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High Court of New Zealand Decisions |
Last Updated: 31 July 2019
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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
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CIV-2018-404-1716
[2019] NZHC 1739 |
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BETWEEN
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LYNDA MARLYN ELLICE and STANLEY EDWARD ELLICE
Plaintiffs
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AND
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SHANE RAY STALLARD
Defendant
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Hearing:
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7 May 2019; further pleadings (with leave) 6 June 2019
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Counsel:
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CA Andrews and PS Kim for plaintiffs
No appearance for or on behalf of the defendant
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Judgment:
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23 July 2019
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JUDGMENT OF FITZGERALD J
This judgment was delivered by me on 23 July 2019 at 3pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date...............
Solicitors: McVeagh Fleming, Auckland
Ellice v Stallard [2019] NZHC 1739 [23 July 2019]
Introduction
[1] Over a four-year period commencing in 2008, the first-named plaintiff, Mrs Ellice, made regular cash payments to the defendant, Mr Stallard, who was a high school friend of Mr and Mrs Ellice’s son. Mr Stallard told Mrs Ellice, and she believed, that he needed the money to fund cancer treatment (including in Australia), pay his children’s school fees, and for knee surgery. Mr Stallard promised he would repay the money. An analysis of the plaintiffs’ bank accounts shows that approximately $550,000 was paid by Mrs Ellice to Mr Stallard over the period in question.
[2] Mrs Ellice was able to fund these payments because in 2008, she had won approximately $500,000 in Lotto Strike. As a result of the payments to Mr Stallard, however, those winnings are now gone.
[3] At the time the payments were made, Mrs Ellice did not tell her husband about them. She had controlled and overseen the couple’s finances over a 40-year period and Mr Ellice was unaware their funds were being depleted in this way. He first became aware of the payments in late 2012 when demand was made on him and Mrs Ellice by their bank, given their then precarious financial position.
[4] This led to a meeting between Mr and Mrs Ellice and Mr Stallard in late 2012, at which the plaintiffs made demand on Mr Stallard for repayment of the money. He has not repaid any of the money. Hence the plaintiffs have commenced these proceedings.
Procedural background
[5] While Mr Stallard has been served with the proceedings (through an order for substituted service), he has not participated in or defended them. The hearing before me accordingly proceeded by way of formal proof.
[6] When the matter was first called before me, the only evidential materials before the Court were relatively brief affidavits by Mrs Ellice and her son, setting out the analysis of the bank statements and the amounts in question. There was no evidence
from Mr Ellice, and Mrs Ellice’s affidavit gave rise to a number of questions on which I considered it would be helpful to hear from her. The day before the hearing, I accordingly issued a minute requesting that Mrs Ellice (and her son) be available to answer any questions the Court might have at the formal proof hearing.
[7] As it transpired, given the plaintiffs and their son live outside of Auckland and have fixed work commitments, they were not available in person at the time the proceedings were first called. The matter was therefore adjourned to a date on which they were available. I also indicated that, given the content of Mrs Ellice’s affidavit indicated her husband had also had some interaction with Mr Stallard in relation to the moneys paid to him, the plaintiffs might consider whether Mr Ellice also swear an affidavit.
[8] The matter accordingly was called again before me in May 2019. Mr Ellice had in the interim also sworn an affidavit in support of the plaintiffs’ claims. Mr and Mrs Ellice were (separately) sworn in and responded to questions from the Court, and some follow-up questions from their counsel. This process was, I am bound to say, extremely helpful in presenting a much more complete and realistic picture of what had occurred between the Ellices and Mr Stallard.
[9] At the hearing, I also raised whether the plaintiffs’ claim might, in addition to (or instead of) some of the causes of action pleaded in the original statement of claim, sound in breach of contract. I granted leave for the plaintiffs to file an amended claim including a contract cause of action if they wished. The plaintiffs filed an amended statement of claim in June 2019 adding that cause of action.
[10] In this judgment, I first set out the factual background to the claims now made against Mr Stallard. That factual background is drawn from the affidavit materials, together with the further viva voce evidence given by Mr and Mrs Ellice at the formal proof hearing. I then summarise the causes of action advanced by the plaintiffs and set out my discussion of each of them.
