IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE	
CIV 2018-404-001379
[2020] NZHC 2086	

BETWEEN	PACIFIC PREMIER BANK
Plaintiff	
AND	ASIATRUST NEW ZEALAND LIMITED
First Defendant	
AND	ASIACITI TRUST NEW ZEALAND LIMITED
Second Defendant	
AND	SONIA JOLENE DALRYMPLE aka SONIA CORTEZ
Third Defendant	
AND	CYNTHIA DALRYMPLE aka CINDY DALRYMPLE
Fourth Defendant	
AND	ASIATRUST LIMITED
Fifth Defendant	
AND	SWISSTRUST INTERNATIONAL
Sixth Defendant	

Hearing:	21 February and 25 June 2020	
Appearances:	R J Hooker for the Plaintiff
B A Keown for the First and Second Defendants (appearance only in relation to costs)	
Judgment:	18 August 2020	

JUDGMENT OF VAN BOHEMEN J

This judgment was delivered by me on 18 August 2020 at 4.00pm
Pursuant to Rule 11.5 of the High Court Rules

…………………………
Registrar/Deputy Registrar

PACIFIC PREMIER BANK v ASIATRUST NEW ZEALAND LIMITED [2020] NZHC 2086 [18 August 2020]

Introduction

[1]	There is a long history to this proceeding. It began in 2010 in California and has played out in the courts of California and then New Zealand over the ensuing 10 years.

[2]	The New Zealand proceeding started in 2018 as a claim against six named defendants, of which only two, the first and second  defendants,  are  resident  in New Zealand. Eventually, the proceeding reduced to a formal proof hearing of only the plaintiff’s claim against the fifth defendant, which is resident in the Cook Islands and which has taken no part in the New Zealand proceeding or the proceeding in California on which the New Zealand proceeding is based.

[3]	The plaintiff discontinued its claims against the first and second defendants before any substantive hearing of the plaintiff’s claims. The plaintiff also discontinued its claim against the sixth defendant. At the formal proof hearing, the plaintiff did not pursue its claims against the third and fourth defendants, who are resident in California and have also taken no part in the New Zealand proceeding.

[4]	Under the fifth  cause of action in its amended  statement of claim dated      21 December 2018, which is the only cause of action relating to the fifth defendant, the plaintiff seeks declarations that:

(a)	All property that the fifth defendant, as trustee of a trust established initially in New Zealand and then transferred to the Cook Islands, is traceable to a trust established in California;

(b)	In accordance with a judgment of the Superior Court of California, the fifth defendant holds that property on a constructive trust for the plaintiff; and

(c)	The fifth defendant is directed to remit that property to the plaintiff.

[5]	A fourth declaration sought with regard to the sixth defendant is moot because the sixth defendant, which was resident in Switzerland, is no longer in existence.

Relevant background

[6]	The following summary is derived from submissions and evidence filed by the plaintiff and the first and second defendants, including decisions of the courts of California. No other parties filed submissions or evidence.

The California proceedings

[7]	The plaintiff, Pacific Premier Bank (Pacific Premier), is a bank established in California. It has acquired rights deriving from an arbitration award made in California in 2010. The arbitration was initiated by Jay Cho, the purchaser of a business which failed some six months after the purchase because it had lost its main customer, and Gilmore Bank, which financed the purchase. Mr Cho and Gilmore Bank alleged misrepresentation and other causes of action against the seller of the business, Cindy Dalrymple, the fourth defendant, who had not disclosed the impending loss of the customer when selling the business.

[8]	In January 2010, while the arbitration was in progress, Cindy Dalrymple established a private retirement trust, the CD Private Retirement Trust (CD PRT) under the CD Private Retirement Trust Agreement dated 12 January 2010. Cindy Dalrymple transferred all her assets, including the proceeds of sale of the business, to the CD PRT. Cindy Dalrymple’s 25-year-old niece, Sonia Dalrymple, the third defendant, was made the trustee of the CD PRT, which was to pay Cindy Dalrymple US$203,000 annually.

[9]	In March 2010, the arbitrators issued their award which held that Cindy Dalrymple and her wholly owned company, Alliance Technology Corporation, must pay Mr Cho and Gilmore Bank US$3,228,341.51.

[10]	In June 2010, the award was registered as a judgment with the Superior Court of California and judgment was entered in favour of Mr Cho and Gilmore Bank and against Cindy Dalrymple and Alliance Technology Corporation.

[11]	In February 2011, Mr Cho and Gilmore Bank filed a complaint in the Superior Court of California for fraudulent transfers and other causes of action. The defendants were Cindy Dalrymple personally and as trustee of various revocable trusts in favour

of Cindy Dalrymple, Sonia Dalrymple as trustee of the CD PRT, various corporations and “DOES 1 through 200, inclusive” who were parties unknown to the plaintiffs but in respect of whom the plaintiffs said they would amend their complaint when the names and capacities of the DOES became known.

