Olliver v Sparks
[2021] NZHC 220
•19 February 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2020-404-1890
[2021] NZHC 220
UNDER section 182 of the Family Proceedings Act 1980 BETWEEN
GREGORY MARTIN OLLIVER
Plaintiff
AND
SARAH PATRICIA SPARKS
First Defendant
GLOVER NO 2 TRUST LIMITED (as
trustee of Glover No 2 Trust) Second Defendant
Hearing: 12 November 2020 Counsel:
PJK Spring and HG Holmes for plaintiff LJ Kearns for first respondent
KJ Crossland for second respondent
Judgment:
19 February 2021
JUDGMENT OF FITZGERALD J
This judgment was delivered by me on 19 February 2021 at 11.30am, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: Keegan Alexander, Auckland
Lane Neave, Auckland (A Taggart) Shieff Angland, Auckland
OLLIVER v SPARKS [2021] NZHC 220 [19 February 2021]
Introduction
[1] On 30 June 2020, the plaintiff, Mr Olliver, commenced proceedings in the Family Court against his former wife, Ms Sparks, and Glover No. 2 Trust Ltd (Glover No. 2 Trustee) as trustee of a trust associated with Ms Sparks (the Glover No. 2 Trust). On 24 September 2020, and by consent, Mr Olliver’s proceedings were transferred to this Court in which related proceedings are in progress.
[2] Mr Olliver seeks relief pursuant to s 182 of the Family Proceedings Act 1980 (the Act). He says that arrangements surrounding monies due to the Glover No. 2 Trust from CIT Holdings Ltd (in liquidation) (the CIT Distribution) constitute a nuptial settlement for the purposes of s 182 of the Act. Mr Olliver seeks a resettlement of the CIT Distribution on him in its entirety. The amount in issue is approximately
$1.9 million.
[3] Ms Sparks applies to strike out and/or for a defendant’s summary judgment on Mr Olliver’s claim. She advances the following grounds in support of her application:
(a)First, it is not reasonably arguable that the arrangements relied on by Mr Olliver could give rise to a nuptial settlement.
(b)Second and in any event, it is no longer open to Mr Olliver to bring a s 182 claim, given his wholesale divestment in 2009 of any legal or beneficial interest in the trust assets which give rise to the CIT Distribution.
(c)Third, Mr Olliver failed to bring his s 182 claim within a “reasonable time” after dissolution of the parties’ marriage, as required by s 182(1) of the Act.
(d)Fourth, Mr Olliver’s s 182 claim could and should have been brought by him several years ago, and represents the latest in a series of attempts by him to gain control of the CIT Distribution. Ms Sparks says the
present proceedings are therefore vexatious and/or an abuse of process and ought to be struck out on Henderson v Henderson principles.1
[4]In light of the above, key issues for determination are:
(a)Whether the Court can be satisfied at this stage of the proceedings that it is not reasonably arguable that the arrangements relied on by Mr Olliver constitute a nuptial settlement for the purposes of s 182 of the Act (Issue 1).
(b)Whether Mr Olliver’s divestment of any legal and beneficial interest in the assets which give rise to the CIT Distribution debars him from advancing his s 182 claim (Issue 2).
(c)Whether Mr Olliver failed to bring his s 182 claim within a reasonable time as required by s 182 of the Act, and if so, whether the proceedings ought to be struck out as a result (Issue 3).
(d)Whether, in the context of the now six years of litigation between Mr Olliver and Ms Sparks (and entities associated with them), Mr Olliver’s s 182 claim is vexatious and/or otherwise an abuse of process and thus ought to be struck out (Issue 4).
[5] Finally, counsel for Glover No. 2 Trustee made some brief oral submissions at the hearing before me. Those submissions were broadly supportive of Ms Sparks’ position. I merely observe for present purposes that should the matter progress, Glover No. 2 Trustee may need to consider its position in this ongoing litigation and what role, if any, it is appropriate for it to take, given the main protagonists are clearly Mr Olliver and Ms Sparks.2
[6]The balance of this judgment is structured as follows:
1 Henderson v Henderson (1843) 3 Hare 100, 67 ER 313 (Ch).
2 See, for example, the principles discussed in Re Uncle’s Joint Pty Ltd [2014] NSWSC 321, (2014) 12 ASTLR 487 at [30]–[33].
(a)First, I summarise the factual background to the present proceedings, including earlier litigation between Mr Olliver and Ms Sparks on which Ms Sparks relies in support of her present application.
(b)Second, I summarise the procedural background to the present proceedings.
(c)Third, I summarise the principles applicable to an application to strike out and for defendant’s summary judgment, which are not in dispute.
(d)Fourth, I summarise the parties’ respective submissions on each of Issues 1 to 4.
(e)Finally, I set out my decision and reasoning on each of Issues 1 to 4.
Factual background and prior litigation
Introduction
[7] Mr Olliver swore a detailed narrative affidavit in support of his Family Court proceedings, before they were transferred to this Court. There was no dispute that his affidavit can be taken into account on Ms Sparks’ strike out and/or summary judgment application.
[8] Ms Sparks did not swear a narrative affidavit in response to Mr Olliver’s affidavit, or otherwise advance any substantive factual evidence on her application. Mr Olliver’s narrative affidavit is accordingly the only material before the Court which provides the factual background to these proceedings. Much of the following narrative is accordingly drawn from Mr Olliver’s pleading and his narrative affidavit. I am conscious that, at least on a strike out application (and to the extent that they are not entirely speculative and without foundation), pleaded facts are assumed to be true. It is also not possible on the present application to make any credibility assessment in relation to Mr Olliver’s narrative affidavit.
[9] There is one further point to note by way of introduction to this section of my judgment. As the Court of Appeal observed in a 2013 judgment on claims between Mr Olliver and Ms Sparks’ related entities:3
[The parties] were developers of high value residential properties in St Heliers, Auckland. Their operations were conducted through a convoluted legal structure of trusts and companies apparently designed to protect assets from creditors and minimise tax liabilities.
[10] The “convoluted legal structure” of Mr Olliver and Ms Sparks’ business affairs, and the litany of litigation which followed the end of their marriage, means it is necessary to traverse the background facts to the present application in some detail. This section of my judgment is accordingly somewhat lengthy, though I have sought to limit the background to those matters upon which the parties rely on the present application.
Marriage to events in 2009
[11] Mr Olliver and Ms Sparks commenced a relationship in 1997 and married on 18 March 2000. They separated on 4 July 2012 and their marriage was dissolved on 25 August 2014. There are three children of the marriage.
[12] For most of their relationship, Mr Olliver was a property developer. He explains his various property developments and projects, culminating in the “Landco Group”, which in the period 2005 to 2007 employed nearly 300 people across various entities. By all accounts Mr Olliver was successful in his business, and he and his family enjoyed a comfortable lifestyle as a result. Allan J also noted in a 2013 judgment in related litigation that “Ms Sparks is an experienced business-woman in her own right, owning and operating her own public relations company”.4
[13] Mr Olliver says that his success in property development “all ended with the global financial crisis” and in 2009, creditors applied to have him adjudicated bankrupt. He was at that time liable as guarantor for about $93 million in borrowings
3 Glover No. 2 Ltd v The Glover Trust Limited [2013] NZCA 608, (2013) 3 NZTR 23-028 at [1].
4 The Glover Trust Ltd v Glover Trust Corporation Ltd [2013] NZHC 545 at [4].
by various entities associated with him. I return to Mr Olliver’s bankruptcy, and his proposed creditors’ scheme in order to avoid bankruptcy, later in this factual narrative.
The Waimarie development
[14] Mr Olliver says that over the course of the couple’s marriage, he had purchased (through related entities) a number of properties in Waimarie Street in St Heliers. One of those properties was used as the family home for most of the parties’ relationship. Mr Olliver viewed the other properties (other than those immediately adjacent to the family home, which would be developed as part of it) as a prime development opportunity.
[15] He explains that in 2009, and in order to try and salvage some value for the benefit of the family, he devised a plan which was structured as a joint venture between the Waimarie Trust, which was controlled by Ms Sparks, and the Glover Trust, which was (or at least had been) controlled by him. By way of background, the Glover Trust had been settled by Mr Olliver on 7 September 1999 and thus shortly before the parties’ marriage. Its discretionary beneficiaries included Mr Olliver, Ms Sparks and their children. Its primary assets included the shares in CIT Holdings. The Waimarie Trust had been settled by Ms Sparks on 13 July 2005 and thus during the course of the parties’ marriage. Its discretionary beneficiaries also included Ms Sparks, Mr Olliver and their children.
[16] Mr Olliver says the purpose of the joint venture was to develop the Waimarie properties “to provide a good home for the family and generate some wealth so that we could live comfortably”. Similar statements are pleaded in his statement of claim, including that “the purpose of the joint venture was … in every real sense to benefit the marriage and the children”.
[17] The joint venture was to be carried out through a corporate entity, CIT Holdings, so as to avoid the Waimarie Trust (which Mr Olliver says was the family trust) assuming the risks of the borrowings associated with the development.
[18] Mr Olliver explains that by 2009, the Waimarie properties were owned by “separate albeit related entities” which each owed substantial sums to creditors. He
says it was therefore necessary to “re-acquire” the properties from those entities, with this occurring in two separate tranches:
(a)The first, on 9 March 2009, when CIT Holdings agreed to purchase the first tranche of properties for approximately $8.3 million, funded by a
$2 million contribution by the Waimarie Trust and $6.75 million in debt finance from the Bank of New Zealand (BNZ).
(b)The second, in April 2009, when CIT Holdings purchased the second tranche of properties for $1.65 million, funded by an advance in that amount from the Waimarie Trust. Unlike the first tranche of properties, this second tranche was not secured by way of mortgages in favour of BNZ, though was subject to a pre-existing General Security Agreement (GSA) between CIT Holdings and BNZ.
[19] Mr Olliver deposes that the Waimarie Trust was able to afford the two contributions to CIT Holdings because it had owned a historic homestead in Marlborough, called the Bankhouse Homestead, which it had sold to the Todd Group in 2008 for $7.75 million. The Bankhouse Homestead had originally been owned by a trust associated with Mr Olliver (the BBG Trust), but at some point had been transferred to the Waimarie Trust. Mr Olliver says he was involved in and indeed enabled the transfer and its subsequent sale to the Todd Group:
Naturally I would not have either transferred the property to the Waimarie Trust, or negotiated such a favourable sale, had I not expected that the family would enjoy a continuing benefit from the Waimarie Trust and its sole asset.
[20] Mr Olliver’s statement of claim similarly pleads that “the funds from the Waimarie Trust were derived in their entirety from investments actuated by [Mr Olliver] and only available to the marriage because of his business contacts and experience”. Other than Mr Olliver’s narrative affidavit, there is no other evidence before me as to how the Waimarie Trust came to be in funds to make the two contributions to CIT Holdings. In this context, do not consider Mr Olliver’s factual pleading to be of a type that is entirely speculative or without foundation. I accordingly proceed for present purposes on the basis it is true.
[21] Returning to the factual narrative, the plan for developing the Waimarie properties was reflected in a Joint Venture Agreement between the Glover and Waimarie Trusts executed in March 2009 (the JV Agreement). The recitals to the JV Agreement included the statement that:
For the purposes of preserving the residential portion of the property for the benefit of Waimarie and maximising the potential for the residue of the property without prejudicing the residential portion, the parties are to form the joint venture.
