Sergent v White (aka Wood) - [2015] NZHC 1351

IN THE HIGH COURT OF NEW ZEALAND WANGANUI REGISTRY

CIV-2014-483-000031 [2015] NZHC 1351

BETWEEN
PAUL GRAHAM SERGENT

First Plaintiff

SERGENT HOLDINGS LIMITED (formerly known as KIWI HONEY LIMITED)

Second Plaintiff

PAUL GRAHAM SERGENT AND ARMSTRONG BARTON TRUSTEE COMPANY LIMITED being the trustees of P G FAMILY TRUST

Third Plaintiff

AND

ELLEN WHITE (ALSO KNOWN AS ELLEN WOOD)

First Defendant

HONEYWORX LIMITED Second Defendant

BEE NZ MANUKA LIMITED Third Defendant

Hearing: 10 June 2015

Counsel:

L C Rowe for Plaintiffs
L M Hansen for Defendants

Judgment:

15 June 2015

JUDGMENT OF COLLINS J

Summary of judgment

[1] The freezing order made on 18 August 2014, which was modified on

9 October 2014, is to remain in place.

SERGENT v WHITE (ALSO KNOWN AS WOOD) [2015] NZHC 1351 [15 June 2015]

Context

[2] On 31 July 2014, Mr Sergent, his company (Kiwi Honey) and family trust (the Sergent Family Trust) commenced proceedings against Ms Wood and two of her companies. The statement of claim sets out 11 causes of action, which allege against Ms Wood breaches of fiduciary duty, money had and received, conversion, deceit and debt. The total claimed in the statement of claim is $1,057,993.11.

[3] On 18 August 2014, a freezing order was put in place to prevent Ms Wood and her companies disposing of assets. That freezing order was modified on
9 October 2014 to enable Ms Wood and her companies to complete the sale of her honey business to a company called Queen and Country Ltd (Queen and Country). The settlement involves Queen and Country paying $330,000 on 8 August 2015 and
$308,000 on 8 August 2016.

[4] Ms Wood and her companies have now applied to have the freezing order set aside. Four grounds are relied upon:

(1) The plaintiffs do not have a good arguable case. (2) There is no risk of dissipation of assets.
(3) The freezing order was obtained without full and proper disclosure. (4) The overall justice does not justify continuation of the freezing order.

Background

[5] Ms Wood and Mr Sergent commenced a romantic relationship in about 2006. The duration of that relationship is disputed. What is not disputed is that Ms Wood was an employee of Kiwi Honey from 2006 to 2012, and that she and Mr Sergent engaged in a joint venture to purchase and develop rental properties at 14 Matai Street, Wanganui and 137 Karaka Street, Wanganui.

[6] It is also not disputed that during the time Ms Wood was employed by Kiwi Honey, she established a beehive and honey business. Ms Wood now lives at an undisclosed address in South Australia.

[7] The gravamen of the plaintiffs’ claims is that Ms Wood inveigled herself into a position of trust and took advantage of Mr Sergent’s naivety to misappropriate money and assets that belonged to the plaintiffs.

The pleadings

[8] The first cause of action is brought by Mr Sergent against Ms Wood. It alleges Ms Wood breached her fiduciary duty to Mr Sergent by making seven payments…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2015] NZHC 1351
Decision Date: 15 June 2015

CaseChat Overview and Summary

The case involves Paul Graham Sergent, Sergent Holdings Limited, and Armstrong Barton Trustee Company Limited as plaintiffs against Ellen White, Honeyworx Limited, and Bee NZ Manuka Limited as defendants. The plaintiffs are suing for breach of fiduciary duty, money had and received, conversion, deceit, and debt, with a total claim of $1,057,993.11. The primary issue is whether the freezing order, which was made on 18 August 2014 and modified on 9 October 2014, should be set aside. The defendants argue that the plaintiffs lack a good arguable case, there is no risk of asset dissipation, the order was obtained without full disclosure, and overall justice does not support the continuation of the freezing order.

The court held that the plaintiffs have a good arguable case based on the affidavits submitted, including those from a forensic accountant and former employees. The allegations of unsophisticated thefts, while disputed, are sufficiently plausible to meet the threshold for a good arguable case. The court rejected the argument that the fiduciary relationship was not genuine and noted that Ms. Wood’s relocation to South Australia and plans to leave New Zealand create a real risk of asset dissipation. The court also found that while there were some late disclosures, they did not justify setting aside the freezing order. The court concluded that the overall justice of the case supports maintaining the freezing order but granted leave for Ms. Wood to apply to vary the terms of the order to meet her obligations.

The final orders are that the freezing order remains in place, leave is granted to Ms. Wood to apply to vary the terms of the freezing order, and costs are reserved.

Orders