Purucker v Huebler
[2023] NZHC 2246
•18 August 2023
IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY
I TE KŌTI MATUA O AOTEAROA WHAKATŪ ROHE
CIV-2018-442-000058
[2023] NZHC 2246
BETWEEN MARINA ALEXANDRA PURUCKER
Plaintiff
AND
IRIS HUEBLER
First Defendant
AND
RAINER WOLFGANG HUEBLER
Second Defendant
Hearing: 7–12 May 2023 Counsel:
G Dewar and J Pietras for Plaintiff First Defendant self-represented
G Downing for Second Defendant
Judgment:
18 August 2023
Reissued:
18 August 2023
JUDGMENT (No 3) OF ISAC J
PURUCKER v HUEBLER [2023] NZHC 2246 [18 August 2023]
TABLE OF CONTENTS
The case [1]
The trial [3]
The claim and defences [6]
Ms Huebler’s defence [10]
Mr Huebler’s defence [12]
Issues for determination [14]
Did Ms Huebler appropriate $868,954.24 from Ms Purucker? [15] Ms Purucker and Ms Huebler establish a business relationship [17] Sale of The Dangerous Kitchen and Ms Purucker’s regular travel overseas [24] Discovery of the fraud [33]
Ms Purucker files civil proceedings and Mr and Ms Huebler dispose of
their joint assets [42]
Ms Huebler is convicted of fraud [45]
Consideration [52]
Is Ms Huebler liable to Ms Purucker in respect of any sums appropriated
from Ms Purucker? [58]
First cause of action against first defendant – breach of fiduciary duty [59]
Exemplary damages [65]
Second cause of action against first defendant – money had and received [70] Is Mr Huebler liable to Ms Purucker for money had and received? [82] Deposits to the joint bank account [83]
Mr Huebler’s presentation of Ms Purucker’s cash cheques at ANZ bank [89]
Is the separation agreement void as against Ms Purucker as a device to
defeat creditors? [93]
The defendants’ joint ownership of property and treatment of business
affairs prior to separation [98]
The defendants’ subsequent division of assets [103]
The defendants’ post-separation conduct [112]
Jurisdiction [118]
Consideration [123]
Conclusion and result [128]
Costs [133]
The case
[1] In this proceeding the plaintiff, Ms Alexandra Purucker, seeks judgment against the defendants relating to funds stolen from her by the first defendant, Ms Huebler. She also seeks an order setting aside a separation agreement and bank transfers between Ms Huebler and her husband, Mr Rainer Huebler, the second defendant, as dispositions intended to defeat creditors.
[2] Ms Purucker purchased a well-known café in Tākaka in 2003. She met Ms Huebler and employed her as her bookkeeper and, subsequently, an investment adviser. The two women—both German nationals—became close friends. Then between April 2012 and October 2018, Ms Huebler misappropriated at least $700,000 of Ms Purucker’s funds. Ms Purucker did not discover the fraud until late 2018, on returning to New Zealand from a long period overseas. Shortly after that Police carried out an investigation which culminated in Ms Huebler’s conviction on five charges of fraud and eventual imprisonment.
The trial
[3] The trial before me took place over five days. Ms Purucker called three witnesses and gave evidence herself. Ms Huebler represented herself and despite the opportunity to give evidence chose not to do so. The only witness to give evidence on behalf of the defendants was Mr Huebler.
[4] In addition to acting for herself, Ms Huebler faced the added difficulty of appearing in court as a serving prisoner.1 Despite this, the Department of Corrections was able to provide her with access to a personal laptop she said she needed to prepare for the trial and to present her defence.2
1 Ms Huebler was sentenced to four years’ imprisonment in the District Court on 11 October 2022.
2 In a Minute of 26 April 2023, I noted the importance of Corrections facilitating Ms Huebler’s access to a personal computer and associated personal papers both before and during the trial itself. Ms Huebler clearly had access to her computer as she was able to introduce into evidence documents which she said she had recovered from it, and she did not raise any meaningful objection about her ability to prepare or attend to her own defence during the trial. I had previously declined an application by Ms Huebler to adjourn the trial and for the appointment of a court appointed independent forensic expert: see Purucker v Huebler [2023] NZHC 981.
[5] Finally, shortly before the trial was due to start Ms Huebler advised the Court that she intended to seek leave under s 47(2) of the Evidence Act 2006 to adduce evidence tending to contradict her convictions for theft. Given the limitations of time available to deal with the issue pre-trial, I dealt with the question as a preliminary issue at the hearing before the plaintiff opened her case. I declined Ms Huebler’s application, and subsequently provided my reasons in a judgment of 11 May 2023.3
The claim and defences
[6]Ms Purucker advances three causes of action:4
(a)First, a claim against Ms Huebler alone for breach of fiduciary duty. In closing she sought judgment in the sum of $868,959.24, together with exemplary damages of $50,000.
(b)Second, she pleads an action for money had and received against both defendants, although she seeks different sums against each defendant.
(i)As against Mr Huebler, Ms Purucker seeks judgment in the sum of $155,127.29. This figure is made up of two principal amounts. The first is funds paid into a joint bank account of which Mr Huebler was one of the two account holders. The second relates to five of Ms Purucker’s personal cheques that were cashed by Mr Huebler at a bank.
(ii)As against Ms Huebler she again seeks judgment for
$868,959.24.
(c)The final cause of action is also against both defendants, and seeks declarations that specific dispositions and transactions, including a separation agreement between the defendants, are transactions intended to defeat the interests of the first defendant’s creditors and therefore
3 Purucker v Huebler (No 2) [2023] NZHC 1134.
4 Third amended statement of claim of 2 February 2023.
void under s 47(1) and (2) of the Property (Relationships) Act 1976. Ancillary orders consequent on a declaration are also sought.
[7] By closing, Ms Purucker’s claim for damages against Ms Huebler was for a total of $868,959.24 made up of:
(a)the amount encompassed by the five criminal charges on which Ms Huebler was convicted, totalling $700,000.00;
(b)an additional $68,651.91 that originally formed part of the offending covered by one of the charges but that was reduced to reflect a plea resolution Ms Huebler reached with the Crown;
(c)three payments made by Ms Huebler to an overseas business, Heritage House International, amounting to a further $102,416.66;
(d)Artfull Crafts payments of $1,652.26;
(e)House of Travel payments of $2,002.00;
(f)Pure Wellbeing payments of $1,316.41;
(g) Hastings Rubber Stamp payments of $70.00; Less:
(h)funds returned from the defendants’ joint bank account to the plaintiff’s account of $6,150.00;
(i)funds returned from another client account controlled by Ms Huebler (for a Ms Gaya Selder, who appears to have been another friend and client of Ms Huebler’s) to the plaintiff’s account of $1,000.00.
[8] In addition, Ms Purucker seeks $50,000 in exemplary damages against the first defendant in relation the breach of fiduciary duty claim.
[9] As noted, Ms Purucker seeks judgment against Mr Huebler for $155,127 (jointly and severally with Ms Huebler). This sum is made up of:
(a)funds paid by Ms Huebler into the defendants’ joint bank account of
$141,977.29;
(b)cheque and cash withdrawals undertaken by Mr Huebler personally amounting to $19,300;
Less:
(c)the funds returned from the defendants’ joint bank account to the plaintiff’s account in the sum of $6,150.00.
Ms Huebler’s defence
[10] Despite her convictions for fraud, Ms Huebler maintains that none of Ms Purucker’s funds have been stolen. She claimed in submissions that the money had all been returned to Mr Purucker, and the reason it is now “missing” is due to Ms Purucker’s lavish spending on overseas travel and improvements to her home. Despite making these claims, Ms Huebler chose not to give or to call any evidence. This was so despite my suggestion to her that the failure to do so could lead to an adverse inference. More fundamentally, apart from some limited cross-examination, Ms Huebler’s election means there is virtually no evidence to support the allegations she made in submissions or during cross-examination.
[11] In light of my ruling that special circumstances were not made out that would justify permitting Ms Huebler to adduce evidence tending to suggest her convictions were wrong, she was only able to maintain a challenge to the theft of funds over and above the $700,000 on which sentencing in the District Court proceeded. As I found in Purucker v Huebler (No 2), she was entitled to dispute the remaining $173,364.93 sought by Ms Purucker in the third amended statement of claim.5 That sum is principally made up of:
5 Purucker v Huebler (No 2), above n 3, at [32].
(a)the $68,651.91 reduction in the amount of funds alleged to have been dishonestly taken and covered by one of the five criminal charges. This reduction occurred as part of Ms Huebler’s plea arrangement; and
(b)second, an additional sum of $102,416.66 advanced by Ms Purucker ostensibly as a loan to Ms Huebler (referred to during the trial as the Heritage House International loan).
Mr Huebler’s defence
[12] In contrast to Ms Huebler, Mr Huebler did not seek to raise a positive defence inconsistent with Ms Huebler’s convictions for fraud. During closing submissions Mr Downing accepted that if the funds paid into Mr Huebler’s joint account with Ms Huebler together with the cheques he cashed personally were the proceeds of fraud, Mr Huebler would have no lawful entitlement to the funds and there could be no basis on which to oppose judgment for those sums as moneys had and received.
