SANG CHEOL WOO v. YOO SHIN CHOI(naturalized name CHARLES C. SPACKMAN)

HCA 1586/2016

[2022] HKCFI 1163

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1586 OF 2016

_________________

BETWEEN

	Sang Cheol Woo	Plaintiff
and
	Yoo Shin Choi (naturalized name Charles C Spackman)	Defendant

_________________

Before: Hon Ng J in Court

Dates of Hearing: 2-3, 7-8 and 28 September 2021

Date of Judgment: 6 May 2022

________________

JUDGMENT

________________

Introduction

1.  This is the trial of the Action in which the Plaintiff seeks to enforce a judgment entered by the Seoul High Court on 29 September 2011 (“Seoul High Court Judgment”) in his favour against the Defendant.

2.  The Korean proceedings were extraordinarily protracted, as can be seen from the next section.

3.  Putting it very simply, in the Korean proceedings, the Plaintiff claimed against multiple defendants, including the Defendant, for damages for his loss arising from an alleged securities fraud jointly committed on him by those defendants. The Plaintiff lost at first instance before the Seoul Central District Court.

4.  The Plaintiff then appealed to the Seoul High Court in relation to 5 defendants, including the Defendant. By the Seoul High Court Judgment, the Seoul High Court allowed the appeal and ordered the Defendant and the 4 other defendants to jointly pay the Plaintiff damages in the sum of KRW5,207,884,800 plus interest.[1]

5.  Only the Defendant and 2 others viz Littauer Technologies Co Ltd (“Littauer”) and Korea Technology Investment Corporation (later renamed as SBI Investment Co Ltd) (“KTIC”) appealed to the Supreme Court of Korea against the Seoul High Court Judgment. The remaining 2 defendants viz Mr Gap Soo Seo (“Seo”) and Silverline Investment Ltd (“Silverline”) did not and the Seoul High Court Judgment against them stands. Hence, by the Seoul High Court Judgment, the Defendant, Seo and Silverline are held jointly liable to the Plaintiff.

6.  On 31 October 2013, the Supreme Court of Korea handed down its judgment (“2013 Supreme Court Judgment”) dismissing the Defendant’s appeal but allowing the appeals of the 2 other defendants viz Littauer and KTIC.

7.  As can be seen from the events set out in the next section, the Korean proceedings did not stop after the handing down of the 2013 Supreme Court Judgment. In 2017, the Defendant lodged a retrial application with the Seoul High Court. The re-trial application was dismissed. In 2018, the Defendant’s appeal to the Korean Supreme Court was also dismissed.

8.  To put the Defendant’s resistance to the enforcement of the Seoul High Court Judgment in its proper perspective, procedurally, the Defendant has exhausted all avenue of appeal and application for retrial available to him under the Korea legal system in order to set aside the Seoul High Court Judgment. He failed to overturn the Seoul High Court Judgment before the Korean Supreme Court in 2013. He failed to obtained a re-trial in 2017 and he also failed to reverse the Seoul High Court’s dismissal of his retrial application before the Korean Supreme Court in 2018. The matter is clearly res judicata between the Plaintiff and the Defendant - the Seoul High Court Judgment is final and conclusive against him. This much is in fact accepted in the Defendant’s Retrial Complaint dated 26 April 2017 in support of his re-trial application.

The Facts

9.  The Plaintiff is a citizen and resident of the Republic of Korea.

10.  The Defendant is a US citizen and a permanent resident of the HKSAR.

11.  The parties have lodged with the court a statement of agreed facts. Based on that statement and other contemporaneous documents, Mr Lui has set out in section C of his Opening submissions the undisputed and indisputable background facts which this court finds helpful[2]. For ease of comprehension, a more succinct version of Section C is set out below.

Seoul Central District Court – dismissing the Plaintiff’s claims

12.  On 25 July 2003, the Plaintiff started proceedings in the Seoul Central District Court against 10 defendants including the Defendant as the 2nd defendant, and subsequently added an 11th defendant.

13.  On 4 March 2004, the Hong Kong High Court tried to, but could not, effect personal service of documents of the District Court proceedings on the Defendant in Hong Kong.

14.  On 20 July 2004, the Seoul Central District Court ordered the Plaintiff to effect service of documents of the District Court proceedings by way of “public notice” on the Defendant as a substitute for personal service. Pursuant to the order, the Plaintiff issued 19 public notices.

15.  On 28 July 2008, the Plaintiff effected personal service via the Hong Kong High Court on the Defendant in Hong Kong of documents of the Seoul Central District Court proceedings.

16.  The Defendant never entered an appearance or otherwise participated in the Seoul Central District Court proceedings.

17.  On 5 November 2008, the Seoul Central District Court dismissed the Plaintiff’s claims.

Seoul High Court – allowing the Plaintiff’s appeal

18.  On 2 December 2008, the Plaintiff lodged his appeal to the Seoul High Court[3] against the Seoul Central District Court judgment. The Plaintiff took steps to serve those proceedings on inter alia the Defendant[4].

19.  From 5 November 2009 to 21 December 2010, 4 hearings were held in the Seoul High Court without addressing the merits of the Plaintiff’s appeal in relation to the Defendant. The Seoul High Court ordered postponement of the hearing of the Plaintiff’s appeal in relation to the Defendant to allow revision of the Defendant’s address and execution of evidence procedure.

20.  In the appeal proceedings, the Plaintiff withdrew his claims against 6 other defendants leaving Littauer, the Defendant, KTIC, Seo and Silverline as the 1st, 2nd, 7th, 8th and 9th defendants remaining.

21.  At the hearing on 21 December 2010, which the Defendant did not attend, the Seoul High Court heard oral arguments regarding other remaining defendants but did not hear the Plaintiff’s submissions on his appeal concerning the Defendant. The Seoul High Court postponed the hearing of the Plaintiff’s arguments to allow the Defendant to appear and ordered the Plaintiff to re-apply for service abroad of the appeal papers on the Defendant.

22.  The Plaintiff applied for service abroad as directed by the Seoul High Court. The documents which the Plaintiff requested to be served on the Defendant through the Bailiff’s Assistant of the Hong Kong High Court were:

(1) Notice of Appeal dated 2 December 2008;

(2) Appellate Brief dated 28 January 2009;

(3) Preparatory Pleadings (Appellate Brief) dated 12 February 2009; and

(4) Notice of Hearing Date (for the postponed hearing to be held on 1 September 2011) and Announcement Date (for announcing ruling on 29 September 2011).

23.  On 21 April 2011, the Plaintiff served on the Defendant in Hong Kong the above appeal documents. The Defendant admitted in this Action that he had received the above appeal documents but decided not to participate in the Seoul High Court proceedings.

24.  The Plaintiff did not serve 2 other appeal documents on the Defendant. They are:

(1) Preparatory Pleading dated 30 October 2009 (“Oct 2009 Pleading”); and

(2) Preparatory Pleading dated 20 December 2010 (“Dec 2010 Pleading”).[5]

25.  On 1 September 2011, the appeal hearing was held before the Seoul High Court. The Defendant did not attend that hearing.

26.  As stated in the Record of Argument for the hearing on 1 September 2011, the Plaintiff’s attorney only raised arguments at the hearing on the points raised in the Appellate Brief dated 28 January 2009 and the Preparatory Pleadings (Appellate Brief) dated 12 February 2009. The Plaintiff’s attorney did not address or rely on the Oct 2009 Pleading or the Dec 2010 Pleading.

27.  On 29 September 2011, the Seoul High Court Judgment was handed down allowing the Plaintiff’s appeal in respect of his claims against the Defendant and 4 other defendants.

28.  The judgment against the Defendant and Silverline was based on deemed confession for the undisputed fact that they had not appeared to contest the Plaintiff’s appeal[6]. At page 8 of the Seoul High Court Judgment, the High Court explained:

“ B. Regarding Defendant Yoo Shin Choi and Defendant Silverline

Since the above Defendants did not appear in court and did not object to the Plaintiff’s argument even after receiving a lawful service not based on public notice, they shall be deemed to have made admissions thereof pursuant to Article 150, Paragraph 3 of the Civil Procedure Act.

Therefore, the above Defendants shall be liable for the above loss of KRW 5,207,884,800 … to Plaintiff jointly with the remaining Defendants.”

Supreme Court of Korea – dismissing the Defendant’s appeal but allowing 2 other defendants’ appeals

29.  3 defendants held liable by the Seoul High Court appealed. Seo and Silverline did not. The Seoul High Court Judgment against them stands.

30.  On 13 October 2011, KTIC lodged its appeal to the Supreme Court of Korea. On 28 October 2011, the Defendant and Littauer lodged their appeals to the Supreme Court of Korea. They instructed the same lawyers who represented Littauer in the Seoul High Court.

31.  On 2 January and 25 April 2012, the Defendant filed jointly with Littauer Reasons for Appeal and Supplementary Reasons for Appeal containing comprehensive submissions on the merits of their appeals without disputing the jurisdiction of the Korean Courts over the Defendant.