(emphasis added)
[22] Consistent with this, the JV Agreement described the purpose of the joint venture as being to pursue the “business”, which in turn was defined as:
… the preservation of the potential value of the property by its sale, with or without any boundary adjustment or subdivision, while separating out the residential portion to be vested in the Waimarie Trust for the purposes and benefit of that trust.
(emphasis added)
[23] The JV Agreement recorded that upon the commencement date of the joint venture, Waimarie Trust was to contribute initial capital of $2 million (which appears to be the $2 million contribution discussed earlier which enabled CIT Holdings to acquire the first tranche of properties), and Glover Trust was to contribute “the property” (defined as the various Waimarie properties listed in a schedule to the agreement). Clause 2.3(b) of the JV Agreement went on to provide that:
The property to remain in the name of the Glover-owned company, CIT Holdings Ltd (“CIT”), for so long as the property or any part of it remains part of the assets of the joint venture. The beneficial ownership of the property and other assets of the joint venture shall be determined in accordance with the terms of this agreement and not by reference to the title to any part of the property or the shareholding of CIT.
[24]Clause 3.1 of the JV Agreement provided that:
Borrowing by the parties for the purposes of the joint venture shall include the initial loan advances received by CIT for the purchase of the property. Such borrowing to be a charge against the remainder of the property to the exclusion of the residential portion to the extent that it is possible.
[25]Clause 6 of the JV Agreement dealt with termination and provided as follows:
This agreement shall terminate upon the transfer of the residential portion to Waimarie free of any encumbrance and completion of the realisation by sale of the remainder of the property. On the completion of the transfer of the residential portion all sales of the remainder of the property any remaining cash assets shall be divided between the parties in proportion to their respective percentage interests in completion of the termination of the joint venture.
[26] Waimarie Trust was to receive a 60 per cent share of the venture (which was to include the distribution or transfer in specie of the residential portion of the property) and Glover Trust a 40 per cent share.
[27] The JV Agreement also included an entire agreement clause in the following terms:
This agreement constitutes the sole understanding of the parties with respect to the subject-matter hereof and supersedes all prior understandings, written or oral, which shall be of no further force or effect. No modification, alteration or waiver of the terms of this agreement shall be binding unless the same shall be in writing dated subsequent to the date of this agreement and duly executed by both parties.
[28] In April 2009, the Glover and Waimarie Trusts entered into a supplementary Joint Venture Agreement. This documented Waimarie Trust’s second contribution to CIT Holdings (of $1.675 million).
[29] Mr Olliver says the overall plan was to subdivide the Waimarie properties, with 60 per cent of them going in due course to the Waimarie Trust as the family home, and the other 40 per cent going to the Glover Trust to be further subdivided and sold to repay BNZ and to make a profit. Mr Glover says in his affidavit that:
It was hoped that the Waimarie trust contribution of $3,650,000, which had been derived from the sale of the Bankhouse Homestead, would result in:
(a)A very comfortable, unencumbered family home and gardens in a very desirable part of the city; and
(b)Cash in approximately the same amount put in, i.e. $3,650,000.
[30] This overall purpose is consistent with evidence given by CIT Holdings’ former accountant, Ann Dew, in separate litigation involving Mr Olliver and
Ms Sparks in 2018. In his judgment dated 11 September 2018, Jagose J recorded the following:5
The joint venture’s overall objective is said by the Company’s former accountant, Ann Dew, to have been to settle one of the properties as the family home on Waimarie Trust, leaving the other development properties under the control of the Glover Trust.
[31] Mr Olliver says that subsequent to entry into these arrangements, he personally contributed a further $1 million to the venture which was used to partially repay the BNZ mortgage.
[32] Mr Olliver says that in about 2009, Ms Sparks decided she no longer wished to develop the Waimarie properties as originally envisaged, viewing the development as overly ambitious. In order to accommodate her concerns, Mr Olliver says he tried to sell some of the land. He describes the difficulties in doing so, and work he did as a result to obtain a consent to subdivide the site. He goes on to explain that when this failed to elicit a sale, he then took steps to obtain a resource consent for the land to be split into two blocks. Mr Olliver says that over the following two years, Ms Sparks (then in control of the Waimarie development and CIT Holdings – see further below) did not take steps to substantively progress the joint venture development.
Parallel developments – Mr Olliver’s financial strife
[33] As noted above, from around 2008, Mr Olliver, and entities associated with him, experienced serious financial difficulties as a result of the global financial crisis. This included Mr Olliver being personally liable as guarantor to some $93 million in borrowings by related entities. Creditors were taking steps which would have led to him being adjudicated bankrupt. This in turn led to Mr Olliver advancing a creditors’ scheme, by way of a Court approved scheme of arrangement under Part 5 of the Insolvency Act 2006 (the Creditors’ Scheme).
[34] In the context of the Creditors’ Scheme, in 2009, Mr Olliver took steps to divest himself of all legal and beneficial ownership of assets that might have otherwise been available to his creditors. In another separate judgment in the ongoing litigation
5 Harris v Bank of New Zealand [2018] NZHC 2386 at [6].
between Mr Olliver and Ms Sparks, Associate Judge Osborne (as he then was) described the position as follows:6
When Mr Olliver’s insolvency proposal was being pursued in 2009, Mr Olliver and Ms Sparks embarked upon arrangements to have Mr Olliver drop out of both legal and beneficial ownership of assets held by them or their interests.
(emphasis added)
[35] These steps included appointing Glover Trust Corporation Ltd (GTC) as the new trustee of the Glover Trust, the directors and equal shareholders of which were Ms Sparks and the family barrister and solicitor, a Mr Thomas. Mr Olliver also says that “from 2009 to about 2013”, Ms Sparks (together with Mr Thomas) was a director of CIT Holdings and “had control over CIT Holdings and therefore the Waimarie land and the development generally.”
[36] On 4 May 2009, Mr Olliver (with his consent) was removed as a discretionary beneficiary of the Glover Trust. Although the precise date is not clear from the materials presently before the Court, it seems Mr Olliver was also removed as a discretionary beneficiary of the Waimarie Trust. In an affidavit sworn in separate litigation between Mr Olliver and Ms Sparks (but produced in evidence on the present application), Mr Thomas stated the following:
Glover Trust Corporation Ltd was appointed as a corporate trustee of Mrs Olliver’s existing trusts, Mrs Olliver and I being the shareholders and directors of that company. The trusts are exclusively for the benefit of Mrs Olliver and her family interests, the trustees having irrevocably excluded Mr Olliver as a beneficiary of the trusts pursuant to the powers contained in the relevant trust deeds.
[37] In his narrative affidavit, and having referred to the “Waimarie street development”, Mr Olliver states:
I acknowledge that I have been excluded as a beneficiary in 2009 but this was only to prevent any potential challenge by the creditors who had applied to make me bankrupt in 2009. Indeed, my exclusion as a beneficiary was a voluntary act which specifically sought to preserve the assets for the benefit of the family.
6 CIT Holdings Ltd v Glover No 2 Ltd [2014] NZHC 3114, (2014) 16 NZCPR 85 at [6].
[38] Further, in another separate judgment in the litigation between Mr Olliver and Ms Sparks, Associate Judge Faire (as he then was) noted that Mr Olliver “had no interest”7 in his then wife’s trust (which was presumably the Waimarie Trust) and “in particular, is not a beneficiary of it”.8
[39] In this judgment, I refer to the steps taken by Mr Olliver to drop out of legal and beneficial ownership of assets as “Mr Olliver’s divestment of interests”.
The Creditors’ Scheme
[40] The Creditors’ Scheme was the subject of a hearing before Associate Judge Faire in early May 2009. While most of Mr Olliver’s creditors approved the scheme, some did not and commenced separate bankruptcy proceedings. In a judgment delivered on 13 May 2009, Associate Judge Faire considered both the proposed Creditors’ Scheme and the dissenting creditors’ application to adjudicate Mr Olliver bankrupt.
[41] Assessment of Mr Olliver’s assets and financial position was central to Associate Judge Faire’s consideration of whether to approve the Creditors’ Scheme. His judgment records the following about what Mr Olliver said were his assets at that time:9
[5] Mr Olliver says his only assets are the shares in three companies, which have no appreciable value because they are bare trustees. He says that he is the settlor, appointor and/or a discretionary beneficiary in five trusts. The trusts own properties which are subject to mortgages which he said exceed the likely current value of the properties. The mortgages are in default. He personally is a guarantor of the mortgages. He expects that if the properties were sold by the mortgagees there would be a shortfall in each case and nothing left for the trusts. He says that the only other assets of the trusts are a computer and phone system and two vehicles that are available for his personal use. He says the trusts have substantial tax losses but their only value is to reduce future taxable income. The only income that is derived from the trusts or the companies is a consultancy fee and income derived from a company which runs a farm at Marlborough. The income from the farm is paid to South Canterbury Finance Limited to service the debt owed to that
7 Re St Laurence Lending Ltd ex parte Olliver HC Auckland, 13/5/2009, CIV-2008-404-7417, CIV- 2009-404-579 at [5].
8 Re St Laurence Lending Ltd ex parte Olliver HC Auckland, 13/5/2009, CIV-2008-404-7417, CIV- 2009-404-579 at [5].
9 Re St Laurence Lending Ltd ex parte Olliver HC Auckland, 13/5/2009, CIV-2008-404-7417, CIV- 2009-404-579.
company. The consultancy fee is $525,000.00 per annum, paid monthly. It is for a two-year period. At the time of proposal it was paid to a company owned by one of Mr Olliver’s trusts. Subsequent to the filing of the proposal the shareholding in that company has been transferred to Mr Olliver’s wife’s trust. The evidence is that Mr Olliver has no interest in that trust and, in particular, is not a beneficiary of it.
[42] Creditors were concerned about whether Mr Olliver nevertheless retained interests in or control over assets (then under the control of Ms Sparks) which would otherwise have been available to them. Having addressed a number of the creditors’ particular concerns, Associate Judge Faire said:10
[64] A further complaint was made on the general ground that Mr Olliver maintained some controlling interest in assets which are beyond the reach of his creditors because they are owned by the interests of Mr Olliver’s wife. Mr Donald Thomas, Mrs Olliver’s solicitor, has given an affidavit and has deposed to Mrs Olliver’s independence and has not been challenged.
[43] Ms Sparks also produced on her present application a copy of Mr Olliver’s counsel’s (draft) submissions for the hearing before Associate Judge Faire.11 Those submissions stated:
[One creditor] sees [matters] as evidence that Mr Olliver retains a controlling interest in substantial assets that are not available to his creditors. There is no basis for any such conclusion. As deposed to by Mrs Olliver’s own solicitor, she is an independent professional woman, financially successful and independent in her own right. Mr Olliver has no control or other influence over Mrs Olliver’s interests and he is no longer a beneficiary of those interests following the filing of this proposal.
[44] Associate Judge Faire ultimately approved the Creditors’ Scheme. It is a fair reading of his judgment and associated papers that approval of the scheme was based in large part on the proposition that Mr Olliver had no (significant) present or contingent assets in his own right.
10 Re St Laurence Lending Ltd ex parte Olliver HC Auckland, 13/5/2009, CIV-2008-404-7417, CIV- 2009-404-579.
11 There was no suggestion on behalf of Mr Olliver that the draft submissions did not reflect the actual submissions made to Associate Judge Faire.
