Sergent v White

[2014] NZHC 1945

IN THE HIGH COURT OF NEW ZEALAND WHANGANUI REGISTRY

CIV-2014-483-31 [2014] NZHC 1945

BETWEEN

PAUL GRAHAM SERGENT

First Plaintiff

SERGENT HOLDINGS LIMITED Second Plaintiff

PAUL GRAHAM SERGENT and ARMSTRONG BARTON TRUSTEE COMPANY LIMITED

Third Plaintiffs

AND

ELLEN WHITE First Defendant

HONEYWORX LIMITED Second Defendant

BEE NZ MANUKA LIMITED Third Defendant

QUEEN AND COUNTRY LIMITED Fourth Defendant

Hearing:	18 August 2014
Counsel:	L C Rowe for Plaintiffs L Hansen for First Defendant G Allan for Fourth Defendant
Judgment:	18 August 2014

JUDGMENT OF WILLIAMS J

[1]      The plaintiffs sue the first defendant and her beekeeping companies alleging fraud, conversion and breach of fiduciary obligation among other things.              They

obtained restraining and ancillary orders on 8 August 2014, and a further order on

SERGENT & ORS v WHITE& ORS [2014] NZHC 1945 [18 August 2014]

11 August 2014 preventing the first defendant from leaving the country and requiring her to surrender her passport.  It fell to me to review these orders in the Chamber’s List today.

[2]      There was an appearance on behalf of the first defendant by Ms Hansen though her instructions were limited to supporting the position taken by Queen and Country Limited (QCL), the purchasers of the First Defendant’s property at 57 No.2

Line Durie Hill, Whanganui, together with her beekeeping businesses.  QCL has not, until now, been a formal party to these proceedings.   Rather, Mr Allan made an appearance in opposition.  I make orders below joining QCL as a defendant.

[3]      For QCL, Mr Allan argued that the restraining order should be removed in respect of the property and the assets of the defendant’s beekeeping business so that the respective agreements for sale and purchase in favour of his client can settle.  For the plaintiff, Mr Rowe argued that the restraining and ancillary orders should be extended and slightly expanded.

[4]      As  I  indicated  to  the  parties  at  the  conclusion  of  a  brief  hearing  this afternoon, I have concluded that the restraining orders should be extended subject to the matter being more fully canvassed than was possible in the 30 minutes available to me.  I set out timetabling directions to a half-day fixture for 3 September 2014 at the end of this judgment.

[5]      In my view, the plaintiff has a reasonably arguable case both in relation to the substance of his proceedings and in the risk that those proceedings may be rendered nugatory by the dissipation of the defendant’s assets through the respective sale and purchase agreements for the property and the business.  It is also reasonably arguable that the combined effect of cls 8.3(4) and 2(5) of the sale and purchase agreement for the business (there are mirror provisions in respect of the property transaction) is such as to suggest that QCL became aware of the restraining orders before they gave notice, or were deemed to give notice, to the defendant that the agreement was unconditional.  If that is so, it is at least arguable that they took equitable title with notice of the restraining order.

[6]      Mr Allan challenges this.   He did not accept the proposition that QCL had notice prior to the contract becoming unconditional.   He argued further that restraining orders are always in personam so that although the restraining order was binding on the defendant, it could not prevent a third party from completing the contract.  Notice of the restraining order was, he said, irrelevant.  It did not and could not prevent QCL from doing that which it was entitled to do under the contract.

[7]      While Mr Allan raises an important point, it is not one that I feel comfortable in resolving after hearing 30 minutes of argument.  It is a matter that requires more careful consideration.

[8]      QCL also complains that if it is prevented from settling the contracts, its bees may be put at risk.  QCL is currently, it says, spending $3,000 a day in the upkeep of hives that belonged to the defendant, and this Friday it must place an order for “bee boxes” (counsel’s term not mine) requiring it to commit to $100,000 in expenditure. Mr Allan argued that QCL would be significantly prejudiced thereby, and there is at least the potential that the livestock may suffer.

[9]      That  may be  so,  and  I  am  not  unsympathetic  to  the  position  QCL find themselves in, but there can be no doubt that the business and the property are the main assets of the defendant and her associated companies, and there are allegations that the assets to be transferred include the same assets that were stolen by the defendant from the plaintiff.  There are also allegations that the sale and purchase agreements are on uncommercial terms and are not arms length.

[10]     On  the  balance  of  competing  equities  and  prejudices,  I  consider  that maintaining the status quo until the matter can be properly argued is the preferable course.

[11]     I order therefore that the freezing orders imposed on 8 and 11 August 2014 be extended until further order of this Court.

[12]     In addition, I order that the plaintiffs be admitted to inventory the contents of the shipping container currently located in Whanganui and referred to in the submissions of Mr Rowe.

[13]     I also make the following timetabling orders:

(a)       any further evidence in relation to restraining orders must be filed and served by 29 August 2014;

(b)any  evidence  in  reply  and  any  application  to  cross-examine  any deponent must be filed and served by 2 September 2014; and

(c)       the matter is set down for a half-day fixture on 3 September 2014.

[14]     I direct that QCL be joined as a party to the proceeding.  The undertaking as to damages will apply to that party accordingly.

[15]     Finally, I note that the first defendant, Ms White, has yet to be served and, despite the appearance of counsel, I do not know where she is and advice in that respect was not forthcoming in Court.  Apparently she will be back in Whanganui in two weeks.   She must surrender her passport forthwith.   If she wishes to provide evidence in respect of the matter of restraining orders, she must comply with the foregoing timetabling orders.

[16]     Costs are reserved.

Williams J

Solicitors:

Armstrong Barton, Solicitors, Whanganui

G Allan, Barrister, Wellington