Eliahu v Eliahu [2022] NZHC 2872 (3 November 2022)

Last Updated: 17 December 2022

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-2088 [2022] NZHC 2872

BETWEEN	YARON ELIAHU First Plaintiff LIA ELIZABETH ELIAHU, LEO DANIEL ELIAHU AND LILLY RON ELIAHU Second Plaintiffs
AND	DANIEL ELIAHU First Defendant
	Continued over

Hearing:	3 October 2022
Appearances:	C R Andrews and M C Staines for First Plaintiff K F Gould for First Defendant
Judgment:	3 November 2022

JUDGMENT OF PETERS J

This judgment was delivered by Justice Peters on 3 November 2022 at 3.30 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date: ...................................

Solicitors: McVeagh Fleming, Auckland

DMG Solicitors, Auckland

Counsel: G P Blanchard KC, Auckland

K F Gould, Auckland

ELIAHU v ELIAHU [2022] NZHC 2872 [3 November 2022]

AND	PITA BREAD LIMITED Second Defendant PITA HOLDINGS LIMITED Third Defendant DANIEL ELIAHU AND DMG TRUSTEES (ELIAHU) LIMITED AS TRUSTEES OF THE PITA PROPERTY TRUST Fourth Defendants

• [1] This judgment concerns an application by Mr Yaron Eliahu, the first plaintiff, seeking relief in respect of an order that Gault J made against the first defendant, Mr Daniel Eliahu, on 15 March 2022 (“Gault J’s order”).¹ Given that the application involves only the first plaintiff and first defendant, I shall refer to them as plaintiff and defendant.

• [2] By his application, the plaintiff seeks a declaration that the defendant has acted in contempt of Court by breaching Gault J’s order, and other relief consequential thereon. The application is made pursuant to s 16 of the Contempt of Court Act 2019 (“the Act”).

• [3] Gault J’s order provides:²

Pending the on-notice hearing on 12 April 2022, an order restraining the first defendant from authorising or making any payments from the bank accounts of Pita Holdings Ltd or Pita Bread Ltd to himself or to any other person except for a monthly salary of $25,000 and his ordinary expenses (principally his life insurance payment, payment to his ex-wife and his credit card expenses).

• [4] The plaintiff alleges that the defendant breached Gault J’s order by transferring funds from the accounts of Pita Bread Ltd (“PBL”) between 29 April and 3 May 2022, and that the payments did not fall within the exceptions permitted by the order. The funds so transferred totalled $610,000. Of this, $230,000 was repaid to PBL, and another payment of $150,000 was reversed, leaving an outstanding balance of

$230,000.

• [5] The defendant opposes the application. He denies making the payments, and submits that they were made by third party “hackers” who gained remote access to his computer as part of a “scam”.

Background

• [6] The defendant incorporated PBL and Pita Holdings Ltd (“PHL”) in 1989. At all material times since 2009, he and the plaintiff have been the companies’ directors.

¹ Eliahu v Eliahu HC Auckland CIV-2021-404-2088, 15 March 2022 (Minute No 3).

² Above n 1, at [4](a).

• [7] PBL is a wholly owned subsidiary of PHL. The plaintiff and defendant hold 9,998 of the shares in PHL jointly, as trustees of the Pita Business Trust. Each also holds one share personally.

• [8] In recent years, the plaintiff and defendant have been in dispute regarding the operations of PBL and PHL, and the affairs of three associated trusts. That dispute is now before the Court, the plaintiff having commenced this proceeding on 29 October 2021.

• [9] Shortly thereafter, the plaintiff filed an application for an interim injunction to restrain the defendant from authorising or making any payments from the companies’ accounts to himself or anyone else, or incurring any expense on behalf of the companies, other than in accordance with the terms of a directors’ resolution referred to in the application. This application by the plaintiff was allocated a hearing date of 12 April 2022.

• [10] In advance of that hearing, on 14 March 2022, the plaintiff sought an “interim interim” injunction seeking relief in the same terms as the application for the interim injunction. This application — for interim interim relief — came before Gault J on 15 March 2022 in his capacity as Duty Judge. Having heard from counsel in a telephone conference that day, the Judge issued a minute recording his order, which was made by consent.