The marriage founders and Ms Sparks takes steps to protect her position
[45] The couple’s marriage evidently started to fail in around late 2010. In (yet) another judgment in the context of the parties’ continuing litigation, Allan J described the situation as follows:12
[17] In the meantime, the relationship between Mr Olliver and Ms Sparks was deteriorating. In October 2010, and again early in 2011, Ms Sparks sought advice from senior counsel about her marriage and in particular about relationship property issues.
[18] On the evening of 9 March 2011, there was a serious argument between the couple. On the following morning, 10 March, Ms Sparks telephoned Mr Thomas, asking that he take steps to protect the second tranche assets so far as he could, from the reach of Mr Olliver and creditors generally. The instruction was to act urgently because Mr Olliver had threatened to take immediate steps to assume control of the various entities and of the joint venture assets.
[19] Mr Thomas acted with considerable speed. Within an hour or so he had prepared a number of documents which Ms Sparks signed at his office later that morning.
[46] The Court of Appeal, in its judgment dismissing Ms Sparks’ appeal from Allan J’s judgment, succinctly summarised the nature and effect of the documents executed by Ms Sparks on 10 March 2011 as follows:13
(a)A trust deed creating the Glover No 2 Trust. Ms Sparks was the settlor. Glover No 2 Ltd was the trustee. Ms Sparks and Mr Thomas were directors and equal shareholders; and Ms Sparks, her children and grandchildren and Mr Olliver were discretionary beneficiaries.
(b)A resolution of GTC, trustee of the Glover Trust, to distribute the four properties to the Glover No 2 Trust.
(c)Glover No 2 Ltd’s resolution as trustee of the Glover No 2 Trust to accept the distribution of the properties from the Glover Trust for the benefit of the beneficiaries of the Glover No 2 Trust.
(d)An authority form for the transfer of the properties from CIT Holdings Ltd to Glover No 2 Ltd.
(e)Ms Sparks’ memorandum of wishes.
(f)A deed of novation, substituting Glover No 2 Ltd for Waimarie Trust Ltd in the joint venture arrangement.
12 Glover Trust Ltd v Glover Trust Corporation Ltd [2013] NZHC 545.
13 Glover No 2 Ltd v Glover Trust Ltd [2013] NZCA 608, (2013) 3 NZTR 23-028 at [14].
[47] Also executed on 10 March 2011 was a trust deed by which Glover No. 2 Trustee declared that it held the second tranche properties on bare trust for CIT Holdings (given an absolute transfer to Glover No. 2 Trustee would apparently have given rise to tax liabilities).
Mr Olliver takes steps to regain control
[48] Upon finding out about the steps taken by Ms Sparks, Mr Olliver sought to regain control of the various assets. As settlor of the Glover Trust, he appointed new trustees in place of GTC, who then replaced the board of CIT Holdings (of which Ms Sparks was then the sole director, Mr Thomas having resigned in August 2012). As a result of these steps, Mr Olliver regained effective control of the Glover Trust and CIT Holdings.
[49] The Glover Trust and CIT Holdings then commenced proceedings against GTC and Glover No. 2 Trustee to recover the second tranche Waimarie properties. The proceedings ultimately focused on the validity of the trust deed referred to at [47] above. Ms Sparks’ entities contended that the trust deed was in fact a sham, and that an absolute transfer of the second tranche properties to Glover No. 2 Trustee had been intended. The argument was rejected by both Allan J and the Court of Appeal, primarily on the basis that the only way in which the transfer would have had the intended effect of avoiding tax liabilities was by way of a transfer of only legal title to Glover No. 2 Trustee. Consistent with this, Allan J ordered Glover No. 2 Trustee to reconvey the second tranche properties back to CIT Holdings.
[50] Mr Olliver says that by the time he regained control of CIT Holdings, it became apparent to him that Ms Sparks had removed significant value from the company, including for her own personal use. Mr Olliver says Ms Sparks arranged for CIT Holdings to take out a $500,000 loan with Southern Cross Finance, secured by the second tranche Waimarie properties (and thus in breach of the BNZ GSA), with about half of that loan then being paid out to Ms Sparks personally. Mr Olliver says that Ms Sparks then travelled to Switzerland for a ski holiday. Mr Olliver also says that during her tenure as director of CIT Holdings, and in the period after 30 June 2012 (when the loan to BNZ had fallen due), Ms Sparks arranged for payments totalling
some $320,000 to be made by CIT Holdings to the Waimarie Trust, and to herself of around $820,000. Jumping forward a little in the chronology, in 2014, CIT Holdings commenced proceedings against Ms Sparks and the Waimarie Trust for recovery of those funds. The claim was later subject to a stay after CIT Holdings was put into liquidation (see further below at [53].) It is because, at least on Mr Olliver’s case, Ms Sparks has already had significant personal benefit from CIT Holdings, that he seeks a resettlement on him of the full CIT Distribution.
[51] Returning to the chronology, following transfer of the second tranche properties back to CIT Holdings, Ms Sparks arranged for Glover No. 2 Trustee to lodge caveats against the properties’ titles. Glover No. 2 Trustee claimed a caveatable interest as beneficiary of a bare trust of which CIT Holdings was trustee, on the basis of the JV Agreement.
[52] CIT Holdings applied for an order that the caveats be removed. That application was determined by Associate Judge Osborne in December 2014. The Associate Judge declined CIT Holdings’ application. He concluded that on a plain construction of the JV Agreement, CIT Holdings was trustee of the residential portion of the Waimarie properties for Waimarie Trust, and thus (following the novation) Glover No. 2 Trustee. And in the context of CIT Holdings’ argument that the Court should exercise its residual discretion to order removal of the caveats in any event (on the basis Glover No. 2 Trustee had been a party to a known breach of the terms of the JV Agreement), Associate Judge Osborne declined to do so. He observed that issues of that nature were only capable of just determination in a trial, with the benefit of pleadings and evidence.14
CIT Holdings’ liquidation
[53] Given the issues outlined in the preceding sections of this judgment, the development of the Waimarie properties did not proceed as planned. This led to CIT Holdings owing significant amounts to the Inland Revenue Department (the IRD). The IRD subsequently commenced liquidation proceedings and the company was
14 CIT Holdings Ltd v Glover No. 2 Ltd [2014] NZHC 3114, (2014) 16 NZCPR 85 at [90].
placed into liquidation in early 2016. At that time, it also owed significant sums to BNZ (including penalty interest).
Waimarie Trust’s contributions to CIT Holdings – equity or loans?
[54] Once CIT Holdings had been put into liquidation, Glover No. 2 Trustee lodged a creditor’s claim of $3,675,050, reflecting Waimarie Trust’s earlier contributions to CIT Holdings and summarised at [18] above. The company’s liquidators had in the meantime realised its assets (including selling the Waimarie properties in 2018 for
$20,500,000), and after paying secured and preferred creditors, held approximately
$3.8 million for distribution.15
[55] An issue then arose as to whether Waimarie Trust’s contributions to CIT Holdings were by way of debt or equity. The distinction was important, and is of relevance to Mr Olliver’s current s 182 claim. In short, if the contributions were by way of debt, Glover No. 2 Trustee would receive a substantial distribution from CIT Holdings’ assets as an unsecured creditor; on the other hand, if they were contributed by way of equity, Waimarie Trust would only be entitled to a share of the residue available upon repayment of creditors (likely to be minimal).
[56] Mr Olliver/CIT Holdings took the view that the Waimarie Trust’s contributions to CIT Holdings were by way of equity. They advocated for that position in litigation in 2014 before Associate Judge Matthews, namely Glover No. 2 Trustee’s application to set aside a statutory demand issued against it by CIT Holdings for unpaid court costs. In his judgment dated 10 November 2014, Associate Judge Matthews concluded that there was an evidential foundation for the contributions being debt rather than equity, and thus that Glover No. 2 Trustee “appear[ed] to have a counterclaim or cross- demand exceeding the sum claimed in the statutory demand”.16 Given the nature of the proceedings, however, it was not necessary for the Associate Judge to reach a concluded view on the issue.
15 In the event, BNZ did not charge penalty interest on the (overdue) loan.
16 Glover No 2 Ltd v CIT Holdings Ltd [2014] NZHC 2786 at [37].
[57] In the context of CIT Holdings’ liquidation, Mr Olliver/CIT Holdings maintained that Waimarie Trust’s contributions had been by way of equity. As a result, in September 2018, CIT Holdings’ liquidators sought directions from the Court on the issue.
[58] The characterisation of the contributions was finally resolved by Jagose J in a judgment delivered in September 2018. The Judge concluded that, on a proper interpretation of the JV Agreement, the contributions were intended to be by way of debt. On that basis, Jagose J directed that “Waimarie Trust’s payments of capital under the principal and supplementary joint venture agreements are loan advances to the Company, establishing the Company’s debt to Waimarie Trust in that amount.”17
[59] The final piece of litigation relevant to the present application is the Court of Appeal’s judgment in Fatupaito v Harris.18 The proceedings arose out of Bankhouse Trust Ltd’s (Bankhouse) appointment of receivers to CIT Holdings. At that time, Mr Olliver was the sole director of both Bankhouse and CIT Holdings. CIT Holdings’ liquidators argued that Bankhouse had appointed receivers for a purpose unrelated to obtaining repayment of the debt due from CIT Holdings, being to ensure that the charged properties were sold, on very particular terms, to another entity associated with Mr Olliver (GMO). The very particular terms of the proposed sale included that the liquidators sell, not only the Waimarie properties to GMO, but also CIT Holdings’ claims against Ms Sparks and Waimarie Trust (which as noted earlier, had been stayed upon CIT Holdings going into liquidation). In the resulting proceedings before this Court, the liquidators said that:19
By controlling the sale in this way, Mr Olliver could retain control of the properties to his advantage, whilst also obtaining claims CIT had against his former wife, with whom he was in an acrimonious relationship property dispute.
[60] The liquidators sought a declaration that the receivers’ appointment was invalid, having been made for an improper purpose. The liquidators were unsuccessful
17 Harris v Bank of New Zealand [2018] NZHC 2386 at [20](a).
18 Fatupaito v Harris [2018] NZCA 497, [2019] NZAR 192.
19 Fatupaito v Harris [2018] NZCA 497, [2019] NZAR 192 at [2].
in the High Court but were successful on appeal. In allowing the appeal, the Court of Appeal observed as follows:20
[57] In this case there is good evidence that the predominant purpose, perhaps the sole purpose for the appointment, was gaining control of the properties in order to gain access to the accounts receivable of CIT and in particular the debts owed to that company by Mr Olliver’s estranged wife and a trust associated with her, Waimarie Trust. It is not disputed by the first respondents that as the sole director of Bankhouse, Mr Olliver’s actions and intentions can be equated with those of Bankhouse. …
[58] Evidence of Bankhouse’s purpose in appointing receivers can be gleaned from the following. The terms of sale of the properties were agreed between the liquidators and Mr Olliver, except for the condition Mr Olliver sought to impose for the benefit of GMO that the liquidators also agree to sell the claims against Ms Sparks and Waimarie Trust. As we have noted, Mr Olliver was, at the time, in a prolonged and it seems from the correspondence, bitter dispute with his estranged wife, Ms Sparks. There is nothing to suggest that GMO had any genuine commercial interest in the purchase of the debt. The inference to be drawn is that Mr Olliver was attempting to acquire the debts owed by Ms Sparks and Waimarie Trust to enable him to better pursue those debts as part of his personal dispute with her.
[61]I turn now to the background to the present proceedings.
Procedural background to these proceedings
[62] Ms Sparks first commenced relationship property proceedings against Mr Olliver in late 2014, in the Family Court. Those proceedings were then transferred to this Court in 2015.