Factual background – more detail
[11] The defendant was a high school friend of the plaintiffs’ son, who I will refer to as Evan. Neither Mr or Mrs Ellice knew the defendant at that time. By 2008, all parties lived in reasonably close proximity in Glenfield. Mrs Ellice explained that her son was at that time going through some medical issues. It was in that context she and her husband first met Mr Stallard. It appears that through their son, there was a chance or informal meeting, which relatively quickly transformed into frequent visits by Mr Stallard to the plaintiffs’ home. He provided assistance to Mrs Ellice in particular
– for example taking her out to doctor’s visits, to the shops and so on. Mrs Ellice explained that over time, Mr Stallard became almost like a third son to her and Mr Ellice. The couple also became close with his children, who lived with their mother nearby.
[12] Mrs Ellice said Mr Stallard ended up coming around to their house up to five or six days a week, often just popping in, she presumed, on his way to or from work.
[13] During her evidence, the following exchange took place between the Court and Mrs Ellice:
Q. Just turning your mind back, and as best as you can recall it, how did the topic or question of you providing money to Shane come up?
A. He had told me well in the beginning that he had had, well he had had bowel cancer and that that first lot was clear. Then when he started to come through he said, “Oh, I’ve just been for test and the bowel cancer has returned” and it was basically he was doing, I understood that he was having private treatment, not through the public system. We understood that it was public system. We would basically take to some occasions when he was poor, poorly we would take him down to the hospital, to the hospital but we were not allowed in his [insistence] we had to drop him off at the gate, so whether he actually went in there or not we don't know.
Q. And just in that context how did the question of you providing him with money come up?
A. He said he needed because the medication or pills or whatever, and the what you call it, yeah, medication and that was expensive and he didn’t have the funds because he was on his own and he couldn't afford them.
Q. And what was your response to that?
A. Well, basically as he was a friend, if I could help him out, that I would help him out. I didn’t basically want to see him die.
[14] When asked why she didn’t tell her husband at the time about the payments, Mrs Ellice explained that she proceeded on the basis Mr Stallard would repay her in due course, and given her husband’s then health, she didn’t want to burden him with such matters.
[15] In terms of physically how the transactions came about, Mrs Ellice explained as follows:
...
Q. I’ve looked through the bank accounts and I can see that there were often monies going almost every day –
A. Yes.
Q. – and sometimes even twice a day, just sort of talk me through in general terms physically how would that come about? Like, how would he ask for it? How would you go and get it? How would you give it to him? So just sort of if there was a general pattern, perhaps you could explain that to me?
A. Most times I, mmm, I worked in a supermarket and there was an ATM machine in the building.
Q. It was in Glenfield, was it? I saw a lot of them were in Glenfield?
A. Sorry?
Q. I saw a lot of the ATMs were Glenfield-based?
A. Yes, there was Glenfield. Like, if he, for instance, he’d take me up to shop and I’d go out and if I wasn’t work – I worked, because I worked different hours during the week, quite often I would go up and meet my girlfriend for coffee or another girlfriend for lunch or something, and he would quite often come up and sort of say to me, “Well, can I get some money?”
Q. So would he actually go with you on those visits or would he just happen to bump into you or would he come to the house in the morning?
A. I think he made a point of knowing where he [sic] was, that he was able to even sometimes give me a text message and say, “Can I meet you such and such?” The banks, the BNZ was in Glenfield. The ATM machine was in the mall. So it sort of worked quite handy to – that I could – had access to the money.
A. Yes.
[16] By 2012, Mrs Ellice explained that she was starting to get concerned about the amount of money she had provided to Mr Stallard. She said she had discussions with him about whether he had been keeping a record of the amounts lent to him. He reassured her he had it all written down and that he would be able to secure loans (including from finance companies) in order to pay her back. No repayment, however, has ever been made by Mr Stallard to either Mr or Mrs Ellice.
