Equity / Law / Study by subject

NZLJ Student Companion: Equity

The following Student Companion by Juliet Chevalier-Watts is from the New Zealand Law Journal April 2105 edition [2015] NZLJ 102

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Waho v Olsen-Ratana [2014] NZCA 612

In this case, the Court of Appeal dismissed the appellant’s appeal from the High Court decision ([2014] NZHC 2729), refusing an interlocutory injunction removing the appellant as a trustee. Since the High Court decision, the appellant, Mr Waho, has since been removed as a trustee, however, the Trust did not argue that the appeal was moot. Rather, if the appeal were successful, the Trust would reinstate Mr Waho as trustee.

Mr Waho was a trustee of Te Kohanga Reo National Trust (the Trust). In 2013, the media published allegations of financial impropriety by the management of the Trust’s commercial arm, Te Pataka Ohanga Ltd (TPO). Amidst further allegations, the Minister of Education commissioned a review of the Trust’s activities by Ernst & Young, and an independent review was also commissioned by TPO. The Board of the Trust arranged to meet to discuss the Ernst & Young report, but the meeting was cancelled at very short notice due to further allegations, which the Board needed time to consider. The Trust agreed to hold a hui to discuss matters in accordance with tikanga. Mr Waho subsequently contacted two Ministers of the Crown with his allegations of wrongdoing. The Ministers referred the matter to the Serious Fraud Office (SFO). The SFO reported that its investigations disclosed no criminal offending. The Board resolved at a special meeting that Mr Waho’s actions had brought the Trust into disrepute and, with a majority of over 75% trustees, passed a resolution to remove Mr Waho as a trustee because he was unfit or unsuitable to continue in office as trustee.

The majority of the Court, in a judgment delivered by French J, was of the view that at that early stage it was impossible to say, with any degree of confidence, that Mr Waho did not have a seriously arguable case if he were wrongly removed as trustee. On the basis of Mr Waho’s evidence, he emerged as a principled whistleblower, with an aim to protect the Trust and to discharge his responsibilities as a trustee. On the other hand, the respondents asserted that Mr Waho impugned and discredited the other trustees and the trust without reasonable justification. Overall, in differing from Harrison J, the majority would not dismiss the appeal on the ground of lacking a seriously arguable case.

However, the Court was of the view that the balance of convenience was decisive against Mr Waho.  The Court determined that removing Mr Waho from the Board did not endanger his personal interests or put him at any personal disadvantage. In reality, the removal enabled him to pursue his allegations of wrongdoing without any constraints of trustee responsibility. In addition, his reinstatement at this stage would compound the degree of dysfunctionality, to which Mr Waho contributed. It would not be possible for the Board, with such an important public function, to operate effectively in such a difficult environment.

For those reasons, the Court was of the view that the balance of convenience fell against Mr Waho, thus the appeal was dismissed.

Harrison J concurred that the appeal should be dismissed on the grounds of the balance of convenience, however, he was not of the view that Mr Waho successfully established a seriously arguable question for trial.

In his Honour’s view, the Board had a sufficient factual basis for removing him as trustee because it was evident that Mr Waho had brought the trust into disrepute by his actions. Mr Waho should have recognised, in his capacity as trustee, that a measured, balanced and careful assessment would have been the appropriate course of action for the Board to take in response to the allegations. Mr Waho’s actions unilaterally pre-empted the Board’s opportunity to provide that measured and careful response to the allegations and to the requisite action to be taken as a result. In other words, his actions were “the direct antithesis of the collective responsibility required for Trust decisions” (at [60]). As a result, Harrison J was not persuaded that Mr Waho showed a seriously arguable question for trial.

Whilst this case is fairly straightforward, it is a useful illustration of the principles of interim injunctions and the judgment sets out logical and reasoned considerations relating to the serious question to be tried and the balance of convenience.

The full April 2015 edition of the New Zealand Law Journal is available on the LexisNexis database.