32.  According to the Reasons for Appeal at pages 41-46 and Supplementary Reasons for Appeal at pages 20-22, other than the complaint about injustice because the Defendant was said to be the only defendant held liable, all complaints of irregularity or unfairness pleaded in this Action attacking the “deemed confession” basis were raised before the Supreme Court of Korea.

33.  On 31 October 2013, the Supreme Court of Korea handed down judgment allowing the appeals of Littauer and KTIC but dismissing the Defendant’s appeal. The Supreme Court ordered the Plaintiff’s claims against Littauer and KTIC to be remanded to the Seoul High Court for reconsideration.[7]

34.  The Supreme Court of Korea rejected the Defendant’s contention that the Seoul High Court had erred in giving judgment against him on the basis of “deemed confession”. Pages 2 - 3 of the 2013 Supreme Court Judgment set out the Court’s reasoning as follows:

“1. Regarding Defendant Yoo Shin Choi’s Reasons for Appeal

Since we could learn the following facts through the records, Defendant Yoo Shin Choi shall be deemed to have made an admission of the above reasons for claim according to the Article 150 of the Civil Procedures Act: the first instance court dismissed Plaintiff’s claims after proceeding with the lawsuit by serving Defendant Yoo Shin Choi with the Complaint, Pleadings, Notice of Argument Dates, etc. by public notice; the original court served Defendant Yoo Shin Choi, who was residing in Hong Kong at that time, with the Notice of Appeal, Reasons for Appeal, and Pleadings dated 02/12/2009, and Notice of Argument Dates by service in a foreign country after Plaintiff appealed; at the 5th argument for the original trial[8], Plaintiff made an argument for the reasons for the claim through the Notice of Appeal, Reasons for Appeal, and Pleadings dated 02/12/2009, stating that Defendant Yoo Shin Choi raised the value of shares of Defendant Littauer Tech by promoting to the media about attracting a large amount of foreign capital to Defendant Littauer Technology Limited (hereinafter referred to as ‘Defendant Littauer Tech’) and AsiaNet Corp. Ltd., an Internet-related holding company located in Hong Kong [on 08/13/2004, the company name was changed to Silverline investments Ltd., which was a co-Defendant of the original trial. Hereinafter referred to as ‘AsiaNet’], Plaintiff believed in these statements and purchased the shares of Defendant Littauer Tech, and Plaintiff incurred a loss of KRW 5,207,884,800 due to Defendants dumping the shares of Defendant Littauer Tech purchased by Plaintiff through capital increase with consideration in this case and the share prices plummeted; and the above Defendant did not attend the arguments for the lower court trial and did not submit any pleadings. In addition, it cannot be deemed that the above Defendant contested the reasons for claim even though the trial proceeded by service by public notice on the above Defendant in the lower court trial and the claims against the above Defendant were dismissed.

There is no reason to continue reviewing this case as it is deemed that the above Defendant made an admission of the Plaintiff’s reasons for the claim considering the following: it is proper for the original court[9], from the same purpose, to accept Plaintiff’s claims against Defendant Yoo Shin Choi by presuming that Defendant Yoo Shin Choi made an admission of the Plaintiff’s reasons for the claim; it cannot be reasoned that [the original court] committed an error by not exercising a right to request explanations by misunderstanding the legal principle regarding deemed confession as the arguments in the Reasons for Appeal or did not complete all the necessary hearings; and the remaining arguments in the Reasons for Appeal by Defendant Yoo Shin Choi argues that there were errors in the fact-finding of the original court regarding fraudulent acts and damages.” (emphasis added)

The Defendant’s unsuccessful retrial application before the Seoul High Court and the Supreme Court of Korea

35.  On 26 April 2017, the Defendant made a retrial application with the Seoul High Court. According to the Retrial Complaint filed by the Defendant, he re-argued all the grounds that had been rejected by the Supreme Court of Korea in his failed appeal.

36.  On 21 December 2017, the Seoul High Court dismissed the Defendant’s retrial application. The Defendant then appealed to the Supreme Court of Korea against that decision.

37.  On 30 May 2018, the Supreme Court of Korea dismissed the Defendant’s appeal against the Seoul High Court’s dismissal of his retrial application.

Enforcement proceedings in Korea and other jurisdictions

38.  On 31 March 2016, the Seoul Central District Court entered a Writ of Execution ordering the enforcement of the Seoul High Court Judgment against the Defendant.

39.  On 15 June 2016, the Plaintiff commenced this Action in Hong Kong.

40.  On 11 September 2018, the Plaintiff obtained a final judgment against the Defendant in the Supreme Court of the State of New York in recognition of the Seoul High Court Judgment. The Defendant was legally represented and contested the proceedings.

The issues and the witnesses

41.  The Agreed issues[10] for this court’s adjudication are as follows.

42.  Whether, for any of the following reasons, if found to be factually substantiated on the evidence (independently or collectively), the Seoul High Court Judgment offends and/or its enforcement would offend Hong Kong notions of substantial justice and/or public policy:

(1) There was no observation of due process in proceedings before the Seoul High Court by reason of the non-service on the Defendant of the Plaintiff’s Preparatory Pleadings dated 30 October 2009 and 20 December 2010 ie the Oct 2009 and Dec 2010 Pleadings. (“Ground 1”)

(2) There was effective or de facto dismissal of the Plaintiff’s claims against the Defendant in the Korean proceedings by reason of the 2013 Supreme Court Judgment, and/or the 2014 Remand Judgment, and/or the alleged non-engagement of Article 760 of the Korean Civil Act (“CA760”)[11]. (“Ground 2”)

(3) There was an absolute bar on any effective review of the merits of the Defendant’s defence to the Plaintiff’s claims on liability and quantum by reason of the “deemed confession” rule[12] in the Korean proceedings, so that there was no effective means for the Defendant to set aside or appeal against the Seoul High Court Judgment. (“Ground 3”)

(4) There was no proper judicial assessment on the quantum of damages. (“Ground 4”)

43.  Essentially, Mr Lee for the Defendant urges this court to refuse enforcement of the Seoul High Court Judgment on the basis that by reason of the above 4 grounds, enforcement of the Seoul High Court Judgment would offend Hong Kong notions of substantial justice and/or public policy.

44.  At trial, the Plaintiff testified on his behalf. The Defendant declined to testify despite having filed a witness statement.

45.  Both parties also called 1 expert witness each on Korean law to opine on 3 questions:

(1) Question 1: For the purposes of determining the Plaintiff’s claims under CA760, was it necessary for all defendants to be held liable on the same factual basis in order for any defendant to be held liable?

(2) Question 2: Did the 2013 Supreme Court Judgment or the 2014 Remand Judgment constitute an effective or de facto dismissal of the Plaintiff’s claims against the Defendant in Korea?

(3) Question 3: Did the “deemed confession” rule as a matter of Korean Law amount to an absolute bar on an effective review, by the Supreme Court or any other Korean Court, of the merits of the Defendant’s defence to the Plaintiff’s claims in Korea?

46.  As Mr Lui submits in his Closing submissions which are not disputed by Mr Lee:

(1) On Question 1, the Defendant’s expert effectively conceded the position in his report (that all defendants sued must be held liable[13] in order for any of them to be held liable) when he said in cross-examination that CA760 applies where two or more persons are held liable for a joint tortious act.

(2) On Questions 2 and 3, the experts have no disagreement on the status and effect of the Korean Judgments and the application of the deemed confession rule.

Deliberation

47.  The applicable legal principles can be summarised as follows.

48.  The starting point is that, subject to a number of well-established exceptions, including those referred to at paragraph 51 below, a foreign judgment which is final and conclusive on the merits is conclusive as to any matter thereby adjudicated upon and cannot be impeached for any error either of fact or of law: Dicey, Morris & Collins, The Conflict of Laws (15^th ed) Vol 1 Rule 48 at para 14R-118.

49.  A foreign default judgment may be “final and conclusive” for the purpose of its enforcement in the local jurisdiction, provided that the judgment must be one given by a court of competent jurisdiction on the merits. The local courts draw no distinction between a judgment after trial and a judgment by default: Fabiano Hotels Ltd v Profitmax Holdings Inc & Ors [2017] 6 HKC 414 at [19] - [21], [25].

50.  A foreign judgment on the merits means the judgment pronounced by a foreign court of competent jurisdiction according to its established procedure in which the whole merits of the case were open to the parties, however much they may have failed to take advantage of them, or may have waived any of their rights, and cannot thereafter be disputed: Fabiano Hotels Ltd at [44].

51.  A foreign judgment which is “final and conclusive” will be enforced in Hong Kong, unless, for instance, the foreign proceedings offend against Hong Kong notions of substantial/natural justice or the enforcement of the foreign judgment would be contrary to Hong Kong notions of public policy: Dicey, Morris & Collins, The Conflict of Laws Rule 52 at para 14R-162, Rule 51 at para 14R-152; Pemberton v Hughes [1899] 1 Ch 781 at 790; Adams v Cape Industries Plc [1990] Ch 433, 559E-F; Fabiano Hotels Ltd at [17] - [18]. The public policy exception is a narrow one that must be necessarily confined in line with the comity of nations principle - simply because a case could have been decided differently in Hong Kong is not a weighty enough factor to invoke it: Reeves v One World Challenge LLC [2006] 2 NZLR 184 at [56].

