McKay Shipping Ltd v Miu HC Auckland CIV 2007-404-1038

[2007] NZHC 1927

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2007-404-001038

BETWEEN  MCKAY SHIPPING LTD Plaintiff

AND  JIMMY MIN YING MIU First Defendant

AND  YUEN LING FUNG Second Defendant

Hearing:         28 June 2007

Appearances: John Hannan for Plaintiff

Stuart Connolly for Defendants (seeking leave to withdraw)

Judgment:      28 June 2007

JUDGMENT OF HARRISON J

SOLICITORS

DLA Phillips Fox (Auckland) for Plaintiff
(copies to: Metro Law & Stuart Connolly; and on defendants at PO Box 1033 Templestow Victoria

3106, Australia & 3/225 Blackburn Road, Doncaster East, Victoria, Australia)

MCKAY SHIPPING LTD V MIU AND ANOR HC AK CIV 2007-404-001038  28 June 2007

[1]      McKay Shipping Ltd has applied for an order striking out the defences filed by Mr Jimmy Miu and Ms Yuen Fung to its claim and for entry of judgment on liability.  It also seeks leave to issue arrest warrants against Mr Miu and Ms Fung for failure to comply with an earlier order of this Court.

[2]      By  way  of  a  preliminary  issue,  I  am  satisfied  that  the  application  and supporting affidavits were served on counsel for Mr Miu and Ms Fung, Mr Stuart Connolly,  and  on  their  solicitor,  Mr Aaron  Nicholls  of  Metro  Law,  on  18  and

19 June respectively.

[3]      Mr Connolly appears  and  seeks  leave  to  withdraw,  both  for  himself and Mr Nicholls.  He has filed an application for an order: R45A High Court Rules.  I am satisfied that Mr Miu and Ms Fung have failed to give Mr Nicholls and Mr Connolly any  or  adequate  instructions  to  advance  their   defences   to  this   proceeding. Accordingly, it is appropriate to make an order declaring that Metro Law and/or Mr Nicholls have ceased to be the solicitor on the record for Mr Miu and Ms Fung in this proceeding.  Also I make an order granting Mr Connolly leave to withdraw.  I am grateful for his courtesy in appearing today.

[4]      I order also that McKay arranges for service of a copy of this particular order upon Mr Miu and Ms Fung by sending by ordinary prepaid post a copy both to PO Box 1033 Templestow Victoria 3106,  Australia,  and  the  physical address at

3/225 Blackburn Road, Doncaster East, Victoria, Australia.

[5]      McKay’s substantive claim is based upon an allegation of conversion.   The company previously employed Mr Miu as its IT manager between April 1999 and December 2006.  During that period Mr Miu purchased IT equipment and software on McKay’s behalf from ‘Avanti System Integration’.   However, McKay has established that Avanti is not a legally incorporated entity but is a trading name employed by Mr Miu and Ms Fung.

[6]      McKay was not aware until recently that Avanti was a name employed for the fraudulent  activities of Mr Miu and Ms Fung.    They followed  a  practice  of arranging for Avanti to invoice McKay for computer and IT hardware and software

items which were not supplied.   Avanti charged prices for items well in excess of reasonable market price.

[7]      McKay’s suspicions were aroused in late 2006, when it commenced an investigation.  Mr Miu and Ms Fung departed almost immediately and without notice for Melbourne where they continue to reside.  The circumstances of their flight are consistent with guilt.

[8]      McKay has been unable to finalise its losses suffered as a result of the fraud perpetrated by Mr Miu and Ms Fung.  Its loss is presently estimated in the region of

$1.081 million and $1.431 million.  Mr John Hannon, McKay’s counsel, advises that it is likely to take the company up to another month to settle its claim for damages.

[9]      On 11 April 2007 this Court issued a Mareva injunction directing, among other  things,  that  both  Mr Miu  and  Ms Fung  make  full  disclosure  of  their New Zealand and worldwide assets by midday on the seventh working day following service.  Service was effected that day on Mr Miu and Ms Fung’s solicitors and on them personally on 16 April and 18 April respectively.   Statements of defence to McKay’s statement of claim were filed on 24 April 2007.

[10]     The time for compliance by Mr Miu and Ms Fung with the Mareva order expired for both at midday on 20 April.   I am satisfied that Mr Miu and Ms Fung have failed to observe the terms of the order.  There is no record of any affidavits filed by either Mr Miu and Ms Fung.  Furthermore Mr Connolly advised Phillips Fox on or about 4 May 2007 that neither he nor Mr Nicholls had instructions to take steps to effect compliance with the Mareva orders.

[11]     I am satisfied that both Mr Miu and Ms Fung are and have been in deliberate breach of orders of this Court since 20 April 2007.  They have frustrated the purpose of the orders made on 11 April.  Accordingly, I have a wide jurisdiction including an order striking out the defences and entering judgment: R258(1).

[12]     Given my satisfaction that Mr Miu and Ms Fung are in wilful default of the orders made on 11 April 2007, I am satisfied that their defences should be struck out.

I accept that McKay is suffering ongoing prejudice as a result of the breaches by Mr Miu  and  Ms Fung.    They  have  shown  what  Mr Hannon  submits  is  a  clear disregard for this Court’s processes.   Those who choose to disobey Court orders must  live with the consequences.    Coupled with that  factor, I  am satisfied that McKay’s case is strong, if not overwhelming.  The ongoing failure by Mr Miu and Ms Fung to provide details of their assets supports an inference of knowledge that full disclosure of their assets will lead to discovery of frauds committed against McKay.

[13]     Furthermore, I am satisfied that it is appropriate to issue writs of arrest: R608. McKay has satisfied me to the requisite high standard that both the terms of the order are clear and that they have been intentionally broken.  The circumstances of Mr Miu and Ms Fung’s sudden departure from New Zealand with knowledge that McKay had initiated an investigation into their participation in substantial frauds confirm the inference that they have departed this jurisdiction in an attempt to avoid liability.

[14]     Accordingly, I make orders:

(1)      Striking out the statements of defence filed by Mr Miu and Ms Fung; (2)     Entering judgment for McKay against Mr Miu and Ms Fung;

(3)      Directing  trial  of  this  proceeding  for  the  purpose  of  assessing damages;

(4)      Directing  service  of these  orders  by  ordinary  prepaid  post  at  the addresses of PO Box 1033 Templestow Victoria 3106, Australia, and the physical address of 3/225 Blackburn Road, Doncaster East, Victoria, Australia;

(5)      Granting leave to McKay to issue warrants of arrest against Mr Miu and Ms Fung;

(6)       Entering  judgment  for  McKay  against  Mr Miu  and  Ms Fung  for indemnity costs fixed on a reasonable solicitor/client basis together

with associated disbursements.

Rhys Harrison J