Evans v A W Builders Limited
[2019] NZHC 1152
•24 May 2019
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2018-404-2529
[2019] NZHC 1152
BETWEEN OLIVER LLEWELLYN EVANS
Plaintiff
AND
A W BUILDERS LIMITED
First Defendant
AND
ANTHONY DAVID WILLIAMSON
Second Defendant
Hearing: 3 April 2019 Appearances:
T M Bates for Plaintiff
J Long & J K Grimmer for Defendants
Judgment:
24 May 2019
JUDGMENT OF PAUL DAVISON J
This judgment was delivered by me on 24 May 2019 at 3:00 pm Pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors:
Legal Vision, Auckland Akarana Legal, Auckland
EVANS v A W BUILDERS LIMITED [2019] NZHC 1152 [24 May 2019]
Introduction
[1] Oliver Evans (Mr Evans) applies for an interlocutory freezing order in respect of Anthony Williamson’s (Mr Williamson) interest in the residential property located at Churchill Road, Cockle Bay, Auckland. Mr Williamson opposes any order being made.
[2] Mr Evans commenced a substantive proceeding on 8 November 2018 against A W Builders Ltd (AWB) and Mr Williamson, as the first and second defendants respectively. His claim arises from a construction contract (the contract) entered into between himself as the owner of a property situated in Whitford, and AWB operating as a construction company.
[3] The contract provided for two discrete types of work to be undertaken by AWB. Part A related to earthworks and the construction of retaining walls, to be undertaken on a cost reimbursement basis. Part B related to the construction of a house on the plaintiff’s property for a fixed price of $1,139, 262 (the building contract).
[4] In his first cause of action, the plaintiff alleges AWB breached an implied term of the contract by failing to carry out the earthworks and construction of retaining walls for a reasonable price, and also breached the building contract in a number of respects. The plaintiff also makes claims against AWB in negligence and pursuant to the Consumer Guarantees Act 1993. The plaintiff claims damages totalling approximately $800,000, being the additional expenditure he incurred as a result of AWB’s breaches of contract and tortious duties, and including $500,000, being the estimated additional cost required to complete construction of the building.
[5] Mr Evans’ claim against the second defendant, Mr Williamson, is brought in negligence. The plaintiff alleges that the second defendant assumed personal responsibility for the building works carried out by AWB at his property. The plaintiff further alleges that Mr Williamson owed him a duty of care to exercise reasonable skill and care in carrying out the building works at his property. He claims that Mr Williamson breached his duty of care by carrying out the building works negligently, resulting in Mr Evans incurring excessive building costs.
[6] The plaintiff makes this application out of concern that, should he be successful in his claim against the second defendant, there will be no assets belonging to Mr Williamson against which he could enforce a judgment.
Background
[7] Mr Evans and Mr Williamson have known each other for at least the past six years. Both say that prior to their dispute they regarded the other as a friend.
[8] Mr Williamson is the sole director and shareholder of AWB. The first defendant provides residential and commercial building services, including the construction of new homes, developments and renovation of existing structures.
[9] On 5 September 2017, Mr Evans and AWB entered into a construction contract for the construction of a house at the plaintiff’s property at Whitford Road, Whitford. The plaintiff paid a deposit of $58,959.31 to AWB, and work on the site commenced around 1 November 2017.
[10] As already noted, there were two parts to the contract. First, the earthworks and retaining wall which was to be costed and paid for on a charge up basis. Second, there was the fixed price part relating to the construction of a house. The fixed price for that part of the contract work relating to construction of the house was
$1,139,269.92.
[11] Work on site under the contract continued until 30 April 2018. On that date the plaintiff cancelled the contract, and engaged another builder to complete the construction.
[12] Mr Evans claims that the manner in which the earthworks were undertaken by AWB and Mr Williamson did not comply with the contract because they failed to adhere to the agreed methodology. The plaintiff says that the earth excavated from the upper part of the house platform should have been used as fill on the site, and that methodology was clearly specified in the plans and specifications for the job and the building consent. Instead, the plaintiff says, AWB and Mr Williamson made an unauthorised decision to proceed contrary to the project plans and to remove all the
excavated earth from the site, and use purchased hardfill for filling the site. The adoption of that method resulted in significant additional costs being incurred by Mr Evans.
