FRAUD PROVED

Press, Volume LXXI, Issue 21584, 21 September 1935, Page 7

FRAUD PROVED

JUDGMENT. IN SUPREME COURT CASE DIVERSION OF MORTGAGE MONEYS Reserved judgment was given by Mr Justice Johnston in the case, heard on March 8 and August 9, in which George Tracey Fisher, of EUesmere, farmer, and Elaine Mabel Fisher, ried woman, of EUesmere, made allegations of fraud against Henry Martin Boyle, of the Trafalgar HoteJ, Nelson, and Elsie May Boyle, his wife. Originally William Lancelot Aynsley, a solicitor, of Christchurch, was cited as one of the defendants, but the allegations against him were withdrawn by counsel for the plaintiffs at the second hearing and a non-suit was entered. Against the otner defendants his Honour found that the plaintiffs were entitled either to a . judgment for damages or to a retransfer of the disputed mortgage if such is possible. Lacking evidence of the way in which the mortgage had been dealt with, his Honour withheld judgment to enable the parties to explain the position. If it appeared that the mortgage could not be transferred judgment would be entered for £BSO damages, with interest thereon, as claimed. Mr C. S. Thomas appeared for the plaintiffs, Mr W. R. Lascelles for the defendants, H. M. and E. M. Boyle, and at the original hearing Mr R. Twyneham for Aynsley. Contract Cancelled In giving .'-.idgment bis Honour said: "The plaintiffs in this action, who entered into an agreement to purchase from the two first-named defendants a farm at EUesmere comprising some 262 acres and the stock grazing thereon, claim that the defendants fraudulently diverted to other purposes moneys obtained on the security of a mortgage for £IOSO, which plaintiffs caused to be transferred to defendant, H. M. Boyle, to nable defendants to make certain payments owing in respect of a mortgage on the land agreed to be purchased and in respect of rates and land tax in respect of the said land. "In alternative causes of action plaintiffs allege on the part of defendants false and fraudulent representation, conspiracy to defraud, fraudulent conversion, breach of trust, and breach of contract. By such diversion to purposes other than those agreed upon, plaintiff allege defendants were unable to carry out their contract and in consequence plaintiffs canceUed the contract. They claim return of the mortgage transferred or its equivalent in money as damages. Defendants in their statement of defence admit receipt of the mortgage and obtaining on the security thereof a substantial sum of money. "After evidence on behalf of the plaintiffs had been taken, all charges made against the defendant Aynsley were withdrawn and by agreement he was struck out of the action. No evidence was called on behalf of defendants. Counsel for the defendants admitted there was an agreement between the parties as to the use of the moneys to be obtained by the defendants on the security of the mortgage transferred, but in view of his principal contention that evidence of an agreement to vary the written contract between the parties is not admissible, I must take -his admission to mean that if parol evidence is admissible to show the terms upon which the mortgage was transferred he is not able to dispute plaintiffs' evidence in this respect. Comment on Statements "Apart from counsel's admission, the failure to call evidence on behalf of defendants, and in particular, to call Mr Aynsley, solicitor for defendants, who was present at all material times, is sufficient indication c: defendants' inability to controvert plaintiffs' evidence. As a result, therefore, the argument has been practically confined to whether plaintiffs' evidcrce is sufficient to establish fraud or goes no further than to prove a parol agreement attempting to var." the terms of a contract necessarily reduced to writing. "In my opinion pl"in. Is* evidence establishes much more than an agreement to vary the terms of the written contract. "I am satisfied that in this case defendants' statement as to their intention was false, and that it was through acting on that statement that the plaintiffs incurred damage, and there is no doubt in my min that the defendants intended that plaintiff should act on the faith of that s' 'ement," said his Honour. "I am quite convinced that the position of the defendants as disclosed in the affidavits shows them to have been practically insolvent and in urgent need of money to complete their purchase of the Nelson Hot<° at the time of the agreement dated August 14, and ] that their need of money for that purpose induced them to deceive plaintiffs and their solicitor by statements as to their intention to pcy off charges on the EUesmere property when their real purpose was to dispose of the j money they could raise towards the j purchase of the Nelson Hotel. "To my mind it is impossible to dissociate Mrs Boyle from the fraud of her husband and to acquit her of complicity in the use of the moneys which she must «e taken to have known were subject to use for certain purposes. Both, Mr and Mrs Boyle signed the contract. The offer was addressed in the first person singular to the defendant, Henry Martin Boyle. Henry Martin Boyle has put it on record that Mrs Boyle had a 50 years' lease of the property; he has also put it on record that the farming was carried on by him and that the milk cheques were paid to him; it is also on record that the £7OO went to Mrs Boyle and that the "Telson Hotel, although, in Boyle's name, was held in trust by him for Mrs Boyle. Changes of Ownership "I am not at all satisfied that these changes of ownership, or assertions as to ownership, are not more cover against creditors than genuine. Whether that suspicion be justified or not, on the evidence and on the face of the agreement, and the admission as to the receipt of the moneys raised upon the mortgage, judgment must be against both the first-named defendants. , , "The plaintiffs claim alternatively the retransfer of the mortgage or damages. They are entitled to either a judgment for damages or, if restitutio in integrum is possible, to a retransfer of the mortgage. If, however, the mortgage can only be retransfer red subject to a charge, the damages will be the amount for which it has been charged. In the event of damages being awarded such damages will be less the amount received for the stock, namely, £2OO being the jsum in excess of that paid to dis- ! charge the chattel security. Should restitution in integrum be possible by a retransfer free from encumbrances, the plaintiffs will have to pay £2OO to the defendants on settlement."