The case involved fraudulent misappropriations by a Hong Kong broker
In a recent ruling, the High Court has concluded a case involving an international asset recovery dispute, awarding damages to the plaintiff.
The judgment in Huljich v McCaffrey [2024] NZHC 361 follows an application for formal proof under Rule 15.9 of the High Court Rules 2016 due to the defendant’s failure to defend the claim. The plaintiff initiated the proceedings to recover assets or compensation, alleging that the defendant obtained assets through recovery efforts related to fraudulent misappropriations by a Hong Kong broker. The defendant, a UK citizen residing in Dubai, was served in Nairobi, Kenya, with the assets in question believed to be in England.
The court considered three causes of action—a contractual claim based on an assignment agreement, conversion or detinue, and a constructive trust alleging a common intention constructive trust based on expanded principles from existing jurisprudence.
The case background revealed that the plaintiff advanced US$ 1.5 million for a long-term investment in 1999, which was subsequently lost due to fraud by a Hong Kong broker. There were efforts to recover the misappropriated assets and the plaintiff engaged TASK International Ltd, where the defendant was employed, to assist in the recovery. Eventually, the defendant, working in a personal capacity, successfully recovered several assets purportedly on behalf of the plaintiff and other investors.
Disputes arose when the defendant did not transfer the recovered assets as agreed in the assignment agreement. Despite multiple communications and a visit to a storage facility in England, the assets were not transferred, leading to legal proceedings.
The court's analysis included jurisdictional and conflict of laws considerations, assessing personal and subject-matter jurisdiction. It found sufficient grounds under Rule 6.27 of the High Court Rules for assuming jurisdiction based on the contractual nature of the claim and the agreement's governance under New Zealand law.
Ultimately, the High Court awarded the plaintiff $12,892,040 in damages, plus interest and costs, based on the contractual claim. It concluded that limitation issues did not bar the claim and dismissed the conversion or detinue and constructive trust claims based on the facts presented and the election for damages rather than specific performance.