[13] Mr Evans says that when he cancelled the building contract, he had already paid AWB approximately $780,000 while the fixed price for completion was just over
$1.1 million. He says that the value of the construction work undertaken by AWB as at the date he cancelled the building contract, was significantly less than the amount he had already paid, and that there were numerous defects in the workmanship of what had been done, causing the cost of completing the construction to substantially exceed the fixed price provided for in the building contract.
[14] On 18 September 2018 Mr Evans’ solicitor wrote to the solicitors representing both AWB and Mr Williamson advising that a claim would be filed in the High Court regarding the additional costs incurred by the plaintiff as a result of the earthworks methodology adopted and breaches of the building contract. In the letter, the plaintiff’s solicitor expressed concern regarding whether AWB and Mr Williamson would be able to meet a judgment entered against them. The solicitor wrote:
My clients remain concerned that you as the likely defendants will not be able to meet any judgment amount entered. This concern is especially high as regards A. W. Builders Limited, Anthony Williamson, Eastern Earthmovers and Richard Cowdell. Accordingly, in order to give my clients comfort and the following queries please be answered.
…
Please advise whether you and [Rochelle] Williamson have any current intentions to sell [the Churchill Road] property?
[15] On 23 October 2018, the solicitors for AWB and Mr Williamson responded. They disputed all the claims levelled against AWB and Mr Williamson, and declined to answer any questions regarding Mr Williamson’s personal assets, stating that this information was confidential. The defendants’ solicitor wrote:
If the concern that lays (sic) behind those questions is that Mr Evans’ allegations have caused Mr Williamson to dissipate his assets or prepare to flee the jurisdiction, then those concerns are without any factual basis.
[16] However, on 15 October 2018, Mr Williamson and his wife had entered into a written agreement (the agreement) to sell their respective undivided half shares in the property which is their family home situated at Churchill Road, Cockle Bay, Auckland to the trustees of the Williamson Family Trust. The trustees of the Williamson Family Trust are Mr Williamson, his wife Rochelle, and Williamson Family Trustee 2017 Ltd. The agreement for sale and purchase stipulated a purchase price of $1.2 million dollars. While the agreement is dated 15 October 2018, the settlement date stipulated in the agreement is 1 October 2018.
[17] The Minutes of a trustees meeting of the Williamson Family Trust, also dated 15 October 2018, and signed by Mr and Mrs Williamson, record the Williamson Family Trust’s purchase from Mr Williamson and his wife of their separate undivided half shares in the Churchill Road property, each half share being valued at
$319,059.00. The trust minutes also record that:
(a)the trust had satisfied the purchase price payable to Mr and Mrs Williamson by means of deeds of acknowledgement of debt for the full amount due to each of them; and
(b)that the trustees accepted gifts from both Mr and Mrs Williamson for the full amount of the debt owed to them by the trust, thereby reducing the trust’s liability to them under the deeds of acknowledgement to nil.
[18] A Deed of Acknowledgement of Debt between Mr Williamson as lender and Mr and Mrs Williamson as borrowers, dated 15 October 2018, records Mr Williamson’s loan advance of $319,059 to Mr and Mrs Williamson as “the present trustees of a trust known as Williamson Family Trust (“Trust”) which was” created by deed dated June 29, 2017 (“Deed”).
[19] The transfer of the title to the Churchill Road property from Mr and Mrs Williamson to themselves and Williamson Family Trustee 2017 Limited, being the trustees of the Williamson Family Trust was effected on 30 October 2018.
[20] On 30 January 2019 Mr Evans discovered that Mr Williamson had transferred his half interest in the Churchill Road property to the Williamson Family Trust. One week later, on 7 February 2019, he filed an interlocutory application without notice seeking a freezing order against the Churchill Road property. In a Minute, issued on 8 February 2019, Wylie J declined to deal with the application on a without notice basis, and he directed that it be served on the defendants.
The present application
[21]The grounds on which Mr Evans seeks the freezing order are:
(a)in the substantive proceeding he is claiming a substantial sum of money in damages from Mr Williamson;
(b)there is a strong arguable claim against Mr Williamson;
(c)on 18 September 2018, solicitors for Mr Evans wrote to Mr Williamson, putting him on notice as to the likelihood of impending legal proceedings, and seeking assurances that he would not sell the Churchill Road property;
(d)no assurances were given by the solicitors for Mr Williamson, when they responded, on 23 October 2018;
(e)on 30 October 2018, the Churchill Road property was transferred to the Williamson Family Trust, pursuant to a sale and purchase agreement entered into on 15 October 2018;
(f)there is a real risk that Mr Williamson will dissipate or dispose of the Churchill Road property so that any judgment entered against him, in favour of Mr Evans, would remain unsatisfied; and
(g)the overall justice of the case warrants the granting of the order.
