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A New Zealand court has handed down a judgment freezing assets in a Cook Islands trust, in a groundbreaking case.
Horticulture consultancy Primary Services NZ Ltd had sought the freezing order in the hope of reclaiming $850,000 (US$543,000) it is owed. Last night its lawyer said Cook Islands company Ora Fiduciary had tried to “evade the action” but the court had taken the remarkable step of freezing the foreign trust’s assets.
Justice Peter Churchman had already found it was “seriously arguable” that Auckland developer Andrew Fonagy was attempting to shift assets to a Cook Islands company in a bid to avoid paying his debts to the horticulture consultant Primary Services Ltd.
First the judge stopped Fonagy shifting more of his properties into the trust, which is managed by Puai Wichman’s Avarua-based company Ora Fiduciary.
Now he has frozen the assets that had already been put in trust, overruling Ora Fiduciary’s protestations. He also ordered Ora to pay $7000(US$4,447) in court costs.
Lawyer Jol Bates said his client Primary Services was pleased to now be able to pursue recovery of funds from Andrew Fonagy, secure in the knowledge that the assets he had “salted away” in trust were now frozen.
“This is a step the Courts do not take lightly, but the freezing order remedy is aimed at halting judgment proofing efforts in worthy cases,” Bates said.
“The case is remarkable because of Ora Trustee’s unsuccessful attempt to evade the action by protesting jurisdiction, and the Court being prepared to freeze the assets of a foreign trust, while creditor recovery action is pursued.”
Fonagy is an Auckland-based developer who headed plans for a $20 million (US$12 million) hotel in Christchurch.
SOURCE: COOK ISLANDS NEWS/PACNEWS
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