[12]	The essence of the complaint was that while the arbitration was in progress and as her potential liability became clear, Cindy Dalrymple had transferred all assets held by her personally and by revocable trusts in her favour to the CD PRT and various limited liability corporations in order to sequester and conceal her assets. The plaintiffs also alleged that Cindy Dalrymple  retained  effective  control  over  the CD PRT through her influence and control over Sonia Dalrymple. The plaintiffs asked the Court to set aside the transfers of Cindy Dalrymple’s assets to the CD PRT. They also sought exemplary and punitive damages.

[13]	In June 2011, Sonia Dalrymple was introduced by email to Lauren Willis, General Manager of AsiaCiti Trust Ltd (AsiaCiti), the second defendant. Following that introduction, AsiaTrust New Zealand Ltd (AsiaTrust NZ), the first defendant, established the CD PRT NZ Trust. Sonia Dalrymple and Lauren Willis signed the Deed of Settlement of the CD PRT NZ Trust made on 28 June 2011. AsiaTrust NZ was the trustee and Sonia Dalrymple the settlor of the trust. AsiaTrust NZ was wholly owned by AsiaCiti and both companies were registered in New Zealand.

[14]	Following the establishment of the CD PRT NZ Trust, Sonia Dalrymple transferred US$2,500,000 from the CD PRT to the CD PRT Trust which purchased an annuity from SwissTrust International, the sixth defendant.1 The annuity was in favour of the CD PRT NZ Trust which was to make regular payments to Cindy Dalrymple as directed by Sonia Dalrymple. Sonia Dalrymple subsequently paid a further US$500,000 into the CD PRT NZ Trust.

[15]	In June 2012, Mr Cho and Gilmore Bank amended their complaint to include AsiaTrust NZ as a defendant.

1	In some documents, the name SwissGuard International rather than SwissTrust International is used. It appears that SwissGuard International was the representative of SwissTrust International.

[16]	On 28 June 2012, AsiaTrust NZ retired as trustee of the CD PRT NZ Trust and AsiaTrust Ltd (AsiaTrust CI), a company registered in the Cook Islands, was appointed trustee in its place. In an affidavit affirmed on 30 August 2018 and filed in the present proceeding, Ms Willis said AsiaTrust CI was a member of the AsiaCiti Trust Group but that AsiaCiti and AsiaTrust NZ had no control over AsiaTrust CI.

[17]	Also on 28 June 2012, Ms Willis was served with the complaint brought by Mr Cho and Gilmore Bank before the Superior Court of California. In her affidavit of 30 August 2018, Ms Willis said AsiaTrust NZ retired as trustee of the CD PRT NZ Trust before it was served with the complaint and that the change of trustee had been proposed by Sonia Dalrymple’s US attorney earlier in 2012.

[18]	In July 2012, Mr Cho and Gilmore Bank applied for an injunction to freeze Cindy Dalrymple’s assets in California and to require the repatriation of assets held by the CD PRT NZ Trust and SwissTrust International. In October 2012, Mr Cho and Gilmore Bank served a notice of default on AsiaTrust NZ.

[19]	In November 2012, and notwithstanding its retirement as trustee of the CD PRT NZ Trust, AsiaTrust NZ applied to the Superior Court of California to quash service of the complaint filed by Mr Cho and Gilmore Bank. Ms Willis filed a declaration dated 11 October 2012 in support of the application stating that AsiaTrust NZ and AsiaCiti were resident in New Zealand and all their business was conducted in New Zealand. Ms Willis’s declaration explained that she had engaged with Sonia Darlymple only by email and ordinary mail and had never met Sonia Dalrymple or travelled to California to solicit, negotiate or execute the deed of settlement establishing the CD PRT NZ Trust. Ms Willis’s declaration referred to the service of the complaint on her on 28 June 2012 but did not disclose that AsiaTrust NZ was no longer trustee of the CD PRT NZ Trust.

[20]	On 3 December 2012, the Superior Court of California granted an interim injunction freezing the assets of Cindy Dalrymple and requiring the repatriation to the United States of all assets transferred to AsiaTrust NZ as well as the annuity held by SwissTrust International.

[21]	On 12 December 2012, the Superior Court granted AsiaTrust NZ’s motion to quash service of the complaint for lack of personal jurisdiction. This decision did not affect the injunction granted on 3 December 2012.

