Emmott v Michael Wilson & Partners Limited

[2017] NZHC 592

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2016-485-722 [2017] NZHC 592

UNDER

the Reciprocal Enforcement of Judgments

Act 1934

IN THE MATTER OF

an order of the Commercial Court, Queen’s Bench Division, High Court of Justice of England and Wales

BETWEEN

JOHN FORSTER EMMOTT Judgment Creditor

AND

MICHAEL WILSON & PARTNERS LIMITED

Judgment Debtor

Hearing:	15 March 2017
Counsel:	J F Emmott in person (via telephone) K P Sullivan for Judgment Debtor
Judgment:	29 March 2017

JUDGMENT OF CLIFFORD J

Introduction

[1]      On  14  October  2016  Clark  J,  on  Mr Emmott’s  application  in  these proceedings, made an order under the Reciprocal Enforcement of Judgments Act

1934 (the REJA) registering an order of the Commercial Court, Queen’s Bench

Division,  United  Kingdom  High  Court  of  Justice  of  England  and  Wales,  dated

26 June 2015 (Claim number 2014/Folio 1210) (the Order).

[2]      The Order is against Michael Wilson & Partners Limited (MWP).  The Order allowed,  but  dismissed,  MWP’s  challenge  to  costs  orders  made  against  it  in

Mr Emmott’s favour in arbitral proceedings.  Those costs comprised £3,209,213 and

EMMOTT v MICHAEL WILSON & PARTNERS LIMITED [2017] NZHC 592 [29 March 2017]

US$841,213 plus interest.   The Order also gave Mr Emmott leave to enforce the award in the same manner as a judgment of the High Court of Justice and entered judgment against MWP in terms of the award.

[3]      On 21 December 2016, MWP commenced, by way of originating application (again in this proceeding), an application for registration of the Order under the REJA to be set aside or, alternatively, adjourning that application until MWP had exhausted its steps to challenge, appeal, and/or set aside the awards on which the Order was based.

[4]      On 6 March 2017, I convened the first case management conference for MWP’s application.  I set that application down for a hearing on 19 June 2017, here in the High Court at Wellington, and made timetabling orders.  MWP’s challenge to the registration of the Order is, thus, pending in these proceedings.

[5]      On 21 February 2017, Mr Emmott filed, in reliance on registration of the Order under the REJA, an application for an interim charging order. The background to that application is that MWP obtained orders in the English Courts, registered those  orders  in  New  Zealand  under  the  REJA,  and  enforced  them  against  a Mr Sinclair.  By way of enforcement, the Sherriff of the High Court at Wellington has  sold  a  Wellington  property  belonging  to  Mr Sinclair.    That  sale  settled  on

24 March  2017,  and  Mr Emmott  seeks  an  interim  charging  order  against  the proceeds. This judgment addresses that application.

Submissions

[6]      Mr Emmott says that such an order is appropriate, in effect to preserve the benefit for him of the Order as registered in New Zealand, as enforceable against the assets of MWP represented by the proceeds of enforcement.   Notwithstanding the world-wide freezing orders referred to at various points in the various proceedings now before the New Zealand Courts, Mr Emmott is concerned that, without that charging order, those funds may be placed beyond reach.   Mr Emmott’s primary argument is that, under s 4(2) of the REJA and r 17.42 of the High Court Rules 2016, he is entitled to such a charging order as of right.  Alternatively, the Court should pre-judgment grant that Order under r 17.41 on Mr Emmott’s proof that MWP, with

intent to defeat him as its creditor, is “removing, concealing, or disposing of [its]

property”.

[7]      MWP opposes any such charging order.   Mr Sullivan’s basic submission is that there is no jurisdiction for the Court to make such an order under r 17.42 as, pending the determination of MWP’s application to set aside registration, the Order is not enforceable in New Zealand.  Furthermore, there is no proof of any relevant intention in terms of r 17.41.   MWP is a solvent, and commercially significant, entity.  It is not and has never been present in New Zealand.  The rule is designed to prevent persons from defeating creditors by themselves leaving New Zealand or sending assets outside New Zealand.  Not only is there no evidence of an intent to defeat a creditor, the rule is simply inapplicable.

