Legler v Formannou - [2022] NZHC 586

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 586

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: 23 March 2022

Appearances:

D R Bigio QC and JWH Little for the Plaintiffs J McBride and R Woods for the Defendants

Judgment:

28 March 2022

JUDGMENT OF GAULT J

This judgment was delivered by me on 28 March 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, Martelli McKegg (defendants’ instructing solicitor), Auckland

LEGLER, KLAUI and LEGLER v FORMANNOIJ [2022] NZHC 586 [28 March 2022]

[1] On 16 March 2022 the plaintiffs applied without notice (on a Pickwick basis) for an urgent interim order requiring the defendants, Ms Formannoij (Marina) and Kaahu Trustee Ltd (KTL), “to comply with Downs J’s injunction” dated 18 October 2021 pending further order the Court.

[2] The defendants filed a notice of opposition and, following telephone conferences on 17 and 18 March, I directed an urgent hearing on 23 March.

Factual background

[3] Ricco Legler (Ricco) and Marina began a relationship in 1989. They married in 2009. Ricco died in 2017.

[4]The plaintiffs are Ricco’s adult children from his first marriage.

[5] Ricco’s father died in 2002, leaving Ricco a significant inheritance. This led to the creation of two family trusts: the Horowai Family Trust (Horowai) and the Kaahu Trust (Kaahu). The discretionary beneficiaries of each trust were the same: Ricco, Marina, the children and any trust which included a beneficiary. Ricco and his children were the final beneficiaries of Horowai; Ricco and Marina were the final beneficiaries of Kaahu.

[6] These proceedings concern Kaahu, which was established on 9 June 2008. Its trustees were Ricco, Marina, and BOI Taxation Trustee Co No.2 Ltd (BOI).

[7] Following Ricco’s death and the resignation of BOI, Marina was the sole trustee of Kaahu.

[8] On 27 November 2019, Marina appointed KTL a trustee and then resigned as a trustee. Marina is the sole director of KTL.

[9] On 3 March 2020, KTL and Marina executed a Deed of Distribution and Indemnity resolving to pay a distribution to Marina of $1 million. The distribution was paid to Marina on 17 March 2020 and placed on two term deposits of $500,000.

[10] On 12 March 2020, KTL executed a Deed of Distribution (Kaahu to Horowai) resolving to transfer to Horowai a debt of $3,738,297.93 owed by Horowai to KTL; that is, forgiving the debt.

[11] Also on 12 March 2020, KTL and Marina executed a Deed of Distribution and Indemnity resolving…

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 Formannou

Details

AGLC: Legler v Formannou [2022] NZHC 586
Case: [2022] NZHC 586
Decision Date: 28 March 2022

CaseChat Overview and Summary

The plaintiffs, Li Kari Legler, Laila Sun Legler Klaui, and Ken Legler, who are Ricco Legler's adult children from his first marriage, sought an urgent interim order requiring the defendants, Marina Formannou and Kaahu Trustee Limited (KTL), to comply with an earlier injunction. The defendants opposed the application, and the matter was heard urgently on 23 March 2022. The primary issues for the Court to determine were whether Downs J's interim order of 18 October 2021 restrained use of the term deposits and, if not, whether the defendants should be restrained from using the term deposits pending appeal. The Court considered the scope of Downs J's interim order and found that it did not restrain use of the $1 million held on term deposit. The Court then considered whether, aside from Downs J's order, the defendants should be restrained from using the term deposits pending appeal. The Court accepted that the balance of convenience favoured allowing Marina to access $500,000 from one term deposit pending appeal. The plaintiffs' interlocutory application was dismissed.

This case highlights the importance of understanding the scope of interim orders and the need for careful consideration of the balance of convenience when granting or refusing further interim relief. The Court's decision also underscores the principle that the reasonableness of a trustee's entitlement to indemnity for legal costs incurred in litigation is subject to those costs being necessarily and reasonably incurred.

Orders