[17] Mr Ellice explained that he first became aware that his wife had been providing the cash payments to Mr Stallard when he and his wife received formal correspondence from the bank about their then precarious financial position, and what Mr Ellice described as suggestions there were going to be “liens” taken out over their property. The issue led to a meeting between himself, Mrs Ellice and Mr Stallard in or around September 2012. Mr Ellice demanded repayment from Mr Stallard. Mr Ellice said in his viva voce evidence that at one point during discussions with Mr Stallard, when he (Mr Ellice) was going upstairs to get changed, he heard Mr Stallard tell Mrs Ellice that she should say she had gambled the money away.
[18] Mr Ellice said that was the last interaction he had with Mr Stallard. He was aware that Mrs Ellice was, however, still in contact with him. When asked about the lengthy gap between making demand on Mr Stallard and seeking legal advice and commencing these proceedings, Mrs Ellice explained that she wanted to give Mr Stallard an opportunity to repay the amounts, as he had always said he would do so.
[19] A final but quite important point which was not canvassed in the affidavit evidence, but which arose during the viva voce evidence, was how Mrs Ellice was able to make substantial payments to Mr Stallard on an almost daily basis. As noted earlier, in 2008, she had won approximately $500,000 on Lotto Strike. The funds had been invested. She said that Mr Stallard had shown her how to make cash withdrawals on her Visa card, and how she could break term deposits, as she had to that point thought the money could not be accessed until the completion of the investment term.
Mrs Ellice also said that from her perspective, she had understood Mr Stallard was aware she had won Lotto.
Assessment of factual evidence
[20] I found the viva voce evidence given by Mr and Mrs Ellice extremely helpful in providing a more fulsome and personal context to the background to Mrs Ellice making the cash payments to Mr Stallard.
[21] I also found both Mr and Mrs Ellice to be credible and reliable witnesses. They struck me as humble people. I accept as credible their explanation of the factual background to their claims against Mr Stallard, and in particular, Mrs Ellice’s evidence:
(a) as to why she made the payments to him;
(b) that they were intended to be a loan only; and
(c) that Mr Stallard had always said he would repay her when required.
[22] As a corollary of these findings, I am satisfied the payments to Mr Stallard were not intended to be a gift.
The plaintiffs’ legal claims and submissions
[23] The plaintiffs’ plead five causes of action.1
[24] The first cause of action is in debt. The plaintiffs rely on the decision of the High Court in Pendergrast v Chapman in which it was held that a cause of action in debt may be brought in its own right, rather than by way of an action in contract.2
[25] The second cause of action is in deceit. The plaintiffs say the representations made by Mr Stallard as to why he needed the funds were plainly false and the Court
2 Pendergrast v Chapman [1988] 2 NZLR 177.
can infer that he knew they were false at the time they were made. The plaintiffs submit that on the basis of all of the facts, the Court can infer that the (false) representations were only made for the purpose of inducing Mrs Ellice to advance the cash to Mr Stallard.
[26] The third cause of action is money had and received. The plaintiffs refer to Thomas v Houston Corbett & Co for the proposition that an action for money had and received will lie where the plaintiff has voluntarily paid money to the defendant and the money would not have been paid but for a mistake of fact.3
[27] The plaintiffs submit that the cash advanced to Mr Stallard would not have been paid but for the mistaken belief as to the truth of the representations made by him to Mrs Ellice, and/or the truth of the stated intention at the time that he only needed the money to “tide him over”. The plaintiffs submit that Mr Stallard has received the cash loans and with demand having been made, has no right to retain the moneys.
[28] The fourth cause of action is styled “unjust enrichment”. The plaintiffs refer to National Bank of New Zealand Ltd v Waitaki International Processing (NI) Ltd for the proposition that there are three elements of a claim for unjust enrichment, being:4
(a) proof of enrichment by receipt of a benefit;
(b) enrichment at the expense of the plaintiff; and
(c) the receipt and/or retention of the benefit is unjust.
[29] The plaintiffs say Mr Stallard has been unjustly enriched through the receipt of the cash payments, the cash payments were sourced from the plaintiffs’ joint bank accounts and a joint credit card facility and were therefore at the expense of the plaintiffs, and in the circumstances outlined in the evidence before the Court, Mr Stallard’s receipt and retention of the cash loans is unjust.
