TY Investment Limited v YS Auto Trading Limited

[2019] NZHC 3041

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-2560

[2019] NZHC 3041

BETWEEN

TY INVESTMENT LIMITED

Applicant

AND

YS AUTO TRADING LIMITED

First Respondent

VIPOOL AKHILENDRA SINGH

Second Respondent

Hearing:	On the papers
Appearances:	H L R McDermott for the applicant
Judgment:	21 November 2019

JUDGMENT OF PALMER J

The judgment was delivered by me on Thursday 21 November 2019 at 11.00am.

Pursuant to Rule 11.5 of the High Court Rules

……………………………… Registrar/Deputy Registrar

Counsel/Solicitors:
Righteous Law, Auckland

TY INVESTMENT LIMITED v YS AUTO TRADING LIMITED [2019] NZHC 3041 [21 November 2019]

Context and application

[1]    The applicant, TY Investment Ltd (TY), seeks a without notice freezing order restraining the first and second respondents, YS Auto Trading Ltd (YS) and Mr Vipool Singh, from removing from New Zealand the assets in their bank accounts and certain vehicle stock in their possession, or disposing of, dealing with or diminishing them in value. The evidence of Mr Tianyu Jiang, for TY, is:

(a)Mr Jiang is the director of TY which trades as Smart Motors on Great North Road, Glen Eden, Auckland. Mr Singh, the second respondent, is the sole director and shareholder of the first respondent, YS. They became business associates.

(b)In October 2017, Mr Jiang planned to return  to  China and  offered Mr Singh a licence to operate his business. They executed a licence agreement on 1 March 2018 with TY as licensor, YS as licensee and Mr Singh as guarantor. Mr Jiang left New Zealand in late March 2018. Mr Singh was granted access rights to TY’s bank account and agreed to ensure it had sufficient funds for Mr Jiang to withdraw a monthly management fee.

(c)From around June 2018, the respondents ceased to deposit funds from the sale of vehicles into TY’s bank account and defaulted on payment of the monthly management fee in July, November 2018 and from December 2018 onwards.

(d)Following Mr Jiang’s return to New Zealand in June 2018, Mr Singh eventually said he wanted to terminate the agreement over the management fee. Mr Jiang said he could not do so in the first year of the agreement. Mr Singh continued to operate the business.

(e)In October 2019, on Mr Jiang’s return to New Zealand again, Mr Singh said he could not pay the overdue management fees but he could sell the stock, which he said was worth around $270,000, and repay Mr Jiang. The two negotiated a termination agreement but Mr Singh

refused to sign it. Mr Jiang says the original stock is still being sold by Mr Singh.

Should I make a freezing order?

[2]    To make a freezing order, I must be satisfied the applicant has a good arguable case for substantive relief, there are assets to which the order can apply and there is a real risk of their dissipation.1 I must weigh the overall interests of justice. A good arguable case requires “the allegations in the proposed claim are capable of tenable argument and are supported by sufficient evidence, bearing in mind the early stage at which the application is likely to be brought”.2

[3]    Ms McDermott, for TY, submits YS is in breach of the licence agreement, YS and Mr Singh are in control of the funds, Mr Jiang does not know where they are, and Mr Singh has been actively avoiding Mr Jiang and refusing to remedy the respondents’ breaches or negotiate with Mr Jiang. She files the application without notice to the respondents on the basis of the urgent need to have the matter resolved before the respondents can further disperse the funds and assets of Mr Jiang.

[4]    I am satisfied the applicant has a good arguable case for substantive relief, on the basis of the evidence adduced to date, and that there are assets to which the order can apply. But there is insufficient evidence there is a real risk of dissipation of the assets. There is no evidence the second respondent will flee the jurisdiction, that the respondents will send funds overseas or that they cannot pay a judgment debt if required to do so.

[5]    I decline to grant the freezing order without notice to the respondents. The applicant may wish to apply again on notice, or it may not. In any case, I direct that, once evidence has been filed that the proceeding has been served on the respondents, it be called in a duty list.

Palmer J

1      Shaw v Narain [1992] 2 NZLR 544 (CA) at 548; High Court Rules 2016, r 32.5(4).

2      Hannay v Mount [2011] NZCA 530 at [22].