement by the plaintiff). The recitals record that only 300 million Korean Won had been loaned by Mr Choi to Mr Hong and Mr Hong’s liability was limited to that sum (the actual amount advanced to Mr Hong and whether any advance was made at all is in dispute). It further provided that 20% of the shares were to be transferred from Mr Choi to GWM Limited. Importantly, it recorded that Mr Choi was to transfer back his 80% shareholding to Mr Hong in order to enable Mr Hong to effectively procure an agreement for sale of the property by the due date (apparently in order for Mr Hong to pay back the amount outstanding on the loan provided by Mr Choi).

[5] The due date was recorded as 14 September 2012. Clause 4 of the agreement provided that in the event that no sale and purchase agreement for the property was

1 Proceedings against the second defendant, Mr Park, were discontinued in accordance of a minute of Associate Judge Bell dated 18 October 2013.

signed by the due date, Mr Hong should arrange for and effectuate immediate transfer of the shareholding to Mr Choi. Similarly clause 6 provided that the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Choi v Hong

Details

AGLC: Choi v Hong [2014] NZHC 1883
Case: [2014] NZHC 1883
Decision Date: 11 August 2014

CaseChat Overview and Summary

In the High Court of New Zealand, Auckland Registry, the case of Choi v Hong was heard on the papers, with the plaintiff, Mr Choi, discontinuing the proceedings against the defendant, Mr Hong. The proceedings were concerned with the control of a company, Twin Oaks Gold Ranges Limited, and the dispute over the interpretation of two agreements regarding the transfer of shares. The key legal issue was whether the presumption in favour of awarding costs to a defendant in the event of a discontinuance should be displaced due to just and equitable circumstances.

The court considered the timeline of events leading up to the discontinuance. It was noted that Mr Choi had obtained an interim injunction preventing Mr Hong from dealing with the shares and the property, which was granted due to Mr Choi's serious case and the risk of Mr Hong dealing with the property in a manner inconsistent with Mr Choi's claim. However, Mr Hong failed to respond to communications and take any positive steps in the proceedings, leading Mr Choi to exercise his rights as mortgagee and sell the property. The court found that the proceedings were rendered nugatory by Mr Hong's unwillingness to constructively engage in the court process, and it was reasonable for Mr Choi to discontinue the proceedings to recoup his losses through the forced sale of the Twin Oaks property.

As a result, the court directed that costs were to lie where they fall, and dismissed the defendant's claim for a 50 per cent uplift in costs. The court found that the claims of non-compliance with s 196 of the Property Law Act 2007 and the use of the proceeding as a clog on the equity of redemption were not supported by evidence and were at best conjecture.

Orders