Official Assignee v McMahon
[2024] NZHC 2477
•30 August 2024
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 infer a danger of default’” on adverse judgment.5
[6] I then must consider where lies the balance of convenience,6 meaning if it bears harder on the Official Assignee to be without prospective recourse to Ms McMahon’s assets, or on Ms McMahon to have her assets frozen, pending judgment in their respective favours.7
[7] The form of any freezing order must not prohibit dealings with the assets to pay ordinary living expenses and legal expenses relating to the freezing order or in the ordinary course of business,8 and where made without notice be limited to a particular date as early as practicable after the freezing order is made,9 and with leave reserved to discharge or vary the freezing order urgently on notice.10
Discussion
[8] Being satisfied r 32.2 of the High Court Rules 2016 expressly permits the application to be made without serving notice of the application, I determine the Official Assignee’s application can properly be dealt with without notice.11
[9] I am satisfied by the Official Assignee’s affidavit evidence sworn 28 August 2024 its allegations against Ms McMahon are capable of tenable argument. The evidence appears to establish Ms McMahon is in possession of money properly for administration by the Official Assignee as part of Mr Coupe’s estate in bankruptcy.
[10] Given money’s inherent fungibility and the impropriety of Ms McMahon having such in her possession on Mr Coupe’s account, I also infer the requisite danger.
5 Murren v Schaeffer [2018] NZCA 318, (2018) 24 PRNZ 285 at [16], citing Raukura Moana Fisheries Ltd v The Ship “Irina Zharkikh” [2001] 2 NZLR 801 (HC) (citing Third Chandris Shipping Corporation v Unimarine SA [1979] QB 645 at 671).
6 At [17].
7 By analogy with Wellington International Airport Ltd v Air New Zealand Ltd HC Wellington CIV-2007-485-1756, 30 July 2008 at [4] citing Cayne v Global Natural Resources Plc [1984] 1 All ER
225 (CA) at 237.
8 High Court Rules, r 32.6
9 Rule 32.7.
10 Rule 32.8.
11 Rule 7.46(3).
I am in no doubt, particularly given subsequent freezing order procedures as I have explained them,12 the balance of convenience much favours the Official Assignee.
[11] Finally, I accept the Official Assignee’s inability to give an undertaking ,and the expectation the Crown will meet any damages ordered payable by it, constitute “special circumstances” obviating requirement for an undertaking as to damages.13
Result
[12] I therefore order in terms of subpara 4(a) of the draft orders annexed to the Official Assignee’s 29 August 2024 without notice originating application and otherwise in terms of the High Court Rules’ Form G 38 (omitting para 9):
(a)the freezing order to have no effect after its call in the duty judge’s list
at 10.00 am on Thursday, 5 September 2024; and
(b)any interlocutory application to discharge or vary the order to be made on two working days’ notice to the Official Assignee.
—Jagose J
12 At [7] above.
13 High Court Rules 2016, r 32.6(4).
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