52.  A foreign judgment which is arguably or even manifestly wrong on the merits is not impeachable on the ground that it would offend Hong Kong concepts of substantial justice. Further, a mere procedural irregularity would not offend Hong Kong concepts of substantial justice: Dicey, Morris & Collins, The Conflict of Laws at paras 14-163 & 14-165; Adams v Cape Industries Plc at 567H; Nintendo of America Inc v Bung Enterprises Ltd [2000] 2 HKC 629 at 637A-B.

53.  In his written Closing, Mr Lui gives an “executive summary” of his principal submissions which would serve to defeat the Defendant’s opposition to the Plaintiff’s claim herein. Suffice it for this court to highlight the following two which are not disputed.

54.  First, the grounds raised by the Defendant to resist enforcement essentially seek to re-argue the case already finally and conclusively decided in Korea, in (i) complaining about the alleged procedural irregularity in the Korean proceedings concerning the non-service of the Oct 2009 and Dec 2010 Pleadings, (ii) raising substantive issues of Korean law ie the alleged non-applicability of CA760, or (iii) attacking the fairness of the Korean legal system featuring the “deemed confession” rule. This is not disputed by Mr Lee. These grounds in effect invite this court to reconsider the merits of the Seoul High Court Judgment, which this court should decline to do.

55.  Second, those grounds raised by the Defendant to resist enforcement of the Seoul High Court Judgment were already raised and rejected in his first appeal to the Supreme Court and subsequently in his retrial application to the Seoul High Court and his second appeal therefrom again to the Supreme Court of Korea. This is also not disputed by Mr Lee.

56.  With these preliminary submissions in mind, this court turns specifically to the 4 Grounds relied upon by the Defendant. In this court’s view, none of the grounds are meritorious, either on the facts or as a matter of law, and they do not support the contention that enforcement of the Seoul High Court Judgment would offend Hong Kong notions of substantial justice or public policy.

57.  Regarding Ground 1, Mr Lee emphasises in his Closing submissions that (i) the Plaintiff has indeed filed the Oct 2009 and Dec 2010 Pleadings in support of his appeal to the Seoul High Court but has not served them on the Defendant, and (ii) the Oct 2009 and Dec 2010 Pleadings contained direct reference to the Defendant by name and passages on his liability. Mr Lee further submits the arguments that the Plaintiff raised in the Oct 2009 and Dec 2010 Pleadings were those that the Seoul High Court found the Defendant had deemed to have accepted under the “deemed confession” rule.

58.  The first answer to Ground 1 is that the undisputed evidence shows the Plaintiff had not been directed by the Seoul High Court to serve the Oct 2009 and Dec 2010 Pleadings on the Defendant. Moreover, the Plaintiff had not relied on the 2 pleadings against the Defendant before the Seoul High Court. This is confirmed by the Plaintiff’s own testimony as well as the Korean Court documents which are undisputed.

(1) First, the Record of Arguments for the hearing on 1 September 2011 shows that the list of documents relied upon by the Plaintiff’s attorney in prosecuting the Plaintiff’s appeal in relation to the Defendant did not include those two pleadings. The reason given by the Plaintiff is that those 2 pleadings only pertained to the Plaintiff’s appeal against the other defendants.

(2) Second, in the Korean 2013 Supreme Court Judgment quoted above, the Supreme Court, after reviewing the records, also confirmed that the Plaintiff’s attorney did not raise any argument before the Seoul High Court in reliance on the Oct 2009 and Dec 2010 Pleadings. Obviously, the Korean Supreme Court did not see anything irregular in the non-service of these 2 documents on the Defendant as there was no mention of them when the Supreme Court eventually dismissed the Defendant’s appeal.

59.  As Mr Lui submits, if the Plaintiff did not rely on those 2 pleadings in his appeal in relation to the Defendant before the Seoul High Court, it is irrelevant whether the Defendant was referred to somewhere in them as one of the co-defendants.

60.  What Mr Lee appears to contend is that, notwithstanding the Plaintiff’s non-reliance of the 2 pleadings, the Seoul High Court nevertheless had in fact relied upon them in finding the Defendant liable to the Plaintiff. This is a question of fact.

61.  The answer to that contention is that it is simply not substantiated with evidence eg from a Korean attorney who appeared in and was familiar with the proceedings before the Seoul High Court and was therefore in a position to testify whether the Seoul High Court had indeed relied upon them in finding against the Defendant. Instead, what Mr Lee invites this court to do in Closing is to read the entirety of the Seoul High Court Judgment, including those parts specifically concerning the other defendants, compare it with the contents of what had been served on the Defendant, and draw the inference that the Seoul High Court must have also relied on the contents of the 2 pleadings against his client.

62.  In essence, the Defendant’s contention is premised on Mr Lee’s own conjecture of what the Seoul High Court had done with the 2 pleadings and invites this court to carry out the same exercise and to second guess the Seoul High Court’s thinking.

63.  Mr Lui submits and this court agrees that it is unsafe and unsatisfactory for this court to decide, based simply on reading a translated copy of the judgment, whether the Seoul High Court had indeed relied on the Oct 2009 and Dec 2010 Pleadings in finding the Defendant liable. As a matter of inherent probabilities, if it is undisputed that the Plaintiff did not rely on the 2 pleadings in his appeal against the Defendant, how probable would it be for the Seoul High Court to rely on them in finding against the Defendant? For these reasons, this court is not prepared to make a finding of fact that the Seoul High Court had relied on the Oct 2009 and Dec 2010 Pleadings in finding the Defendant liable.

64.  For completeness, Mr Lui submits that the Defendant had already complained once in his Retrial Complaint that the Seoul High Court had not afforded him an opportunity to rebut the Oct 2009 and Dec 2010 Pleadings in his retrial application before the Seoul High Court in 2017. The Seoul High Court saw no merits in the complaint and dismissed the retrial application.

65.  For these reasons, Ground 1 is rejected.

66.  Regarding Ground 2, in essence, Mr Lee submits that, judging from the contents of the 2013 Supreme Court Judgment and the 2014 Remand Judgment, both the Supreme Court and the Seoul High Court have made findings that were either inconsistent with or have rejected all the Plaintiff’s factual allegations that the Defendant was “deemed” to have confessed to in the Seoul High Court Judgment. In his Closing submissions and in particular Annex II, Mr Lee has gone to great length to select bits and pieces from the 2013 Supreme Court Judgment and the 2014 Remand Judgment, purporting to demonstrate that the Korean Supreme Court (and the Seoul High Court) have effectively or de facto dismissed the Plaintiff’s claim against the Defendant. In other words, he is submitting that the Seoul High Court Judgment has effectively been overturned so far as concerns the Defendant.

67.  As this court sees it, the laborious exercise carried out by Mr Lee is futile and unhelpful and that Ground 2 is a complete non-point and should be rejected.

68.  First, the notion of effective or de facto dismissal of the Plaintiff’s claim against the Defendant is a curious one. Either the Korean Supreme Court had allowed the Defendant’s appeal against the Seoul High Court Judgment or it had not. On the evidence, it is indisputable that the Korean Supreme Court had not and that was it, since the Korean Supreme Court is a Court of final appeal in Korea. As Mr Lui notes in his Closing submissions, there is no or no satisfactory evidence, by way of expert opinion, that there is such a legally recognised concept as a matter of Korean law. The Defendant’s own expert has not testified, with supporting materials, that there is such a concept under Korean law - he simply asserts in the Joint Memorandum that because the 2013 Supreme Court Judgment’s and the 2014 Remand Judgment’s findings of fact contradict those in the Seoul High Court Judgment, those Judgments “therefore constitute an effective and de facto dismissal of facts and allegations that formed the basis of the Plaintiff’s claim against the Defendant in this case.” In this court’s view, one would require much more than a bare assertion in order to persuade this court to accept such an odd notion. The testimony of the Defendant’s expert in this regard must be rejected.

69.  Mr Lui submits and this court agrees that it is not possible to reconcile the Defendant’s contention of effective or de facto dismissal of the Plaintiff’s claim with the fact that (i) in the 2013 Supreme Court Judgment, the Supreme Court did dismiss the Defendant’s appeal and upheld the Seoul High Court Judgment against him, or the fact that (ii) in 2017 and 2018, both the Seoul High Court and the Korean Supreme Court had decided against the Defendant in his retrial application and appeal. If the Korean Supreme Court had effectively or de facto dismissed the Plaintiff’s claim against the Defendant in 2013, one would have expected the Korean Supreme Court to have said so in its 2018 Judgment, instead of simply dismissing the Defendant’s retrial appeal.

