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Strauss v Warner [2018] TOCA 21; AC 11 of 2017 (7 September 2018)

IN THE COURT OF APPEAL OF TONGA
CIVIL JURISDICTION
NUKU’ALOFA REGISTRY

AC 11 of 2017
[CV 45 of 2016]

BETWEEN : 1. FRANZ STRAUSS
2. GUDRUN STRAUSS

- Applicants

AND : DIANNE WARNER
- Respondent

Coram : Handley J

Blanchard J

Hansen J

Counsel : Mr. D. Corbett for Applicants

Hearing : On the papers

Date of Judgment : 7 September 2018

JUDGMENT OF THE COURT

[1] Franz and Gudrun Strauss were heavily indebted to Juergen and Brigitta Wolf who obtained a judgment against them in the Supreme Court and subsequently, on 24 October 2012, obtained an order appointing Dianne Warner as receiver of their business assets, including their shares in Seaview Lodge Ltd and a restaurant business operating in the company’s premises in Vuna Rd.

[2] The receiver was empowered by court order to sell those assets. She consolidated all the business assets into the company and, on 15 April 2014, sold the shares to an arm’s length purchaser conditional upon the approval of the sale by the Court. That approval was given by an order made by Lord Chief Justice Scott on 8 April 2014 (recalled and re-issued on 13 May 2014). It approved the sale of the shares and directed their transfer to the purchaser. It terminated the receivership as from 15 April 2014 and released the receiver from all obligations relating to the receivership.

[3] After payment of the receiver’s fees and disbursements, including real estate commission and lawyer’s fees, and repayment of a secured loan to Westpac Bank of Tonga, there was not enough to repay the Wolfs in full. They are still owed nearly $400,000 plus accruing interest. Thus the shortfall is very substantial.

[4] The Strausses issued proceedings on 22 August 2016 against Ms Warner alleging, inter alia, that the sale had been unlawfully made at an undervalue. They allege that the shares alone were worth more than $1.2 million, yet the shares and the business were together sold for $907,000. They also challenge the quantum of the fees and various disbursements made by the receiver. They allege that they have suffered very substantial loss of income for the rest of their lifetimes. Their total claim, under a number of heads, is for more than $11.5 million.

[5] The Strausses, as well as suing Ms Warner, also originally sued the real estate agents and the lawyers instructed by her but they discontinued against those other defendants in January 2017. They filed an amended Statement of Claim on 31 March 2017, to which Ms Warner filed a Defence on 2 May 2017.