[13] Instead, Mr Huebler’s focus is on the legitimacy of the separation agreement and related transactions, and a denial that either he or Ms Huebler had an intention to defeat the claims of her creditors, and in particular Ms Purucker, when they entered into the agreement.
Issues for determination
[14] Prior to the commencement of the parties’ closing addresses, I provided a draft outline of the issues which had arisen during the trial. As the parties were content with the outline, I adopt it in my analysis of the evidence and law which follows. The issues are:
(a)Did Ms Huebler appropriate $868,954.24 from Ms Purucker?
(b)If so, is Ms Huebler liable to Ms Purucker in respect of any sums appropriated from Ms Purucker for:
(i)breach of fiduciary duty; and
(ii)money had and received?
(c)Is Mr Huebler liable to Ms Purucker for money had and received in relation to:
(i)sums paid into Mr and Ms Huebler’s joint account (in the sum of $135,827.29); and
(ii)Ms Purucker’s cheques cashed by Mr Huebler (in the sum of
$19,300)?
(d)Is the separation agreement (and related transfers of property) between Mr and Ms Huebler, void as against Ms Purucker as an agreement intended to defeat creditors under s 47 of the Property (Relationships) Act?
Did Ms Huebler appropriate $868,954.24 from Ms Purucker?
[15] In light of Ms Huebler’s denial that any fraud has taken place, the first question is whether Ms Purucker has established, on the balance of probabilities, that Ms Huebler appropriated $868,954.24 from her and has failed to return those funds.
[16] In addition to contemporaneous documents and recordings produced in evidence, Ms Purucker and a forensic accounting expert, Mr Kelvin Scoble, gave evidence in support of the claims. I found both witnesses credible and accurate in their accounts. I therefore have no hesitation in accepting their evidence. The factual findings that now follow are largely drawn from it.
Ms Purucker and Ms Huebler establish a business relationship
[17] Ms Purucker is originally from Germany. In 1996 she immigrated to New Zealand with her husband and children.
[18] In mid-2001, Ms Purucker separated from her husband and bought out his share in the family home in Tākaka, where she continues to live.
[19] In 2003, Ms Purucker purchased a well-known café in Tākaka called The Dangerous Kitchen. While initially she undertook all the bookkeeping and accounting for the business herself, she soon found that she needed to focus her energy on running the café and managing its staff. Around the same time she met another German immigrant—Ms Huebler—who was providing bookkeeping services to small businesses around the Tākaka area. The two appear to have hit it off and Ms Huebler was soon engaged to undertake contract bookkeeping work.6 The first defendant would travel from her home in Collingwood to Tākaka once a week and often work from Ms Purucker’s home office while Ms Purucker was running the café.
[20] As part of the bookkeeping arrangements, Ms Purucker provided Ms Huebler with full signing authority for Ms Purucker’s ANZ bank accounts and gave her a blank cheque book. This enabled Ms Huebler to pay business invoices without further involvement from Ms Purucker. Every month Ms Huebler generated service fee invoices and provided them to Ms Purucker for approval. Once approved, Ms Huebler paid herself directly from Ms Purucker’s bank accounts using her banking authorities.
[21] On occasions when Ms Huebler was unavailable to travel to Tākaka to undertake the bookwork, Mr Huebler would cover for her. He would occasionally operate out of Ms Purucker’s home office and also had access to her online banking.
[22] In 2006, Ms Purucker’s son died unexpectedly while travelling in Belgium. She immediately flew to Europe to be with her son’s partner and their young child. While these distressing events were unfolding, Ms Huebler was very supportive. Ms Purucker described her as a “close friend”. The two women would often share personal or intimate information with each other.
[23] Over the next four years, Ms Huebler continued to provide bookkeeping services for Ms Purucker’s café business. She would often tell Ms Purucker not to trust
6 The first defendant undertook her business as a sole trader under the moniker “Huebler Consulting”.
the banks or her accountants, but that she could rely on Ms Huebler to look after all of her finances.
Sale of The Dangerous Kitchen and Ms Purucker’s regular travel overseas
[24] In 2010, Ms Purucker decided that she needed more flexibility and time to travel to Germany to see her aging parents and aunt. On 29 June 2010 she sold The Dangerous Kitchen café and transferred the $270,000 sale proceeds into a personal ANZ bank account.
[25] Around the same time, Ms Huebler advised Ms Purucker that the banks had stopped sending out paper statements because “everything had moved online”. She also said that some types of bills could not be paid by internet banking, and that she would continue to need access to Ms Purucker’s cheque book. Ms Purucker explained in evidence that as she had been born in 1953 and did not feel expert in using computers and spreadsheets, she was grateful that Ms Huebler was prepared to stay on as her bookkeeper and look after her money. Given their close friendship, Ms Purucker was comfortable providing Ms Huebler with access to her online banking as well as a cheque book with signing authority.
[26] Between mid-2011 and October 2018, Ms Purucker regularly travelled to Germany and stayed there for long periods, often six-months at a time, to support her parents and aunt. Whenever Ms Purucker returned to New Zealand, Ms Huebler would visit her at her house and show her a spreadsheet that Ms Huebler had prepared with Ms Purucker’s bank balances and term deposits.7 She also gave Ms Purucker investment advice, encouraging her to invest her money in various businesses often with a connection to Ms Huebler. As Ms Purucker said, “I completely trusted Iris’ advice and allowed her to invest money with these companies”.
[27] In mid-2012, Ms Huebler and Mr Huebler set up an online health food business called The Super Food Academy. It seems the motivation to establish a business
7 These spreadsheets disappeared from Ms Purucker’s home office when she last travelled overseas in 2018.
focussed on healthy food was the result of a life-threatening condition Mr Huebler suffered in 2012.
[28] Then, between May 2014 and February 2015, while Ms Purucker was in Germany, both her parents passed away. In late 2015, she received substantial sums—
€280,000 and NZ$485,000—from her parents’ estate. These funds were paid into Ms Purucker’s New Zealand bank accounts and were therefore accessible to Ms Huebler.
[29] In May 2016, Ms Huebler asked Ms Purucker to lend her $100,000 for her Super Food Academy business. Ms Huebler said that she and her husband had the same amount of money in a Swiss bank account but did not want to use it at the time because of the weak exchange rate and commission they would pay. Ultimately Ms Purucker agreed to lend the business $100,000 with a low interest rate of
3.5 per cent per annum. I also accept Ms Purucker’s evidence that it was a condition of The Super Food Academy advance that it would be secured against the Swiss francs held in Mr and Ms Huebler’s bank account and would be repaid within a year. However, unknown to Ms Purucker, Ms Huebler used her banking authorities to set-up three electronic fund transfers to a California based company called “Heritage House International”, apparently founded by Alex Mandossian, a self-described online marketing guru.
[30] A representative from ANZ bank telephoned Ms Purucker on 23 May 2016 to confirm that the transaction had been authorised by Ms Purucker. The recording of the discussion, and one of a discussion the following day, were played in evidence. They reveal that Ms Purucker was initially surprised and confused by the suggestion that a payment of USD 33,000 was to be made to an overseas account. She advised the caller she would need to clarify the position “to find out exactly where it is going”, noting that it was likely to be “some money I lent to my bookkeeper”. In the call the following day (presumably following assurances from Ms Huebler about the transaction), Ms Purucker authorised the payments. However, I also accept Ms Purucker’s unequivocal evidence that she would not have authorised the transfers had she known that they were to be used to purchase online management courses.
[31] Ms Huebler also persuaded Ms Purucker to open two new bank accounts with NBS in Tākaka, on the basis that the bank offered a higher rate of interest on term deposits. As with ANZ, Ms Purucker gave Ms Huebler full authority over the accounts and provided her with the cheque book and internet banking access. Ms Purucker also understood that Ms Huebler would continue making investments for her from the ANZ and NBS accounts based on Ms Huebler’s recommendations.
[32] In October 2017, Ms Purucker returned to New Zealand from a six-month trip to Europe. She asked Ms Huebler about the $100,000 loan, and was advised it had been repaid into Ms Purucker’s account with interest. This of course was not the case.
Discovery of the fraud
[33] On 30 April 2018, Ms Purucker again left New Zealand for a six month stay in Europe, in part to deal with her late mother’s apartment in Cannes. While away, Ms Huebler encouraged Ms Purucker to claim the New Zealand pension. Ms Purucker’s evidence was that Ms Huebler put “an unusual interest” in pursuing pension payments while she was overseas and after Work and Income New Zealand initially declined her application.8
[34] Then, in May 2018, Ms Purucker received a phone call from Ms Huebler. Ms Huebler advised her that her bank accounts had been frozen due to “foreign hackers”. Ms Huebler reassured Ms Purucker that she would be able to “fix everything” but, nevertheless, Ms Purucker stopped using her New Zealand credit card. Subsequently, Ms Purucker’s evidence was:
Iris [Huebler] would pretend she was looking out for my best interests back in New Zealand. She would send me photos of my cat, keep tab on my boarder, and touch base to make sure everything was okay.