[63] There were evidently delays in the proceedings progressing to a hearing, including as a result of non-compliance with timetable orders, the parties being unrepresented at times, a deferral of the original substantive hearing in July 2017 and then a lengthy period (from September 2018 to March 2020) in which a number of – ultimately unsuccessful – settlement conferences and other settlement discussions took place.
[64] Mr Olliver first put Ms Sparks on notice of his intention to bring a s 182 claim (by way of a counterclaim in her relationship property proceedings) in November 2018. Mr Olliver says it was only when Jagose J ruled on the nature of Waimarie
20 Fatupaito v Harris [2018] NZCA 497, [2019] NZAR 192.
Trust’s contributions to CIT Holdings that it became evident that there was any value in a s 182 claim. Mr Olliver further says that he did not file his counterclaim in 2018/2019 as the parties were then in the middle of ongoing settlement discussions and it would have effectively been a “declaration of war” had he done so. Mr Olliver says that by around March 2020, it was clear to him that a settlement was unlikely and the parties would need to revert to the litigation which had been “on hold” since September 2018.
[65] By interlocutory application dated 20 April 2020, Mr Olliver sought leave to bring his s 182 counterclaim in Ms Sparks’ relationship property proceedings. Leave was required given the close of pleadings date had passed.
[66] Before Mr Olliver’s application could be determined, however, on 19 May 2020, Ms Sparks filed a notice of change of counsel advising the Court that she was again self-represented. She also filed a notice of discontinuance of her proceedings.
[67] In a minute issued on 21 May 2020, Duffy J noted that the discontinuance necessarily entailed the ending of all interlocutory applications associated with the proceedings, including Mr Olliver’s application for leave to file his counterclaim. Duffy J observed that “whether Mr Olliver chooses to bring a separate proceeding against Ms Sparks is a separate matter for him to determine but is not relevant to the present proceeding”.
[68] Given these developments, Mr Olliver commenced his s 182 claim as fresh proceedings in the Family Court which were, as noted at the outset of this judgment, transferred by consent to this Court in September 2020. Ms Sparks’ application to strike out and/or for summary judgment followed shortly thereafter.
Applicable legal principles — strike out/defendant’s summary judgment
Strike out
[69] High Court Rule 15.1(1) provides that the Court may strike out all or part of a pleading if it discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading.
[70] The relevant principles are well established.21 A claim will be struck out where the causes of action are clearly untenable, even assuming the pleaded material facts to be true (but this does not extend to pleaded allegations which are entirely speculative and without foundation).22 The jurisdiction, which should be exercised only in clear cases, is not excluded by the need to decide difficult questions of law requiring extensive argument.23 Defendants should not be forced through a lengthy trial process to defend untenable claims.24 The Court can strike out part of a pleading in appropriate cases.25
Summary judgment
[71] High Court Rule 12.2(2) provides that the Court may give judgment against a plaintiff if the defendant satisfies the Court that none of the causes of action in the plaintiff’s statement of claim can succeed. It is similar in nature to an application for striking out, but the same restrictions on evidence do not apply.26
[72] The defendant bears the onus of proving on the balance of probabilities that the plaintiff’s claim cannot succeed. The threshold for summary judgment is reasonably high. Summary judgment will generally only be entered against a plaintiff where there is a complete defence to the plaintiff’s claim, or a clear answer to the claim which cannot be contradicted.27
[73] In Krukziener v Hanover Finance Limited, the Court of Appeal summarised the legal principles and, in particular, confirmed that:28
The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as for example where the evidence is inconsistent with undisputed contemporary documents or other statements by
21 Attorney-General v Prince and Gardner [1998] 1 NZLR 262 (CA) at 267; Couch v Attorney- General [2008] NZSC 45, [2008] 3 NZLR 725 at [33].
22 Southland Building Society v Allison [2012] NZHC 2614 at [18(a)].
23 Attorney-General v Prince and Gardner [1998] 1 NZLR 262 (CA) at 267.
24 Queenstown Lakes District Council v Charterhall Trustees Ltd [2009] NZCA 374, [2009] 3 NZLR 786 at [16].
25 For example, one of two causes of action was struck out in MacKenzie v MacLachlan [1979] 1 NZLR 670 (SC).
26 Ferrymead Tavern Ltd v Christchurch Press Ltd (1999) 13 PRNZ 616 (HC) at 619.
27 Westpac Banking Corp v MM Kembla NZ Ltd [2001] 2 NZLR 298 (CA) at [60].
28 Krukziener v Hanover Finance Ltd [2008] NZCA 187, (2008) 19 PRNZ 162 at [26] (citations omitted).
the same deponent, or is inherently improbable. In the end the Court's assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it.
The parties’ submissions
Ms Sparks’ submissions29
[74] Ms Sparks’ says that Mr Olliver’s s 182 claim fails at the first hurdle, as it is clear that none of the matters relied upon by him could give rise to a nuptial settlement, including the joint venture and its surrounding arrangements. Rather, Ms Kearns, counsel for Ms Sparks, submits that the essence of the joint venture was the repayment of debt, and in particular, the debt now due from CIT Holdings to Waimarie Trust. Counsel highlights that this debt was always going to be repaid, irrespective of whether Ms Sparks’ and Mr Olliver’s marriage continued.
[75] Ms Kearns refers to Booth v Booth, in which the Court of Appeal concluded that an arrangement which was in substance the repayment of debt could not give rise to a nuptial settlement. The Court therefore endorsed the High Court’s earlier decision to strike out the claim.30 Ms Kearns says that in this case, there is nothing in the terms of the JV Agreement itself which arguably gives rise to a nuptial settlement, and the entire agreement clause strips away all prior understandings or agreements between the parties in any event.
[76] Ms Sparks’ second argument is that even if it is arguable that the joint venture and/or the surrounding arrangements gave rise to a nuptial settlement, Mr Olliver’s divestment of interests in 2009 debars him from now bringing a s 182 claim. In particular, Ms Kearns submits that from the point of disavowing any interest in the various trust assets, Mr Olliver cannot have had a continuing expectation of any benefit from them. She therefore submits that to permit Mr Olliver now to receive the entirety of the proceeds of those earlier arrangements would effectively be a fraud on his creditors and an abuse of this Court’s process.
29 At noted at the outset of this judgment, counsel for Glover No. 2 Trustee made (oral) submissions at the hearing before me. Given these largely traversed the same ground and points relied upon by Ms Sparks, I do not address those submissions separately.
30 Booth v Booth [2020] NZCA 451.
[77] In the context of this argument, Ms Kearns refers to authorities such as Horsfall v Potter, to the effect it is not open to a party to characterise their assets and property in one way (for the purposes of engagement with creditors/asset preservation), but then later seek to re-characterise those interests in a relationship property context.31 Ms Kearns says that like the husband’s position in Horsfall v Potter, the change in stance between Mr Olliver’s divestment of interests in 2009 and his present s 182 claim amounts to “having his cake and eating it too”.
[78] Ms Sparks’ third argument is that Mr Olliver’s s 182 claim was not brought within a reasonable time of the date of the dissolution of marriage (as required by s 182), being brought some six years later. Ms Kearns accepts there are authorities in which a s 182 claim has been brought more than six years after dissolution of the marriage. But she says in this case, and in the context of the significant volume of litigation between the parties since dissolution, there was ample opportunity for Mr Olliver to bring his claim at an earlier point in time but he failed to do so. Ms Kearns points, for example, to Associate Judge Matthews’ judgment in 2014, in which he which found it was arguable that the Waimarie Trust’s contributions to CIT Holdings were by way of debt rather than equity, which should have triggered Mr Olliver (and his advisers) to the possibility of a s 182 claim. Ms Kearns also submits that the suggestion Mr Olliver did not want to commence the claim while the parties were in settlement discussions is no answer, given he could have easily sought a suspension or tolling agreement pending those discussions concluding. And finally in this context, Ms Sparks says she has suffered prejudice as a result of the delay, namely that:
(a)after the stay of CIT Holdings’ 2014 proceedings against her and the Waimarie Trust, she believed she no longer had to be concerned about the allegations made against her, yet will now have to traverse all those events again, given Mr Olliver’s claim to the full CIT Distribution; and
(b)as a result of moving house a number of times since 2013, she no longer has all the documents and information she might need to assist her
31 Horsfall v Potter [2017] NZSC 196, [2018] 1 NZLR 638.
defence, and her recollection of events is not as good as it was in 2014 to 2016 (when CIT Holdings’ proceedings were on foot).
[79] Finally, Ms Sparks says that Mr Olliver’s present claim is vexatious and/or an abuse of process, given it is the latest in a string of actions taken by Mr Olliver to secure control over the funds in question. In this context, Ms Kearns first points to Mr Olliver’s claims, on behalf of CIT Holdings, in relation to what he alleged to be Ms Sparks’ misuse of CIT Holdings’ property. Ms Kearns also points to Mr Olliver’s attempts in 2018 to persuade CIT Holdings’ liquidators that Waimarie Trust’s contributions were in fact equity and not debt, to stymie Glover No. 2 Trustee’s proof of claim in the liquidation. Given this was done by Mr Olliver to prevent Glover No. 2 Trustee receiving a distribution in CIT Holdings’ liquidation, Ms Kearns says this was contrary to Mr Olliver’s own interests now being pursued through his s 182 claim. Ms Kearns also refers to Mr Olliver’s more recent attempt to appoint receivers to CIT Holdings, saying that was yet another improper attempt to gain control of the funds. Ms Kearns submits that the Court should not countenance Mr Olliver having a “further go” at trying to secure the CIT Distribution.
Mr Olliver’s submissions
[80] Mr Spring, counsel for Mr Olliver, first says there is ample evidence to conclude that the joint venture and the various arrangements surrounding it give rise to a nuptial settlement or settlements, or at the very least, the position is sufficiently arguable. Mr Spring urges particular caution in this regard, given the intensely factual inquiry required when determining a s 182 claim.
[81] In the present case, Mr Spring says the uncontroverted evidence is that the purpose of and rationale for the joint venture (as recorded in the JV Agreement itself) was not the repayment of debt, but to preserve and enhance the family home, and for the family’s broader enjoyment of profit from the sale of the remainder of the properties. Mr Spring accepts that as presently pleaded, only the Waimarie and Glover Trusts are said to be nuptial settlements. But in his submissions before me, he submits that it is clearly arguable that a range of other matters could also amount to nuptial settlements, including:
(a)the transfer of the Bankhouse Homestead from the BBG Trust to the Waimarie Trust;
(b)Waimarie Trust’s contributions to CIT Holdings for the purpose of advancing the joint venture;
(c)the settlement, during the marriage, of the Glover No. 2 Trust (of which Mr Olliver was a discretionary beneficiary);
(d)the novation of Waimarie Trust’s interests in the joint venture to Glover No. 2 Trustee;
(e)the CIT Distribution itself; and
(f)the overall joint venture and the suite of documents and trusts relating to it.
[82] Mr Spring emphasises that with the exception of (d) and (e), all the above steps were undertaken with considerable input by Mr Olliver, for the benefit of the parties’ marriage and their children generally.
[83] Mr Spring further highlights that the particular form an arrangement takes for the purposes of s 182 does not matter, and that the authorities are clear that flexibility is required to ensure s 182 can respond to the myriad of circumstances that comes before the courts. Ultimately, Mr Spring says that is it beyond arguable that the various trusts and arrangements concerning the joint venture made some continuing provision for both or either of Mr Olliver and Ms Sparks (and their children), in their role as spouses.
