New South Wales Supreme Court CITATION : PARK V. LEE [2000] NSWSC 600 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 3871/97 HEARING DATE(S) : 22/06/00 and 29/06/00 JUDGMENT DATE : 29 June 2000 PARTIES : Yong Sik Park - plaintiff Hyung Keun Lee - defendant JUDGMENT OF : Hodgson CJinEq at 1 COUNSEL : Mr. Marcus Young for plaintiff Mr. Michael Lawler for defendant SOLICITORS : Young Kim Lawyers, Sydney for plaintiff Heidtman & Co., Sydney CATCHWORDS : PRACTICE - Mareva injunctions - Plaintiff's claim of property in defendant's assets - Use of assets for defendant's costs - Security for costs. DECISION : See par.13-16 of judgment IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORAM: HODGSON, CJ in Eq. Thursday 29th June 2000 NO. 3871 OF 1997 PARK V. LEE JUDGMENT 1 I am dealing with the defendant's application for security for costs, and also with a question whether the current orders concerning the preservation of proceeds of sale of a Lamborghini motor vehicle should be modified. 2 The case is an unusual one. The plaintiff is claiming a sum of some $700,000.00 plus interest from the defendant. Both sides are resident in Korea. On the plaintiff's evidence, he is now in very modest circumstances, with no substantial assets. The defendant is in jail in Korea, having been convicted for fraud in connection with the matter in issue in these proceedings. However, so far as the evidence in this Court goes, it has to be said that there is a substantial defence, and the Court cannot, at this stage, come to any view as to what the outcome of these proceedings will be. 3 So far as the evidence goes, the only asset of either party in Australia is now the defendant's Lamborghini motor vehicle, which may be worth about $200,000.00, perhaps a little less, perhaps more. Plainly, there are concerns on both sides concerning the legal costs of these proceedings: concerns both as to the amount of such costs in comparison with the only assets of the parties in Australia, and as to how they are to be provided. 4 Both sides have provided written outlines of submissions which I will leave with the papers. 5 Mr. Lawler for the defendant submitted that the current orders concerning the proceeds of sale of the Lamborghini should be modified, at least to the extent of allowing the defendant to pay his reasonable costs and disbursements in connection with these proceedings. He submitted that, in so far as the orders were of the nature of a Mareva injunction, they could not be justified in so far as they would prevent the defendant using assets to pay his reasonable costs. He submitted that the basis for a Mareva injunction was a threatened dissipation of the assets, not any notion of providing security to the plaintiff for the plaintiff's claim, and that accordingly, orders of the nature of a Mareva injunction had to be qualified so as to allow the defendant access to assets for reasonable living expenses and reasonable legal costs. He referred me to Clark Equipment Credit v. Como Factors (1988) 14 NSWLR 552 and Jackson v. Sterling Industries 162 CLR 612 at 625-6, 642. 6 He submitted that, even if the plaintiff's evidence supported another basis for the orders, namely a basis of trust and tracing of assets of the plaintiff, nevertheless the restriction of the defendant's access to the assets for legal costs could not be justified; and he referred me to the case of PCW (Underwriting Agencies) v. Dixon (1983) 2 AllER 158. He submitted that it would not be appropriate to impose any limit on these costs. He submitted that even a limit of $50,000.00 would have the result that the defendant would not be able to have legal representation. The affidavit in support of the application for security for costs indicated costs totalling about $49,000.00, but these were party and party costs; and Mr. Lawler submitted that events since that affidavit meant that the costs of the proceedings would be higher. 7 As regards security for costs, Mr. Lawler submitted that the plaintiff was overseas and had no assets in Australia, and that if there was no security for costs and the plaintiff was unsuccessful in the proceedings, there would be no hope of the defendant having an order for costs against the plaintiff satisfied. He submitted that, having regard to the plaintiff's evidence of impecuniosity, an order for something like $20,000.00 security would be appropriate. 