[35] Ms Huebler contacted Ms Purucker again sometime later to advise that she had taken her computer to the New Zealand Police. She said she—and therefore Ms Purucker—had fallen victim to “the internet fraud of New Zealand’s history”.
8 Ms Purucker initially applied for the pension before she went overseas as a result of Ms Huebler’s “insistence” that she do so.
[36] Ms Purucker arrived back in New Zealand on 9 October 2018. Within a day or so, Ms Huebler phoned her to say that she was at the ANZ’s “headquarters” in Wellington trying to “sort out” Ms Huebler’s bank accounts. She promised to phone again once she got back to Nelson. Later in the week Ms Purucker received another call from Ms Huebler. She was told that Ms Huebler had “good news and bad news”. The bad news was that all of Ms Purucker’s money was gone. The good news was that Ms Huebler’s business was flourishing and she would be able to repay Ms Purucker at $20,000 a month, starting in January 2019.
[37] Word that her life savings were gone, including the substantial sums received as an inheritance from her mother and father, came as startling news for Ms Purucker. She began to doubt Ms Huebler’s advice and spoke to other friends whom she trusted about the situation.
[38] On Monday, 15 October 2018, a meeting took place between the two women. Ms Huebler came to Ms Purucker’s home carrying two tomato plants known as “money makers” and said they were appropriately named “because that’s what we need right now”. Ms Purucker had prepared some questions ahead of the meeting with another friend. And, usefully for my purposes, the conversation was recorded and played in evidence.
[39] The recorded conversation is entirely consistent with Ms Purucker’s account of the previous explanations given by Ms Huebler about the missing funds, which were clearly untrue. In particular, Ms Huebler confirms her previous explanation that the money had gone missing as a result of the actions of internet hackers.
[40] The following day, 16 October 2018, Ms Purucker drove to the ANZ branch in Richmond and spoke to the manager. She discovered that all of her accounts had been emptied of funds, and that she had been left with a $14,500 debt on her credit card. Ms Purucker then drove to the NBS branch in Tākaka, and discovered these accounts had also been emptied. Shortly thereafter, she made a complaint to the Tākaka Police.
[41] In the following days, Ms Purucker remained in contact with Ms Huebler over the phone and on Facebook Messenger. She was careful not to disclose that she had
made a Police complaint. During this period, Ms Huebler told Ms Purucker that she would be able to repay her $50,000 a month from January 2019 onwards.
Ms Purucker files civil proceedings and Mr and Ms Huebler dispose of their joint assets
[42] On 29 October 2018, Ms Purucker filed these proceedings against Ms Huebler. She also applied successfully for an injunction preventing the defendants from selling their property in Golden Bay, which had been placed on the market.
[43] Ms Huebler was served with the proceedings on 8 November 2018. Eight days later, Ms Huebler and Mr Huebler prepared and signed a handwritten document recording that they had agreed to separate. On the same day, they travelled to the Westpac bank branch at Richmond and closed their joint accounts. Their jointly held funds, including Swiss francs valued at NZD 302,510, were transferred into new accounts in Mr Huebler’s sole name. Ms Purucker joined Mr Huebler to the civil proceedings in September 2020, after learning about these transactions and discovering that Mr Huebler had cashed several of her personal cheques which drew on funds in her accounts.
[44] On 21 January 2019, Ms Huebler and Mr Huebler signed a separation agreement under s 21A of the Property (Relationships) Act 1976. I will return to the agreement in greater detail when I consider Ms Purucker’s claim that it was entered with an intention to defeat creditors. For now, it is enough to say that the agreement resulted in a significantly unequal division of relationship assets in Mr Huebler’s favour. The defendants say this inequality is consistent with a German contracting out agreement they made on 3 February 1994, and Mr Huebler’s receipt of an inheritance in 2004.
Ms Huebler is convicted of fraud
[45] On 17 April 2019, the Police laid five charges against Ms Huebler of theft by a person in a special relationship.9 The summary of facts originally recorded that the amount stolen was $768,651.91. Ms Huebler entered not guilty pleas.
[46] The Crown then engaged an experienced forensic accountant, Mr Kelvin Scoble, to undertake a detailed analysis of funds leaving Ms Purucker’s accounts at Ms Huebler’s direction. His analysis for the purposes of the prosecution identified 271 suspicious or unexplained transactions totalling $854,376.57. In the main, Mr Scoble determined that Ms Huebler used the electronic and other banking access she held over Ms Purucker’s account to transfer funds into the defendants’ bank accounts, or to reimburse money taken by Ms Huebler from another client’s bank accounts over which she also had control. Mr Scoble’s key findings are that:
(a)Between 10 April 2012 and 2 October 2018, Ms Huebler transferred
$141,977.29 from Ms Purucker’s bank accounts into the defendants’ joint account. The transfers came from three separate bank accounts held by Ms Purucker.
(b)Between 8 January 2013 and 21 March 2018, Ms Huebler used her operating authority for one of Ms Purucker’s accounts to either draw cash cheques on, or withdraw cash by other means from, that account. This series of withdrawals comprised 27 transactions totalling
$103,750. Importantly in the context of Ms Purucker’s claim against Mr Huebler, this amount included five separate occasions where cheques totalling $19,300 were written by Ms Huebler but were subsequently cashed in bank teller withdrawals undertaken by Mr Huebler.
(c)Ms Huebler transferred $386,341.39 of Ms Purucker’s funds into bank accounts in the names of Ms Selder and Mr William Brabant.
9 Originally, Ms Huebler was also charged with a sixth count of theft against a different person, Ms McCurdy, but that charge was dropped as part of plea negotiations.
Mr Scoble’s review of those accounts identified that these transfers were likely to have been performed to reimburse Ms Selder for expenditures incurred on her credit card by Ms Huebler, in circumstances that indicated the underlying transactions were for Ms Huebler’s benefit.
(d)Between 22 September 2014 and 20 June 2018, Ms Huebler transferred
$110,161.23 of Ms Purucker’s funds to third party bank accounts in circumstances where Ms Purucker disclaimed any knowledge or approval of the payments and where the available evidence indicated that the purpose of the payments was likely to have been for Ms Huebler’s principal or sole benefit.
[47] Mr Scoble also acknowledged that the total value of the fraud he identified exceeded that covered by the Police charges—which originally identified a total fraud of $768,651.91. He noted that the Police analysis predated his own, and accounted for the difference in figures based on the following factors:
(a)The different methodologies used: The approach taken by Police in their analysis was to list every transaction identified as suspicious by Ms Purucker in a series of spreadsheets. This had the effect of aggregating all suspicious transactions in a particular bank account, but not necessarily in a way that distinguished between them in terms of describing the nature of each discrepancy. By contrast, Mr Scoble separately analysed every transaction and categorised them according to the nature of the alleged offending (for example, by distinguishing transfers to third parties that appeared to benefit Ms Huebler from transfers that were disclaimed by Ms Purucker but which could not be attributed conclusively to Ms Huebler). Mr Scoble explained that he took this approach from the outset because his primary task was to establish what happened to the money when it left Ms Purucker’s accounts. From there, more detailed analysis could be performed by examining records obtained during the Police investigation and by researching publicly available information.
(b)Adjustments for internal transfers: Mr Scoble decreased the value of identified discrepancies in circumstances where a payment from one of Ms Purucker’s accounts was directed to another of her accounts.
(c)Payments to Heritage House International: Mr Scoble identified three previously unidentified international funds transfers totalling
$102,416.66 that appeared to have been arranged by Ms Huebler for her own benefit. Although these payments were substantially the same as an earlier payment that was treated as suspicious by the Crown, they did not form part of the transactions identified at trial because Police treated them as a “civil matter”.
[48] Although Mr Scoble reported the extent to which Ms Purucker received payments from bank accounts controlled by Ms Huebler, he did not treat those transfers as off-setting amounts in the final analysis because he could not, on the basis of the available information, identify the purpose or intention of those particular payments. In value they totalled $7,150. Mr Scoble also acknowledged this sum could be deducted from the total value of the fraud and in closing Ms Purucker made an adjustment to her claim to reflect it.
[49] Finally, Mr Scoble in evidence at trial noted that after conducting his analysis for the purposes of the prosecution, he had become aware of additional transactions that should be categorised as suspicious. These related to additional third party payments from Ms Purucker’s bank accounts to Artfull and the House of Travel. In total, they increased the level of fraud by a further $3,501.40.
[50] Following plea negotiations between Ms Huebler’s counsel and Crown counsel shortly before her trial, the total amount of the alleged theft was reduced to $700,000 for the purpose of resolution.10 On 10 September 2021, Ms Huebler sought a sentence indication on the basis of an updated summary of facts recording the reduced total of
10 Charge 3 in the updated summary of facts was reduced from $386,341.39 to $317,689.48, a difference of $68,651.91. Including the withdrawal of the charge relating to Ms McCurdy, it appears that the negotiations saw the alleged theft by Ms Huebler reduced from an original figure of approximately $850,000.
the fraud and accepted the indication. She was arraigned before the District Court and entered guilty pleas.
