Morresey v Innes HC Auckland CIV-2010-404-001698

[2011] NZHC 1534

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2010-404-001698

BETWEEN  LESLEY ELIZABETH MORRESEY Plaintiff

ANDMICHELLE ROBERTA INNES First Defendant

ANDROBERT STRONACH INNES Second Defendant

ANDMICHELLE ROBERTA INNES, ROBERT STRONACH INNES AND MICHAEL PETER HALL

Third Defendants

Hearing:         29 September 2011

Counsel:         E St John for Plaintiff

No appearance for defendants

Judgment:      29 September 2011

JUDGMENT OF ASHER J

Solicitors/Counsel:

E St John, PO Box 105 270, Auckland City 1143. Email:  [email protected]

MORRESEY V INNES HC AK CIV-2010-404-001698 29 September 2011

Introduction

[1]      In this formal proof hearing Mr St John is only seeking some of the orders sought in the statement of claim.   This hearing can therefore be regarded as an interim hearing and there will be a later hearing to consider damages claims.

[2]      No statements of defence have been filed.  There is no affidavit of service. All the defendants Michelle Roberta Innes, Robert Stronach Innes and Michael Peter Hall have filed affidavits responding to interrogatories.   There have also been appearances for all the defendants.   Mr Litchfield initially appeared for Ms and Mr Innes with Mr Kohler representing Mr Hall who is a barrister and solicitor in his personal capacity.  More latterly Mr Hucker has appeared for all three defendants, although he ultimately was granted leave to withdraw.  In all the circumstances I am satisfied that the statement of claim and notice of proceeding have been served and that the parties have effectively entered an appearance.  The steps taken constitute unequivocal acknowledgement of service on the part of the defendants.

Background

[3]      The plaintiff Lesley Elizabeth Morresey is Ms Innes’ sister.   Mr Innes is Ms Innes’ husband.  Mr Hall is a solicitor practicing in Pukekohe.  It would appear that he, with the other defendants, was a trustee of the Innes Hanlon Family Trust. He has since resigned.

[4]      Between 1990 and 2003 Ms Morresey advanced various sums of money to Ms Innes.  These are particularised in the statement of claim.  In the first affidavit of Ms  Morresey  she  refers  to  a  memorandum  from  Ms  Innes’ solicitor  where  an acknowledgement  that  Ms  Innes  held  $900,000  on  behalf  of her sister and  her sister’s husband is recorded.

[5]      In the affidavits filed by Ms Innes responding to interrogatories there are acknowledgements of receipt of significant sums of money which are particularised.

[6]      Ms Morresey also agreed to purchase a section at 607 Waterways Parade, Pauanui.  The Pauanui property was put in the name of Ms Innes who Ms Morresey says agreed to hold it on trust for her.  The trust deed has recently been located and placed before the Court in a recent affidavit.   It records the existence of the trust. There is nothing on the title recording Ms Morresey’s interest in the property.  The affidavit of Ms Morresey discloses by reference to extracts from the Companies Office, the Land Transfer Office and emails from Ms Innes that Ms Innes and her husband have unlawfully used Ms Morresey’s funds.  Rather than hold the money for Ms Morresey those funds were used to purchase properties and to develop a company.   The properties were acquired in the names of Ms and Mr Innes and Mr Hall,  their  solicitor.    The  use  of  the  funds  was  without  the  permission  of Ms Morresey and against her interests.

[7]      The  Inneses  have  used  the  funds  to  purchase  properties  at  635  and

637 Harrisville  Road,  Pukekohe,  and  281  Kohekohe  Road,  Waiuku.    Both  the

Pukekohe and Waiuku properties were sold and from the proceeds a property at

269 Union Road, Mauku was acquired.

[8]      In the meantime, the Inneses also mortgaged the Pauanui property which was in the name of Ms Innes.  This was entirely without the knowledge or permission of Ms Morresey who thought the property was being held in her name.  That mortgage now stands in excess of $450,000 with accumulated interest.  The funds from that mortgage and from the sale of the Pukekohe property were used to buy another property at 92 Wymer Road, Glenbrook and shares in a business called Country Green Salads Ltd.   The shares in Country Green Salads Ltd were owned by the Inneses and Mr Hall.

[9]      Country  Green  Salads  Ltd  has  since  been  placed  into  liquidation.    The Glenbrook property remains and is the subject of a sale and purchase agreement. Thus the answers to interrogatories in the supporting documentation reveal that in breach of trust all of the cash provided by Ms Morresey has been used by the Inneses for their own purposes and the Pauanui property wrongly mortgaged, so that there is now a mortgage in excess of $450,000.  That mortgage was to ASB Bank Ltd, but has since been replaced and the current mortgage is with ANZ National Bank Ltd.  I

am  informed  by  Mr  St  John  the ANZ  National  Bank  Ltd  has  a  set  of  these proceedings and is aware of them.

