One million dollars lent to Craig Johnson as beneficiary of a family trust is centre of a relationship property dispute as estranged spouse Maria contests legal action to force repayment.
Living in Wellington, Craig and Maria Johnson benefitted in June 2011 from the one million dollar loan when purchasing an Auckland preschool business operating in St Heliers. Craig’s father, as trustee of a family trust called the Abel Trust, agreed a loan on commercial terms, charging interest at six per cent. This money was paid into a joint account controlled by Craig and Maria; purchase of the St Heliers preschool by their company Johnson Preschool Ltd followed immediately after. Craig and Maria are 50/50 shareholders; both are directors.
With Craig’s and Maria’s relationship at an end, the Abel Trust sued to recover its one million dollars. The High Court was told Preschool financial statements did not record the one million dollars as a liability. Including this debt as a Preschool liability dramatically reduces the value of Johnson Preschool. Craig said the loan is a Preschool debt; Maria alleges the one million dollars was used for other purposes and that Craig is in breach of director’s fiduciary duties by belatedly including this as a Preschool debt. She asked the High Court for Companies Act authority to sue Craig in their company’s name for this alleged breach of duty. Associate Judge Johnstone refused. It would complicate what in essence is a debt collecting claim by Abel Trust, he said. Maria and Craig are deadlocked over control of Johnson Preschool; other Companies Act rules are more appropriate for dealing with deadlocked companies, Judge Johnstone ruled.
Abel Trust v. Johnson Preschool Ltd – High Court (3.07.20)
20.115