[51] Having done so, before sentencing took place Ms Huebler sought to vacate her guilty pleas. An application to do so was declined by Judge Ruth. His Honour was satisfied that Ms Huebler fully understood the consequences of her pleas and rejected her criticisms of her former lawyers, observing that she had been unable to provide any coherent explanation for the fraudulent transactions.11 Then, on 11 October 2022, four years after Ms Purucker first complained to the Police, Ms Huebler was sentenced to four years’ imprisonment.12 In the intervening time the defendants have not acknowledged any wrongdoing and have not made any form of reparation. To the contrary, Mr Huebler has sent threatening messages urging Ms Purucker to abandon her civil claim, and has complained to the Ministry of Justice seeking to have Ms Purucker’s grant of legal aid to pursue these proceedings withdrawn.
Consideration
[52] As I found in my previous judgment, Ms Huebler’s convictions for the theft are conclusive evidence that she is guilty of defrauding Ms Purucker of $700,000. Appropriation of Ms Purucker’s money to that extent is not in issue. However, as I found in Purucker v Huebler (No 2),13 the remaining question is whether Ms Purucker has also established to the requisite standard theft of the remaining $168,959.24 for which judgment is sought.
[53] Given the evidence that I accept as credible and reliable, I have no hesitation concluding that Ms Huebler was responsible for defrauding Ms Purucker of this additional amount. The total sum for which judgment is sought is supported by the detailed and careful analysis undertaken by Mr Scoble. It also broadly reflects the value of the theft encompassed by the original Police charges together with the Heritage House advance. Ms Huebler’s claim to have repaid all of Ms Purucker’s money is breath-takingly incredible and also inconsistent with her original claims, captured in an audio recording played in evidence at trial, that internet hackers are
11 R v Huebler [2022] NZDC 13425.
12 R v Huebler [2022] NZDC 20111. Ms Huebler was also ordered to pay $80,000 in reparations.
13 Purucker v Huebler (No 2), above n 3, at [31]–[32].
responsible for stealing Ms Purucker’s funds. I similarly reject as fanciful Ms Huebler’s submission that Ms Purucker spent the missing money on overseas travel, renovations to her home and a lavish lifestyle. There is no credible evidence to support this contention.
[54]I am also satisfied that Ms Huebler’s ability to gain access to a further
$102,416.66 of Ms Purucker’s moneys, used by Ms Purucker to pay Heritage House Foundation, was achieved by deceit. Ms Huebler told Ms Purucker that the loan was for one year, would earn interest, and would be secured against the defendants’ Swiss franc account. None of this was true, and I find these representations were made by Ms Huebler knowing they were untrue and in order to induce the plaintiff to authorise the foreign bank payments to Heritage House which the first defendant had arranged.
[55] Ms Huebler also misled Ms Purucker about the purpose of the loan. I have found that Ms Purucker would not have made the advance had she known it was to be used to purchase on-line management courses. However, years later the “loan” has never been repaid, no interest has been paid, and the defendants have taken steps to remove Ms Huebler’s interest in the Swiss franc account, placing the security beyond Ms Purucker’s reach.
[56] Nor is there any evidence that would seriously undermine Mr Scoble’s careful analysis. I am also reinforced in my rejection of Ms Huebler’s claims by her failure to give evidence in circumstances clearly calling for an explanation.14
[57] In conclusion, Ms Purucker has established on the balance of probabilities that Ms Huebler has unlawfully obtained $868,954.24 of her funds, and these funds have not been repaid. The stolen money is principally (although not entirely) made up of:
14 The failure of a party to call a witness may allow an inference that the missing evidence would not have helped a party’s case. Such an inference may only arise where the party would be expected to call the witness, where the evidence would explain or elucidate a particular matter required to be explained or elucidated, and the absence of the witness was unexplained. The result of such an inference was not to prove a party’s case, but to strengthen the weight of evidence. See Ithaca (Custodians) Ltd v Perry Corporation [2004] 1 NZLR 731 (CA) at [153]–[154].
(a)the $700,000 for which Ms Huebler was convicted and sentenced. As noted, her convictions are conclusive evidence of her offending,15 and entirely consistent with the expert evidence provided by the plaintiff and Ms Huebler’s guilty pleas;
(b)the additional $68,651.91 originally encompassed within charge 3 but reduced as part of a plea resolution with the Crown; and
(c)the $102,416.66 “loan” to Heritage House International.
Is Ms Huebler liable to Ms Purucker in respect of any sums appropriated from Ms Purucker?
[58] Ms Purucker seeks recovery of the misappropriated funds under two heads of action: breach of fiduciary duty and money had and received. I address both in turn.
First cause of action against first defendant – breach of fiduciary duty
[59] To succeed in her breach of fiduciary duty claim, Ms Purucker must establish three elements:16
(a)Ms Huebler owed Ms Purucker a fiduciary duty;
(b)Ms Huebler breached her fiduciary duty; and
(c)the breach of duty caused Ms Purucker loss.
[60] Fiduciary duties arise in two kinds of case. The first is where the parties are in a recognised category of relationship which is inherently fiduciary in nature; for instance, trustee and beneficiary or solicitor and client.17 The second category of case—of which the present is an example— is where a fiduciary relationship can be
15 Purucker v Huebler (No 2), above n 3, at [31]–[32].
16 Everist v McEvedy [1996] 3 NZLR 348 (HC) at 355, affirmed in Gilbert v Shanahan [1998] 3 NZLR 528 (CA) at 535.
17 Chirnside v Fay [2006] NZSC 68, [2007] 1 NZLR 433 at [73].
inferred from the particular circumstances. This is sometimes referred to as a “special facts” fiduciary relationship.18 The indicia of the second category are:19
(a)the conferral of powers in favour of the alleged fiduciary, which may be used to affect the proprietary rights of the principal;
(b)the apparent assumption of a representative or protective responsibility by the alleged fiduciary for the principal (for example, to promote the principal’s interests, or to prefer the interests of the principal over those of third parties); and
(c)the implied subordination (although not necessarily elimination) of the alleged fiduciary’s self-interest.
[61] Each of these factors are present in this case. Ms Purucker entrusted Ms Huebler with complete access to and control over her bank and cheque accounts. Ms Huebler undertook and held herself out as protecting Ms Purucker’s financial interests both in her control over Ms Purucker’s bank accounts, and in purporting to provide advice and recommendations concerning investment opportunities. It is also clear that in undertaking these activities Ms Huebler’s interests were subordinate to those of Ms Purucker. The fiduciary relationship required Ms Huebler to act honestly and in Ms Purucker’s interests when using the banking authorities granted to her. It was a clear breach of those obligations for Ms Huebler to misappropriate Ms Purucker’s funds using those powers. Ms Purucker suffered significant loss as a result.
[62] The only aspect of Ms Purucker’s fiduciary duty claim on which I have reason to pause relates to the Heritage House loan. While dishonesty was again a significant element of Ms Huebler’s conduct, the necessary element of control and trust over the principal’s affairs appears to be missing, at least in one material respect. In the case of the Heritage House loan, Ms Purucker’s bank would not authorise such substantial
18 At [75]; and Nathaniel Walker and Nic Wilson “Fiduciary relationships in light of D and E Ltd (as trustees of the Z Trust) v A” [2023] NZLJ 119 at 119.
19 Dold v Murphy [2020] NZCA 313, [2021] 2 NZLR 834 at [55], cited with approval in D and E Limited as Trustees of the Z Trust v A, B and C [2022] NZCA 430, [2022] 3 NZLR 566 at [72].
payments to a foreign bank account without first obtaining Ms Purucker’s direct approval. It telephoned the plaintiff to confirm she had authorised the payment. After clarifying the proposed fund transfer, Ms Purucker authorised it. In addition, while the electronic payment was set-up by Ms Huebler, Ms Purucker’s understanding was that the funds formed part of an advance repayable after one year. The transaction did not have the same character as the other suspicious transactions, which were carried out without Ms Purucker’s knowledge or approval and essentially involved the unauthorised appropriation or use of funds directly from Ms Purucker’s accounts. So, while I am satisfied that the loan was induced through dishonest means, it was still understood by Ms Purucker to be a loan, and gave rise to a debtor-creditor relationship rather than a relationship of a fiduciary nature.
[63] As I indicated to Mr Pietras at the hearing, the Heritage Home claim would appear likely to meet the requirements for a claim in deceit, misrepresentation or for a simple claim in debt or breach of contract. Ms Purucker was not inclined to amend her claim but had she sought leave to do so I would have granted it.20
[64] Accordingly, there will be judgment for the plaintiff against the first defendant under this cause of action in the sum of $766,537.58. I decline to enter judgment for the remaining sum sought under this cause of action because I am not satisfied the circumstances support a finding that Ms Huebler was acting as Ms Purucker’s fiduciary when she secured the advance.
Exemplary damages
[65]In addition to general damages, Ms Purucker seeks exemplary damages of
$50,000 against Ms Huebler on the first cause of action.
[66] Exemplary damages are available for breach of fiduciary obligations where the defendant’s conduct is outrageous and involves conscious wrongdoing and a contumelious disregard of others’ rights to such an extent that other remedies would
20 There could be no prejudice to the defendants from a late amendment given the factual basis for the amended claims would be unchanged.
fall short of an adequate punishment.21 It follows that such awards are rare. The purpose of exemplary damages is to punish the defendant and denounce their conduct.
