Gillam v Gillam - [2012] NZHC 124

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2012-409-000060 [2012] NZHC 124

UNDER the Trustee Act 1956
AND UNDER Companies Act 1993

BETWEEN KAREN GAYLE GILLAM Plaintiff

ANDMARK ANTONY ANDREW GILLAM First Defendant

ANDENERSAVE PRODUCTS LIMITED Second Defendant

Hearing: 2 February 2012

Appearances: B Burke and K Hill-Dunn for Plaintiff
H Evans and D Weatherley for First Defendant
M Singleton for Second Defendant
K Dalziel and L Williams for NZ Trustee Services Ltd

Judgment: 10 February 2012

JUDGMENT OF FOGARTY J

This judgment was delivered by Justice Fogarty on
10 February 2012 at5.00 p.m., pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar
Date:

Solicitors:
Harmans Lawyers, PO Box 5496, Christchurch
Young Hunter, DX WP 21513, Christchurch
Goodman Tavendale Reid, PO Box 442, Christchurch
Taylor Shaw, PO Box 1123, Christchurch 8140

GILLAM V GILLAM HC CHCH CIV-2012-409-000060 10 February 2012

[1] This is an application for an interim mandatory injunction appointing the plaintiff as a director of the second defendant and authorising the plaintiff to carry out an audit of the second defendant.

[2] In the substantive proceedings the plaintiff is seeking an order under the Trustee Act 1956 that the first defendant be removed from the office of Trustee of the Gillam Business Trust, which owns 98 of the 100 shares of the second defendant. And that her son, Nathan Gillam be appointed in his father’s place or some other trustee. The statement of claim also seeks an order that the plaintiff be appointed a director of the second defendant and an order that the first defendant be removed as a director of the second defendant and an order authorising the plaintiff to carry out an audit of the second defendant in order to rectify the records of that company.

[3] The parties are close to a settlement of interim relief. A consent memorandum was prepared and is agreed to with one critical qualification. The first defendant agrees that the plaintiff be appointed as a director of the second defendant but, “subject to the appointment of an appropriate qualified and independent third director”. The first defendant says that he has approached a suitably qualified person who is overseas but will be back on 15 February 2012 and is likely to agree to being appointed. The plaintiff is pursuing this application rather than waiting out the fortnight.

The company

[4] Enersave Products Ltd (“Enersave”) has issued 100 shares. Ninety-eight of them are owned by the trustees of the M and K Gillam Business Trust. There are three trustees, the plaintiff, the first defendant and a limited liability company, New Zealand Trustee Services Ltd. The other two shares are held, one share each by the plaintiff and the first defendant. The business trust deed does not provide for majority decisions by the trustees. The company has one director, the first defendant. It used to have two, the first defendant and his wife, the plaintiff. The business of the company is the wholesale of electrical products.

[5] The company…

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 Gillam v Gillam

Details

AGLC: Gillam v Gillam [2012] NZHC 124
Case: [2012] NZHC 124
Decision Date: 10 February 2012

CaseChat Overview and Summary

In the High Court of New Zealand, Christchurch Registry, Karen Gayle Gillam filed a case against her ex-husband, Mark Antony Andrew Gillam, and Enersave Products Limited, seeking an interim mandatory injunction to appoint her as a director of Enersave and authorize her to carry out an audit of the company. The substantive proceedings aimed to remove the first defendant from his position as Trustee of the Gillam Business Trust, which owned 98 of the 100 shares of Enersave, and appoint Karen as a director of Enersave, while removing her ex-husband as a director. The legal issues before the court included whether the court had jurisdiction to grant the requested injunction under the Companies Act 1993 and the Trustee Act 1956, and if so, whether the plaintiff had a serious arguable case for such relief.

The court found that it had jurisdiction to grant the requested injunction under section 174 of the Companies Act 1993, which provides relief for oppressive or unfairly discriminatory conduct. The court also found that there was a serious arguable case for relief under the Trustee Act, as the deadlock in decision-making benefited only the husband, who was one of the discretionary beneficiaries and not a co-owner of the assets held by the trustees. The court concluded that the plaintiff should have a reasonable expectation of an urgent solution to provide her with employment and income from one of the business vehicles.

The court made an order that the first defendant should not make significant business decisions without first seeking the advice of the company's accountant, Mr. White, and not act against his written advice. The court also ordered that Mr. White should report in writing to the shareholders on the advice sought and given by him within two working days of providing that advice. The case was to be called before a Judge of the court within one calendar month from the date of the judgment. The plaintiff was partially successful and entitled to an order for costs on a 2B basis, subject to the qualification that the success was partial only.

Orders