Korea Resolution and Collections Corporation v Lee
[2013] NZHC 985
•6 May 2013
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2012-409-001561 [2013] NZHC 985
BETWEEN KOREA RESOLUTION AND COLLECTIONS CORPORATION Plaintiff
ANDHWE GOUNG LEE Defendant
Hearing: 1 May 2013
Appearances: G J Thwaite and K Oh for Plaintiff
M R Bendall for Defendant
Judgment: 6 May 2013
JUDGMENT OF ASSOCIATE JUDGE MATTHEWS
[1] The plaintiff (KRCC) is the liquidator of Hanmaeum Mutual Savings and Finance Co Limited which formerly operated as a bank in the Republic of Korea. On 19 February 2009 the District Court of Busan entered judgment in its favour against the defendant (Ms Lee) in the sum of KRW581,079,079 plus interest at 36 per cent per annum from 2003 until the date of payment. KRCC says the sum owing is now KRW1,690,000,000. In this proceeding it seeks judgment in this Court for the New Zealand dollar equivalent of this sum at the exchange rate prevailing at the date of judgment.
[2] KRCC seeks summary judgment on its claim. Judgment can only be entered on this basis if KRCC can satisfy the Court that Ms Lee does not have a defence to the claim.1 This procedure is not usually suitable for the determination of issues of
fact unless a plaintiff can show that a defendant’s allegations are utterly baseless2
1 High Court Rules, r 12.2.
2 Attorney-General v Rakiura Holdings Ltd (1986) 1 PRNZ 12 (HC); Pemberton v Chappell
[1987] 1 NZLR 1 (CA).
KOREA RESOLUTION AND COLLECTIONS CORPORATION V HWE GOUNG LEE HC CHCH CIV-2012-
409-001561 [6 May 2013]
and that there is no defence. If KRCC lays a foundation for this conclusion, an evidential onus shifts to Ms Lee to demonstrate a tenable defence, but the onus of establishing entitlement to summary judgment remains on KRCC.3
[3] Ms Lee says that at the time the proceedings against her were instituted in Korea she was resident in New Zealand, was not subject to the jurisdiction of the Korean Court, was not served, did not receive notice of the proceedings or of the Korean judgment prior to this proceeding being served on her in New Zealand, and that she did not submit to the jurisdiction of the Korean Court. She says the conduct of the Korean proceeding offends natural justice, and she disputes the quantum of the claim made by the plaintiff.
Facts
[4] Ms Lee has lived in New Zealand since December 2002. In 2003, together with a company and four other individuals, she started development of an apartment block in Korea. She travelled to Korea in that year to set up this venture but returned to New Zealand. She travelled to Korea again three times between 2010 and 2012. Successively, she held temporary student, guardianship and work visas to stay in New Zealand. In 2010 she was granted a residence visa, and in 2012 a permanent residence visa.
[5] Ms Lee and others borrowed KRW799,992,549 from the Hanmaeum Bank for this project. They defaulted on the loan, and the bank took possession of the apartment block, sold the apartments, and brought proceedings against all parties for a claimed shortfall between the amount said to be owing, and the amount it received.
[6] Ms Lee disputes the amount now claimed. She says her liability was limited to KRW1,041,000,000 and the bank received KRW947,960,308 leaving a shortfall of under KRW100,000,000. Ms Lee said that she was not at any time served with the
court documents.
3 Auckett v Falvey HC Wellington CP296/86, 20 August 1986, per Eichelbaum J;
MacLean v Stewart (1997) 11 PRNZ 66 (CA).
[7] Evidence given for KRCC initially consisted of an affidavit from Mr Shin, an assistant with KRCC who verified the allegations of fact in the statement of claim. After Ms Lee served her affidavit in opposition, KRCC filed an affidavit from Mr Park, a member of the Bar in Korea who gave expert evidence on the Korean Citizens Registration Act, and on the process of the court in Busan on the claim by KRCC against Ms Lee.