[84] Mr Spring submits that Ms Sparks’ reliance on Mr Olliver’s 2009 divestment of interests is misconceived. Mr Spring says Mr Olliver does not resile from his earlier evidence that he had no legal or beneficial interest in the various assets or trusts. Mr Spring says that remains the position. For that reason, Mr Spring submits that Ms Sparks’ reliance on authorities such as Horsfall v Potter is misplaced. He emphasises that it is not a requirement for a s 182 claim that the claiming spouse has
a beneficial or legal interest in the property in question, and indeed, the very foundation for such a claim is usually that the property is under the control and ownership of the other spouse.
[85] Mr Spring also rejects the suggestion that Mr Olliver’s divestment of interests meant he no longer had any reasonable expectation of benefiting from the joint venture and its surrounding arrangements. While Mr Olliver could not have legally required Ms Sparks or any of the entities associated with her (including the Waimarie Trust) to pay him any of the funds in question, Mr Spring says it is another thing entirely to say that Mr Olliver could never have expected to benefit from the property either then or in the future – as part of the overall family unit which the joint venture was to benefit. Mr Spring says Mr Olliver’s ongoing contribution to the joint venture of further funds and personal effort (referred to at [31] and [32] above) is “potent evidence” of such an expectation.
[86] Mr Spring acknowledges that the various matters relied on by Ms Sparks may be relevant to the Court’s exercise of discretion on a s 182 claim. But for the purposes of a strike out/defendant’s summary judgment application, Mr Spring submits it is far from clear that anything arising out of Mr Olliver’s Creditors’ Scheme legally debars him from bringing a s 182 claim. Mr Spring says this is particularly so given no s 182 claim did or could have existed in 2009, as the parties were still happily married at that time.
[87] Mr Spring also rejects the suggestion that the claim ought to be struck out as an abuse of process. He acknowledges that in earlier litigation, Mr Olliver and/or entities associated with him sought to characterise Waimarie Trust’s contributions to CIT Holdings as equity rather than debt. Mr Spring says that was Mr Olliver’s genuine view at the time (said in Mr Olliver’s narrative affidavit to have been based on professional accounting advice), and the fact CIT Holdings’ liquidators were required to seek directions from the Court highlights the uncertainty involved. Mr Spring says that in those circumstances, the fact Mr Olliver/CIT Holdings pursued an avenue of argument which was clearly available and arguable on the evidence then before the Court cannot prevent him from bringing the present s 182 claim.
[88] Mr Spring further submits that nothing determined in any of the earlier proceedings is sought to be determined in the present claim; as noted, Mr Olliver accepts that at the time of his Creditors’ Scheme, he had no legal or beneficial interest in the various trust assets, and had no means of compelling payment or other benefits to him. And there has been no prior determination of the legal consequences of Ms Sparks’ alleged conduct while a director of CIT Holdings.
[89] In response to the submission that the s 182 claim has been brought too late to be entertained, Mr Spring says it was only upon Jagose J’s ruling towards the end of 2018 that the proper characterisation of Waimarie Trust’s contributions to CIT Holdings was settled. Prior to that point (and when Mr Olliver still assumed BNZ would charge full penalty interest on the CIT Holdings loan), Mr Olliver did not believe there was any real value left in the joint venture arrangements, let alone value flowing from CIT Holdings to Waimarie Trust/Glover No. 2 Trustee. The position changed, however, by the time of the realisation of CIT Holdings’ assets and Jagose J’s ruling, providing a pathway to what Mr Spring says is a viable and economic s 182 claim.
[90] Mr Spring points to the fact that promptly following Jagose J’s judgment, Mr Olliver signalled to Ms Sparks that he would be bringing a s 182 claim in the event the parties’ settlement discussions were not successful. Further, once those settlement discussions concluded, Mr Spring says Mr Olliver promptly sought leave to file his s 182 claim. Mr Spring submits it is no coincidence that Ms Sparks then unilaterally discontinued those proceedings a matter of days prior to the hearing of Mr Olliver’s application for leave. As a result, Mr Olliver promptly filed his fresh claim in the Family Court.
[91] Accordingly, while some time has passed since dissolution of the parties’ marriage, Mr Spring says the timing of the s 182 claim, particularly in the context of the parties’ ongoing litigation, is understandable. Further, Mr Spring says there is no compelling evidence of any prejudice to Ms Sparks in any event. He says this is far from a case where there has been no litigation between former spouses for several years and then a s 182 claim comes “out of the blue”.
Issue 1: Is it reasonably arguable there was a nuptial settlement?
Legal principles32
[92] The leading authorities on s 182 are the Court of Appeal and Supreme Court’s judgments in Ward v Ward,33 and the Supreme Court’s judgment in Clayton v Clayton.34
[93]The Supreme Court in Clayton noted that s 182 contemplates a two-stage test:
(a)first, determining whether there is a “nuptial settlement”; and
(b)second, determining whether, and if so, in what manner, the Court’s discretion under s 182 should be exercised.
[94] The Court of Appeal in Ward said the following in relation to the concept of “settlement” as it is used in s 182:35
[22] There should be a generous approach to the interpretation of the term settlement and this has been the traditional approach. For example, in Blood v Blood [1902] P 78 Gorell Barnes J, when dealing with an application to vary a nuptial settlement under the predecessor to the Matrimonial Causes Act 1973, noted that the words of the section are extremely wide. He said that he was anxious that they should not, by any construction the court may put upon them, be narrowed in any way. To narrow the words would be undesirable because the various circumstances which come before the court are so diverse that it is important that, so far as possible, the court should have power to deal with all the cases that come before it, and in dealing with them, to meet the justice of the case.
[23] The particular form of the settlement does not matter. It may be a settlement in the strict sense of the term. It may be a covenant to pay by one spouse to the other, or by a third person to a spouse. What is essential is that the settlement should provide for the financial benefit of one or other or both of the spouses as spouses and with reference to their married state: Prinsep v Prinsep [1929] P 225 at 232 per Hill J. The section is thus intended to embrace a large number of transactions which might not appear to be settlements in a
32 I recently considered in some detail what constitutes a “nuptial settlement”; see Preston v Preston [2019] NZHC 3389. The following section of my judgment is accordingly drawn from my earlier judgment.
33 Ward v Ward [2009] NZSC 125, [2010] 2 NZLR 31; Ward v Ward [2009] NZCA 139, [2009] 3
NZLR 336.
34 Clayton v Clayton [2016] NZSC 30, [2016] 1 NZLR 590.
35 Ward v Ward [2009] NZCA 139, [2009] 3 NZLR 336 (footnotes omitted). The point was not considered by the Supreme Court, which was of the view that the Court of Appeal’s approach on this issue was correct and thus declining leave to appeal in relation to it.
conveyancer's eyes: Melvill v Melvill [1930] P 159 (CA) per Lord Hanworth MR.
…
[27] What first emerges from the above authorities is that there should be a generous approach to the interpretation of the term settlement. Nevertheless, in order to come within the term settlement as used in s 182 of the FPA, any arrangement must be one which, at the date of the hearing, makes some form of continuing provision for either or both of the parties to a marriage in their capacity as spouses, with or without provision for their children. The property transferred must be impressed with an extant obligation and not be an absolute transfer to one of the spouses. However, what is clear is that the particular form of the arrangement does not matter.
(emphasis added)
[95] The Supreme Court in Clayton endorsed the approach taken in Ward. In delivering the judgment of herself, William Young, Arnold and O’Regan JJ,
Glazebrook J said the following:36
[33] The Court of Appeal in Ward went on to say that to come within the term “settlement” as used in s 182, any arrangement must be one that “ makes some form of continuing provision for both or either of the parties to a marriage in their capacity as spouses, with or without provision for their children”. It was also made clear that discretionary family trusts can be settlements for the purposes of s 182. Further, property acquired by a trust after it is settled can also come within the definition of settlement. This is because the settlement is “the trust itself and any trust property (whenever acquired) must be part of the settlement”.
[34] We agree with the analysis of the Court of Appeal in Ward. We add that we see the requirement that the settlement be for both or either of the parties in their capacity as spouses” as meaning only that there must be a connection or proximity between the settlement and the marriage. Where there is a family trust (whether discretionary or otherwise) set up during the currency of a marriage with either or both parties to the marriage as beneficiaries, there will almost inevitably be that connection. As Lord Penzance said in Worsley v Worsley:
“The Court would have a great difficulty in saying that any deed which is a settlement of property, made after marriage, and on the parties to the marriage, is not a post-nuptial settlement.”
[96] Both the Court of Appeal in Ward and the Supreme Court in Clayton referred extensively to English authorities on the concept of ante and post-nuptial settlements
36 Clayton v Clayton [2016] NZSC 30, [2016] 1 NZLR 590 at [33]-[36].
(the English legislation being in broadly similar terms to s 182). A leading English decision is that of the House of Lords in Brooks v Brooks.37
[97] That case considered whether a husband’s pension scheme (established three years after the parties had married) compromised an ante-nuptial or post-nuptial settlement. Lord Nicholls of Birkenhead, delivering the lead judgment, emphasised the broad approach to be taken to the concept of a “settlement”. He stated:38
In English law "settlement" is not a term of art, with one specific and precise meaning. Its meaning depends on the context in which it is being used. To a conveyancer a settlement essentially connotes a disposition by deed vesting property in trustees to be held by them for a succession of interests. …
In the Matrimonial Causes Act settlement is not defined, but the context of section 24 affords some clues. Certain indicia of the type of disposition with which the section is concerned can be identified reasonably easily. The section is concerned with a settlement "made on the parties to the marriage" So, broadly stated, the disposition must be one which makes some form of continuing provision for both or either of the parties to a marriage, with or without provision for their children. Conversely, a disposition which confers an immediate, absolute interest in an item of property does not constitute a settlement of that property. …
Beyond this the authorities have consistently given a wide meaning to settlement in this context, and they have spelled out no precise limitations. This seems right, because this approach accords with the purpose of the statutory provision. Financial provision that is appropriate so long as the parties are married will often cease to be appropriate when the marriage ends. In order to promote the best interests of the parties and their children in the fundamentally changed situation, it is desirable that the court should have power to alter the terms of the settlement. The purpose of the section is to give the court this power. This object does not dictate that settlement should be given a narrow meaning. On the contrary, the purpose of the section would be impeded, rather than advanced, by confining its scope. The continuing use of the archaic expressions "ante-nuptial" and "post-nuptial" does not point in the opposite direction. These expressions are apt to embrace all settlements in respect of the particular marriage, whether made before or after the marriage.
…
Applying this approach, there is no difficulty with a disposition which creates interests in succession in specified property. Nor is there difficulty where the interests are concurrent but discretionary. Concurrent joint interests are nearer the borderline, such as a case where parties to a marriage hold the matrimonial home as beneficial joint tenants or tenants in common. Even in such a case, however, given the restrictions which would impede any sale of the house while the marriage subsists, this type of case has rightly been held to fall within the scope of the section: see Brown v. Brown [1959] P 86. Periodical
37 Brooks v Brooks [1996] 1 AC 375 (HL).
38 At 391-392.
payment provisions have also been controversial. But income provision from settled property would readily qualify, and it is only a short step from this to include income provision which takes the form of an obligation by one party to the marriage to make periodical payments to the other. This was held to be so from the earliest days of this statutory provision whose ancestry stretches back to the Matrimonial Causes Act 1859: see Worsley v. Worsley (1869) LR 1 P & D 648. a decision subsequently affirmed in Bosworthick v. Bosworthick [1927] P 64.