[22] Mr Williamson opposes the making of a freezing order on the following grounds:
(a)he says he has no interest in the Churchill Road property;
(b)any interest he may have had in that property was lawfully transferred to the Williamson Family Trust on 15 October 2018;
(c)the proper party to the application for a freezing order are the trustees;
(d)the application is defective because there is no proper evidential foundation to support the contention that there is an arguable claim against Mr Williamson;
(e)the application is misleading, as it asserts that assurances were sought from Mr Williamson that he would not attempt to dispose of his interest in the property, when no such assurances were sought;
(f)there is no basis for a concern of dissipation of the Churchill Road property; and
(g)the application was brought after a consistent period of bad conduct by Mr Evans towards Mr Williamson.
Freezing orders
[23] The jurisdiction of this Court to grant a freezing order is found in s 12 of the Senior Courts Act 2016 and r 32.2(1) of the High Court Rules 2016 (the Rules). Rules 32.2(1) and (2) provide that:
32.2 Freezing order
(1)The court may make an order (a freezing order), on or without notice to a respondent in accordance with this Part.
(2)A freezing order may restrain 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.
…
[24] Rule 32.5 sets out the basis on which a freezing order can be made. The rule relevantly provides:
32.5Order against judgment debtor or prospective judgment debtor or third party
(1)This rule applies if—
…
(b)an applicant has a good arguable case on an accrued or prospective cause of action that is justiciable in—
(i)the court; or
…
(4)The court may make a freezing order or an ancillary order or both against a judgment debtor or prospective judgment debtor if the court is satisfied, having regard to all the circumstances, that there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because—
…
(b)the assets of the judgment debtor, prospective judgment debtor, or another person might be—
…
(ii)disposed of, dealt with, or diminished in value (whether the assets are in or outside New Zealand).
(5)The court may make a freezing order or an ancillary order or both against a person other than a judgment debtor or prospective judgment debtor (a third party) if the court is satisfied, having regard to all the circumstances, that—
(a)there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because—
(i)the third party holds or is using, or has exercised or is exercising, a power of disposition over assets (including claims and expectancies) of the judgment debtor or prospective judgment debtor; or
(ii)the third party is in possession of, or in a position of control or influence concerning, assets (including claims and expectancies) of the judgment debtor or prospective judgment debtor; or
(b)a process in the court is or may ultimately be available to the applicant, as a result of a judgment or prospective judgment, under which the third party may be obliged to disgorge assets or contribute toward satisfying the judgment or prospective judgment.
[25] Rule 32.6(4) provides that except where special circumstances exist, the Court must require the applicant to give an undertaking as to damages.
[26]Accordingly, in order to obtain a freezing order:
(a)the applicant must show that they have a good arguable case;1
(b)there must be assets owned by the defendant to which the order can apply;2
(c)there must be a risk that the asset will be dissipated or disposed of, the consequence of which will be to defeat in whole or in part the applicant’s ability to enforce any judgment;3
(d)the applicant must provide a meaningful undertaking as to damages;4
(e)where the application is made on a without notice basis, the applicant must make full and accurate disclosure.5
[27] Ultimately, the Court must weigh and consider where the overall interests of justice lie, and balance the need to protect the applicant (so as to ensure any judgment obtained is not rendered barren), against any prejudice or hardship to the defendant or third parties that would be caused by the making of an order.6
1 High Court Rules 2016, rule 32.5(1)(b).
2 Shaw v Narain [1992] 2 NZLR 544 at 548 (CA).
3 High Court Rules 2016, rule 32.5(4).
4 High Court Rules 2016, rule 32.2(5).
5 High Court Rules 2016, rule 32.2(3).
6 Bank of New Zealand v Hawkins (1989) 1PRNZ 451 at 452 (HC).
[28] Rule 32.4 provides that the Court may make a freezing order against a respondent who is not a party to a proceeding in which substantive relief is sought against them. It provides:
The court may make a freezing order or an ancillary order against a respondent even if the respondent is not a party to a proceeding in which substantive relief is sought against the respondent.
