ASI Global Investments Inc v Al-Yousef

[2021] NZHC 288

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-1173

[2021] NZHC 288

BETWEEN

ASI GLOBAL INVESTMENTS INC

Applicant

AND

ABBAS IBRAHIM YOUSEF AL YOUSEF

Respondent

Hearing:	15 February 2021
Appearances:	B O’Callahan and D Yu for Applicant M D Pascariu for Respondent
Judgment:	26 February 2021

JUDGMENT OF LANG J

[on application for continuation of pre-judgment charging order]

This judgment was delivered by me on 26 February 2021 at 3.30 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date……………

Solicitors:

K3 Legal Ltd

Anderson Creagh Lai Ltd, Auckland

ASI GLOBAL INVESTMENTS INC v YOUSEF [2021] NZHC 288 [26 February 2021]

[1]    On 1 September 2020 Downs J granted a without notice application by the applicant, ASI Global Investments Inc (ASI), for a pre-judgment charging order over a block of forestry land in Northland owned by the respondent, Mr Abbas Al-Yousef.1

[2]    ASI now seeks an order that the charging order is to remain in force pending determination of civil proceedings it has filed against Mr Al-Yousef in Switzerland (the Swiss proceedings). Mr Al-Yousef asks for the orders to be set aside with immediate effect.

Background

[3]    The present proceeding forms a sideshow to litigation involving members of the Al-Yousef family in Switzerland, Dubai and Liechtenstein. The litigation reflects the fact that Mr Al-Yousef is now at loggerheads with his wife and three children regarding property-related issues.

[4]    Mr Al-Yousef originally controlled ASI and its subsidiaries. Those companies are incorporated in the British Virgin Islands and it appears that they accumulated substantial assets. Unfortunately, however, Mr Al-Yousef became the victim of several fraudulent schemes perpetrated by persons in Africa. ASI contends this resulted in Mr Al-Yousef transferring assets belonging to the companies to the fraudsters and obtaining loans in ASI’s name that enabled him to make substantial payments to them. In total Mr Al-Yousef is alleged to have transferred company assets to the fraudsters having a value in excess of US$48 million. ASI subsequently treated the use of those funds and assets as a loan to Mr Al-Yousef.

[5]    In 2015 Mr Al-Yousef executed powers of attorney in favour of his son, Saeed. He also transferred the shares he held in ASI to his wife. There are conflicting accounts as to the reason for this and as to whether he still holds any shares in ASI. The family say Mr Al-Yousef agreed to execute the power of attorney because he acknowledged (and did not wish to repeat) the losses he had caused to the family fortunes when he exercised poor judgment in transferring company assets to the

1      ASI Global Investments v Al Yousef HC Auckland CIV-2020-404-1173, Minute of Downs J dated 1 September 2020.

African fraudsters. Mr Al-Yousef says he executed the powers of attorney to enable his son to develop his business and entrepreneurial skills. Whatever the reason, Saeed and Mr Al-Yousef’s wife then took control of Mr Al-Yousef’s business assets, including ASI and its subsidiaries. This led to ASI treating the value of the assets that Mr Al-Yousef transferred to the fraudsters as a loan or advance that needed to be repaid.

[6]    In the Swiss proceedings ASI contends Mr Abbas Al-Yousef originally caused it losses amounting to approximately US$48 million by transferring assets to the African fraudsters. This sum was progressively reduced as Mr Saeed Al-Yousef used the powers of attorney to transfer funds and assets belonging to his father into ASI’s name and control. ASI nevertheless contends Mr Al-Yousef still owes it approximately $11.8 million.

[7]    The sum owing to ASI may in fact be larger because there is now a dispute regarding the validity of the final transaction in which Mr Saeed Al-Yousef used one of the powers of attorney to transfer assets owned by Mr Al-Yousef to ASI after receiving advice that his father had revoked the powers of attorney.

[8]    In the Dubai proceedings members of Mr Al-Yousef’s family alleged Mr Al- Yousef suffered from mental infirmity. They sought orders from the courts in Dubai appointing Mr Saeed Al-Yousef as his father’s administrator or manager. The Dubai proceedings appear to have ended with the courts in Dubai concluding Mr Al-Yousef is now capable of managing his own affairs.