[8]      Both Mr Emmott and, for MWP, Mr Sullivan also relied on aspects of the extraordinary legal clash between Mr Emmott and MWP that has now, after some ten years of battle in various jurisdictions, arrived on fair Aotearoa’s shores.   I am satisfied I can resolve this application without further reference to those matters.  I note  that,  in  any  event,  they  have  already  been  adequately  recorded  in  other decisions of the New Zealand courts.1

[9]      After  Mr Sullivan  had  presented  his  submissions  opposing  Mr Emmott’s application, I gave Mr Emmott leave to reply in writing.  I did so principally because MWP had  filed lengthy affidavits  shortly before the hearing of the application. Mr Emmott had not had an opportunity to respond to the factual matters set out in those affidavits.  In those circumstances, I considered it also more efficient that he made any submissions in reply in writing.   He subsequently did so, but did not himself file any further affidavit.  Mr Sullivan, on instructions, subsequently filed a memorandum in reply to Mr Emmott’s reply.  The rules do not provide for replies to replies.  I granted no leave for the filing of such a memorandum.  I acknowledge that Mr Sullivan was acting on instructions, but record that I have not considered the

contents of that memorandum in preparing this judgment.

1      Michael Wilson & Partners Ltd v Sinclair [2016] NZHC 835; and Michael Wilson & Partners

Ltd v Sinclair [2016] NZCA 376, [2016] NZAR 1186.

Analysis and outcome

Section s 4(2) of the REJA and r 17.42 of the High Court Rules

[10]     Section 4(2) of the REJA provides:

(2)      Subject to the provisions of this Act with respect to the setting aside of registration,—

(a)      a registered judgment shall, for the purposes of enforcement be of the same force and effect; and

(b)      proceedings may be taken on a registered judgment; and

(c)      the  sum  for  which  a  judgment  is  registered  shall  carry interest; and

(d)      the  High  Court  shall  have  the  same  control  over  the enforcement of a registered judgment—

as if the judgment had been a judgment originally given in the High

Court on the date of registration:

provided that the judgment shall not be enforced so long as, under this Part and the rules of Court made thereunder, it is competent for any party to make an application to have the registration of the judgment set aside, or, where such an application is made, until after the application has been finally determined.

[11]     That section confirms that no enforcement of a registered judgment can occur until an application for registration of the judgment to be set aside has been determined.  Moreover, that restriction on enforcement is explicitly confirmed in the High   Court   Rules.      Part 23   deals   with   enforcement   between   jurisdictions. Rule 23.22 provides that a registered judgment “must not be enforced at any time in

… (c) the period between the filing and the disposal of any application to set aside

the registration”.

[12]     Mr Emmott says that r 17.42, which provides for the registration of charging orders after a judgment is sealed, does not constitute enforcement of that judgment.

[13]     In pt 17, the phrase “enforcement process” is defined to include “every order referred  to  in  r 17.3”.    Rule  17.3  provides  six  inclusive  methods  of  enforcing judgments.  One of those is a “charging order”.  Sub-part 5 deals with enforcement by way of charging order (rr 17.40–17.61).  The issue of a charging order therefore

constitutes enforcement.  Rule 17.53 provides for charging orders against personal property.  It is by dint of r 17.54 that charging orders against personal property are interim charging orders in the first instance.

[14]     In my view it is therefore clear that the ability to enforce, without leave, a charging order (be it in the first instance interim or final by reference to the property sought to be charged) is just that:  enforcement. Accordingly, enforcement by way of registration of a charging order based on a judgment registered under REJA cannot occur until the proviso to s 4(2) of REJA has been satisfied.  In this case, that will not occur until MWP’s application to set aside registration of the order has been finally determined.

[15]     On that basis, Mr Emmott’s application by reference to s 4(2) of the REJA

and r 17.42 must fail.

Pre-judgment enforcement

[16]     I therefore turn r 17.41, which gives the Court a discretion to issue a charging order in the following terms:

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.

