Trident Trust Company (NZ) Limited v Bozo

[2018] NZHC 738

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-404-003060

[2018] NZHC 738

BETWEEN

TRIDENT TRUST COMPANY (NZ) LIMITED

Applicant

AND

LEOPOLDO EDUARDO CASTILLO BOZO

Respondent

CIV-2018-404-000304

BETWEEN

GILDA MARIA CALVO DE CASTILLO

Applicant

AND

TRIDENT TRUST COMPANY (NZ) LIMITED

First Respondent

MARIALE HOLDINGS LIMITED

Second Respondent

LEOPOLDO EDUARDO CASTILLO BOZO

Third Respondent

Hearing:

19 April 201 (by teleconference)

Counsel:

R Knight for Trident and Mariale Holdings Ltd G H J Brant for Mr Castillo

A E Simkiss for Mrs Castillo

Judgment:

19 April 2018

JUDGMENT OF VENNING J

on application to adjourn fixture

This judgment was delivered by me on 19 April 2018 at 4.30 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           Stace Hammond, Hamilton

Minter Ellison Rudd Watts, Auckland TGT Legal, Auckland

TRIDENT TRUST COMPANY (NZ) LIMITED v CASTILLO BOZO [2018] NZHC 738 [19 April 2018]

[1]        Trident Trust Company (NZ) Limited (Trident) seeks directions under s 66 of the Trustee Act 1956.1 Mrs Castillo seeks freezing orders.2 Both applications are scheduled for hearing on 3 May 2018.

[2]        Mr Castillo applies to vacate the fixture. Trident and Mrs Castillo oppose the application.

[3]        Mr Castillo lives in the Dominican Republic. Mrs Castillo lives in Florida in the United States of America. The parties were married in Venezuela. They are estranged and Mrs Castillo has taken proceedings in Florida.

[4]        Mr Castillo established the Chuni Azul Trust (CA Trust) with Trident as trustee. The beneficiaries were Mr Castillo, his wife and his children.

[5]        On 1 December 2017 Mr Castillo purported to direct Trident to apply the trust fund in part or in whole towards an investment project in Panama.

[6]        Trident was aware that on 14 November 2017 an injunction was issued in Mrs Castillo’s favour, out of the circuit court of the 15th Judicial Circuit in and for Palm Beach, Florida which prohibited Mr Castillo from, among other things, giving directions of any kind, either directly or indirectly through any agent in relation to dealing in bank or other accounts.

[7]Trident sought advice and declined to action the direction.

[8]        Mr Castillo’s response was to purport to exercise a power of revocation of the trust and to claim damages from Trident.

[9]        Trident has sought directions from the Court as to whether, in light of the injunction, Trident was obliged to follow Mr Castillo’s direction.

[10]      An early hearing was allocated for the application on 20 February 2018. Mrs Castillo applied to be joined as a party to the proceeding and noted her intention to

1      CIV-2017-404-3060.

2      CIV-2018-404-304.

apply for interim orders to be heard at the same time. The parties were not in a position to proceed to the hearing on 20 February 2018.

[11]      The following directions were made by Muir J by consent on 14 February 2018:

a)Mrs Castillo be joined as a party to the 3060 proceedings;

b)the hearing currently scheduled for 20 February 2018 be vacated; and

c)a new fixture of one day be allocated on a date no earlier than 16 April 2018 on the basis counsel agree:

i)Mrs Castillo’s application for interim orders will be filed before Friday, 16 February 2018;

ii)Mr Castillo will have five weeks to appear and file affidavit evidence;

iii)Mrs Castillo and Trident will have two weeks to file any affidavit evidence in reply.

d)counsel for Mr Castillo in this proceeding will accept service of Mrs Castillo’s application for interim orders;

e)the Court will hear Mrs Castillo’s application for interim orders in this proceeding at the one day fixture referred to above;

f)Trident will not take or cause to take any steps in regard to the funds that are currently held on trust which are the subject of this proceeding until the Court’s determination on this application for directions under s 66 of the Trustee Act 1956;

g)leave be reserved to all parties to apply on two working days’ notice to all other parties for any variation to the consent orders.

[12]An alternative fixture date of 3 May 2018 was allocated.

[13]      Mrs Castillo then filed her application for freezing orders. An issue arose with the Registry as to whether they were a separate proceeding or to be dealt with within the context of the existing 3060 proceeding. Ultimately a separate proceeding was issued (304) but by order of 2 March 2018 the Court directed the consolidation of both proceedings. The Court also confirmed that the directions applying to the timetable fixed on 14 February 2018 applied to the application filed by Mrs Castillo.