[10]     It is to be noted that there is nothing to indicate at this point that Mr Hall had any knowledge of Ms Morresey’s interest in the money or the Pauanui property, and that ANZ  National  Bank  Ltd  was  not  aware  of  Ms  Morresey’s  interest  in  the properties.  Therefore no relief has been sought in these proceedings against Mr Hall or ANZ  National  Bank  Ltd  and  it  is  accepted  that ANZ  National  Bank  Ltd’s mortgage is a valid mortgage and properly secured against the title.   Thus, any transfer to Ms Morresey will have to be subject to that mortgage.   Indeed, I am informed from the bar that Ms Morresey, to avert a mortgagee sale, is presently meeting the mortgage outgoings.

[11]     The affidavits filed by Ms and Mr Innes and the emails indicate that the Inneses do not have any immediate ability to reimburse Ms Morresey.  In a number of the emails Ms Innes expressly records that she has used Ms Morresey’s funds and wrongly mortgaged the Pauanui property.  She apologises and indicates a wish to put things right.

Decision

[12]     Mr St John on behalf of Ms Morresey seeks a declaration that the Pauanui property is held by Ms Innes on trust for Ms Morresey and an order that she transfer the  property  to  Ms  Morresey.    Costs  and  compound  interest  are  also  sought. Mr St John now asks the order sought be amended and what is now requested is an order that the District Land Registrar transfer the property to the plaintiff.  It is noted any transfer must be subject to the ANZ National Bank Ltd mortgage.

[13]     Mr St John also seeks a declaration that all assets held or acquired directly or indirectly  from  Ms  Morresey’s  assets  are  held  by  the  Inneses  in  trust  for Ms Morresey,  that  all  necessary  accounts  and  enquiries  to  enable  tracing  and recovery take place, and orders of delivery up or transfer to Ms Morresey of the assets referred to.  Included in those assets is the Waiuku property.

[14]     I am satisfied on the material before me that the property at 607 Waterways Parade, Pauanui is held by Ms Innes on trust for Ms Morresey.  I am also satisfied on the  material  before  me  that  the  property  at  92  Wymer  Road,  Glenbrook  was purchased  with  monies  that  can  be  traced  back  to  the  monies  belonging  to Ms Morresey that were wrongfully taken by Ms Innes and used for the purposes of her and her husband.

[15]     I therefore consider that specific declarations recording this position can be made.   Mr St John at this point does not seek any orders as to damages.   The quantum of those damages will not become clear until the properties are sold or valued.

[16]     On the face of the material on the Court file there appears to be no possible defence that can be raised by the defendants.  At one point there is a statement by Ms Innes in an email of 27 January 2010 to Ms Morresey that she would “like to be compensated for the value I have added to the property, as well as the ongoing annual costs associate[d] with maintaining it, for the past 10  years”.   However, Ms Innes has taken no steps to substantiate this assertion.   In any event on the material before me at the moment the amount Ms Innes owes Ms Morresey would be far greater than any claim she might have for any input into the Pauanui property. Moreover, as it is just a section it seems unlikely that there would have been any significant expenditure by Ms Innes.

Conclusion

[17]     I  am  therefore  satisfied  that  Ms  Morresey  is  the  owner  in  equity  of

607 Waterways  Parade,  Pauanui  and  92  Wymer  Road,  Glenbrook.    I  make  the following declarations:

(a)      The   property   at   607   Waterways   Parade,   Pauanui,   identifier SA52C/641,  is  held  on  trust  for  the  plaintiff  Lesley  Elizabeth Morresey by the first defendant Michelle Roberta Innes, subject to the ANZ National Bank Ltd mortgage.

(b)I direct the District Land Registrar to transfer that property to the plaintiff Lesley Elizabeth Morresey subject to all charges and encumbrances registered against the title.

(c)      The property at 92 Wymer Road, Glenbrook, identifier NA69C/364 is held on trust for the plaintiff Lesley Elizabeth Morresey by the third defendants  Michelle  Roberta  Innes,  Robert  Stronach  Innes  and Michael Peter Hall.

(d)I direct the District Land Registrar to transfer that property to the plaintiff Lesley Elizabeth Morresey subject to all charges and encumbrances registered against the title.

(e)      The third defendants Michelle Roberta Innes, Robert Stronach Innes and Michael Peter Hall hold all shares in their names in Country Green Salads Ltd (in liquidation) in trust for the plaintiff Lesley Elizabeth Morresey.

[18]     Ms Morresey is entitled to costs on the application which I fix on a 2B basis.

[19]     The proceedings are adjourned for call in the Duty Judge list on 2 November

2011.  At that point Mr St John is likely to be seeking formal proof on the damages claim so this matter should be set down on that day, or the closest available day, for an hour and a quarter at 11.45am.

……………………………..

Asher J