Analysis
Should the reply affidavits of the plaintiff and Mr Craig Turner be admitted into evidence and read?
[29] Mr Long, on behalf of Mr Williamson, concedes that a good arguable case against Mr Williamson is established, but only if the Court is prepared to read the reply affidavits of Mr Evans and Mr Turner, both sworn and filed on 27 March 2019. Mr Turner is a director of Forensic Building Consultants Limited who was retained as an expert by the plaintiff to review the earthworks and building contract and provide his opinion regarding the performance of the defendants and other contractors engaged in relation to the work done at the plaintiff’s Whitford property.
[30] Mr Long submits that at the time the application was made, the affidavit evidence filed in support did not satisfy the requirement of showing the plaintiff has a good arguable case. Since then, counsel argues that affidavits have been filed in reply by both Mr Evans and Mr Turner that are not strictly in reply to those filed in opposition to the application on behalf of Mr Williamson. Mr Long notes that r 7.26(2) provides that an affidavit in reply must be limited to new matters raised in either the notice of opposition, or in affidavits filed by the respondent. Accordingly, Mr Long submits that the reply affidavits of Mr Evans and Mr Turner should not be read.
[31] Mr Bates for Mr Evans, submits that based on the nature of the material contained in the reply affidavits of Mr Turner and Mr Evans, and the authority of the High Court in Fisk v Nicholls,7 and Commissioner of Police v T R S,8 the reply affidavits should be accepted into evidence.
7 Fisk v Nicholls [2012] NZHC 2507.
8 Commissioner of Police v T R S [2014] NZHC 1116.
[32] In Fisk, Associate Judge Matthews considered the issue of when a Judge should exercise the discretion to accept into evidence a reply affidavit which introduces new material or evidence. The Associate Judge said:9
It must also be remembered that evidence in reply is not confined merely to acceptance or rejection of evidence given in opposition. The latter is the factual basis of a respondent’s case, disclosed formally for the first time. It may well be necessary, therefore, and is permissible to file evidence which is new, in the sense that it was not part of the applicant’s original evidence, but presents the applicant’s factual material relevant to the respondent’s evidence. Plainly, therefore, it can potentially be extensive. Assessment of whether it is in reply rests not on its extent, nor whether it is original, but on whether it relates to the evidence of the respondent, and is relevant to the issues.
[33] The case of T R S concerned an application by the Commissioner of Police for the making of restraining and forfeiture orders against the respondent, under the Criminal Proceeds (Recovery) Act 2009. The respondents filed affidavits in response to the affidavit evidence of a Detective. The Commissioner filed an affidavit by the Detective in reply. The respondents took issue with the contents of the reply affidavit, saying it went beyond matters strictly in reply. Toogood J referred with approval to the decision of Associate Judge Matthews in Fisk, and said:10
…the assessment of whether the Court should exercise its discretion to read an affidavit in reply should rest not on its extent, nor whether it is original, but on whether it relates to the evidence of the respondent, and is relevant to the issues.
The reply affidavit of Mr Craig Turner
[34] In his first affidavit,11 Mr Turner set out a brief summary of what he described as being poor construction management and performance by the defendants in relation to the plaintiff’s Whitford property. He identified issues relating to: the construction of retaining walls; the construction of concrete block walls; building defects; and the earthworks undertaken in connection with the house construction. He identified particulars and succinctly expressed his conclusions relating to these issues.
9 At [8].
10 At [19].
11 Affidavit of Craig George Turner in support of interlocutory application without notice freezing order (sworn and filed 5 February 2019).
[35] In Mr Williamson’s notice of opposition to the application for a freezing order, he refers to Mr Turner’s affidavit in the following terms:
There is no proper evidential foundation to support the contention that there is an arguable claim against the Defendants: The affidavit of Mr Turner is assertion only and merely parrots the allegations in the statement of claim. It does nothing to properly prove them or lay any form of evidential foundation (be it factual or opinion based) for them, or respond to the matters raised in the Statement of Defence.