3 Thomas v Houston Corbett & Co [1969] NZLR 151.
[30] The fifth cause of action (which was the subject of the amended pleading) is breach of contract. It is essentially advanced as an alternative to the cause of action in debt. The plaintiffs allege that Mrs Ellice and Mr Stallard entered into an oral loan contract (or a number of separate oral loan contracts) pursuant to which it was agreed Mrs Ellice would advance sums of money to Mr Stallard by way of loans, and that Mr Stallard would be required to repay the loans on demand. The plaintiffs allege that in or about September 2012, Mrs Ellice and/or Mr Ellice as her agent, made oral demand on Mr Stallard but despite that demand, he has failed to repay the cash loans. In breach of the loan contract, the plaintiffs plead that they have suffered loss of the amount of the cash loans advanced, which have not been repaid.
[31] Under all causes of action, the plaintiffs seek judgment (by way of debt or damages) in the sum of $522,323, together with interest from 30 September 2012 pursuant to s 24 of the Interest on Money Claims Act 2016. At the hearing, Mr Andrews, counsel for the plaintiffs, noted that it may be that in relation to the restitutionary causes of action, interest is properly ordered pursuant to s 10 of the Interest on Money Claims Act 2016.
Claim in debt
[32] The author of The Principles of the Law of Restitution, states that an action for debt is made out:5
[if] the claimant could establish that the defendant had received property in which the claimant had legal title, the claimant could bring an action for debt against the defendant and obtain an order for payment of the money.
[33] He suggests the claim has similar practical consequences as a claim in money had and received, although could have the added benefit of allowing a plaintiff to recover any income the defendant has earned from investing the money received.
[34] The leading New Zealand authority on debt as a free-standing cause of action is Pendergrast v Chapman.6 Wylie J in that case held that “the essence of debt is the
6 Pendergrast v Chapman, above n 2.
obligation to pay a sum certain on a day certain”.7 There, $40,000 of a $50,000 deposit for the purchase of a house had been unpaid; the contract was accordingly cancelled.
[35] The plaintiffs sought to recover the outstanding $40,000. The defendants claimed they were precluded from doing so by s 8(3)(a) of the Contractual Remedies Act 1979, which provides that “so far as the contract remains unperformed at the time of the cancellation, no party shall be obliged or entitled to perform it further.” The plaintiffs nonetheless claimed that when the deposit due date passed, the $40,000 sum became a debt payable and recoverable in its own right, and not merely by way of enforcement of a contractual undertaking.
[36] Wylie J noted the differing conclusions other courts had reached in dealing with cases involving the recovery of sums owing, as well as the apparent dearth of binding appellate authority to provide guidance. With reference to a High Court of Australia decision,8 he concluded that:9
... there is nothing in the judgments to detract from the proposition that debt in its earliest form was a separate cause of action from indebitatus assumpsit and indeed long preceded it, or that it survives as a cause of action separate and distinct from contract today.
[37] Recovery through debt as a cause of action therefore was not precluded by s 8(3)(a); the plaintiffs were successful.
[38] The Court of Appeal several years later endorsed Wylie J’s approach (albeit their focus was the impact of s 8(3)(a)).10
[39] In Earthquake Commission v Insurance Council of New Zealand, a full bench of the High Court considered statutory obligations to pay sums of money.11 The Court noted there was no clear articulation of the Court’s jurisdiction to entertain an ordinary
7 At 186.
8 Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221.
9 Pendergrast v Chapman, above n 2, at 191.
10 Brown v Langwoods Photo Stores Ltd [1990] NZCA 180; [1991] 1 NZLR 173 at 176: “In Pendergrast v Chapman, Wylie J held that s 8(3)(a) did not prevent enforcement of an accrued cause of action in debt. We agree, but would state the law more broadly. The provision does not abrogate any cause of action accrued unconditionally before cancellation, whether or not for debt.”