[67] I have no hesitation in concluding that Ms Huebler’s conduct in the present case meets the necessary threshold for an award of exemplary damages. Over the course of six years, Ms Huebler systematically defrauded Ms Purucker—a close friend—out of her entire life savings, all the while pretending to have her best interests at heart and providing regular assurances that everything was in order. While I have found her liable for breach of fiduciary duties and (as we will soon see) money had and received, underlying these claims are Ms Huebler’s dishonesty. The conduct giving rise to liability is towards the most serious end of the range of conduct giving rise to a breach of fiduciary duty. Judgment which amounts to no more than a declaration of liability for money that has been stolen is inadequate, in my view, to denounce and deter the first defendant’s conscious wrongdoing.
[68] Had it been necessary, I would have also found that Ms Huebler’s conduct after discovery of the fraud is relevant. When the theft was discovered, she did not seek to address the loss she had caused Mr Purucker. Instead, she continued to blame the victim of her offending for the loss she caused. This included requiring Ms Purucker to attend a five-day trial during which Ms Huebler continued to make allegations and claims (including in the course of cross-examination of the plaintiff) that were inconsistent with her guilty pleas and convictions, unsupported by evidence and distressing for Ms Purucker.
[69] I award the plaintiff $50,000 in exemplary damages against the first defendant on the first cause of action.
Second cause of action against first defendant – money had and received
[70] The claim for money had and received is a personal claim, not a proprietary claim or claim in rem.22 It does not depend on proof of any wrongdoing or impropriety
21 Couch v Attorney-General [2010] NZSC 27, [2010] 3 NZLR 149 at [45] per Blanchard J, [150]–
[151] per Tipping J, [246] per McGrath J, and [253] per Wilson J; and Fa’agutu v Derhamy [2020] NZHC 404 at [150], citing Cook v Evatt (No 2) [1992] 1 NZLR 676 (HC) at 706.
22 Napier v Torbay Holdings [2016] NZCA 608, [2017] NZAR 108 at [21], citing Lipkin Gorman (a firm) v Karpnale Ltd [1991] 2 AC 548 (HL) at 572.
on the part of a recipient. Nor does it turn on the continued existence or retention of the money received. Although unjust enrichment may be seen as underpinning the cause of action, there is no actual requirement of unjust enrichment. The claim has been used in cases where money has been misappropriated,23 paid under mistake or duress,24 or obtained where there has been a total failure of consideration.25 In each instance, the law deems the recipient’s refusal to return the funds unconscionable.26 Simply put:27
An action for money had and received is based on the receipt of money by a defendant who no longer has the right to retain it or has improperly disposed of it.
[71]Similarly, in Martin v Pont, the Court of Appeal observed that:28
… if the principal has entrusted money to his agent for a particular purpose which the agent has not carried out, the principal can recover that money as had and received to his use.
[72] In the present case there can be no doubt that the funds dishonestly taken by Ms Huebler from Ms Purucker’s accounts without her knowledge or authority are recoverable as moneys had and received. In that respect, the facts closely resemble Torbay Holdings Ltd v Napier, where a rest home was entitled to recover from the defendant employees, as money had and received, company funds of more than
$1.4 million which the defendants had fraudulently directed into their personal bank accounts.
[73] The remaining question, which is more complex, is whether the Heritage House International advance, and other advances made directly from Ms Purucker’s accounts to those of third parties, are also recoverable as money had and received.
[74] As I have already found, the claim relating to the Heritage House advance could have been brought under several alternative causes of action, including a simple
23 At [23], citing Neate v Harding (1851) 6 Exch 348.
24 Thomas v Houston Corbett & Co [1969] NZLR 151 (CA) at 166–167, citing Kelly v Solari (1841) 9 M & W 54 (Exch of Pleas) at 58.
25 Moses v Macferlan (1760) 2 Burr 1005, 1012, 97 ER 676; Lipkin Gorman (a firm) v Karpnale Ltd, above n 22; and Goss v Chilcott [1996] 3 NZLR 385 (PC) at 391.
26 Napier v Torbay Holdings, above n 22, at [23].
27 Nimmo v Westpac Banking Corporation [1993] 3 NZLR 218 (HC) at 238.
28 Martin v Pont [1993] 3 NZLR 25 (CA) at 27, citing Bowstead on Agency (15th ed, 1985) at 197.
claim in debt. The parties ostensibly agreed to a secured loan of $100,000 repayable after one year with interest. Ms Huebler received the benefit of the advance and has not paid it back.29 It is difficult to see why judgment could not be entered had the claim been advanced in this way, or on one of the other alternative bases.
[75] In any event, I have concluded that judgment can be entered for the Heritage House advance (and the other third-party payments, including those to Ms Selder) on the basis of money had and received.
[76] While not raised by the parties, an issue is whether Ms Huebler has “received” funds—a normal requirement for the cause of action—which she directed to a third-party account rather than to her personal account.30 On one view, it might be said that Ms Huebler never received the money. However, I have reached a different view in the circumstances of this case.
[77] Central to an action for money had and received is the notion of control over the funds. This is typically met by the requirement that the funds have been received by the defendant and have thereby come under the defendant’s control. The cause of action’s more recent origins reflect a time when bills of exchange and printed and minted currency were the principal means of exchanging value from one person to another.31 Historically, the transfer requirement was met by the plaintiff’s money literally coming “into the hands” of the defendant. Such a requirement is, by contemporary standards, anachronistic and fails to reflect modern banking and commercial practice, where most financial transactions are electronic. In my view, the control principle can accommodate contemporary financial practice. It is also consistent with the unifying concepts of unjust enrichment thought to underpin the cause of action.32
29 The existence of a claim in contract does not exclude an action for money had and received in this case: see Charles Mitchell, Paul Mitchell and Stephen Watterson Goff & Jones on Unjust Enrichment (10th ed, Sweet & Maxwell, London) at [3-40].
30 “The cause of action is complete when the money is received”: Torbay Holdings v Napier [2015] NZHC 2477, [2015] NZAR 1839 at [164].
31 For a summary of the more ancient origins of the cause of action, and the writ of account, see S R Scott The Recovery of Money – Recognising the Potential of the Claim for Money Had and Received (1994) 8 Otago LR 239 at 240–247.
32 Martin v Pont, above n 28, at 30; and Napier v Torbay Holdings Ltd, above n 22, at [21].
[78] Some support for a more expansive view of the notion of receipt based on a corresponding enrichment can be found in the Privy Council’s decision in Goss v Chilcott.33 In that case the Court considered a claim in restitution arising from an advance by a company to Mr and Mrs Goss. They had signed a mortgage to support the advance as part of what can best be described as a device to enable a third party, Mr Haddon, to obtain the funds when he was unable to borrow them directly from the company. Mr Haddon was a solicitor, and the advance was paid directly into his firm’s trust account ostensibly for the benefit of Mr and Mrs Goss, but Mr Haddon used the funds for his own benefit in keeping with an agreement he had reached with Mr and Mrs Goss. In considering a submission that Mr and Mrs Goss should not be required to make restitution because they never “received” the advance, their Lordships held that the advance was “received when it was paid, with [Mr and Mrs Goss’] agreement, direct to Mr Haddon.”
[79] In the present case Ms Huebler had full access to and control over Ms Purucker’s bank accounts. She was authorised to withdraw $100,000 of Ms Purucker’s money as a loan on conditions which I have found she did not comply with and for a purpose Ms Purucker would not have approved had she been aware of it. Ms Huebler then used her authority to direct Ms Purucker’s funds to the account of a third-party account to acquire services for her own benefit. Evidently, Ms Huebler could just have easily transferred the money into her own bank account before sending the funds on the Heritage House. Had she done so, there could be no question that she received the funds to her benefit.
[80] In these circumstances, I am satisfied that the necessary element of receipt is met. Ms Huebler had the ability and the right to control the direction of the loan money for her own benefit. There is no doubt she was enriched. The fact that the funds were not paid into Ms Huebler’s account is immaterial; they were, for all intents and purposes, in Ms Huebler’s hands. To hold otherwise would ignore Ms Huebler’s control over the funds both while they were in Ms Purucker’s bank accounts, and subsequently, once Ms Purucker’s authority had been obtained to their transfer (by deceit or misrepresentation).
33 Goss v Chilcott, above n 25, at 391.
[81] Accordingly, the necessary elements for the cause of action are satisfied in respect of the Heritage House advance, as well as the other payments where Ms Huebler has directed funds from Ms Purucker’s accounts to those of a third party such as Ms Selder. There will be judgment for the plaintiff against the first defendant for money had and received in the sum of $868,954.24.
Is Mr Huebler liable to Ms Purucker for money had and received?
[82] There are two parts to Ms Purucker’s claim against Mr Huebler for money had and received. The first relates to funds taken from Ms Purucker’s bank accounts by Ms Huebler and deposited into a joint bank account that she held with Mr Huebler. The second relates to at least five, and more likely seven, of Ms Purucker’s cash cheques that Mr Huebler presented at an ANZ branch.