8 Mr. Young for the plaintiff submitted that the defendant had been convicted in Korea for the fraud alleged in these proceedings, and his appeal against that conviction had been dismissed; and he submitted that the Court could approach this matter on the basis that the plaintiff has a very strong case. He submitted that the evidence suggested that $174,000.00 of the amounts alleged to have been advanced by the plaintiff had been advanced at the time of purchase of the Lamborghini. It could be inferred that some, at least, of these moneys was put towards the Lamborghini; and in circumstances where funds alleged to be trust funds had been mixed, the trustee mixing the funds could not take advantage of that mixture; and Mr. Young submitted further that the plaintiff could claim the return of the whole of the $174,000.00 plus interest from the purchased asset. In support of those submissions, he referred me to In Re Oatway (1903) 2 Ch. 357 and Scott v. Scott (1962) 109 CLR 649. Accordingly, he submitted that the order concerning the proceeds of the Lamborghini could be justified on the basis that the plaintiff has a property claim to money which could approximate the whole of those proceeds. 9 Mr. Young submitted that the defendant should not be allowed any access to the fund for payment of legal costs, at least unless similar access was allowed to the plaintiff. He submitted that the plaintiff, because of the Korean conviction, had a stronger claim than the defendant, and in those circumstances, the defendant should not be given preferred access to that fund just because the defendant was the last person in physical possession of the relevant assets. 10 On the question of security, Mr. Young submitted that $20,000.00 would plainly be too great and would stifle the litigation. The plaintiff was in a very poor financial position, and was in this position because of the actions of the defendant. 11 In my opinion, because the plaintiff lives in Korea and has no assets in the jurisdiction, there is a case for security, although I accept Mr. Young's submission that to order security could stifle this claim. I think there is some force in Mr. Young's submission that there would be an imbalance in allowing the defendant access to the proceeds of the Lamborghini for the defendant's costs, and not allowing the plaintiff access to those proceeds, and a further imbalance if the plaintiff was in addition ordered to pay security. However, in proceedings in this Court, the onus of proof is on the plaintiff. The plaintiff has given untrue evidence to this Court in respects pointed out by Mr. Lawler, and although some weight should be given to the Korean judgment, I believe I must still approach the matters now before me on the basis that there is a dispute and that the plaintiff bears the onus of proof, and has yet to discharge that onus. So far as matters have been proved to date, the proceeds of sale of the Lamborghini are the defendant's property, and not that of the plaintiff. 12 If the only basis of the restraining order was the Mareva basis, then I would accept Mr. Lawler's submission that no ceiling should be put on the access to which the defendant can have to those funds for the purpose of his reasonable costs. However, I do accept Mr. Young's submission that there is a basis on which the plaintiff may prove a property entitlement to at least a substantial part of those funds. In those circumstances, in my opinion, I can put a limit on the amount of those funds to which the defendant can have access for legal costs. 13 The fees estimated by the defendant's solicitor in relation to costs to date and future costs do appear to me to be very reasonable. However, when the amount in issue may turn out to be something between $150,000.00 and $200,000.00, and where the nature of the issues could lead to very substantial preparation of evidence, involving trips to and from Korea, and interviewing witnesses in Korea, I think it is necessary to put a ceiling on what can be expended in a dispute about this sum of money. I am prepared to authorise payment of reasonable legal expenses incurred to date. However, so far as the future legal expenses of the defendant are concerned, I would authorise such expenses only up to a limit of $60,000.00 (including the expenses owing to date), and only on the basis that if future legal costs are incurred, they will be incurred on the basis that the solicitors will carry the matter through to conclusion and not just carry on until the money runs out. 14 Turning to the question of security, I have decided that I will not order any security for costs. To order security for costs would result in an unfair imbalance of the type referred to by Mr. Young, and I think it could stifle the litigation. 15 So far as the costs of this application are concerned, I will make them costs in the proceedings. 16 I stand this matter over to Thursday 6th July 2000 at 9.30am for Short Minutes. ********* Last Modified: 09/26/2000 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.