[36] Mr Bates says that Mr Turner’s reply affidavit was specifically addressed to responding to the second defendant’s claim that there was no evidential foundation to support the freezing order application and no basis for the allegations made by Mr Turner in his first affidavit. Mr Bates says that Mr Turner’s reply affidavit annexed his report, which had provided the basis for the allegations made in the statement of claim, and which was summarised by Mr Turner in his first affidavit. Nothing else was included in his reply affidavit. Mr Bates says that as Mr Turner’s report was a privileged document being prepared for the purposes of litigation, it was not exhibited as an attachment to Mr Turner’s first affidavit, but was produced as an attachment to Mr Turner’s reply affidavit to respond to the defendants’ allegation that there was no basis or foundation for the allegations contained in the plaintiff’s statement of claim.
[37] While Mr Williamson’s affidavit in opposition to the application for freezing orders does not directly respond to the contents of Mr Turner’s first affidavit, the Notice of Opposition filed by Mr Williamson, specifically refers to Mr Turner’s affidavit, and alleges that there is no proper evidential foundation to support the specific allegations he made in his first affidavit. In my view, Mr Turner’s reply affidavit does respond to Mr Williamson’s allegation contained in his notice of opposition, and the contents of Mr Turner’s affidavit in which he annexes his comprehensive report regarding the construction work undertaken by the defendants is clearly relevant to the issues, and particularly to the issue of whether the plaintiff can show a good arguable case against the second defendant. In his reply affidavit Mr Turner states that he is responding to the allegation made in the second defendant’s notice of opposition that his evidence in his first affidavit has no proper evidential foundation and merely “parrots the allegations in the statement of claim.” Mr Turner explained in his reply affidavit that the contents of his first affidavit represented a summary of his conclusions regarding the poor contract management, poor
construction methodology, defective workmanship, and the cost consequences thereof as he had determined from his review of the defendants’ performance under the contract.
[38] Adopting the reasoning of Toogood J in Commissioner of Police v T R S,12 I consider that this is a case for exercising my discretion to allow Mr Turner’s reply affidavit to be introduced as evidence. The matters covered in the affidavit are clearly relevant to the issues. Although Mr Turner’s reply affidavit does not directly respond to the evidence of the defendants, it replies to the contents of the second defendant’s notice of opposition in which it is said that the allegations and statements contained in Mr Turner’s first affidavit were made without any foundation.
The reply affidavit of the plaintiff
[39] I consider Mr Evans’ affidavit in reply is properly regarded as being a reply affidavit. Mr Long noted that it was largely replying to an exhibit contained in Mr Williamson’s affidavit, being the collection of documents that accompanied the letter from Mr Williamson’s solicitors on 23 October 2018, and which material should have been produced to the Court by Mr Evans in support of the application for the freezing order. In my view that is not relevant. The fact that Mr Williamson’s affidavit introduced that material as evidence, justifies Mr Evans in replying to it, regardless of whether or not it would have been prudent for him to have adduced it in the first instance.
Has the plaintiff shown that he has a good arguable case against the defendants?
[40] Having admitted the reply affidavits of the plaintiff and Mr Turner, I turn to consider whether, on the basis of the evidence put before me, Mr Evans has made out a good arguable case against Mr Williamson.
[41] While Mr Long says that without the reply affidavits the evidential basis for the application is lacking and a good arguable case is not made out, he nevertheless
12 Commissioner of Police v T R S [2014] NZHC 1116.
accepts that should the reply affidavits be admitted and read, that the plaintiff has established a good arguable case.
[42] Mr Bates says that in his first affidavit Mr Turner set out a detailed summary of the construction defects and the particulars of Mr Williamson’s negligence. Mr Turner qualified himself as an expert and while his findings are summary in nature, they were unchallenged by the defendants, who did not file evidence in opposition. Those allegations and the basis for them was subsequently elaborated on in Mr Turner’s reply affidavit.
[43] Mr Bates relies on the decision of the Court of Appeal in Wing Hung Printing Company Ltd v Saito Offshore Pty Ltd, where the Court said:13
…the good arguable case test does not require the plaintiff to establish a prima facie case. This recognises that disputed questions of fact cannot be readily resolved on affidavit evidence. On the other hand, there must be a sufficiently plausible foundation established…
[44] Having ruled the reply affidavits admissible, and noting Mr Long’s concession, I agree with Mr Bates, that a good arguable cause of action has been made out. Mr Turner’s evidence in his first and reply affidavits details and explains the basis for the allegations of poor workmanship and the unnecessary incurring of costs, that are the basis of the plaintiff’s claim against the defendants. Mr Turner provides his expert opinion evidence regarding defects in the retaining wall poles, membrane and scoria; the oversized concrete block walls, and changes to their design without the consent of Mr Evans; and AWB and Mr Williamson’s deviation from the approved methodology for earthworks on the building site.
