Glover No 2 Ltd v CIT Holdings Ltd - [2014] NZHC 2786

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-002031 [2014] NZHC 2786

BETWEEN
GLOVER NO. 2 LIMITED

Applicant

AND

CIT HOLDINGS LIMITED Respondent

Hearing: 31 October 2014

Appearances:

R C Knight and T Chubb for Applicant
M D Pascariu and C L Haemmerle for Respondent

Judgment:

10 November 2014

JUDGMENT OF ASSOCIATE JUDGE MATTHEWS

This judgment was delivered by me at 1.00 pm on 10 November 2014 pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:
Lane Neave, Auckland
Minter Ellison, Auckland

GLOVER NO. 2 LTD v CIT HOLDINGS LTD [2014] NZHC 2786 [10 November 2014]

[1] Glover No. 2 Limited (Glover No. 2) applies to set aside a statutory demand issued against it by CIT Holdings Limited (CIT) dated 29 July 2014 and served
1 August 2014. The sum demanded is $14,486.88.

[2] The demand is for payment of costs which Glover No. 2 has been ordered to pay to CIT by the High Court,1 the Court of Appeal2 and the Supreme Court.3 There are no outstanding appeals in relation to the costs orders, nor have any of the orders been stayed.

[3] The disputes between Glover No. 2 and CIT stem from business arrangements put in place during the former marriage of a Mr Olliver and a Ms Sparks. Through trusts in which they respectively had interests (the Glover Trust4 for Mr Olliver, and the Waimarie Trust for Ms Sparks) they entered a joint venture agreement to develop residential properties in St Heliers, Auckland. The intention was that on conclusion of the intended development the proceeds, including cash assets and the family home, would be divided between the two trusts.

[4] CIT was set up to purchase and hold the properties which were to be developed, on behalf of the Glover Trust and the Waimarie Trust. It spent approximately $10m buying properties. This was funded by an advance from the Bank of New Zealand and funding from the Waimarie Trust.

[5] The shares in CIT are owned by the Glover Trust. Mr Olliver is its sole director.

[6] These arrangements were put in place early in 2009. In 2011 Ms Sparks set up the Glover No. 2 Trust, assigned to it the interests of the Waimarie Trust, and arranged for some of the development properties to be transferred to it. Litigation ensued in relation to the transfers of property, and resulted in directions that the
properties be transferred back to CIT. Eventually, and not without difficulty, this

1      The Glover Trust Ltd v Glover Trust Corp Ltd [2013] NZHC 545.
2      Glover No 2 Ltd v The Glover Trust Ltd [2013] NZCA 608.
3      Glover No 2 Ltd v Glover Trust Ltd [2014] NZSC 54.
4 This is a separate trust from the applicant, Glover No. 2 Trust, see [9].

occurred. It is this litigation which has given rise to the costs orders which are now the subject of the demand by CIT.

[7] Since this application was filed a further…

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: [2014] NZHC 2786
Decision Date: 10 November 2014

CaseChat Overview and Summary

Glover No. 2 Limited applied to set aside a statutory demand issued by CIT Holdings Limited, which sought payment of $14,486.88 in costs. The costs arose from litigation between the parties related to a joint venture to develop residential properties in St Heliers, Auckland. The venture was funded by an advance from the Bank of New Zealand and contributions from the Glover Trust and the Waimarie Trust. Glover No. 2 argued it had a counterclaim for a debt owed by CIT, which would exceed the amount of the statutory demand. CIT maintained that the funds provided by the Waimarie Trust were capital contributions, not loans, and thus not repayable except through the distribution of joint venture proceeds. The court found that there was sufficient evidence to show that at least one of the payments made by the Waimarie Trust to CIT was an advance, and thus repayable. The court set aside the statutory demand, finding that Glover No. 2 had an arguable counterclaim exceeding the amount of the demand and that CIT’s actions could result in undue pressure being brought to bear on Glover No. 2.

The court ordered that the statutory demand dated 29 July 2014 be set aside and that Glover No. 2 was entitled to costs against CIT Holdings Limited on a 2B basis plus disbursements fixed by the Registrar.

Orders