[98] Turning to the facts before the Court, Lord Nicholls noted that at his retirement, Mr Brooks was entitled to elect to give up a portion of his pension to provide, from the date of his death, a deferred pension for life for his spouse, or for any other person financially dependent on him (r 1(e) of the scheme). Further, a lump sum death benefit was payable if Mr Brooks were to die while still employed, with such death benefits payable at the discretion of the company to the members of a class comprising Mr Brooks’ spouse, children, parents and grandparents and the issue of them (r 2(c)). Lord Nicholls noted that:39
If each of these unexceptional features is considered in isolation, it is easy to conclude that the scheme does not constitute a marriage settlement made by Mr Brooks. The primary benefit is a pension payable to him. The option to cut in a dependant's deferred pension conferred no rights on Mrs Brooks. The discretionary trust in respect of the death benefits should not colour the character of the whole scheme.
(emphasis added)
[99] Nevertheless, Lord Nicholls did not consider that to be the correct approach, and emphasised the importance of the purpose of the arrangement:40
In considering the purpose of the husband when entering into the scheme, the scheme must be looked at in the round and in the context of the circumstances then subsisting. Viewed in this light, the husband is to be taken to have entered into this scheme with the intention of providing for the retirement of himself and his wife by the highly tax efficient means afforded by this scheme. His pension would provide financial support for both of them in his retirement. If his wife was still alive when he retired, he could then direct that part of his pension benefit should be used to make separate provision for her after his death. Should he die prematurely, the death benefits would be available for her. In my view, a disposition of this character falls within the wide meaning given to marriage settlement in the matrimonial legislation. The feature which places this scheme on the marriage settlement side of the line is the presence of rules 1(e) and 2(c).
(emphasis added)
39 At 393.
40 At 394.
[100] Finally, in the Court of Appeal’s recent decision in Preston v Preston, the Court reinforced that it is unnecessary for s 182 to be triggered for the settlement to involve any vesting of property on the spouse; as the authorities make clear, discretionary family trusts, creating mere expectations on the part of discretionary beneficiaries, can be and often are nuptial settlements.41
Issue 1 – discussion
[101] I am not persuaded it is unarguable, at least on the materials presently before the Court, that some or all of the arrangements concerning the joint venture could give rise to a nuptial settlement (or settlements). I say this for the following reasons.
[102] First, as the authorities make clear, the concept of a “settlement” does not need to involve a settlement in the conventional sense. A covenant to pay, or other arrangement making provision for one or both of the spouses (in their capacity as spouses) can constitute a “settlement” – such as Mr Brooks’ pension scheme in Brooks v Brooks. Accordingly, the form of the joint venture and the trusts surrounding it does not itself disentitle those arrangements, or parts of them, from being a nuptial settlement.
[103] Second, there is no doubt Mr Olliver and Ms Sparks’ joint venture arrangements involved a number of trusts which are likely to constitute nuptial settlements themselves. For example, both the Glover and Waimarie Trusts were settled during the course of (or shortly before) the marriage, with a connection to the marriage, given Mr Olliver, Ms Sparks, and their children were all named as discretionary beneficiaries. Those trusts might therefore be viewed as relatively conventional nuptial settlements.
[104] Indeed, Ms Sparks’ own position in earlier litigation seems to have been that these and all trusts settled by the parties during their relationship were nuptial settlements. For example, in her first amended statement of claim in 2015, Ms Sparks pleaded that:
41 Preston v Preston [2020] NZCA 679 at [22].
At the time of the settlements [of the various trusts], up to the date of the dissolution of marriage, [Ms Sparks] and [Mr Olliver] had a reasonable expectation that they and the children would benefit from all of the trusts, with the exception of [the Glover Trust], under which trust the first defendant had irrevocably waived all rights to be considered as a beneficiary at or around the time of the creditor’s scheme.42
[105]Similarly, in her narrative affidavit sworn in September 2014, Ms Sparks said:
My expectation in respect of the Glover Trust was that the family, Greg, myself and the children, would share in the benefits of the Glover Trust. This was reinforced to me by the former family home at 22 Waimarie Street St Helliers, being owned by the Glover Trust (through its wholly owned subsidiary CIT Holdings Ltd) and the special status accorded to the former family home in the Joint Venture Agreement.
[106]Ms Sparks also explained in the same affidavit that:
After [Mr Olliver’s creditors’ application to adjudicate Mr Olliver bankrupt] was filed, Greg took various steps to divest or disassociate himself with the nuptial trusts, such steps being designed to make it appear that he has no assets and no access to trust assets, the relevant assets instead being in my name.
(emphasis added)
[107] Ms Sparks also pleaded in her 2015 amended statement of claim that the BBG Trust was a nuptial settlement, that trust being the original owner of the Bankhouse Homestead (before it was transferred to the Waimarie Trust). Indeed, in her 2014 narrative affidavit, Ms Sparks’ stated that her expectation was “for the whole family to benefit from the BBG Trust”. It is also arguable that the Glover No. 2 Trust itself is a nuptial settlement, being a trust settled during the course of the parties’ marriage, with Ms Sparks, Mr Olliver and their children as discretionary beneficiaries.43
[108] Third, as noted in Clayton, property acquired by a trust (which is a nuptial settlement) also forms part of that settlement. On this basis, it is arguable that the Bankhouse Homestead, acquired by the Waimarie Trust after it was settled, became part of that nuptial settlement. It is also arguable that, but for the novation of the Waimarie Trust’s rights and interests in the joint venture to Glover No. 2 Trustee, the CIT Distribution, once paid, would also have formed part of that nuptial settlement.
42 I return below to the effect of Mr Olliver’s divestment of interests.
43 Whether Mr Olliver ever had any expectation of benefit from that settlement is a separate question.
[109] Fourth, I do not consider the presence or terms of the JV Agreement itself means it is unarguable that some or all of the joint venture arrangements gave rise to a nuptial settlement or settlements. The JV Agreement was a contractual agreement between two trusts (which were likely themselves to be nuptial settlements). It simply recorded how those two trusts would work together for the purposes of the joint venture business – with a focus on protection of the family home.
[110] Indeed, the position is somewhat similar to that in Clayton, in which the Supreme Court held that the fact one of the trust’s purposes was to take assets out of the circle of bank guarantees, and thus to protect the family’s assets, supported a finding of a nuptial settlement.44 In addition, in this case, all of the joint venture assets were held by CIT Holdings on a bare trust for the joint venture partners.
[111] Fifth, I consider this case somewhat removed from the scenario in Booth v Booth, a case relied on by Ms Sparks. In that case, the transaction said to give rise to a nuptial settlement was a debt owed by a company (owned jointly by the wife and husband) to the husband’s father, coupled with a collateral agreement that if the parties remained married, no demand for repayment would be made.
[112] In the High Court, the Associate Judge concluded that it was arguable the arrangements gave rise to a nuptial settlement. But he concluded that it was not arguable that the Court should exercise its discretion under s 182 and make orders of the kind sought by the wife. On the evidence before the Court, the suggested collateral agreement was expressly conditional on the marriage continuing. As such, on dissolution of the marriage, were the father to call up the loan, there was no relevant change in circumstances and no injustice to remedy.
[113] On appeal, counsel for the wife disavowed reliance on the suggested collateral agreement, arguing instead that there was an expectation integral to the overall family arrangement that the debt owed by the couple’s company would not have to be repaid. And the suggestion that the “forgiveness” of debt would last only so long as the marriage was said to be “bad assisted drafting” in the wife’s evidence.
44 Clayton v Clayton [2016] NZSC 30, [2016] 1 NZLR 590 at [40].
[114] The Court of Appeal nevertheless concluded that the arrangements gave rise to a nuptial settlement. They did not involve the settlement of property on the wife, husband or their company, nor was there any ongoing provision for any person under a legally binding arrangement. The Court considered the documentation was clear as to the debtor/creditor relationship, and there was no obligation on the father to make “ongoing provision” for either the husband or wife. In addition, the relevant (repayment) obligation flowed from the couple’s company (and thus in substance from the couple themselves), rather than to the spouses (or one of them), as in the case of a covenant to pay. And ultimately no injustice required remedying; the value of each party’s shares in the company was reduced equally by the existence of the debt.
[115] The circumstances in this case are somewhat different to those in Booth v Booth:
(a)As a preliminary point, I do not read the Court of Appeal’s judgment as suggesting that in order to qualify as a “settlement” for the purposes of s 182, the arrangements must give rise to a legally binding obligation to make provision for one or more of the spouses (in their capacity as spouses). That “requirement” would not apply, for example, to discretionary family trusts, where there is no legal obligation on the trustees to confer any benefit on the discretionary beneficiaries, yet such trusts are regularly found to be nuptial settlements.45
(b)Further, in Booth v Booth, the debt in question was owed by the couple’s company to the father – in effect a third party to the marriage, with there being no obligation or expectation that he would make ongoing provision for either the husband or wife. In this case, CIT Holdings’ debt was owed to Waimarie Trust, arguably a nuptial settlement which, at settlement, included both Mr Olliver and Ms Sparks as discretionary beneficiaries.
45 A requirement as to a legally binding obligation would also not apply to the pension arrangements in Brooks v Brooks, given the wife’s benefit from a deferred pension was at her husband’s election, and her benefit from the lump sum death benefit were Mr Brooks to die while still employed was payable at the discretion of the employer company.
(c)Further, but for the imposition of Glover No. 2 Trustee, the CIT Distribution would have been paid to the Waimarie Trust, thus becoming a part of that (arguably) nuptial settlement. Putting aside for present purposes Mr Olliver’s divestment of interests, he would no doubt have had an expectation of benefitting from those funds in some way. That also appears to have been the general thrust of Ms Sparks’ own position in 2014/2015. Those expectations have arguably been defeated given dissolution of the marriage.
Issue 2: Does Mr Olliver’s divestment of interests bar his s 182 claim?
[116] The next question is whether it is arguable that the Court would exercise its discretion and vary any nuptial settlement found to exist. While Ms Sparks’ submissions were not framed in this way, I consider her argument that Mr Olliver’s divestment of interests “disentitles” or “bars” him to relief under s 182 is best framed as it being untenable that the Court would exercise its discretion under s 182 in Mr Olliver’s favour.
Legal principles
[117] The proper approach to the exercise of the discretion under s 182 was examined by the Supreme Court in Clayton v Clayton.46 The following principles may be drawn from the Court’s judgment:
(a)First, s 182 is premised on a continuing marriage, and where that premise fails, Parliament recognises that injustices could arise. Thus one of s 182’s purposes is to prevent one party benefitting unfairly from the settlement at the expense of the other in the changed circumstances arising from dissolution.47
(b)Second, in considering the exercise of discretion under s 182, the Court will take into account the parties’ reasonable expectations, which is an objective concept. While the parties’ subjective views (particularly if
46 Clayton v Clayton [2016] NZSC 30, [2016] 1 NZLR 590.
47 At [44].
mutual) may be relevant to that exercise, it is the circumstances overall that must be assessed.48 The Court must guard against the risk of placing too much emphasis on the particular financial expectations that an applicant might have from the settlement in question, rather than making an objective assessment of the circumstances as a whole.49
(c)Third, in the context of a discretionary trust (where there is no guarantee of future benefit), the Court ought to look at the situation from the perspective of the family unit of which the applicant is a part. Looked at through the lens of a continuing marriage, the applicant, as part of the family unit, would likely have continued to benefit directly or indirectly from the relevant trust.50
(d)Fourth, in order to assess whether it is appropriate to remedy the consequences of the failure of the premise of a continuing marriage, the Court is not to limit its consideration to a comparison of the parties’ expectations at the time of settlement and the position which exists after the dissolution of marriage. All circumstances, including those arising post-settlement, are to be taken into account.
