Stanley v McDonald - [2014] NZHC 369

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-5898 [2014] NZHC 369

BETWEEN LN & MJ STANLEY Applicants

ANDD P MCDONALD First Respondent

MCDONALD TEXTURES PROPERTIES LIMITED
Second Respondent
L MCDONALD Third Respondent

Hearing: 4 March 2014

Appearances: L Stanley in person (accompanied by Mr G Stevens and
Mr A Howard as McKenzie friends)
JPR Scott for the Second and Third Respondents

Judgment: 4 March 2014

JUDGMENT OF BROWN J

This judgment was delivered by me on 4 March 2014 at 4.30 pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors: Martelli McKegg, Auckland
Copy To: L Stanley, Auckland

STANLEY v MCDONALD [2014] NZHC 369 [4 March 2014]

Background

[1] On 22 September 2011 L N Stanley and M J Stanley as the trustees of the Lucy Stanley Family Trust filed an originating application without notice for an order under s 348 of the Property Law Act 2007 (“the Act”) vesting property in Mr D P McDonald and, pending the making of orders under s 348, a freezing order under r 32.2.

[2] On 22 September 2011 Allan J made a freezing order in favour of the trustees over any shares in McDonald Textures Properties Ltd held by either Mr D P McDonald or Ms L McDonald and over the assets of McDonald Textures Properties Ltd until further order of the court. The order was sealed on
23 September 2011. McDonald Textures Properties Ltd and Ms L McDonald were joined as second and third respondents respectively by the order of Asher J dated
29 September 2011.

[3] The assets subject to the freezing order comprised Mr D P McDonald’s

50 per cent shareholding in McDonald Textures Properties Ltd (the second respondent) and the property owned by that company at 4 Dallan Place, Rosedale, Auckland (contained in five separate certificates of title). Pursuant to the freezing order, caveats were lodged over the properties with unique identifiers 159546,
159547, 159548, 159549 and 159550 being the units A-E, 4 Dallan Place, Rosedale,

Auckland (“the caveats”).

[4] The substantive application was heard by Rodney Hansen J on 23 March

2012. In a judgment dated 30 March 2012 his Honour made an order vesting in Mr McDonald the 49 shares in McDonald Textures Properties Ltd that had been transferred by Mr McDonald to Ms McDonald for the purpose only of enabling the carrying out of any execution or similar process against Mr McDonald for the administration of a future bankruptcy of him or arrangement with his creditors.1
Leave was reserved to the parties to apply for further orders.

1 Stanley v McDonald [2012] NZHC 597 at [40].

The present application

[5] Mr McDonald has been made bankrupt and his shareholding in the second respondent has vested in the Official Assignee. Ms McDonald has now purchased Mr McDonald’s former shareholding from the Official Assignee.

[6] In those circumstances Ms McDonald and McDonald Textures Properties Ltd apply to the court for the following orders:

(a) Discharging the freezing order dated 22 September…

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.

Continue reading Stanley v McDonald

Details

AGLC: Stanley v McDonald [2014] NZHC 369
Case: [2014] NZHC 369
Decision Date: 4 March 2014

CaseChat Overview and Summary

The case of Stanley v McDonald involved an application by LN and MJ Stanley, trustees of the Lucy Stanley Family Trust, to the High Court of New Zealand to discharge a freezing order and remove caveats over properties owned by McDonald Textures Properties Ltd. The respondents, DP McDonald, McDonald Textures Properties Ltd, and L McDonald, sought to have the freezing order discharged and the caveats removed, arguing that there was no longer a need for them as the trustees' rights were as a judgment creditor of DP McDonald, who had been declared bankrupt. The primary legal issue for the Court was whether the freezing order should be discharged, given the change in circumstances since it was made, and whether the transfer of shares by the Official Assignee to L McDonald constituted a breach of the freezing order. The Court held that the freezing order was now spent as the substantive application had been determined, and DP McDonald was now bankrupt with his assets vested in the Official Assignee. The Court also held that if the transfer of shares by the Official Assignee was a breach of the freezing order, it sanctioned the transfer. The Court ordered the freezing order be discharged and the caveats removed, and sanctioned the transfer of shares by the Official Assignee to L McDonald. The Court also directed that no documents listing non-joined parties as respondents be accepted for filing in the proceeding.

This case highlights the importance of considering the temporary nature of freezing orders and the need to adapt to changes in circumstances. The Court also emphasised the importance of following directions given by the Court and the need for parties to focus on the issues relevant to the hearing. The case also highlights the role of the Official Assignee in managing the assets of bankrupts and the need to balance the interests of creditors and bankrupts in such situations.

Orders