Johnstone v Webster

[2013] NZHC 1797

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV 2013-419-000729 [2013] NZHC 1797

BETWEEN  SHIRLEY PATRICIA JOHNSTONE SUSAN MARGARET JOHNSTONE BRIAN ACHESON SMITH

Plaintiffs

ANDWARREN AUSTIN WEBSTER CORALINE JOY WATSON First Defendants

ANDPRUDENCE ELIZABETH VULETA PAUL GERARD VULETA

Second Defendants

Hearing:                   (on the papers) Appearances:      T M Braun for the Plaintiffs Judgment:     17 July 2013

[RESERVED] JUDGMENT OF WYLIE J

This judgment was delivered by Justice Wylie on 17 July 2013 at 10.00 am

Pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date:

JOHNSTONE & ORS v WEBSTER & ORS [2013] NZHC 1797 [17 July 2013]

[1]      The plaintiffs have applied for freezing and ancillary orders.

[2]      I am satisfied that orders are appropriate.  Attached to this judgment is the order I approve.  I am satisfied that the order is appropriate.

[3]      First, the plaintiffs have a good arguable case.   They are the owners of a property in Liverpool Street, Hamilton.  The property has been leased for a number of years.   The lease was assigned to an  entity known as  Lollipops Limited on

12 August 2011.  The first defendants were guarantors on the assignment.  Pursuant to the guarantee, the first defendants guaranteed to the plaintiffs, and to the assignor, Kids Playzone Waikato Limited, the performance by Lollipops Limited of its obligations under the lease.   The guarantee was limited to a sum equivalent to

12 months’  rental,  rates  and  insurance,  or  until  the  termination  of  the  lease, whichever was the earlier.

[4]      At the time of assignment, rental due under the lease was $99,000 per annum, plus GST.  It was payable in advance by equal monthly instalments of $8,250 plus GST, on the 24th of each month.

[5]      Lollipops Limited defaulted on its obligations and it got into arrears.  As at September 2012, the arrears amounted to $30,288. A rental variation agreement was entered  into,  whereby the  plaintiffs  as  landlords  agreed  to  reduce  the  rental  to

$78,000 (inclusive of GST) per annum. The rental arrears however were to be repaid in two instalments, one due on 11 September 2012, and the other on 31 October

2012.  A Mr Perry, who manages the property for the plaintiffs, has deposed that the rental arrears were not paid.   The rental variation agreement recorded that should Lollipops Limited fail to meet any of its obligations, then the agreement was to be void, and all outstanding rental was to be immediately due and payable.

[6]      On  26  April  2013,  the  landlords  gave  Lollipops  Limited  and  the  first defendants notice of their intention to cancel the lease.   At that date, the amount outstanding was $39,601 (inclusive of GST).  In the event, the lease was cancelled, and a letter confirming this was sent to Lollipops Limited on 22 May 2013.  On the same day, letters of demand for outstanding rent and outgoings were sent to the

defendants, and a statutory demand was served on Lollipops Limited.  No response was received either from Lollipops Limited, or the first defendants.

[7]      Secondly,  I am  also  satisfied that there are assets in respect of which  a freezing order can properly be made.  The first-named first defendant, Mr Webster, is a registered proprietor of two properties, one in Hamilton, and the other in Tauranga. Copies of certificates of title have been made available to the Court.  Both properties are also in the name of a Mr Arnold James Yeoman.  The extent of Mr Webster’s interest in the properties is not known to the plaintiffs.  Given Mr Yeoman’s interest in the properties, it is appropriate to name him as a party to the freezing order, pursuant to r 32.4, even though he is not a party to the proceeding.  It will then be open to Mr Yeoman to take any steps he wishes to take to vary or set aside the freezing order, should his interests be adversely affected.

[8]      The plaintiffs also sought freezing orders in respect of any bank accounts the first defendants may have in New Zealand.  The plaintiffs however could not provide detail of any such bank accounts.  Nor is there anything from which I can infer that there are bank accounts to which any freezing order could apply.  In discussions with Mr Braun, appearing for the plaintiffs, I advised that I was not prepared to make an order in vague terms against an asset which may not exist.

[9]      Thirdly, I accept that there is a risk of dissipation.  According to Mr Perry, both houses in which the first-named first defendant has an interest are on the market for sale.  Mr Perry also advises that he has spoken to a number of persons who have dealt with the first defendants, that he understands they have left New Zealand, and are currently residing in Australia.   He deposes of his understanding that the first defendants intend to permanently migrate to Australia.  Further, the first defendants have loaded furniture and other items, which they were previously holding in long- term storage, into shipping containers.  It seems from inquiries that have been made, that the first defendants have already left New Zealand.  Indeed, Mr Wadley has filed an affidavit confirming that the first-named first defendant departed New Zealand on

16 June 2013, and that the second-named first defendant departed New Zealand on

18 June 2013.  It seems that neither has since returned to this country.

[10]     Further, it is clear from Mr Perry’s affidavit that the first defendants have

been evasive, and failed to respond to communications from the plaintiffs.

