Public Trust of Rotorua v Rogers

[2018] NZHC 2622

IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY

I TE KŌTI MATUA O AOTEAROA

TE ROTORUA-NUI-A-KAHUMATAMOMOE ROHE

CIV-2016-463-006 [2018] NZHC 2622

UNDER

PROPERTY RELATIONSHIPS ACT 1976

IN THE MATTER

Of the Estate of Shirley Anne Rogers, late, of Te Kauwhata, Deceased

BETWEEN

PUBLIC TRUST OF ROTORUA Applicant

AND AND

AND

JOHN WILLIAM ROGERS First Respondent

MICHELLE RYDER Second Respondent

PORTAGE PLUMBING LIMITED Third Respondent

Hearing:	1 October 2018
Appearances:	J M Briscoe for the Applicant No appearance by or on behalf of the First, Second or Third Respondents
Judgment:	12 October 2018

JUDGMENT OF POWELL J

This judgment was delivered by me on 12 October 2018 at 10 a.m pursuant to

R 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date:

Solicitors:

Tompkins Wake, Rotorua

PUBLIC TRUST v ROGERS & ORS [2018] NZHC 2622 [12 October 2018]

[1]      The Public Trust, as administrator of the estate of Shirley Anne Rogers, seeks orders pursuant to the Property (Relationships) Act 1976 (“the Act”). The Public Trust seeks to determine Mrs Rogers’ share of relationship property arising out of her marriage to John Rogers, the first respondent in this proceeding, and then seeks payment of this including compensation for any material diminution in the value of relationship property since the sale of Mr and Mrs Rogers’ family home at 507 Kopuku

Road, Te Kauwhata (“Kopuku Road”). The net proceeds of this sale were transferred to Michelle Ryder and Portage Plumbing Ltd (“Portage Plumbing”), the second and third respondents, respectively. The Public Trust also seeks orders setting aside these two  transactions,  on  the  basis  that  the  monies  transferred  by  Mr Rogers  were relationship property from the sale of Kopuku Road, to which neither Ms Ryder nor Portage Plumbing were entitled, with the monies being transferred to defeat the claims of others to that property.

[2]      The application has come about following the filing of an application under the Family Protection Act 1955 by three of Mrs Rogers’ four children from another relationship (“the family protection proceedings”). At the time the family protection proceedings were issued the plaintiffs in those proceedings sought to prevent the sale of Kopuku Road, but on the strength of assurances given by Mr Rogers to this Court the transaction was allowed to proceed and the net proceeds of sale were transferred to Ms Ryder and Portage Plumbing.

[3]      Although Mrs Rogers’ last will dated 28 April 2009 had left all of her estate to Mr Rogers, as executor of Mrs Rogers’ estate, he took no steps to apply for probate and  as  a  result  on  28  May 2014  the  Public Trust  was  appointed  to  administer Mrs Rogers’ estate.

[4]      In light of the family protection proceedings and the need to ascertain the assets in Mrs Rogers’ estate, the Public Trust obtained leave to bring the present application. As  none of the  respondents  have  taken  any steps  whatsoever in  respect  of  the application, the hearing before me proceeded by way of formal proof.

Mrs and Mrs Rogers relationship property

[5]      It  appears  Mr  and  Mrs  Rogers  were  married  in  2003  and  the  marriage continued  until  Mrs  Rogers’  death  on  19  June  2013.    Evidence  provided  by Mrs Rogers’ children,1 the plaintiffs in the family protection proceedings, as well as two of her sisters,2 makes it clear that Kopuku Road was Mr and Mrs Rogers’ family home.   This property had been owned by Mr Rogers prior to their marriage but following their marriage Mr and Mrs Rogers subsequently financed  and built a residential  home together,  and  also  made other improvements  at  Kopuku Road. Mrs Rogers’ children have also confirmed in regard to Portage Plumbing that while

Mr Rogers was the sole shareholder, the company was incorporated after Mr and

Mrs Rogers were married and was operated by Mr and Mrs Rogers.

[6]      The evidence also discloses that Mr and Mrs Rogers operated another business together, Morley Transport. Morley Transport provided, and apparently still provides, pet transfer services around New Zealand. This business was purchased by Fledgling Holdings Ltd (“Fledgling Holdings”), another company in which Mr Rogers is the sole shareholder and which was incorporated prior to their marriage. Records provided by Mrs Rogers’ daughter, Paula Ellis, confirm that the purchase price for the business was secured over Kopuku Road.

[7]      On the basis of the evidence before the Court, and in the absence of any contrary evidence, I am satisfied that Kopuku Road, Portage Plumbing and Fledgling Holdings were relationship property.

Value of relationship property

[8]      As part of its investigations the Public Trust has obtained the conveyancing file for the sale of Kopuku Road from Mr Rogers’ solicitors, The Conveyancing Shop

Lawyers Ltd (“Conveyancing Shop”),3  and has commissioned valuation reports in

1      Affidavits of Paula Marie Ellis, Nathan Graham Edwards and Nichola Anne Gosling.

2      Affidavits of Barbara Fraser and Jan Saywell.

3      Affidavits of Dinelle Callander and Tammy Lucille Allan.

respect of both Portage Plumbing and Fledgling Holdings4 based on financial reports for those companies prepared by Albany Chartered Accountants Ltd.5

[9]      The Conveyancing Shop’s records make it clear that following repayment of a mortgage to the ANZ Bank NZ Ltd, rates and legal fees the sale of Kopuku Road realised a net sum of $165,208.35.  Specifically, the sale shows that at Mr Rogers’ instruction $100,000 of this sum was transferred to Ms Ryder, and the balance of

$65,208.35 to Portage Plumbing. There is nothing on the conveyancing file to indicate any justification for either payment other than to avoid accounting to the family protection proceedings plaintiffs.   On the contrary emails from Ms Ryder to the Conveyancing Shop, in response to a request for information from Mr Rogers by the solicitors for the family protection proceedings plaintiffs, were actively obstructive.

