Premier Legal Financial GP Limited v Fishbowl Trustee Stanley Limited
[2025] NZHC 1239
•19 May 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2025-404-1093
[2025] NZHC 1239
BETWEEN PREMIER LEGAL FINANCIAL GP LIMITED
PlaintiffAND
FISHBOWL TRUSTEE STANLEY LIMITED
First Defendant
THE STARK TRUSTEES LIMITED
Second DefendantLEXUS TRUSTEES 29 LIMITED
Third DefendantMARK ENSOM
Fourth DefendantContinued:…/2
Hearing: On the papers Counsel:
R B Hucker for the Plaintiff
Judgment:
19 May 2025
JUDGMENT OF HARVEY J
This judgment is delivered by me on 19 May 2025 at 4.25 pm pursuant to r 11.5 of the High Court Rules
………………………………
Deputy Registrar
Solicitors:
Hucker Law, Auckland for the Plaintiff
PREMIER LEGAL FINANCIAL GP LIMITED v FISHBOWL TRUSTEE STANLEY LIMITED [2025] NZHC 1239 [19 May 2025]
…/2
AND STEFANIE WINITANA
Fifth Defendant
RUBY CITY LIMITED
Sixth Defendant
Introduction
[1] On a without notice basis, the plaintiff, Premier Legal Financial GP Ltd, seeks freezing orders against the defendants. In essence, the plaintiff claimed the defendants have acted in an underhanded and unlawful manner (involving misrepresentations and concealed transactions) which deprived the plaintiff of its entitlements as mortgagee. In particular, Mr Hucker for the plaintiff submitted that the plaintiff has a good arguable case for relief against the defendants that includes proprietary remedies to set aside the transfer of 2 Stanley Street, Parnell, Auckland1 to the sixth defendant.
[2] The freezing orders sought by the plaintiff are broad but primarily concern the property at 2 Stanley Street along with interests in any funds held in bank accounts or solicitors’ trust accounts for the credit of the defendants, as well as the sale proceeds of 2 Stanley Street and any debt or unpaid part of the purchase price.
[3]In addition, the plaintiff seeks ancillary orders that:
(a)the defendants file and serve an affidavit clarifying the defendants’ assets and the details of the sale of 2 Stanley Street and the disbursement of the sale proceeds;
(b)the sixth defendant not transfer, further mortgage, distribute to its shareholders or part with possession of 2 Stanley Street;
(c)to the extent there are funds remaining in the trust account of Atmore & Co held for the credit of the defendants or that were derived from the sale of 2 Stanley Street, that leave be granted to apply for a charging order which would issue against such funds;
(d)any orders made by the Court and service of these proceedings on the first to fifth defendants be effected by email to [redacted] and [redacted] and on the sixth defendant at [redacted]; and
1 As contained and described in certificates of title NA126/147 and NA53/264.
(e)summary judgment be entered for the plaintiff on the causes of action set out in the statement of claim once the defendants have had an opportunity to file any affidavits and notices in opposition.
[4]The principal issues for determination are:
(a)Does the plaintiff have a good arguable case?
(b)Do the defendants have assets over which a freezing order might apply?
(c)Is there a real risk of dissipation of those assets?
(d)Where does the balance of convenience and overall justice lie?
Background
[5] In summary, the plaintiff says it provided loans to the first to third defendants and held a second ranking mortgage behind the BNZ on two Auckland properties at 2 Stanley Street and 34 Rawene Avenue. The first to fifth defendants represented to the plaintiff that if a discharge was provided of its second mortgage over 34 Rawene Avenue to enable settlement, those defendants would subrogate any interest they acquired from the assignment of the BNZ mortgage secured against 2 Stanley Street so that the plaintiff held a first ranking mortgage over that property.
[6] Those representations were then relied on by the plaintiff acting to its detriment in discharging the 34 Rawene Avenue mortgage to enable its sale. Once repayment of the BNZ mortgage against 34 Rawene Avenue occurred, the amount secured by the BNZ over 2 Stanley Street was $3,705,486. The right and interest in the BNZ mortgage over 2 Stanley Street was then assigned to the second defendant. The plaintiff’s mortgage over 2 Stanley Street as of 1 February 2025 was $3,108,000 along with accrued interest. Seagars then provided the second defendant with a valuation for 2 Stanley Street being $8.9 million plus GST as of 20 January 2025.