[22]	On 21 February 2014, the Court of Appeal of California reversed the decision of the Superior Court to quash service of the complaint on AsiaTrust NZ. The Court of Appeal held there was sufficient nexus between AsiaTrust NZ’s activities and events in California to subject AsiaTrust NZ to California’s jurisdiction, and that California’s exercise of personal jurisdiction over AsiaTrust NZ was fair and reasonable.2

[23]	On 11 June 2014, the Superior Court of California granted a motion to allow AsiaTrust NZ’s lawyers to withdraw from the complaint filed by Mr Cho and Gilmore Bank. By that time, Gilmore Bank had merged with Grandpoint Bank.

[24]	Later in 2014, the Court of Appeal of California dismissed an appeal by Cindy Dalrymple and the other defendants against the injunction granted by the Superior Court on 3 December 2012.3 The Court of Appeal held there was abundant substantial evidence to support the Superior Court’s factual findings, including the implied finding that Cindy Dalrymple did not design and use her retirement plan for retirement purposes. That evidence included:

… the timing of the defendants’ creation of the retirement plan relative to the arbitration and court proceedings and rulings; the absence of tax benefits afforded by the plan; the appointment of Cindy’s young niece as trustee and manager of the entities; Cindy’s retention of control over the assets after transferring them; the movement of all of Cindy’s assets overseas …

[25]	The Court of Appeal also held that the assets in the CD PRT NZ Trust and the SwissTrust International annuity were not exempt from the plaintiffs’ enforcement of their judgment against the defendants.

2	Gilmore Bank v AsiaTrust New Zealand Ltd (2014) 223 Cal.App. 4th 1558.
3	Gilmore Bank v Dalrymple et al, Court of Appeal of the State of California, 4th App D, CA4/3, G047902 (Cal Superior Ct. 30-00452056) (2014).

[26]	In April 2015, the complaint filed by Mr Cho and Gilmore Bank, now Grandpoint Bank, was tried in the Superior Court of California before a jury. AsiaTrust NZ took no part in the trial.

[27]	Following the jury’s findings, on 14 October 2015, the Superior Court entered judgment in favour of Mr Cho and Gilmore Bank and against the named defendants, including AsiaTrust NZ as trustee of the CD PRT NZ Trust.4 This judgment, referred to from now on as “the California judgment”, is the judgment on which the present proceeding is based.

[28]	Based on the jury’s findings, in Section H of the California Judgment, the Superior Court entered judgment in favour of the plaintiff, Gilmore Bank, and against AsiaTrust NZ, as trustee of the CD PRT NZ Trust, (defined as “NZ Trust”) as follows:

(1)	The transfers by one of more of the Dalrymple Defendants of property consisting of stocks, bonds, marketable securities and cash to the NZ Trust is subject to a constructive trust in favour of Plaintiff.

(2)	NZ Trust is enjoined and restrained, together with its agents, representatives and employees, from transferring, in whole or in part, any of the property specified above in Section H or from selling, encumbering, transferring, conveying, assigning or otherwise disposing of any of said assets.

(3)	NZ Trust shall account to Plaintiff for all profits, rents, payments, and proceeds received from or by virtue of the property that it holds, has held, or has transferred, and al such profits, rents, proceeds, payments or disbursements that it has or will hereafter receive are held on constructive trust for the benefit of Plaintiff.

[29]	As defined by the Superior Court, the “Dalrymple Defendants” included Cindy Dalrymple personally and as trustee of named revocable trusts in her favour, and Sonia Dalrymple as trustee of the CD PRT.

[30]	In July 2018, Pacific Premier acquired the assets of Grandpoint Bank, including its rights under the California Judgment.

4	Gilmore Bank and Jay Cho v Cindy Dalrymple  & Ors,  Cal Superior Ct. 30-2011-00452056,   14 October 2015.

The New Zealand proceeding

[31]	On 10 July 2018, Pacific Premier filed the current proceeding in this Court. Its first statement of claim named AsiaTrust NZ, AsiaCiti, Sonia Dalrymple and Cindy Dalrymple as the four defendants. The first cause of action was enforcement of the California Judgment. The relief sought included declarations that, in accordance with the California Judgment, AsiaTrust NZ held all property as trustee of the CD PRT NZ Trust on constructive trust for Pacific Premier and AsiaTrust NZ be directed to remit that property to Pacific Premier. On the same date, Pacific Premier applied without notice for freezing orders over the assets of AsiaTrust NZ.5

[32]	By judgment dated 17 July 2018,6 Churchman J made the freezing orders sought. Churchman J held that the High Court had jurisdiction to enforce the California Judgment on the basis of the High Court’s inherent jurisdiction, as recognised in s 12 of the Senior Courts Act 2016.7 Churchman J was satisfied the judgment was enforceable at common law in accordance with the principles restated by the Court of Appeal in Eilenberg v Gutierrez.8 In his decision, Churchman J took note of the decision of the Court of Appeal of California that the Superior Court of California had jurisdiction over AsiaTrust NZ and accepted that decision.9

[33]	On 30 August 2018, the solicitors for AsiaTrust NZ and AsiaCiti filed a statement of defence in which the two defendants stated that AsiaTrust NZ had retired as trustee of the CD PRT NZ Trust on 28 June 2011 and had transferred all trust property to the new trustee, and that the California Judgment was not enforceable in New Zealand because the Superior Court of California did not have jurisdiction over AsiaTrust NZ or AsiaCiti, and neither AsiaTrust NZ nor AsiaCiti had participated in the proceeding before the Superior Court except to protest jurisdiction.