70.  Second, the observations and findings that the Korean Supreme Court and the Seoul High Court have made only had effect on the other 2 defendants viz Littauer and KTIC. The Supreme Court upheld their appeals and remanded the Plaintiff’s claims against them to the High Court for re-trial. In the subsequent remand proceedings before the Seoul High Court, they both succeeded in having the Plaintiff’s claims against them dismissed. The Defendant’s position was wholly unaffected by the Korean Supreme Court who dismissed his appeal. Further, the Defendant was not even a party to the remand proceedings. It is therefore difficult to see why the observations and findings of the Korean Supreme Court and the Seoul High Court were intended to apply also to the Defendant’s case. There is no answer to this in Mr Lee’s Closing submissions.

71.  Third, it is trite law that a foreign judgment, even if it is manifestly wrong on the merits, is not impeachable on the ground that it would offend the Hong Kong notions of substantial justice: Dicey, Morris & Collins, The Conflict of Laws at para 14-163; Adams v Cape Industries Plc at 569E; Nintendo of America Inc at 637A-B. But what the Defendant is seeking to do here is exactly that: to impeach the Seoul High Court Judgment on the ground that it is clearly wrong on the merits.

72.  The Defendant also contends that CA760 was not engaged in light of those findings made in the 2013 Supreme Court Judgment and the 2014 Remand Judgment in favour of Littauer and KTIC. But this argument becomes academic given the concession of the Defendant’s expert in Court that CA760 was applicable so long as two or more persons (instead of all defendants) were held liable for a joint tortious act. In the present case, by the Seoul High Court Judgment, the Defendant, Seo and Silverline were held jointly liable to the Plaintiff which would suffice for the application of CA760. Further, the contention CA760 was not engaged is just another way of arguing that the Seoul High Court Judgment is wrong on the merits and should not be enforced in Hong Kong.

73.  Regarding Ground 3, the Defendant’s submission is that both parties’ experts agree that if the “deemed confession” rule is applied in a court of second instance ie the Seoul High Court, the Korean Supreme Court cannot review the facts so found by the Seoul High Court. The experts further agree that the Korean Supreme Court has limited jurisdiction and can only interfere with a decision of the Court below if the lower Court had erred on a question of law. The Defendant’s case is that the application of these Korean legal principles means that there was an absolute bar on any effective review of the merits of his defence in the Korean proceedings and hence no remedy was available to him.

74.  Taking at its highest, the “deemed confession” rule only prevents the Korean Supreme Court from reviewing the facts so found by the Seoul High Court by the application of that rule.[14] It is a complete non sequitur to suggest that there was an absolute bar on any effective review of the merits of his defence at all. To the extent that the Defendant’s expert asserts in the Joint Memorandum that there was no real remedy against the “deemed confession” rule on appeal to the Supreme Court, that assertion must be rejected as being groundless. This is because there is no suggestion by the experts that the application of the rule itself is unchallengeable as a matter of law. As Mr Lui puts it in his oral closing, of course the Supreme Court can review whether the lower court’s application of the rule is legally correct or not ie whether the lower Court had erred on a question of law.

75.  The fact is that the Defendant had taken all available steps within the Korean legal system to try to overturn the Seoul High Court Judgment by way of appeal and then by way of a retrial application. Just because the Defendant had lost all the way does not mean there was no effective review of the merits of his defence. It is not uncommon for final appellate courts to have limited powers to review and overturn the findings of fact by the lower courts, as is the case with eg our CFA. In this court’s view, there is nothing inherently unfair or objectionable about such a limitation on the powers of final appellate courts. If the Defendant failed in the Korean Supreme Court because of the “deemed confession” rule, he has no cause for complaint in the Hong Kong Courts as that is just a feature within the Korean legal system. In line with the comity of nations principle, it is inappropriate for this court to embark upon any qualitative assessment of the justice of the Korean legal system and its laws, whether in the name of Hong Kong’s notions of substantial justice and/or public policy.

76.  For these reasons, Ground 3 is also rejected.

77.  Lastly, Ground 4.

78.  In his Opening submissions, Mr Lee has succinctly summarised Ground 4 as follows:

“70. Both the Supreme Court Judgment and the Remand Judgment have clearly rejected P’s claims in Korea and found that in any event there was no causation between any of the defendants’ alleged acts and any loss that P may have suffered.

71. D’s case therefore is that there was no proper judicial assessment of damages and that the award made under the Seoul High Court Judgment was arbitrary, irrational and could not in any way be said to be related to P’s true entitlement …”

79.  In his Closing submissions, Mr Lee elaborated on Ground 4 by quoting a few truncated passages in the 2013 Supreme Court Judgment and the 2014 Remand Judgment in support of the proposition that the 2013 Supreme Court Judgment and the 2014 Remand Judgment have rejected the Plaintiff’s claims in substance and found that there was no causation between any of the Defendant’s alleged acts and any alleged damage that the Plaintiff may have suffered.

80.  It seems to this court that in substance Ground 4 is just a variant of Ground 2 in that Mr Lee is seeking to argue that the Korean Supreme Court[15] has dismissed the Plaintiff’s claim against the Defendant in terms of liability (Ground 2) as well as quantum (Ground 4) and therefore the Seoul High Court Judgment has effectively been overruled even though it has not. This is made abundantly clear by Mr Lee’s assertion at para 49 of his Closing that “Even the parties’ experts agree that the 2013 Supreme Court Judgment and 2014 Remand Judgment found that there was no jointly committed tortious act and no causation between any of the Defendant’s alleged acts and the Plaintiff’s alleged damage” citing the Joint Memorandum at paragraph 11, which deals with the alleged effective or de facto dismissal of the Plaintiff’s claims against the Defendant ie Ground 2.

81.  But as this court notes earlier, the observations and findings made by the Korean Supreme Court and the Seoul High Court only had effect on the case of the other 2 defendants viz Littauer and KTIC. The Defendant’s position was wholly unaffected by the 2013 Supreme Court Judgment since the Korean Supreme Court actually dismissed his appeal, notwithstanding the various passages quoted by Mr Lee. As for the 2014 Remand Judgment, the Defendant was not even a party to it and hence his position could not have been improved by whatever was stated in it. Any assertion by the Defendant to the contrary is simply what it is - a bare assertion.

82.  For the same reasons that this court rejects Ground 2, Ground 4 must also be rejected.

83.  Further, in this court’s view, dressing up Ground 4 as a case of “No Judicial Assessment of Damages” is misleading in that it conveys the inaccurate impression that the learned Judges in the Seoul High Court Judgment had arbitrarily came up with the figure of KRW5,207,884,800 as the quantum of the Defendant’s liability towards the Plaintiff.

84.  As pointed out in paragraph 54 of the Plaintiff’s Closing submissions, the Seoul High Court did conduct its assessment and analysis on the question of damages, accepting the evidence that the Plaintiff acquired shares of Littauer for KRW5,790,744,000 and subsequently sold them for a meagre KRW582,859,200, and held at p 24/26 of the Seoul High Court Judgment that:

“It shall be reasonable to conclude that the scope of loss is KRW 5,207,884,800, which is the amount deducting the sales price of Defendant Littauer Tech shares possessed by Plaintiff, KRW 582,859,200, from the stock purchase price of KRW 5,790,744,000 borrowed by Plaintiff in order to purchase the shares of Defendant Littauer Tech”.

Disposition and costs order

85.  In the premises, this court finds in favour of the Plaintiff. There shall be judgment in favour of the Plaintiff for:

(1) A declaration that the Plaintiff is entitled to enforce the Seoul High Court Judgment against the Defendant.

(2) The sum of KRW5,207,884,800 together with interest thereon calculated at 5% per annum from 5 June 2001 to 29 September 2011 and at 20% per annum thereafter until payment.

86.  The parties having agreed that costs should follow the event, there shall be an order that costs of the Action be to the Plaintiff to be taxed if not agreed and paid by the Defendant forthwith, certificate for counsel.

	(Peter Ng)
	Judge of the Court of First Instance
	High Court

Mr Mike Lui, instructed by Kobre & Kim, for the Plaintiff

Mr Jun Lee, instructed by John C H Suen & Co, for the Defendant

HCA 1586/2016

[2020] HKCFI 2706

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1586 OF 2016

_____________

BETWEEN
	SANG CHEOL WOO Plaintiff
and
	YOO SHIN CHOI (naturalized name CHARLES C. SPACKMAN)	Defendant
and
	RICHARD LEE	1st Respondent
	AZUR INVESTISSEMENT LTD	2nd Respondent
	TRINITY CAPITAL ADVISORS LTD	3rd Respondent

_____________

Before:  Deputy High Court Judge Le Pichon in Chambers

Date of Hearing: 15 September 2020

Date of Decision: 20 October 2020

____________________

DECISION

____________________

I. INTRODUCTION

1.  There are 3 summonses for determination:

(1)  The summons dated 4 June 2019 (“the continuation summons”) for continuation of an ex parte worldwide Mareva injunction obtained by Sang Cheol Woo (“the Plaintiff”) dated 3 June 2019 (“the HK Injunction”) against Yoo Shin Choi (naturalized name Charles C Spackman) (“the Defendant”) and the 3 respondents to the summons, namely Richard Lee (“Lee”), Azur Investissement Limited (“Azur”) and Trinity Capital Advisors Limited (“Trinity”) (collectively “the Respondents”);

(2)  The summons of the Defendant (“the setting aside summons”) dated 11 June 2019 to set aside the HK Injunction; and

(3)  The Plaintiff’s summons dated 18 June 2019 to lift the stay of the Defendant’s disclosure obligations under the HK Injunction (“the lifting of stay summons”).

