River Oaks Mews Limited v Meurant

[2023] NZHC 1222

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-960

[2023] NZHC 1222

BETWEEN

RIVER OAKS MEWS LIMITED

Applicant

AND

ALAN ROSS MEURANT

First respondent

AND

JACK RABBIT COMPANY LIMITED

Second respondent

AND

MEURANT INTERNATIONAL GROUP LIMITED

Third respondent

AND

MEURANT CONSULTING LIMITED

Fourth respondent

AND

MARINA VALERIEVNA KOLTSOVA

Fifth respondent

AND

LISA MEURANT

Sixth respondent

AND

LMJ CONSULTING LIMITED

Seventh respondent

Hearing:	On the papers
Counsel:	A H Brown and JY Leenoh for applicant
Date of judgment:	23 May 2023

JUDGMENT OF JAGOSE J

This judgment was delivered by me on 23 May 2023 at 4.30pm. Pursuant to Rule 11.5 of the High Court Rules.

Solicitors:
K3 Legal, Auckland

………………………… Registrar/Deputy Registrar

RIVER OAKS MEWS LTD v MEURANT [2023] NZHC 1222 [23 May 2023]

[1]                 As duty judge, I have the applicant’s (River Oaks) 19 May 2023 without notice application for freezing and ancillary orders and directions as to service in support of an intended claim against the defendants.

[2]                 River Oaks intends to allege Mr Meurant has breached his duties as its director, including by making payments of some $1.611 million from its bank accounts to accounts held by him or other defendants associated with him during and after his directorship, with consequential losses to River Oaks calculated at least of $783,000 (allowing for Mr Meurant’s remuneration). It comprehends the 12 May 2023 sale of a residential property in Auckland’s St Johns owned by Mr Meurant and his wife, after its reduction in asking price to $50,000 below its rating valuation, to be an attempt to dissipate his assets to avoid any judgment in River Oaks’ favour.

Law on freezing orders

[3]                 Freezing orders may be ordered if I am satisfied, having regard to all the circumstances, there is a danger a prospective judgment in River Oaks’ favour will be wholly or partly unsatisfied because the value of Mr Meurant’s assets are alienated from him in some manner.1 The substantive claim need not have been filed.2

[4]                 Freezing orders are “a valuable protective measure for those commencing civil proceedings”,3 for which River Oaks must show “a good arguable case on an accrued or prospective cause of action”.4 By ‘good arguable case’ is meant establishment of “a sufficiently plausible foundation” such that “the cause of action is at least tenable”.5

A good arguable case against the respondent is therefore established if the allegations in the proposed claim are capable of tenable argument and are supported by sufficient evidence, bearing in mind the early stage at which the application is likely to be brought.

1      High Court Rules 2016, r 32.5(4).

2      Commerce Commission v Viagogo AG [2019] NZCA 472, [2019] 3 NZLR 559 at [26(a)].

3      Hannay v Mount [2011] NZCA 530 at [20], referring to Deutsche Schachtbau-und Tiefbohrgesellschaft MBH v Shell International Petroleum Co Ltd (trading as Shell International Trading Co) [1990] 1 AC 295 (HL) at 317.

4      High Court Rules, r 32.5(1)(b).

5      Hannay v Mount, above n 3, at [21], citing Wing Hung Printing Co Ltd v Saito Offshore Pty Ltd [2011] 1 NZLR 754 (CA) at [41] and referring to Kuwait Asia Bank EC v National Mutual Life Nominees Ltd (No 2) [1989] 2 NZLR 50 (CA) at 55, and [22].

[5]                 As to the danger of alienation, I must be satisfied assets may be removed or dealt with in a way that may frustrate the prospective judgment; that there are “circumstances from which a ‘prudent, sensible commercial man, can properly infer a danger of default’”.6

[6]                 I then must consider where lies the balance of convenience,7 meaning if it bears harder on River Oaks to be without prospective recourse to assets, or on the defendants to have their assets frozen, pending judgment in their respective favours.8

[7]                 The form of any freezing order must not prohibit dealings with the assets to pay ordinary living expenses and legal expenses relating to the freezing order or in the ordinary course of business,9 and where made without notice be limited to a particular date as early as practicable after the freezing order is made,10 and with leave reserved to the defendants to discharge or vary the freezing order urgently on notice.11

Discussion

[8]                 Being satisfied r 32.2 of the High Court Rules 2016 expressly permits the application to be made without serving notice of the application, I determine River Oaks’ application can properly be dealt with without notice.12

[9]                 I am satisfied from the affidavit evidence of Egor Aleksandrovich Petrenko and Alexey  Potter,  River  Oaks’  trustee  shareholders,  River   Oaks’  allegation   of  Mr Meurant’s breaches of duty are capable of tenable argument.

[10]             In essence, the evidence appears to illustrate payments from River Oaks’ bank accounts to accounts held by Mr Meurant or others associated with him materially in excess of his contractual entitlement to remuneration, for which his explanation was

6      Murren v Schaeffer [2018] NZCA 318, (2018) 24 PRNZ 285 at [16], citing Raukura Moana Fisheries Ltd v The Ship “Irina Zharkikh” [2001] 2 NZLR 801 (HC) (citing Third Chandris Shipping Corporation v Unimarine SA [1979] QB 645 at 671).

7 At [17].

8      By analogy with Wellington International Airport Ltd v Air New Zealand Ltd HC Wellington CIV- 2007-485-1756, 30 July 2008 at [4] citing Cayne v Global Natural Resources Plc [1984] 1 All ER 225 (CA) at 237.

9      High Court Rules, r 32.6

10     Rule 32.7.

11     Rule 32.8.

12     Rule 7.46(3).

unsubstantiated or sought retrospectively to remedy, including some $136,000 after termination of his engagement. Auditors concluded:

We have concerns over the quantum of fees that Mr Meurant and associated entities have been charging the company and the use of company funds by Mr Meurant and associated entities. We question if Mr Meurant has endeavoured to maximise the returns of the company and act in the best interests of the company and the shareholder.

We suspect that Mr Meurant, as Trustee of ANP Trust, the sole shareholder of River Oaks Mews Limited, has failed to act in the best interests of the Trusts beneficiaries and has instead prioritised the needs of himself and his family.

As such, we believe it appropriate to request full justification of the management and professional fees charged by Mr Meurant and related entities, the treatment of company funds and the management of the company. If Mr Meurant is unable or unwilling to provide suitable justifications and evidence, we believe that legal action should immediately be considered, including investigating matters relating to theft in a special relationship, and fraud/obtaining by deception.

[11]             Given money’s inherent fungibility, and the seemingly rushed and discounted sale of Mr Meurant’s St Johns property, I also infer the requisite danger. I am in no doubt, particularly given subsequent freezing order procedures as I have explained them,13 the balance of convenience much favours River Oaks.

Result

[12]             I therefore order in terms of subparas 1.(a)–(c) of River Oaks’ 19 May 2023 without notice originating application and otherwise in terms of the High Court Rules’ Form G 38:

(a)the freezing order to have no effect after its call in the duty judge’s list at 10.00 am on Wednesday, 31 May 2023;

(b)any interlocutory application to discharge or vary the order to be made on two working days’ notice to River Oaks; and

(c)attaching River Oaks’ 19 May 2023 undertaking as to damages.

—Jagose J

13     At [7] above.