AHS Construction Limited fta Advanced Housing Systems NZ Limited v Andrews

[2019] NZHC 1779

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE

CIV-2019-470-68

[2019] NZHC 1779

BETWEEN

AHS CONSTRUCTION LIMITED formerly

trading as ADVANCED HOUSING SYSTEMS NZ LIMITED

Applicant

AND

DANNY AND GLENDA ANDREWS

Respondents

Hearing:	On the papers
Judgment:	26 July 2019

JUDGMENT OF GORDON J

This judgment was delivered by me on 26 July 2019 at 3 pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

Solicitors:           Hollister-Jones Lellman, Tauranga

AHS CONSTRUCTION LTD v ANDREWS [2019] NZHC 1779 [26 July 2019]

[1]    The applicant, AHS Construction Ltd, formerly trading as Advanced Housing Systems NZ Ltd (AHS), applies without notice for leave to issue a charging order before judgment under r 17.41 of the High Court Rules 2016. The application is supported by an affidavit of Paul William, a director of AHS.

Background

[2]    In 2018, AHS entered into an oral agreement with the respondents to prepare a housing platform on the respondents’ (the Andrews) property, Lot 1, 333 Pahoia Road (the property) in the Western Bay of Plenty. The Andrews also asked AHS to price the construction of a house on the property. AHS undertook the work and completed the housing platform, but the Andrews chose not to go ahead with the house construction. The reason given was that the quote given by AHS was more than they had anticipated and they had chosen to commence another development.

[3]    AHS has made demand for payment from the Andrews, who have either failed or refused to pay. AHS has issued proceedings by way of a statement of claim dated 14 June 2019 in the District Court at Tauranga claiming for the cost of the initial site earthworks, construction of the building platform and obtaining a building consent.

[4]    The Andrews are permanent residents of the Gold Coast, Australia. They have now placed the property up for sale with an auction date of 30 July 2019. The marketing material annexed to Mr Williams’ affidavit has the headline “Overseas vendor liquidates prime waterfront land”.

Charging orders

[5]Rule 17.41 provides:

17.41   Leave to issue charging order

Leave to issue a charging order before judgment may be granted only on proof that the liable party, with intent to defeat either his or her creditors or the entitled party or both,—

(a)is removing, concealing, or disposing of the liable party’s property; or

(b)is absent from or about to leave New Zealand.

[6]    There is differing case law as to whether there is a threshold requirement. The favoured approach, as set out in McKay v 314 Maunganui Road Ltd (under the previous r 567 which was materially similar), is that there is no threshold requirement. In that case, Keane J held:1

To obtain the benefit of the rule a claimant need not show a serious question to be tried or that he or she is favoured by the balance of convenience and justice overall, but must satisfy a test that is equally stringent.

[7]    The Court continued that the rule required the applicant to establish that the respondent had a particular intent, namely “an ‘intent to defeat’ the claim and to do so by ‘making away’ with the property. In short an intent to act illegitimately”.2

[8]    In this case, the applicants rely on r 17.41(b), that the respondents are absent from New Zealand. On behalf of the applicants it is submitted that the intention to defeat creditors is satisfied on the evidence.

[9]    The Andrews are residents of the Gold Coast. They operate a company in the Gold Coast, Andrews Project, which is a company registered in Australia. They own no property here in New Zealand and are liquidating their sole asset in New Zealand.

[10]   I accept the submission made on behalf of the applicant that the necessary intent can be inferred by the Andrews’ act of arranging a liquidation sale of the property. The Andrews’ act of selling the property without making provision to pay AHS will defeat, hinder and delay payment of the debt.

[11]   I accept that the sale of the only asset owned by the Andrews in New Zealand will prejudice AHS if it is successful in its claim. If the property is sold on 30 July 2019 and the proceeds taken to Australia, and if AHS is successful in its claim, it will be forced to register the judgment in Queensland and pursue enforcement there.

[12]   Counsel for the applicant advises that AHS has asked the Andrews’ solicitors to confirm they will retain a sufficient amount from the proceeds of sale to meet any judgment, but to date the solicitors have refused.

1      McKay v 314 Maunganui Road Ltd HC Auckland CIV-2007-404-7434, 30 April 2008 at [24].

2 At [25].

[13]   In all the circumstances, I am satisfied that leave should be granted to AHS to issue a charging order before judgment in the terms as sought, namely the estate, right, title or interest of Danny and Glenda Andrews in 333 Pahoia Road, Pahoia (legal description: Lot 1 Deposited Plan 479371) be charged with payment of the amount for which the entitled party, AHS Construction Ltd, formerly trading as Advanced Housing Systems NZ Ltd, may obtain judgment, being $99,358.96.

[14]The Andrews have leave to apply to this Court on three days’ notice.

Gordon J