Legler v Formannoij

[2022] NZHC 1804

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

I TE KŌTI MATUA O AOTEAROA WHANGĀREI-TERENGA-PARĀOA ROHE

CIV-2020-488-32

[2022] NZHC 1804

IN THE MATTER

of the Kaahu Trust

UNDER

Part 18 of the High Court Rules 2016

BETWEEN

LI KARI LEGLER, LAILA SUN LEGLER KLAUI and KEN LEGLER

Plaintiffs

AND

MARIA GUILLAUMINA CORNELIA JOHANNA FORMANNOIJ

First Defendant

KAAHU TRUSTEE LIMITED

Second Defendant

Hearing:	On the papers
Counsel:	D R Bigio QC and JWH Little for the Plaintiffs J McBride and R Woods for the Defendants
Judgment:	26 July 2022

JUDGMENT OF GAULT J

(Costs)

This judgment was delivered by me on 26 July 2022 at 4:00 pm pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

……………………………………

Solicitors / Counsel:

Mr D R Bigio QC and Mr JWH Little, Barristers, Auckland

Ms Pravir Tesiram (plaintiffs’ instructing solicitor), TGT Legal, Auckland Mr J McBride and Ms R Woods, Barristers, Auckland

Mr L T Grant (defendants’ instructing solicitor), Martelli McKegg, Auckland

LEGLER, KLAUI and LEGLER v FORMANNOIJ [2022] NZHC 1804 [26 July 2022]

[1]                   Following my judgment dated 28 March 2022 dismissing the plaintiff’s interlocutory application,1 both parties seek costs.

Factual background

[2]                   The factual background and history of the proceeding leading to the plaintiffs’ application were set out in my earlier judgment and need not be repeated in any detail. In summary, the proceeding concerns a trust dispute between the adult children of the late Ricco Legler (from his first marriage) and his widow (Marina). The adult children claimed that Marina’s appointment of a sole corporate trustee was void as a fraud on a power. The plaintiffs’ claim was dismissed by Downs J on 2 June 2021.2

[3]The plaintiffs appealed and Downs J granted interim relief pending appeal.3

[4]                   On 16 March 2022, following the lapse of an interim arrangement between the parties, the plaintiffs applied without notice (on a Pickwick basis) for an urgent interim order requiring Marina and the corporate trustee to comply with Downs J’s injunction pending further order of the Court. Rather than deal with the application on a without notice/Pickwick basis, I directed an urgent hearing.

[5]                   The interlocutory dispute concerned Marina’s proposed access to $1 million held on term deposit given that she had personally paid all the defendants’ legal costs in the proceeding.

My earlier judgment

[6]                   I concluded that Downs J’s interim order of 18 October 2021 did not restrain use of the $1 million held on term deposit. I declined to grant the plaintiffs further interim relief restraining Marina from accessing the $500,000 sought from one term deposit pending appeal.

1      Legler v Formannoij [2022] NZHC 586.

2      Legler v Formannoij [2021] NZHC 1271.

3      Legler v Formannoij [2021] NZHC 2759.

[7]                   In relation to costs, I said that costs ordinarily follow the event, but noted that Mr Bigio QC, for the plaintiffs, had signalled that he wished to be heard in relation to costs given the way the issue developed.

Costs sought

[8]The defendants seek 2B costs and disbursements on the application, totalling

$6,921.50, together with an uplift of 25 per cent to compensate them for the costs of having to prepare a costs memorandum.

[9]                   The plaintiffs also seek 2B costs and disbursements, totalling $8,445.50, on the basis that they were required to make the application because the defendants took the position that they were not bound by Downs J’s injunction and declined to agree to comply with it pending a separate judgment by Harland J which would determine whether it was binding.

Analysis

[10]               I accept that when the application was made the plaintiffs reasonably understood that the defendants took the position that they were not bound  by  Downs J’s injunction given the dispute about the undertaking as to damages. It only emerged subsequently that the defendants’ position was instead that Downs J’s interim order did not restrain use of the $1 million held on term deposit.

[11]               However, I do not consider this justifies a departure from the general principle that costs ordinarily follow the event. The plaintiffs elected to continue to pursue the application once the defendants’ position became clear, submitting unsuccessfully that Downs J’s interim order did restrain use of the $1 million held on term deposit and in the alternative that the defendants should in any event be restrained from using the term deposits pending appeal. Nor does the fact that the defendants ultimately sought to access only one of the two $500,000 deposits justify a departure from the general principle.

[12]               I do not consider that the defendants are entitled to an uplift of 25 per cent, for two related reasons. First, while the Court has power to award costs in relation to costs

matters, costs are often dealt with by way of exchanging memoranda and the Court is reluctant to award costs on costs.4 Secondly, even when costs on costs are appropriate, they should generally be awarded by allowing scale costs for the filing of a costs memorandum. Increased costs may be awarded where there is failure by the paying party to act reasonably,5 and an unreasonable stance in relation to costs may give rise to increased costs in relation to that memorandum but would not itself justify an award of increased costs in respect of the application or proceeding as a whole. I am not satisfied that increased costs are justified here. Nor do I award scale costs on costs given that a defendants’ memorandum was required whether or not the plaintiffs sought costs or only that costs should lie where they fell.

Result

[13]The defendants are entitled to 2B costs of $6,811.50 plus disbursements of

$110, totalling $6,921.50.

Gault J

4      Jeffreys v Morgenstern [2013] NZHC 1361 at [40]; Barry Park Investments Ltd v Body Corporate Number 95388 [2016] NZHC 1527 at [25]; Epsom Woods Ltd v Waitakere Farms Ltd [2020] NZHC 3137 at [4]; Norrie v Crown Range Holdings Ltd [2022] NZHC 898 at [28]; and DGL Manufacturing Ltd v Simmonds [2022] NZHC 1434 at [18].

5      Bradbury v Westpac Banking Corporation [2009] 3 NZLR 400 (CA) at [27].