11 Earthquake Commission v Insurance Council of New Zealand Inc [2014] NZHC 3138, [2015] 2 NZLR 381.
action to enforce payment for a sum of money pursuant to a statutory obligation – but discussed whether an action for debt could be a possible route:
[181] An action for debt lay where the obligation to pay a liquidated sum was unconditional. Such actions lay on records (such as judgments), specialities (such as bills, bonds, leases and mortgages), simple contracts and generally whenever the action of indebitatus assumpsit was appropriate. The latter effectively made the action of debt obsolete, although it was not formally abolished until 1852. However despite the abolition of the form of action for debt, a cause of action in debt may still be brought, as the judgment of Wylie J in Prendergrast v Chapman makes clear. But the essence of that claim remained an obligation “to pay a sum certain on a day certain”. It was unavailable where the extent of the payment obligation, if any, was uncertain.
[Emphasis added]
[40] Fogarty J in Carolan v New Zealand Real Estate Credit Ltd reiterated an underlying contract was unnecessary for a cause of action in debt to succeed:12
Before me both counsel tried to prove different agreements. This appeared to flow from a common assumption that before a debt can arise there has to be an agreement and that a debt is a kind of contract. Well, of course, usually it is. But does not have to be. Proof of a debt is sufficient for a cause of action on the debt.
[41] In my view, the cause of action in debt in this case is problematic. Mr Stallard’s obligation was not to pay a certain sum of money on a certain day. Rather, he agreed to pay back to Mrs Ellice an uncertain sum on an uncertain date in the future (i.e. after demand had been made).
[42] Although the plaintiffs have pleaded debt rather than indebitatus assumpsit, the High Court in Earthquake Commission noted that the action of debt historically was appropriate where an action for indebitatus assumpsit would succeed. The Laws of New Zealand provides a helpful summary of indebitatus assumpsit:13
The action of assumpsit, though tortious in origin, had by the early seventeenth century become the regular remedy for breaches of contract. The origin of quasi-contractual remedies at common law is to be found in the fruitful action, indebitatus assumpsit, which substantially replaced the action of debt in the seventeenth century. Eventually, the action of indebitatus assumpsit was held to lie when the remuneration or price paid for the doing of work or the supply of goods had been left indeterminate. By the end of the seventeenth century, the action of indebitatus assumpsit was extended to actions in which the
12 Carolan v New Zealand Real Estate Credit Ltd [2016] NZHC 1757 at [27].
13 Peter Twist Laws of New Zealand Restitution (online ed) at [6].
element of contract was purely fictitious: an obligation was imposed by law on the defendant and had nothing contractual about it. Thenceforth, the action of indebitatus assumpsit embraced both actions founded on debts arising out of executed contracts and actions that were not contractual but quasi- contractual. The action was applied to cases where the defendant had received money of the plaintiff to which he or she was not entitled, including cases where the plaintiff had intentionally paid money to the defendant, such as claims for money paid on a consideration that wholly failed and money paid under a mistake; cases where the plaintiff had been deceived into paying money; cases where money had been extorted from the plaintiff by threats or duress of goods; cases where money had not been paid by the plaintiff at all but had been received from third persons, as where the defendant had received fees under colour of holding office, which was in fact held by the plaintiff; and finally cases where the defendant had been wrongfully in possession of the plaintiff’s goods, had sold them, and was in possession of the proceeds.
[Emphasis added]
[43] Despite the possible availability of such an (ultimately restitutionary) cause of action, I note the discussion of this cause of action by the House of Lords in United Australia Ltd v Barclays Bank Ltd.14 In that case, Lord Atkin traced the history of the claim in indebitatus assumpsit, noting that it was a “somewhat forced application” to cases in which (inter alia) a plaintiff had been deceived into paying money. Lord Atkin noted:15
Now to find a basis for the actions in any actual contract whether express or to be implied from the conduct of the parties was in many of the instances given obviously impossible. The cheat or the blackmailer does not promise to repay the person he has wronged the money which he has unlawfully taken: nor does the thief promise to repay the owner of the goods stolen the money which he has gained from selling the goods. Nevertheless, if a man so wronged was to recover the money in the hands of the wrongdoer, and it was obviously just that he should be able to do so, it was necessary to create a fictitious contract: for there was no action possible other than debt or assumpsit on the one side and action for damages for tort on the other. The action of indebitatus assumpsit for money had and received to the use of the plaintiff in the cases I have enumerated was therefore supported by the imputation by the Court to the defendant of a promise to repay. The fiction was so obvious that in some cases the judge created a fanciful relation between the plaintiff and the defendant.