(e)Finally, while not an exhaustive list, factors that are likely to inform the exercise of the discretion are the terms of the settlement and how the trustees are exercising, or are likely to exercise, their powers in the changes circumstances; who established the trust and the source and character of the assets which have been vested in it; the relevant interests of any children or other beneficiaries; and the length of the marriage.51
48 At [48].
49 At [49].
50 At [50]. The Court noted an indirect benefit might be distributions to minor children which have obvious benefits for the parents, relieving them from expenditure on the children and often incurring lower taxation rates than if the distributions had been made to the parents. See fn 93.
51 At [58]-[59].
Issue 2 – discussion
[118] Again, I do not consider Ms Sparks has demonstrated that it not arguable that the Court would exercise its discretion under s 182, notwithstanding Mr Olliver’s divestment of interests.
[119] As discussed in the preceding section of this judgment, it is not necessary for a s 182 claim for the claimant to have a legal or beneficial interest in the property in question. The Court of Appeal’s judgment in Preston v Preston makes that clear. So Mr Olliver’s position that as of 2009, he has not had any legal or beneficial interest in the trusts and assets in question does not itself bar relief under s 182. As noted, Mr Spring confirmed that Mr Olliver does not seek to argue on the present application that he has any legal or beneficial interest in the property in question.
[120] This in my view distinguishes the present case from cases such as Horsfall v Potter.52 In Horsfall (which did not involve a s 182 claim), the claimant, who had jointly registered the title of a property in his and his partner’s names to avoid potential tax liability, was unable to subsequently maintain that his partner held title as trustee only.53 Given Mr Olliver will not seek to argue on his present claim that he did in fact retain some legal or beneficial interest in the trust assets, there is not the element of recharacterisation of interests as was present in Horsfall.
[121] What then of the parties’ reasonable expectations in relation to the trusts? Plainly at the time of settlement of the trusts discussed earlier in this judgment, Mr Olliver would have had a reasonable expectation of benefiting from them – both directly (as a discretionary beneficiary) and indirectly, as part of the overall family unit for whose benefit those trusts were established.
[122] But those circumstances arguably changed post-settlement. Does Mr Olliver’s divestment of interests mean that as of 2009, he cannot have had any further reasonable expectation of benefitting, even indirectly, from the nuptial settlement(s)?
52 Horsfall v Potter [2017] NZSC 196, [2018] 1 NZLR 638.
53 Though the majority noted that if the parties’ common intention had been that the wife took legal title only, the beneficial interest in her share of the property would have been held on trust as suggested by the husband; see Horsfall v Potter [2017] NZSC 196, [2018] 1 NZLR 638 at [55] and [77].
[123] Certainly Mr Olliver cannot have had a reasonable expectation of a legal or beneficial interest in the trust assets himself, which would have been contrary to his evidence to this Court in the context of the Creditors’ Scheme. But I am not persuaded this means a s 182 claim is unavailable. As Mr Spring emphasised, at the time of Mr Olliver’s divestment of interests, no s 182 claim was available to or contemplated by him (the couple still being happily married). And when the various trusts in issue are looked at from the perspective of the family unit as a whole (as directed by the majority of the Supreme Court in Clayton), it is arguable Mr Olliver would have retained a reasonable expectation of indirect benefit from the arrangements, through provision from the trusts to his wife and children. His apparent financial and other contributions to the joint venture after his Creditors’ Scheme was approved are arguably consistent with such an expectation. Further, and as observed in Clayton,54 the very process of “ringfencing” the trusts’ assets from Mr Olliver was arguably to protect those assets for the benefit of the family as a whole.
[124] It is likely, however, that Mr Olliver’s divestment of interests will be relevant in some way to the exercise of the Court’s discretion under s 182. But so too may the fact that Ms Sparks was arguably involved in and a party to Mr Olliver’s divestment of interests, the result of which was to put the trusts and assets under her control. The extent of Ms Sparks’ involvement in that process, and her and Mr Olliver’s intentions at the time (particularly if mutual), may well be relevant to whether the discretion ought to be exercised, and if so, in what way.55
[125] For completeness, Ms Kearns also referred to the Family Court’s decision in INH v KAH (AKA) W.56 The claimant in that case had placed the assets of his logging business outside the reach of his creditors through a set of transactions between himself and his then partner, including a trust. The beneficiaries of the trust, which the claimant sought to characterise as a nuptial settlement, were his former partner and the couple’s children. The Judge found that the trust was a nuptial settlement. But he declined to exercise his discretion under s 182 in favour of the claimant, including on
54 Clayton v Clayton [2016] NZSC 30, [2016] 1 NZLR 590 at [50].
55 The majority of the Supreme Court in Horsfall v Potter [2017] NZSC 196, [2018] 1 NZLR 638 Horsfallemphasised that the parties’ common intentions at the time of a property disposition might “override” how that disposition had been objectively recorded for other purposes.
56 INH v KAH (AKA) W [2012] NZFC 4435.
the basis that “[the claimant] cannot have had any expectation of an interest in the trust property at the time of settlement, because he was bankrupt.”
[126] But I do not see the decision in INH v KAH as supporting Ms Sparks’ application:
(a)First, at the time all the (suggested) nuptial trusts in this case were settled (other than the Glover No. 2 Trust), Mr Olliver was not bankrupt or advancing his Creditors’ Scheme; rather he was a discretionary beneficiary of those trusts.
(b)Second, the decision in INH v KAH was delivered before the Supreme Court’s judgment in Clayton. The Judge did not discuss any expectation the claimant might have had to ongoing indirect benefit from the trust in that case (as a result of being part of the family unit overall), despite his intervening bankruptcy.
(c)Third, that the claimant could not have had a reasonable expectation of a direct interest in the trust property (given his bankruptcy) was only one of many factors taken into account by the Judge when considering whether to exercise his discretion under s 182. In other words, that factor was not viewed (or argued, it seems) as a “knock-out” blow to the s 182 claim.
[127] For these reasons, I consider the issues arising on Mr Olliver’s s 182 claim are unsuitable for determination on a strike out or defendant’s summary judgment application. That is not to say, however, that Mr Olliver’s claim necessarily has real or significant merit – I make no comment in that regard. It simply reflects that I am not persuaded that on Issues 1 and 2, Ms Sparks has discharged the onus on her present application.
Issue 3: Was Mr Olliver’s claim brought within a “reasonable time”?
Legal principles
[128] An application under s 182 must be brought “on, or within a reasonable time” of the dissolution of marriage. In determining whether an application has been brought within “a reasonable time”, the context and facts of each case are important.57 The reasons for – and length of – the delay, and any material prejudice to the other party, have all been suggested to be relevant considerations in determining whether an application has been made on, or within, a reasonable time.58
[129] An examination of some earlier decisions in which this issue has been previously considered is illustrative of the principles involved:
(a)In McGirr v McGirr, an application under s 182 was made one year and 10 months after the dissolution of the parties’ marriage.59 The reasons for the delay were not explained. Anderson J noted that consideration of whether a claim is brought within a reasonable time must occur in the context of the litigation itself.60 In that particular case, proceedings between the parties had been prolonged by “entrenched resistance to sensible interlocutory applications” and the “unrealistic” attitude of the respondent.61 Having regard to all of the relevant matters, Anderson J concluded the application had been made within a reasonable time.
(b)In McLeay v McLeay, an application under s 182 was made some five and a half years after the decree absolute.62 The Family Court Judge held that the application had been made within a reasonable time. On appeal, Jeffries J acknowledged that five and a half years a “very long time to wait” but held the important issue to be what the effect of that
57 Jo Hosking Law of Trusts (NZ) (online ed, LexisNexis) at [9.13]. See also Pool v Pool (1981) 4 MPC 166 (HC) at 167.
58 Jo Hosking Fisher on Matrimonial and Relationship Property (online ed, LexisNexis) at [6.7]. See also DHS v GJS FC Wellington FAM-1998-85-2876, 28 June 2005 at [109].
59 McGirr v McGirr (1989) 5 FRNZ 707 (HC).
60 At 712.
61 At 713.
62 McLeay v McLeay HC Napier M 35/85, 23 September 1986.
delay was.63 After referring to an earlier decision in which he had noted that limitation periods must be applied with compassion in the realm of matrimonial issues, the Judge ultimately concluded that the Family Court did not err.
(c)In B v F, Judge LJ Ryan in the Family Court considered whether a s 182 application had been brought within a reasonable time, being nearly six years after the dissolution of the parties’ marriage.64 The Judge noted that a “generous and liberal approach” to the issue of lapse of time is usually adopted.65 In addition, he considered it relevant that there was no evidence of prejudice to the respondent as a result of the time that elapsed before the application was heard. The hearing was held to be within a reasonable time after the making of the dissolution order.
(d)In Bravenboer v Bravenboer, Judge D Lowe held an application under s 182 some 13 years after the making of a final decree was not within a reasonable time.66 He considered the position may have been different if the applicant had been incapacitated or in a coma during those 13 years.67
Issue 3 – discussion
[130] I do not consider Mr Olliver’s claim has been so delayed as to warrant it being struck out (or a defendant’s summary judgment being entered on it).
[131] There is no doubt that six years post-dissolution is a lengthy period of time. But the materials suggest that Ms Sparks was put on notice in November 2018 that a s 182 claim was likely (in the absence of a settlement). And while the claim was not commenced in the Family Court until June 2020, Mr Olliver did seek leave in January 2020 to bring his s 182 counterclaim in Ms Sparks’ relationship property proceedings
63 At 5.
64 B v F [2004] NZFLR 966 (FC).
65 At [40]. See also Jo Hosking Fisher on Matrimonial and Relationship Property (online ed, LexisNexis) at [6.7]: “on the whole, generous allowances for lapse of time seem to have been made”.
66 Bravenboer v Bravenboer [1990] NZFLR 485 (FC).
67 At [5].
in this Court. And I consider the particular circumstances arising in this case ameliorate the resulting delay – at least to the point of successfully resisting this aspect of Ms Sparks’ application.
[132] First, I accept Mr Spring’s submission that up until Jagose J’s decision in September 2018, Mr Olliver’s position was that Waimarie Trust’s contributions to CIT Holdings were by way of equity rather than debt. On that basis, it would not have been unreasonable to conclude there was unlikely to be any or much value left in the joint venture arrangements. And it seems that reasonably promptly after Jagose J’s decision was delivered, Mr Olliver put Ms Sparks on notice of his s 182 claim. It was not unreasonable, in my view, and in light of having put Ms Sparks on notice of the claim, not to file the claim during the settlement negotiations, or to seek a formal “tolling” agreement.