[10]     The valuations of Portage Plumbing and Fledgling Holdings were carried out by Paul Manning, a director of BDO Tauranga Ltd and a chartered accountant.  The valuations assessed the value of the companies as at 31 March 2013, immediately prior to Mrs Rogers’ death. In relation to Portage Plumbing, Mr Manning assessed the value

of the company at $291,861 made up as follows:

Portage Plumbing Limited	Realisable
Assets	Value
Cash & Bank	316
Fledgling Holdings Limited	72,992
Tangible assets	16,376
Realisable value of assets	89,684
Less GST	(1,523)
Less term loans	( 1,455)
86,706
Shareholder current account	205,155
Mr Rogers total value	$291,861

[11]     Conversely with regard to Fledgling Holdings, Mr Manning concluded that the company was technically insolvent as at 31 March 2013 and as such Mr Rogers’ interest in the company was nil at that date.  Mr Manning’s calculations supporting

this conclusion for the year ending 31 March 2013 are set out as follows:

4      Affidavit of Paul Manning.

5      Affidavit of Rodney Clarke.

Fledgling Holdings Limited

Balance Sheet

Current Assets

31/03/13

GST refund      -       Total current assets  - Tangible assets           94,084

Intangibles assets                                   215

Total assets              94,299

Liabilities

Bank overdraft  20,596

Portage Plumbing Limited                  221,257

GST  496

Shareholders current account  17

Total current liabilities                   242,366

Total Net Assets           (148,067)

Net Tangible Assets                       (148,282)

[12]     As Mr Manning noted however a large part of the reason Fledgling Holdings was  technically  insolvent  was  because  of  the  extent  of  its  indebtedness  to Portage Plumbing.   As  a result  Mr Manning  assumed  $72,992  was  available to distribute from Fledgling Holdings to Portage Plumbing as at 31 March 2013, hence the inclusion of that sum as part of the realisable assets of Portage Plumbing.

Conclusion

[13]     In the absence of any evidence to the contrary, I am therefore satisfied that the relationship property of Mr and Mrs Rogers comprised the following:

(a)      Kopuku Road  $165,208.35 (b)      Portage Plumbing Ltd  $291,861.00 (c)      Fledgling Holdings Ltd  $          0.00

Total value of relationship property              $457,069.35

[14]     Mr and Mrs Rogers were both entitled to a half share of this relationship property, being the sum of $228,534.67.

[15]     I am also satisfied that the transfer of the net proceeds of sale in respect of Kopuku Road made by Mr Rogers to Ms Ryder and Portage Plumbing should be set aside pursuant to s 44(2) of the Act on the basis that both payments were made in order to defeat the claims of the family protection proceedings plaintiffs and/or the Public Trust, there being no evidence before the Court that such payments were for any other purpose, and they were clearly in breach of the assurances Mr Rogers gave to the Court on 4 April 2014.

Declarations and Orders

[16]     The relationship property of John William Rogers and Shirley Anne Rogers consists of the following assets and values:

(a)      Kopuku Road  $165,208.35 (b)      Portage Plumbing Ltd  $291,861.00 (c)      Fledgling Holdings Ltd  $          0.00

Total value of relationship property              $457,069.35

[17]     Mr and Mrs Rogers respective share in their relationship property is as follows: John Williams Rogers  $228,534.67

Shirley Anne Rogers  $228,534.67

[18]     Mr Rogers is to retain the shareholdings in Portage Plumbing Ltd and Fledgling Holdings Ltd but is to pay to the Public Trust as the administrator of the estate of Shirley Anne Rogers:

(a)      The  sum  of  $228,534.67,  being  Mrs  Rogers’  half  share  of  the relationship property less any amounts recovered from Michelle Ryder or Portage Plumbing Ltd pursuant to [20](a) and [22](a) below; and

(b)interest on the sum of $228,534.67 less any amounts recovered from Michelle Ryder or Portage Plumbing Ltd pursuant to [20](a) and [22](a) below from 14 May 2014 to the date of payment pursuant to the Interest on Money Claims Act 2016.

[19]     The disposition of $100,000 from John William Rogers to Michelle Ryder is set aside.

[20]     Michelle Ryder is to pay to the Public Trust as the administrator of the estate of Shirley Anne Rogers:

(a)       the sum of $100,000; and

(b)interest on the sum of $100,000 from 14 May 2014 to the date of payment pursuant to the Interest on Money Claims Act 2016.

[21]     The disposition of $65,208.35 from John William Rogers to Portage Plumbing

Ltd on 14 May 2014 is set aside.

[22]     Portage Plumbing Ltd is to pay to the Public Trust as administrator of the estate of Shirley Anne Rogers:

(a)       the sum of $65,208.35; and

(b)interest on the sum of $65,208.35 from 14 May 2014 to the date of payment pursuant to the Interest on Money Claims Act 2016.

[23]     The Public Trust is entitled to costs and disbursements from the respondents on a 2B basis.

Powell J