At the conclusion hearing, the decision was reserved which I now give.

2.  The Plaintiff obtained a judgment against the Defendant in Korea in 2011. Since then, the Plaintiff has been seeking to enforce the Korean Judgment. The HK Injunction prohibits the diminution of assets up to the value of the judgment sum, namely, KRW15,886,902,275.51 (“the injunction sum”) equivalent to approximately US$13.66 million. The Korean Judgment remains unsatisfied to this day.

II. BACKGROUND

A. The KoreanJudgment

3.  In July 2003, the Plaintiff unsuccessfully brought an action against the Defendant and 9 others[1] in the Seoul Central District Court alleging that they had induced him to acquire certain shares.

4.  In 2011, the Seoul High Court allowed the Plaintiff’s appeal and entered judgment against the Defendant and the other defendants jointly and severally. As the Defendant had been personally served with both sets of proceedings[2] in Hong Kong and had chosen not to appear or defend the proceedings in Korea, the Seoul High Court entered judgment against the Defendant and the others for KRW5,207,884,800 (or approximately US$4.5 million) with interest.

5.  In 2013, the Supreme Court of Korea affirmed the judgment against the Defendant based on his non-appearance despite having been served with notice of the Korean proceedings[3]. It ordered a retrial in respect of only 2 of the remaining defendants (whose retrial was successful) and not of the others.

6.  In April 2017, the Defendant sought to reopen the Korean Judgment in the Seoul High Court.

7.  The Defendant’s application was dismissed by the Seoul High Court[4] in December 2017 which decision was affirmed on 30 May 2018 by the Supreme Court of Korea.

8.  By 30 May 2018, the Defendant had exhausted all avenues open to him to challenge the Korean Judgment[5] which is final and conclusive.

B.Enforcement proceedings

9.  After the Korean Supreme Court’s dismissal of the Defendant’s appeal in 2013, the Plaintiff sought to enforce the Korean Judgment in jurisdictions where the Defendant’s assets are suspected to be present.

(1) Proceedings in Hong Kong

10.  On 15 June 2016, the Plaintiff commenced these proceedings in Hong Kong to recognise the Korean Judgment. The Hong Kong proceedings were set down for trial earlier this year but had to be rescheduled. The new trial date is 2 September 2021.

(2) US proceedings

11.  The Plaintiff commenced proceedings in the State of New York on 23 May 2017 for summary judgment in recognition of the Korean Judgment which the Defendant opposed.

12.  On 10 July 2018, the Supreme Court of the State of New York entered judgment in favour of the Plaintiff in the sum of approximately US$13.8 million.

(3) BVI proceedings

13.  The Plaintiff commenced proceedings to recognise and enforce the Korean Judgment in the BVI on 18 April 2019[6].

14.  On 4 June 2020, the BVI Commercial Court entered judgment against the Defendant in recognition of the Korean Judgment.

(4) Singapore proceedings

15.  On 25 February 2019, the Plaintiff commenced an action in Singapore to recognise the Korean Judgment. The Defendant appeared in the Singapore proceedings to challenge jurisdiction but was not successful.

C. Mareva applications

16.  As will become apparent, circumstances arose that prompted the Plaintiff to apply for Mareva relief in the jurisdictions described below.

(1) BVI Injunctions

17.  With a view to enforcing the Korean Judgment, the Plaintiff investigated a Hong Kong company called Spackman Media Group Limited (“SMG”). His investigations revealed sales of SMG’s shares to BVI companies, namely, GD Enterprises Holdings Limited (“GD”),  Azur Investissement Ltd (“Azur”) and DVG Limited (“DVG”) at a low cost, with DVG transferring a portion of the SMG shares to another BVI company, Trinity Capital Advisors Ltd (“Trinity”), also at a low cost. GD, Azur, DVG and Trinity (collectively “the BVI Entities”) resold the SMG shares to Spackman Entertainment Group Limited (“SEGL”), a Singapore listed company, several months later at 23 times their purchase price.

18.  The pattern of disposition of shares in SMG by the BVI Entities between 18 August 2017 and September 2018[7] and at the share prices involved (mostly at US$1 or $3 with two transfers at HK$1[8]) were suspicious and prima facie inexplicable. 

19.  Norwich Pharmacal discovery was obtained in the BVI in early February 2019 in aid of enforcement of the Korean Judgment.

20.  The Plaintiff learnt that Trinity was owned (on paper) by the Defendant’s wife who is a housewife and unemployed and that GD, Azur and DVG were owned (on paper) by the Defendant’s brother-in-law Jae Seung Kim (“Kim”) both of whom were believed to be nominees for the Defendant.

21.  The grounds for the Plaintiff’s belief that the BVI Entities appear in the supporting affirmations presented to the BVI court, the substance of which is also to be found in Kang Jian’s affirmation dated 31 May 2019 in support of the application for the HK Injunction (“Kang 1^st”) and considered in a later part of this Decision.

22.  On 11 April 2019, the BVI court granted the Plaintiff worldwide freezing injunctions against the BVI Entities (“the BVI Injunctions”) restraining each of them from causing any change in its share register and restraining any dealings with its assets worldwide up to the value of US$13.8 million.  

23.  Although the BVI Entities were ordered to disclose their worldwide assets by 18 April 2019, none of the entities has complied with the orders.  The BVI Entities are challenging the BVI Injunctions and that hearing is pending in the BVI.

(2) Singapore Injunctions (“SG Injunctions”)

24.  The Defendant was Chairman of SEGL from June 2014 to December 2017 and also its CEO for most of that period.

25.  The Plaintiff’s investigations revealed that DVG, Azur and Trinity owned shares in SEGL as a result of share swaps of SMG shares for SEGL shares. Azur was one of the top 20 shareholders of SEGL and Trinity and DVG were also substantial shareholders.

26.  That meant that the primary assets of the BVI Entities in the form of SEGL shares were located in Singapore. As the directors of the BVI Entities were not amenable to the jurisdiction of the Singapore courts and the assets of the BVI Entities were likely in Singapore, the Plaintiff applied for Mareva relief in Singapore.

27.  On 23 April 2019, the Plaintiff obtained a worldwide Mareva injunction against the Defendant and Lee and domestic Mareva injunctions against each of the BVI Entities (collectively, “the SG Injunctions”).

28.  In respect of the SG Injunctions against the Defendant and Lee, the Plaintiff gave, inter alia, the following undertaking (“the SG undertaking[9]“):

“The plaintiff shall not without the leave of the Court seek to enforce this order in any country outside Singapore or seek an order of a similar nature in any jurisdiction outside Singapore against the Defendant.”

(3) The HK Injunction

29.  On a further inspection[10] of SMG’s register of members which the Plaintiff’s solicitors were only able to carry out on 27 May 2019[11], it emerged that on 24 April 2019[12] Azur[13] and Trinity[14] sold over 3.175 million and 2.5 million SMG shares respectively to Plutoray Pte Ltd (“Plutoray”) a Singapore company for HK$1 per share.

30.  Those disposals breached the BVI Injunctions (and the spirit of the SG Injunctions) which restrained transfer of their worldwide assets.

31.  The dispositions by Azur and Trinity of their SMG shares to Plutoray occurred on the day the SG Injunctions[15] were served but after the application for the SG Injunctions was made and granted.

32.  Since SMG is a Hong Kong company, the immediately effective way to stop further transfers of SMG shares would be to seek injunctive relief in Hong Kong. It was in those circumstances that the Plaintiff made its ex parte application on 31 May 2019 to restrain the Defendant and the Respondents from disposing of assets.

D.Further injunctions

(1) The SG Funvest Injunction

33.  On 24 September 2019, Plutoray transferred all its shares in SMG[16] to Republic Park Productions Limited (“Republic Park”) a Cayman Islands company. On the same day other Singapore companies by the name of Starlight and Vaara also transferred SMG shares acquired from GD to Republic Park in August 2017 at HK$1 per share.

34.  On 21 November 2019, a total of 6,353,968 SMG shares were transferred from Republic Park to Funvest Global Pte Ltd (“Funvest”), its wholly-owned subsidiary. As illustrated in a flowchart[17] provided to the court, all those SMG shares can be traced to GD and DVG.

35.  On 28 November 2019, ESA agreed with Funvest to purchase all the SMG shares held by Funvest at the time for US$14 million.

36.  On 27 May 2020, the Singapore Court granted injunctions against Funvest to restrain the sale of SMG shares or to preserve the proceeds of sale (“the SG Funvest Injunction”).