The proceeding in this Court

[9]    ASI sought a pre-judgment charging order in this Court on a without notice basis to protect the fruits of any judgment it might obtain in the Swiss proceedings. It relied on r 17.41 of the High Court Rules 2016, which permits the Court to issue a pre- judgment charging order where a debtor is either absent from New Zealand or is disposing of assets with intent to defeat creditors.

[10]   This is the third occasion on which the Court has been asked to determine whether it should make or continue a pre-judgment charging order. Duffy J dismissed

ASI’s initial application, which relied on the fact that Mr Al-Yousef was absent from New Zealand.2 Duffy J was not satisfied Mr Al-Yousef’s absence from New Zealand was connected to any intent to defeat his creditors.3 That outcome was not surprising because it appears Mr Al-Yousef has never been to this country.

[11]    When ASI renewed its application before Downs J it alleged Mr Al-Yousef was endeavouring to sell or dispose of the forestry block in Northland with intent to defeat ASI’s interests as a creditor. The Judge was persuaded to make the order in part because of evidence ASI adduced from one of Mr Al-Yousef’s business associates, Dr Matthias Niedermuller. Dr Niedermuller gave evidence about a telephone conversation he had had with Mr Hans Rudolf Häni, a family friend of Mr Al-Yousef, on 7 August 2020. Mr Häni did not wish to become involved in the dispute involving the Al-Yousef family and was not prepared to provide an affidavit. ASI was therefore required to rely on the hearsay evidence of Dr Niedermuller to place Mr Häni’s version of events before the Court.

[12]   Dr Niedermuller deposes Mr Häni told him he had asked Mr Al-Yousef to reimburse  him  for  expenses  he  had  incurred  in  relation  to  the   storage  of     Mr Al- Yousef’s motor vehicles. Mr Häni said the following exchange then occurred:

… [Mr Al-Yousef] replied to this that he would acknowledge the debt but currently was out of funds and therefore was not able to repay the outstanding debt of CHF [Swiss francs] 15’000. Mr Häni then told [Mr Al-Yousef] that he considered [Mr Al-Yousef] to be effectively broke. To this [Mr Al-Yousef] replied that he was currently in the process of selling some of his assets and had instructed persons to sell a property he owned in New Zealand and therefore should be able to get some further funds. After this sale [Mr Al- Yousef] would again be able to repay the outstanding debt.

[13]   Downs J noted that Mr Häni’s statements were hearsay. The Judge considered Mr Häni clearly appreciated the significance of what was being discussed and there was nothing to suggest Mr Häni was of dubious veracity.4 The Judge then concluded:5

[10] Rule 17.41(a) [of the High Court Rules 2016] requires “proof” the respondent “is removing, concealing, or disposing of” their property. Mr Al- Yousef’s observation to Mr Häni he is selling property in New Zealand could,

2      ASI Global Investments Inc v Al Yousef [2020] NZHC 1984.

3 At [29].

4      ASI Global Investments v Al Yousef, above n 1 at [9].

5      ASI Global Investments v Al Yousef, above n 1.

of course, be puffery; the observation was made in response to Mr Häni wanting reimbursement. However, with the evidence discussed by Duffy J, I am satisfied the rule is met. So too the requirement Mr Al-Yousef is doing so with the intent to defeat his creditors, ASI, or both.

[14]   The evidence  ASI  had  placed  before  Duffy  J  included  assertions  that  Mr Al- Yousef had squandered family assets in the past, he was resisting the Swiss proceedings, he had committed forgery to prevent some of his European assets from being seized, he had unpaid accounts in several jurisdictions and he was delaying seizure proceedings in Liechtenstein.

[15]   Matters have moved on evidentially because Mr Al-Yousef has now filed an affidavit denying he is indebted to ASI and explaining his intentions regarding the forestry block. He has also provided several affidavits sworn or affirmed by other persons who have been involved in the events I have described. Mr Al-Yousef contends the new evidence undermines ASI’s argument that Mr Al-Yousef is indebted to it.

