Americhip, Inc v Dean
[2015] NZHC 2529
•14 October 2015
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2013-404-004247 [2015] NZHC 2529
BETWEEN AMERICHIP, INC
Plaintiff
AND
JASON CHARLES DEAN First Defendant
JUAN CHEN Second Defendant
Hearing: 14 October 2015 Appearances:
L Theron and C Cross for the Plaintiff
No appearance by or on behalf of the DefendantsJudgment:
14 October 2015
(ORAL) JUDGMENT OF WOOLFORD J
Solicitors: Meredith Connell, Wellington
Winston Wang & Associates, Auckland
AMERICHIP, INC v DEAN & ANOR [2015] NZHC 2529 [14 October 2015]
[1] I have before me the following applications, which have been set down for hearing today:
(a) Notice of Application by Plaintiff for Unless and Cross-examination
Orders dated 11 August 2015; and
(b)Notice of Application by Plaintiff for Orders Appointing Receivers and Unless Orders dated 21 September 2015.
[2] Between the filing of the two applications, Mr Jones QC, counsel for the first and second defendants advised the Court by memorandum dated 10 September 2015 that he was unable to act and sought leave to withdraw. Leave was granted by Heath J on 15 September 2015 for Mr Jones to withdraw as counsel. The solicitors for the defendants however remained on the Court record. I have, however, today been provided with an interlocutory application for an order declaring that the solicitor on record for the defendants, Mr Wang, has ceased to act, together with an affidavit in support.
[3] Although the applicant, Mr Wang, has not appeared today, I am prepared to deal with his application on the papers. It seems to me, in the circumstances as outlined in his affidavit, that leave should be granted to him to withdraw as solicitor on the record. In his affidavit, Mr Wang annexes correspondence both from Mr Jones QC and himself to his clients. In particular, he advised his clients by letter dated 8 October 2015, that if they wished to continue to defend the proceedings they would need to either instruct a new lawyer to act on their behalf or conduct the proceedings themselves. He advised them that if they wished to act on their own behalf, they would need to provide to the High Court and solicitors for the plaintiff details of an email address, which they were regularly and reliably monitoring and by which they were able to receive communications in relation to the proceedings.
[4] Ms Chen replied to Mr Wang by email on 9 October 2015, as follows:
Thank you Winston I will contact Ann Mitchell (a Registrar in the High
Court).
She has, however, not contacted the High Court or the plaintiff’s solicitors with advice as to any contact address. Fortuitously, in Court this morning was Mr Dean’s mother, Ms Sylvia Dean, and after discussions with her it has been agreed that any further correspondence or documents can be served on her son by posting them to her at her residential address.
[5] I request that Mr Wang, having being granted leave to withdraw as solicitor on record, notify his clients that service of any future documents in these proceedings will be on his mother at her postal address.
[6] In the minute of 15 September 2015, Heath J directed that if the defendants intended to take any steps in advance of the hearing today that they must obtain leave to do so out of time. He directed that any application for leave must be made formally and supported by affidavits explaining the reasons for the delay to date. He advised that in the absence of such an application the Court would determine the application for unless and cross-examination orders on the basis of the materials provided by the plaintiff.
[7] The defendants are not represented by counsel, nor have they appeared in person. No application for leave has been made formally. I therefore proceed to determine the applications on the basis of the materials provided by the plaintiff.
[8] As to the first application, it seeks two orders:
(a) That the defendants attend the High Court at Auckland on such date as is fixed by the Court for cross-examination on their affidavits dated
5 May 2015, 11 May 2015, memorandum dated 29 July 2015 and any further affidavits provided in response to the order for disclosure dated 24 April 2015 (and the Court’s further orders extending the time for compliance dated 4 May 2015 and 3 July 2015).
(b)That, unless the defendants each file an affidavit in full compliance with the disclosure order dated 24 April 2015 and, in particular, provide:
(i)answers to the 10 questions identified in appendix A to the application;
(ii)supporting documentation or an explanation as to why there is no supporting documentation for those answers;
(iii)evidence of attempts to obtain bank statements relating to the bank accounts identified in appendix B to the application;
within five working days of the orders, the defendants will be debarred from defending the proceedings and Americhip may proceed by way of formal proof against the defendants.