[8] Mr Park says that the Citizens Registration Act obliges every citizen of Korea who resides there to register an address with an appropriate local authority. This obligation arises where the person concerned lives at an address within the area of the relevant local authority for the purpose of living there for more than 30 days. Mr Park says that such persons are defined as “residents”. Registration as a resident includes the provision of the person’s name, gender, date of birth, relationship to others in the household, address, previous address, address of the new residence and the date of moving there. This step must be taken within 14 days of moving to the residence. Further, a resident intending to live outside the Republic of Korea is required to report that fact to the relevant local authority.
[9] Mr Park says that Article 23(1) of the Act provides that a person’s registered address is an official address where that resident may be contacted by government agencies. He says that in practice this address is used for a first attempt at the service of documents.
[10] Mr Park says the records of registration relating to Ms Lee show that on
28 January 1992 she registered as her residence a certain address in Busan City, and she registered a new address in the same city on 20 March 2012. On 12 April that year she terminated her registration on the basis that she was emigrating abroad. Based on this information Mr Park says that, in his opinion:
Ms Lee complied with the law for the registration of the address by a resident of the Republic of Korea up until 12 April 2012, being the date when she terminated her registration.
[11] Mr Park then gives evidence in relation to the court file in Korea. He says that civil proceedings are served on parties by the court. This is normally effected during normal working hours, but if the defendant cannot be contacted during that
time a plaintiff may apply to the court for an order that service be attempted outside normal working hours. By reference to documents from the file Mr Park says that application was made to serve Ms Lee at night or during a holiday. Mr Park produces the application, but not an order made on it; nor does he say that an order was made.
[12] Mr Park then produces an application for service on Ms Lee by publication. That document describes endeavours made to serve her and another defendant at the address of her registered residence and records the belief of KRCC’s counsel, who made the application, that Ms Lee and the other defendant do not reside at the address and have failed to declare their change of address with the intention of evading service. The document then makes a formal request to the court that it serve the process upon two of the original five defendants by means of publication, as provided for by the Civil Procedure Act. Notably, Ms Lee is not one of the defendants in respect of whom service by publication was sought. Again, too, Mr Park does not produce an order made on this application but states that having reviewed the judgment of the court “I note the record that service had been effected upon Ms Lee”. Mr Park does not say how that service is said to have been effected.
[13] Ms Lee says she did not evade service. The reason the court could not serve the documents on her was because she lived in New Zealand.
Discussion
[14] It is common ground that the Reciprocal Enforcement of Judgments Act 1934 does not apply to the judgment in this case. Accordingly enforcement of the judgment must be considered under common law principles.
[15] In Reeves v One World Challenge4 O’Regan J summarised the requirements
for a foreign judgment to be enforced in New Zealand:
[36] ... In general terms, an order for a foreign judgment will be enforceable in New Zealand subject to three basic requirements (“jurisdictional matters”):
4 Reeves v One World Challenge [2006] 2 NZLR 184 (CA).
(a) The foreign court must have had jurisdiction to give judgment; (b) The foreign judgment must be for a definite sum of money; and (c) The foreign judgment must be final and conclusive.
[37] There are limited exceptions. The two exceptions relied on in the
High Court were, as mentioned above:
e
that the court in Korea did not have jurisdiction to give judgment, and secondly, she says that there was a breach of natural justice as she was not served with the proceedings at the time they were instituted. Because of the conclusion I have reached on the latter issue I deal with it first.
(a) That enforcement of the foreign judgment would be contrary to public policy; and (b)
The proceedings in which the judgment was obtained were opposed to natural justice.
[16]
From th
se requirements, two are put in issue in this case. First, Ms Lee says
[17] It is common ground that the proceedings were not physically served on Ms Lee prior to being adjudicated on by the court in Korea. KRCC relies first on the documents produced by Mr Park to support the proposition that a valid order for substituted service on Ms Lee by publication was made by the court. As Mr Bendall submits, however, there are real difficulties in the way of this submission, on the evidence before me. First, although Ms Lee is referred to in the application for an order for service by publication as a defendant on whom service has not been possible, the application expressly requests that the process be served on two of the defendants by means of publication, but does not apply for this method of service in respect of Ms Lee. Secondly, there is no evidence that an order was made as sought. Thirdly, there is no evidence before the Court of whether an order for service by way of publication, if made, was in fact carried out.