[16]   Mr Al-Yousef also contends the charging order should be set aside at this point because ASI failed to draw the Court’s attention to significant factual, legal and procedural issues that were material to its application. He also says the new evidence demonstrates that grounds do not exist to justify the charging orders remaining on the titles to the forestry block. In particular, he says the Court cannot now be satisfied he is selling or otherwise disposing of either the land or the harvesting rights in relation to the forest on the land with intent to defeat his creditors.

Did ASI fail to provide the Court with all material information when it obtained the orders on a without notice basis?

[17]   As in the case of any application sought on a without notice basis, an applicant seeking a pre-judgment charging order owes a duty to the Court to make a full and fair disclosure of all material facts. Failure to do so may result in the Court rescinding any orders that it makes. These principles reflect rr 7.23(3) and (4), which provide:

7.23     Application without notice

…

(3)An applicant who makes an application without notice must, if the application is of a kind that is likely to be contested if it were made on notice, file a memorandum with the application that sets out—

(a)the background to the proceeding (including the material facts that relate to the proceeding); and

(b)the grounds on which the order is sought; and

(c)an explanation of the grounds on which each order is sought without notice; and

(d)all information known to the applicant that is relevant to the application, including any known grounds of opposition or defence that any other party might rely on, or any facts that would support opposition to the application or defence of the proceeding by any other party.

(4)Failure to disclose all relevant matters to the court or to comply with subclause (3) may result in the court—

(a)dismissing the application; or

(b)if 1 or more orders have been made by the court in reliance on the application, rescinding those orders.

…

(Emphasis added)

[18]   Mr Pascariu contends on Mr Al-Yousef’s behalf that ASI failed to fully and fairly disclose the true situation when it advanced its second application before Downs J for the following reasons:

(a)By asserting Mr Al-Yousef had squandered “family  money”  when Mr Saeed Al-Yousef knew his father had acquired those funds himself through his own efforts;

(b)In failing to advise the Court that Mr Al-Yousef disputed ASI’s contention that he owed money to it;

(c)In failing to advise the Court that Mr Al-Yousef contended his son Saeed used the power of attorney to transfer assets from his father’s ownership to ASI after receiving advice that his father had revoked them;

(d)In failing to advise the Court of the requirements under Swiss law before a loan may be recovered;

(e)In failing to advise the Court about the positions taken by other persons who were acting as Mr Al-Yousef’s fiduciaries;

(f)In failing to advise the Court about the Dubai proceedings.

[19]   I deal with each of these arguments briefly because, regardless of whether they are considered individually or collectively, I do not consider they would have made any difference if they had been disclosed when Downs J determined ASI’s renewed application for a pre-judgment charging order.

Reference to “family money”

[20]   I do not consider the use of the term “family money” to be of any significance. Mr Al-Yousef was clearly sufficiently trusting of his son Saeed that he was prepared to execute the powers of attorney in his favour and thereby permit him to deal with ASI’s assets. He also signed a share transfer in favour of his wife. This suggests he considered the assets belonged to the family as a whole. Furthermore, on ASI’s case the assets that Mr Al-Yousef transferred to the fraudsters did not  belong to  either Mr Al-Yousef or the family as a whole. Rather, they belonged to ASI or its subsidiaries.

Denial of indebtedness

[21]   Other than statements made in his affidavit there is very limited independent evidence that Mr Al-Yousef has denied he owes money to ASI. Perhaps the clearest expression of denial, albeit bare denial, is contained in an email that Mr François Chesnay, a consultant engaged by the Al-Yousef family in 2013, sent to several recipients on 23 November 2016. The recipients included Mr Saeed Al-Yousef. The email includes the statement “Abbas disputes that he has borrowed any money (let alone the aforementioned amount of over US$40 million) from ASI”.

[22]   However, the material before the Court when Downs J granted the second application included the fact that Mr Al-Yousef was contesting the Swiss proceedings. The Judge would therefore have known Mr Al-Yousef was resisting ASI’s attempts to recover the loan in those proceedings. Furthermore, the fact that a debtor may deny indebtedness to a creditor is unlikely to be of great moment in an application for a pre- judgment charging order. I therefore regard this issue as being of little significance.

Notice of revocation of powers of attorney

[23]   Mr Pascariu relies on this as the most serious omission. It relates to ASI’s failure to disclose that Mr  Al-Yousef  contends  the  final  transaction  Mr  Saeed  Al- Yousef undertook using the powers of attorney was arguably invalid because he had received advice by that stage that he had no authority to act on his father’s behalf.

