KIM V WASAN INTERNATIONAL COMPANY LIMITED CA CA39/06

KIM V WASAN INTERNATIONAL COMPANY LIMITED CA CA39/06 4 October 2006IN THE COURT OF APPEAL OF NEW ZEALAND CA39/06BETWEEN SUNG WON KIM Appellant AND WASAN INTERNATIONAL COMPANY LIMITED Respondent Hearing: 18 September 2006 Court: William Young P, O'Regan and Arnold JJ Counsel: A M Swan for Appellant R J Connell for Respondent Judgment: 4 October 2006 at 4.15 pmJUDGMENT OF THE COURT A The appeal is dismissed. B The appellant is to pay Wasan $3,000 costs together with usual disbursements.REASONS OF THE COURT(Given by William Young P) [1] Wasan International Co Ltd is controlled by Mr Edward Kang and provides immigration consultancy services primarily to Korean nationals seeking to obtain residence in New Zealand. Mr Dong Yeon Jeong sought the assistance of Wasan to obtain immigration services for himself, his wife (Mal Kum Jaung), children and two of his wife's relatives (one of whom is Jae Young Yoo). It is common ground that Sung Won Kim, who is Mr Jeong's brother-in-law, paid $60,000 to Wasan for these (and related) services. The money was paid on the basis that it would be refunded if satisfactory results were not achieved. Two receipts, one for $35,000 and one for $25,000, were issued by Wasan and each was addressed to Mr Kim, described in one as "Attorney of Jae Yong Yoo and one other person" and in the other as "Attorney of Dong Yeon Jeong/Mal Kum Yaung". [2] On 27 October 2003, Duk Seung Ahn (who is associated with Wasan) gave Mr Kim a receipt for $45,000. The receipt is in Korean. In the English translation which we have, the $45,000 is described being "the balance of the fee for residence application". It also records that "if Don Yeon Jeong pays the abovementioned amount to the company then Duk Seung Ahn shall refund the abovementioned amount to Sung Won Kim forthwith". [3] Mr Kim claims that the receipt evidences a payment of $45,000 which he made to Mr Ahn as agent for Wasan and that he is entitled to a refund of the $45,000 because favourable immigration outcomes were not achieved for Mr Jeong and his family. Accordingly he issued a statutory demand against Wasan and later issued liquidation proceedings. These proceedings were stayed in the High Court by Associate Judge Doogue and Mr Kim now appeals to this Court against that stay. [4] Primarily in issue in the appeal is whether Wasan has a genuinely arguable defence to the demand. As well, Mr Swan (counsel for Mr Kim) sought to argue that Wasan was required, but failed, to prove its solvency before the Associate Judge andfor this reason ought not to have been granted a stay. We will address the case primarily by reference to those two issues, but before we do so, it is appropriate for us to refer briefly to the factual background and the basis upon which the Associate Judge decided the case.The factual background[5] Mr Kim maintains that the receipt means what it says. He paid Mr Ahn $45,000 on the basis recorded in the receipt. Mr Ahn was agent for Wasan. He made the payment (which was on top of the $60,000 paid on 1 August 2003) with a view to ensuring that Wasan acted promptly on behalf of Mr Jeong and his family. Since Wasan did not achieve favourable outcomes, he is now entitled to the money back. [6] Mr Ahn denies that he received $45,000. Rather, he maintains that the "receipt" is referable to the $60,000 paid to Wasan on 1 August 2003 and represented an agreement that if satisfactory immigration outcomes were not achieved, only $45,000 of that sum would be refunded to Mr Kim with the balance ($15,000) being retained by Wasan to compensate it for the work it carried out. He described the receipt as a "guarantee". This explanation is plainly not closely congruent with the language of the receipt. [7] There is however a broader context which must be addressed. [8] The formalities of the dispute between Mr Kim and Wasan started with Mr Kim's solicitor (Mr Peter Hong) writing to Wasan on 29 June 2005 referring to the $60,000 which was paid on 1 August 2003. This letter goes on:I have been informed by my client that: 1. You have not done anything in respect of the immigration applications for the individuals referred to in the receipts to date since my client paid the sum of $60,000 on or about 1 August 2003. 2. My client has demanded refund of the sum of $60,000 since April 2004 on numerous occasions when he knew that you had notdone anything about the work visa applications you promised to lodge to the New Zealand Immigration Service in consideration of my client's paying you $60,000. 3. You refused to refund the sum of $60,000 or any part thereof to my client.