Amplexus Limited v Liao [2016] NZHC 924 (6 May 2016)

Last Updated: 16 May 2016

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2016-404-000813 [2016] NZHC 924

BETWEEN	AMPLEXUS LIMITED Applicant
AND	HO PING LIAO AND I FANG LEE LIAO Respondents

Hearing:	5 May 2016
Appearances:	S Raju for Applicant No appearance for Respondents
Judgment:	6 May 2016

_{JUDGMENT OF WYLIE J}

This judgment was delivered by Justice Wylie on 6 May 2016 at 4.30pm

Pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

_{Date:..............................}

Solicitors:

Aaron Kashyap, Auckland

AMPLEXUS LIMITED v LIAO [2016] NZHC 924 [6 May 2016]

Introduction

[1] The applicant, Amplexus Limited, has filed an originating application, without notice, seeking leave to issue a charging order against the interests of the respondents in a property at Paremoremo Road, Lucas Heights, North Shore, Auckland.

[2] The application was supported by an affidavit from a Mr Shah, who is a director of Amplexus.

[3] The application was filed on 20 April 2015. It was placed before Fogarty J as duty Judge. He declined to make an order, and invited the applicant to reconsider the application and to file additional supporting material if it wished to do so.

[4] In response, Mr Raju, as counsel for the applicant, filed submissions. He appeared before me today in support of the application.

Background

[5] Amplexus has commenced proceedings against the respondents in the District Court. It seeks to recover losses it says arise from the sale and purchase of a property in Walters Road, Takanini, Auckland. The Court has not been provided with a copy of the agreement for sale and purchase, but it does have a copy of the statement of claim filed in the District Court. The statement of claim alleges that the agreement provided for a purchase price of $4,000,000, that it was declared unconditional on 22 June 2015, and that settlement was supposed to occur on 22

December 2015.

[6] The statement of claim also asserts that:

(a) by letter dated 29 October 2015, Amplexus through its solicitors advised the respondents that they required the property to be tidy at settlement and that they would inspect it on 15 December 2015;

(b) on 25 November 2015 the respondents through their solicitors advised Amplexus that the property was vacant, that it had been tidied, and that overgrown grass had been dealt with;

(c) Amplexus disputed this, and requested that long grass, broken glass and rubbish on the property should be removed;

(d) the respondents then asserted that they were not obliged to mow the property, and that broken windows were being repaired as part of an insurance claim;

(e) on 14 December 2015 the respondents through their solicitor, advised that the property had been broken into and that a hot water cylinder had been stolen resulting in a flood throughout the house. The respondents asserted that their insurance company was arranging for the carpets to be dried and requested that the applicant’s pre-purchase inspection should be delayed. The respondents offered to compensate the applicant for the loss of the hot water cylinder by allowing a credit of $1,000 against the purchase price;

(f) Amplexus refused to accept that offer, and gave notice that it required the property to be reinstated to its May 2015 condition before it would settle. It estimated the cost to repair the damage at $200,000, and suggested that that sum be deducted from the purchase price;

(g) by letter dated 21 December 2015 the respondents advised that the damage to the property would be repaired by their insurance company and proposed that $20,000 be retained in their solicitor’s trust account pending completion of the works;

(h) this offer was not accepted by Amplexus. It proposed that $200,000 be held back and that the money should be held in its solicitor’s trust account;

(i) settlement did not occur;

(j) the respondents withdrew their offer, and advised that their insurance company had agreed to complete the works on the property. They demanded that Amplexus settle in full;

(k) eventually the respondents served a settlement notice on Amplexus.

Inter alia they claimed penalty interest;

(l) Amplexus disputed the validity of the settlement notice, and contended that the respondents had no right to charge penalty interest;

(m) further negotiations failed to resolve matters, but in the event the sale and purchase agreement was settled on 19 January 2016. Amplexus settled in full, including the penalty interest demanded by the respondents. Amplexus settled on the basis that it reserved its rights to recover all losses it alleged had occurred from the respondents.

[7] In the District Court, Amplexus is seeking to recover approximately $150,000 from the respondents.

[8] Amplexus endeavoured to serve the District Court proceedings on the respondents at an address in Wade Road, which was the respondents’ last known residential address. The process server however advised Amplexus that the respondents did not live at that property. Amplexus instructed an investigator to try and locate the respondents. The investigator reported to Amplexus that the respondents left New Zealand and returned to Taiwan in March 2016.

[9] Since that date, the Auckland District Court has granted an application made by Amplexus to dispense with personal service. The Court has ordered substituted service. It required that the statement of claim be served on the resident at the Paremoremo Road property and on the respondents’ last known solicitors, Knight Coldicutt.

The Application

[10] The application is made pursuant to r 17.41. It provides as follows:

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.

[11] By seeking a charging order, Amplexus is seeking to convert its in personam claim against the respondents into an in rem claim, secured by a charging order over a property in which the respondents have a joint interest, along with another individual.

[12] It does appear that the respondents have left New Zealand, but it is clear that the rule requires more than that. It requires that Amplexus prove that the respondents left New Zealand with intent to defeat their creditors.

[13] There is very little that the applicant can point to in this regard.

[14] Mr Ward referred me to the investigator’s report. It advised that a property purchased by the respondents in July 2007 was sold by them in July 2015, and that another property owned by the respondents which they purchased in August 2006 was sold by them in May 2015.

[15] I do not consider that the sale of either of these properties evidences any intention on behalf of the respondents to defeat their creditors. Both properties were sold before there was any dispute with Amplexus, and there is nothing to suggest that the respondents have any other potential customers. There is also nothing to suggest that the respondents have sought or are seeking to sell the property at Paremoremo Road, the subject of the application. Indeed the fact that they still own that property, jointly with another individual, with knowledge that Amplexus settled on a without

prejudice basis to its rights to sue, suggests that they have no intention to defeat their potential creditors.

[16] Amplexus has not attended to substituted service on the respondents as ordered by the District Court, because it did not wish them to be alerted to the fact of the present application. As a result there is nothing to suggest that the respondents are aware that they are being sued by Amplexus. At best from Amplexus’s perspective, the respondents are aware that there was a dispute at the time that Amplexus settled in full, and that Amplexus settled on a without prejudice basis. That does not prove that the respondents left New Zealand with an intent to defeat Amplexus’s claim against them.

[17] I am not satisfied that the jurisdictional threshold imposed by r 17.41 is met. There is nothing to suggest that the respondents left New Zealand with intent to defeat their creditors.

_{[18] The application is declined.}

Wylie J