Kiwi Joint Limited v Buttar

[2024] NZHC 1459

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE

CIV-2023-470-000058

[2024] NZHC 1459

UNDER

Part 32 of the High Court Rules 2016

BETWEEN

KIWI JOINT LIMITED

Applicant

AND

DALJEET SINGH BUTTAR

First Respondent

ROOP KIRAN KAUR

Second Respondent

Judicial Telephone Conference:	4 June 2024
Appearances:	D P Weaver and D S Howell and for Applicant First respondent in person
Judgment:	4 June 2024

JUDGMENT OF VAN BOHEMEN J

[application for freezing order]

This judgment was delivered by me on 4 June 2024 at 4:30 pm Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar Date…………………………

Counsel/Solicitors:

D P Weaver, Tauranga

Holland Beckett, Tauranga

Copy to: Daljeet Singh Buttar Roop Kaur

KIWI JOINT LTDD v DALJEET SINGH BUTTAR [2024] NZHC 1459 [4 June 2024]

[1]    Kiwi Joint Ltd (Kiwi Joint) applies without notice, under pt 32 of the High Court Rules 2016, for an order freezing the property at 7 Allanah Place, Te Puke  (Lot 133, DP 404821) (the property) and for any other orders the Court deems just.

[2]    An affidavit sworn by Jaswinder Singh, a director of Kiwi Joint, has been filed in support of the application, together with a draft order, an undertaking as to damages and a memorandum of counsel for Kiwi Joint.

[3]    According to the affidavit and exhibits filed by Mr Jaswinder Singh, the property is owned by Daljeet Singh Buttar, the other director of Kiwi Joint, and Roop Kiran Kaur, together the respondents named in the application. Mr Jaswinder Singh says the property has been listed for sale on TradeMe and with Harcourts Real Estate and provides evidence that the property has been advertised for sale by auction on    5 June 2024.

[4]    Kiwi Joint’s application relates to a proceeding (the substantive proceeding) brought by Mr Jaswinder Singh by derivative action on behalf of Kiwi Joint against Mr Singh Buttar. In that proceeding, Kiwi Joint alleges misappropriation of company funds and equitable fraud by Mr Singh Buttar and seeks damages for various alleged breaches of Mr Singh Buttar’s duties as a director and fiduciary duties owed to Kiwi Joint and, in the alternative, equitable compensation. The substantive proceeding is set down for a five-day hearing commencing on 15 July 2024.

[5]    In his affidavit, Mr Jaswinder Singh says he is concerned that Mr Singh Buttar will dispose of the property and that there will be no property or assets to satisfy any judgment against Mr Singh Buttar.

[6]    In March 2021, prior to the commencement of the substantive proceeding, Kiwi Joint applied for charging, freezing and ancillary orders against the property and other properties purchased by Mr Singh Buttar using funds which, Mr Jaswinder Singh believes, were wrongfully taken from Kiwi Joint’s bank account.

[7]    In the event, that application was not proceeded with after Mr Singh Buttar signed an undertaking that he would not sell, transfer or dispose of, or enter into an

agreement to sell, transfer or dispose of any property or shares in his personal name or property or shares in the name of Kiwi Joint and two other named companies, until further order of the Court or written agreement of Mr Jaswinder Singh, Mr Singh Buttar and Kiwi Joint. The undertaking recorded that, for the sake of clarity, it included the property.

[8]    The application for a freezing order was filed in the High Court at Tauranga on 30 May 2024. It was brought to my attention at approximately 9.30 am on 4 June 2024. Given the terms of Mr Singh Buttar’s undertaking and the documents exhibited to Mr Jaswinder Singh’s affidavit, which establish that the property has been advertised for auction at 12 pm on 5 June 2024, I directed Kiwi Joint to serve the application on Mr Singh Buttar and further directed that there be a telephone conference at 2.30 pm on 4 June 2024.

[9]    At the telephone conference, Mr Singh Buttar acknowledged that the property had been put up for sale and said that is because the property was too large and he was looking to buy a smaller house. He acknowledged that there had been an earlier application for freezing orders but appeared not to recall the terms of his undertaking.

[10]   I said that, in these circumstances, I was satisfied that the freezing order should be made in the terms sought and that I would do so that afternoon.

Reasons

[11]As stated by Jagose J in Liu v Kang:1

[4]        Freezing orders may be ordered if I am satisfied, having regard to all the circumstances, there is a danger a prospective judgment in the plaintiffs' favour will be wholly or partly unsatisfied because the value of the defendants' assets are alienated from them in some manner.

[5]        Freezing orders are “a valuable protective measure for those commencing civil proceedings”, for which the plaintiffs must show “a good arguable case on an accrued or prospective cause of action”. By “good arguable case” is meant establishment of “a sufficiently plausible foundation” such that “the cause of action is at least tenable”. …

[6]        As to the danger of alienation, I must be satisfied assets may be removed or dealt with in a way that may frustrate the prospective judgment;

1      Liu v Kang [2023] NZHC 1263.

that there are “circumstances from which a ‘prudent, sensible commercial man, can properly infer a danger of default’” on adverse judgment.

[7]        I then must consider where lies the balance of convenience, meaning if it bears harder on the plaintiffs to be without prospective recourse to the defendants' assets, or on the defendants to have their assets frozen, pending judgment in their respective favours.

(footnotes omitted)

[12]   Having regard to the above principles, my reasons for making the order are as follows:

(a)There is a proceeding on foot and about to be heard, in which Mr Singh Buttar faces the prospect of being ordered to pay significant damages to Kiwi Joint.

(b)The property is a significant asset owned, at least as to 50 per cent, by Mr Singh Buttar.

(c)Mr Singh Buttar has given an undertaking not to sell, transfer or dispose of the property, or to enter into an agreement to sell, transfer or dispose of the property without a Court order or the written agreement of     Mr Jaswinder Singh and Kiwi Joint.

(d)The property has been advertised for auction in apparent breach of  Mr Singh Buttar’s undertaking.

(e)It is reasonable to infer that Mr Singh Buttar is seeking to liquidate his interest in the property ahead of the hearing of the substantive proceeding.

(f)In these circumstances, I am satisfied there is a danger that judgment in Kiwi Joint’s favour in the substantive proceeding will be wholly or partly unsatisfied because an asset of Mr Singh Buttar is alienated from it in some manner.

Order

[13]   Accordingly, I make a freezing order in the terms of the draft order filed with the application.

G J van Bohemen J