(2) The HK Funvest Injunction

37.  On 16 June 2020, the Plaintiff obtained an injunction in Hong Kong against Funvest and SMG prohibiting any change in SMG’s register of members as regards Funvest’s holding of shares in SMG  (“the HK Funvest Injunction[18]“).

38.  Shortly thereafter, Funvest filed evidence that it had paid US$10 million received from its sale to ESA to Plutoray, Starlight and Vaara.

(3) SG Plutoray, Vaara and Starlight Injunction

39.  On 14 August 2020 the Plaintiff obtained an injunction in Singapore against the recipients of the ESA sale proceeds.

40.  A few days later, on 19 August 2020, Funvest changed its sworn evidence and asserted that it had spent the US$10 million on loans, investments and other expenses.

E. Post HK Injunction events

41.  On 11 June 2019, the Defendant’s solicitors raised with the Plaintiff the latter’s alleged breach of the SG Undertaking.

42.  On 14 June 2019, (i) the Plaintiff confirmed that the SG Undertaking was not brought to the ex parte Judge’s attention of 14 June 2019 and on the same day applied for a declaration that the obtaining of the HK Injunction was not in breach of the SG Undertaking, and alternatively for retrospective leave (“the SG Declaration Application”); and (ii) DHCJ MK Liu stayed[19] the Defendant’s disclosure obligations under the HK Injunction.

43.  On 30 March 2020, the Singapore Court allowed the Defendant’s application to set aside the SG Injunction against him and at the same time dismissed the Plaintiff’s SG Declaration Application.

44.  On 24 July 2020, the SG Court dismissed the Plaintiff’s application for leave to appeal against the setting aside of the SG Injunction and dismissal of the SG Declaration Application.

45.  Meanwhile, on 7 July 2020, as a result of the Defendant’s failure/refusal to comply with the New York subpoena to disclose assets, the New York Court held the Defendant in contempt of court. 

III.THE DEFENDANT’S SETTING ASIDE SUMMONS

46.  Mr Dennis Kwok counsel for the Defendant submitted that the HK Injunction should not be continued but set aside. The issues which arise are: material non-disclosure; abuse of process; whether Chabra jurisdiction was engaged; and risk of dissipation.

47.  Further, if the HK Injunction were to be set aside against the Defendant, the Court was invited to set it aside against the Respondents (who did not appear and whom Mr Kwok did not represent) on the basis that the injunctions against them are “parasitic” to the HK Injunction against the Defendant.

A. Material non-disclosure

(1) Applicable principles

48.  It is common ground that when the Plaintiff applied for the HK Injunction, the SG Undertaking was not drawn to the Court’s attention.

49.  Materiality is decided by the Court and not by the applicant. The test of materiality is whether the facts are relevant to the exercise of the discretion, regardless of whether they are relevant to the merits of the claim, and irrespective of whether the matters, if disclosed, would have caused the Court to refuse to grant the ex parte application. If established, the practice of the Court is to discharge the order without going into the merits : Velatel Global Communications Inc v Chinacomm Limited, unreported, HCA 1978/2011, 26 October 2012 at §§27 and 31.

50.  The key point made by the Defendant in regard to nondisclosure and in this application concerns an alleged breach of the SG Undertaking to which I now turn.

(2) The SG Undertaking

51.  The Defendant submitted that the Plaintiff’s failure to refer to the SG Undertaking amounted to material non-disclosure because it was a fact relevant to the exercise of the Court’s discretion.

52.  Pausing here, it needs to be highlighted that no such undertaking was given in respect of the SG Injunctions against the BVI Entities.  

53.  Mr Mike Lui, counsel for the Plaintiff, submitted that there was no material non-disclosure because the SG Undertaking was not engaged, citing Bankas Snoras AB v Antonov& Ors [2018] 1 CLC 834 a case where the court had to consider the meaning and scope of a similar undertaking.

54.  In that case, the judge identified twin concerns that underpinned the origin of the undertaking: (1) avoiding the oppression of the defendant by the institution of multiple proceedings for enforcement of the English freezing order in several countries at the expense of the ability of the defendant to defend the English proceedings; and (2) preventing the enforcement of the freezing order in a foreign jurisdiction having a more far-reaching effect in that jurisdiction than in England: at §44.

55.  Looking at the wording of the undertaking, the judge considered (at §52) that

“there appears to be a potential ambiguity in the Undertaking in that the phrase ‘order of a similar nature’ could refer to an order which is similar in nature or effect to the Freezing Order (the wide interpretation) or to an order which is similar to an order enforcing the Freezing Order (the narrower interpretation)”.

56.  After reviewing the judgment in Re an LMAA Arbitration E, F, G v M (F v M) [2013] EWHC 895 (Comm), the judge concluded (at §53) that it is the narrower interpretation that is the correct construction and, apart from the twin concerns noted above, made the following additional observations:

“ …

(3) The English court would wish to police the circumstances in which the applicant sought to use the English Freezing Order as a means to obtain further or greater or oppressive relief abroad. It is this concern which gave rise to the Undertaking.

(4) The Undertaking is not concerned with the situation where the order sought abroad does not amount to the direct or effective enforcement of the Freezing Order. The Undertaking is not concerned with the situation where the foreign court in making the relevant order is exercising its own independent jurisdiction, irrespective of the English Freezing Order, even if the existence of the Freezing Order granted in England is referred to in support of the application abroad for that order and even if the order of the foreign court is of a similar nature or effect as the English Freezing Order. Therefore, if the jurisdiction of the foreign court to grant the order does not depend upon or derive from the making by the English court of the Freezing Order for the purposes of the direct or effective enforcement of the Freezing Order, but arises from a different and independent right or jurisdiction, the Undertaking is not engaged.”

57.  I find the reasoning in §53(4) persuasive and I respectfully agree that the narrower construction of the undertaking is the correct construction. In my view, the HK Injunction was not an enforcement of the SG Injunctions. Rather, it was an exercise by the HK Court of its own independent jurisdiction based on the circumstances then prevailing on the evidence before it. That jurisdiction did not depend on the SG Injunctions. Accordingly, there was no breach of the SG Undertaking.

58.  Mr Kwok submitted that whether or not there had been a breach of the SG Undertaking is a matter for the Singapore Court. He relied on the fact that in the Singapore proceedings, the judge chose to dismiss the SG Declaration Application rather than make no order on the summons which was open to him given the setting aside of the SG Injunction.

59.  While the Snoras case had evidently been cited to the Singapore Court at some point during the hearing which obviously lasted more than one day, the transcript exhibited was limited to the submissions of the parties on the morning of 30 March 2020 to address the issue of the remand judgment of the Korean Court[20] and there were no submissions made on Snoras on that occasion.

60.  At the conclusion of the hearing, the Court set aside the worldwide Mareva injunction not only against the Defendant but also against Lee and the BVI Entities although the latter were not represented. No reasons (written or oral) appear to have been given. After refusing the Plaintiff’s application for an Erinford[21] order the Singapore Court dismissed the SG Declaration Application. Again, no reasons (written or oral) were given.

61.  The Plaintiff’s application for the HK Injunction was made 9 months before the dismissal of the SG Declaration Application. In my view, whether the SG Undertaking was a material factor to be disclosed in the Plaintiff’s application would be a matter for the Hong Kong Court which was asked to exercise its discretion. 

62.  While I take the view that there was no breach of the SG Undertaking for the reasons set out above, in May 2019, there was no Hong Kong authority on the point. It is thus arguable that Snoras and the absence of any Hong Kong authority should have been drawn to the Court’s attention.

63.  Whether, for that reason, the HK Injunction should be set aside will be addressed at §§111-113 below.

64.  As to the Defendant’s submission that the SG Injunctions against the non-appearing Respondents should also be set aside because they are “parasitic”, no question of any breach of undertaking arises in respect of the SG Injunctions against Azur and Trinity as no similar undertakings were given.   

B. Abuse of process

(1) Multi-jurisdictional proceedings

65.  The Defendant submitted that suing the same party in two different jurisdictions in respect of the same claim might well be oppressive citing Eastgate Partners Limited v Suthi Tejavibulya, CACV 289/2005, unreported, at §11. Here, it was said that the Plaintiff sued the Defendant in 4 jurisdictions over the same claim.

66.  Having obtained the Korean Judgment, since the Defendant failed/refused to satisfy it in any way, the Plaintiff sought to enforce the Korean Judgment in jurisdictions where the Plaintiff believed the Defendant to have assets, namely Hong Kong (2016), the US (2017), the BVI (April 2019) and Singapore (February 2019): see Section II B above.

67.  Eastgate was not about the enforcement of a judgment that was rendered final and conclusive. No authority has been cited for the proposition that it is an abuse of process for a judgment creditor to seek to enforce the judgment obtained in more than one jurisdiction.

68.  Bluntly put, the irresistible inference to be drawn from the evidence presented in the present case is that the Defendant has gone to great lengths to evade adjudged liability since 2011. The fact that Mareva applications had to be made in different jurisdictions in succession (in the BVI, Singapore and Hong Kong in 2019) to preserve assets were dictated and necessitated by changes in circumstances as new evidence came to light.

