Daily Freight (1994) Limited v Mosese [2014] NZHC 316 (27 February 2014)

Last Updated: 27 March 2014

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-003851 [2014] NZHC 316

BETWEEN DAILY FREIGHT (1994) LIMITED Plaintiff

AND SUSHILA DEVI MOSESE First Defendant

MATAGI MOSESE Second Defendant

Hearing: 27 February 2014

Appearances: P Davey for Plaintiff

E Telle for Defendants

Judgment: 27 February 2014

_{ORAL JUDGMENT OF VENNING J}

Solicitors: Howard-Smith & Co, Auckland

Neilsons Lawyers, Auckland

Copy to: P Davey, Auckland

DAILY FREIGHT (1994) LTD v MOSESE [2014] NZHC 316 [27 February 2014]

[1] On 16 September 2013 the Court made freezing and ancillary orders primarily affecting primarily the first defendant’s interest in various assets. The defendants both seek orders varying the freezing orders. They seek an increase in the current reasonable living expenses permitted under the terms of the freezing order to $5,065 per month. They also seek an order they be paid $2,500 for the months of December 2013 and February 2014, in total $5,000, being periods which the defendants say the plaintiff refused to allow payment to them. They also seek such other orders as may be just.

[2] That application was filed on 14 February 2014. There have been two significant developments since then. First, on 19 February the plaintiff obtained summary judgment against the first defendant in the sum of $4,449,967.90 plus interest on the sum of $1,199,967.90 being the difference between the sum for which judgment was entered and the amount that the plaintiff had received or anticipated receiving pursuant to settlements with third parties.

[3] The second significant development is that on 20 February Westpac issued a Property Law Act Notice to the first and second defendants in relation to their home at 6 Nelson Street, Otahuhu. The amount required to satisfy the Property Law Act Notice including costs is $14,871.41. It relates to three separate accounts:

(a) a first Choices Home Loan which is in default of the sum of $450.18;

(b) a second Choices Home Loan which is in default in the sum of

$2,944.46; and

(c) a third, a further account called up by Westpac in the name of Pan

Pacific Pictures Limited of $10,646.77.

The additional sum of $830.00 is the costs of the Property Law Act Notice.

[4] Following the entry of judgment the plaintiff has obtained an interim charging order over the funds held by the first defendant’s lawyers. The amount

charged is the $1,199,967.90. The sum held by the lawyers is, however, limited. The freezing orders are more extensive.

[5] The application to vary the charging orders is opposed by the plaintiff, but Mr Davey confirmed that in order to preserve the equity in the property owned by the first and second defendants he was instructed the plaintiff would agree to the release of sufficient moneys from the BT Westpac Retirement Plan account to meet the Property Law Act Notice demand, namely $14,871.41, on condition that such moneys be paid directly to the plaintiff’s solicitors on their undertaking to account to and pay that sum directly to Westpac to satisfy the Property Law Act Notice. The plaintiff maintains its opposition to any other variation to the freezing order.

[6] In support of the application to vary the freezing order Mr Telle has noted the following grounds:

(a) There has never been a full hearing on what may be the reasonable living expenses that ought to be payable to the defendants.

(b) The defendants are currently only entitled to $2,500 per month for reasonable living expenses, but even two of those payments have been held back by the plaintiff.

(c) The defendants’ monthly payments for mortgage and interest

payments alone amount to about $2,150.

(d) The defendants’ reasonable living expenses are in the region of

$5,065.

(e) The earlier sum was fixed subject to clarification of the defendants’ living expenses and further information being provided by the defendants, which the defendants say they have now provided. The first defendant has sworn a number of affidavits in support of her position as has the second defendant.

[7] The plaintiff maintains its opposition to any variation to the orders save, as noted, for release of funds for the purposes of meeting the Westpac Property Law Act Notice. It does so relying on the judgment it has now obtained against the first defendant.

[8] The plaintiff takes the view that the defendants have already received additional payments of $3,235.70 from the sale of shares on 10 September 2013 and

$1,290 on 2 October 2013 from bonus bonds, neither of which were disclosed in the

first defendant’s initial sworn affidavit of assets and liability.

[9] The plaintiff also considers that in breach of the freezing orders the first defendant traded in motor vehicles that were subject to freezing orders and notes that two other vehicles have been obtained. It considers there was a trade in benefit to that. I observe here the defendants’ response is that there was no trade in benefit to them and they refer to a letter from the dealer confirming that.

[10] The plaintiff also considers the first defendant has received further income from the sale of some business assets, particularly assets relating to a hairdressing business and those receipts were not fully disclosed. It also does not consider the defendants have satisfied their obligations to provide confirmation of the benefit received from Work and Income. The plaintiffs also make the observation that prior to this matter arising the first defendant received no more than $3,800 a month for her salary in any event.

