SOVEREIGN SERVICES LTD v CATTERALL [2014] NZHC 279

SOVEREIGN SERVICES LTD v CATTERALL [2014] NZHC 279 [25 February 2014]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2014-404-000378[2014] NZHC 279UNDER Part 12 of the High Court RulesIN THE MATTER of an application for summary judgmentBETWEEN SOVEREIGN SERVICES LIMITEDPlaintiffAND MECHELLE TE AWHINA CATTERALLDefendantHearing: On the papersJudgment: 25 February 2014JUDGMENT OF COURTNEY JThis judgment was delivered by Justice Courtneyon 25 February 2014 at 4.30 pmpursuant to R 11.5 of the High Court RulesRegistrar / Deputy RegistrarDateIntroduction[1] On 24 February 2014 the plaintiff, Sovereign Services Ltd, applied urgently and without notice for freezing orders affecting assets held by the defendant, Mechelle Catterall, and ancillary orders. The purpose of the orders is to restrain Ms Catterall from dealing with her assets (subject to an allowance for ordinary living expenses and legal expenses) pending the determination of proceedings it has commences against her.[2] The prerequisites for such orders are well settled:1(a) There must be a good arguable case against the defendant;(b) The defendant must hold assets within the jurisdiction;(c) There must be grounds for believing there is a risk that assets within the jurisdiction will dissipate;(d) The plaintiff must give an undertaking as to damages;(e) The plaintiff must make material disclosure of all facts and possible defences;(f) Assets held by a third party may be the subject of a Mareva injunction if a causal link can be established.[3] I made freezing orders immediately with reasons to follow. In this judgment I give those reasons and also make ancillary orders as sought.The basis for the application[4] The defendant, Mechelle Catterall, has been employed as executive personalassistant to Sovereign's chief executive officer since 2006. She is currently on parental leave. After going on leave she contacted Sovereign's accounts department1 Wilsons (NZ) Portland Cement Ltd v Gatx-Fuller Australasia Pty Ltd [1985] 2 NZLR 11 (CA).several times regarding invoices that she claimed she had forgotten to process. This and the discovery of an invoice with an identical narration to one Ms Catterall hadpresented for payment to "J R Lester Consultancy" raised suspicions. Sovereign'smanager of fraud and investigations, Ross Anderson, began to investigate. He has sworn an affidavit regarding the relevant events.[5] Mr Anderson's investigations have identified a large number of fictitiousinvoices and unauthorised payments totalling $659,896.74. The invoices were apparently rendered by J R Lester Consultancy, Helen O'Toole ExecutiveProfessional Services and J Bernardo Professional Services. The invoices did not have GST numbers and Mr Anderson has been unable to locate any businesses with these names.[6] The invoices were presented by Ms Catterall to the accounts department for urgent payment. Payments were made into bank accounts in the name of JodieRochelle Lester, H P D O'Toole and J Bernardo. Mr Anderson's enquiries indicate that those account holders remitted about two-thirds of the payments made to thecredit of Ms Catterall's personal ASB bank account.[7] Mr Anderson has interviewed Ms Catterall about the invoices. He annexed a copy of his handwritten notes of that interview, which record Ms Catterall'sacknowledgement that she had created and claimed payment on the false invoices.[8] Sovereign has sued Ms Catterall for breach of fiduciary duty and money hadand received. It is seeking summary judgment. However, Mr Anderson's enquiriesindicate that there are funds of about $30,000 in the joint account that Ms Catterall holds with her husband, William Anthony Catterall, and $3,000 in her personal account. She and her husband jointly own property in Glenfield which is mortgaged. Sovereign is concerned that Ms Catterall will take steps to dispose of her assets or the proceeds of the fraud. This suspicion is heightened by the fact that during the interview with Mr Anderson, Ms Catterall was not completely frank and extent of the frauds (by comparison to what Mr Anderson himself knew from his investigations).The application[9] The circumstances that I have described make it plain that there is a strong, arguable case for breach of fiduciary and money had and received by Ms Catterall. I am also satisfied that there is a real risk in this case of assets being disposed of ordissipated. This is particularly true of the cash held in the Catteralls' joint bankaccount. The frauds that Mr Anderson describes and which Ms Catterall apparently acknowledges at her interview appear to have been well thought out and carried out over a sustained period of about three years. There is no reason to think that, confronted with the prospect of legal proceedings to recover the money stolen, Ms Catterall will be cooperative. She has acknowledged her dishonesty but, on MrAnderson's evidence, has not been completely frank.