[11]     Fourthly, an undertaking has been received from the plaintiffs.  I requested Mr Braun to file a further affidavit setting out what assets they hold to support that undertaking.  An affidavit in this regard from Mr Perry has now been filed.  It has been filed with the authority of the plaintiffs.  It is clear that the plaintiffs do have sufficient assets to support their undertaking as to damages.

[12]     Finally, insofar as I am aware, full disclosure has been made by the plaintiffs.

[13]     I am also satisfied that an ancillary order is necessary to determine whether there are any other assets in respect of which a freezing order should be made.  If further assets are disclosed, then it will be open to the plaintiffs to make further application in that regard.

[14]     I direct that a copy of this judgment is to be served on the first defendants, and on Mr Yeoman, together with the freezing and ancillary orders  in the form

approved by me.

Wylie J

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV 2013-419-

BETWEEN  SHIRLEY PATRICIA JOHNSTONE and SUSAN MARGARET JOHNSTONE and BRIAN ACHESON SMITH

Plaintiffs

AND  WARREN AUSTIN WEBSTER and

CORALINE JOY WATSON First Defendants

AND  PRUDENCE ELIZABETH VULETA and

PAUL GERARD VULETA Second Defendants

FREEZING AND ANCILLARY ORDERS

Whitfield Braun Limited

Level 1, Vero House
127 Alexandra Street
P O Box 928
Hamilton 3240
P:  [phone]
F:  [phone]

E: [email protected]            Solicitor: T M Braun

FREEZING AND ANCILLARY ORDERS

TO:               the first defendants, Warren Austin Webster and Coraline Watson.

AND TO:      Arnold James Yeoman

[15]     The Court has considered the plaintiffs’ application for freezing and ancillary orders, has heard the solicitor for the plaintiffs, T M Braun, in support, and has considered the affidavits of Paul Raymond Perry and Robert James Wadley filed in support.

[16]     The  plaintiffs,  Shirley  Patricia  Johnstone,  Susan  Margaret  Johnstone  and Brian Acheson Smith, have a good arguable case on an accrued or prospective cause of action that is justiciable in this Court.   The Court is also satisfied, that having regard to all of the circumstances disclosed by the affidavit evidence filed in support of the application, that there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because the assets of the judgment debtor, or prospective judgment debtor, might be removed from New Zealand, or disposed of, or dealt with, or diminished in value.

[17]     This freezing order is made in respect of the following assets:

(a)       The  property  at  27  Opoia  Place,  Hamilton  East,  Hamilton,  as described on certificate of title SA34D/208; and

(b)The  property  at  1  Douglas  Place,  Papamoa  Beach,  Tauranga,  as described on certificate of title 62172 (South Auckland).

[18]     Subject to [5], this order restrains you from disposing of, dealing with, or diminishing the value of either of those assets.

[19]     This  freezing  order  does  not  prohibit  you  from  dealing  with  the  assets covered by the order for the purpose of:

(a)       paying ordinary living expenses; or

(b)      paying legal expenses relating to the freezing order; or

(c)       disposing of assets, or making payments, in the ordinary course of your business, including business expenses incurred in good faith.

[20]     Warren Austin Webster and Coraline Watson are ordered to provide, within

10 working days of the date of this order, by way of affidavit, details of their assets and liabilities, and whether held or owed individually, or jointly.  This order requires them to disclose detail of all bank accounts in their names, or in the name of either of them, and of all bank accounts under their control, either individually or jointly. This order extends to all accounts, whether held in New Zealand, or elsewhere.

[21]     As the freezing order has been made without notice to you, it will have no effect after 14 August 2013, unless on that date it is continued or renewed.  On that date, you or your counsel are entitled to be heard by the Court in opposition to the continuation or renewal of the order.

[22]     You may apply to the Court by interlocutory application to discharge or vary the order.   If you apply, you must give the plaintiffs notice of not less than two working days.

[23]     An undertaking as to damages given by the plaintiffs is attached.

[24]     This order does not affect anyone outside New Zealand until it is declared enforceable by a court in the relevant country, (in which case it affects a person only to the extent that it has been declared enforceable) unless the person is:

(a)       a person to whom this order is addressed, or an officer of that person, or an agent appointed by power of attorney of that person; or

(b)      a person who:

(i)       has been given written notice of this order at that person’s

residence or place of business within New Zealand; and

(ii)is able to prevent acts or omissions outside the jurisdiction of this Court that constitute, or assist, a breach of this order.

[25]     This order does not prevent, in respect of assets located outside New Zealand, any third party from complying with:

(a)      what  it  reasonably  believes  to  be  the  third  party’s  obligations, contractual or otherwise, under the laws of the country in which those assets are situated or under the proper law of any contract between the third party and the first defendants; and

(b)any orders of the courts of that country, provided that reasonable notice of any application for such an order is given to the plaintiffs’ solicitors.

Dated:  July 2013

(Registrar/Deputy Registrar)