[Emphasis added]
[44] In this case, however, it would not be strained or a “fiction” to impute to Mr Stallard a promise to repay the moneys advanced to him. On the contrary,
14 United Australia Ltd v Barclays Bank Ltd [1941] AC 1 at 26–27.
15 At 27.
Mrs Ellice’s (unchallenged) evidence is that that is precisely what Mr Stallard did. Putting aside that indebitatus assumpsit is not pleaded, I consider the appropriate cause of action is in contract, to which I now turn.
Breach of contract
[45] I am satisfied the evidence establishes an oral contract between Mrs Ellice and Mr Stallard to advance moneys as requested by Mr Stallard from time-to-time, and that Mr Stallard agreed that they were to be repayable on demand.
[46] In my view, the key question is whether Mrs Ellice and Mr Stallard intended the arrangements between them to be legally binding. The courts are usually hesitant to impute such intention to agreements between parents and children.16 Despite Mrs Ellice describing Mr Stallard as something akin to a “third son”, however, I do not consider this precludes a finding of an intention to create legal relations. Mrs Ellice was clearly paying significant sums of money to Mr Stallard. There is no doubt in my view that these were not intended by either Mrs Ellice or Mr Stallard as a gift. Mr Stallard had made it clear that he intended to repay Mrs Ellice, which infers an acceptance by him of a binding obligation on his part towards Mrs Ellice. In those circumstances, I am satisfied there was the necessary intention to create legal relations sufficient to give rise to a claim in contract.
[47] The evidence is also clear that either Mrs Ellice together with Mr Ellice, or Mr Ellice acting on Mrs Ellice’s behalf, made formal demand for repayment from Mr Stallard in or about September 2012. At that time, and pursuant to the oral contract between Mrs Ellice and Mr Stallard, the moneys advanced became due to be repaid. In breach of his obligations to Mrs Ellice, Mr Stallard has not repaid the money.
[48] I am accordingly satisfied the breach of contract claim is made out. I will therefore enter judgment against the defendant in favour of Mrs Ellice17 in the sum of
$522,323, together with interest thereon from 30 September 2012 pursuant to
s 24(2)(b)(i) of the Interest on Money Claims Act 2016. I direct that interest be paid on a simple (i.e. not compounding) basis at a rate of 4 per cent per annum.
The remaining causes of action
[49] Given the above, it is not strictly necessary to address the claims in deceit, money had and received and unjust enrichment, all of which were pleaded in the alternative only. In the event this matter was to proceed further (for example, Mr Stallard applied to set aside the judgment), it is appropriate that I record my observations on those causes of action.
Claim in deceit
[50] Had the breach of contract claim not been made out, I would have found in Mrs Ellice’s favour in relation to a claim of deceit.
[51] The elements of a claim in deceit are as follows:18
(a) A false representation (as to a past or existing fact) made by a defendant who knew it to be untrue or had no belief in its truth or who was reckless as to its truth;
(b) Intention that the claimant should have acted on the representation; and
(c) Action by the plaintiff in reliance on the representation.
[52] In this case, I am satisfied Mrs Ellice was deceived into paying money to Mr Stallard. I am satisfied on the evidence before the Court that, having learned of Mrs Ellice’s Lotto win, Mr Stallard took steps to become close with the Ellice family, and in particular Mrs Ellice, and that his statements that he needed so much money over a lengthy time period for cancer treatment, and/or his children’s school fees and/or knee surgery were false. I am also satisfied that Mr Stallard knew them to be false at the time they were made and intended that Mrs Ellice would rely on them.
