CA Trustees (Tillemans) Limited v Tillemans - [2024] NZHC 3945

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2020-419-000348

[2024] NZHC 3945

UNDER the Property Law Act 2007

IN THE MATTER OF

an application to set aside a disposition of property under s 348 of the Property Law Act 2007

BETWEEN

CA TRUSTEES (TILLEMANS) LIMITED and MICHAEL JOHN TILLEMANS as

trustees of the LEO TILLEMANS FAMILY TRUST

Plaintiffs

AND

SUZANNE MARIEA TILLEMANS and DIPROSE MILLER TRUSTEES 2015

LIMITED as trustees of the TILLEMANS FAMILIE TRUST
First Defendants

GARTH WILLIAM O’BRIEN as executor of the Estate of LEONARDUS

WILHELMUS MARIE TILLEMANS

Second Defendants

Hearing: 25 & 26 November 2024

Appearances:

E R Anderson & S K Poborowski for Plaintiffs R P Sutton for First Defendants

P A Depledge for Second Defendant

Judgment:

19 December 2024

JUDGMENT OF TAHANA J

This judgment was delivered by me on 19 December 2024 at 4.00pm Pursuant to Rule 11.5 of the High Court Rules
…………………………
Registrar/Deputy Registrar

CA TRUSTEES (TILLEMANS) LIMITED v TILLEMANS [2024] NZHC 3945 [19 December 2024]

Introduction

[1] The trustees of the Leo Tillemans Family Trust (the Leo Trust) apply under s 348 of the Property Law Act 2007 (the PLA) to set aside the sale of a property by Leo Tillemans (Leo) to his daughter’s family trust, the Tillemans Familie Trust (the Suzanne Trust).

[2] Leo sadly passed away in 2015. Leo is the father of Suzanne Tillemans (Suzanne) and Michael Tillemans (Michael). Michael is now a trustee of the Leo Trust. Leo was also the husband of Judith Tillemans (Judith) who is not the mother of Suzanne and Michael. Prior to his death, Leo, Judith and a corporate trustee were the trustees of the Leo Trust. Given the shared family name, I refer to the parties by their first names.

[3] Leo had cancer and knew that he was dying. He prepared a will dated 5 December 2014 (the Will). The Will records his intention to transfer his property at Tauwhare (the Tauwhare property) to Suzanne and for her to enter a deed of acknowledgement of debt for $1 million. If this occurred, then on his death, he forgave any monies she owed to him. If this had not occurred, then on his death, he transferred the Tauwhare property to her. The Will records that he had done this because he considered that this “equalises the benefit I have given to my son Michael…during my lifetime.” Michael disputes that he received a benefit of this value.

[4] After executing the Will, Leo entered into arrangements with the Suzanne Trust to transfer the Tauwhare Property as follows:

(a)the parties agreed a deed of acknowledgement of debt and agreement to mortgage dated 19 January 2015 (the Deed) pursuant to which Leo advanced $1 million to the Suzanne Trust and forgave $700,000. Payment of the $300,000 was secured by a mortgage over the Tauwhare property; and

(b)the parties agreed a sale and purchase agreement for the Tauwhare property dated 21 January 2015 at a…

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.

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Details

Case: [2024] NZHC 3945
Decision Date: 19 December 2024

CaseChat Overview and Summary

The High Court of New Zealand considered an application by the trustees of the Leo Tillemans Family Trust to set aside a disposition of property made by Leo Tillemans to the Suzanne Tillemans family trust, the Tillemans Familie Trust. The trustees of the Leo Trust argued that the sale of a property by Leo to the Suzanne Trust prejudiced the Leo Trust, as Leo was unable to repay his current account deficit to the Leo Trust after the sale. The court was required to determine whether the sale of the property constituted a disposition under s 348 of the Property Law Act 2007, whether the sale prejudiced the Leo Trust, and if the Suzanne Trust was entitled to any protections under s 349 of the Property Law Act 2007.

The court found that the transfer of the Tauwhare property to the Suzanne Trust was a disposition to which s 348 applied as Leo became insolvent by making the transfer. The court held that the transfer of the property to the Suzanne Trust did prejudice the Leo Trust as it hindered their ability to recover the full amount of the current account deficit. However, the court found that the Suzanne Trust was entitled to protection under s 349 of the Property Law Act 2007 as they had acquired the property for valuable consideration and in good faith without knowledge that the disposition was subject to s 348.

In the alternative, the court ordered that the Suzanne Trust pay reasonable compensation to Leo’s estate for the amount owing under the Deed with interest at the rate specified in the Deed. The court declined to make any findings as to the conduct of the trustees as the alleged breaches of trust were not relevant to the application under s 348 of the Property Law Act 2007.

The final orders of the court were that the trustees of the Suzanne Trust pay to the estate of Leo the amount outstanding under the Deed (including interest) by a specified date, continue to pay all amounts owing to the estate of Leo under the Deed until the borrowings are repaid in full, and advance the monies received from the Suzanne Trust to repay the current account deficit as at a specified date (less any monies owing by the Leo Trust to the estate). The parties were encouraged to avoid further legal costs by agreeing costs. If costs could not be agreed, costs memoranda of no more than three pages were to be filed with the Leo Trust filing a costs memorandum by a specified date and the respondents filing any costs memoranda by another specified date.

Orders