Huh v Yoonwoo C & C Development Corp
[2022] NZHC 1958
•9 August 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2018-404-664
[2022] NZHC 1958
BETWEEN JAE HO HUH
Applicant
AND
YOONWOO C & C DEVELOPMENT CORP
Respondent
Hearing: 8 August 2022 Appearances:
S Holden and K Grant for Applicant
A Holmes and N Foulis for Respondent
Judgment:
9 August 2022
JUDGMENT OF WYLIE J
(Application for adjournment/stay)
This judgment was delivered by Justice Wylie On 9 August 2022 at 3.30 pm
Pursuant to r 11.5 of the High Court Rules Registrar/Deputy Registrar
Date:…………………………
Solicitors/counsel:
Loo & Koo/A J B Holmes and N M Foulis, Auckland Chapman Tripp, Auckland
HUH v YOONWOO C & C DEVELOPMENT CORP [2022] NZHC 1958 [9 August 2022]
Introduction
[1] The respondent, Yoonwoo C & C Development Corporation (Yoonwoo), has commenced proceedings against the applicant, Jae Ho Huh (Mr Huh). Yoonwoo seeks recognition and registration of Korean judgments given against Mr Huh in a total sum of approximately NZD 8.5 million (2.03 billion Korean Won (KRW)), together with interest accruing at the rate of 20 per cent per annum since 2010. Mr Huh is defending the proceeding.
[2] The proceeding is due to be heard over five days, commencing on 22 August 2022.
[3]On 21 July 2022, Mr Huh applied for orders:
(a)staying the proceeding until such time as bankruptcy proceedings against him in Korea have concluded;
(b)adjourning the fixture date; and
(c)on costs.
The application is opposed by Yoonwoo.
Background
[4] Yoonwoo is a construction company based in the Republic of Korea. Mr Huh resides in New Zealand. He says that he has done so for some 13 years. He was formerly the President/Chairman and a member of the board of various companies, including Dae Joo Construction Corporation, Dae Han Construction Corporation and Mirae RAC Corporation, all in the Republic of Korea (jointly the “Dae Joo companies”).
[5] Disputes arose between Yoonwoo, Mr Huh and the Dae Joo companies. Yoonwoo and the Dae Joo companies entered into three settlement agreements to resolve the disputes in 2008. Mr Huh was a party to two of the agreements. The third agreement, to which Mr Huh was not a party, obliged one of the Dae Joo companies –
Mirae RAC Corporation – to pay Yoonwoo KRW 2.7 billion and to provide Yoonwoo with documents necessary so that it could redeem a KRW 0.89 billion deposit.
[6] Mirae RAC Corporation paid KRW 1.5 million to Yoonwoo but it failed to pay the balance owing.
[7] Yoonwoo issued proceedings in Korea against the Dae Joo companies and Mr Huh in 2009, seeking payments of the balance owing under the settlement agreements. Steps were taken to defend the proceedings. In late November 2009, documents were filed with the Korean Court, which were purportedly approved by all defendants including Mr Huh, appointing Mirae RAC Corporation to represent them in the proceedings.
[8] Yoonwoo and a representative of Mirae RAC Corporation attended a judicial mediation in Korea in March and April 2010. The parties reached further settlement agreements. According to Yoonwoo:
(a)pursuant to one of the settlement agreements, the Dae Joo companies and Mr Huh agreed to jointly pay Yoonwoo KRW .89 billion by 30 April 2010 and further provided that if payment was not made by that date, interest would accrue at 20 per cent per annum until payment was made in full. This agreement was recorded by the Korean courts as a judicial court record under case number 2009GaHap6537;
(b)another settlement agreement recorded that Mr Huh and the Dae Joo companies would pay Yoonwoo KRW 1.05 billion by 30 May 2010 together with interest at 20 per cent until payment. The agreement was formally recorded by the Korean courts as a judicial court record under case number 2009GaHap6520;
(c)both judicial court records have the effect of in-court settlements and are final and non-appealable judgments issued by the Korean courts;
(d)the judicial court records were served on Mr Huh;
(e)payments as required by the judicial court records have not been made; and
(f)Yoonwoo has since obtained further judgments for interest outstanding on the judgment sums.
