Leah McDonald’s past relationship with Jerry Toko left her with no home and only the right to recover $106,800 surplus from a mortgagee sale after he inveigled himself into her life, stealing her major asset.
Jerry Toko, also known as Jerry Ngatai, is now bankrupt having dissipated most of the equity he extracted from what was formerly Ms McDonald’s Kaikoura home.
The High Court was told that Ms McDonald began her relationship with Mr Toko around 2018, shortly after her widowed mother transferred her debt-free Athelney Road earthquake-damaged house to Ms McDonald.
Ms McDonald was persuaded to transfer ownership into Mr Toko’s name, supposedly to allow Mr Toko to release Kiwisaver funds which would be used to repair Athelney Road.
On taking ownership, the deal saw him sign a mortgage back in favour of Ms McDonald securing a loan of $185,000 coupled with his promise to pay her a further $40,000 cash. Only about $2000 was paid, the High Court was told.
There was no Kiwisaver funding.
Mr Toko then arranged to sell Athelney Road for a price never disclosed to Ms McDonald, but believed to be in excess of $500,000.
He lied to lawyers that Ms McDonald had been repaid her $185,000 loan and she unwittingly signed a discharge of mortgage, unaware of the fraud being perpetrated.
Mr Toko used proceeds from sale of Athelney Road to buy a further property in Kaikoura, on Ludstone Road, registered in his name alone.
While Ms McDonald and her mother lived at Ludstone Road, Mr Toko departed their lives, spending most of his time in Christchurch.
They later learnt Mr Toko had mortgaged Ludstone Road, borrowing $235,000 from financier Secure Funding Ltd. They were forced to move out when Ludstone Road was sold in a mortgagee sale.
In the High Court, Justice Mander said Mr Toko was liable for breach of trust, having registered Ms McDonald’s home into his own name, dishonestly doing the same on purchase of a new home and then borrowing against this asset while not accounting for the proceeds.
A constructive trust existed, he ruled, with Ms McDonald entitled to a $106,800 net surplus from the Ludstone Road mortgagee sale; all that now remained following his fraud.
Mr Toko did not challenge Ms McDonald’s claim in the High Court.
McDonald v. Toko – High Court (18.06.26)
26.185