(a) BVI

69.  As will become apparent, evidence relating to the control/ownership of the BVI Entities, the sharing of the same addresses by the Defendant, the Defendant’s wife and Kim and suspicious dealings in SMG’s shares were presented to the BVI court upon which the BVI Injunctions were granted.

70.  Leaving aside the suspicious dealings, when the Plaintiff applied for the BVI Injunctions, the Plaintiff had good reason to believe that Azur and Trinity together still held over 5.75 million SMG shares with a notional value of US$17.2 million.

(b) Singapore

71.  The SG Injunctions were rendered necessary because it transpired from investigations that through share swaps mentioned earlier[22], some of the SMG shares held by the BVI Entities were swapped for shares in SEGL, a Singapore company and so were not caught by the BVI Injunctions. That meant that significant assets of the BVI Entities were located in Singapore in the form of SEGL shares. Thus, the SG Injunctions were directed at the SEGL shares held by three of the BVI Entities.

72.  The SG Injunctions extended to the Defendant who was the defendant in the Singapore recognition and enforcement proceedings and believed on reasonable grounds to be holding assets through BVI Entities.

73.  Insofar as Lee is concerned, there is ample evidence that Lee had acted as the Defendant’s nominee:

(i)  Apart from being a longtime associate/friend and college classmate of the Defendant, it is apparent from the website of the Spackman Group that he has held very senior positions within the Group including SEGL, Spackman Equities, Spackman Media Group Pte Ltd and SMG.

(ii)  He has also acted as the corporate secretary for DVG, Azur and Trinity and had custody of their company records at his Singapore residence.

(iii)  Significantly, between 24 May 2017 (the day after the commencement of the New York action) and 11 January 2019, he disbursed just shy of US$300,000 for the Defendant’s benefit by payment for the Defendant’s legal fees and US taxes.

(c) Hong Kong

74.  Lee was a director of SMG at the time of the transfers to Plutoray. As such, he must have known of the changes to SMG’s register well before the inspection on 27 May 2019 but he made no disclosure despite having been notified of the SG Injunction.

75.  The Plaintiff did not know that Trinity and Azur had closed out their remaining holdings of SMG shares by transferring them to Plutoray on 24 April 2019 until his inspection of SMG’s register on 27 May 2019. The BVI Entities only made the belated disclosure on 4 June 2019 through Kim[23]. 

76.  Some of the circumstances that gave rise to need for the HK Injunction have already been mentioned[24]. Then, from about mid-May 2019, the Defendant made applications to challenge the jurisdiction of the SG Courts over the Defendant and to set aside the SG Injunctions.

77.  The disposals by Trinity and Azur to Plutoray speak to the ineffectiveness of the BVI and SG Injunctions in preventing dissipation of assets believed to be owned and/or controlled by the Defendant. Those transfers were in breach of both BVI and Singapore Injunctions.

78.  In my view, the Plaintiff had good reason and cannot be criticised for making each of the 4 applications for Mareva injunctions in different jurisdictions when the Defendant as judgment debtor has been evading payment since 2011. Assets of the BVI Entities believed to be beneficially owned/controlled by the Defendant assumed chameleonic qualities, seemingly designed to frustrate enforcement of the Defendant’s liability.

(2) The Plaintiff’s “campaign of oppression”  

79.  The New York Judgment was granted against the Defendant in September 2018. The Defendant is a US citizen who was legally represented throughout and defended the New York proceedings but never took steps to appeal it.

80.  The matters about which the Defendant complains were no more than legitimate actions in aid of the execution of that judgment. Moreover the actions taken by the Plaintiff in the US, whether discovery pre-and post-judgment, registration of judgment, dissemination of notices to preserve documents, securing depositions by the Defendant’s daughter in aid of execution of the judgment were all contested and argued by lawyers representing the Defendant.

81.  The Defendant also complained about the wide circulation of the SG Injunction to at least 63 persons/entities including media outlets.

82.  However, in the course of the New York proceedings and through enforcement actions, the Plaintiff obtained evidence[25] that Lee had access to the Defendant’s assets.

83.  I have little difficulty in rejecting the submission that the Plaintiff had been conducting a “campaign of oppression” against the Defendant. Taking a broad view, the actions taken do not amount to “oppression” when the Defendant has put up a wall of resistance against all efforts on the Plaintiff’s part to enforce the Korean Judgment.

C. Chabra

(1) The Plaintiff’s case

84.  Underpinning the Plaintiff’s case that the BVI Entities are the Defendant’s nominees (the common thread running through all the applications for injunctions in the different jurisdiction) are the transfers of SMG shares from GD/DVG to Azur and Trinity at an undervalue:

(i)  on 21 November 2017, GD transferred 4 million SMG shares to Azur at US$1 per share; and

(ii)  on 22 February 2018 DVG transferred approximately 3.5 million SMG shares to Trinity at HK$1 per share.

85.  Those transfers were in all probability at an undervalue given that both Azur and Trinity sold a portion of their respective holdings of SMG shares to SEGL a few months later (on 14 June 2018) at US$3 per share.  

86.  The connection between the Defendant and Azur and Trinity is through GD and DVG. The Plaintiff’s evidence[26] in that regard may be summarised as follows.

(1) GD:

(a)  It was incorporated in the BVI, struck off and currently restored in the register.

(b)  It held 10 million SMG shares being SMG’s largest shareholder.

(c)  The affirmation of Yi Liu dated 20 December 2018 (“Liu’s affirmation) deposed to the visit he made with John Han on 20 November 2017 to the offices of Triolink Corporate Services Ltd (“Triolink”), GD’s corporate secretary, to serve a copy of the Notice to Preserve Documents in connection with the New York litigation. On that occasion, they were told by a person who identified herself as Melody that Triolink worked with the Defendant and GD and that the Defendant was the owner of GD.

(2) DVG

(a)  The Defendant founded a company in 1998 which changed its name to DVG in 2003.

(b)  DVG owned a substantial number of SMG shares, a portion which was sold to, inter alia, Trinity in February 2018 at HK$1 per share which Trinity resold 4 months later to a SEGL at US$3 per share.

(c)  The last legal owner of the shares was Wan Kim Poon (a former employee of the Spackman Group), the listed beneficial owner being the Defendant’s brother-in-law Kim.

(d)  In 2015 DVG obtained a loan of US$0.5 million from Spackman Equities which loan was subsequently written off. The Defendant was the CEO and director of Spackman Equities both when the loan was made to DVG and when it was written off.

(e)  Kim resided at the Defendant’s residence (in Las Pinadas[27]) in Hong Kong. Kim was the registered account holder of an account with the Water Supplies Department for supplying water not only to the Las Pinadas address but also to One Island South being office premises and the address used by the Defendant in these proceedings.  

(f)  In November 2017 and February 2018, Azur and Trinity became substantial shareholders of SMG. Prior to that, GD and DVG were substantial shareholders of SMG.

(g)  Significantly, since August 2017, Spackman Media Group Pte Ltd (SMG SG), a wholly owned subsidiary of SMG, paid the Defendant’s rent in the US of almost US$1 million, his personal legal fees of over US$400,000 for the New York proceedings, and US$500,000 towards a scholarship fund.

(h)  The Plaintiff submitted that if the Defendant had no interest in or control over the BVI Entities (and hence no control over SMG or SMG SG), there would have been no business purpose for the payments set out in (g) above.

(i)  Kim has not filed any evidence in these proceedings but has filed 3 affirmations[28] opposing the BVI Injunctions: Kim 1^st and Kim 3^rd in his capacity as director of the BVI Entities in relation to the BVI Injunctions and Kim 2^nd was specifically as director of Azur.

(2). The Defendant’s evidence  

87.  The Defendant adopted Kim’s evidence filed in the BVI in opposition to the BVI Injunctions.

88.  Kim claims to be the beneficial owner of GD, DVG and Azur and a director of each of the BVI Entities. His evidence is that

(a)  he acquired (i) GD from DVG in 2008, (ii) DVG in 2010 (at a time when it was worthless), and (iii) Azur in 2008.

(b)  SEGL was incorporated in January 2014 and is the largest shareholder of SMG which was incorporated in October 2015.

(c)  The Defendant did not personally invest in SMG or SEGL although he did provide advice and ideas and he has never been a shareholder of SMG.

(d)  The BVI Entities are owned by Kim and his sister (the Defendant’s wife) and the so-called ‘low-cost’ transfers were effected for internal restructuring purposes.

89.  As regards Liu’s visit to Triolink on 20 November 2017, in response to the Defendant’s solicitors letter of 1 June 2020, Triolink acknowledged that at that time they did have an employee by the name of Melody but who had since left. In a further response to a follow-up enquiry from the Defendant as to whether inter alia Liu was authorised by GD to receive information about GD from Triolink, the answer was that “[t]hese people are unknown to Triolink”.