[9] Yoonwoo’s proceeding in this country seeks registration of the Korean judicial court records in New Zealand or, in the alternative, judgment for the amounts recorded in those records. I was advised by Mr Holmes, appearing for Yoonwoo, and it was accepted by Mr Holden for Mr Huh, that, at this stage, all that is sought is recognition and registration of the Korean judicial court records.
[10] Yoonwoo’s statement of claim was filed as long ago as 10 April 2018. Yoonwoo initially sought to proceed by way of summary judgment. Mr Huh could not be found and substituted service was ordered. Mr Huh took no steps and the matter proceeded by way of formal proof before Paul Davison J on 4 October 2018. He issued judgment in favour of Yoonwoo on 20 November 2018.1 Yoonwoo sealed the judgment and then served a bankruptcy notice on Mr Huh. Mr Huh then applied to set aside the summary judgment. This application came before Bell AJ and, in an oral judgment dated 11 November 2019, he granted Mr Huh’s application and set aside the summary judgment.2 The Associate Judge however recorded that he did not “regard Mr Huh as being particularly impressive in his conduct”; he considered that Mr Huh had been evasive when Yoonwoo had sought to serve him.3
[11] Mr Huh filed a statement of defence. He claimed that he had no knowledge of the Korean proceedings until Yoonwoo took steps seeking to enforce the Korean judicial court records against him in New Zealand in 2018. He further claimed that he was never served with the proceedings in Korea and that he did not authorise Mirae RAC Corporation to represent him or to bind him to any settlements. Broadly, he seeks to argue as follows:
1 Yoonwoo C & C Development Corp v Huh [2018] NZHC 3015, [2019] NZAR 45.
2 Yoonwoo C & C Development Corp v Huh [2019] NZHC 2986.
3 At [52].
(a)the judicial court records are not judgments which can be recognised in New Zealand;
(b)he was not resident in Korea at the time the judicial court records were issued;
(c)he did not submit to the jurisdiction of the courts in Korea and he did not authorise the use of his seal on the documents which resulted in the judicial court records;
(d)he did not have notice of the Korean proceedings and the judicial court records were obtained in breach of the rules of natural justice;
(e)the Limitation Act 1950 precludes registration of the judicial court records.
[12] The proceeding was given a fixture for five days, beginning on 15 February 2021 and timetable orders were made. There was some slippage with these orders by both parties. An interlocutory fixture on 6 July 2021 had to be vacated. Mr Huh then changed his lawyers. The parties were able to reach agreement on security for costs and I directed that the amount agreed was to be paid on or before 15 January 2021 and if not, the proceeding was to be stayed.4 In mid-January 2021, the lawyers for Yoonwoo sought leave to withdraw. Further, Yoonwoo did not pay the security for costs ordered by the date fixed and, as a result, on Mr Huh’s application, the fixture was vacated and the proceeding was stayed.5
[13] Security was belatedly paid on 30 July 2021 and, on 18 August 2021, the proceeding was allocated a new fixture commencing a year later on 22 August 2022.
[14] On 28 January 2022, Mr Huh filed in bankruptcy in the Seoul Rehabilitation Court. He identified six creditors. He did not list Yoonwoo. He was declared bankrupt
4 Yoonwoo C & C Development Corp v Huh HC Auckland CIV-2018-404-664, 2 December 2020 (minute of Wylie J).
5 Yoonwoo C & C Development Corp v Huh HC Auckland CIV-2018-404-664, 26 January 2021 (minute of van Bohemen J).
by the Korean courts on 11 April 2022. On 17 June 2022, a meeting of creditors was held. A second meeting of creditors is scheduled for 21 October 2022.
[15] On 14 July 2022, Mr Holden suggested to this Court, in the course of a case management conference, that the appropriate course might be to vacate the fixture in this country and stay the proceeding until the outcome of Mr Huh’s bankruptcy in Korea becomes clear. Timetable orders were made and the application to vacate the fixture and for a stay was filed on 21 July 2022.
