Jong v Yang

[2010] NZCA 343

IN THE COURT OF APPEAL OF NEW ZEALAND

CA432/2007
[2010] NZCA 343

AND BETWEEN  YEON SOON JONG (ALSO KNOWN AS DEBORAH KO)

Applicant

ANDDO YUN YANG

Respondent

Counsel:P Chambers for Applicant

P A Craighead for Respondent

Judgment:2 August 2010 at 10.30 am 

JUDGMENT OF ARNOLD J

The application for review of the Registrar’s decision refusing to waive or vary the payment of security for costs is declined.  The applicant must pay security in the amount of $4,740 within 20 working days of the date of this judgment.

REASONS

Introduction

[1]        The applicant, Ms Jong, has filed an appeal and applied to the Registrar for a dispensation from the requirement to pay security for costs.  By letter dated 26 February 2008, the Registrar declined the application on the grounds that the applicant had not provided sufficient evidence of impecuniosity and the matter was not of genuine public interest.  Security was fixed at $4,740. 

[2]        On 19 May 2008, Ms Jong filed an application for a review of the Registrar’s decision.  It appears that this application was not referred to a Judge until it was recently referred to me.

Background

[3]        The applicant was married to a Mr Ko.  They entered into an oral loan agreement with Mr Yang, in which Mr Yang advanced them 200,000,000 Korean won (approximately $260,000).  The parties later executed a written “Investment Agreement”, intended to reflect the oral agreement, which recorded that the loan was made to New World Vision Centre Ltd, the entity through which Mr Ko and Ms Jong operated a church and a homestay school business.  Following this, the parties signed a “Deed of Indebtedness” which recorded that Mr Ko and Ms Jong were personally liable for the loan. 

[4]        Subsequently, Mr Ko and Ms Jong had marital problems and Mr Ko returned to South Korea.  After Mr Ko’s departure, the interest due under the loan went unpaid.  Solicitors for Mr Yang demanded repayment of both the principal and interest.  Solicitors for Ms Jong advised that repayment would occur when a property owned by Mr Ko and Ms Jong had sold.  Mr Yang then placed caveats on properties in South Korea owned by Ms Jong, and she travelled there to attempt to refinance the loan.  Ultimately, however, no repayments were made.

[5]        Mr Yang commenced proceedings to recover the debt and applied for summary judgment.  At the first call, Ms Jong and Mr Ko were represented by counsel.  The proceedings were adjourned to give time for settlement discussions and for the filing of a notice of opposition if the discussions were unsuccessful.  At the next call, counsel advised the Court that settlement discussions were continuing.  The Court made timetabling orders in the event that the discussions failed, which included a time for the filing of any notice of opposition.  Prior to the next call, counsel for Mr Yang filed a memorandum advising that he intended to seek summary judgment.  By the time of that call, no notice of opposition had been filed.  Counsel appeared for Ms Jong and Mr Ko and advised that he was unable to advance any grounds of opposition to Mr Yang’s application.  The Court then entered summary judgment for Mr Yang.

[6]        When the judgment was not met, Mr Yang sought to have Ms Jong declared bankrupt.  At that point, Ms Jong, having obtained new counsel, applied to have the judgment against her set aside.  The application was made under the High Court Rules (as then in force), in particular r 143 (setting aside judgment where miscarriage of justice) and r 261 (rescinding judgment where fraudulently or improperly obtained).  Counsel indicated that Ms Jong’s defence was that the funds were advanced to New World Vision Centre, rather than to Ms Jong personally.

[7]        Associate Judge Abbott held that there was no evidence to support the claim that the judgment was improperly or fraudulently obtained and found that there was no risk of a miscarriage of justice.  Accordingly, he declined the application.[1]  Ms Jong then appealed to this Court.

Security for costs

[1]      Yang v Ko and Jong HC Auckland CIV-2005-404-4583, 31 July 2007.

[8]        In the normal course, appellants in civil proceedings in this Court are required to pay security for costs.[2]  If an appellant wishes to apply to the Registrar for a waiver of security, he or she must do so within 20 days of filing the appeal.[3] The Registrar may vary or waive security “if satisfied that the circumstances warrant it”.[4]  A party who is dissatisfied with the Registrar’s decision may apply to a Judge for a review of the Registrar’s decision.  Such an application must be made within 10 working days after the decision,[5] although a Judge may extend that time limit.[6]

[2]      Court of Appeal (Civil) Rules 2005, r 35(2).