• [11] Thereafter, as scheduled, the application for the interim injunction came before Brewer J on 12 April 2022. This is the “on-notice” hearing referred to at the beginning of Gault J’s order.

• [12] Brewer J issued his judgment on 30 May 2022 granting, amongst other things, the interim injunction sought by the plaintiff.³

³ Eliahu v Eliahu [2022] NZHC 1226.

Contempt of Court Act 2019, s 16

• [13] Section 16 of the Act provides for the enforcement of a court order or undertaking. Certain criteria must be met or proved before the Court has power to make an order against a person in default. In the usual course of events, it would be necessary for me to address the individual criteria and determine whether or not they were established and, if so, what order, if any, I should make against the defendant to reflect the breach.

• [14] However, there is an immediate difficulty with the plaintiff’s application because of the opening words of Gault J’s order, that is “Pending the on-notice hearing on 12 April 2022”. I consider that “Pending” in this context means “Until”, that is the opening words are to the effect “Until the on-notice hearing on 12 April 2022 ...”.

• [15] This led me to enquire of counsel (after the hearing before me) whether, at the hearing before him, Brewer J had extended or continued Gault J’s order so that it remained in effect during the period in dispute, namely between 29 April and 2 May 2022.

• [16] Counsel for the defendant advised that Brewer J had not done so. Counsel for the plaintiff on the present application advised likewise in their memorandum of 28 October 2022, they having made enquiries of counsel who had appeared for the plaintiff before Brewer J.

• [17] That said, in their memorandum, counsel for the plaintiff submitted that no such order was required from Brewer J. This is because, construed in its context, Gault J’s order was intended to and did restrain the defendant pending the “outcome” of the hearing on 12 April 2022.

• [18] Counsel’s reasons were these: before Gault J, the plaintiff had sought an order until the application for interim injunction was determined; that, in the telephone conference to which I have referred, there was no discussion that the Judge might make an order on lesser terms than those sought; and, consistently with that, neither party at the hearing before me contended that Gault J’s order was not in effect at the time of the withdrawals referred to in [4] above. Counsel also referred to the

acknowledgment by the defendant at the hearing before me that he understood the order to be binding on him during the relevant period. Counsel contended that this construction of Gault J’s order afforded more effectual and appropriate relief than would a literal interpretation.

Discussion

• [19] I am unable to construe the opening words of Gault J’s order as meaning anything but “Until the on-notice hearing”. Not only is this literally correct, it is also not uncommon for an order to be made in these terms. Doing so leaves it open to the judge who is hearing the substantive application to continue the order if they see fit. The interim interim order is made to preserve the position pending a fuller hearing of the merits. The matter is then in the hands of the judge presiding at that hearing.

• [20] Accordingly, I do not accept the plaintiff’s submissions that the order should be construed as proposed in [18] above.

• [21] Even if I am wrong in that, one requirement of s 16 is that I find it proved beyond reasonable doubt that the Court order (or undertaking) to be enforced has been made in “clear and unambiguous terms and is clearly binding on the person”, in this case the defendant.⁴

• [22] Whatever the defendant may have acknowledged in evidence, I am unable to make that finding in respect of the period between 29 April and 30 May 2022. It is the Court that has to be satisfied of these matters, not the party against whom the order is sought to be enforced.

• [23] To conclude, Gault J’s order not having been continued by Brewer J at the hearing on 12 April 2022, I consider it must be taken to have lapsed on, at or immediately after that hearing. This in turn means that order was not binding on the defendant between 29 April and 2 May 2022, when the defendant is alleged to have been in breach. The plaintiff’s application fails accordingly.

⁴ Contempt of Court Act 2019, s 16(3)(b)(i).

Conclusion

• [24] I dismiss the plaintiff’s application pursuant to s 16 of the Contempt of Court Act 2019.

• [25] The (first) plaintiff must pay the (first) defendant’s costs on a 2B basis plus disbursements.

Peters J