The application
[16]The application is advanced on three grounds.
(a)If the trial were to go ahead on 22 August 2022, Mr Huh would be unable to present an effective defence because he cannot afford legal representation. Mr Huh is not legally trained. He has limited understanding of English and it was argued that it is in the interests of justice that he should be able to defend the proceeding with the assistance of counsel.
(b)While the bankruptcy proceeding in Korea is ongoing, enforcement of any proceedings against Mr Huh in Korea is stayed. It would be contrary to the interests of justice to permit Yoonwoo to register the Korean judgments in New Zealand while other creditors are unable to take steps against Mr Huh as a result of a stay in Korea and must go through the bankruptcy process in that country. It is desirable that there should be only one universal process for the distribution of a bankrupt’s estate, and the courts in New Zealand are unable to sensibly determine Yoonwoo’s claim until such time as the Korean courts have determined whether Mr Huh should be discharged from his debts.
(c)It is in the interests of justice and more efficient to stay the proceeding and adjourn the trial than to proceed on 22 August 2022.
[17]The application is opposed by Yoonwoo. It says as follows:
(a)there are doubts about Mr Huh’s claims to be impecunious and his wish to appoint new counsel to represent him does not provide a basis for the proceeding to be adjourned or stayed;
(b)the Korean judgments are final and enforceable in Korea and have not been stayed by Mr Huh filing in bankruptcy. Mr Huh has not been discharged or granted immunity and his bankruptcy in Korea does not entitle him to a stay of the proceeding against him in New Zealand. He has not filed in bankruptcy in this country;
(c)it is not in the interests of justice that the trial be further adjourned and the proceedings stayed indefinitely. Yoonwoo has already been waiting some time to have its proceeding heard and delay increases the risk that Mr Huh might seek to dissipate his assets in New Zealand.
Analysis
[18] The application is brought pursuant to rr 10.2 and 15.1 of the High Court Rules 2016.
(a)Adjournment
[19]Rule 10.2 provides as follows:
10.2 Adjournment of trial
The court may, before or at the trial, if it is in the interests of justice, postpone or adjourn the trial for any time, to any place, and upon any terms it thinks just.
[20] Whether or not to adjourn a trial calls for the exercise of judicial discretion. The essential question which the Court always has to consider is whether or not an adjournment is necessary in order to do justice between the parties.6 The court has to essentially undertake a balancing exercise.7 The court should consider not only what is necessary to do justice between the parties but also the interests of parties in cases
6 O’Malley v Southern Lakes Helicopters Ltd HC Christchurch CP513/89, 4 December 1990 at 1.
7 At 2.
waiting in the queue for a hearing and the public interest in achieving the most efficient use of court resources.8 Relevant factors can also include whether the parties and those representing them have done everything reasonably practicable to avoid having to seek an adjournment.9
[21] Against this background, I consider each of the grounds for an adjournment advanced by Mr Huh.
Mr Huh’s financial position
[22] Mr Huh has filed an affidavit in support of his application. He deposed that he is in a difficult financial position. He said he has been working as an advisor to a construction company associated with his family, but that it is no longer able to lend him any more money for legal fees because it is in financial difficulty. He also asserted that he does not have any assets in New Zealand which he could use to fund his legal fees.
[23] I have some reservations about these assertions, both as to what is said and what is not said.
(a)Annexed to Mr Huh’s affidavit was a statement of his financial means. He declared that he was earning an average weekly wage, after tax, of
$1,811.59. He asserted that his weekly expenses were food, telephone, power, petrol, medical insurance, clothing and entertainment. Some of the expenses asserted by him appear to be excessive. He claimed that he was spending $500 per week on petrol, $400 per week on entertainment and $150 per week on clothing. It is difficult to see how these expenses could have reasonably been incurred on a week by week basis and no explanation was offered.
(b)Mr Huh declared that he was in a relationship, but he failed to set out his partner’s income or name the partner’s employer.