90.  The Defendant relied on that correspondence to show that the Melody incident never happened. However, that correspondence was not contemporaneous but took place 18 months after Liu’s affirmation. In any event, it stretches ones credulity to think that if the Liu affirmation been made up as the Defendant suggests, Liu could have hit the jackpot as it were with a name as unusual as “Melody”.  

91.  In the present case, the question whether Chabra should be exercised is inextricably linked with the outcome of the risk of dissipation. That is because to negate the risk of dissipation the Defendant simply adopted Kim’s explanations regarding 2 transactions on which the Plaintiff relies. Thus, Kim’s credibility lies at the heart of both Chabra and the risk of dissipation issues.  

D. Risk of dissipation

92.  The Plaintiff relies on two post BVI Injunctions acts of dissipation considered below.

(1). Transfers of SMG shares to Plutoray on 24 April 2019[29]

93.  Kim’s evidence is that (a) he acquired 9,999,999 SMG shares through GD in December 2015 financed by a loan of US 1 million from Monetary Management Consultancy Ltd (“MMC”) with the SMG shares as collateral; (b) Kim distributed SMG shares to Azur and Trinity at a nominal price; (c) MMC enforced its security; (d) the SMG shares held by Azur and Trinity were transferred to Plutoray.

94.  Kim 3^rd (§§44-51) describes in detail the complicated arrangements devised that gave rise to the barebones framework in §92 above which replicates §42 of Kim 3^rd. The Plaintiff’s written submissions at §§66-71 set out in meticulous detail the numerous difficulties that arise with the arrangements described.

95.  For present purposes, it suffices to highlight the following:

(a)  MMC’s alleged enforcement on 27 March 2019 preceded the maturity dates[30] of the promissory notes given by Azur and Trinity[31] which did not contain acceleration provisions;

(b)  a loan agreement was said to exist between MMC and GD for US$1 million to fund a share swap between GD and SMG but which loan agreement Kim was unable to produce;

(c)  the cash consideration of US$0.9 million[32] is not mentioned anywhere in the share swap agreement between GD and SMG dated 13 January 2015;

(d)  the bank statement said to show receipt by Crystal Planet Limited of US$1 million on 2 November 2015[33] does not reveal the name of the transferor or payer;

(e)  no evidence was adduced to show that Plutoray was a “designee” of MMC; and

(f)  the Defendant[34] exhibited the business profile of Plutoray showing MMC as its sole shareholder as at 1 July 2019 but evidence adduced by the Plaintiff shows that Yoo Jaemin only ceased to be Plutoray’s sole shareholder on 3 June 2019, the day before the filing of Kim 1^st.  

96.  Central to Kim’s explanations (adopted by the Defendant) is that the transfers of SMG shares to Plutoray after service of the BVI Injunctions as nominee of MMC had been arranged on 27 March 2019 before those injunctions were granted and served. But the evidence[35] before the Court shows otherwise: MMC did not have the alleged relationship with Plutoray prior to 4 June 2019.

97.  In view of the matters set out above, Kim’s explanations do not withstand scrutiny.

(2) Transfers of SEGL shares by Azur to JS Lee

98.  In Kim 2^nd, he disclosed that while Azur had no shareholding in SEGL when he made his first two affirmations, it was in possession of approximately 36.4 million ordinary shares in SEGL as at 11 April 2019 that was subject to a share transfer agreement of 25 March 2019 (“the STA”).

99.  Kim’s explanation for the STA is that in January 2019

(a)    he offered to buy 48 million SEGL shares from a long-time friend John Ko (“Ko”) when the latter was looking to sell them (for regulatory reasons) prior to being appointed CEO of SEGL on the assumption that Kim “would eventually pay him for the consideration in the future”;

(b)    on 28 January 2019, Ko transferred 48 million SEGL shares[36] to GD;

(c)    by mid-March 2019, Ko requested Kim to discharge a financial obligation[37] he owed to a mutual friend Lee Jae Seung (“JS Lee”), a non-related party;

(d)    because of Kim’s financial obligation[38] towards Ko, Kim agreed to transfer 36,446,300 shares in SEGL (which Azur owned) to JS Lee;

(e)    on 25 March 2019, at Kim’s direction, Azur provided a pre-signed copy of the STA to JS Lee; and

(f)    JS Lee did not register the shares until 18 April 2019.

100.  Further elaboration made in Kim 3^rd at §§53-57 in some respects differed from, if not at odds with, the earlier version:

(a)    repayment, rather than being left at large[39], would be made when Kim resold the shares;

(b)    Kim delayed selling those shares because the share price of SEGL had declined but in March 2019, because Ko had to repay JS Lee US$700,000[40], he asked Kim to make the payment;

(c)    as Kim did not want to sell the shares at a loss[41], he told Ko that he would give JS Lee the 36.4 million SEGL shares owned by Azur to be transferred to JS Lee at SGD0.023[42] per share; and

(d)    Kim gave JS Lee an undated copy of the STA on about 25 March 2019.

101.  The thrust of the evidence is that there had been no breach of the BVI Injunction brought about by that transfer by Azur which was said to be ‘involuntary’.

102.  Despite the attempt to improve on Kim 1^st, Kim 3^rd could be said to be a different or second version. The evidence adduced is hardly believable when the fundamental question, namely, the price at which it was agreed that the 48 million SEGL shares were to be acquired was never stated[43]. Further, the explanation for the STA makes no sense when, on the one hand, Kim did not want to sell the shares because of the “low” price[44] and, on the other, it is not explained how, by entering to the STA, Kim was avoiding a “sale” of the 36.4 million SEGL shares. There is no suggestion of any arrangement for a buyback at some specific price or that JS Lee could not deal with the SEGL shares as he saw fit.

103.  In short, whether it is version 1 or version 2, the explanations given simply do not add up, seriously undermining Kim’s credibility.

104.  In my view, the Plaintiff has discharged the burden of showing a risk of dissipation of assets.

IV. CONCLUSION ON THE CONTINUATION AND SETTING ASIDE SUMMONSES

105.  Those summonses are in reality 2 sides of the same coin and can conveniently be addressed together.

A. The SG and HK Funvest Injunctions[45]

106.  The Defendant submitted that as the Plaintiff applied for the Funvest Injunctions in Singapore and Hong Kong on the basis that the assets covered by those injunctions represent the Defendant’s assets and the Funvest Injunctions were necessary to prevent dissipation of the Defendant’s assets, the HK Injunction is duplicative and redundant. In other words, according to the Defendant, the Funvest Injunctions provide ample protection for the Plaintiff

107.  However, both the SG and HK Funvest Injunctions are being challenged. ESA, a company listed on the KOSDAQ, is involved as a 3^rd party. It is not known whether, for example, the defence of bona fide purchaser without notice will be invoked. One cannot rule out the possibility that the court may order registration of the SMG shares that form the subject matter of the ESA agreement.

108.  So far as concerns the proceeds of sale, Funvest asserted in or about June 2020 that it had paid US$10 million received from ESA to Plutoray, Vaara and Starlight. Then on 19 August 2020 it asserted that it has spent the US$10.8 million received from ESA on expenses. What can be said at this stage is that there is considerable uncertainty as to what protection the Funvest Injunctions can actually provide.

109.  In those circumstances, it cannot be said that the HK Injunction is duplicative and redundant.

B. Material non-disclosure

110.  The Plaintiff plainly has satisfied all the requirements for the court to exercise its discretion to grant the HK Injunction. The only reservation stems the matters raised in §63 above.

111.  As earlier noted[46], if established, the practice of the Court is to discharge the order without going into the merits: see Velatel. Nevertheless, the Court retains a discretion whether or not to discharge the injunction.

112.  The Plaintiff’s failure to draw the Court’s attention to the matters in §63 is regrettable but in the scheme of things, it is a borderline matter that pales into insignificance. When one takes a holistic view of all the evidence in this long-running saga, it is clear that it would hardly serve the ends of justice to penalise the Plaintiff by depriving him of the protection that the HK Injunction provides.

113.  I do not consider that I am bound to discharge the HK Injunction but if I am wrong in this regard, I have no hesitation in exercising the Court’s discretion afresh and re-grant the HK Injunction.

V. THE LIFTING OF STAY SUMMONS

114.  Since the Court has come to the conclusion that the HK Injunction should continue or re-granted afresh, there is no reason for not lifting the stay. 

VI. Order

115.  Accordingly, in summary:

(1)  the HK Injunction is continued until trial or further order;

(2)  the stay granted by the order dated 14 June 2019 is lifted;

(3)  the setting aside summons is dismissed.

116.  There is to be an order nisi of costs in favour of the Plaintiff with certificate for counsel, such costs to be summarily assessed and payable forthwith. Directions for summary assessment will be given separately.

	(Doreen Le Pichon)
	Deputy High Court Judge

Mr Mike Lui, instructed by Kobre & Kim, for the plaintiff

Mr Dennis W.H Kwok and Mr. Jun Lee, instructed by John C H Suen & Co, for the defendant

The 1^st Respondent, in person, absent

The 2^nd Respondent, in person, absent

The 3^rd Respondent, in person, absent