Legler v Formannoij - [2021] NZHC 2759

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

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

CIV-2020-488-000032

[2021] NZHC 2759

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: 13 October 2021

Appearances (via VMR):

DR Bigio QC and JWH Little for Plaintiffs JD McBride and R Woods for Defendants

Judgment:

18 October 2021

JUDGMENT OF DOWNS J

(Undertaking to pay damages)

This judgment was delivered by me on Monday, 18 October 2021 at 11 am
pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors/Counsel:
TGT Legal, Auckland.
Martelli McKegg, Auckland. DR Bigio QC, Auckland.
JWH Little, Auckland. JD McBride, Auckland. R Woods, Auckland.

LEGLER v FORMANNOIJ [2021] NZHC 2759 [18 October 2021]

A long run-up

[1] ... best explains why I recall my stay and interim relief orders and make them conditional on an undertaking to pay damages.

[2] Ricco Legler died 2017 leaving his wife, Maria Formannoij; three adult children from an earlier marriage, Li, Laila and Ken Legler;1 and two family trusts: Kaahu Trust2 and Horowai Family Trust.3 Kaahu existed primarily to benefit Ricco and Maria.4 Horowai existed primarily to benefit the children. Each trust has substantial assets.

[3] Ricco’s death left Kaahu with two trustees: Maria and another. The other resigned. Maria appointed Kaahu Trustee Ltd5 as a trustee, then herself resigned.

[4] The children challenged their stepmother’s appointment of Kaahu Trustee. They alleged Maria committed a fraud on a power, meaning she appointed Kaahu Trustee with an improper purpose.

[5] On 8 July 2020, the children obtained an interim injunction, without notice, from Brewer J. The injunction prevented Maria and Kaahu Trustee from exercising “any dispositive powers” in relation to trust property.6

[6] The children did not provide an undertaking to pay damages, nor inform Brewer J they were not doing so. It is unlikely these omissions were sinister, for, the children served the papers on a Pickwick basis (making them readily discoverable). But, the omissions were serious. To compound matters, the children certified the application contained “all relevant information” when, plainly, it did not. Again, the children did not inform Brewer J they were not providing an undertaking. Nor did the

1      The children.
2      Kaahu.
3      Horowai.
4      I use Christian names to avoid confusion given Ricco’s children are parties.
5      Kaahu Trustee.
6 Minute of Brewer J at [5].

children seek exemption from r 7.54 of the High Court Rules 2016.7 This rule makes an undertaking mandatory when someone seeks an interim injunction.

[7] All this escaped attention, presumably because duty Judges are very busy and things happened quickly.

[8]The interim injunction was later varied by agreement.

[9] The children’s challenge to Maria’s appointment of Kaahu Trustee failed at trial. On 2 June 2021, I found instead for Maria and Kaahu Trustee.8 So, I rescinded…

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 Legler v Formannoij

Details

AGLC: Legler v Formannoij [2021] NZHC 2759
Case: [2021] NZHC 2759
Decision Date: 18 October 2021

CaseChat Overview and Summary

The High Court of New Zealand was asked to determine whether the children of Ricco Legler, deceased, were required to provide an undertaking to pay damages as a condition of the stay and interim relief orders they had previously obtained. The children, Li, Laila, and Ken Legler, had challenged their stepmother's appointment of a trustee to the Kaahu Trust, which was primarily established to benefit Ricco and his wife, Maria Formannoij. They sought to prevent Maria and the appointed trustee, Kaahu Trustee Ltd, from exercising any dispositive powers in relation to the trust property. However, the children failed to provide the necessary undertaking to pay damages when they initially obtained the interim injunction, which was a mandatory requirement under rule 7.54 of the High Court Rules 2016. The court had to decide whether it was appropriate to now require the children to provide an undertaking to pay damages.

The court considered the arguments presented by both parties. Maria and Kaahu Trustee Ltd argued that an undertaking to pay damages was automatically implied when interim relief was granted, citing English case law in support. On the other hand, the children's counsel argued that there was no jurisdiction to now require the children to provide an undertaking, that English case law was distinguishable, and that no undertaking should be required given the facts of the case. The court found that the children had been in error when they initially obtained the interim injunction and that it was appropriate to recall the orders and require an undertaking as a condition of the stay and interim relief. The court was not persuaded by the children's proposed undertaking, as it was not sufficiently broad and did not align with the language of rule 7.54. The court concluded that an undertaking to pay damages was the orthodox, presumptive "price" of an interim injunction and that it was proper in this case.

The court recalled the stay and interim relief orders it had made on 2 July 2021 and re-issued them conditional on the children providing an undertaking to pay damages in accordance with rule 7.54 on or before 5 pm, Thursday 21 October 2021. Costs in relation to the stay application were still to be determined, and the court was inclined to award the children scale costs and Maria and Kaahu Trustee Ltd increased costs in relation to this application. The parties were given the opportunity to file memoranda if they disagreed with the court's proposed costs order.

Orders