[34]	On 21 December 2018, Pacific Premier filed an amended statement of claim adding AsiaTrust CI and SwissTrust International as fifth and sixth defendants.

5	On the same date, Pacific Premier also applied for summary judgment against the four defendants but subsequently withdrew that application.
6	Pacific Premier Bank v AsiaTrust New Zealand Ltd & Ors [2018] NZHC 1762.
7	At [12].
8	At [12] and [16], citing Eilenberg v Gutierrez [2017] NZCA 270, [2017] NZFLR 471, (2017) 31 FRNZ 408.
9	At [19]-[20].

[35]	On 11 November 2019, Pacific Premier’s claims against AsiaTrust NZ and AsiaCiti were discontinued, save as to costs, and the freezing order made on 17 July 2018 was discharged. On 10 December 2019, Pacific Premier’s claim against SwissTrust International was discontinued.

[36]	Because the remaining defendants had taken no part in the proceeding, Pacific Premier’s claims against the third, fourth and fifth defendants were set down for a formal proof hearing on 21 February 2020. However, at the formal  proof hearing, Mr Hooker, counsel for Pacific Premier, told the Court that Pacific Premier was seeking judgment only against the fifth defendant, AsiaTrust CI.

[37]	In accordance with case management directions made by the Court, counsel for AsiaTrust NZ  and  AsiaCiti  also  appeared  at  the  formal  proof  hearing  on  21 February 2020 but only in relation to costs sought against Pacific Premier.

[38]	The formal proof hearing on 21 February 2020 exceeded the time available and was adjourned part heard. For various reasons, including the COVID-19 lockdown, the hearing did not resume until 25 June 2020.

[39]	Prior to the resumption of the formal proof hearing on 25 June 29, Mr Hooker, counsel for Pacific Premier and Mr Keown, counsel for AsiaTrust NZ and AsiaCiti, advised the Court that they had reached agreement on costs and requested that the Court by consent:

(a)	That scale costs and disbursements in the sum of $17,404.87 be payable by the plaintiff to the first and second defendants.

[40]	By minute dated 2 April 2020, Moore J made the requested costs order.

[41]	By memorandum dated 25 June 2020, Mr Keown advised the Court that, despite formal demand, Pacific Premier had still not paid the ordered costs or indicated when payment might be made. At the hearing on 25 June 2020, Mr Keown submitted that the Court may wish to consider whether the hearing of the plaintiff’s claim against the fifth defendant should proceed given that the plaintiff had not paid the costs order

to the first and second defendants but was continuing the proceedings against another party.

[42]	Mr Hooker said his client had not refused to pay the costs order and that his experience with his own invoices to the client was that it could take some time before payment was made. He also referred to the COVID-19 lockdown which was still in place in California and which was adding to the delays.

[43]	I decided not to delay that day’s hearing but, in order to encourage observance of the Court order, said I would reserve the release of my decision on the plaintiff’s claim against the fifth defendant until I had been advised of progress in the payment of the amount ordered.

Submissions on behalf of Pacific Premier

[44]	Mr Hooker submitted that the Court of Appeal of California had resolved the question of whether the Superior Court had jurisdiction and that had been accepted by Churchman J in his decision granting the freezing orders. He said further that the California Judgment attached to the trustee of the CD PRT NZ Trust, whoever that might be, and to the property of the Trust. That is, the California Judgment applied to AsiaTrust CI as trustee of the CD PRT NZ Trust even though AsiaTrust CI was not a party to the California proceeding and was not the subject of the orders made in the California Judgment.

[45]	In support of that submission, Mr Hooker said that the Superior Court’s orders should apply to AsiaTrust CI because AsiaTrust NZ had been aware of the California proceeding, had chosen not to participate in the proceeding, and had not disclosed to the Superior Court that it was no longer the trustee of the CD PRT NZ Trust. As a consequence, the plaintiffs in the California proceeding had lost the opportunity to join AsiaTrust CI as a party to the proceeding.