[7] The plaintiff claims that it was not notified that the second defendant was intending to sell 2 Stanley Street to Ruby City Ltd or to exercise a power of sale under the assigned BNZ mortgage. Ruby City Ltd is an entity controlled by a Paul Reid and
the Icon Group (2014) Ltd. The plaintiff says that the first to fifth defendants are close associates of Mr Reid and the Icon Group (2014) Ltd. The plaintiff was also unaware of marketing efforts by real estate agents for the property, received no advice of the sales price obtained by the second defendant nor any accounting for the sale proceeds.
[8] On 15 May 2025, the plaintiff discovered via Auckland Council that the amount paid for the transfer of 2 Stanley Street was $5.7 million. The transfer of 2 Stanley Street to Ruby City Limited was, according to the plaintiff, designed to defeat its interests as a creditor of the first to fifth defendants. Those defendants purportedly discharged the plaintiff’s mortgage over 2 Stanley Street as part of the transfer to Ruby City Ltd. Importantly, the sole asset of the second defendant was the 34 Rawene Avenue property and the sole asset of the first defendant is 2 Stanley Street.
Legal principles
[9] Rule 32.2 of the High Court Rules 2016 enables the Court to make a freezing order restraining a respondent from removing any assets located in or outside New Zealand or from disposing of, dealing with, or diminishing the value of, those assets. The Court’s jurisdiction is flexible. Under r 32.3, it may also make an order ancillary to a freezing order or prospective freezing order, including for the purpose of eliciting information relating to the assets.
[10]As Asher J said in Oaks Hotels & Resorts NZ Ltd v Body Corporate 358851:2
[18] … the fact that an asset is to be disposed of is in itself not enough to invoke the jurisdiction. The heart of the jurisdiction is a real risk that a judgment or award may go unsatisfied. There must be a danger that the prospective judgment creditor’s ability to recover will be defeated because assets have been disposed of. In Bank of New Zealand v Hawkins it was observed that there had to be a “... real risk that the defendant will dissipate or dispose of assets so as to render himself ‘judgment proof’”. … As Lawton LJ observed in Third Chandris Shipping Corporation v Unimarina SA, there must be facts from which the commercial court, like a prudent sensible commercial person, could properly infer a danger of default if assets are removed. This test is “not unduly exacting”.
…
[20] The jurisdiction is not designed to provide an applicant with pre-judgment security. The general rule that a respondent can deal with its
2 Oaks Hotels & Resorts NZ Ltd v Body Corporate 358851 [2013] NZHC 2695.
assets without constraint, which applied to the original Mareva jurisdiction, is still reflected in the new detailed rule, if only indirectly. Even if the disposal will result in insufficient funds to pay a plaintiff, a Court is unlikely to interfere if the disposition is genuine and in the ordinary course of business. … The prospective judgment debtor must be able to continue to trade or carry on business in the usual way.
(Footnotes omitted)
[11] To secure a freezing order under r 32.5, the plaintiff must first demonstrate a good arguable case in their substantive claim. Secondly, that assets exist over which the order can apply. Thirdly, that there is real risk of dissipation.3 The Court must also consider where the overall justice of the case lies. The heart of the jurisdiction is whether there is a real risk that a judgment or award may go unsatisfied.4 The need for a good arguable case will be satisfied where the allegations in the applicant’s proposed claim are capable of tenable argument and supported by evidence, taking into account the early stage of the proceeding.5 This is not a high threshold. While an applicant’s case should be more than barely arguable, it need not have a greater than 50 per cent chance of success.6
[12] Assets to which the order can apply must be described clearly in the application to enable identification by the party tasked with complying with any freezing order. Wasting assets will not be suitable for a freezing order, especially if the value cannot be maintained.7 As to the risk of dissipation, where there has been only partial disclosure of a defendant’s financial circumstances, and limited responses to specific instances, this may heighten a sense of risk of dissipation. In addition, an applicant must provide evidence to justify a belief that the respondent will dissipate the assets such that there is a real risk a judgment in favour of the applicant will be partly or wholly unsatisfied if the freezing order is not made.8
3 Shaw v Narain [1992] 2 NZLR 544 (CA). See also Mareva Compania Naviera SA v International Bulkcarriers SA (“The Mareva”) [1980] 1 All ER 213 (CA).