[45] The reply affidavit of Mr Evans further supports the finding that a good arguable cause of action has been made out. He responds to Mr Williamson’s evidence setting out the charges for the earthworks, stating that the estimate for those charges was not sent to him until 10 November 2017, provided after completion of the earthworks. Mr Evans says that although the estimate bears the date 27 October 2017,
13 Wing Hung Printing Company Ltd v Saito Offshore Pty Ltd [2010] NZCA 502, [2011] 1 NZLR 754 at [41].
it was not prepared until after the earthworks had been completed, as a means of attempting to justify the costs incurred.
Are there assets belonging to the second defendant to which a freezing order can apply?
[46] The next issue is whether there are assets to which a freezing order can apply. In his affidavit in opposition to the making of a freezing order Mr Williamson says that he no longer has any interest in the Churchill Road property, having gifted his half share in the equity in the property to the trustees of the Williamson Family Trust. Mr Williamson says that as a result he no longer has any fixed interest in the property, although he is a discretionary beneficiary of the Trust.
[47] The issue is therefore whether he has an interest in the Churchill Road property that would support the making of a freezing order. The trustees of the Williamson Family Trust are the present registered owners of the property occupied by Mr Williamson and his wife and family, while the present application has been made against Mr Williamson alone.
[48] Mr Long relies on Medtronic v Finch, and submits that a freezing order should not be made against Mr Williamson as he does not own an interest in the Churchill Road property. However, I consider that case to be clearly distinguishable.14 In Medtronic Katz J considered whether to extend an interim freezing order made by consent. The defendant conceded that all the requirements for the making of a freezing order were satisfied. The only live issue being whether there were assets of the defendant, “on which any freezing orders can ‘bite’.” The defendant Mr Finch, argued that the assets Medtronic sought to restrain did not belong to him, and were held by him on trust for the beneficial owners. Katz J referred to Allen v Commissioner of Inland Revenue where the Court of Appeal said that in circumstances where a third party owes a debt to the defendant, it may well be appropriate to make orders against assets underpinning the value of that debt.15 However, on the facts of Finch, Katz J refused to continue the freezing order, noting that Mr Finch had not contributed anything personally to the assets of the trust, there was no debt owing to him by the
14 Medtronic v Finch [2013] NZHC 1253.
15 Allen v Commissioner of Inland Revenue (2004) 21 NZTC 18, 718 (CA) at [108].
trust, and that he had no identifiable interests in the assets of the trust.16 Therefore, even if Medtronic were to succeed, there would be no basis on which they could enforce a judgment against the assets of the trust.
[49] Here however, shortly after being advised that proceedings were to be issued against him, Mr Williamson transferred his interest in the Churchill Road property to the trustees of the Williamson Family Trust, the consideration being a deed of acknowledgement of debt, which he immediately forgave by means of a gift to that Trust.
[50] The steps taken by Mr Williamson were clearly a response to being advised that Mr Evans was intending to commence court proceedings against AWB and him personally claiming a substantial sum in damages. Mr and Mrs Williamson’s “sale” of their interest in the Churchill Road property to the trustees of their family trust by him upon terms whereby their ownership and the value of their interest in the property was transferred to the Williamson Family Trust for nil consideration, was clearly undertaken in order to frustrate and prevent the plaintiff from enforcing any judgment obtained against the defendants and securing the payment and satisfaction of any award of damages.
[51] I do not overlook Mr Williamson’s evidence in which he says that the transfer of his and his wife’s interest in the family residence at Churchill Road was not undertaken to render himself “judgment proof” from Mr Evans, but rather was part of an estate-planning exercise that had been underway since 2017, well before the dispute between Mr Evans and he arose. The Williamson Family Trust was established by deed dated 29 June 2017, and Mr Williamson has exhibited correspondence written by his accountant to Mr Williamson’s solicitor in April 2017 referring to plans to establish the trust and to transfer the Churchill Road property to the trust. While I accept that this evidence shows that Mr Williamson and his wife had some plans for transferring Churchill Road to their family trust from 2017 and before the dispute with Mr Evans arose, they had not carried the proposed transfer of Churchill Road into effect, and did not do so until soon after Mr Evans’ solicitor notified Mr Williamson and AWB’s
16 At [24].
solicitor that he was intending to bring a substantial damages claim against them. In my view, although the transfer of Churchill Road had been planned for as part of the estate-planning proposed by Mr and Mrs Williamson, the urgency and timing of the transfer so soon after being advised of Mr Evans claim, demonstrates that removing the asset from Mr Williamson’s name to prevent it from being available to satisfy a judgment against him, was a material reason and motivation for the transfer being undertaken when it was.