Deposits to the joint bank account
[83] The evidence clearly establishes that Ms Huebler deposited $141,977.29 of Ms Purucker’s funds directly into their joint bank account, and that $6,150.00 was repaid from that same account into Ms Purucker’s accounts, leaving a net balance of
$135,827.29.
[84] The defendants’ joint bank account was used as the main transactional account for their businesses and, it would seem, to run their household.
[85] Receipt of money into a joint bank account held in the name of the defendant is typically considered sufficient for receipt of money for the purposes of a claim for money had and received, and joint recipients will usually be jointly and severally liable.34
[86] Where control of a bank account is in issue, questions may arise. However, Mr Huebler did not offer evidence to suggest that he had no control over the joint bank account and, in fact, there is clear evidence to the contrary. In particular:
34 Torbay Holdings Ltd v Napier, above n 30, at [176], citing Charles Mitchell, Paul Mitchell and Stephen Watterson (eds) Goff & Jones The Law of Unjust Enrichment (8th ed, Sweet & Maxwell, London, 2011) at [4-54].
(a)Mr Huebler was a signatory of the account;
(b)he used the bank account to purchase supplies for his electrical business;
(c)the bank account details were included on invoices issued by his electrical business; and
(d)the defendants used the funds in the bank account to cover household expenses, such as local authority rates and utilities.
[87] In addition, joint bank accounts are held as joint tenants and each party is entitled to use the funds held within them equally.35 It follows that whether or not he had any knowledge of the legitimacy of Ms Purucker’s funds paid into his joint account, Mr Huebler together with his wife both received Ms Purucker’s funds the moment they were deposited into the joint bank account.
[88] I am therefore satisfied that Mr Huebler is jointly and severally liable to Ms Purucker for the net amount of $135,827.29 deposited into the defendants’ joint bank account.
Mr Huebler’s presentation of Ms Purucker’s cash cheques at ANZ bank
[89] Between 28 August 2013 and 7 November 2016, Mr Huebler personally cashed five of Ms Purucker’s cheques totalling $19,300. Four of those cheques were signed by Ms Huebler, and only one by Ms Purucker. Although not pleaded, Mr Huebler conceded that he may have cashed two other cheques totalling $3,000 with NBS Bank Tākaka on 16 September 2016 and 28 September 2016.
[90] Mr Huebler’s explanation for these transactions was that it was convenient for him to cash the cheques while travelling for his work as an electrician (as the ANZ branch in Golden Bay had closed), and that he would hand over the withdrawn cash to his wife as soon as he returned home. He said his understanding was that
35 In re Bishop [1965] 1 Ch 450 at 456; and OEM PLC v Schneider [2005] EWHC 1072 at [34].
Ms Purucker liked to have her accounts paid in cash, and Ms Huebler would need money to be able to do so. However, during cross-examination Mr Huebler also confirmed that once withdrawn he would place the cash in the couples’ money safe. The cash would then be taken out of that safe, as and when needed. It is clear Mr Huebler also had access to cash kept in the safe.
[91] I am also satisfied that Mr Huebler is liable to Ms Purucker for the proceeds of the cheques he cashed. The funds were within his control, both when he received cash from a bank teller, when he disposed funds into the cash safe or when he handed over cash to Ms Huebler for her use. There can be no suggestion he provided any form of consideration for receiving Ms Purucker’s money, or that he has a change of position defence available to him. It follows, as Mr Downing conceded at the hearing, that if Mr Huebler received Ms Purucker’s funds as a consequence of Ms Huebler’s fraud, as I have found, there can be no basis on which to oppose judgment.
[92] Judgment is therefore entered in favour of the plaintiff against the second defendant for money had and received in the sum of $155,127.29. Such liability is joint and several with the first defendant.
Is the separation agreement void as against Ms Purucker as a device to defeat creditors?
[93] Ms Purucker seeks a declaration under s 3 of the Declaratory Judgments Act 1908 that certain inter-spousal transfers and a separation agreement between Mr and Ms Huebler are void under section 47 of the Property (Relationships) Act (“the PRA”). The statement of claim identifies the dispositions in issue as transfers of funds from the defendants’ bank accounts between 19 and 30 November 2018 into accounts held by Mr Huebler alone. This included a joint foreign currency account containing 205,523.47 Swiss francs. Ms Purucker pleads that as a result of the relevant dispositions, Mr Huebler received $313,080.39 of the defendants’ jointly owned funds.
[94] Mr and Ms Huebler oppose this claim. Mr Huebler’s evidence is that in 1994, the year following their marriage in Germany, the defendants entered into the equivalent of a contracting out agreement which reflected the significantly disparate capital position between them at the time they were married. The agreement provided
that there would be no “compensation” to Ms Huebler for “accrued gains that had already occurred or would occur in the future”. Clause 2(b) of the German agreement recorded that the parties refrained at the time from including an inventory or value of any joint assets. Later the same year the defendants immigrated to New Zealand. In July 1995 they appear to have made a list of their respective property, valued in New Zealand dollars. Mr Huebler’s property according to the inventory was valued at
$687,000, which consisted of a property they owned in New Zealand together with funds of NZD 363,000 and some US and German currency. Then in 2004 Mr Huebler inherited, according to his evidence, 247,000 Swiss francs, worth at the time NZD 235,000.
[95] Mr Huebler’s case, in essence, is that both the informal property agreement the defendants prepared shortly after their separation in November 2018 and the formal agreement signed in January 2019, involved updating their respective property interests based on the 1994 German agreement and 1995 property inventory. It follows the 2019 separation agreement was not made with an intention to defeat Ms Huebler’s creditors; it simply reflected a long-standing property position between the spouses.
[96] Mr Huebler did not seek to enforce the German property agreement. He accepted that for present purposes the relevant agreement is the 2019 agreement made under the PRA. The German agreement is therefore relevant as circumstantial evidence, but its status and enforceability in New Zealand is not in issue in this case.36
[97] In assessing whether the 2019 separation agreement was entered with an intention to defeat creditors, it is relevant to consider:
(a)the way in which the defendants structured their personal and business affairs, and their likely entitlements under the PRA, prior to the discovery of Ms Huebler’s fraud;
36 Section 7A of the PRA provides that partners can opt out of the Act if they have previously agreed that the law of another country is to apply to their relationship property, and that agreement is in writing or otherwise valid according to the law of that country. The foreign agreement will not apply if the New Zealand courts determine that the application of the law of the other country under the agreement would be contrary to justice or public policy, for instance, where it would be inconsistent with the emphasis on equal division of the family home under New Zealand law.
(b)the terms of the agreement and the circumstances in which it was entered; and
(c)the defendants’ conduct following their separation.
The defendants’ joint ownership of property and treatment of business affairs prior to separation
[98] Mr and Ms Huebler moved to New Zealand in December 1994. Since at least 1996, the two have consistently owned properties as joint tenants. Together they owned and operated the Pakawau Motor Camp in Golden Bay from October 1996 to March 1998.37 Then, in March 1997, the defendants purchased a bare section of land in Golden Bay. They developed it into a lifestyle block in the following years, constructing a house and a stand-alone workshop and garage building. They have continued to live on the property ever since. In October 2005, Mr and Ms Huebler jointly purchased a property in Ōhaeawai. While their initial intention was to move there, they sold the property about nine months later.38
[99] Mr and Ms Huebler also held joint bank accounts. In cross-examination, Mr Huebler accepted that they had a single shared bank account into which income from their respective business ventures was received and mixed. The defendants used that account to meet both their personal and business expenses, including rates on their property. He described it as “the front end account, where everything went in and everything went out”. This is also the account into which Ms Huebler improperly directed over $140,000 of Ms Purucker’s funds.
[100] In addition, the defendants conducted their businesses as a partnership, at least according to the information they provided to the Commissioner of Inland Revenue. Mr Huebler trained as an electrician in Germany, and has continued to do electrical work since moving to New Zealand. Ms Huebler began her bookkeeping service in about 2003. She also sought to establish a range of other businesses, most notably
37 While Mr Huebler maintained in evidence that it was mainly his money that was used to fund the purchase, he accepted that he and his wife were jointly responsible for the mortgage. It also appears that Mrs Huebler was engaged in running the business.
38 Mr Huebler accepted in evidence that they made an approximate $50,000 capital gain on the sale of the property, and that those proceeds would have been deposited into a shared bank account.
The Super Food Academy in 2012. Between 2012 and 2017 the defendants submitted income tax returns for the “Iris and Rainer Huebler partnership”. In the accounts any taxable income was split 50/50 between them. And from 2014 to 2018, they also submitted “Profit / Loss” statements for the partnership breaking down the income and expenditure (and net profit or loss) for each of the defendants’ business ventures in the relevant financial year.
[101] Mr Huebler contended in evidence that the partnership arrangement depicted in the financial documents submitted to Inland Revenue was simply a tax construct, and that in fact the businesses were run separately. However, I am unable to accept that contention. Mr and Ms Huebler operated their various business ventures from a shared account, meaning profits from one source were applied to the expenses of another, and vice versa. Further, the defendants’ 2019 relationship property agreement recorded that their partnership had been dissolved. This admission is at odds with their position in the trial before me, to the effect that no such partnership existed. Overall, I consider the defendants’ tax records accurately reflect their partnership arrangement.