[24]   I see no relevance in this fact for present purposes because, even assuming Mr Al-Yousef’s argument succeeds, the result will be that Mr Al-Yousef’s indebtedness to ASI will increase. If ASI is directed to return the assets involved in the final transaction, or the value of those assets, it will result in Mr Al-Yousef’s indebtedness to ASI increasing by a corresponding amount.

Requirements of Swiss law to establish an enforceable loan

[25]    The evidence adduced by Mr Al-Yousef in support of the present application suggests that, under Swiss law, a loan will only be enforceable where the recipient of funds is subject to an obligation to repay them. Mr Benjamin Lörtscher, a Swiss lawyer, has provided an affidavit in which he deposes that, in order to enforce repayment under Swiss law, a lender must “sufficiently prove and document not only the transfer of funds but also the obligation to repay, interests etc”. Mr Lörtscher is critical of the evidence provided by ASI in the Swiss proceeding.

[26]   It is arguable, however, that Mr Lörtscher has misunderstood the nature of ASI’s claim. As I understand the position, ASI does not contend it loaned monies to Mr Al-Yousef in the traditional sense. Rather, it argues he used company assets for unauthorised purposes when he transferred them or otherwise made them available to

the  fraudsters in Africa.    That forms the basis for ASI’s claim that he must now reimburse it for the losses caused by his actions.

[27]   In any event the requirements of Swiss law regarding debt recovery do not appear to differ greatly from the requirements under New Zealand law to recover repayment of a loan. A lender in New Zealand will generally have to prove the terms on which funds were advanced, one of which will be an obligation to repay either at a specified time or on the happening of a specified event. I do not consider this issue would have had any effect on the outcome of the application when it was determined by Downs J.

The position of the fiduciaries

[28]   Since 2010 ASI and its subsidiaries have been assisted by four fiduciary experts. The nature of their role is not entirely clear, but I take it to be the provision of expert financial and other advice regarding business matters. They also appear to have some role in the management of the ASI companies.

[29]   Mr Pius Waser is one of the fiduciaries. He has filed an affidavit in which he deposes that Mr Saeed Al-Yousef advised the fiduciaries in 2015 that his father could not make any major financial decisions because of mental impairment. This meant other members of his  family would be taking  full control of the  family’s assets.   Mr Waser says that over the next two years he and the other fiduciaries “were misinformed and manipulated by the Al-Yousef  family into believing it was true   Mr Al-Yousef had a mental illness”. As a result, the fiduciaries were under the impression that the actions taken by Mr Saeed Al-Yousef using the powers of attorney granted by his father were part of a legitimate restructuring of the ASI companies due to Mr Al-Yousef’s mental illness.

[30]   Mr Waser says that in November 2016 he received advice from Mr Al-Yousef’s counsel that Mr Al-Yousef had revoked the powers of attorney he had earlier executed in favour of his son. Mr Waser also met with Mr Al-Yousef at about this time and noted that he was focussed and mentally sharp. It became apparent to Mr Waser that the Al-Yousef family had been lying to the fiduciaries about Mr Al-Yousef’s mental impairment. The fiduciaries then began an investigation of the affairs of the ASI

companies and this led them to require Mr Saeed Al-Yousef to return the assets transferred to ASI after 2015.

[31]   Again, however, any reversal of the asset transfers undertaken since 2015 would only result in Mr Al-Yousef’s alleged indebtedness to ASI being increased. For that reason, and even assuming there is validity in Mr Waser’s concern about the use of  the  powers  of  attorney,  the  stance  taken  by  the  fiduciaries  cannot  assist   Mr Al- Yousef for present purposes. I therefore do not consider ASI was under any obligation to disclose the role played by the fiduciaries between 2015 and 2017.

The Dubai proceedings

[32]   As I have already recorded, Mr Saeed Al-Yousef and other members of Mr Al- Yousef’s family commenced the Dubai proceedings seeking to have Mr Saeed Al- Yousef appointed as his father’s manager or administrator. They alleged Mr Al-Yousef was suffering from mental impairment that prevented him from managing his own affairs. The Dubai proceedings came to an end on 26 November 2019 when the Dubai Court of Cassation, the highest court in Dubai, confirmed the judgments of courts below that Mr Al-Yousef did not suffer from mental impairment that prevented him from managing his affairs. Mr Pascariu contends ASI ought to have disclosed the existence of the Dubai proceedings when it applied for the charging order.

