Devoy v Goldex International Services Limited

[2012] NZHC 3371

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-1313 [2012] NZHC 3371

BETWEEN  ELI DEVOY First Plaintiff

ANDAKIKO ITO Second Plaintiff

ANDALIREZI NOROUZY Third Plaintiff

ANDDANA OMIDVAR Fourth Plaintiff

ANDHASSAN AREFI Fifth Plaintiff

ANDSACHITO SHIOZAWA Sixth Plaintiff

ANDZOHREH AZIMI Seventh Plaintiff

ANDGOLDEX INTERNATIONAL SERVICES LIMITED

First Defendant

ANDHAJI ABD RAHMAN AWG HAJI DAMIT

Second Defendant

ANDDEMIN SERGEY VLADIMIROVICH Third Defendant

Judgment:      21 December 2012

JUDGMENT OF KATZ J

Solicitors:           Brookfields, Auckland [email protected] z

Copy to:            M Ryan, Auckland – [email protected]

DEVOY V GOLDEX INTERNATIONAL SERVICES LIMITED HC AK CIV-2012-404-1313 [21 December

2012]

Introduction

[1]      The plaintiffs seek freezing orders on a “without notice” basis against the third defendant, Mr Demin Vladimirovich, pursuant to Part 32 of the High Court Rules.  In particular, the plaintiffs seek to freeze funds which are held by Velocity Trading Limited (“the Velocity Trading Account”) on behalf of Mr Vladimirovich.

[2]      These   proceedings   are   against   Goldex   International   Services   Limited (“Goldex”), Mr Haji Damit and Mr Vladimirovich.  Goldex is (or was) a company which carried on business as a financial investment and advisory firm, specialising in gold and bullion market trading.   The plaintiffs all  invested in the gold market through Goldex.   Each of them has lost a significant portion of the money they invested.

[3]      Judgment has been obtained by way of formal proof against Goldex and Mr Damit.   However the plaintiffs have,  as  yet, been unable to  formally serve Mr Vladimirovich, who lives in Russia.   It appears, however, that he is aware of the proceedings and has seen a copy of them as his Russian legal advisors have written a detailed letter to the plaintiffs’ solicitors denying any wrongdoing on the part of Mr Vladimirovich.

[4]      The  plaintiffs  now  wish  to  freeze  the  money  held  on  behalf  of  Mr Vladimirovich  in  the  Velocity  Trading Account,  pending  formal  service  of  the proceedings on Mr Vladimirovich and, they hope, the eventual entry of judgment against him.

Requirements for a freezing order

[5]      An applicant for a freezing order must:

(a)       Satisfy the Court there is a good arguable case against the defendant;

(b)Show that there are assets either inside or outside the jurisdiction to which the order can apply;

(c)       Show a risk of dissipation of those assets; (d)  Provide an undertaking as to damages.

[6]      An application for a freezing order on a without notice basis is also required to make material disclosure of all relevant information and possible defences.

Have the plaintiffs established a good arguable case against Mr Vladimirovich?

[7]      As the learned authors of McGechan note, the requirement to satisfy the Court that there is a good arguable case against the defendant appears to be a more stringent requirement than is normally required of an interlocutory injunction: BNZ v Hawkins and Euro-National Corp Ltd v Petricevic Financial Services Ltd.[1]   The case does not, however, have to be so strong as to entitle summary judgment: Gatx-Fuller Australasia Pty Ltd v Wilsons (NZ) Portland Cement Ltd.[2]

[1] BNZ v Hawkins (1989) 1 PRNZ 451 and Euro-National Corp Ltd v Petricevic Financial Services

Ltd (1989) 2 PRNZ 351.

[2] Gatx-Fuller Australasia Pty Ltd v Wilsons (NZ) Portland Cement Ltd [1985] 2 NZLR 11 at [21]- [22].

[8]      The memorandum of counsel filed in support of the application for a freezing order does not address why the plaintiffs say they have a good arguable case against Mr Vladimirovich. The notice of application itself simply states that:

There is a sufficient prospect that the plaintiffs/applicants will be entitled to judgment to justify the order sought in paragraph 1(a).