[14]      Trident and Mrs Castillo are ready to proceed to the fixture on 3 May 2018. Mr Castillo seeks to vacate the fixture. He seeks to vacate the fixture because he has not filed any affidavits in reply. The reason he gives for not doing so is because he and Mrs Castillo were engaged in settlement discussions in the United States of America.

[15]      The application is said to be under r 7.42. That rule applies to the adjournment of interlocutory hearings. The applications will effectively determine both matters before the Court finally, but nevertheless any application for adjournment requires consideration of the interests of the parties and will be based on the overall interests of justice.

[16]      In support of the adjournment Mr Brant argues it was reasonable for Mr Castillo to take the opportunity to endeavour to settle all issues. He submits he ought to be given the opportunity to file documents in opposition to the current applications. He asks the fixture be vacated and Mr Castillo be given the opportunity to file affidavits within a further six weeks.

[17]      While I accept it is reasonable to engage in settlement discussions it is not reasonable to fail to comply with orders of the Court particularly orders made by consent. Orders of the Court are not advisory. They are to be complied with. Mr Castillo did not seek to suspend or vary the timetable orders of the Court.

[18]      Mr Castillo chose to instruct his New Zealand lawyer not to prepare his evidence ahead of the 3 May hearing on the basis of the settlement discussions that

Mr and Mrs Castillo were engaged in Florida. But that position was never agreed to by Mrs Castillo. Email exchanges between counsel disclose that in his email of 19 March 2018 the lawyer for the husband said:

I am instructed that there is about to be a settlement reached … which will in effect settle the dispute here in New Zealand; … this settlement agreement will be completed either this week or next.

[19]      The solicitors for Mrs Castillo made it clear that they did not agree. Mrs Castillo’s lawyers wrote in response to the email of 19 March that they were instructed not to agree to a timetable variation. They reserved her position. They also noted that their instructions were not consistent with Mr Castillo’s counsel’s understanding of the state of the settlement.

[20]      The next communication was on 10 April when Mr Castillo’s solicitor sought an adjournment which Mrs Castillo’s solicitors opposed. The application for adjournment was then filed on 13 April 2018.

[21]      This is not a case where Mr Castillo was unable to comply with the timetable, rather he chose not to comply with it.

[22]      Mr Castillo chose to take a particular course in relation to this litigation. He was aware of the fixture and his obligations to prepare for it. He consented to timetable orders of the Court. He made a tactical decision not to comply with them. He did not seek to stay or vary them.

[23]      The evidence that could be provided in response to the applications will necessarily be limited in any event. As Mr Brant reasonably accepted Trident’s application will largely involve consideration of legal issues. Mrs Castillo’s application will require consideration of whether she has a good arguable claim in another Court and a sufficient prospect of a judgment which this Court will enforce. Trident and Mariale have assets which it could attach to. The application will also address whether there is a danger the judgment will be unsatisfied because assets may be removed from New Zealand.

[24]      Mr Brant also submitted that there is a danger of giving the argument that adjournments are a waste of Court resources undue prominence. But it is not so much a case of waste of Court resources nor a matter or reallocation of resources to other litigants. Fixtures are loaded but they are loaded on the basis of allocated work. Other litigants and cases cannot now be allocated to that date. If this case is adjourned it will be several months before it could be allocated an alternative fixture. This is against the basis that Mr Castillo has threatened damages against Trident and that Mr Castillo was aware throughout of Mrs Castillo’s position that she did not agree to any variation suspension of the timetable.

[25]      As Mr Castillo apparently intends to pursue the threat against Trident for breach of its duty as trustee it is in the interests of Trident and all parties that that issue is resolved sooner rather than later. Mrs Castillo’s position is protected by the order confirming Trident will not take steps in relation to the funds pending determination of its application, but as noted, given Mr Castillo’s threat, the Trident application should be clarified as soon as possible. If Trident is in breach it is an ongoing breach.

[26]      There is still time for Mr Castillo to file affidavit evidence in reply if he gives proper attention and priority to this matter.

[27]      For those reasons the application for adjournment is declined. The hearing will proceed on 3 May 2018. I make the following directions however:

a)Trident and Mrs Castillo’s solicitors are to file and serve submissions in support of their applications by 24 April 2018.

b)Mr Castillo may serve any further evidence (by email initially) by 25 April 2018.

c)Mr Castillo’s solicitors are to file and serve submissions in reply by 27 April 2018.

d)Any submissions Mrs Castillo wishes to file in support of the application by Trident and vice versa are to be filed and served by 27 April 2018.

e)In the event that evidence is filed by Mr Castillo I reserve leave for Trident and Mrs Castillo to address that evidence at the hearing (either in reply and/or by submission).

Costs

[28]      Mr Castillo is to pay Trident and Mrs Castillo’s costs of the application on a 2B basis together with disbursements as fixed by the Registrar.

Venning J