Cleaver v Bond

[2023] NZHC 3588

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2023-419-000343

[2023] NZHC 3588

IN THE MATTER OF

a Constructive Trust and interim freezing and ancillary orders under Part 32 of the High Court Rules

BETWEEN

KEVIN RAYMOND CLEAVER

Plaintiff

AND

KRYSTALL ERIKA CLEAVER BOND

Defendant

ANZ BANK NEW ZEALAND LIMITED

Non-Party

Hearing:	On the papers
Appearances:	J M Rushton for the Plaintiff
Judgment:	8 December 2023

JUDGMENT OF HARVEY J

[On without notice application for freezing orders]

This judgment was delivered by me on 8 December 2023 at 12.30 pm pursuant to r 11.5 of the High Court Rules.

Date: …………………..
(Deputy) Registrar

Counsel:
Jane M Rushton, Barrister, Hamilton

CLEAVER v BOND [2023] NZHC 3588 [8 December 2023]

Introduction

[1]    Kevin Cleaver seeks a freezing order over the ANZ bank account of his daughter, Krystall Bond. He claims that she is holding on trust funds for Mr Cleaver that are derived from his late mother’s estate. Mr Cleaver further claims that Ms Bond:

(a)has failed or refused to answer his questions about the balance of the account;

(b)has failed or refused to provide bank statements from that account on request;

(c)has failed or refused to return the inheritance to him on request.

[2]    Mr Cleaver also alleges that Ms Bond has made unauthorised transactions and has been disposing of his inheritance funds or diminishing its value to her material advantage. He seeks an order that Ms Bond account in full to him in respect of ANZ Account No: [redacted], including by providing copies of all bank statements in respect of that account.

[3]    In addition, I infer from the application, that Mr Cleaver seeks orders for substituted service to Ms Bond’s email address and work address as he says her whereabouts are unknown to him. Finally, Mr Cleaver seeks costs, interest and any other relief that the Court deems just. Affidavits in support, affirmed and sworn by the plaintiff and Mark Jepson respectively, along with a statement of claim, were also filed on 7 December 2023.

Submissions

[4]    Ms Rushton submitted, in summary, that all of the elements required to enable the issuing of urgent freezing orders are present, as confirmed by the evidence of   Mr Cleaver and his former solicitor, Mr Jepson. Counsel contended that Mr Cleaver has a good arguable case in that Ms Bond holds the funds for him on trust, that she has an asset over which an order could apply and that there is a real risk of dissipation of those funds by her which counsel argued are held by Ms Bond on trust for her father.

[5]    For all of these reasons, and relying on the evidence of the two witnesses,  Ms Rushton argued that the freezing order should be made on a without notice basis against Ms Bond.

Legal principles

[6]    Rule 32.2 of the High Court Rules 2016 enables the Court to make a freezing order restraining a respondent from removing any assets located in or outside New Zealand or from disposing of, dealing with, or diminishing the value of, those assets.1 The Court’s jurisdiction is flexible. Under r 32.3, it may also make an order ancillary to a freezing order or prospective freezing order, including for the purpose of eliciting information relating to the assets.2

[7]    To secure a freezing order, a plaintiff must first, demonstrate a good arguable case in the substantive claim. Secondly, that assets exist over which the order can apply. Thirdly, that there is real risk of dissipation.3 The Court must also consider where the overall justice of the case lies. The heart of the jurisdiction is where there is a real risk that the order may go unsatisfied.4 These requirements were confirmed by the Court of Appeal in Shaw v Narain.5 The need for a good arguable cases will be satisfied where the allegations in the applicant’s proposed claim are capable of tenable argument and supported by evidence, taking into account the early stage of the proceeding.6 This is not a high threshold. While an applicant’s case should be more than barely arguable, it need not have a greater than 50 per cent chance of success.7

1      High Court Rules 2016, r 32.2(2).

2      Rule 32.3(2)(a).

3      Shaw v Narain [1992] 2 NZLR 544 (CA). Freezing orders, or Mareva injunctions, were developed by the English Court of Appeal where the court process would be effectively defeated if the freezing order were not made: Mareva Compania Naviera SA v International Bulkcarriers SA (“The Mareva”) [1980] 1 All ER 213 (CA).

4      See Oaks Hotels & Resorts NZ Ltd v Body Corporate 358851 [2013] NZHC 2695 at [18]; and

Dotcom v Twentieth Century Fox Film Corp [2014] NZCA 509 at [18] and [31].

5      Shaw v Narain, above n 87, at 548. McGechan on Procedure provides a useful summary on the three elements, Robert Osborne and others McGechan on Procedure (online ed, Brookers) at [HR32.2.03].

6      Wing Hung Printing Ltd v Saito Offshore Pty Ltd [2010] NZCA 502, [2011] 1 NZLR 754.

7      Wilsons (NZ) Portland Cement Ltd v Gatx-Fuller Australasia Pty Ltd [1985] 2 NZLR 11 at 21-22. See also Ninemia Maritime Corp v Trave Schiffahrtsgesellschaft mbH “The Niedersachsen” [1983] 1 WLR 1412 (CA) at 1417.