[9] Americhip applied for the order that the defendants be cross-examined in order to obtain further information about their assets so that sufficient assets could be located and preserved to meet a judgment. The application was made before Mr Jones QC sought leave to withdraw as counsel. Americhip now recognises that if the defendants persist in their current approach (not to participate in the proceedings or to respond to any correspondence and to ignore Court orders) then a cross- examination order is likely to be futile. That is the position currently and, accordingly, Americhip seeks an adjournment of the application for a cross- examination order or leave to reapply if circumstances change. Accordingly, I will adjourn this aspect of it’s first application.
[10] The second interlocutory application seeks orders for:
(a) The appointment of Grant Graham and Neale Jackson of
KordaMentha as joint and several receivers of the property at
15B Brighton Terrace, Mairangi Bay, Auckland, in terms of the draft orders attached to the application; and
(b)An order that, unless the defendants pay the costs awarded against them by Katz J on 10 August 2015 and Moore J on 27 August 2015, totalling $37,283.66, within five working days of the order, the
defendants will be debarred from defending the proceedings and
Americhip may proceed by way of formal proof against the defendants.
[11] The second orders sought in both applications are the debarment of the defendants from defending the proceedings if each does not file a comprehensive affidavit in full compliance with the disclosure order dated 24 April 2015 and also if the costs awarded against them are not paid, both within five working days of the order.
[12] The plaintiff submits that recently disclosed documents evidence significant assets that have not been disclosed, including NZ$8.3 million that was withdrawn from Mr Dean’s bank account within two weeks of Americhip confronting the defendants in Auckland in August 2013. Furthermore, the plaintiff notes that the defendants are no longer participating in the proceeding.
[13] The plaintiff submits that these circumstances confirm that there is a significant risk of dissipation of assets to avoid meeting a judgment. It appears that assets, including in China, have not been disclosed to avoid satisfaction of a judgment. The plaintiff also submits that the defendants have deliberately not complied with Court orders inasmuch as their disclosure has been incomplete, evasive, and there is reason to believe it has been untruthful.
[14] In those circumstances, the plaintiff submits that more stringent orders are therefore required to maintain respect for the law and to protect Americhip, including by immediately appointing receivers to protect the most significant asset disclosed and frozen, a property in Mairangi Bay (in respect of which Americhip claims beneficial title).
[15] Having heard at some length from counsel for the plaintiff, I am satisfied, largely for the reasons articulated in her written submissions, that both applications should be granted. Moore J did not see fit to grant the application for the appointment of receivers when he dealt with that application. I am of the view that circumstances have changed. In particular, the defendants are no longer participating
in the proceedings and there is a very real prospect of a default judgment being entered against them. I am also satisfied, on the basis of the material provided to me, that there has been deliberate non-compliance with previous Court orders.
[16] As to, in particular, the receivership there is in my view, no other form of interim relief that will preserve the income earning potential of the property for whoever is ultimately held to be entitled to it. If an order for receivership is not made and Americhip’s claim is upheld, then Americhip will have been deprived of income to which it was entitled. It appears that there may be no other source from which that loss could be made good, given the shortfall between the amounts claimed by Americhip and the assets disclosed by the defendants and frozen by Americhip.
[17] Accordingly, the following orders are made:
(a) That unless the defendants each file an affidavit in full compliance with the disclosure order dated 24 April 2015 and, in particular, provide:
(i)answers to the 10 questions identified in appendix A to the application;
(ii)supporting documentation or an explanation as to why there is no supporting documentation for those answers;
(iii)evidence of attempts to obtain bank statements relating to the bank accounts identified in appendix B to the application;
within ten working days of the order, the defendants will be debarred from defending the proceedings and Americhip may proceed by way of formal proof against the defendants.
(b)An order that unless the defendants pay the costs awarded against them by Katz J on 10 August 2015 and Moore J on 27 August 2015, totalling $37,283.66, within ten working days of the order, the
defendants will be debarred from defending the proceedings and
Americhip may proceed by way of formal proof against the defendants.
(c) Grant Graham and Neale Jackson of KordaMentha are appointed as joint and several receivers of the property at 15B Brighton Terrace, Mairangi Bay, Auckland, in terms of the draft orders attached to the application with the exception that the receivers are to pay the costs awards of Katz J and Moore J out of any rental proceeds, but otherwise are to hold those proceeds on trust.
[18] The application for cross-examination orders is adjourned with leave reserved to the plaintiff to make application to bring it on at ten working days notice.
[19] Finally, the plaintiff is entitled to indemnity costs in respect of these applications which can also come out of the rental proceeds of the Mairangi Bay property.
……………………………….
Woolford J
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