Woori Bank v KDB Ireland Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Clarke
• Judgment Date: 17 May 2006
• Neutral Citation: [2006] IEHC 156
• Court: High Court
• Date: 17 May 2006

Woori Bank & Hanvit LSP Finance Ltd v KDB Ireland Ltd

COMMERCIAL

BETWEEN

WOORI BANK AND HANVIT LSP FINANCE LIMITED

PLAINTIFFS

AND

KDB IRELAND LIMITED

DEFENDANT

[2006] IEHC 156

[No. 19386 P/2004]

THE HIGH COURT

PRACTICE AND PROCEDURE

Pleadings

Amendment of defence - Relevant considerations - Necessity for good reasons -Principle of ensuring real controversy litigated - Prejudice - Croke v Waterford Crystal Ltd [2005] 2 IR 383 and O'Leary v Minister for Transport [2001] 1 ILRM 132followed - Petty Sessions Ireland Act 1851(14 & 15 Vict, c 93), s 10(9) - Amendments allowed (2004/19386 P - Clarke J -17/5/2006) [2006] IEHC 156 Woori Bank Ltd v KDB Ireland Ltd

Facts: The defendant applied to amend its defence and essentially sought to extend its defence in two respects. The plaintiffs opposed the application on the basis of delay and further contended that the amendments should be refused because the matters sought to be raised by the amended pleading were bound to fail.

Held by Clarke J. in allowing the application: That the plaintiffs failed to establish any significant prejudice arising out of the proposed amendments and the delay by the defendant in seeking to make the amendments was not such as ought to preclude the application. Furthermore, it was not established that the issues sought to be raised by the defendant in the amended defence were bound to fail. Consequently, it was not inappropriate to allow the amendments, which were necessary in order for the real issues in controversy between the parties to be litigated.

Reporter: L.O’S.

CROKE v WATERFORD CRYSTAL LTD 2005 2 IR 383

SHEPPERTON INVESTMENT CO LTD v CONCAST (1975) LTD UNREP HIGH COURT BARRON 21.12.1992 1993/5/1393

MCFADDEN v DUNDALK & DOWDALLSHILL COURSING CLUB UNREP SUPREME 22.4.1994 1998/25/9762

PALAMOS PROPERTIES LTD v BROOKS & ORS 1996 3 IR 597

O'LEARY v MIN FOR TRANSPORT & ORS 2001 1 ILRM 132

HYNES v WESTERN HEALTH BOARD & CRONIN UNREP HIGH COURT CLARKE 8.3.2006

1 JUDGMENT of Mr. Justice Clarke delivered 17th May, 2006 .

1. Introduction

2 2 1.1 This judgment relates to an application made by the defendant ("KDBI") to amend its defence. The proceedings concern a loan transaction which was entered into by KDBI as part of its role in the managing of certain funds on behalf of the plaintiffs. The transaction would appear to be outside the formal authorisation terms under which the KDBI managed the relevant funds. The transaction gave rise to significant losses. In its existing defence KDBI maintains that the plaintiffs ("Hanvit" and "Woori") were aware of the disputed transaction prior to, or at least as early as, the 19th July, 2002 (the day after the transaction), that Hanvit and Woori either directed or were at least aware of the application of interest arising from the loan for a significant period of time and took no steps to require KDBI to undo the transaction.

3 3 1.2 KDBI now seeks to extend its defence in two respects. One category of amendments relates to a proposed plea that Woori and Hanvit knowingly benefited from what are contended to be higher returns available from the transaction in dispute and should have any entitlement to damages reduced by the sum accruing to the plaintiffs and accepted by them.

4 A further, and separate, proposed amendment relates to the role of a HJ Kim whom, it is contended, introduced the transaction the subject matter of the proceedings to KDBI and who, it is contended, was, at all material times, a director of Hanvit.

5 While not consenting counsel for the plaintiffs did not strenuously oppose the amendments in the first category to which I have referred. The real issue between the parties is, therefore, whether the proposed amendment relating to the involvement of HJ Kim should be allowed.

6 2 1.3 The matter was listed for hearing before me on 5th May last. As a case management conference was due to be conducted by the judge having carriage of the trial (Finlay Geoghegan J.) on 12th May I indicated to the parties that I would inform them of the result of the application prior to the case management conference. Having considered the matter I indicated to the parties that I proposed allowing all of the amendments (including the disputed amendment concerning the role of HJ Kim) but that I would give detailed reasons at a later date. The purpose of this judgment is to set out those reasons.

2. Background

7 2 2.1 In order to understand the principal ground of objection put forward on behalf of the plaintiffs to the contested amendment it is necessary to understand the background to the role of HJ Kim in the disputed transaction. Insofar as it is possible to ascertain at this stage it would appear that HJ Kim was, at all material times, a director of Hanvit. KDBI is an Irish company, which is a subsidiary of the Korean Development Bank ("KDB"). It is contended that HJ Kim may well have received his initial appointment as a director of Hanvit on the nomination of KDB.

8 3 2.2 However the real controversy between the parties arises out of the possibility that the entire loan transaction which is at the centre of these proceedings may have resulted from wrongdoing on the part of a number of persons including HJ Kim. The plaintiffs placed before the court a form of petition presented to the authorities in Korea by KDB in which KDB indicated its strong belief that they were "additional suspicions that DH Kim and HJ Kim bribed DK Kim with money and that DH Kim, HJ Kim and DK Kim bribed WR Kim." In fairness it should be noted that the petition records that the suspicions are "only based upon the statement that was made by DK Kim during out internal investigation but we have not found any other evidence yet". It would appear that the petition is part of a process in which the Korean authorities may be invited, in a formal fashion, to conduct enquiries into alleged wrongdoing. In that context it is said that, at a minimum, there are strong grounds for suspecting that HJ Kim was involved in wrongdoing in relation to the very transaction which is at the heart of these proceedings and that KDB, and by extension KDBI, share those suspicions. In those circumstances it is suggested that it is inappropriate to permit KDBI seek to rely upon the alleged knowledge of HJ Kim of the transaction.

3. The Law

9 2 3.1 The Supreme Court has recently addressed the question of amendment of pleadings in Croke v. Waterford Crystal Limited [2005] 2 I.R. 383. In the course of his judgment (speaking for the court) Geoghegan J. indicated that there had been an over emphasis in a number of cases on an obligation to give good reasons for having to amend the pleadings. In that context it may be said that some doubt was cast upon Shepperton Investment Company Limited v. Concast Limited (1975) Ltd (Unreported, High Court, Barron J. December 21st 1992); McFadden v. Dundalk and Dowdallshill Coursing Club Limited (Unreported, Supreme Court, April 22nd, 1994); and Palamos Properties v. Brooks (1996) 3 I.R. 597 insofar as those cases may have placed a significant weight upon the absence of a good reason for the case having not being properly pleaded in the first place. In expressing that view the court reaffirmed O'Leary v. Minister for Transport Energy and Communications [2001] 1 ILRM 132 and held that the principal consideration in an amendment application was to the effect that pleadings should be amended so as to ensure that the real questions of controversy between the parties should be determined in the litigation. That principle is, of course, subject to the limitation that amendments should not be made where to allow same would cause prejudice to the other party. This latter fact is, in turn, subject to the limitation that where it is possible to deal with the prejudice in a fair and just manner by means other than excluding the party from relying upon the matters sought to be pleaded (such as by an appropriate order for costs) then the amendment should be allowed and the...