Morresey v Innes [2014] NZHC 1527 (2 July 2014)

Last Updated: 9 July 2014

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