Official Assignee v McMahon - [2024] NZHC 2477

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-2150

[2024] NZHC 2477

UNDER the Insolvency Act 2006

IN THE MATTER

of the bankruptcy of Aaron Peter Coupe

BETWEEN

THE OFFICIAL ASSIGNEE in bankruptcy of the property of Aaron Peter Coupe

Applicant

AND

KIRSTINA MARY MCMAHON

Respondent

Hearing: On the papers

Counsel:

GAD Neil and RMG Hindriksen for applicant

Dateof judgment:

30 August 2024

JUDGMENT OF JAGOSE J

This judgment was delivered by me on 30 August 2024 at 3.30pm.
Pursuant to Rule 11.5 of the High Court Rules.
………………………… Registrar/Deputy Registrar

Solicitors:
Meredith Connell, Auckland

THE OFFICIAL ASSIGNEE v MCMAHON [2024] NZHC 2477 [30 August 2024]

[1] As duty judge, I have the Official Assignee’s 29 August 2024 without notice originating application for freezing and ancillary orders in respect of Kirstina McMahon’s bank accounts in support of proceedings to be brought against her.

Background

[2] The Official Assignee is administering Aaron Coupe’s estate in bankruptcy under the Insolvency Act 2006. The Official Assignee alleges Mr Coupe has directed some $1.7 million in funds to Ms McMahon’s bank accounts, and will contend she holds it on some basis for Mr Coupe (and, as in bankruptcy, for the Official Assignee).

Law on freezing orders

[3] Freezing orders may be ordered if I am satisfied, having regard to all the circumstances, there is a danger a prospective judgment in the Official Assignee’s favour will be wholly or partly unsatisfied because the value of Ms McMahon’s assets is alienated from her in some manner.¹

[4] Freezing orders are “a valuable protective measure for those commencing civil proceedings”,² for which the Official Assignee must show “a good arguable case on an accrued or prospective cause of action”.³ By ‘good arguable case’ is meant establishment of “a sufficiently plausible foundation” such that “the cause of action is at least tenable”:⁴
A good arguable case against the respondent is therefore established if the allegations in the proposed claim are capable of tenable argument and are supported by sufficient evidence, bearing in mind the early stage at which the application is likely to be brought.

[5] 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; that there are

¹ High Court Rules 2016, r 32.5(4).
² Hannay v Mount [2011] NZCA 530 at [20], referring to Deutsche Schachtbau-und Tiefbohrgesellschaft MBH v Shell International Petroleum Co Ltd (trading as Shell International Trading Co) [1990] 1 AC 295 (HL) at 317.
³ High Court Rules, r 32.5(1)(b).
⁴ Hannay v Mount, above n 2, at [21], citing Wing Hung Printing Co Ltd v Saito Offshore Pty Ltd [2011] 1 NZLR 754 (CA) at [41] and referring to Kuwait Asia Bank EC v National Mutual Life Nominees Ltd (No 2) [1989] 2 NZLR 50 (CA) at 55, and [22].

“circumstances from which a ‘prudent, sensible commercial man, can properly…

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 Official Assignee v McMahon

Details

AGLC: Official Assignee v McMahon [2024] NZHC 2477
Case: [2024] NZHC 2477
Decision Date: 30 August 2024

CaseChat Overview and Summary

The Official Assignee, representing the bankruptcy estate of Aaron Peter Coupe, sought a freezing order against Kirstina Mary McMahon to prevent her from disposing of approximately $1.7 million allegedly directed to her bank accounts by Mr. Coupe. The application was made without notice to Ms. McMahon under the Insolvency Act 2006. The primary issue before the court was whether there was a good arguable case that Ms. McMahon held funds belonging to Mr. Coupe's bankruptcy estate, and if so, whether there was a sufficient risk of those funds being alienated or dissipated, thus justifying a freezing order. The court had to determine if the Official Assignee had established a good arguable case based on the evidence provided and if there was a real risk of assets being removed or dealt with in a way that could frustrate any future judgment in the Official Assignee's favour.

The court found that the Official Assignee had presented a sufficiently plausible foundation for a good arguable case against Ms. McMahon. The evidence suggested that Ms. McMahon was in possession of money that should be administered by the Official Assignee as part of Mr. Coupe's bankruptcy estate. The inherent fungibility of money meant that the funds could easily be dissipated, and it was improper for Ms. McMahon to hold such funds on Mr. Coupe's account. The balance of convenience heavily favoured the Official Assignee, as the potential frustration of a future judgment in their favour outweighed any inconvenience to Ms. McMahon. The court also noted that the freezing order would not prohibit Ms. McMahon from using the funds for ordinary living and legal expenses or in the ordinary course of business. The lack of an undertaking as to damages was deemed justified by special circumstances, particularly the expectation that the Crown would meet any damages awarded.

The court granted the freezing order, which would remain in effect until it was called in the duty judge's list at 10:00 am on Thursday, 5 September 2024. Any application to discharge or vary the order would require two working days' notice to the Official Assignee. The order was designed to protect the Official Assignee's potential recourse to the disputed funds while balancing Ms. McMahon's rights to use the funds for necessary expenses.

Orders