[17]     For the purposes of r 17.41 an entitled party includes:2

… a party entitled to issue a charging order because the party may obtain judgment for—

(i)        the payment of a sum of money; or

(ii)      the return of the property the party seeks to charge.

[18]     Under r 17.41, Mr Emmott is not relying on the Order as registered as a judgment  in  New  Zealand;  rather  he  is  relying  on  his  rights  against  MWP  as

2      High Court Rules 2016, r 17.1, definition of “entitled party”.

reflected by the Order, “pre-judgment”.  To that extent he is no different to any other person who asserts a right to be paid monies by another, and who applies for a charging order to protect the possible fruits of a claim enforcing that right.

[19]     MWP  has  never,  save  perhaps  for  the  purpose  of  enforcing  against Mr Sinclair, been in New Zealand.  There can be no question of MWP being absent from, or about to leave, New Zealand.

[20]     Rather, Mr Emmott suggests that it is self-evident that MWP, by opposing registration of the Order and the grant of an (interim) charging order, is acting with an intent to defeat him as a judgment creditor.

[21]     As the various judgments that have been issued by this Court and the Court of Appeal  already show,  Mr Emmott  and  MWP have  sustained  costly  litigation against each other for many years.  Mr Emmott, by his own account, has judgments and associated enforcement rights against MWP in various jurisdictions.   MWP makes  the  same  assertion  as  regards  Mr Emmott.    At  least  in  New  Zealand, Mr Emmott  acts  for  himself.    That  would  not  appear  to  be  the  case  in  other jurisdictions.  MWP is represented.  Both Mr Emmott and MWP have, I infer, been paying their lawyers, if not meeting costs orders made against each other.   In that context,  it  would  be  difficult  to  categorise  any  particular  action  taken  in  this litigation as one taken with an “intent to defeat creditors”.  Mr Emmott and MWP are not fleeing each other, or New Zealand.  They have been and are engaging with each other on an ongoing and intensive basis.  They have both come to New Zealand for that purpose.

[22]     More specifically Mr Emmott submits that, as shown by affidavit evidence, MWP will  remit  the  proceeds  of  enforcement  against  Mr Sinclair  from  a  bank account in New Zealand to a bank account in Kazakhstan, not to one in the UK. That action, Mr Emmott says, will put those monies beyond his reach.  Mr Emmott says that his judgments and rights of execution, and what he describes as “world- wide freezing orders”, are not of any help to him in Kazakhstan.  Thus, Mr Emmott asserts:

Clearly  MWP are  remitting  the  funds  to  Kazakhstan  with  the  intent  of defeating the judgment I have.

[23]     I am not satisfied that the fact of MWP’s stated intention to transfer the relevant funds to its bank account in Kazakhstan is, of itself, sufficient proof of an intent to defeat Mr Emmott as an entitled party. As McGechan notes, a high standard of proof is required: concrete evidence, albeit to a civil standard, establishing one of the grounds in r 17.41 is required.  This dispute originated in Kazakhstan, where at the relevant time MWP and Mr Emmott were residing.  As I understand it, they both still reside in Kazakhstan.  Mr Emmott offers no proof of the inefficacy of his global freezing orders.  Nor does he refer to any legal rights or entitlements that may be available to him in Kazakhstan.  In effect, Mr Emmott worries that MWP may take monies back to Kazakhstan, but Kazakhstan is where Mr Emmott is resident.

[24]     Whether or not the transfer of settlement proceeds by MWP from a New Zealand bank account to a bank account in Kazakhstan does constitute “the removal of their property” for r 17.41 purposes, Mr Emmott has not proved, to the civil standard,  that  such  an  action  itself  establishes  an  intent  by  MWP  to  defeat Mr Emmott as an entitled party.

[25]     Mr Emmott’s application for a charging order is, therefore, declined.

[26]     I see no reason why costs on this application should not follow the event, on the basis of a 2B characterisation and a half day hearing.

“Clifford J”

Solicitors:

WCM Legal, Wellington for Judgment Debtor.

Copy to:   Mr Emmott