Described as ‘an unintended consequence of mathematics,’ what was supposed to be a work-around to avoid tax issues for their brother in the United States led to a bitter dispute between his two New Zealand based siblings with the High Court ruling Craig Bowler wrongly purloined some $530,000 family trust money owed his brother Glenn.
At issue was distribution of family trust cash following completion of a 54-lot subdivision on Racecourse Road at Waiuku, near Auckland, following death of their parents.
Litigation was initially settled with an out of court agreement in early March 2016.
Tax complications for their US-based brother led to a revamp four days later; rather than receiving his share directly from their family trust, it was agreed his entitlement would be paid through his two brothers who would then forward payment to him.
The revised agreement saw him being paid some two million dollars, with two tranches of $1.075 million to be received via each of Craig and Glenn. The balance of family trust funds were to be divided: 72.5 per cent to Craig; 27.5 per cent to Glenn.
However, wording of the revised agreement did not have the two serving as mere conduits. Instead, the $1.075 million payments were deducted from their respective shares. Since the two were not sharing the residue equally, Glenn lost a greater proportion of his personal payout than brother Craig – a mismatch totalling just under $530,000.
The High Court was told brother Craig refused to rectify the issue, going so far as later assuming sole control of the corporate trustee managing their family trust and seizing $1.3 million dollars supposedly set aside until the problem was resolved.
Justice Brewer ruled Craig was in breach of trust, both in the manner he acted as director of the corporate trustee holding family trust assets and in taking for his personal benefit the $1.3 million required to be kept untouched until the dispute was settled.
The corporate trustee was ordered to pay Glenn $530,000, with Justice Brewer setting in train procedures to put the trustee into liquidation. An independent liquidator is needed to remove Craig from trust management and then take steps to recover from him the $1.3 million taken.
Glenn Bowler died in 2023. Legal action continued in the name of his estate.
Estate of Glenn Bowler v. Craig Bowler & Bowler Investment Trustee Ltd – High Court (1.07.24)
24.167