[10] The circumstances that Ms Catterall described in her interview as having given rise to the frauds are unrelated to Sovereign and would not constitute any defence to the claim Sovereign is bringing against her.[11] Sovereign has provided an undertaking as to damages that is satisfactory.Orders[12] I made draft orders yesterday under urgency in the form sought at paragraph 4 of the draft orders filed.[13] Ancillary orders were sought but not made yesterday. Having reviewed the file again today I now make those further orders, being the orders in the form set out at paragraphs 5, 9, 13, 14, 15, 16, 17 and 18:5. That a freezing order be granted, pending further order of the Court, restraining any party from removing any of the assets listed below (insofar as their aggregate value equals or is less than $659,896.74) from New Zealand or from any place outside New Zealand, or from otherwise disposing of, or dealing with, or diminishing the value of, those assets:(a) funds held in Kiwibank Limited account number 38-0008- 0246989-00 and any other suffix of that account number;(b) funds held in Kiwibank Limited account number 38-9002- 0318988-02 and any other suffix of that account number;(c) funds held in Westpac New Zealand Limited account number 03-1390-0000931-00 and any other suffix of that account number.13. The defendant is ordered to file an affidavit and serve the same on the plaintiff within three working days of service of this order, disclosing the existence, nature, value and whereabouts of her assets, including, but not limited to:(a) particulars of all bank accounts and other accounts held inthe defendant's name, and the balances of those accounts;(b) originals or copies of all bank statements in the defendant'sname;(c) a detailed description of where all the monies taken from the plaintiff have been transferred, paid out, or spent, including details of the names of any companies, persons or accounts to whom transfers or payments have been made, when such transfers or payments were made, and where those funds transferred are presently; and(d) particulars of all other assets either real or personal in which the defendant has a beneficial or legal interest, and all assets over which the defendant has power of disposition or control.14. William Anthony Catterall, the defendant's husband, is ordered tofiled an affidavit and serve the same on the plaintiff within five working days of service of this order, disclosing to the best of his information and belief, the existence, nature, value, and whereaboutsof the defendant's assets, including, but not limited to:(a) particulars of all bank accounts and other accounts held in thedefendant's name, including any jointly held accounts, and the balances of those accounts;(b) originals or copies of all bank statements in his and thedefendant's name;(c) a detailed description of where all the monies taken from the plaintiff have been transferred, paid out, or spent, including details of the names of any companies, persons, or accounts to whom transfers or payments have been made, when such transfers or payments were made, and where those funds transferred are presently; and(d) particulars of all other assets either real or personal in which he and the defendant has a beneficial or legal interest, and all assets over which he and the defendant has power of disposition or control.15. ANZ Bank New Zealand Limited, ASB Bank Limited, Bank of New Zealand Limited, Kiwibank Limited, the Hongkong and Shanghai Bank Corporation Limited, Westpac New Zealand Limited, and any other bank or financial institution are required to disclose within five working days of service of this order all:(a) bank account statements, files, and information held by them in any way relating to the defendant; and(b) bank account statements, files, and information held by them in any way relating to:(i) Kiwibank Limited account number 38-9008- 0245989-00 and any other suffix of that account number;(ii) Jody Rochelle Lester;(iii) Kiwibank Limited account number 38-9002- 0318988-02 and any other suffix of that account number;(iv) Helen O'Toole;(v) Westpac New Zealand Limited account number 03- 1390-0000931-00 and any other suffix of that account number;(v) Jerick Bernardo.16. That the plaintiff pay the reasonable costs and disbursements of the banks and financial institutions in providing the information set out at paragraph 14 above;17. That costs be reserved.18. That leave be reserved to all parties and actually person affected by these orders to apply further to the Court on 24 hours notice to vary or discharge these orders.____________________P Courtney J