Legal Research
Cases
Legler v Formannoij

Legler v Formannoij

Case [2021] NZHC 1271 2 June 2021

Beneficiary Interests

Trusts & Equity

No judgment structure available for this case.

Type to search within this case.

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 1271

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: 17 - 20 May 2021

Counsel:

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

Judgment:

2 June 2021

JUDGMENT OF DOWNS J

This judgment was delivered by me on Wednesday, 2 June 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.
JD McBride, Auckland. JWH Little, Auckland. R Woods, Auckland.

LEGLER v FORMANNOIJ [2021] NZHC 1271 [2 June 2021]

The case

[1] This case is about a challenge to the appointment of a single corporate trustee, on the basis it involved a fraud on a power, meaning, an improper purpose. It is also about two family trusts created little more than a year apart, and related acrimony in the wake of the patriarch’s death.

Background

[2] Ricco Legler and Maria Formannoij met in the Caribbean in 1989.1 They began a relationship that year. In 1991, the couple moved to New Zealand. They married 2009. Ricco died 2017. He and Maria were thus together 28 years.

[3] Ricco’s children from his first marriage are Li, Ken and Laila Legler. All are now adults. Li also moved to New Zealand in 1991. Laila came approximately a year later. Ken lives in Perth.

[4] Ricco’s father, Frederico or Fredy Legler, was a successful Italian businessman. Fredy died 2002, leaving Ricco a significant inheritance. This led to the creation of two family trusts: the Horowai Family Trust2 and Kaahu Trust.3

[5] Horowai was established 2 March 2007. Its sole trustee remains Horowai Trustee Co Ltd.4 The directors of that company were Ricco and Li. They are now Li and Laila.

[6] Kaahu was established 9 June 2008. Its trustees were Ricco, Maria, and BOI Taxation Trustee Co No.2 Ltd.5 Philip Tyler, an accountant, was BOI’s director. Mr Tyler was the accountant for both Horowai and Kaahu.

[7] Kaahu’s sole trustee is now Kaahu Trustee Ltd.6 Its appointment is the heart of the case, about which more soon.

1      For convenience, I use Christian names.
2      Horowai.
3      Kaahu.
4      Horowai Trustee.
5      BOI.
6      Kaahu Trustee.

[8] The discretionary beneficiaries of each trust were the same: Ricco, Maria, Li, Ken, Laila, and any trust which included a beneficiary.7 Ricco and his children were the final beneficiaries of Horowai; Ricco and Maria only the final beneficiaries of Kaahu.

[9] A series of transactions ending 2016 endowed each trust with substantial assets. Horowai has a 214-hectare block of forested land at Purerua Road, Kerikeri. Li manages the forest. Horowai also has an adjacent 21-hectare block of farmland,8 and a…

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 1271
Case: [2021] NZHC 1271
Decision Date: 2 June 2021

CaseChat Overview and Summary

The High Court of New Zealand was presented with a case involving a challenge to the appointment of a corporate trustee of the Kaahu Trust. The plaintiffs, Li, Ken, and Laila Legler, claimed that Maria Formannoij, the widow of Ricco Legler and a trustee of the Kaahu Trust, appointed Kaahu Trustee Limited as a trustee for an improper purpose, constituting a fraud on a power. The plaintiffs argued that Maria appointed Kaahu Trustee to benefit herself and evade the limits imposed by the trust deed and the law on her ability as trustee to use the trust property to benefit herself.

The court considered the legal principles surrounding fraud on a power, which requires a trustee to exercise their powers in accordance with the purposes for which those powers were conferred. If a trustee exercises a power for an improper purpose, they commit a fraud on a power. The court also examined the Kaahu Trust deed, which expressly permitted a single corporate trustee to exercise all the powers and discretions vested in that Trustee, even if a beneficiary had an interest in that Trustee.

The court found that Maria did not commit a fraud on a power by appointing Kaahu Trustee, as the trust deed expressly allowed for a single corporate trustee. The court also found that Maria did not act with an improper purpose when appointing Kaahu Trustee, as she genuinely sought to find a second trustee and acted on legal advice. The court concluded that the children's claim failed, and the interim relief orders were discharged. The court ordered that Maria be awarded 2B scale costs if the parties could not agree on the costs.

Orders