[46]	In a memorandum filed before the resumed formal proof hearing on 25 June 2020, Mr Hooker said AsiaTrust CI was a party to the proceeding that led to the California Judgment because it was one of the unnamed “DOES” in the complaint filed by Mr Cho and Gilmore Bank. He supplemented the submissions made

previously concerning AsiaTrust NZ’s participation in the California proceeding and its failure to disclose that it had retired as trustee of the CD PRT NZ, as well as the links between AsiaTrust NZ and AsiaTrust CI. Mr Hooker pointed, in particular, to the declaration made by Ms Willis in support of AsiaTrust NZ’s challenge to the jurisdiction of the Superior Court in which Ms Willis did not disclose that AsiaTrust NZ had resigned as trustee of the CD PRT NZ Trust. Mr Hooker said that in not disclosing that AsiaTrust NZ had already retired as trustee, Ms Willis had misled the Superior Court. He said the misleading of the Courts of California had been perpetuated by AsiaTrust NZ appearing in support of the challenge to the Superior Court’s jurisdiction and in the appeal before the California Court of Appeal against the Superior Court’s decision declining jurisdiction.

[47]	Mr Hooker said that the fact that the Superior Court’s judgment had been entered against AsiaTrust NZ and not the correct trustee was attributable to the actions of AsiaTrust NZ. He submitted that to deny the plaintiffs the declarations they sought solely on the ground they had obtained judgment against the wrong entity would amount to a miscarriage of justice. Mr Hooker further submitted that this Court has the power to avoid that miscarriage by amending the Superior Court’s orders to name the correct trustee, AsiaTrust CI. In support of that submission, Mr Hooker cited decisions of the English Court of Appeal,10 the New Zealand High Court,11 the High Court of Australia,12 and the Appellate Division of the Superior Court of New Jersey13 where those courts had accepted that their jurisdictions extended to allowing the variation of previously made orders in order to supress an abuse of the Court’s processes, to remedy a manifest error in order to avoid an injustice, and to correcting a formal error or fraud.

[48]	Mr Hooker also referred to the remedies sought by Pacific Premier. The first declaration sought was simply a declaration of law based on facts established from the evidence filed by Pacific Premier, which included the California Judgment and other

10	Taylor v Taylor [2002] 2 All ER 353.
11	Allan Scott Wines & Estates Holdings Ltd v Lloyd (2006) 18 PRNZ 199 (HC) and Clements v Clements [2019] NZHC 204.
12	DJL v The Central Authority [2000] HCA 17, (2000) 170 ALR 659.
13	Dashi Slatina v D Construction Corp and Armoured Corp New Jersey Superior Court Docket No A-0851-10T2.

decisions of the Courts of California.  As  to  the  other  two  declarations  sought, Mr Hooker said Pacific Premier was not asking the Court to recognise the California Judgment as creating an obligation to repay but to recognise the California Judgment as holding that the trustee of the CD PRT NZ Trust held the property of the trust in a constructive trust for Pacific Premier. He submitted that the important consideration was the existence of the trust, not the identity of the trustee. He said the position of trustee was an office, that the rights and duties of a trustee passed with the office, and the newly appointed trustee took the property subject to those rights and duties, including any claims on the property, and the claim of Gilmore Bank, now the claim of Pacific Premier, predated the change of trustee.

Analysis

[49]	As noted above, Pacific Premier seeks three declarations. It is convenient to deal with the first declaration separately from the other two declarations.

The first declaration

[50]	The first declaration sought is that the property AsiaTrust CI holds as trustee of the CD PRT NZ Trust is traceable to the CD PRT. The prayer for relief under the fifth cause of action in Pacific Premier’s amended statement of claim does not link this declaration to the California Judgment. Even so, Mr Hooker says I can draw the legal conclusion that the property is traceable to the CD PRT based on the facts established in the California Judgment and other decisions of the California Courts.

[51]	To rely on those decisions for that purpose, however, I would have to be satisfied that the Superior Court had asserted jurisdiction over and made decisions in respect of AsiaTrust CI. I am satisfied I can reach that conclusion based solely on evidence filed in this proceeding and independently of the decisions of the California courts.

[52]	The factual and legal basis for such a declaration is provided by the affidavit affirmed by Ms Willis on 30 August 2018 and by the affidavit sworn by Richard Broad, Ms Willis’s successor as Managing Director of AsiaCiti, on 9 September 2019. The affidavits were filed in this proceeding.