[18] Mr Park says in his affidavit that he has not been shown the actual order made by the District Court for substituted service. He says that he has reviewed the judgment of the Korean Court and notes a record that service has been effected upon Ms Lee.
[19] The judgment was produced, together with an English translation, and I note that it refers, in a document headed “Service/Finalisation Certificate”, to the judgment having been served on Ms Lee on 24 February 2009. However, there is no further reference in the judgment to any aspect of service and it does not state that the proceedings were served on Ms Lee or, for that matter, any other defendant.
[20] Mr Thwaite submits that the Court can draw a fair inference that service took place, because the judgment of the Korean Court shows that it properly addressed the merits of the case and it is therefore fair to assume that it properly addressed procedural issues as well. That, however, is tantamount to asking me to accept that the judicial process in the court in question is foolproof. In the ordinary course of events one would expect that a court would be presented with evidence that service on each defendant had taken place as required by the rules of the court, or a court order. However, I am not prepared to draw that assumption in the context of this case, where there is no evidence that an order for substituted service on Ms Lee was sought, nor that such an order was made, nor that if it was made it was carried out. It is a matter of record that Ms Lee was not represented or present. There was no-one to raise this issue on her behalf.
[21] Mr Thwaite submitted that it may be open to Ms Lee to apply to the court in Korea to set aside the judgment, based on her not having been served with the proceeding. However, no evidence was adduced to suggest that course remains open to her, under Korean law. It presupposes, as Mr Thwaite says, that a procedure exists analogous to High Court Rule 10.9, but there is no evidence to that effect.
[22] I am not satisfied on the evidence before me that the Korean proceeding was served on Ms Lee as required by the rules of natural justice.5
[23] Mr Thwaite notes that Mr Bendall accepts that even if an order for substituted service by publication was made and carried out, the proceeding would still not have come to the attention of Ms Lee who was in New Zealand at the time. I do not see
this as assisting his case. There are manifest gaps in the evidence relating to service.
5 See, for example, Jacobsen v Frachon (1927) 138 L.T. 386 (CA) and L Collins (ed)
Dicey, Morris and Collins on the Conflict of Laws (15th ed, Sweet and Maxwell, London, 2012)
at 741.
This is an application for summary judgment and it is for the plaintiff to show that the judgment should be enforced. There is a clear common law exception to the enforceability of this judgment, where a rule of natural justice has not been applied. The evidence before me leaves a real doubt on this issue.
[24] For this reason I decline the application to enter summary judgment against
Ms Lee.
[25] In case this conclusion should be wrong I will discuss briefly the second issue. This arises from the requirement that the foreign court had jurisdiction to determine the case. In Von Wyl v Engeler6 the Court of Appeal set out the elements of the first jurisdictional requirement referred to by O’Regan J in Reeves v One World Challenge.7 At p 420 the Court said:
The foreign court must have had jurisdiction as determined by the New Zealand rules of conflict of laws, rather than according to the foreign court’s own law (p473). Jurisdiction in personam exists where the debtor was present in the foreign country at the time the proceedings were instituted; or where the judgment debtor was plaintiff or counter-claimed in the foreign court; or where, being defendant in the foreign court, submitted to the jurisdiction of that court by voluntarily appearing in the proceedings; or before the commencement of the proceedings agreed in respect of the subject matter of the proceedings to submit to the jurisdiction of that court or of the courts of that country.