[52] I note that the copy of the agreement for the sale and purchase of the Churchill Road property exhibited to the affidavit of Mr Williamson and described by him as being “the cover to the 15 October 2018 agreement for sale and purchase …” does not include the remaining pages of the agreement containing the signatures of the vendors and the purchasers. Although the agreement is dated 15 October 2018, it provides for payment and settlement of the purchase price of $1.2 Million on 1 October 2018. The Deed of Acknowledgement of Debt pursuant to which Mr Williamson loaned the trustees of the Williamson Family Trust the sum of $319,059 representing the value of his ownership of a half share of the equity in the Churchill Road property is dated the same day as the agreement for the “sale” of the property to the trustees. The Minutes of the meeting of the trustees of the Williamson Family Trust are also dated 15 October 2018.
[53] I also note that while the minutes record that the trustees “accept from [Mr Williamson] a gift of $319,059 in reduction of the debt owing under the Deed of Acknowledgment of Debt dated the same date as these Minutes reducing the sum owing to $Nil”, the minutes are signed by Mr and Mrs Williamson themselves as trustees and there is no execution of the minutes by or on behalf of the corporate trustee, Williamson Family Trustee 2017 Limited. The minutes also refer to the trustees having received “a Memorandum of Wishes from Anthony David Williamson and Rochelle Maree Williamson which shall be considered by them when making decisions.” Although the memorandum of wishes has not been produced in evidence, the existence of such a memorandum provides further support for a conclusion that Mr and Mrs Williamson are in full and effective control of the Williamson Family Trust.
[54] I am satisfied that although the Williamson Family Trust is a third party, and not itself a party to these proceedings, both Mr and Mrs Williamson are trustees of that trust and it appears from the manner in which the transfer of their interests in Churchill Road was effected to the Williamson Family Trust that they also control and direct the operation of that trust.
[55] Accordingly, I conclude that it prima facie appears that although he and his wife may have had estate-planning plans to do so, in October 2018 Mr Williamson divested himself of his share in the ownership of the Churchill Road property for no consideration, principally in order to prevent the plaintiff from enforcing any judgment he may obtain against him.
[56] I consider that the trustees of the Williamson Family Trust, are so closely associated with the second defendant Mr Williamson, that it is fair and reasonable to make a freezing order in respect of the Churchill Road property of which the trustees are the registered owners. I consider that the making of a freezing order is necessary to prevent a risk of dissipation of the second defendant’s assets pending determination of Mr Evans’ claim against him for damages arising from the cancelled building and construction contract. While the making of a freezing order will inevitably have some impact upon the interests of the Williamson Family Trust, I consider that Mr Williamson’s interests and those of the Trust are closely aligned, meaning that it is likely that they will continue to occupy and manage the trustee’s ownership of Churchill Road so as to effectively maintain the status quo.
[57] Having regard to these circumstances in which Mr and Mrs Williamson were both vendors personally and purchasers as trustees, and to their ability to control and direct the administration and business of the Williamson Family Trust, I agree with Mr Bates that the other trustees did not need to be served or joined to this proceeding. However I note from the affidavit of Mr Van Herwaarde that as of 1 April 2019, the other trustees have since been served and they have taken no steps in the proceeding.
Result
[58] In these circumstances and for the reasons set out above, I consider that the overall interests of justice are best met by the making of a freezing order, freezing the
interest of the second defendant Anthony David Williamson in the property at 17B Churchill Road Cockle Bay, Auckland (Identifier NA 104B/147; North Auckland Land Registration District).
[59] To address the possibility of the Williamson Family Trust encountering management or administrative problems as a consequence of the freezing order and its effect on their ability to register instruments on the title to the Churchill Road property or otherwise, having made the freezing order, I also reserve leave to the trustees of the Williamson Family Trust to apply to the Court, on five working days’ notice to the plaintiff, for discharge or variation of the freezing order.
Paul Davison J
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