Clark & Son Limited v Clark - [2023] NZHC 957

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2022-419-000274

[2023] NZHC 957

UNDER Section 91 of the Companies Act 1993

BETWEEN

CLARK & SON LIMITED

Applicant

AND

LANCE STEPHEN CLARK as trustee of the Terra Firma Trust

First Respondent

AND

COONEY TRUSTEES 2007 LIMITED as

trustee of the Terra Firma Trust Second Respondent

AND

BEVERLY PETERSEN as trustee of the Terra Firma Trust

Third Respondent

Hearing: 19 April 2023

Appearances:

Murray Branch for the Applicant

No appearances for the First and Second Respondents Mike Phillipps and Gavin Jolliffe for the Third Respondent

Judgment:

27 April 2023

JUDGMENT OF MOORE J

This judgment was delivered by me on 27 April 2023 at 3:00 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/ Deputy Registrar Date:

CLARK & SON LIMITED v CLARK & ORS [2023] NZHC 957 [27 April 2023]

Introduction

[1] The applicant, Clark & Son Limited (“the Company”), seeks a declaration that a certain parcel of its shares is legally owned by the three trustees of the Terra Firma Trust (“the TF Trust”), being the first, second and third respondents rather than by Lance Stephen Clark (“Mr Clark”), the first respondent, in his personal capacity. The application is opposed by the third respondent, Beverly Petersen who was formerly Mr Clark’s partner.

[2] On 5 October 2020, Ms Petersen commenced proceedings against Mr Clark and the trustees of the TF Trust under the Property (Relationships) Act 1976 (“the PRA”).1

[3] It appears that in those proceedings Ms Petersen is or will be claiming that the shares in question are owned by Mr Clark personally and are relationship property for the purposes of the PRA.

Factual background

[4] An understanding of the factual background is essential to the determination of these proceedings. Except where indicated, there is no real contest as to the chronology of events and the key facts as set out below.

[5] The Company is a family business based in the Waikato. It was incorporated in 1999 by Mr Clark’s parents. Since its incorporation, Mr Clark has operated the business with his parents.

[6] The original owners of the 1,000 shares issued in the Company were the trustees of the Acacia Grove Properties Trust (“the AGP Trust”), being Mr Clark’s parents jointly holding 900 shares with the balance equally owned in their personal capacities by Mr Clark (50 shares) and his parents (50 shares).

[7] In 2003, there was a change to the shareholding. The Companies Office records were updated to record this with Mr Clark’s parents, as trustees of the AGP

1 Petersen v Clark FC Hamilton, FAM-2020-019-000862.

Trust holding 997 shares and Mr Clark and each of his parents holding 1 share. The reasons behind this shareholding adjustment are uncertain.

[8] In February 2008, Mr Clark settled the TF Trust with his then wife. The intention of the TF Trust was to provide for him, his wife and any children. At about this time, the Company’s…

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 Clark & Son Limited v Clark

Details

AGLC: Clark & Son Limited v Clark [2023] NZHC 957
Case: [2023] NZHC 957
Decision Date: 27 April 2023

CaseChat Overview and Summary

The High Court of New Zealand considered a case where Clark & Son Limited sought a declaration that certain shares in the company were legally owned by the trustees of the Terra Firma Trust rather than by Lance Stephen Clark, who was one of the trustees, in his personal capacity. The application was opposed by Beverly Petersen, another trustee of the Terra Firma Trust. The court was required to determine whether it had the jurisdiction to make the declaration and, if so, whether it should exercise its discretion to do so.

The court found that while the declaration did not fit within the scope of the Declaratory Judgments Act, the inherent jurisdiction of the High Court, as recognised in section 2 of that Act, did provide the court with the jurisdiction to grant the declaration. The court considered various factors in determining whether to exercise its inherent jurisdiction, including whether a plaintiff had a sufficient interest in the proceedings, whether an issue was now moot, and the practical utility of issuing a declaration. The court was satisfied that the declaration would serve a useful purpose, as it would ensure that the company could maintain an accurate record of its shareholding and be compliant with its obligations under the Companies Act. The court also found that the declaration would reflect the correct factual and legal position as to the ownership of the shares.

The court concluded that the 499 shares in question were jointly legally owned by the three trustees of the Terra Firma Trust. The court found that there was no evidence that the composition of the trustees had changed since the deed was executed, nor was there any evidence that the trustees had acquiesced in such a way or to such an extent that the legal ownership of the shares now vested solely in Mr Clark. The court rejected the argument that the application amounted to an abuse of process designed to collaterally attack the interests of the third respondent in the Family Court proceedings.

The court granted the application and made orders declaring that the 499 shares in question were legally owned by Lance Stephen Clark, Cooney Trustees (2017) Limited, and Beverly Petersen as trustees of the Terra Firma Trust. The company, being the successful party, was entitled to costs. The court directed that if the parties were unable to agree on costs, the applicant was to file and serve its memorandum no later than 5:00 pm on Thursday, 25 May 2023, and the third respondent was to file and serve her memorandum as to costs no later than 5:00 pm on Friday, 9 June 2023. The court would then determine the question of costs on the papers.

Orders