Glover No 2 Ltd v Glover Trust Ltd - [2014] NZSC 54

IN THE SUPREME COURT OF NEW ZEALAND

SC 6/2014
[2014] NZSC 54

BETWEEN	GLOVER No.2 LIMITED as Trustee of the Glover No.2 Trust Applicant
AND	THE GLOVER TRUST LIMITED, BAILEY TRUSTEE SERVICES LIMITED and AUCKLAND WEST LEGAL SERVICES LIMITED as Trustees of the Glover Trust First Respondent
AND	CIT HOLDINGS LIMITED Second Respondent

Court:	Elias CJ and William Young J
Counsel:	R C Knight and T A Chubb for Applicant Z G Kennedy and M D Pascariu for Respondents
Judgment:	7 May 2014

JUDGMENT OF THE COURT

A The application for leave to appeal is dismissed.

B The applicant must pay the respondent costs of $2,500.
____________________________________________________________________

REASONS

The applicant seeks leave to appeal the decision of the Court of Appeal[1] upholding a decision of Allan J in the High Court[2] rejecting its contention that a deed of trust given by the applicant company as trustee of the Glover No 2 Trust be declared a sham and set aside. The effect of such declaration would be that property of which the Glover No 2 Trust is the registered proprietor after transfer from CIT Holdings Ltd would be held for the benefit of the discretionary beneficiaries of the Glover No.2 Trust instead of for the benefit of CIT Holdings Ltd (as is the effect of the deed of trust).
[1]Glover (No.2) Ltd v The Glover Trust Ltd and CIT Holdings Ltd (2013) NZCA 608.
[2]The Glover Trust Ltd v Glover Trust Corp Ltd [2013] NZHC 545.
The background is the development of a group of properties in St Heliers, Auckland, carried out by two of the discretionary beneficiaries in the Glover No.2 Trust, Mr Olliver and his former wife, Ms Sparks. The development, which began in March 2009, was undertaken through a group of inter-related trusts and companies set up by Ms Sparks and Mr Olliver.
By 2010 the development and Mr Olliver were in financial difficulties and the marriage of Ms Sparks and Mr Olliver was under strain. In order to try to preserve her share of the matrimonial property while not incurring tax liabilities, some of the assets held through the trusts and companies were rearranged through a series of transactions of which the trust deed in issue was one. The Glover No 2 Trust was set up and properties were transferred to it from CIT Holdings Ltd (the shares in which were held by the pre-existing Glover Trust) on the basis of the deed declaring that the properties transferred were held on trust for CIT Holdings Limited. It is this trust that the trustee of the Glover No 2 Trust, at the direction of Ms Sparks, sought to have declared to be a sham.
No other transaction in the sequence is impugned. The arrangements put in place entailed the creation of the Glover No.2 Trust in which Ms Sparks, her children, grandchildren and Mr Olliver are discretionary beneficiaries, authority to transfer the properties from CIT Holdings Ltd to Glover No.2 Ltd, as trustee of the…

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.

Keep reading for free

Create a free CaseChat account to read Glover No 2 Ltd v Glover Trust Ltd and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2014] NZSC 54
Decision Date: 7 May 2014

CaseChat Overview and Summary

The Supreme Court of New Zealand was asked to consider an application for leave to appeal by Glover No.2 Limited, as trustee of the Glover No.2 Trust, against a decision of the Court of Appeal that had upheld a decision of the High Court. The central issue in this case was whether a deed of trust, which was executed by Glover No.2 Limited as trustee of the Glover No.2 Trust, should be declared a sham and set aside. Such a declaration would result in the properties held by Glover No.2 Limited being held for the benefit of the discretionary beneficiaries of the Glover No.2 Trust rather than for the benefit of CIT Holdings Ltd. This case arose from the development of a group of properties in St Heliers, Auckland, by two discretionary beneficiaries of the Glover No.2 Trust, Mr Olliver and Ms Sparks, who encountered financial difficulties and marital issues by 2010. To restructure their assets and avoid incurring tax liabilities, they arranged a series of transactions, including the trust deed in question.

The legal issue before the court was whether the trust deed was a sham. The High Court and Court of Appeal had previously found that the trust deed was not a sham, concluding that the properties were held by Glover No.2 Limited in trust for CIT Holdings Ltd. The Court of Appeal's findings were based on the resolution of the trustees approving the receipt of the distribution "as a distribution from the Glover Family Trust for the benefit of the beneficiaries of this Trust." The Court of Appeal found that the resolution was passed subject to the terms of the trust, without which it would have made "no legal sense." The Supreme Court, in dismissing the application for leave to appeal, found that no novel legal issue arose, as the principles relating to sham transactions were well-established and not challenged by the applicant. Additionally, the Court found that the applicant did not demonstrate any basis for challenge to the well-settled principles applied in the lower courts or any appearance of a miscarriage of justice. As a result, the Court dismissed the application for leave to appeal with costs of $2,500 to the respondents.

Orders