Ridge v Parore - [2014] NZHC 318

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV2012-404-000957 [2014] NZHC 318

UNDER Section 174 of the Companies Act 1993

BETWEEN SALLY ANNE JUDITH RIDGE and
JAMIE DILLON RIDGE First Plaintiffs
SALLY ANNE JUDITH RIDGE Second Plaintiff

ANDADAM CRAIG PARORE and AARON LLOYD as Trustees of the Adam Parore Family Trust
First Defendants
ADAM CRAIG PARORE Second Defendant
SMALL BUSINESS ACCOUNTING (NZ) LIMITED
Third Defendant

Hearing: 16-23 September 2013

Appearances: D W Grove for the Plaintiffs
Z G Kennedy and R W Harris for the Defendants

Judgment: 28 February 2014

JUDGMENT OF GILBERT J

This judgment is delivered by me on 28 February 2014 at 4.30pm pursuant to r 11.5 of the High Court Rules.

..................................................... Registrar / Deputy Registrar

RIDGE and RIDGE v PARORE and LLOYD [2014] NZHC 318 [28 February 2014]

Introduction

[1] This proceeding involves a dispute over property following the breakdown of the relationship between Ms Ridge and Mr Parore. The claim is brought in this Court rather than in the Family Court under the Property (Relationships) Act 1976 because the relevant assets are held on trust rather than in the parties’ own names.

[2] Although at the commencement of the trial the plaintiffs advanced six causes of action, they abandoned all but one of these by the time of closing submissions. The sole remaining claim is that the Sally Ridge Family Trust is entitled to 50 per cent of the shares in Small Business Accounting (NZ) Limited (SBA), a company owned by the Parore Family Trust. This claim is based on the assertion that the parties had a shared intention, despite the legal ownership, that all assets of either trust were held for the benefit of both trusts equally. The plaintiffs claim that a common intention constructive trust arises out of this shared intention.

[3] The trustees of the Ridge Trust seek an order requiring the trustees of the Parore Trust to transfer 50 per cent of the shares in SBA to them. They also seek payment of 50 per cent of the distributions made by SBA to the Parore Trust from and including the year ended 31 March 2012.

Factual background

[4] Ms Ridge and Mr Parore met in early 2001. Initially, the couple kept their assets separate with Mr Parore forming the Parore Trust in 2001 and Ms Ridge settling the Ridge Trust in 2002.

[5] In late 2003, Ms Ridge and Mr Parore purchased a residential property in Ponsonby as a family home. They nominated their two trusts to take title to the property as tenants in common in equal shares. The Ridge Trust paid its half share of the purchase price in cash whereas the Parore Trust borrowed its half share secured by a first mortgage over the property.

[6] At the time of settlement in March 2004, the parties entered into a property sharing agreement prepared by Ms Ridge’s solicitor, Mr Garry Davidson. This

agreement recorded that all mortgage payments were the sole responsibility of the Parore Trust and…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Ridge v Parore

Details

AGLC: Ridge v Parore [2014] NZHC 318
Case: [2014] NZHC 318
Decision Date: 28 February 2014

CaseChat Overview and Summary

This case arose from the breakdown of a relationship between Ms Ridge and Mr Parore. The core dispute centred on the ownership of assets held by their respective trusts, particularly the shares in Small Business Accounting (NZ) Limited (SBA). The plaintiffs, Ms Ridge and her son, asserted that the Sally Ridge Family Trust was entitled to 50 per cent of the shares in SBA, arguing that there was a shared intention that the assets of either trust would be held for the benefit of both trusts equally, giving rise to a common intention constructive trust. The trustees of the Ridge Trust sought an order for the trustees of the Parore Trust to transfer 50 per cent of the shares in SBA to them and payment of 50 per cent of the distributions made by SBA to the Parore Trust.

The legal issue the court had to determine was whether a common intention constructive trust existed over the Parore Trust’s shareholding in SBA, based on an alleged shared intention that the assets of each trust would be held for the joint benefit of the beneficiaries of both trusts. The plaintiffs had to prove a subjective common intention, clearly and unequivocally established by words or conduct. The court needed to assess whether the trusts' assets were intended to be held for the benefit of both trusts’ beneficiaries equally, despite the legal ownership.

The court found that there was no clear and unequivocal intention by the trustees of the two trusts that the assets of each trust would be held for the joint benefit of the beneficiaries of both trusts. The 2007 restructuring had clearly separated the ownership of the family and business assets between the two trusts. While there was an intention to share the assets and income equally between the parties, this was to be achieved by the trustees exercising their discretion to treat the parties as equal beneficiaries under each trust, not by the trusts sharing ownership of the assets. The court held that there was never any intention that the trustees of the Parore Trust would hold 50 per cent of the shares in SBA on trust for the beneficiaries of the Ridge Trust. Consequently, the plaintiffs’ claim failed.

As the defendants' counterclaims were contingent on the plaintiffs' claim succeeding, the court did not need to consider them. The defendants were entitled to judgment on the plaintiffs' claim, and the defendants' counterclaims were dismissed. If the parties could not agree on costs, they were required to file and serve a memorandum as to costs within 14 days of the judgment.

Orders