[26] At p 421 the Court continued:
The foundation of the jurisdiction in personam is service of the writ or other originating process. Personal service on a defendant present within the jurisdiction and, where it is impracticable to serve the proceeding in the prescribed manner, substituted service within the jurisdiction by taking such steps as the court may direct to bring the proceeding to the defendant’s notice, satisfy that requirement. And it seems there is no jurisdiction to order substituted service within the jurisdiction on a defendant who was outside the jurisdiction when the proceeding was issued (p303). The principle underlying the concept of submission to the jurisdiction is that a person who would not otherwise be subject to the jurisdiction of the court may preclude himself or herself by his or her own conduct from objecting to the jurisdiction and thus giving the court an authority over that person which, but for that submission, it would not possess (p310). Accordingly the onus is on the party seeking to enforce the foreign judgment to establish that the non-resident accepted the jurisdiction of the foreign court to determine the
proceeding. It follows that a person who appears merely to contest the jurisdiction of the court does not thereby submit ...
[27] The references in these quotations to numbers are to pages in Dicey, Morris and Collins on the Conflict of Laws (12th ed, 1993).
[28] The evidence in relation to service also fails to establish that the court in Korea had jurisdiction, as the requirements described in this passage are not established.
[29] Although the Court referred to the jurisdiction arising where the debtor was present in the foreign country, there is authority for the proposition that even if not present, residence in the country concerned is sufficient. Summarising the principles in Gordon Pacific Developments Ltd (in liquidation) v Conlon, Henry J said:8
... The common law principles of recognition of judgments in personam are summarised in Dicey & Morris, Rule 38 as being:
1. if the judgment debtor was at the time the proceedings were instituted resident (or possibly present) in the foreign country
[30] Ms Lee was not present in Korea when the proceedings were instituted in
2008. The plaintiff relies on her being a resident of that country to establish this element of jurisdiction.
[31] Ms Lee was in fact resident in New Zealand at that time, with a lawful right to enter and remain in this country under one or other of the visas she held from
2002 until 2012. Mr Thwaite submits that it is possible, at law, to be resident in two places.9 Mr Thwaite says that although Ms Lee resided in New Zealand she also resided in Korea for the purposes of giving the domestic courts of that country jurisdiction over her, because she maintained a registered residential address as required by the domestic law of that country.
[32] Given that Ms Lee did not live in Korea at the relevant time or for some years either side of it, this submission could only be accepted if there were sufficient evidence to show that as a matter of law Ms Lee was a resident in Korea by virtue of
maintaining a registered residential address. Mr Park says that the Republic of Korea obliges every citizen who resides in the republic to register an address with the appropriate local authority. He says that Article 23 of the Citizens Registration Act provides in general that the registered address is that person’s official address, so is an address where a resident may be contacted by a governmental agency. That falls short of establishing the inverse proposition, that registering an address means that a person is at all material times a resident of the country. Indeed Mr Park’s opening proposition is that every citizen who resides in the country must register an address. It does not logically follow that if a person registers an address they are deemed to be resident there. If that is the position, it is not so stated by Mr Park. All that can be gleaned from his evidence is that in Korea there is a system by which residents must notify local authorities of their addresses, and those addresses are where the resident concerned may be contacted by government agencies. The evidence goes no further than to suggest that this is an administrative arrangement. It may be likened, perhaps, to companies in this country having to have registered offices, under the provisions of the Companies Act 1993. But on the evidence before me, that is all that the system is shown to be.
[33] Ms Lee had not lived in Korea for six years when the proceeding was instituted, and has not lived there since. Her absence in 2008 was not temporary. Her evidence is that when she left in 2002 she intended to live in New Zealand permanently, and she later gained the right to do so after ten years of temporary
rights to stay here.10 Even accepting that as a matter of law a person may be resident
in two places simultaneously, the evidence does not establish that position as a matter of fact.