[53]	The affidavits and their exhibits establish that:

(a)	The source of the funds settled on the CD PRT  NZ Trust  was  the  CD PRT. This is stated in the Client Assessment Data & Due Diligence Form completed by Sonia Dalrymple and annexed to Ms Willis’s affidavit. Sonia Dalrymple stated in the form that the source of the funds to be settled on the CD PRT NZ Trust was “Assets of the CD Private Retirement Trust”. In addition, cl 7(b) of the Deed of Settlement of the CD PRT NZ made on 28 June 2011 and annexed to Mr Broad’s affidavit provides that “the Final Repository of the CD PRT NZ Trust is intended to be the CD Private Retirement Trust Dated 12 January 2010 (the “CD PRT”) and the beneficiaries thereof…”.

(b)	Following Sonia Dalrymple’s completion of the Client Assessment form, AsiaTrust NZ agreed to act as trustee of the CD PRT NZ Trust and Ms Willis prepared the Deed of Settlement of the CD PRT NZ Trust, as stated by Ms Willis in her affidavit.

(c)	All of the property comprised in the CD PRT NZ Trust and all assets of the CD PRT NZ Trust were conveyed to AsiaTrust CI when AsiaTrust NZ resigned as trustee and AsiaTrust CI became trustee of the CD PRT NZ Trust, as stated in the Deed of Retirement and Appointment of Trustee made on 28 June 2012 and annexed to Ms Willis’s affidavit.

[54]	It is clear, therefore, that the property settled on the CD PRT NZ Trust was sourced from the CD PRT and that that property passed to AsiaTrust CI when it became trustee of the CD PRT NZ Trust.

[55]	I consider that this evidence filed by New Zealand parties to this proceeding provides sufficient basis to conclude that the property that AsiaTrust CI holds as trustee is traceable to the CD PRT and that I can make the first declaration sought by Pacific Premier.

[56]	I am also satisfied that it is appropriate to make the declaration even though AsiaTrust CI is registered in the Cook Islands and has taken no part in this proceeding.

[57]	Clause 3(a) and (b) of the Deed of Settlement of the CD PRT NZ Trust provides:

(a)	The proper law of this Trust shall be that of New Zealand and all rights under this Trust and its construction and effect shall be subject to the jurisdiction of and construed according to the laws of New Zealand.

(b)	The courts of the [sic] New Zealand shall be the forum for the administration of these trusts.

[58]	In addition:

(a)	Clause 5 of the Deed of Retirement and Appointment of Trustee made on 28 June 2012 provides that upon the trust assets being transferred to AsiaTrust CI, AsiaTrust CI “shall hold and stand possessed of the same upon the trusts terms and conditions of” the Deed of Settlement; and

(b)	Clause 8 of the Deed of Retirement and Appointment of Trustee provides that that Deed “shall be governed by and construed in all respects in accordance with the laws of the [sic] New Zealand.”

[59]	It follows that in signing the Deed of Retirement and Appointment of Trustee and in agreeing to hold the CD PRT NZ Trust upon the terms and conditions of the Deed of Settlement, AsiaTrust CI agreed to be bound by New Zealand law in relation to its role and responsibilities as trustee of the CD PRT NZ Trust. AsiaTrust CI cannot avoid that reality by failing to appear in this proceeding.

The second and third declarations

[60]	The prayer for relief in the fifth cause of action in Pacific Premier’s amended statement of claim seeks two declarations “in accordance with” the California Judgment. The first is that all property that AsiaTrust CI holds as trustee of the CD PRT NZ Trust is held on a constructive trust for Pacific Premier. The second is that AsiaTrust CI is directed to remit that property to Pacific Premier.

[61]	Both declarations, as sought, are based directly on the California Judgment, in particular the findings of the Superior Court as set out at [28] above. In addition, there is no sufficient basis for this Court to make such declarations based on the pleadings and evidence filed in this proceeding. The question, therefore, is whether this Court can be satisfied that the California Judgment provides an appropriate basis for the declarations. That, in turn, raises the scope of this Court’s jurisdiction with regard to recognition and enforcement of the California Judgment.

Recognition and enforcement of the California Judgment

[62]	As Mr Hooker noted, Churchman J decided, in the context of the application for freezing orders, that it was appropriate for the High Court to recognise the California Judgment, having regard to the findings of jurisdiction of the California Court of Appeal. However, the California decisions and Churchman J’s decision concerned AsiaTrust NZ, not AsiaTrust CI.

[63]	AsiaTrust CI was not a party to the California Judgment. It was not named in the complaint brought by Mr Cho and Gilmore Bank. It was not the subject of the decision of the California Court of Appeal holding that AsiaTrust NZ was subject to the jurisdiction of the California courts. It was not named as a defendant in the California Judgment.