8 Cygnet Farms Ltd v ANZ Bank New Zealand Ltd [2016] NZHC 1945 at [8].
9 See Andrew Beck McGechan on Procedure (online looseleaf ed, Thomson Reuters) at [HR10.2.02(2)(a)].
(c)Mr Huh did not claim any rental expenses. It appears from other papers filed that Mr Huh is living at a property in Mission Bay. It is owned by another person. The relationship of the owner to Mr Huh was not explained. The property has a capital valuation of $4.4 million. It appears to be subject to a mortgage. Whether or not Mr Huh has an entitlement to an interest in the property is not explained. If he has no interest in it one would expect that he would be paying rental.
(d)Mr Huh declared that his only asset is a sum of $1,041.23 in an account with the ANZ Bank. A search of the Companies Register by Yoonwoo disclosed however that Mr Huh is a 50 per cent shareholder in a company known as Eutopia Tower Ltd. Eutopia Tower Ltd in turn is a
50 per cent shareholder in another company, Victoria Tower Developments Co Ltd. Whether these companies have any assets has not been disclosed.
(e)The court has been given no information about the family construction company or its financial position, notwithstanding that it appears to have been funding, at least in part, the litigation to date. No debt to this company is disclosed which raises the question how the funding to date has been provided.
Mr Huh was not cross-examined before me and I make no findings as to his credibility. I do however consider that his assertion of impecuniosity should be treated with caution.
[24] There is an additional difficulty. Mr Huh claimed that because he is impecunious, his present solicitors are unable to represent him at trial and will seek leave to withdraw. He said however that he has “a retainer arrangement” with a Queen’s Counsel who is prepared to assist him “within the scope of [an] existing retainer”. This has been confirmed by an email from the Queen’s Counsel. However, the Queen’s Counsel is engaged in another matter and is unable to act for Mr Huh if the existing trial date is maintained.
[25] There is nothing suggesting that Mr Huh, or his present solicitors, have made any endeavours to obtain somebody else to act for Mr Huh if the matter proceeds on 22 August 2022. The nature of the existing retainer with the Queen’s Counsel, and whether any “credit” to which it seems Mr Huh is entitled can be transferred to other counsel, do not appear to have been considered. Mr Huh has known about the fixture date for almost a year. It appears that he only contacted the Queen’s Counsel concerned in late July of this year to enquire as to his availability and readiness to act. No explanation for this delay has been offered.
[26] I am not persuaded that everything practicable has been done by Mr Huh to try to avoid an adjournment.
(b)The bankruptcy proceedings in Korea
[27] Both parties have filed affidavits from persons claiming expertise in Korean law.
[28] It is common ground that Mr Huh’s bankruptcy in Korea is governed by the Debtor Rehabilitation and Bankruptcy Act 2005 in that country. It is also common ground that Mr Huh did not disclose the indebtedness alleged by Yoonwoo when he filed in bankruptcy in Korea.
[29] It appears from the affidavits that the Korean legislation seeks to rehabilitate debtors facing distress due to financial difficulties, through the coordination of legal relations between interested persons, including creditors, shareholders and the like, and by fairly realising and dividing the property of debtors. As part of this process, the Korean courts consider whether a bankrupt should have “immunity”, which is a form of discharge for the bankruptcy. Immunity releases a bankrupt from all claims that accrued before the bankrupt was declared bankrupt. Unless immunity is declared, the debts still exist. Immunity does not automatically follow from a declaration of bankruptcy. However, where a debtor files a petition for bankruptcy, he or she is deemed to have filed an application for immunity (unless an intention to the contrary is expressed). The Korean courts will generally not grant immunity, inter alia, if a debtor has submitted a falsified list of creditors.