[3]      Rule 35(3) and (6).

[4]      Rule 35(6).

[5]      Rule 7(3).

[6]      Rule 5(2).

[9]        Security for costs will be waived where it is in the interests of justice to do so.  Given that the normal rule is that security must be provided, there will need to be some exceptional circumstance to justify waiver.[7]  The circumstances of the appeal are relevant, in the sense that the appellant must honestly intend to pursue it and it must be arguable – respondents should not face the threat of hopeless appeals without provision for security.  The importance of the issues raised in the appeal will be significant, as will the question whether there is any public interest in having them determined.[8]  Impecuniousity alone is not usually sufficient to justify a waiver, but may be reason to reduce the quantum of security.[9]

The Registrar’s decision

[7]      Fava v Zaghloul [2007] NZCA 498 at [9].

[8]      Creser v Official Assignee CA196/05, 12 June 2006 at [29].

[9]      Fava v Zaghloul at [9]; Easton v Broadcasting Commission [2009] NZCA 252 at [5].

[10]       Ms Jong applied for a waiver of security for costs on the basis that she was impecunious, the appeal would be unable to proceed if security was required and the appeal had genuine public interest. Ms Jong stated that she had no income but weekly expenses of $3,325 and listed two properties and three motor vehicles as assets. 

[11]       The Registrar, in declining the application, considered that the matter was not in the public interest as it concerned only the parties involved. She also queried Ms Jong’s financial position in light of the information in her application.

Discussion

[12]       Ms Jong applies for a review of the Registrar’s decision on the grounds that her financial circumstances have worsened since her application for waiver was declined.  Evidence of her current circumstances is said to be contained in an application and supporting affidavit filed in this Court for waiver of the setting down fee. The application lists Ms Jong’s assets as comprising one property, which is subject to mortgagee sale. The application states that Ms Jong has no income, no current liabilities and no expenses.  In her affidavit Ms Jong refers to three properties in New Zealand.  One, a hotel complex, was sold at auction by the mortgagee.  Ms Jong was living in another, but that also was subject to the mortgagee sale process.  A further property is referred to but it is not clear what has happened to that.  In addition, Ms Jong says that she has properties and assets in South Korea but is unable to sell or raise finance against them as a result of steps taken by the respondent and her former lawyer. She says that she is surviving on a student allowance and assistance from her family overseas. She applied for legal aid for the appeal, but that application seems to have been declined.

[13]       Like the Registrar, I consider that the information provided by Ms Jong as to her financial position is incomplete and confusing.  Moreover, her appeal does not appear to have any realistic prospect of success.  Associate Judge Abbott correctly interpreted the High Court Rules and made findings of fact that were open on the evidence.  Ms Jong was represented at call hearings and had several opportunities to raise a defence.  If her contention was that she was not personally liable for the debt, this should have been raised well before the enforcement stage.  While Ms Jong suggests in her affidavit that her previous counsel acted without instructions or negligently, she does not give any detail of that, and in any event it is something that she can pursue in separate proceedings.

[14]       Ms Jong has not established that the appeal is one which engages the public interest or that there is anything of an exceptional character in it which warrants a waiver or reduction in security for costs.  Mr Yang is entitled to some protection for his costs of responding to the appeal.  Accordingly, I consider that the Registrar was right to require Ms Jong to pay $4,740 by way of security for costs.

Decision

[15]        The application for review of the Registrar’s decision declining security for costs is declined.  The applicant must security for costs in the sum of $4,740 within 20 working days of the date of this judgment.

Postscript

[16]       As I have said, this file was not referred to a Judge until recently.  No other action has been taken in relation to the appeal over the last two years.  It may be that the applicant does not intend to pursue it.  I ask that counsel advise the Registry in writing as to the position.  If the appeal is to be pursued, steps should be taken to arrange a fixture, subject, of course, to the payment of security and any other amounts required to be paid.  If security is not paid, the respondent will be entitled to apply to have the appeal struck out.[10]

[10]      Rule 37(1).

Solicitors:

Equity Law, Auckland for Applicant

Duthie Whyte Lawyers, Auckland for Respondent