[8]    Assets to which the order can apply must be described sufficiently clearly in the application to enable identification by the party tasked with complying with any freezing order. Wasting assets will not be suitable for a freezing order, especially if the value cannot be maintained.8

[9]    As to the risk of dissipation, where there has been only partial disclosure of a defendant’s financial circumstances, and limited responses to specific instances, this may heighten a sense of risk of dissipation.9 In addition, an applicant must provide evidence to justify a belief that the respondent will dissipate the assets,.

[10]   As foreshadowed, when determining an application for freezing orders, the Court must finally consider the overall justice of the case. This involves weighing the need to protect the applicant to ensure that they are not deprived of the benefit of any judgment against any prejudice or hardship that may be caused to the respondent if the freezing orders are issued.

[11]   An application can proceed without notice if the Judge is satisfied that requiring the applicant to proceed on notice would cause undue delay or prejudice to the applicant; or the application affects only the applicant; or the application relates to a routine matter; or an enactment expressly permits the application to be made without serving notice of the application; or the interests of justice require the application to be determined without serving notice of the application.10

[12]   In addition, if the Judge determines that the application can properly be dealt with without notice, the Judge may make the order sought in the application; or make any other order that the Judge thinks just in the circumstances; or dismiss the application.

8      Hannay v Mount [2011] NZCA 530 at [20].

9      Oaks Hotels & Resorts NZ Ltd v Body Corporate 358851, above, n 9, at [18], [19] and [22]. The applicant must point to circumstances from which “a prudent, sensible commercial [person] can properly infer a danger of default”, a test which is “not unduly exacting”: Raukura Moana Fisheries Ltd v The Ship Irina Zharkikh [2001] 2 NZLR 801, [2001] 2 Lloyd's Rep 319 (HC) at [122].

10 High Court Rules 2016, r 7.46.

Discussion

[13]   On the face of the evidence before the Court, from both Mr Cleaver and Mr Jepson, I accept that the plaintiff has a good arguable case. In summary, he inherited money from his mother. He gave those funds to Ms Bond to hold for him. She continued to issue payments from that account at Mr Cleaver’s request, including legal fees to his barrister, Mr Jepson. Mr Cleaver now says Ms Bond has refused to engage with him and has therefore failed or refused to provide information to him regarding the funds he says were being held by her on trust for his benefit. While Ms Bond is yet to tell her side of the story, the documentary evidence and that of Mr Jepson satisfies me that Mr Cleaver has a good arguable case.

[14]   The second limb is whether the defendant has assets over which a freezing order might apply. The ANZ account as identified by the plaintiff qualifies in this context. This was the very account in which Mr Cleaver’s alleged funds were being held by Ms Bond at his request and with her consent. Whether any of those funds are still there can only be determined by the provision of bank statements in the first instance. According to Mr Cleaver, thus far Ms Bond has failed or refused to provide them.

[15]   Finally, is there a real risk of dissipation of those assets? Not unsurprisingly at this early stage of the proceedings, the defendant who is currently without notice of the application, has not disclosed her financial position and in particular the current balance of and transactions from the account of relevance to the plaintiff. In the absence of bank statements from the ANZ account, it is understandably difficult for the plaintiff to assess whether proceeding against the defendant, should the account be empty, will be worth anything. I accept that there is a danger of dissipation so that any judgment or accounting in favour of the plaintiff may go unsatisfied.

[16]   On balance, the interests of justice support the orders being granted on a without notice basis. I accept that the ANZ Account No: [redacted] should be frozen until such time as any claim by the plaintiff can be properly inquired into and determined. I note that this a separate account from that which Ms Bond’s wages are paid into and freezing this account is unlikely to prejudice her. In the first instance,

Ms Bond should provide to Mr Cleaver’s counsel and to the Court copies of all bank statements for the relevant period on an urgent basis. In the meantime, it may also be appropriate for the plaintiff to seek the bank statements directly from the ANZ.

[17]   Finally, I agree that in light of the plaintiff’s legal aid status, the requirement for an undertaking as to damages should be waived.

Decision

[18]   The plaintiff’s application for freezing orders over the defendant’s ANZ account [redacted] is granted on the terms as sought.

[19]   The defendant is directed to provide the ANZ bank statements from 1 August 2020 to the plaintiff’s counsel on an urgent basis.

[20]   If the defendant fails to promptly provide these statements, plaintiff’s counsel may request the same directly from ANZ bank. I direct ANZ Bank to comply with this request.11

[21]   Ms Rushton may serve Ms Bond using her current email address and by couriering the documents to her work address as set out in the application.

[22]   If necessary, an urgent telephone conference of the parties and counsel can be arranged through the registry to consider timetabling and related issues.

[23]Costs are reserved.

Harvey J

11     Colville Developments Ltd v Colville [2021] NZHC 2272.