[102] The relevance of all this is that by November 2018, after 25 years of joint endeavour (both in a marital and business sense) and after jointly owning assets with her husband, Ms Huebler was at first blush entitled to claim half of the relationship property pool under the PRA.
The defendants’ subsequent division of assets
[103] As I have already noted,39 within a very short space of time of Ms Huebler’s fraud coming to light, the defendants took concerted steps to divest Ms Huebler of any interest in substantial assets that, until that time, had been jointly owned.
[104] On 16 October 2018, Ms Purucker reported the suspected fraud to the New Zealand Police. On 29 October 2018, she filed the civil proceedings and obtained an interim charging order against Ms Huebler’s share in the family home in Golden Bay. Ms Huebler was served with proceedings on 8 November 2018.
39 See above at [43]–[44].
[105] On 16 November 2018, the defendants made the almost two-hour journey from their home near Collingwood to the Richmond branch of the Westpac bank. They instructed the teller to close their two joint accounts and open two corresponding accounts in Mr Huebler’s sole name. The funds in their personal account were split roughly in half: $4,742 was used to clear a credit card debt owed by Ms Huebler, while the remaining $4,561 was paid into Mr Huebler’s new account. The defendants also transferred their Swiss francs, valued at NZD 302,510, from their joint foreign currency account into the new account held by Mr Huebler alone.40 Shortly thereafter, the Swiss francs were converted into New Zealand dollars and transferred into two of Mr Huebler’s Westpac accounts,41 and from there the funds were spread across various accounts held by Mr Huebler.42
[106] While Mr Huebler gave evidence that these Swiss f rancs originated from his inheritance in 2004, he did not produce any bank records establishing the source of the funds when the Westpac foreign exchange account was opened in April 2012. No explanation was given for the fact that the funds had been held in a joint bank account for years, despite Mr Huebler’s claim that his wife had no interest in them. This is significant because s 8(1)(c) of the PRA defines ‘relationship property’ as “ all property owned jointly or in common in equal shares by the married couple”.
[107] On 16 November 2018, the same day the defendants transferred their joint funds into Mr Huebler’s accounts, they prepared a handwritten agreement at Mr Huebler’s lawyer’s office confirming that they had agreed to separate. Later that evening, they typed a document entitled “Living Arrangement between Iris and Rainer Huebler after separation on 16 November 2018”, under which they agreed to live in different areas of the marital property in Golden Bay. Mr Huebler was to use and reside in the main house, while Ms Huebler was to live in “the guest area of the second building”.
40 While the transfer of Swiss francs occurred on Monday 19 November 2018, the evidence indicates that the defendants most likely gave instructions for the transaction during their visit to the Richmond branch on the previous Friday, 16 November.
41 On 23 November 2018, CHF 20,000 (NZD 28,935.19) was transferred from the Swiss franc account into Mr Huebler’s account. On 30 November, the remaining CHF 185,523.47 (NZD 265,412.69) was transferred into another of Mr Huebler’s accounts.
42 Immediately, $100,000 was transferred to an account at Kiwibank held by Mr Huebler, and
$120,000 was placed on term deposit in Mr Huebler’s name at Westpac. A further $22,000 was purportedly “loaned” to Ms Huebler in tranches of $5,000 and $17,000, and $6,365 was paid to the defendants’ lawyers.
[108] The next week, on 21 November 2018, the defendants signed a document which purported to be an agreement dividing their relationship property. The total pool of combined assets, said to be $962,382.61, was apportioned 3.261 per cent to Ms Huebler and 96.738 per cent to Mr Huebler. The basis for this grossly unequal division was the inventory of the defendants’ property dated 31 July 1995. The document records the following approach to the division of property:
(a)The 1995 inventory recorded the parties’ respective interests at that time as:
Iris: $31,385.17
Rainer: $687,460.30
(b)Between the creation of the 1995 inventory and the parties’ separation in November 2018, “no great changes took place to this ratio”, according to the document, except in 2004 when Mr Huebler inherited NZD 243,537.14.
(c)Therefore, taking into account the inheritance, the updated division of property was:
Iris: $31,385.17
Rainer: $930,997.44
[109] In this way, the 2018 document recorded that the value of Ms Huebler’s interest in the relationship property had been frozen for 25 years, with no adjustment for capital gains on property, inflation, or to reflect her decades of financial contribution to the relationship capital. It left Ms Huebler in the same position she was in as that recorded at the start of their relationship. Given the timing and content of the document, I consider the 2018 agreement is powerful evidence of the defendants’ intention to defeat creditor claims, and in particular Ms Purucker’s claim. While it was not ultimately enacted in the separation agreement that followed, that is not a surprise given Mr and Ms Huebler sought legal advice about their proposed property split.
[110] By 14 December 2018, a draft separation agreement had been prepared by Mr Huebler’s lawyer, Mr Downing, who also appeared as counsel in the trial. The draft agreement again purported to assign most of the value in the relationship assets to Mr Huebler. Then on 24 January 2019, a final version of the separation agreement on virtually identical terms was signed and certified by the defendants’ lawyers in accordance with the PRA. The key terms of the agreement were as follows:
(a)Ms Huebler would receive a 20 per cent interest in the Golden Bay property, while Mr Huebler received the remaining 80 per cent. The value of the property was fixed using its 2017 rateable value of
$830,000, even though the defendants had advertised the property for sale on Trade Me for enquiries over $1.5 million in October 2018.43
(b)Upon settlement, Ms Huebler was to transfer her interest in the freehold title to Mr Huebler. In return, he agreed to pay her $166,000, less any loans he had advanced to Ms Huebler since separation. This amount is recorded as $23,000.
(c)The parties agreed that bank accounts in the sole name of a party would be that party’s separate property. The agreement did not mention the transfer of Swiss francs worth NZD 302,510 from the defendants’ joint account to Mr Huebler that had occurred two months earlier.
(d)Gold and silver bullion worth approximately $88,000 was agreed to be Mr Huebler’s separate property, even though the evidence indicates that at least some of the bullion was purchased with joint funds. Mr Huebler also received a car and a van, valued in the agreement at $2,000 and
$3,000 respectively.
(e)All household chattels were deemed Mr Huebler’s separate property, except for a few modest items listed in a schedule to the agreement.44
43 Although a valuation was obtained by Mr Huebler in December 2018, this was for GST purposes rather than a market valuation.
44 Ms Huebler received a coffee table, an office desk and chair, assorted kitchenware, cookbooks, silk painting equipment, a spinning wheel and related equipment, and a cassette player and tapes.
(f)Any debt owed by Ms Huebler to Ms Purucker and Ms Selder, and any other debts arising from Ms Huebler’s consulting business, were her personal debts. That is so despite Ms Huebler ostensibly operating her businesses through a partnership with her husband, and that any business debts would ordinarily be treated as relationship debts.45
(g)The defendants agreed to terminate their partnership, which is described as “an informal Partnership incorporating [Mr Huebler’s] electrical business, and some other ventures on their home property”. The electrical business was agreed to be Mr Huebler separate property. No valuation was obtained for the business.
[111] The gross disparity in financial outcomes brought about by the relationship property agreement is illustrated in the table below:46
Mr Rainer Huebler Ms Iris Huebler A mortgage-free, 8.9- hectare freehold property
$830,000
Monetary adjustment
$143,000
Converted Swiss francs
$302,510
Debts
–$869,000
Gold and silver bullion
$88,000
The household chattels, excluding select items
—
Select household chattels
—
The electrical business
—
Two vehicles
$5,000
$1,225,510
–$726,000
45 Property (Relationships) Act 1976, s 20 definition of “relationship debt”, which includes a debt that has been incurred in the course of a common enterprise carried on by the spouses.
46 The true position, if anything, is likely to be significantly more favourable to Mr Huebler than indicated. First, while this table adopts the property value used in the separation agreement, the evidence suggests its actual value may be significantly higher, given the defendants were trying to sell it in 2018 for $1.5 million. Second, there was no evidence about the value of the electrical business or the household chattels. Nevertheless, it seems clear that Mr Huebler obtained a significantly better deal than his wife in that respect. Third, the value of Ms Huebler’s debts only reflects the current claim by Ms Purucker, and does not include any debts she might owe to other parties.
The defendants’ post-separation conduct
[112] There is no evidence that the defendants have taken steps to dissolve their marriage in the five years since separation.
[113] The evidence establishes that Mr and Ms Huebler continued to live together in the marital home, and were seen dining together at a local restaurant, the Mussel Inn, after they claimed to have separated. One witness who knew the defendants and observed them dining together said they appeared to be a couple.
[114] On 16 April 2019, less than three months after separating, Ms Huebler signed a will appointing Mr Huebler as her executor and leaving her entire estate to him. Around the same time, she also prepared a draft Enduring Power of Attorney, putting her husband in charge of all care and welfare decisions. Then, in June 2020, when Mr Huebler applied for a New Zealand passport, he named Ms Huebler as his emergency contact. During this period, Ms Huebler continued to promote her husband’s electrical business on social media, and posted a positive Google review online.