[9] This letter was followed by a statutory demand which sought payment of $60,000. [10] Wasan applied to the High Court for an order setting aside the statutory demand and this elicited an affidavit from Mr Kim of 2 August 2005 in which he described in narrative form the background to the payment of $60,000 which was made on 1 August 2003 and the services which Wasan was to provide. The affidavit then went on:Wasan failed to obtain work visas within 2 months from the date of payment of its fees being 1 August 2003. In November 2003 I asked Mr Kang to see some evidence of the work visa applications but he did not provide me with any. Mr Kang simply told me that my brother and sister in laws' work visas from New Zealand Immigration Service were imminent and that they together with the members of their family could come to New Zealand immediately rather waiting anxiously in South Korea. My brother and sister in law, their two children and nieces accordingly came to New Zealand on or about 2 December 2003.[11] If Mr Kim paid $45,000 in cash to Mr Ahn on 27 October 2003, it is distinctly odd that this is not mentioned in the letter of 29 June 2005, the statutory demand or Mr Kim's narrative affidavit of 2 August 2005. [12] Wasan's application to set aside the statutory demand for $60,000 was supported by an affidavit sworn by Mr Jeong. In this affidavit Mr Jeong said that he had paid Mr Kim KRW68,000 (the equivalent of NZ$100,000) for immigration services on the basis that Mr Kim was the representative of Wasan and that all money would be passed directly to Wasan. He claims that after repeated requests to Mr Kim he received back KRW29,000 but is still owed the balance of KRW39,000. [13] Mr Jeong's affidavit was made available to Mr Kim's solicitor on 28 September 2005. The statutory demand in relation to the $45,000 in issue in thisappeal was issued on 30 September 2005 and this was the first time that this claim was raised. [14] Wasan, through apparent oversight, did not apply to set aside the second statutory demand. As a result, liquidation proceedings were commenced. It was in the context of those proceedings that a stay and associated orders were sought under Rule 700K of the High Court Rules and this in turn led to the judgment of Associate Judge Doogue which is now under appeal. [15] The first statutory demand, ie that for $60,000, was eventually set aside by Associate Judge Sargisson on the basis that there was doubt whether the $60,000 which was paid "belonged to Mr Kim". Mr Kim's claim for this $60,000 is now to be heard in the District Court. It will be recalled that the two receipts were addressed to Mr Kim as "attorney", a style of address which undoubtedly raised an issue as to whether he was the right claimant. Although Mr Kim is not referred to in that way in the receipt for $45,000, a similar issue necessarily arises. Given his role in relation to the earlier payments (in respect of which he was designated "attorney") and the evidence of Mr Jeong that he paid Mr Kim $100,000, there appears to be scope for argument whether he was acting as a principal or agent in relation to whatever happened on 27 October 2003. It is fair to say, however, that on this aspect of the case the reference to repayment to him in the receipt rather suggests that the $45,000 in question was his money. [16] There are three other contextual issues to which we should refer. [17] The first is that all payments in question were made in cash. No banking records referable to any of the payments were produced. [18] The second is that Mr Hong (ie Mr Kim's solicitor) has waged something of a campaign against Wasan. There is no need for us to discuss the details of this campaign, let alone its merits (or otherwise), but the level of animosity shown by Mr Hong to Wasan and Mr Kang could explain a reluctance on the part of Wasan tomake available to Mr Hong any more information about itself than was absolutely necessary. [19] The third is that the originals of some of the key documents and some of the affidavits are in Korean and have been translated into English for the purposes of the proceedings. We were told from the bar that there is a dispute as to the translation of the receipt in issue and in particular, the words "for residence application". Although this dispute is not obviously material in itself, it does highlight the difficulties of determining on a summary basis a case which turns largely on translated documents.The judgment of the Associate Judge[20] We note that the grounds on which the stay was sought included the contention that the receipt related to the same money as was the subject of the application to set aside the statutory demand, a contention which seems to us to add little to the general argument that there was not a second payment on 27 October 2003. [21] In his judgment, Associate Judge Doogue reviewed the affidavits and then discussed the relevant legal principles by reference to the judgment of Wallace J inNemisis Holdings Ltd v North Harbour Industrial Holdings Ltd (1989) 1 PRNZ 379 (HC). He then went on:[21] This case is an unusual one. In the