Legal Research
Cases
Official Assignee v Wilson

Official Assignee v Wilson

Case [2008] NZCA 122 8 May 2008

Sham Trusts

Alter Ego Trusts

Trust Administration

Intent to Create a Trust

Breach of Trust

Trusts & Equity

No judgment structure available for this case.

Type to search within this case.

For a Court ready (fee required) version please follow this link

IN THE COURT OF APPEAL OF NEW ZEALAND
CA88/06
[2007] NZCA 122
BETWEENOFFICIAL ASSIGNEE IN BANKRUPTCY IN THE PROPERTY OF GARY MARTIN REYNOLDS

Appellant

ANDALEXANDER MCLENNAN WILSON AND JUDITH ANN HARVEY

First Respondent
ANDSUSAN JUDITH CLYMA

Second Respondent

Hearing:21 August 2007

Court:Glazebrook, O'Regan and Robertson JJ
Counsel:J C D Guest and G S Caro for Appellant

A J Forbes QC for Respondents

Judgment:8 May 2008 at 4 pm

JUDGMENT OF THE COURT

A        THE APPEAL IS DISMISSED.
B        Costs lie where they fall.
____________________________________________________________________
REASONS
Robertson and O’Regan JJ  [1]
Glazebrook J  [98]
ROBERTSON AND O’REGAN JJ
(Given by Robertson J)
Table of Contents

Para No

INTRODUCTION  [1]
BACKGROUND  [2]
ISSUES  [14]
         CHALLENGE TO FACTUAL FINDINGS  [14]
         THE NATURE OF THIS LITIGATION  [18]
SHAM AND ALTER EGO TRUSTS – THE LAW  [26]
         SHAM  [26]
         (I)     MUST A SHAM INVOLVE A COMMON INTENTION?  [29]
         (II)     EMERGING SHAM  [55]
         (III)    METHOD OF ASSESSMENT  [58]
         ALTER EGO TRUSTS  [60]
         (I)     LAW ON ALTER EGO TRUSTS  [63]
         (II)     RELATIONSHIP BETWEEN SHAM TRUSTS AND ALTER EGO TRUSTS                   [65]
WAS THE TRUST A SHAM?  [75]
         TRANSFER OF THE INVERCARGILL PROPERTY TO MR REYNOLDS BY TRUSTEES           [79]
         BORROWING MORE THAN NECESSARY TO PURCHASE QUEENSTOWN PROPERTY        [85]
         ATTEMPTS BY MS CLYMA TO USE TRUST PROPERTY TO RAISE MONEY  [88]
         POOR ADMINISTRATION  [91]
         OVERALL ASSESSMENT  [93]
RESULT  [96]
Introduction
[1]       This appeal, from a decision of Chisholm J (Official Assignee v Wilson & Anor CIV 2004-425-74 12 April 2006), involves the law relating to shams (including the concept of an emerging sham) and alter ego principles including whether they constitute a separate action or are only an evidentiary matter with regard to a sham. It must also focus on the position of the Official Assignee (OA) in this litigation. There was an underlying spirited challenge to the factual findings made by the Judge in light of the totality of the evidence he heard.
Background
[2]       Mr G M Reynolds was a property developer. In the early 1990s, he was adjudged bankrupt. By 31 March 1996, when he entered into an agreement to purchase a house in Invercargill, he had been discharged. He signed the contract as agent in anticipation of a trust being established.
[3]       He settled the G M Reynolds Family Trust in May 1996 with the first respondents as trustees. The beneficiaries were named children and Mr Reynolds’ children and grandchildren.
[4]       The Invercargill house transaction was completed in May 1996 and the property registered in the name of the trustees. The first mortgage, provided by Southland Building Society (SBS), was guaranteed by Mr Reynolds personally. One of Mr Reynolds’ companies contributed $9,000 towards the purchase price. The family lived in the home and the outgoings, including mortgage instalments, were met by Mr Reynolds and Ms Clyma (his long term de facto partner).
[5]       Mr Reynolds claimed (and the trustees agreed) that in late 1996 the trustees had orally agreed to sell the Invercargill property…

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 Official Assignee v Wilson

Details

AGLC: Official Assignee v Wilson [2008] NZCA 122
Case: [2008] NZCA 122
Decision Date: 8 May 2008

CaseChat Overview and Summary

This case involved an appeal by the Official Assignee in Bankruptcy against a decision of Chisholm J, which in turn had been a decision on a motion brought by the Official Assignee. The Official Assignee had sought to have a family trust, set up by a discharged bankrupt, Mr Reynolds, found to be a sham or an alter ego trust. The Official Assignee sought to have the assets of the trust made available to Mr Reynolds' creditors. The Court of Appeal dismissed the appeal and held that the trust was neither a sham nor an alter ego trust. The Court found that there was no common intention between the settlor and the trustees to create a sham, and the evidence was insufficient to establish that the trust was an emerging sham. The Court also held that alter ego trusts are not a separate cause of action from sham trusts and are confined to evidence to help establish a sham. The Court found that the Official Assignee did not have a different stance from that of Mr Reynolds and could not seek relief which was effectively for Mr Reynolds' own benefit. The Official Assignee did not have a different position from that of Mr Reynolds and could not seek relief for the benefit of Mr Reynolds' creditors. The Court held that the Official Assignee's appeal should be dismissed and costs should lie where they fall.

Orders