Noble v Lasfargues

[2018] NZHC 484

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA

TE WHANGANUI-Ā-TARA ROHE

CIV-2017-485-151 [2018] NZHC 484

BETWEEN

JACKSON KAY NOBLE AND ESTHER

CHARLOTTE MCLAREN Plaintiffs

AND

ENID EE MIN LASFARGUES First Defendant

TOMMY’S REAL ESTATE LIMITED Second Defendant

ELIZABETH FRANCES POTTER Third Defendant

NZHIC CAPITAL CITY LIMITED Fourth Defendant

CHRIS KOORNNEEF Fifth Defendant

Hearing:	19 March 2018
Appearances:	D P Siva for the plaintiffs T J Castle for the first defendant D A M Mahon for the second and third defendants
Judgment:	21 March 2018

JUDGMENT OF CULL J On a freezing order

[1]      The plaintiffs apply for a freezing order and/or pre-judgment charging order against Mrs Lasfargues, the first defendant, in relation to a “deadline sale” of a property in Seatoun, Wellington, of which she is the registered owner (Seatoun

property).

NOBLE v LASFARGUES [2018] NZHC 484 [20 March 2018]

[2]      In support of the plaintiffs’ application, the plaintiffs claim, in accordance with the authorities, that they:

(a)       have a good arguable case;

(b)there is an asset owned by the first defendant, within the jurisdiction of the Court; and

(c)       there is a risk of dissipation.1

[3]      The plaintiffs’ claim against the first defendant arises out of their purchase of

7 Kilsyth Street, Karori from first defendant, following which the plaintiffs discovered that there were moisture issues with the property.  Following an expert inspection of the property, Grant Hunt Building Consultants Ltd (GHBCL) identified, in their report, defects and estimated remedial costs at $278,861.28.

[4]      The  plaintiffs  filed  a  statement  of  claim,  claiming  the  remedial  costs  in damages together with $35,000 in general damages and, as yet, unspecified damages for consequential loss and the diminution in value of the Karori property. Interest and costs are also claimed. The plaintiff estimates of their total claim to be approximately

$350,000.

[5]      The  plaintiffs  claim  breach  of  contract  and  misrepresentation  against Mrs Lasfargues.   They also claim negligent misstatement and breach of the Fair Trading Act 1986 against Mrs Lasfargues’ real estate agent, Tommy’s Real Estate Ltd, the second defendant.  The Fair Trading Act breach is also alleged against the agent, Ms Potter.

[6]      Finally, the plaintiffs claim breach of contract, negligent misstatement and breach of the Fair Trading Act against the fourth defendant, NZHIC Capital City Ltd, the pre-purchase inspector.   The Fair Trading Act breach is also alleged against

NZHIC’s agent, Mr Koornneef, the fifth defendant.

1      Bank of New Zealand v Hawkins (1989) 1 PRNZ 451 (HC).

Law relating to freezing orders

[7]      The Court may make an order restraining a party from removing, disposing of, dealing with, or diminishing the value of any assets, located in or outside New Zealand.2  A party applying for such an order must file a signed undertaking that they will comply with any order for the payment of compensation for damage sustained in consequence of the order.3

[8]      If the applicant is only a prospective judgment debtor, it is necessary for them to demonstrate a “good arguable case” on a prospective cause of action.4   The Court must also be satisfied that there is an asset within its jurisdiction, and that there is a danger that a prospective judgment will be wholly or partly unsatisfied because that asset might be removed, disposed of, dealt with, or diminished in value.5

[9]      A “good arguable case” requires that “the allegations in the proposed claim [be] capable of tenable argument and [be] supported by sufficient evidence.”6   This does not require the applicant to establish a “prima facie case”, just a “sufficiently plausible foundation”.7   The “sufficiency of evidence required of an applicant must reflect the early stage of the proceeding”.8  The applicant is not required to demonstrate that its case is strong enough to entitle it to summary judgment.9

The current application

[10]     On 17  February 2018,  the plaintiffs discovered  that  Mrs  Lasfargues  had engaged Ray White Wellington City to market the Seatoun property for a “deadline sale” by 7 March 2018.

[11]     In her affidavit, Mrs Lasfargues explains that the reason she is selling her house is to enable her to travel to Malaysia to care for her mother, who was diagnosed with

2      High Court Rules 2016, r 32.2(1) and (2).

3      Rule 32.2(5).

4      Rule 32.5(1)(b).

5      Rule 32.5(4)(b).

6      Hannay v Mount [2011] NZCA 530 at [22].

7      Wing Hung Printing Ltd v Saito Offshore Pty Ltd [2010] NZCA 502; [2011] 1 NZLR 754 at [41].

8      Dotcom v Twentieth Century Fox Film Corporation [2014] NZCA 509 at [18].

9      Wilsons (NZ) Portland Cement Ltd v Gatx-Fuller Australasia Pty Ltd [1985] 2 NZLR 11 (CA) at

21-22.

cancer on 7 September 2017. Her mother underwent urgent surgery, while in Ireland, on 12 September 2017 and returned to Malaysia in October that year, where she began a seven-month chemotherapy treatment.

[12]     Mrs Lasfargues explains that her father passed away in 2014, and her sisters, who live in Ireland, are unable to assist, so she is responsible for looking after her

mother.  Mrs Lasfargues plans to resign from her job at the Ministry of Education for this purpose, as she will be taking care of her mother full-time. She does not anticipate being able to secure employment in Malaysia, as she will be there on a tourist visa and will be undertaking full-time care of her mother.  She is therefore selling her house to provide the necessary funds to live on.

