Okkerse v Aotearoa Enterprises Limited - [2014] NZHC 3317

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2013-485-7137 [2014] NZHC 3317

UNDER Section 174 of the Companies Act

IN THE MATTER

of an application for (inter alia)
rectification of the records of a company

BETWEEN

JANETTE YVONNE OKKERSE AND DAVID JOHN CHAPMAN

Plaintiffs

AND

AOTEAROA ENTERPRISES LIMITED First Defendant

RICHARD HUDSON CAUGHLEY AND MATTHEW PETER WHIMP

Second Defendants

Hearing: 28, 29 and 30 October 2014

Counsel:

G J Toebes and J W Grant for Plaintiff
J B M Smith QC and M J Ferrier for Defendants

Judgment:

19 December 2014

JUDGMENT OF GODDARD J

This judgment was delivered by me on 19 December 2014 at 10.00 am, pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:
J T Law, Wellington for Plaintiffs
Luke Cunningham Clere, Wellington for Defendants

OKKERSE v AOTEAROA ENTERPRISES LIMITED [2014] NZHC 3317 [19 December 2014]

Introduction

[1] It is axiomatic that every case turns on its facts. This case is no exception. Ultimately, its outcome depends on determining who was entitled to the benefit of dividends declared by Aotearoa Enterprises Limited (Aotearoa) for the financial years ending 31 March 2007 and 31 March 2008 and credited to the current accounts of its shareholders. The dividends declared in those respective years were
$2,067,200 and $172,584. Both dividends derived from success fees earned by two companies, Building Solutions Limited (BSL) and Barnes Street Properties Limited (BSPL). BSL and BSPL were wholly owned by the two directors of Aotearoa, Mr R J Burrell and Mr G S Wilkinson. Neither BSL or BSPL had any connection with the business of Aotearoa, but on advice from Price Waterhouse Coopers (PWC), Aotearoa was nominated to receive the success fees earned by BSL and BSPL. This was achieved by generating invoices for “management fees” in each case, although no management services were provided. The management fees were declared as revenue by Aoteoroa, so that the success fees could be paid out as dividends. The dividends declared were then credited pari passu to the accounts of the three shareholders of Aoteoroa: 50 per cent to Mr Wilkinson’s trust, the GS Wilkinson No 1 Trust (50 fully paid shares); 25 per cent to the predecessor of Mr Burrell’s investment trust, the Taranaki No 2 Trust (25 fully paid shares); and 25 per cent to the predecessor of the Janette Okkerse Family Trust (JOFT) (25 fully paid shares).

[2] In 2008, the accounts were adjusted and the 25 per cent share of the dividend derived from the BSL Success Fee and credited to the JOFT in 2007 was transferred to the Taranaki No 2 Trust. In 2009 the accounts were again adjusted and the 25 per cent share of the dividend derived from the BSPL Success Fee and credited to the JOFT in 2008 was similarly transferred to the Taranaki No 2 Trust. The defendants say these current account adjustments were made with the knowledge and consent of the shareholders of Aoteoroa; and that the financial statements of Aoteoroa for each…

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 3317
Decision Date: 19 December 2014

CaseChat Overview and Summary

The High Court of New Zealand, Wellington Registry, heard a case involving Janette Yvonne Okkerse and David John Chapman suing Aotearoa Enterprises Limited, Richard Hudson Caughley, and Matthew Peter Whimp. The plaintiffs sought rectification of the records of Aotearoa to show credits in the Janette Okkerse Family Trust (JOFT) current account for the dividends transferred to the Taranaki No 2 Trust in 2008 and 2009. The key legal issue was whether there was any intention that Ms Okkerse, or the JOFT, would have a beneficial entitlement to the 25 per cent share of the dividends derived from the success fees channelled through the JOFT current account. The court found that there was no intention for Ms Okkerse or the JOFT to have any beneficial entitlement to these dividends, as the transfers were made with the knowledge and consent of all shareholders and the financial statements were formally approved. The court also dismissed the alternative claims regarding inter-trust loans and unjust enrichment. The application was dismissed, and judgment was entered for the defendants. Costs were to follow the event, with an award to the successful defendants if the parties could not agree on the issue of costs.

Orders