[33]   I do not accept this submission because I do not consider the issue to be material for present purposes. The Dubai proceedings had ended approximately eleven months before Downs J determined ASI’s second application for a charging order. By that stage the existence and outcome of those proceedings were matters of historical interest only. I do not see how they could have had any bearing on the issues Downs J was required to consider.

Conclusion

[34]   I therefore reject Mr Pascariu’s preliminary argument that the charging order should be set aside because ASI failed to fully and fairly inform the Court of all material information when it obtained the order from Downs J. This leads to the next

issue, which is whether the charging order should remain in effect given the evidence that is now before the Court.

Should the charging order remain in effect?

[35]Rule 17.41 of the High Court Rules 2016 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.

[36]   As I have already observed, ASI originally advanced its application before Duffy J on the basis that Mr Al-Yousef was absent from New Zealand with intent to defeat his creditors. It now alleges he is in the process of disposing of the forestry block or harvesting rights with that intent.

[37]   The evidence about Mr Al-Yousef’s current financial situation is equivocal. ASI accepts he has no known creditors in New Zealand but contends he owes debts in other jurisdictions. Mr Al-Yousef says he has now reimbursed Mr Häni for the costs incurred in storing his motor vehicles. He also says the recent cashflow issues he has experienced were caused by his son’s unauthorised use of the powers of attorney. He contends he has now recovered some of his assets and this has enabled him to pay his creditors in full. Taking these factors into account I am not satisfied Mr Al-Yousef currently has any creditors other than ASI.

Does ASI have an arguable case against Mr Al-Yousef?

[38]   There has been some debate in the authorities as to whether an applicant for a pre-judgment charging order must be able to demonstrate that it has an arguable case against the defendant. In Lennox-King v Johnson, Fisher J considered an applicant needed to demonstrate it had an arguable case against the respondent or, put another way, whether there was any reason for reservations about the merits of the plaintiff’s

case.6 Fisher J considered the test to be applied depended on the circumstances of the case.

[39]   In McKay v 314 Maunganui Road Ltd Keane J disagreed and held that an applicant need not show a serious question to be tried or that the balance of convenience and interests of justice require an order to be made.7 Keane J considered the applicant must satisfy the test set out in the rule, in this case r 17.41. He considered this to be “a test that is equally stringent”.

[40]   There is an obvious difficulty with the latter approach in situations such as the present, where the applicant is the only known creditor and it has not yet obtained judgment against the defendant. In such a case it would obviously be wrong to make a pre-judgment charging order where the applicant’s case against the respondent is plainly without merit. It would be equally inappropriate to require the applicant to establish its claim on the balance of probabilities because that is the standard required at trial. Decisions made at an interlocutory stage are often made in circumstances where the evidence is incomplete and a decision is required urgently. For these reasons I favour the test suggested by Fisher J in Lennox-King.

[41]   Several factors appear to me to be relevant in the present context. First, there appears to be no dispute that Mr Al-Yousef transferred assets belonging to ASI and its subsidiaries to the fraudsters in Africa. ASI then treated those funds as being a loan made by it to Mr Al-Yousef. In an email sent by Mr Waser on 28 November 2016 to Mr Chesnay, a manager employed by one of AIS’s subsidiaries, Mr Waser stated:

Abbas took all the money out from the different ASI Companies and the money was sent to his various companies. We had to restructure all the loans otherwise it would be too complicated. The result of the assignments was that Abbas has a loan from ASI Global Investments Inc, and not any more Pilatus, Abbas etc.