[13]     The plaintiffs sought a “freezing order” on the grounds that they believed this is Mrs Lasfargues’ only substantial asset and that the dissipation of the net proceeds of sale would create a real risk that any judgment in favour of the plaintiffs would be left unsatisfied.

The hearing

[14]     Just before the hearing before me, a memorandum of counsel for the first defendant had been filed, addressing a number of issues raised by the plaintiffs over discovery, exhibit A of the first defendant’s affidavit of 2 March 2018 and concerns over the plaintiffs’ potential breach of the High Court Rules. A memorandum was also filed by counsel for the first and second defendants in support of the plaintiffs’ application, but that memorandum was not placed before me until after the hearing.

[15]     Because of the partial agreement reached among counsel, the issues raised in the memoranda do not need to be discussed further.

[16]     Mrs Lasfargues accepted that the Seatoun property was her only substantial asset and in accordance with pre-hearing directions, advised the Court that the Seatoun property had undergone a tender process but had not sold.  She also advised that she had received advice that the likely sale price was $650,000 and that her current mortgage indebtedness is $245,000.

[17]     After hearing counsel for the plaintiff canvass the legal principles relating to freezing orders and the matters upon which the plaintiffs relied in the evidence filed before the Court and in their statement of claim, I indicated to counsel that I was not minded to grant an order that the first defendant be restrained from selling or otherwise changing the ownership of the Seatoun property.  However, I was minded to order a proportion of the sale proceeds, in the event the Seatoun property sold, to be held on trust, pending the outcome of the substantive claim.

[18]     Mr  Castle  for  Mrs Lasfargues  and  Mr  Mahon  for  the  second  and  third defendants considered it would be helpful if time were allowed for counsel to confer on the likely form of an order, which restrained and/or froze certain funds.

[19]     After an adjournment to allow for such discussion, counsel advised that there was general agreement on the terms of an order, for funds to be held without deduction on the sale of the Seatoun property.  However, counsel could not agree on the amount of the net sale proceeds to be restrained.

[20]     Mr Castle submits that $90,000 is sufficient to satisfy the plaintiffs’ concerns, because there are five defendants altogether and Mrs Lasfargues’ share would be a quarter of the likely total claim.   Mr Castle also advised that Mrs Lasfargues had moneys in a state sector retirement fund and Kiwisaver, totalling $69,100, which could also be taken into account as potential security.

[21]     Mr Mahon, for the second and third defendants, who were supportive of a freezing order being made, submits that the more appropriate sum is in the range of

$140,000–$150,000, because it is likely that Mrs Lasfargues will be the predominant liability defendant.   On the basis that the Seatoun house sells for approximately
$650,000, with deductions for the outstanding mortgage of $245,000 and $150,000 as the freezing order sum, Mrs Lasfargues would be left with $255,000, from which she could pay her ordinary living expenses for her and her son, whilst caring for her mother in Malaysia and/or any other expenses related to the freezing order, as required under r 32.6 of the High Court Rules.

[22]     Ms Siva, for the plaintiffs, submits that the first defendant’s suggestion of

$90,000 was too low but advised that the plaintiffs considered the Court should decide the appropriate sum.

[23]     After considering the plaintiffs’ claim, the evidence filed in support of the application for the freezing order and the financial position of Mrs Lasfargues, I consider the sum of $150,000 to be an appropriate sum to be held without deduction by Mrs Lasfargues’ solicitors, in their trust account, pending further order of the Court. In this way, the form and terms of the freezing order comply with r 32.6(3)(a), enabling Mrs Lasfargues to look after her mother in Malaysia and support herself and her son from the remaining proceeds, whilst living in Malaysia.

Conclusion

[24]     The plaintiffs have a good arguable case on a prospective course of action that is justiciable in this Court.

[25]     The Court has considered the plaintiffs’ application for a freezing order and has heard Counsel, Ms Siva for the plaintiff, Mr T J Castle for first defendant and Mr Mahon for the second and third defendants.

[26]     The Court is satisfied, having regard to all the circumstances disclosed by affidavit evidence filed in support of the application, that there is a danger that judgment in favour of the plaintiffs will be wholly or partly unsatisfied, because the one substantial asset owned by the first defendant is on the market for sale and the first defendant is leaving her employment, to care for her mother in Malaysia.

[27]     I therefore make the following order:

By consent (as to the form of the order):10

(a)       there will be a freezing order in respect of $150,000 of the net sale proceeds, (the $150,000 sum) on the settlement of 11/231 Marine

10     Counsel agree on the form of the order only. The money sum is the Court’s determination.

Parade, Seatoun, Wellington, more particularly described in Certificate of Title 659228 (the Seatoun property);

(b)the  $150,000  sum  is  to  be  held,  without  deduction,  by  the  first defendant’s solicitors, (whose firm is to be advised to the Registry, before the sealing of this Order) acting on the sale of the Seatoun property, pending further order of the Court;

(c)      leave is reserved for any party to apply on seven days’ notice in respect of this order.

Costs

[28]     In the absence of counsel reaching agreement on costs, counsel are to file memoranda.

Cull J

Solicitors:

Grimshaw & Co, Auckland F R Twiss & Co, Marton Duncan Cotterill, Wellington