[64]	I do not accept that AsiaTrust CI was a party to the California Judgment as one of the “DOES 1 through 200” named as defendants in the original complaint. The copy of the California Judgment produced by Susan Denning in her affidavit of documents sworn on 10 July 2018 bears the words “Final Amended Judgment” and shows the words “DOES 1 through 200” struck out in the list of defendants. The first paragraph of the judgment makes it clear that, for the purposes of the California Judgment, the defendants were “the Dalrymple Defendants” and AsiaTrust New Zealand Ltd as trustee of the CD PRT NZ Trust. There is no scope, therefore, for inferring that AsiaTrust CI as trustee of the CD PRT NZ Trust is also a defendant to which the California Judgment applies.

[65]	As Tipping J said in Kemp v Kemp, in a passage that was cited with approval by the Court of Appeal in Eilenberg v Gutierrez:14

It is a general principle of private international law that, subject to three exceptions, a judgment in personam of a foreign Court of competent jurisdiction, which is final and conclusive on the merits in the foreign country, is to be regarded as final and conclusive in New Zealand as between the same parties and their privies and as regards any issue which the judgment or order settles. Subject to the exceptions, such an overseas judgment is not impeachable or examinable on its merits whether for error of fact or of law.

[66]	The California Judgment was a judgment in personam. AsiaTrust NZ was the named defendant and the Court’s orders were directed to Asia Trust NZ, even if they concerned the property of the CD PRT NZ Trust. Importantly, the decision of the California Court of Appeal that confirmed that the Superior Court had jurisdiction over AsiaTrust NZ held that “California’s exercise of personal jurisdiction” over AsiaTrust NZ was fair and reasonable (emphasis added).

[67]	It follows that, as a judgment in personam, the California Judgment must be accepted as final and conclusive in New Zealand “as between the same parties and privies and as regards any issue which the judgment or order settles” unless one of the exceptions to which Tipping J referred applies.

[68]	Privies are persons with the same or similar interest to a party to litigation and who, because of the rules of res judicata, are taken to be bound by the outcome of litigation. The purpose of the rules of res judicata, which cover cause of action and issue estoppel, is to prevent a party to a final judgment or someone with the same interests as that party challenging the decision in other proceedings involving their same parties or parties with the same interests.15 As Somers J said in New Zealand Social Credit Political League v O'Brien:16
Estoppel per rem judicatam, issue estoppel, and abuse of process in at least one of its manifestations, may be seen as exemplifying similar concepts - that a matter once determined may not be again litigated, that a matter which could and should have been raised in proceedings which have been determined should not be allowed to be raised subsequently, and that a collateral attack

14	Kemp v Kemp [1996] 2 NZLR 454 at 458; cited in Eilenberg v Gutierrez, above n 8 at [31].
15	Lai v Chamberlains [2006] NZSC 70, [2007] 2 NZLR 7 at [58], citing Carl Zeiss Stiftung v Rayner & Keeler (No 2) [1967] 1 AC 853 (HL).
16	New Zealand Social Credit Political League v O'Brien [1984] 1 NZLR 84 (CA) at 95.

upon a final decision in other proceedings will not be permitted. The dual objects are finality of litigation and fair use of curial procedures.

[69]	In that sense, the rules of res judicata operate to protect parties to litigation from having the same matters relitigated against them. I do not consider that the rules of res judicata can be used to extend orders that were made with respect to a party to a proceeding to a person or company that was not party to the proceeding.

[70]	One reason for not regarding AsiaTrust CI as a privy of AsiaTrust NZ is that the California Judgment was based on the decision of the California Court of Appeal that AsiaTrust NZ was subject to the jurisdiction of the California courts. That decision was made after consideration of the specific facts before the Court of Appeal. The Court held that the undisputed facts showed that AsiaTrust NZ had created continuing obligations between itself and California residents, had “purposefully directed its activities towards California residents” and “purposefully derived benefits from its activities in California”. The Court noted in particular that AsiaTrust NZ had conducted due diligence on Sonia Dalrymple, sent promotional materials to Sonia Dalrymple and marketed to her the advantages of forming a New Zealand trust, drafted the trust deed, communicated by email with Sonia Dalrymple and her US attorney, arranged the Swiss annuity and transferred funds to Cindy Dalrymple’s retirement account in California.

[71]	It is not clear that the Court of Appeal would have found that AsiaTrust CI was subject to its jurisdiction given that it was not involved in the establishment of the CD PRT NZ Trust. I accept the general conclusion reached by the Court of Appeal about AsiaTrust NZ would apply equally to AsiaTrust CI. The Court said:

Essentially, AsiaTrust has received compensation for accepting investing, managing, disbursing, and shielding the assets of Cindy, a California judgment debtor, in a scheme that contemplates an ongoing contractual relationship for Cindy’s lifetime.

However, whether that provides a sufficient basis to conclude that AsiaTrust CI is subject to the jurisdiction of the California courts is for the California courts, not the New Zealand High Court, to decide.

