Used by long time friend Raymond Smith as a foil to hide property development profits from Inland Revenue and also to hide assets from his former spouse, Roger Ball claimed on Raymond’s death the assets were his alone. He was ordered to hand over properties in Takapuna on Auckland’s North Shore and to account for rental income received.
Raymond Smith and Roger Ball went back a long way, meeting in the 1970s as employees with the Housing Corporation; Raymond in town planning and Roger then as a survey drafting cadet. Four decades on, Roger Ball was ordered to return properties on Dominion Street in Takapuna which he had retained in breach of trust.
The High Court was told Mr Smith acquired Dominion Street from a family member in 1975. It had subdivision potential. Attempting to avoid personal liability for tax on development profits, Mr Smith sold the property to Crystal Mint Developments Ltd, a company controlled by Mr Ball. Mr Smith’s accountants were to later query the financial benefits of the complex web he created. A letter outlining subdivision plans he wrote to his legal advisers said he ‘would not like this memo to be read by any IRD wallah.’ Mr Ball was to later claim his company Crystal Mint was the absolute owner.
Evidence was given that the Dominion Street sale to Crystal Mint was coupled with a power of attorney back giving Mr Smith complete authority to manage the redevelopment. He used his own property and assets to finance the project. When Mr Smith suffered a series of strokes starting in 2004, Mr Ball used an enduring power of attorney to exercise Mr Smith’s rights. Using this enduring power, Mr Ball sold a Castor Bay property inherited by Mr Smith and transferred the bulk of the proceeds into Crystal Mint. This money came to be described in Crystal Mint’s accounts as being a loan from Mr Ball. He later said this was ‘an accountant’s error’ changing the notation to instead being a loan from Mr Smith.
Mr Smith died in 2010. Daughter Sahra was the sole beneficiary of his estate. The will named Mr Ball as executor. He told Sahra the net worth of her father’s estate was some $18,000. She challenged this assessment.
Justice Gordon ruled that Mr Ball held the Dominion Street assets in trust for Mr Smith’s estate. The sale to Crystal Mint with Mr Smith having absolute control of the development and using his own assets to fund the development provided evidence that Mr Smith was the beneficial owner. Improper use of this trust arrangement to claim a GST refund on the sale to Crystal Mint and to hide assets from Mr Smith’s former wife did not detract from the legal position that an express trust was created, Justice Gordon ruled.
Mr Ball’s claim that Crystal Mint was the absolute owner amounted to fraud, Justice Gordon said. She ordered return of the assets to Mr Smith’s estate. In 2016, the High Court replaced Mr Ball with Sahra as executor.
Re Estate Raymond Smith – High Court (8.05.20)
20.075