[115] The defendants’ period of co-habitation in the family home only ended when Ms Huebler was remanded in custody in December 2021. Even so, they remained in contact while Ms Huebler was imprisoned; the evidence establishes that they had video calls with each other on a weekly basis and that Mr Huebler loaned Ms Huebler money to spend at the prison canteen. He also attended to support her at a whānau hui before the Parole Board in March 2023. Ms Huebler then applied for parole at the family home in Golden Bay, where Mr Huebler appears to have continued to live.
[116] On 5 November 2021, Ms Purucker’s lawyers wrote to the lawyers conducting Ms Huebler’s defence in the criminal proceedings, proposing that Ms Huebler should support a challenge to the property agreement. The following day, Mr Huebler wrote a strongly worded email to Ms Purucker expressing his disappointment that she was pursuing him despite his innocence. Evidently the defendants remained in communication in relation to their defence of Ms Purucker’s claim.
[117] Overall, despite their claim to have separated, the evidence strongly suggests that the defendants have continued to live their lives, including where they live, as though they remain in a marital relationship.
Jurisdiction
[118] Section 47 of the PRA provides that any agreement, disposition, or other transaction between spouses with respect to their relationship property will be void against creditors and the Official Assignee in two situations:
(a)first, where the agreement or disposition is intended to defeat creditors (s 47(1)); or alternatively
(b)where the agreement has the effect of defeating creditors, even if that was not intended, and the challenge is brought within two years.
[119] The principles are well established.47 Under the first limb, the plaintiff must establish that the dominant intention (though not necessarily sole intention) at the time of the relevant agreement or transaction was to defeat creditors.48 Ascertaining the dominant intention is a matter of inference having regard to the evidence and the circumstances of the transaction.49 It is not necessary for both spouses to have intended to defeat creditors; it is sufficient if only the donor held the requisite dominant intention.50
[120] The intention or effect of defeating a creditor involves more than the mere reduction of assets held in the debtor’s name. Rather, it involves an action improperly taken to deprive creditors of moneys to which they would otherwise be entitled to have resort.51 The transaction does not need to render a creditor’s claim entirely
47 See generally Bill Atkin Fisher on Matrimonial and Relationship Property (online ed, LexisNexis) at [1.48]; Bill Atkin Family Law Service (online ed, Lexis Nexis) at [7.416]; and M Tingey and N Moffat Heath and Whale on Insolvency (online ed, LexisNexis) at [24.181]–[24.188].
48 Neill v Official Assignee [1995] 2 NZLR 318 (CA); General Finance v Cooper (1984) 3 NZFLR 108 at 110–111; BNZ v Jordan [1993] NZFLR 287 at 290. See also Regal Castings Limited v Lightbody [2008] NZSC 87, [2009] 2 NZLR 433 where it was held that the disposition of a family home to a family trust was intended to defeat a creditor’s rights.
49 General Finance v Cooper, above n 48, at 115; and De Bruin v R [2008] NZSC 32 at [6].
50 At 115.
51 W v P (1982) 1 NZFLR 103 at 108.
irrecoverable; it need only be a significant cause of loss to creditors.52 It follows that a transaction between spouses for fully adequate consideration will not fall foul of s 47.53 That is because there is no net change in the spouses’ asset position. Conversely, a transaction or agreement, including an agreement settling claims under the PRA, involving inadequate consideration may defeat creditors.54
[121] To qualify as a creditor in terms of s 47 it is sufficient if the claimant has a prima facie bona fide quantifiable monetary claim at the time the proceedings are commenced.55
[122] The second limb of s 47—a disposition that is not intended to defeat creditors but has that effect—is subject to a limitation period; the transaction is only void “during the period of 2 years after it is made”.56
Consideration
[123] When questioned about the close of the joint bank accounts and transfer of joint funds into his sole name, Mr Huebler’s explanation was effectively that he was shocked to learn of the allegations against Ms Huebler, and that they both considered she was in no condition to deal with any funds. He likened the fund transfers to “securing a crash site”.
[124] While Mr Huebler explained that the grossly disproportionate division of relationship property is consistent with the German contracting out agreement the defendants settled shortly after marrying in February 1994, and the inventory of assets they completed in July 1995, no explanation has been given as to why, after 25 years together, Ms Huebler’s contribution to the marriage, including income from her own business, should be discounted so unfavourably when the property agreement was settled. Nor was there any credible explanation provided by the defendants in relation to the significant sum of Swiss francs held in a joint account when, according to
52 Official Assignee v Whitehead (1982) 5 MPC 110 at 112.
53 Neill v Official Assignee, above n 48.
54 Fisher on Matrimonial and Relationship Property, above n 47, at [1.48].
55 At [1.48], citing W v P, above n 51, at 107–108.
56 Johnson v Felton [2006] NZSC 31, [2006] NZFLR 759 at [21].
Mr Huebler, these funds were derived from an inheritance and had always remained separate property.57
[125] The evidence, viewed as a whole, gives rise to an unavoidable inference that the transfer of funds from the defendants’ joint bank accounts as well as the separation agreement were intended to defeat Ms Huebler’s creditors, and in particular Ms Purucker. The timing of the transactions, the grossly unequal terms of the separation agreement, the circumstances in which it was entered, and the defendants’ post-separation conduct all lead to the same conclusion. In summary, the defendants:
(a)documented their separation on a handwritten note the week after Ms Huebler was served with proceedings by Ms Purucker, and at the same time transferred jointly held currency valued at NZD 302,510 into a new bank account in Mr Huebler’s sole name;
(b)agreed to divide their joint assets in grossly disproportionate shares, despite Ms Huebler’s ostensible rights under the PRA, resulting in disparity of some $2 million;
(c)engaged lawyers and managed to “negotiate” a detailed separation agreement to the point that a final draft had been prepared less than a month after separating;58
(d)signed a final version of the separation agreement four weeks later and on terms that call for an explanation of the inequality it produced given Ms Huebler’s rights under the PRA; and
(e)appear to have continued living together as a couple following their purported separation.
57 There is no independent documentary evidence to confirm whether the Swiss francs held in the joint account were, or were not, derived exclusively from Mr Huebler’s inheritance.
58 I use inverted comas because there is no real evidence of any form of negotiation taking place, which is remarkable given Ms Huebler’s apparent rights under the PRA and the terms of settlement which she accepted.
[126] Overall, I am satisfied that the purported separation of the defendants, and their division of assets, was clearly linked to their appreciation of the risk Ms Huebler’s fraud presented to their joint assets. The dispositions pleaded by the plaintiff and the separation agreement were intended by the defendants to provide a protection against Ms Purucker’s claim. I have no hesitation in concluding that the dispositions were undertaken for the dominant purpose of defeating Ms Huebler’s creditors.
[127] For completeness, I note that while the challenged transactions and agreement also clearly had the effect of defeating Ms Huebler’s creditors under s 47(2) of the PRA, given Ms Purucker did not challenge the transactions within two years, I would not have found them void under that provision.
Conclusion and result
[128]Judgment is entered for the plaintiff against the first defendant:
(a)in the sum of $766,537.58 for breach of fiduciary duty, together with exemplary damages of $50,000; and
(b)in the sum of $868,954.24 for money had and received (liability for which is concurrent with the first defendant’s liability for breach of fiduciary duty in the sum of $766,537.58).
[129] Judgment is also entered for the plaintiff against the second defendant in the amount of $155,127.29. That liability is joint and several with the first defendant.
[130] I award interest on the amounts for which judgment has been entered at [128] and [129] above pursuant to ss 9(1) and 10(1) of the Interest on Money Claims Act 2016, from 16 October 2018 until the judgment debt is paid in full.
[131] I declare that the following agreement and dispositions between the defendants are void pursuant to s 47(1) of the Property (Relationships) Act 1976:
(a)a relationship property agreement dated 24 January 2019 between the first and second defendant;
(b)the transfer of $4,561 from the defendants’ joint bank account to Mr Huebler’s bank account on 16 November 2018; and
(c)the transfer of Swiss francs worth NZD 302,510 from the defendants’ joint bank account to Mr Huebler’s bank account on 19 November 2018.
[132] I reserve leave to the plaintiff to apply for further orders or modification of the orders made at [130] above.
Costs
[133] In accordance with Mr Dewar’s request, the question of costs is reserved. If the parties are unable to reach agreement they may file memoranda of no more than five pages including schedules. I will then determine the issue on the papers.59
Isac J
Solicitors
Thomas Dewar Sziranyi Letts, Lower Hutt for Plaintiff McFadden McMeeken Phillips, Nelson for Second Defendant
59 Mr Dewar advised me in closing that his intention may be to attempt to persuade the Court to order costs in excess of Ms Purucker’s grant of legal aid. While I understand the concern leading to this prospect, and without expressing a final view, in the absence of an entitlement to costs beyond that payable under the grant of legal aid it is difficult to immediately see a strong legal foundation on which additional “costs” might be awarded by the Court.
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