[11] The first issue is whether or not the orders sought, namely the variation to the freezing orders can be made post judgment. I note that in The Glover Trust Limited v Glover Trust Corporation¹ Duffy J considered such orders could be made. There is, however, potentially a difference between fresh orders after judgment, and the extension or variation of existing freezing orders, particularly where the judgment creditor has a charging order. Clearly freezing orders can be sought after judgment although it is rare for such orders to be sought. I note in Civil Remedies in New

_Zealand:²

¹ _{The Glover Trust Limited v Glover Trust Corporation [2013] NZHC 2056.}

² Peter Blanchard (ed) Civil Remedies in New Zealand (2^nd ed, Brookers, Wellington 2011) at 322.

It will be rare for a freezing order to be sought or required after judgment: the judgment creditor has the right under r 17.42 of the High Court Rules to issue a charging order without further leave and has access to all the other means of enforcement provided by the Rules. However, there are instances historically where such orders have been made and equity has long been willing to lend injunction as a remedy, against either the judgment debtor or third parties, to prevent post-judgment asset dissipation. As Phillips LJ noted in Camdex International Ltd v Bank of Zambia (No 2):³

“A Mareva [injunction] can properly be granted after judgment in circumstances, which must be rare, where there is necessary to prevent the removal or dissipation of an asset before the process of execution can realise the value of the asset for the benefit of the judgment creditor.”

Rule 32.51(1)(a) now expressly authorises the grant of a freezing order

where “judgment has been given in favour of an applicant”.

[12] I am satisfied that there is jurisdiction for the Court to vary and revisit the issue of allowances to be made in terms of the freezing orders where the freezing orders remain in force even after judgment. Obviously the position would be different if, in place of the freezing orders, the plaintiff obtained charging orders over all the previously frozen assets. In such circumstances the freezing orders could be released or discharged and there would be no issue arising in relation to them nor any need for a variation hearing. Any practical issues could be dealt with as part of the terms of any stay of judgment pending appeal.

[13] However, even though I accept there is jurisdiction to vary the terms of the freezing orders while the orders remain in force it is particularly relevant in my view that there has been a judgment obtained against the first defendant for a substantial sum and that sum exceeds the value of the accounts and other assets secured by the freezing order.

[14] I note Mr Telle’s submission that the first defendant intends to appeal the judgment and may seek some form of stay of execution. As noted, those matters must be for another day.

[15] I also acknowledge the comments of Allan J in An Ying International

_{Financial Limited and An Ying (Wellington) Limited v Qiu Yun Li and Hong Lai}

³ Camdex International Ltd v Bank of Zambia (No 2) [1997] 1 All ER 728 at 735.

Zhao & Anor⁴ concerning the approach to expenses and allowances in relation to the freezing orders but as noted, I consider that the entry of the judgment is a particularly relevant factor to the determination of the current application.

[16] I have reviewed the affidavit material before the Court. Even accepting the defendant’s evidence that they did not receive any particular benefit from the trade in of the cars and that as a result of the plaintiff’s instructions moneys have effectively not been paid out for two months that must be balanced against the fact that the first defendant has not been entirely candid throughout. She has not fully disclosed her assets and has received some benefits from the sale of assets which she did not disclose at the outset.

[17] More importantly, given that the plaintiff has agreed to release sufficient moneys to enable the payment of the $14,871.41 claimed in the Property Law Act Notice, the defendants will receive a substantial benefit which they would otherwise not have received. That is because, as disclosed in Ms Mosese’s first declaration as to assets, she noted the bank account in relation to the film company, Pan Pacific Pictures Limited, was overdrawn as at that date to the extent of $9,881.01. As noted the Property Law Act Notice includes a demand for $10,646.77 relating to that account. By the plaintiff ’s agreement to release funds to meet the Property Law Act Notice the defendants are receiving a substantial benefit in relation to a pre-existing debt which the plaintiff has had no benefit from. I regard that as a sufficient set-off or contra to the first defendant’s complaint that they have not received $5,000 they were entitled to.

[18] Given that consideration and given that the judgment has now been entered against the first defendant as noted I am not minded to make any other adjustment to the existing freezing orders for the future nor to make any retrospective orders. Both defendants will effectively benefit retrospectively from the release of funds to meet the Property Law Act Notice.

[19] The only other remaining issue is Mr Telle’s request that funds be released from the same BT account for the purposes of legal fees. Again it is recognised and accepted that legal fees relating to the freezing order itself and, (in part) to the proceedings may be appropriate.⁵ In the present case I make it clear that while I am prepared to direct and authorise the release of funds from that account to meet the reasonable legal expenses of Mr Telle in relation to this application to vary the

freezing orders I emphasise that there is to be no allowance or claim made for the purposes of any appeal or advice in relation to the appeal. I regard that as quite a separate issue.

Result

[20] Save for:

(a) confirmation that funds to the sum of $14,871.41 from the BT Fund Westpac Retirement Plan account may be paid to the defendants’ solicitors on provision of a satisfactory undertaking from the defendants’ solicitors that those funds will be paid directly to Westpac to meet and satisfy the Property Law Act Notice; and

(b) an order varying the freezing order to approve the payment of further

reasonable legal fees of Mr Telle’s firm in relation to this application. the application for variation is dismissed.

[21] Given the outcome I leave costs to lie where they fall on this application

_itself.

Venning J