Murren v Schaeffer - [2018] NZHC 1517

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

I TE KŌTI MATUA O AOTEAROA WHAKATŪ ROHE

CIV 2015-442-0028

[2018] NZHC 1517

BETWEEN
JAMES JOSEPH MURREN as trustee of the JAMES J MURREN SPENDTHRIFT

TRUST
First Plaintiff

DANIEL LEE
Second Plaintiff

AND

GLENN WILLIAM SCHAEFFER

Defendant

Hearing: 5 March 2018

Appearances:

A J Horne and A E Simkiss for Plaintiffs

B M Nathan and T B Elkington for Defendant

Judgment:

22 June 2018

JUDGMENT OF PETERS J

This judgment was delivered by Justice Peters on 22 June 2018 at 4.30 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date: ...................................

Solicitors: Minter Ellison Rudd Watts, Auckland
Duncan Cotterill, Nelson

MURREN v SCHAEFFER [2018] NZHC 1517 [22 June 2018]

[1] This judgment determines an application by the plaintiffs, Mr James Murren and Mr Daniel Lee, for a freezing order (“application”).1 Simon France J made orders on an interim basis on 13 February 2018 and the question is whether those orders ought to be extended.

[2] The plaintiffs have given an undertaking in damages. Accordingly, the Court may make a freezing order if the plaintiffs establish:

(a)a good arguable case, that is the allegations in the proposed claim are capable of tenable argument and supported by sufficient evidence, bearing in mind the stage of the proceedings at which the application is brought;

(b)assets, usually of the respondent’s, to which the order can apply;

(c)a real risk of dissipation of those assets.2

Orders sought

[3] Mr Murren and Mr Lee’s proceedings, commenced in June 2015, are to go to trial in late October 2018. The proceedings concern the defendant, Mr Glenn Schaeffer, and a limited partnership registered in Nevada in the United States, the purpose of which is to invest in an entity or entities owning a vineyard in New Zealand. The entities concerned are Woollaston Estates Holdings Limited and Mahana Estates Limited (“WEHL” and “MEL”), and are generally referred to as “Mahana Estates”.

[4] The application, brought against Mr Schaeffer, WEHL and MEL, is in respect of the following assets (“assets”):3

(a)Mr Schaeffer:

1      High Court Rules 2016, r 32.2; and Interlocutory Application for Freezing Orders dated 12 February 2018.
2      McGechan on Procedure (online looseleaf ed, Thomson Reuters) at [HR32.2.03].
3      On its face, the application is also brought against Mr Paul Le Gros but does not set out grounds for any order to be made against him. For that reason, I shall not mention Mr Le Gros again.

(i)his shareholdings in WEHL and MEL;

(ii)his artworks; and

(iii)all the land described in CT387917, of which Mr Schaeffer is the registered proprietor.

(b)WEHL and MEL:

(i)all assets including those utilised in and produced by the business known as “Mahana Estates”; and

(ii)all the land described in certificates of title 387916 and NL12C/1028, of which WEHL is the registered proprietor.

[5] The plaintiffs seek orders prohibiting the disposal of the assets unless at arm’s length for market value, with the proceeds of sale to be held on interest…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Murren v Schaeffer

Details

AGLC: Murren v Schaeffer [2018] NZHC 1517
Case: [2018] NZHC 1517
Decision Date: 22 June 2018

CaseChat Overview and Summary

The case of Murren v Schaeffer involved an application by the plaintiffs, Mr James Murren and Mr Daniel Lee, for a freezing order against the defendant, Mr Glenn Schaeffer, as well as the companies Woollaston Estates Holdings Limited and Mahana Estates Limited. The plaintiffs sought to restrain the disposal of specified assets unless at arm’s length for market value, with proceeds held on interest-bearing deposit. The legal issues before the court were whether the plaintiffs established a good arguable case, the presence of assets to which the order could apply, and a real risk of dissipation of those assets. The court found that while the plaintiffs had a good arguable case, there was insufficient evidence to substantiate a real risk of dissipation of assets. The court, therefore, declined to extend the interim orders and discharged them. The plaintiffs were ordered to pay the defendant’s costs on a 2B basis, together with reasonable disbursements.

In delivering the judgment, Justice Peters examined the background of the case, the agreements between the parties, and the nature of the claims. The plaintiffs alleged that Mr Schaeffer misrepresented the ownership structure of the partnership and the investment's benefits. While the court was satisfied that the plaintiffs had an arguable case, it expressed reservations about the ability to prove causation and the impact of limitation defences. The court also considered the evidence regarding the assets and the risk of dissipation, ultimately finding it insufficient to warrant the continuation of the freezing orders. The decision highlighted the need for robust evidence to support such injunctive relief and the balance between preserving assets and the rights of the defendant.

Orders