[133] I do not consider Associate Judge Matthews’ decision in 2014 acted as some kind of “line in the sand” as to when a s 182 claim ought to have been contemplated and/or brought.68 That judgment did not, of course, determine the nature of Waimarie Trust’s contributions to CIT Holdings. Mr Olliver’s position remained throughout that they were by way of equity. That view does not seem to have been untenable or wholly unarguable, given the liquidators saw enough in the point to warrant directions being sought from the Court. Their application for directions accordingly recorded that “there is factual uncertainty” as to the nature of the contributions, and Jagose J noted that the “literal wording of the [JV Agreement] is conflictual”, which no doubt also clouded the position.69
[134] Thus, given the materials suggest that at all times prior to Jagose J’s decision, Mr Olliver held the view that there was likely little to no value in the joint venture arrangements, there is some explanation for the delay.
[135] Second, I do not consider there has been material prejudice to Ms Sparks as a result of the delay, at least to an extent which would justify summary dismissal of the claim at this stage. There is no real evidence of material prejudice. Ms Sparks’
68 Glover No 2 Ltd v CIT Holdings Ltd [2014] NZHC 2786.
69 Harris v Bank of New Zealand [2018] NZHC 2386 at [16].
affidavit on this topic is brief and notably lacking in any detail. And given the ongoing proceedings between her and Mr Olliver until as late as May last year (when Ms Sparks discontinued her relationship property proceedings), she ought to have had available to her all documentation relevant to and produced by way of discovery in those proceedings. And by that point, she was on notice of Mr Olliver’s s 182 claim. Further, even on her present application, Ms Sparks was able to produce relevant materials, including drafts of certain affidavits and submissions from earlier litigation. This is not to suggest that the passage of time will not have had an adverse impact on matters such as document retention. But this is far from a case where there has been no engagement or litigation between the parties since dissolution, such that the party against whom a s 182 claim is brought many years later may well have (quite reasonably) disposed of all relevant documents and other materials.
[136] Nor do I see anything in the point that Ms Sparks’ memory of events is not as fresh as it would have been some years ago. Mr Olliver will be in the same situation. And again, given the extensive litigation between the two over many years, this case is again far removed from parties being required to recall events which had been put “out of mind” for several years. Further, the Court and witnesses are regularly called upon to examine circumstances which took place some time ago. While of course not ideal, the timeframes involved in this case are not unique or uncommon.
[137] Finally, Parliament chose not to adopt a fixed limitation period within which a s 182 must be brought, which recognises the myriad of circumstances which will inform what is a “reasonable time” in any case. No doubt one of the purposes of the requirement to bring a s 182 claim within a “reasonable time” of dissolution is to enable parties to a dissolved marriage to, after a reasonable time, put events behind them and move on with their lives. Mr Olliver and Ms Sparks’ circumstances, and the resulting slew of litigation between them since dissolution, are unfortunately at the opposite end of this spectrum.
[138] For these reasons, I decline to strike out or enter a defendant’s summary judgment on Mr Olliver’s claim on this basis also. That is not to say, however, that the timing of the claim may not be relevant to the exercise of the discretion under s
182. For example, in INH v KAH, the time at which the claim was brought was a factor taken into account in the exercise of the discretion.70
Issue 4: Is Mr Olliver’s claim vexatious or an abuse of process, including on
Henderson v Henderson principles?
Introduction
[139] Ms Sparks’ application to strike out and/or for summary judgment raises a number of (somewhat broad) matters under this head, which essentially boil down to the following propositions:
(a)In relation to the alleged misconduct while she was a director of CIT Holdings, Ms Sparks is being vexed with the same allegations on multiple occasions, which is an abuse of the Court’s process;
(b)Mr Olliver could and should have brought his s 182 claim at a much earlier time, and most likely as a counterclaim in Ms Sparks’ relationship property proceedings; and
(c)Mr Olliver’s steps in the context of earlier pieces of litigation, including those which the Court has found to have been taken for an improper purpose, reinforce that the present claim is yet another attempt to gain control of the CIT Distribution, such that Mr Olliver should not be permitted to “have another go”, albeit in a different garb.
Abuse of process – legal principles
[140] As the Supreme Court in Lai v Chamberlains recognised, the circumstances in which proceedings may amount to an abuse of process are varied.71 One such circumstance is “where defendants are harassed with issues that should have been raised in previous litigation”.72
70 INH v KAH (AKA) W [2012] NZFC 4435 at [196].
71 Lai v Chamberlains [2006] NZSC 70, [2007] 2 NZLR 7 at [61]. See also Sutcliffe v Tarr [2018] NZCA 135, [2018] NZAR 696 at [27]; and Dotcom v District Court at North Shore [2017] NZHC 3158 at [24].
72 Lai v Chamberlains [2006] NZSC 70, [2007] 2 NZLR 7 at [59].
[141] This proposition derives from the decision of Sir James Wigram V-C in Henderson v Henderson.73 In a well-known passage, Sir James Wigram V-C stated that:74
… where a given matter becomes the subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of a matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time.
[142] In other words, “[i]t is incumbent upon a party to litigation to raise every point that is relevant to the issues before the court in that litigation”.75 To commence a proceeding where the plaintiff intends to rely on issues or facts which could and ought to have been raised in a previous proceeding will amount to an abuse of process.76 As the Court of Appeal recently observed, “parties are required to bring forward their whole case and will generally be prevented from later attempting to re-open the same subject on a different basis”.77 It is an abuse of process to bring the same proceeding “in a different garb”.78
[143] The public interest which underlies the Henderson v Henderson principle is the same as that which underpins cause of action estoppel and issue estoppel; there should be finality in litigation and a defendant should not be oppressed by successive suits.79
73 Henderson v Henderson (1843) 3 Hare 100, 67 ER 313 (Ch).
74 At 319. This passage was referred to by the Court of Appeal in Craig v Stringer [2020] NZCA 260 at [17]; Faloon v Planning Tribunal at Wellington [2020] NZCA 170 at [1]; Beattie v Premier Events Group Ltd [2014] NZCA 184, [2015] NZAR 1413 at [43]; Broadspectrum (New Zealand) Ltd v Nathan [2017] NZCA 434 at [49]; and Commissioner of Inland Revenue v Bhanabhai [2007] 2 NZLR 478 (CA) at [59].
75 Broadspectrum (New Zealand) Ltd v Nathan [2017] NZCA 434 at [49].
76 Beattie v Premier Events Group Ltd [2014] NZCA 184, [2015] NZAR 1413 at [45].
77 Craig v Stringer [2020] NZCA 260 at [17].
78 Sutcliffe v Tarr [2018] NZCA 135, [2018] NZAR 696 at [28].
79 Johnson v Gore Wood & Co (a firm) [2002] 2 AC 1 (HL) at 31, cited in Broadspectrum (New Zealand) Ltd v Nathan [2017] NZCA 434 at [50]; and Craig v Stringer [2020] NZCA 260 at [18]. See also Lai v Chamberlains [2006] NZSC 70, [2007] 2 NZLR 7 at [58].
[144] Some caution is, however, required. As the Court of Appeal observed in Beattie v Premier Event Group Ltd (with reference to the Privy Council’s decision in Brisbane City Council v Attorney-General for Queensland), the doctrine should only be applied when the facts are such as to amount to an abuse, otherwise there is a danger that a plaintiff will be prevented from advancing “a genuine subject of litigation”.80 Similarly, in Johnson v Gore Wood & Co (a firm), also cited by the Court of Appeal in Beattie, Lord Bingham observed:81
…It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits based judgment which takes into account all of the facts of the case, focussing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before.
Issue 4 – discussion
[145] I accept there appears to have been a degree of “gaming” by Mr Olliver in some of the earlier sets of litigation between himself and Ms Sparks (or entities associated with them). Mr Kearns also took me through what she says are a number of inconsistencies in Mr Olliver’s affidavit evidence across the different sets of proceedings. But as matters currently stand, I am not satisfied Mr Olliver’s s 182 claim is so clearly an abuse of process that it ought to be struck out or determined summarily at this stage.
[146] First, on the (untested) evidence presently before the Court, there is some reason for the delay in Mr Olliver bringing his claim. Any challenge to the credibility of Mr Olliver’s evidence on such matters can only be resolved by way of a trial in the ordinary way.
[147] Second, it is far from clear that Mr Olliver’s s 182 claim could have been brought in CIT Holdings’ 2014 proceedings against Ms Sparks and Glover Trustee No. 2: the two claims involve different parties and quite different legal issues, with the
80 Beattie v Premier Events Group Ltd [2014] NZCA 184, [2015] NZAR 1413 at [46], citing
Brisbane City Council v Attorney-General for Queensland [1979] AC 411 (PC) at 425.
81 Johnson v Gore Wood & Co (a firm) [2002] 2 AC 1 (HL) at 60.
s 182 claim requiring a much broader inquiry into the parties’ marriage and surrounding circumstances. Further and in any event, CIT Holdings’ 2014 proceedings never resulted in a binding determination or a judgment by the Court on any of the matters that will be determined in the s 182 claim.
[148] For these reasons, I do not consider the fact Mr Olliver (through CIT Holdings) did not seek leave to continue CIT Holdings’ claims (despite its liquidation) to be relevant to Ms Sparks’ present application.
[149] Third, it is correct that Mr Olliver’s s 182 claim could have been brought as a counterclaim in Ms Sparks’ relationship property proceedings at any point from 2014. But as Lord Bingham stated in Johnson v Gore Wood & Co (a firm), this does not automatically render the present claim an abuse of process.82 As noted, there appears to be some explanation for why the claim was not brought at an earlier point in time, and Ms Sparks was on notice of it reasonably promptly following Jagose J’s judgment. Accordingly, but for Ms Sparks’ discontinuance of her relationship property proceedings, all relevant issues between the parties concerning the termination of their marriage, including Mr Olliver’s s 182 claim83 would have been resolved in that single set of proceedings.
[150] Standing back, the essential question is whether the present proceedings represent a misuse of the Court’s procedure or process to an extent which would be manifestly unfair to Ms Sparks, or which would otherwise bring the administration of justice into disrepute among right-thinking people.84 In the context of the significant and ongoing litigation between the parties since dissolution, that the issues for determination on the s 182 claim have not previously been determined in any earlier litigation, and that there is some explanation for the delay in Mr Olliver bringing his claim, I do not consider it amounts to an abuse of process.
[151]This aspect of Ms Sparks’ application is also dismissed.
82 Johnson v Gore Wood & Co (a firm) [2002] 2 AC 1 (HL).
83 Assuming leave to file it was granted.
84 Hunter v Chief Constable of the West Midlands Police [1982] AC 529 at 536, cited in Lai v Chamberlains [2006] NZSC 70, [2007] 2 NZLR 7 at [61].
Result and next steps
[152]Ms Sparks’ application is dismissed.
[153] The parties are to confer on costs. If agreement cannot be reached, Mr Olliver may file a costs memorandum within 15 working days of the date of this judgment. Ms Sparks and Glover No. 2 Trustee may each file a memorandum (no longer than three pages in length) in response within a further five working days. I will thereafter determine costs on the papers.
[154] As to next steps, I consider Mr Olliver ought to “pin his colours to his mast”, in terms of whether anything more than the Waimarie and Glover Trusts is alleged to give rise to a nuptial settlement. Any amended pleading in this regard is to be filed and served by Mr Olliver no later than 10 working days from the date of this judgment. The matter is to be listed in the Duty Judge list on the earliest available date following 10 working days from this judgment. The purpose of that listing will be to timetable next steps in the proceedings. It is also likely that a substantive hearing date will be allocated. As Peters J noted in her minute dated 14 September 2020 in related proceedings CIV-2020-404-001149, all parties to those (and these) proceedings agree it would be beneficial for the two sets of proceedings to be heard expeditiously.
Fitzgerald J
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