4 See Oaks Hotels & Resorts NZ Ltd v Body Corporate 358851, above n 2, at [18].
5 Wing Hung Printing Ltd v Saito Offshore Pty Ltd [2010] NZCA 502, [2011] 1 NZLR 754; and Dotcom v Twentieth Century Fox Film Corp [2014] NZCA 509, (2014) 110 IPR 442 at [18] and [31].
6 Wilsons (NZ) Portland Cement Ltd v Gatx-Fuller Australasia Pty Ltd [1985] 2 NZLR 11 at 21–22; and Ninemia Maritime Corp v Trave Schiffahrtsgesellschaft mbH “The Niedersachsen” [1983] 1 WLR 1412 (CA) at 1417.
7 Hannay v Mount [2011] NZCA 530 at [20].
8 Oaks Hotels & Resorts NZ Ltd v Body Corporate 358851, above n 2, at [18], [19] and [22]. The applicant must point to circumstances from which “a prudent, sensible commercial [person] can properly infer a danger of default”, a test which is “not unduly exacting”: Raukura Moana
[13] When determining an application for freezing orders, the Court must consider the overall justice of the case. This involves weighing the need to protect the applicant to ensure that they are not deprived of the benefit of any judgment against any prejudice or hardship that may be caused to the respondent if the orders are issued.
Discussion
Should the application proceed without notice?
[14] This application is made without notice on the basis that requiring the plaintiff to proceed would cause undue delay or prejudice to it. Mr Hucker submitted that the defendants’ behaviour, in attempting to conceal their conduct regarding the 2 Stanley Street property, leads to an inference that further steps may be taken to defeat the interests of the plaintiff and to dispose of the defendants’ assets.
[15] I accept that this application is properly brought without notice. Rule 32.2 expressly permits for freezing orders to be sought without notice and, considering the alleged misconduct on the part of the defendants, I consider requiring the plaintiff to proceed on notice would cause undue prejudice. In particular, there is a real risk that assets could be disposed of, dealt with or diminished in value in advance of any freezing orders being granted. In the circumstances, I consider it is in the interests of justice for the application to be determined without notice in order to preserve the position of the plaintiff.
Does the plaintiff have a good arguable case?
[16]The plaintiff claimed that the first to fifth defendants:
(a)concealed the 2 Stanley Street transaction in failing to provide copies of notices to the plaintiff contrary to their obligations under ss 119 or 121 of the Property Law Act 2007, or to otherwise notify the plaintiff of their intentions to sell the property.
Fisheries Ltd v The Ship “Irina Zharkikh” [2001] 2 NZLR 801, [2001] 2 Lloyd's Rep 319 (HC)
at [122].
(b)failed to account for any surplus per s 185 of the Property Law Act.
(c)procured the sale to a known associate at a substantial undervalue in breach of the obligations under s 176 and of good faith that mortgagees owe to subsequent mortgagees, to the extent that there was no surplus.
[17] The plaintiff argued that the remedies it seeks are proprietary — the sale must be set aside or the reconveyance of the property must occur per pt 6 subpt 6 of the Property Law Act. The plaintiff also contends that the defendants have no defences to the claims, and so summary judgment should be entered against them.
[18] On the face of the evidence, the defendants appear to have breached their obligations under the Property Law Act at the very least. Bearing in mind the early stage of the case, I am satisfied the proposed causes of action are capable of tenable argument and are supported by sufficient evidence. Overall, I accept that the plaintiff has a good arguable case.
Do the defendants have assets over which a freezing order might apply?
