Bhamidipati v Bhamidipati

[2019] NZHC 720

NOTE: PURSUANT TO S 35A OF THE PROPERTY (RELATIONSHIPS) ACT 1976, ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SS 11B,

11C AND 11D OF THE FAMILY COURT ACT 1980. FOR FURTHER INFORMATION, PLEASE SEE

https://www.justice.govt.nz/family/about/restriction-on-publishing-judgments/

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2018-485-61

[2019] NZHC 720

UNDER

the Property (Relationships) Act 1976

IN THE MATTER

of an appeal against a decision of the Family Court at Hutt Valley

BETWEEN

SEETARAMA RAO BHAMIDIPATI

Appellant

AND

LALITHA DEVI BHAMIDIPATI

Respondent

Hearing:	1 March 2019
Appearances:	M A F Gilkison for Appellant K Lakshman for Respondent
Judgment:	5 April 2019

JUDGMENT OF CLARK J

Introduction

[1]    The parties are in dispute over relationship property. In a comprehensive reserved judgment delivered 21 November 2017 Judge Binns determined the parties’ respective claims.  Mr Bhamidipati filed a notice of appeal on 11 April 2018.  On   16 July 2018 Mr Bhamidipati filed an interlocutory application for leave to adduce evidence in support of his appeal.

BHAMIDIPATI v BHAMIDIPATI [2019] NZHC 720 [5 April 2019]

[2]    The issue raised by the application is whether or not the appellant should be granted leave to adduce further evidence on appeal. I have determined the application is to be dismissed. My reasons are provided in the remainder of this judgment.

Background

[3]    The parties had been married  for  24  years  when  they  separated  in  January 2011. Mrs Bhamidipati applied to the Family Court in August 2013 for an extension of time to make an application under the Property (Relationships) Act 1976 (the Act) and for orders dividing relationship property. Ultimately, Mrs Bhamidipati’s application to file out of time was unopposed and appropriately so, in Judge Binns’ view.1

[4]    In the Family Court some matters were agreed but many were not. Mr Wood, a chartered accountant, was appointed by the Court as an expert on behalf of Mr and Mrs Bhamidipati jointly to assist them in the Family Court proceeding and in particular to help them reach a settlement by advising them about their financial situation and assist them to achieve a just division of their relationship property.

[5]    After delivery of the Family Court decision Mr Bhamidipati appealed and discontinued Mr Wood’s services.

[6]    Mrs Bhamidipati asked Mr Wood to continue to assist for the purpose of the appeal and Mr Wood has agreed to do so.

Mr Bhamidipati’s position

[7]    In his grounds for an order that he be granted leave to adduce further evidence, Mr Bhamidipati says he did not have a proper opportunity to obtain expert accounting assistance at trial and there are aspects of his appeal where such expert assistance is necessary. Mr Bhamidipati relies upon further grounds appearing in his affidavit. The essential thesis of Mr Bhamidipati’s evidence is that he did not have a fair hearing. Or, to put it in Mr Bhamidipati’s words, he “was not given a proper opportunity to defend [him]self at the trial in the Family Court in October 2017”.

1      Bhamidipati v Bhamidipati [2017] NZFC 7991 at [2]–[3].

[8]    Mr Bhamidipati’s evidence describes how, on 22 September 2017, he received a copy of rental income working sheets produced by Mrs Bhamidipati in support of her claim that certain rental income from properties they owned had not been accounted for. Mr Bhamidipati deposes to finding the working sheets difficult to read until receipt of the trial bundle on 27 September 2017. The trial bundle included the working sheets in a larger font and although he could then read the  “workings”     Mr Bhamidipati says there was insufficient time for him to review them fully.

[9]    Mr Bhamidipati has engaged a chartered accountant, Mr Robert Elms, to assist with an analysis of the working sheets. Mr Elms has prepared a report setting out the results of his review of financial information. The report dated 25 July 2018 is annexed to Mr Elms’ affidavit sworn on the same day.  It is this evidence which    Mr Bhamidipati seeks to adduce in the appeal.

Broad nature of the evidence sought to be adduced

[10]   Mr Elms begins his report with a statement of the instruction he has been given “to review and comment on several of the financial aspects of the Family Court judgement dated 21 November 2017”.

[11]   Mr Elms reports he has undertaken a detailed review of the rental income working sheets and tables presented to the Family Court. He identifies the respects in which he finds the analysis wanting. Mr Elms concludes the Family Court judgment “has the effect of creating an inequity between Mr and Mrs Bhamidipati of $648,236 with Mr Bhamidipati being worse off by $324,118 and Mrs Bhamidipati being better off by the same amount” as set out in a table in Mr Elms’ report. Further, in his opinion, the judgment “for the share of the net rental income and the tax refunds from share trading activities will, in effect, result in ‘double-dipping’ to Mrs Bhamidipati on distribution of the net proceeds from the property sales”.

