Morresey v Innes

[2014] NZHC 1527

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2010-404-1698 [2014] NZHC 1527

BETWEEN

LESLEY ELIZABETH MORRESEY

Plaintiff

AND

MICHAELLE ROBERTA INNES First Defendant

ROBERT STRONACH INNES Second Defendant

MICHAELLE ROBERTA INNES, ROBERT STRONACH INNES and MICHAEL PETER HALL

Third Defendants

Hearing:	2 July 2014
Appearances:	E St John for plaintiff No appearance for defendants
Judgment:	2 July 2014

(ORAL) JUDGMENT OF LANG J [as to damages]

MORRESEY v INNES [2014] NZHC 1527 [2 July 2014]

[1]      In  this  proceeding  the  plaintiff,  Ms  Morresey,  seeks  damages  against Michaelle and Robert Innes in respect of funds that they misappropriated in their capacity as constructive trustees for Ms Morresey.

[2]      The background to the claim is set out in a judgment delivered by Asher J on

29 September 2011.1   Asher J made declarations that Mr and Mrs Innes held certain properties on trust for Ms Morresey.  Those properties have now been sold, and Ms Morresey is finally in a position to quantify the damages she has suffered as a result of the activities of the defendants.  Ms Morresey does not, however, seek any award of damages against the third-named third defendant, Mr Hall.  He was a professional trustee and Ms Morresey accepts he played no part at all in the activities that led to Mr and Mrs Innes depriving Ms Morresey of her funds.

[3]      The  first  claim  for  damages  relates  to  the  sum  of  $900,000.00  that  Ms Morresey forwarded to Mr and Mrs Innes for investment on her behalf.  Those funds have now disappeared in their entirety.  For the most part, they appear to have been swallowed up in the liquidation of a company in which Mr and Mrs Innes had an involvement.  It is clearly appropriate to enter judgment in that sum and I now make an award of damages accordingly.

[4]      The  second  claim  for  damages  arises  out  of  the  fact  that  Ms  Morresey remitted funds to Mrs Innes so that she could acquire a section in Pauanui. Although the  section  was  to  be  registered  in  Mrs  Innes’ name,  she  acknowledged  in  a declaration  of  trust  that  she  held  the  property  on  trust  for  Ms  Morresey. Unfortunately,  however,  Mrs  Innes  subsequently  obtained  a  loan  from  a  bank secured by a mortgage over the property.  The end result, therefore, is that, after all assets have been realised, Ms Morresey is left with a debt to the bank in the sum of

$438,448.76.   This remains secured by the mortgage registered over the Pauanui property.   The bank had no notice that Mrs Innes was acting fraudulently.   As a result,  the  bank  is  entitled  to  the  benefit  of  its  security  over  the  property

notwithstanding  the  fact  that  Ms  Morresey  did  not  know  that  Mrs  Innes  had

1      Morresey v Innes HC Auckland CIV-2010-404-1698, 29 September 2011.

encumbered the section in that way.  As a result, Ms Morresey has suffered further loss in the sum of $438,448.76 being the amount presently outstanding to the bank and secured by way of mortgage against the Pauanui property.  I enter judgment in favour of Ms Morresey in respect of that sum as well.

[5]      This means that Ms Morresey has a judgment against Mr and Mrs Innes in the total sum of $1,338,448.76.  I award interest on that sum in accordance with the provisions  of  the  Judicature Act  1908  from  11  October  2011  until  the  date  of judgment.

Costs

[6]      I also award Ms Morresey costs against Mr and Mrs Innes on a Category 2B

basis, together with disbursements as fixed by the Registrar.

Lang J

Solicitors:

Ewart & Ewart, Auckland

Counsel:
E St John, Auckland