[30] Mr Huh’s expert, Ms Kim, considers that the omission of Yoonwoo from Mr Huh’s list of creditors is unlikely to result in his immunity application being refused. She considers that Mr Huh will be given an immunity in relation to his debts. Yoonwoo’s expert, Mr Kang, considers that Mr Huh’s failure to disclose his debt to Yoonwoo means that he is unlikely to be granted immunity. Further, Mr Kang states that even if Mr Huh is granted immunity, it may be found that he “maliciously omitted” Yoonwoo from the list of creditors submitted by him, and that as a result and pursuant to the Korean legislation, the immunity granted would not extend to monies owing to Yoonwoo.
[31] Ms Kim says that Mr Huh’s bankruptcy proceeding is ongoing and that pursuant to Korean law, there is a stay in place which prevents Mr Huh’s creditors from enforcing debts against him in Korea. Mr Kang says that Mr Huh’s bankruptcy is neither final nor conclusive and that the existing court orders are not stayed. He notes that the proceeding in New Zealand does not seek to enforce against Mr Huh’s property (if any) in this country. He also queries whether the Korean legislation can apply to the property of a bankrupt which is not in Korea.
[32] Neither witness was cross-examined before me and I cannot resolve the competing arguments in the course of this application. Rather, they are matters which will fall to be determined at trial. Expert briefs have been filed and as I understand it, notices seeking to cross-examine the experts have been given. The competing contentions will no doubt be advanced at trial and they will fall to be resolved by the trial Judge.
[33] For present purposes, I note that all that is sought is recognition and registration of the Korean judicial court records in New Zealand and not, at this stage, their enforcement. On the (admittedly brief) arguments put to me, I cannot see that recognition and registration of the Korean judgments in this country are precluded by Korean bankruptcy law, and I am not prepared to adjourn the proceeding on the basis of what may happen in Korea.
[34] I also have reservations about Mr Huh’s reliance on Korean bankruptcy law. Notwithstanding that one of his defences to Yoonwoo’s claims is that he did not submit
to the jurisdiction of the courts in Korea, he filed for bankruptcy in that country, with knowledge of Yoonwoo’s proceedings in this country and the fact it had been given a fixture date. He did not file for bankruptcy in this country. Rather, he seeks to take advantage of Korean bankruptcy law to resist Yoonwoo’s claim seeking recognition in New Zealand of judgments alleged to have been given in Korea. I was left with the distinct impression that Mr Huh “wants it both ways” and that he is endeavouring to “game” the system.
(c)Interests of justice
[35] I am not persuaded that the interests of justice favour an adjournment of the trial.
[36] Mr Huh has brought the present situation on himself. He filed in bankruptcy in Korea. He has got into whatever his financial position currently is. He has delayed in seeking to engage counsel to act for him. He cannot rely on his own actions to try to avoid the fixture.
[37] Yoonwoo’s proceeding has been outstanding for some time. Yoonwoo is entitled to have its case heard. Were the fixture to be vacated, it is likely to be some considerable time before an alternative five day fixture could be made available. It may not be until late 2023 or more likely, early 2024. Such delay is not in the interests of the parties.
[38] I have also taken into account the interests of other litigants waiting to have their cases heard. As counsel properly acknowledged, this court is under considerable pressure as a result of the fact that a large number of fixtures had to be vacated during the COVID-19 pandemic and the associated lockdowns. While the court is doing its best to clear the backlog, there are a number of meritorious litigants waiting to have their cases heard. Were the fixture to be vacated now, it is likely that it would prove difficult to find another case able to use the available judicial time at short notice. It is late in the day to expect counsel in other proceedings to take advantage of available judicial time. Judicial time is a precious resource and the public interest requires that it is used wisely.
[39]I decline Mr Huh’s application for an adjournment.
(d)The application for a stay
[40] As a result of my decision on the adjournment application, the application for a stay is also declined.
Costs
[41] Yoonwoo is entitled to its reasonable costs and disbursements. I direct as follows:
(a)costs and disbursements are to be sought by way of memorandum, to be filed and served within five working days of the date of this judgment;
(b)any memorandum in reply is to be filed and served within a further five working days;
(c)memoranda are not to exceed five pages.
I will then deal with the issue of costs and disbursements on the papers unless I require the assistance of counsel.
Wylie J
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