There were concerns that the respondents would mover their assets offshore to India
The High Court has granted a freezing order to prevent the dissipation of assets in a dispute involving alleged misrepresentations regarding the sale of a property.
In Hortus Limited v Ashlesha Holdings Limited [2023] NZHC 2851, Hortus Ltd. applied for a freezing order against Ashlesha Holdings Ltd. (AHL) and its directors and sole shareholders, Ashish and Nisha Sawant, to prevent the dissipation or removal of their assets from New Zealand.
The dispute stems from an alleged misrepresentation of domestic effluent and wastewater treatment arrangements on a property Hortus purchased from AHL. Hortus claimed that the wastewater system did not operate at the capacity represented by the respondents, leading to breaches of the discharge resource consent. Hortus contended that, because of the inadequate wastewater system, it had to remediate, upgrade, and remove contamination that the system caused. Hortus claimed costs of remediation and loss of profits.
Hortus expressed concern that the Sawants would move their assets offshore to India. Hortus alleged that the Sawants had put their house in Riverlands on the market but later took it off the market and transferred it into their daughter's name. The house was valued at $1.74 million with no mortgage and is now in their daughter's name. The Sawants also sold their Range Rover vehicle.
The High Court explained that a freezing order may be made pre-judgment if an applicant has a good arguable case, the respondents are in possession or control of assets to which orders may apply, and there is danger of dissipation or disposal of assets or their removal from New Zealand.
Furthermore, the court explained that concerning the danger of dissipation of assets, a "danger" has been consistently interpreted with the traditional "real risk test.' The applicant must provide evidence from which the court can infer a risk, but the evidence need not amount to certainty nor ground an inference of nefarious intent.
The court found a good arguable case in the circumstances, considering the terms of the contracts and discharge permit. The court also acknowledged the danger of dissipation of assets, citing the Sawants' expressed desire to change their lifestyle, invest in India, and dispose of assets such as their house and a Range Rover vehicle.
The court considered the ancillary orders, designed to elicit information about relevant assets, necessary to ensure the freezing order's effectiveness and proper policing. The court granted the freezing order without notice, emphasizing that serving notice could cause undue delay or prejudice and would be contrary to the interests of justice.
The freezing order is set to expire in 14 days unless extended by a court order. The matter is scheduled for a hearing of the freezing order application, with leave reserved for the respondents to apply to the court.