end, I am left with concern that unless an order for stay is made, the petition will be advertised and arguably harm will be done to the applicant in circumstances where the exact nature of dealings between the parties is very obscure. The difficulties in coming to a clear view on the $45,000 debt stem from a number of causes. In the first place, the fact that the parties are Korean nationals adds a dimension of uncertainty to the dispute. What could be dismissed immediately as an improbable business arrangement if offered up by an applicant in conventional business circumstances relating to commerce in New Zealand may not be dismissed quite so readily given the fact that the principal actors here come from another culture. Secondly, there are the problems with matters of interpretation of the deponents' statements in their affidavits. It is difficult to come to confident conclusions about the strength of their evidence. Third, there is the unusual background circumstance of a long andvitriolic campaign that has been mounted by Mr Hong, the solicitor for Mr Kim against Wasan. [22] Given all of these circumstances, I am concerned that to allow the matter to proceed to a hearing would be to work an injustice to the applicant. [23] Unravelling the factual circumstances given the background to this case will almost certainly need to be done at a conventional trial where oral evidence, cross-examination, discovery and other measures are available to the parties and to the Court. [24] For all of those reasons I grant the application for a stay.Does Wasan have a genuinely arguable defence to the demand?[22] As is apparent from our review of the facts, we think it obvious that the level of dispute about the alleged debt is such that it would be entirely inappropriate for that debt to form the basis of an application to liquidate Wasan. [23] There are sharply conflicting accounts of events given in the affidavits. Although it is true that Mr Ahn's account of events is not a good fit for the language of the receipt, the absence of any reference to the $45,000 in the letter of 29 June 2005, the first statutory demand and Mr Kim's narrative affidavit seem to us to be strange, to say the least. Further, there is at least a question as to whether Mr Kim, in any event, is the right claimant. It is obviously sensible for the dispute as to the $45,000 to be dealt with in conjunction with the claim for $60,000 which is now to be heard in the District Court.Was Wasan required to prove its solvency?[24] In the affidavit he swore on behalf of Wasan, Mr Kang asserted its solvency. He said that Wasan could, if necessary pay $45,000 into court. He did not, however, provide any particulars as to the financial position of Wasan. [25] In the course of his argument, Mr Swan suggested that Wasan ought to have proved it was solvent as a precondition for obtaining a stay of the liquidationproceedings. We are not sure whether this was raised before Associate Judge Doogue. It may be that it was not, as it is not addressed in his judgment. [26] The issue raised by Mr Swan falls to be considered in the context in which we have already held that the alleged liability of Wasan to Mr Kim in relation to the $45,000 is subject to serious argument. Mr Swan's proposition therefore comes down to the argument that Mr Kim should be entitled to proceed with liquidation proceedings based on a distinctly disputable debt because Mr Kang, in his affidavit, did not provide full particulars of the solvency of Wasan. He conceded that he could cite no authority for this proposition, a concession which is unsurprising. [27] Where a statutory demand has been made and the party on which it has been served either seeks to set it aside or applies later to stay liquidation proceedings, it is not uncommon for detailed evidence of solvency to be given or for the money in question to be paid into Court (or perhaps a solicitor's trust account). We are, however, aware of no rule to the effect that detailed evidence of solvency is required. As well, the High Court does not, as a matter of routine, require a disputed debt to be paid into Court (or otherwise secured), cf Maru Industries Ltd v Don Forbes Construction Ltd (1989) 2 PRNZ 176 (HC). In the present circumstances, the background provided by Mr Hong's campaign against Wasan provides a context in which it is understandable that Wasan would not wish to provide to him any more information about itself than was strictly necessary. Further, leaving aside the present dispute, there is no particular reason for regarding Wasan's solvency as questionable. In those circumstances we see no error of approach on the part of the Associate Judge.Disposition[28] The appeal is dismissed. Mr Kim is to pay Wasan $3,000 costs together with usual disbursements.Solicitors: Y C Hong, Auckland for Appellant Connell & Connell, Auckland for Respondent