[9]      Unfortunately, the statement of claim also provides few details as to the precise basis of the claim against Mr Vladimirovich.  It is pleaded that Mr Damit (the second defendant) is an  investment adviser who specialises in gold and bullion market trading. At all material times he allegedly either traded in his own right or as an employee or agent of Goldex.  Between 22 May 2011 and 17 October 2011 Mr

Damit allegedly made various representations to the plaintiffs to the effect that:

(a)       The defendants were specialist investment traders in the international gold market;

(b)If  the  plaintiffs  invested  money  with  the  defendants  they  would receive a substantial return on their investments;

(c)       All  investments  made  would  be  100  per  cent  guaranteed  from suffering any loss.

[10]     It is alleged that in reliance on those representations the plaintiffs entered into a contract whereby the defendants were to provide advice and make investments in the international gold market on the plaintiffs’ behalf.

[11]     The  plaintiffs  then  invested  money  with  Goldex  and,  on  or  about  21

November 2011, the plaintiffs were provided with monthly accounts which recorded that each of the plaintiffs’ investments had suffered substantial trading losses.  The plaintiffs have apparently lost nearly all the money they had invested.

[12]     In terms of specific allegations against Mr Vladimirovich the statement of claim simply asserts that:

(a)       at all material times he either traded in his own right and/or as an employee and/or agent of Goldex (paragraph 4);

(b)the representations which Mr Damit made were made on behalf of himself, Mr Vladimirovich and Goldex.

[13]     The statement of claim provides no particulars of this assertion, nor does it provide details of the connection or relationship between Mr Damit and Mr Vladimirovich.  An affidavit sworn by one of the plaintiffs, Mr Hassan Arefi, on 29

June 2012 (in support of an application for default judgment against the first and second defendants) casts some further light on the matter.  Mr Arefi deposes that in the first week of April 2011 he met Mr Damit at the Rydges Hotel in Auckland. During this meeting Mr Damit allegedly told him that he had set up Goldex with his

business partner, Mr Vladimirovich, and that “the three of them were very successful investment traders who traded on the international gold market”.

[14]     There   are   no   allegations,   however,   of   any   representations   by   Mr Vladimirovich to the plaintiffs.  Similarly no evidence is provided to suggest that any representations made by Mr Damit were made on Mr Vladimirovich’s behalf or with his authority.   Mr Vladimirovich’s specific connection to Goldex (if any) is not pleaded.  There is therefore very little information at all before the Court regarding Mr Vladimirovich’s alleged role in causing the plaintiffs’ losses.

[15]     On 26 September 2012 Mr Vladimirovich’s Russian lawyers wrote to Mr

Ryan, the plaintiffs’ counsel. That letter states that:

(a)      Mr Vladimirovich has never been an investment adviser, nor has he specialised in gold market trading;

(b)      Mr Vladimirovich has never entered New Zealand;

(c)      Mr Vladimirovich is not acquainted with the plaintiffs and has never met them;

(d)Mr Vladimirovich did not provide any services or legal advice to the plaintiffs, nor did he enter into a contract with them;

(e)      Nobody, including Mr Damit, was authorised by Mr Vladimirovich to conduct negotiations, enter into contracts or provide services for investing in international gold markets;

(f)      Any allegations against Mr Vladimirovich are harmful to his honour, dignity and business reputation and are strenuously denied.

[16]     Mr  Vladimirovich’s  lawyers  requested  the  plaintiff  to  stop  publishing incorrect statements about Mr Vladimirovich and “to dismiss unfounded complaint against  Mr [Vladimirovich]  filed in the High  Court  of New Zealand, Auckland Registry CIV-2012-404-001313”.

[17]     The material before the Court as to Mr Vladimirovich’s role in causing the plaintiffs alleged losses is extremely sparse.  I am not prepared to find on the basis of the very limited material before the Court that a “good arguable case” has been established sufficient to justify granting the freezing order sought.  The plaintiffs will need to provide significantly more information substantiating their claim against Mr Vladimirovich, as opposed to their claims against the first and second defendants, in order to justify the granting of a freezing order against his assets.

Result

[18]     On the evidence currently before the Court the plaintiffs are not able to satisfy  the  onus  on  them  of  establishing  a  good  arguable  case  against  Mr

Vladimirovich. The application for freezing orders is therefore declined.

Katz J