[19] The second limb is whether the defendants have assets over which a freezing order might apply. The plaintiff says that the fourth and fifth defendants have left New Zealand permanently and have no assets or income known to the plaintiff other than those that relate to 2 Stanley Street. Although there is an interest in a coolstore retained by the Krats Trust and given the fourth to fifth defendants were requesting funding for various business proposals it can be inferred that there may be further assets. Furthermore, the purpose of the ancillary orders is to determine the assets subject to the freezing order. In addition, there is the surplus received from the sale proceeds of 2 Stanley Street for which there has been no accounting. There are also the various interests held with Paul Reid or the Icon Group (2014) Ltd. The third defendant also seemingly has a remaining interest in the Woolstore in Hastings.
[20] Accordingly, while less clear than the first limb, I find that the answer to the second limb also appears to be in the affirmative. The defendants do seem to possess assets over which a freezing order in favour of the plaintiff could apply. Moreover, the extent of these assets will be clarified by the ancillary orders.
Is there a real risk of dissipation of those assets?
[21] Finally, the plaintiff submits that the risk of dissipation means that any judgment will be wholly or partly unsatisfied unless the defendants’ remaining assets are frozen. Given the close relationships between Ruby City Ltd and the first to fifth defendants, along with the steps taken to conceal the transaction, the risk of dissipation is clear. The plaintiff contends that this conduct suggests further steps may be taken to conceal, transfer or dissipate any assets which could be used to satisfy a judgment in favour of the plaintiff.
[22] I accept that the defendants’ conduct as set out by the evidence creates the not unreasonable impression that concealment of the sale transaction was intended to defeat the plaintiff’s interests. In short, and on a strict approach, taking account of the defendants’ past conduct as set out in the evidence, along with the submissions of counsel, I accept that there is a danger of dissipation so that any judgment may go unsatisfied.
Where does the balance of convenience and overall justice lie?
[23] The plaintiff contends that the balance of convenience and overall justice favour the granting of the application. It is also argued that the ancillary orders are necessary to identify the assets held by the defendants that fall within the scope of the freezing order. The plaintiff submits that where funds are held by solicitors acting on the sale to Ruby City Limited, a pre-judgment charging order should be granted to preserve its entitlement.
[24] I agree that, on balance, the interests of justice support the orders being granted. In addition, the freezing orders will simply require the defendants’ solicitors to hold the proceeds of sale regarding 2 Stanley Street, until further order of the Court, pending resolution of the plaintiff’s claim. On the whole, I find that the need to protect the plaintiff so that any judgment in their favour can be satisfied outweighs the prejudice or hardship to the defendants in granting these orders.
Decision
[25] The plaintiff’s application for freezing orders is granted on the terms set out in sch 1 to their application dated 15 May 2025.
[26]I also grant the following ancillary orders:
(a)The first to sixth defendants must file and serve an affidavit:
(i)identifying all of the assets of the first to sixth defendants, their whereabouts and their value;
(ii)identifying all and any transactions that have been undertaken by the first to sixth defendants involving the sale and transfer of the property at 2 Stanley Street to the sixth defendant;
(iii)providing details of all monies paid by the sixth defendant for the transfer of the property at 2 Stanley Street and the disbursement of those funds; and
(iv)annexing the trust account records of the solicitor engaged by the second defendant that registered the transfer of the 2 Stanley Street property to the sixth defendant insofar as the sale of the 2 Stanley Street property and the disbursement of the proceeds are concerned.
(b)The sixth defendant shall not transfer, further mortgage, distribute to its shareholders or part with possession of the property at 2 Stanley Street.
(c)To the extent there are funds remaining in the trust account of Atmore and Co held for the credit of the first to fifth defendants or that were derived from the sale of the property at 2 Stanley Street to the sixth defendant, leave is granted to apply for a charging order, and a charging order is hereby issued, against such funds.
(d)Any orders made by this Court and service of these proceedings are to be effected on the first to fifth defendants by sending the relevant documents to the email addresses at [redacted] and [redacted], and on the sixth defendant at the email address [redacted].
[27] The plaintiff must serve the defendants with a copy of the application, statement of claim and related documents along with a copy of this minute as soon as possible.
[28]Costs are reserved.
Harvey J
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