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Auto Net v Tyler

Auto Net v Tyler

Case [2020] NZHC 2459 21 September 2020

Equitable Lien

Trustee Duties

Bare Trust

Rule in Saunders v Vautier

Trusts & Equity

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IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2019-419-327

[2020] NZHC 2459

BETWEEN
AUTO NET

Plaintiff

AND

M S TYLER

Defendant

Hearing: 4 June 2020

Appearances:

G Simms for the Plaintiff

KI Bond & Ms UB Keller for the Defendant

Judgment:

21 September 2020

JUDGMENT OF ASSOCIATE JUDGE SMITH

This judgment was delivered by me on 21 September 2020 at 3pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:
Wynn Williams, Auckland
Braun Bond Lomas, Hamilton

Auto Net v Tyler [2020] NZHC 2459 [21 September 2020]

Introduction – the parties and the dispute

[1]This is an application by the plaintiff (Auto Net) for summary judgment.

[2] Auto Net is a company incorporated in the Cayman Islands. It is one of a number of companies around the world owned by interests associated with Mr Robert Stone on the one hand, and Mr Hohua Hemi on the other. In the case of Auto Net, the ultimate beneficial owners are Ms Luciane De Souza Fernandes (Mr Stone’s wife), and interests associated with Mr Hemi.

[3] Mr Stone and Mr Hemi have conducted international business enterprises together for a number of years, in a number of countries. One of their enterprises is a business under which a Japanese-registered company, IBC Japan Limited (IBC), sells Japanese cars to New Zealand buyers. Until recently, IBC sold the cars to a New Zealand member of the Hemi/Stone commercial group, Auto Terminal New Zealand Limited (ATNZ).

[4] Mr Stone and Mr Hemi have now fallen out, and there is litigation in a number of jurisdictions, including New Zealand, between them and/or companies or entities with which they are associated.

[5] The defendant, Mr Tyler, is the sole director of ATNZ. Mr Tyler has fallen out with Mr Hemi, who now controls IBC, and ATNZ no longer purchases vehicles from IBC. Litigation is pending in this Court between IBC and ATNZ, and between Mr Hemi and Mr Tyler.

[6] Mr Tyler is the registered legal owner of all of the shares in ATNZ, but Auto Net says that Mr Tyler holds the ATNZ shares on a bare trust for it. It has issued this proceeding to compel Mr Tyler to transfer the ATNZ shares to it.

[7] Auto Net contends that Mr Tyler’s only obligation under the bare trust was to act on its directions, as both settlor and beneficiary of the trust, and that Mr Tyler has failed to transfer the ATNZ shares to it when so directed. In the alternative, Auto Net

says that it is entitled to wind up the trust of the shares under the rule known as the rule in Saunders v Vautier.1

[8] Auto Net asks for orders for specific performance directing Mr Tyler to enter Auto Net’s name in ATNZ’s share register as the owner of all of the shares in ATNZ, and/or an order under s 91 of the Companies Act 1993 (the Act) rectifying the share…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Auto Net v Tyler

Details

AGLC: Auto Net v Tyler [2020] NZHC 2459
Case: [2020] NZHC 2459
Decision Date: 21 September 2020

CaseChat Overview and Summary

In Auto Net v Tyler, Auto Net applied for summary judgment against Mr Tyler for the transfer of shares in Auto Terminal New Zealand Limited (ATNZ), which Mr Tyler holds as trustee. The Court refused summary judgment, finding that there were factual disputes regarding the terms of the trust, including whether there were restrictions on Mr Tyler transferring the shares. The Court also found that Mr Tyler had an arguable defence based on rights of indemnity arising at law and by agreement, which take priority over Auto Net's beneficial interest in the shares. The Court held that it was not appropriate to grant summary judgment in this case, as it involved a complex factual background, spanning more than a decade, and involved a number of different entities forming part of the global corporate structure set up by Mr Hemi and Mr Stone. The case is one of the rare cases where, even if the Court were to find that Mr Tyler has not established an arguable defence, the Court should exercise its residual discretion to refuse to order summary judgment. Auto Net's application for summary judgment is refused, and Mr Tyler is directed to file and serve his statement of defence by 12 October 2020. The Registrar is directed to allocate a case management conference for the first practical time and date after 26 October 2020.

Orders