[42]   Secondly, the transfer of the companies’ funds to either Mr Al-Yousef’s companies or the fraudsters was obviously of no benefit to the ASI companies. The directors of a company incorporated in New Zealand have a duty to act in good faith

6      Lennox-King v Johnson (1997) 10 PRNZ 664 (HC) at 665.

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

and in what they believe to be the best interests of the company.8 Under New Zealand law it seems likely that a person in Mr Al-Yousef’s position would therefore be treated as owing a company money if he dealt with its assets in his capacity as a director in a manner contrary to what he believed to be in the best interests of the company. If the director was also a shareholder this would usually be accomplished by debiting the shareholder’s current account with the value of the assets of which the company has been deprived. Mr Chesnay confirms that directors of companies incorporated in the British Virgin Islands are subject to similar statutory obligations:

22 Regarding Mr Waser and his responsibilities as a director at the time, pursuant to the BVI [British Virgin Islands] Business Companies Act 2004, these transactions could not have been treated as gifts because a director owes duties solely to the company as a whole and a director must act in good faith in what the director considers to be in the best interests of the company as a whole. A director is regarded as a trustee of the company’s property. Accordingly, a director may only use the company’s property for the benefit of the company. A director must not use the company’s property for the director’s own personal gain.

[43]   Thirdly, ASI has taken the step of issuing and continuing the Swiss proceedings to recover the amount currently outstanding. This suggests it is serious about asserting its rights.

[44]   Fourthly, on 27 November 2013 Mr Waser provided Mr Chesnay with a document that appears to be a set of management accounts for ASI. This was prior to Saeed and his mother taking control of the businesses. The document relates to the year ending 31 March 2013. This shows “other A/R group companies” as owing ASI approximately US$45.9 million as at that date.

[45]   Finally, although Mr Al-Yousef’s arguments relating to the use of the powers of attorney may be relevant to the issue of quantum of any judgment ASI may obtain in the Swiss proceedings it is difficult to see how they can be relevant to the issue of liability. Mr Saeed Al-Yousef used the powers of attorney well after his father had transferred ASI’s assets to the African fraudsters. As I have already observed, if ASI is now required to restore those assets to Mr Al-Yousef his indebtedness to ASI will increase correspondingly.

8      Companies Act 1993, s 131.

[46]   Taking these factors into account I consider ASI appears to have an arguable case in the Swiss proceedings. Put another way, I do not have reservations about the nature of its case in those proceedings. ASI therefore qualifies as a creditor for the purposes of r 17.41.

Is Mr Al-Yousef attempting to dispose of the forestry block?

[47]   Mr Al-Yousef explains his current intentions relating to the forestry block as follows:

9.The Forestry Block

9.1.I am an active investor. I buy and sell assets regularly. I also regularly monitor the performance of my investments. As the trees in the Forestry Block were coming to maturity in 2020, in 2019 I commissioned a proposal from PF Olsen for harvesting the logs. A copy of the proposal, which was issued in June 2019 is annexed and marked “F”.

10.To further explore the option of harvesting the logs, in May 2020 I engaged Pango Limited for additional advice. A copy of Pango Limited’s report is annexed and marked “G”. Due to the record lows of log prices I formed the view that it would not be commercially sensible to harvest the logs for the time being. I will regularly reassess the global market for log prices and to the extent the market recovers, I may decide to proceed with harvesting the logs. A copy of the email correspondence I had with my New Zealand lawyer regarding the harvesting of the Forestry Block is annexed and marked “H”.

11.I never told Hans Häni that I intend to sell the Forestry Block. I may have told him that I was considering harvesting the logs in the context of our discussion about terminating our business relationship and paying any money I owed him. We ended our relationship on good terms in early July 2020. A copy of the email chain I exchanged with Mr Häni regarding the termination of our relationship is annexed and marked “I”.

12.As I always pay my creditors, it was my intention to honour the debt. When I decided not to proceed with the harvesting of the Forestry Block I arranged for Mr Häni to be paid from other sources. A copy of an email confirmation of this payment from Mr Waser to Mr Häni is annexed and marked “J”.

[48]   The report that Mr Al-Yousef received from Pango Limited makes it clear that any decision to harvest the logs is likely to face significant practical hurdles. These flow from the fact that the block contains numerous sites of archaeological and cultural significance. On this issue the report observes:

Presently the biggest impediment to the harvest of the woodlot is in fact the extensive archaeological sites. In order to determine what impacts these features will have on harvesting costs and whether in fact harvesting can proceed AT ALL there will be first need to be an archaeological survey undertaken focussing on the recorded sites and documentation of new sites not found and recorded. Once this has been completed there will need to be a management plan drawn up which will then determine what can practically be done with respect to harvesting. This management plan will then also require both Historic Places Trust signoff and the local Iwi in advance of any planned road construction and/or tree extraction.

