Sang Cheol Woo v. Yoo Shin Choi(Naturalized Name Charles C. Spackman)
Read the full judgment text of HCA 1586/2016 on BabelCite. This High Court CFI judgment was delivered on 20 October 2020.
1. There are 3 summonses for determination:
Cited by 3 cases · Cites 3 cases
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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 _____________
_____________ 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:
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 Korean Judgment 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 1st”) 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]“):
(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
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:
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:
(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:
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.
(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
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 3rd (§§44-51) describes in detail the complicated arrangements devised that gave rise to the barebones framework in §92 above which replicates §42 of Kim 3rd. 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:
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 2nd, 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
100.Further elaboration made in Kim 3rd at §§53-57 in some respects differed from, if not at odds with, the earlier version:
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 1st, Kim 3rd 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 3rd 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:
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.
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 1st Respondent, in person, absent The 2nd Respondent, in person, absent The 3rd Respondent, in person, absent [1] See Decision and Order of O. Peter Sherwood J of the Supreme Court of the State of New York entered on 10 July 2018, Index No.: 652795/2017 (“the New York Decision”), p 1. [2] Before the Seoul Central District Court and the Seoul High Court. [3] Under Korean law, such a defendant is taken to have admitted all the allegations made by the plaintiff. [4] In dismissing the Defendant’s retrial application, the Seoul High Court observed that had the Defendant not admitted to the Plaintiff’s cause of action, in view, inter alia, of the retrial decisions in which the 2 co-defendants were successful, “there is a strong possibility that the Plaintiff’s claim would not have been accepted. Nevertheless, in our civil litigation system which mandates the principle of party representation/duty to submit facts, such a consequence is inevitable”: see the New York Decision at pages 2-3. [5] The last sentence of the section headed “I. Background” in the New York Decision records that: “[D]efendant no longer disputes the finality of the default judgment”. [6] This occurred at the time of the BVI Injunctions: see §§17-23 below. [7] See the table summarising the transactions at Kang 1st dated 31 May 2019 at §37. [8] See entries 6 and 7 of the table. [9] A similar undertaking was given in relation to the SG Injunction against Lee. [10] The initial inspection was carried out on 21 March 2019 the results of which appear in the supporting evidence filed for the BVI Injunctions. [11] This was over a month after the SG Injunctions and 10 days after the initial attempt to inspect the register was blocked by SMG’s company secretary contrary to the Plaintiff’s entitlement under the provisions of the Companies Ordinance. [12] This was after the date of the BVI and SG Injunctions. [13] Azur acquired 4 million SMG shares from GD at US$1 each in November 2017, 825,000 of which had been disposed of in June 2018 for US$3 per share. Its disposal to Plutoray was the balance of all its remaining shares for HK$1 each, representing a considerable loss. [14] Trinity acquired 3,503,850 SMG shares from GD and 383,333 from DVG on 22 February 2018 at HK$1 each (US$0.13) and disposed of two thirds of that holding to Plutoray at the same price. [15] They took place on the date of service of the SG Injunctions. [16] 5,753,968 SMG shares. [17] See the Plaintiff’s flowchart at B2537 of the hearing bundles. [18] The HK Funvest Injunction in effect prohibits the registration of any transfer of Funvest’s shares in SMG to ESA. [19] This order led to the lifting of stay summons. [20] Transcript, p 11 ll 30-32 [21] An injunction pending an appeal: Erinford Properties Ltd v Cheshire County Council [1974] Ch 261 [22] See §25 above. [23] Kim 1st dated 4 June 2019, §8 where the transfer was said to be in voluntary “as a result of [Plutoray] enforcing security right it had over those shares.” [24] See §§29-32 above. [25] See§73 (iii) above. [26] Kang 1st, §§34-82 and the Plaintiff’s 3rd affirmation dated 28 August 2019 (“P 3rd”) at §§11-15. [27] This was the Defendant’s residence until about September 2017 [28] They are respectively dated 4 June, 17 June and 23 July 2019. [29] See §29 above. [30] Respectively, 14 June 2019 and 7 September 2019. [31] There was no evidence that Azur and Trinity could not repay the loans, foreclosure was made without notification of default from MMC; and Azur and Trinity ever made any complaint to MMC, seemingly content to part with valuable assets. [32] Said to be payable on top of the share swap. [33] Payment into CPL’s bank account preceded the share swap agreement by 11 days which is a strange state of affairs. [34] The Defendant’s 2nd affirmation filed in the Singapore proceedings. [35] §95(f) above. [36] Kim 1st §7 gives a value of SGD768,000 as of 3 June 2019: see footnote 37 below. [37] The amount of the financial obligation was never stated. [38] This was also never spelt out. [39] The phrase used in Kim 2nd was “in the future”. [40] The amount was not specified in Kim 2nd [41] This implies that Kim did not have the funds to repay JS Lee and the only option was for him to sell SEGL shares. [42] This translates into approximately SGD838,000 or US$619,000 at current exchange rates. As the then prevailing exchange rate was never stated, it is unclear if it was the equivalent of US$700,000. [43] While the share price of SEGL shares as at 3 June 2019 was stated in Kim 1st, §7, the actual consideration for the transfer is nowhere stated. Nor is the share price of SEGL on 28 January 2019 known, assuming the transfer was to be at market price. [44] Again, one is left guessing what that meant in practical terms. [45] See Section II D, §§33-38 above. [46] See §50 above. | ||||||||||||||||||||||||||||
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