Cox v Coughlan [2015] NZHC 1014 (14 May 2015)

Last Updated: 25 May 2015

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-3083 [2015] NZHC 1014

BETWEEN	GARY DAVID COX , STEVE COWIE AND GARY DAVID SUTCLIFFE First Judgment Creditors GARY DAVID COX Second Judgment Creditor
AND	MICHAEL JOHN COUGHLAN AND ANNEMARIE ELIZABETH WILSON Judgment Debtors
AND	CONVEYANCING SHOP LAWYES LIMITED Third Party

On the papers
Counsel:	RO Parmenter for applicant judgment creditors
Judgment:	14 May 2015

_{JUDGMENT OF FAIRE J}

This judgment was delivered by me on 14 May 2015 at 11 am, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date...............

_{Solicitors: Daniel Overton & Goulding, Auckland}

Cox v Coughlan [2015] NZHC 1014 [14 May 2015]

[1] The judgment creditors apply by a without notice application for leave to issue charging orders before judgment in respect of two sums, namely $9,319.08 and

$89,909.30 in respect of land belonging to the judgment debtors described as:

(a) An estate in fee simple in all that parcel of land containing 610 square metres and being lot 551, Deposited Plan South Auckland 15661 and being the land in identifier SA13D/1350 (South Auckland Registry); and

(b) An estate in fee simple in all that parcel of land containing 732 square metres and being lot 77, Deposited Plan 75185 and being the land in identifier NZ30D/1046 (North Auckland Registry.

[2] The sum claimed relates to the unresolved quantum claim in respect of which a decree of specific performance made by the High Court and upheld by the Court of Appeal has been made. The specific performance decree has been settled. The remaining issues, which involve a claim for rental loss and penalty interest for late settlement, are still to be formally adjudicated upon by the court.

[3] This application is made in reliance on r 17.41 which provides:

17.41 Leave to issue charging order

Leave to issue a charging order before judgment may be granted only on proof that the liable party, with intent to defeat either his or her creditors or the entitled party or both,—

(a) is removing, concealing, or disposing of the liable party's property;

or

(b) is absent from or about to leave New Zealand.

[4] The rule has interpreted in a number of cases. In McKay v 314 Maunganui Road Ltd the court had to consider an application to review an Associate Judge’s decision which had declined leave to issue a charging order. ¹ Keane J described

_{what is required to obtain an order as follows:}²

¹ McKay v 314 Maunganui Road Ltd HC Auckland CIV-2007-404-7434

To obtain an order the claimant must show, obviously enough, that the party who controls the asset is about to do something that will defeat his or her claim. But that this will be the effect is not enough. Not every such disposal qualifies. The one who has the property must be proved to have a particular intent. Not just an intent to dispose of the property but an ‘intent to defeat’ the claim and to do so by ‘making away’ with the property. In short an intent to act illegitimately.

[5] I am therefore required to consider two aspects, namely evidence of disposal

and evidence of intention to defeat the judgment creditors’ claim.

[6] In considering both matters understandably there is no direct evidence. It is necessary to see if there is a foundation to draw an inference in respect of both matters. Guidance as to the methodology to be employed when considering whether it is appropriate to draw the necessary inference can be found in Caswell v Powell Duffryn Associated Collieries Ltd where Lord Wright said:³

Inference must be carefully distinguished from conjecture or speculation. There can be no inference unless there are objective facts from which to infer the other facts which it is sought to establish. In some cases the other facts can be inferred with as much practical certainty as if they had been actually observed. In other cases the inference does not go beyond reasonable probability. But if there are no positive proved facts from which the inference can be made, the method of inference fails and what is left is mere speculation or conjecture.

This passage was approved by the Court of Appeal in R v Kinghorn.⁴

[7] I now consider what evidence there is of a disposal. The judgment creditors’

solicitor received a letter from a solicitor acting for the judgment debtors on 12 May

2015. It asked for the amount to satisfy an earlier charging order that had been placed on the relevant titles. In addition, it sought an undertaking that the charging orders would be withdrawn on payment. The letter advised that payment would be made on Friday, 15 May 2015.

[8] The judgment creditors’ solicitor spoke with the judgment debtors’ solicitor by telephone and asked him when settlement was. He said “Friday”. The implication from that statement is that there was a sale of the properties which was to

_{be settled on Friday.}

³ Caswell v Powell Duffryn Associated Collieries Ltd [1940] AC 152 (HL) at 169–170.

[9] I am satisfied that it is proper to draw the inference that the sale of the two titles is to occur on Friday, having regard to the above facts.

[10] The next question relates to whether or not there is evidence of an intention to defeat the judgment creditors’ claim. The judgment debtors have been served with bankruptcy notices. Counsel advise that there has been non-compliance with the result that an act of bankruptcy occurred in respect of both judgment debtors on

28 and 29 April 2015 respectively. No attempt has been made to settle the outstanding claims. I have already recorded that I am satisfied that a sale of the properties is to be settled on 15 May 2015. All of that, in my view, justifies my drawing an inference that there is an intention to defeat the balance of the judgment creditors’ claim, which is yet to be resolved by judgment.

[11] Accordingly, I am satisfied that the jurisdictional requirements for the issue of a charging order are met in this case.

[12] Accordingly, I order in terms of the draft order submitted by counsel.

_{[13] I reserve the question of costs.}

JA Faire J