[72]	The exceptions to which Tipping J referred are where the judgment was obtained by fraud, where enforcement of the judgment would be contrary to public policy, and where the proceedings in which the judgment was obtained were contrary to natural justice.17 If an exception applies, however, the consequence is that the  New Zealand courts will not recognise and enforce the foreign judgment. The exceptions provide no basis for amending a foreign judgment or the parties to which the judgment applies for the purpose of enforcing its amended terms.

[73]	Therefore, while Cindy Dalrymple has been found to have acted fraudulently and while I accept that AsiaTrust NZ appears to have misled the Superior Court in challenging its jurisdiction while not disclosing that it had retired as trustee of the CD PRT NZ Trust, those considerations do not assist Pacific Premier. Pacific Premier does not seek to avoid the enforcement of the California Judgment. It wants the judgment enforced but against a party that was not named as a party to the judgment. That course is not available, given the principle of private international law stated in Kemp v Kemp and endorsed in Eilenberg v Gutierrez that a judgment in personam of a foreign Court is to be regarded as final and conclusive in New Zealand “as between the same parties and their privies”.18

[74]	Accordingly, and whether or not a miscarriage of justice may have occurred because the wrong trustee was named as the relevant party, this Court must recognise and accept the California Judgment as final and conclusive as between the parties to the judgment. This Court does not have jurisdiction to make a declaration, based on the California Judgment, that would apply to a party that was not a party to the California proceeding. The English, Australian, New Zealand and New Jersey decisions to which Mr Hooker referred all concerned the powers of the Courts in those jurisdictions to cure problems that arose in those jurisdictions. They do not bear on the circumstances of this case.

[75]	Although the factual circumstances were very different from the present case, Kemp v Kemp also involved a miscarrying of process; the party seeking to avoid an order of the English court had not received notice of the hearing and other relevant

17	Eilenberg v Gutierrez, above n 8, at [30].
18	Above n 14.

correspondence.	Tipping J did not accept that this amounted to a procedural irregularity. He stated:19

The conventional and obvious way of curing that sort of problem, which does occasionally happen, is for the party against whom a judgment or order has been entered, in the event ex parte, to apply forthwith for a setting aside of the order and a rehearing. There are rules to that effect in New Zealand and I imagine that the English rules have corresponding provisions.

[76]	The same logic applies to the circumstances of this case. The conventional and obvious way of curing the problem that has arisen in this case is for Pacific Premier to apply to the Superior Court of California to amend its judgment so that it applies to the correct trustee. It would then be for the Superior Court to decide whether AsiaTrust CI is subject to its jurisdiction and whether a miscarriage of justice has occurred and, if so, whether to amend its judgment in accordance with the principles discussed in the cases to which Mr Hooker referred.

[77]	When I asked Mr Hooker why Pacific Premier had not looked to the California courts to remedy the problem of the wrong trustee, he said there were procedural and logistical problems arising out of the fact that the California Judgment was based on the findings of a jury. Whether or not that is so, those are problems for the Superior Court of California to address. The fact that AsiaTrust NZ is a New Zealand registered company and may have contributed to the problems does not confer jurisdiction on the New Zealand courts to amend or vary the application of the California Judgment.

[78]	I conclude, therefore, that this Court does not have jurisdiction to make the other declarations sought under the fifth cause of action in Pacific Premier’s amended statement of claim.

Result

[79]	For the above reasons:

(a)	I make the following declaration:

19	Kemp v Kemp, above n 14, at 457.

All of the property held by AsiaTrust Limited as trustee of the CD PRT Trust established under the Deed of Settlement of the CD PRT NZ Trust made on 28 June 2011is traceable to the CD Private Retirement Trust established under the CD Private Retirement Trust Agreement dated 12 January 2010.

(b)	I dismiss the application of Pacific Premier Bank for the other declarations sought under the fifth cause of action of its first amended statement of claim dated 21 December 2018.

G J van Bohemen J

Postscript on costs

[80]	I understand that Pacific Premier has still not paid the costs of AsiaTrust NZ and AsiaCiti ordered by consent by Moore J on 1 April 2020. That is unsatisfactory. I do not consider, however, that I should delay issuing this judgment for that reason. This matter has dragged on for too long already. Furthermore, AsiaTrust NZ and AsiaCiti were major contributors to the lengthy history of this proceeding. AsiaTrust NZ, with the knowledge of its parent, chose to challenge the jurisdiction of the California courts, in the context of a proceeding where fraud was alleged, without disclosing that it had retired as trustee of the CD PRT NZ Trust some time earlier and that a related trust company, AsiaTrust CI, had become trustee.

Solicitors/Counsel:
Vallant Hooker & Partners, Auckland Bell Gully, Auckland