[49]   Mr Al-Yousef’s evidence, coupled with the email correspondence he has exhibited, demonstrate that during 2019 and 2020 he was actively using professional advisers in New Zealand, including valuers and solicitors, to investigate the possibility of selling the land and/or harvesting rights. His evidence also makes it clear that, as an active investor who regularly buys and sells assets, he remains interested in disposing of those assets. Any decision to do so will likely be driven by external factors, including global log prices and/or his ability to reach an accommodation with the Historic Places Trust and local iwi regarding the archaeological sites.

[50]   I have therefore concluded that, although Mr Al-Yousef has no immediate plans to sell either asset in the short term, that may well change if the global outlook for log prices improves. I regard the disposal of the land and/or harvesting rights as an ongoing process because Mr Al-Yousef is still actively considering the sale of both the forestry block and the harvesting rights. ASI would have no ability to prevent either transaction occurring because it has no means of monitoring Mr Al-Yousef’s activities in New Zealand.

[51]   The next issue is whether Mr Al-Yousef is doing so with intent to defeat his creditors as required by r 17.41(a).

Is Mr Al-Yousef disposing of the block with intent to defeat creditors?

[52]   In Regal Castings Ltd v Lightbody the Supreme Court considered s 60 of the Property Law Act 1952, which related to the transfer of property with intent to defraud

creditors.9   On the issue of what constituted “intent to defraud” Blanchard J observed:10

[54] Whenever the circumstances are such that the  debtor  must  have known that in alienating property, and thereby hindering, delaying or defeating creditors’ recourse to that property, he or she was exposing them to a significantly enhanced risk of not recovering the amounts owing to them, then the debtor must be taken to have intended this consequence, even if it was not actually the debtor’s wish to cause them loss. We respectfully agree with the opinion of Gaudron J in Cannane ( D M) v J Cannane Pty Ltd (in liq) that the intent to defraud11

“… involves the notion of detrimentally affecting or risking the property of others, their rights or interests in property, or an opportunity or advantage which the law accords them with respect to property.”

[53]   In the present case Mr Al-Yousef knows ASI is seeking to recover a large sum of money from him in the Swiss proceedings. He also knows those proceedings are likely to continue to a determination unless he can regain control of the ASI companies. Furthermore, Mr Al-Yousef acknowledges experiencing recent cashflow issues even though he blames these on his son’s actions and says he has now recovered some assets. However, he has not said what these assets comprise or what they are worth. Importantly, too, he does not suggest he currently has access to assets that would enable him to satisfy the amount of any judgment ASI might obtain against him in the Swiss proceedings.

[54]   I also place significance on the fact that, even on his own version of the conversation, Mr Al-Yousef told Mr Häni about the possibility of selling the harvesting rights for the forestry block in August 2020. This suggests he did not have other assets available to reimburse Mr Häni at that time.

[55]   Taken together, I consider these factors demonstrate Mr Al-Yousef knows that disposal of the forestry block or harvesting rights would expose ASI to a significantly enhanced risk of being unable to recover the amount of any judgment it might obtain in the Swiss proceedings. It is immaterial that he may not intend to cause ASI loss through doing so.

9      Regal Castings Ltd v Lightbody [2008] NZSC 87, [2009] 2 NZLR 433.

10     In delivering judgment on behalf of himself and Wilson J. None of the other members of the Court suggested a different approach.

11     Cannane (D M) v J Cannane Pty Ltd (in liq) (1998) 192 CLR 557 at 572 (emphasis added).

[56]   It follows that ASI has made out the necessary grounds for continuation of the existing order.

Result

[57]   The pre-judgment charging order is to remain in effect until further order of the Court. Either party has leave to apply to vary or rescind the order on three days notice should circumstances change.

Costs

[58]   ASI has been the successful party on the present application. My tentative view is that ASI should receive costs on a Category 2B basis together with disbursements as fixed by the Registrar. If either party takes a different view they should file and serve memoranda no longer than four pages in length and I will determine costs on the papers.

Lang J