[34] Mr Thwaite submits that Ms Lee agreed in respect of the subject-matter of this proceeding, namely enforcement of a loan she took out in Korea, to submit to the jurisdiction of the court in that country. He notes that Ms Lee borrowed money in Korea for a project in Korea and that, coupled with her maintaining a registered address in Korea at the same time, establishes her agreement to submit to the jurisdiction of the Korean Court, by implication. Mr Bendall says, however, that
agreement to submit to the jurisdiction of a foreign court must be expressed, and
10 Immigration Act 2009, s 43.
cannot be implied.11 Mr Bendall says that such an agreement might be established, for example, if there were a clause to that effect in the loan agreement between the Hanmaeum Mutual Savings and Finance Co Limited and Ms Lee, but that document is not in evidence.
[35] I am not satisfied that Ms Lee agreed to submit to the jurisdiction of the
Korean Court, on the evidence before me. As noted in Dicey:12
It may be laid down as a general rule that an agreement to submit to the jurisdiction of a foreign court must be express: it cannot be implied. If the parties agree, expressly or by implication, that their contract shall be governed by a particular foreign law, it by no means follows that they agree to submit to the jurisdiction of the courts which apply it. Nor can any such agreement be implied from the fact that the cause of action arose within a foreign country or from the additional fact that the defendant were present there when the cause of action arose. In Emanuel v Symon [1908] 1 KB 302 (CA), the Court of Appeal held that a defendant did not submit to the courts of a foreign country merely because he became a member of a partnership firm which carried on business there. But in Blohn v Desser [1962] 2 QB
116, 123, Diplock J held that where a person resident in England became a sleeping partner in an Austrian firm she did submit to the jurisdiction of the
Austrian courts. These cases can perhaps be reconciled on the basis that
Emanuel v Symon was concerned with the liability of the partners inter se while Blohn v Desser was concerned with the liability of a partner to an outside creditor. In other words, there was an element of holding out in Blohn v Desser which was absent from Emanuel v Symon. It is submitted that on this point Blohn v Desser cannot be supported. It was not followed in Vogel v RA Kohnstamm Ltd [1973] QB 133, and in Adams v Cape Industries Plc [1990] Ch 433, 465-466, Scott J said that he did not think it was right that an agreement to submit could be implied: but he accepted that an alleged consent which was not contractually enforceable could be treated as a representation by the defendant of a willingness to submit to the jurisdiction if acted upon, by the plaintiff, provided that the representation was intended to be acted upon or at least be one which the plaintiff reasonably believed was intended to be acted upon. But in that case no such representation could be inferred.
[36] The evidence falls well short of establishing such a representation, and it is not appropriate in the absence of examination of all the relevant facts in this case at trial to determine whether Ms Lee submitted to the court of Korea in this case by becoming a member of a partnership firm carrying on a development in that country,
a factual position similar to Emanuel v Symon.
11 Collins, above n 5 at [14-079]; Re Hughes and Sharp (1968) 70 DLR (2d) 298.
12 Collins, above n 5 at [14.079].
[37] It follows that it is not established that the court in Korea had jurisdiction in relation to the claim against Ms Lee.
[38] Given the findings I have made in this judgment it is unnecessary to determine Ms Lee’s contention that the quantum of the claim is overstated. I am mindful of the judgment in Kemp v Kemp:13 if a judgment of a foreign court is final and conclusive on the merits in the foreign country it is to be so regarded here, if it qualifies for recognition in this country under the principles to which (to the extent relevant) I have referred. In any event the evidence by Ms Lee went no further than explaining her reason for doubting that the quantum had been properly established in accordance with the loan documents. Quite correctly, in my view, neither counsel
sought to undertake a line by line examination of the arithmetic on how the sum for which judgment was entered in Korea was made up. For the purposes of this argument, that judgment speaks for itself.
Outcome
[39] The application for summary judgment is dismissed. At the request of both counsel costs are reserved. Memoranda not exceeding three pages in length may be
submitted within five working days; costs will then be determined on the papers.
J G Matthews
Associate Judge
13 Kemp v Kemp [1996] 2 NZLR 454 at 458 (HC).
Solicitors:
Kenton Chambers Lawyers, Auckland. Email: [email protected]
Counsel – Gregory J Thwaite. Email: [email protected]
Lane Neave, Christchurch. Email: [email protected]
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