18 Amaltal Corporation Ltd v Maruha Corporation [2006] NZCA 112; [2007] 1 NZLR 608 (CA) at [46]- [50].
[53] I appreciate it is a serious finding that Mr Stallard knowingly made false representations to Mrs Ellice to induce her to pay money to him. However, I am able to draw inferences from Mr Stallard’s failure to answer the allegations and defend the claims against him. Mr Stallard has been served (via substituted service), which the Court is entitled to presume will have brought the proceedings to his attention. It is well-established that the silence of one party in face of the other party’s evidence may add weight to that evidence in relation to matters which are within the knowledge of the silent party, and about which that party could be expected to give evidence.19 Before that principle can apply, however, a prima facie case must be established. On the unchallenged evidence of Mrs Ellice, which I consider credible and reliable, I am satisfied there is a prima facie case that Mr Stallard knowingly deceived Mrs Ellice. What Mrs Ellice said in her evidence, put bluntly, has the ring of truth about it, from which I consider the inescapable inference is that Mr Stallard was seeking to take advance of Mrs Ellice’s goodwill and her fortune in her Lotto Strike win. The fact Mr Stallard took steps to meet Mrs Ellice and take her to ATM machines, taught her how to make withdrawals from her Visa card and to break term deposits, and sought significant cash sums from her on an almost daily (and sometimes more than once daily) basis, reinforce this conclusion. Moreover, Mrs Ellice plainly relied on Mr Stallard’s representations in making the payments to him, and has suffered loss as a result.
Claim in money had and received
[54] Without needing to formally rule on the claim brought in the alternative of money had and received, I record that it is not abundantly clear that such a claim would have succeeded.
[55] The Law of Unjust Enrichment suggests a difference between a mistake about present circumstances (such as, for example, the identity of the person the money is being transferred to), and mistakes about future events:20
It is well-established that a “misprediction”, consisting of a present belief or assumption about a future state of affairs which is subsequently falsified, is not an operative mistake for the purposes of the law of unjust enrichment, even when it causes one person to confer a benefit on another; nor does a misprediction constitute a ground for restitution in its own right.
[56] The Privy Council applied this logic in Dextra Bank v Bank of Jamaica.21 There, Dextra drew a cheque for $2,999,000 in favour of the Bank of Jamaica. It thought it was lending this money to the Bank of Jamaica. The Bank of Jamaica in turn thought the money was for a foreign currency purchase. Both Dextra and the Bank of Jamaica had been deceived by Dextra’s agent, who had organised the transaction. Dextra sued the Bank in, among other things, money had and received. The Privy Council ruled Dextra could not recover because it had made a “misprediction” rather than a “mistake of fact”:22
Here, unfortunately, Dextra failed to communicate directly with the BOJ to make sure that the BOJ understood that the money was being offered as a loan. Instead, it left the communication of this vital matter to its agent, Phillips. Dextra's misplaced reliance on Phillips led it to assume that a loan would result; and this prediction proved to be mistaken. But a misprediction does not, in their Lordships' opinion, provide the basis for a claim to recover money as having been paid under a mistake of fact.
[57] As noted in The Law of Unjust Enrichment, the rule applied in Dextra draws a distinction between plaintiffs who had an “incorrect perception of reality”, and those who ran a risk and now want the consequences of that risk to be relieved.23
[58] Mrs Ellice’s transfers to Mr Stallard may have been ill-advised, but she knowingly and deliberately made them to him. That Mr Stallard would not repay the sums she advanced was not a mistake about a present fact (such as his identity, or the
21 Dextra Bank & Trust Company Ltd v Bank of Jamaica [2001] UKPC 50, [2002] 1 All ER Comm
193. For completeness, Dextra was deemed unhelpful in the New Zealand context by the Court of Appeal in Owens v Chief Executive of the Ministry of Social Development [2006] NZCA 471; (2006) 26 FRNZ 663, but in relation to a different point regarding change of position defences (in New Zealand, affected by provisions in the Judicature Act). In my view it remains good law as to the distinction between mistake of fact and misprediction.
22 At [29]. The Court accepted there had been a mistake of fact on Dextra’s part that the Bank of Jamaica had agreed to take a loan from Dextra but considered that did not cause the transfer – Dextra’s misprediction as to what Phillips would do caused the transfer. Dextra has been cited with (implicit) approval in New Zealand; ASB Securities Ltd v Guerts [2015] 1 NZLR 484 at [44].
23 Charles Mitchell, Paul Mitchell and Stephen Watterson Goff and Jones The Law of Unjust Enrichment (9th ed, Sweet & Maxwell, London, 2016) at [9-08]-[9-10].
amount transferred). It was arguably a misprediction about Mr Stallard’s actions or intentions in the future.
[59] Moreover, while Mrs Ellice might have been misled about Mr Stallard’s intentions with the funds advanced, genuinely believing that he would use the money for medical or schooling expenses, that too could arguably be categorised as a misprediction rather than a mistake. In a similar way, in Dextra, Dextra mistakenly presumed Phillips would use its cheque to arrange a loan (having been deceived by Phillips). So too, Mrs Ellice mistakenly presumed Mr Stallard would put the funds towards medical or schooling expenses, having been deceived by him in this context.
[60] I emphasise, however, that I offer the above views without coming to a conclusive finding or ruling on the money had and received claim, which is pleaded in the alternative only. These matters were not the subject of any detailed argument before me. Given Mrs Ellice’s claim has been made out on other grounds, an examination of the principle arising from Dextra ought to be reserved for a case in which the issue is determinative and the subject of full argument before the Court.
Claim in unjust enrichment
[61] For the same reasons, I also offer brief observations only on the cause of action advanced under unjust enrichment.
[62] As noted at [28] above, a claim of “unjust enrichment” was pleaded as a free- standing cause of action. At least as the law in New Zealand presently stands, “unjust enrichment” is not a (recognised) cause of action in its own right, rather than a unifying principle to other recognised restitutionary causes of action.24
[63] Again, given the claim is made out on other grounds, this is not the appropriate case to determine whether a free-standing cause of action in unjust enrichment exists.
24 See Rod Milner Motors Ltd v Attorney-General [1999] 2 NZLR 568 at 576 (CA) and Villages of New Zealand (Pakuranga) Ltd v Ministry of Health (2006) 8 NZBLC 101,739 (HC) at [99]. Both were applied more recently in Real Cool Holdings Ltd v Northpower Ltd [2012] NZHC 1604 at [36]- [39].
Result
[64] Judgment is entered against Mr Stallard in favour of Mrs Ellice as set out at
[48] above, together with interest as also set out at [48] above.
[65] The plaintiffs seek costs and disbursements. I am satisfied it is appropriate to make a costs award.
[66] As the claims (as presented) were ultimately relatively straightforward and the facts confined, I consider an appropriate approach is to award costs on a scale 2A basis. I do not certify for second counsel. There is a costs award in the Mrs Ellice’s favour on that basis.
[67] The above results in judgment in Mrs Ellice’s favour in the following amounts: (a) $522,323.00;
- (b) Interest on the above amount in the sum of $138,007.7525 pursuant to s 24 of the Interest on Money Claims Act 2016; and
(c) Costs and disbursements in a total sum of $10,737.50 as set out in the schedule attached to this judgment.
Fitzgerald J
SCHEDULE
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Costs (2A basis)
|
||
|
Item 1
|
Commencement of proceeding by plaintiff
(1.6)
|
$3,568.00
|
|
Item 22
|
Filing interlocutory application (0.3)
|
$669.00
|
|
Item 29
|
Sealing order or judgment (0.2)
|
$446.00
|
|
Item 30
|
Preparation of affidavits
(1.5)
|
$3,345.00
|
|
Item 34
|
Appearance at hearing
(0.25)
|
$557.50
|
|
Total costs
|
$8,585.50
|
|
|
Disbursements
|
||
|
Filing fee for statement of claim
|
$1,350.00
|
|
|
Filing fee for interlocutory application for orders for substituted
service
|
$200.00
|
|
|
Process server fees
|
$552.00
|
|
|
Sealing order for substituted service
|
$50.00
|
|
|
Total disbursements
|
$2,152.00
|
|
|
Total costs and disbursements
|
$10,737.50
|
|
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URL: http://www.nzlii.org/nz/cases/NZHC/2019/1739.html