[12]   Turning to tax losses Mr Elms addresses “several factors that have not been considered in the judgement”. Mr Elms concludes “the tax saving associated with the available losses at 28% is approximately $54,040 not $130,000 as set out in the judgement”.

[13]Mr Elms summarises his conclusions:

There are several differences between our findings and the information on which the judgement was based.

In our opinion the judgement should have considered all of the activities of the companies and trust that form part of the Relationship Property rather than just concentrating on the profitable continuing activities.

On this basis the amalgamated position, above, we believe is more representative of the position from which judgement should be made.

On this basis we believe that the following adjustments in the judgement are overstated:

…

[14]   Mr Elms concludes his report with a summary of the differences between his findings and the information on which the judgment is based. Mr Elms identifies four areas in respect of which he considers adjustments in the Family Court judgment are overstated.

[15]   Mr Elms swore a second affidavit on 23 October 2018 to which he annexed a further report to Mr Gilkison, counsel for Mr Bhamidipati. The further report “comments on areas contained in the [Family Court judgment]” and on Mr Wood’s affidavit filed in support of Mrs Bhamidipati’s opposition to the interlocutory application.2

Counsel’s submissions

[16]   Mr Gilkison submitted that Mr Elms’ two reports attached to his affidavits sworn 25 July 2018 and 23 October 2018 demonstrate the events leading up to the trial placed the appellant in a “nearly impossible” situation. Mr Elms’ approach essentially examines  the  parties’  business  enterprises  on  a  global  basis,  in  contrast  to  Mrs Bhamidipati’s workings which are based solely on bank statements showing rental  incomings  and  outgoings.  Mr Elms   is   an   expert   accountant,   unlike Mrs Bhamidipati, and has “concerns about various technical accounting matters which the Family Court found justified payments to [Mrs Bhamidipati by Mr Bhamidipati].”

2 The general nature of Mr Wood’s evidence is outlined at [23]–[24] below.

[17]   Mr Bhamidipati resists the “very black light” in which he says he has been painted from the outset. Mr Bhamidipati says suspicion has been voiced about his integrity in the way he managed the parties’ relationship property from their separation to the date of the hearing. He says he has worked very hard to manage the properties and to reduce the mortgage by $1 million and no money went missing during that time. Mr Gilkison submitted that if the appellant’s position is allowed to be proved correct by Mr Elms’ evidence then Mr Bhamidipati will be seen in a very different light. In particular, his frustration over “endless” lists of questions about financial matters and his reaction to cross-examination will have a different context from that in which the Judge concluded he was obstructive and reluctant.

[18]   Mr Gilkison submitted the admission of Mr Elms’ evidence is in the interests of justice. This should have been apparent to Mrs Bhamidipati from the time the evidence was made available. Mr Gilkison submitted the application should be granted and an order made under r 9.44 for the experts to confer and be asked to produce a joint report noting, if necessary, the areas of disagreement. Such a report, Mr Gilkison submitted, would provide a basis for the parties to discuss a possible resolution and avoid the need for an appeal. If such a resolution is not possible then the Court could direct (or the parties could agree) that a third accountant review the matter and advise the Court.

Opposition to application to adduce evidence

[19]   Mrs Bhamidipati opposes the interlocutory application on several grounds but primarily that the proposed evidence, except for that in respect of rental income, is inadmissible. There are no special reasons for hearing the proposed evidence and, except for that in respect of the rental income, it is not credible.

[20]   Counsel for Mrs Bhamidipati, Mr Lakshman emphasised the responsibility on Mr Bhamidipati, as the person who possessed the relevant evidence, to make full disclosure to Mrs Bhamidipati, the Family Court and to Mr Wood. In failing to do so Mr Bhamidipati failed to conduct himself in accordance with the principles articulated by the Court of Appeal in M v B.3 In particular, Mr Bhamidipati’s uncooperative

3      M v B [2006] 3 NZLR 660, [2006] NZFL 641 (CA).

stance meant the dispute between the parties was not resolved as inexpensively, simply and speedily as it could have been and Mr Bhamidipati made the respondent’s and Mr Wood’s tasks more difficult and ultimately made matters difficult for himself.

Evidence in support of opposition

[21]   In Mrs Bhamidipati’s first affidavit in support of her notice of opposition, she describes how she came to prepare her rental income worksheets. Mrs Bhamidipati had to obtain the relevant rental records and bank statements through court orders for third party discovery against four third parties “because the appellant refused to provide the information”. This was notwithstanding court orders for discovery made on 31 March 2015 on Mrs Bhamidipati’s application in November 2014.

[22]   Mrs Bhamidipati’s second affidavit includes her  response  to  that  part  of Mr Elms’ July 2018 report headed “Rental Income”. It appears to Mrs Bhamidipati that Mr Elms had access to GST returns and bank statements to which she did not have access when she prepared her rental income working sheets and tables.

[23]   The  broad  thrust  of  the   first   part   of   Mr Wood’s   evidence   is   that  Mr Bhamidipati’s failure to provide relevant information, or his failure to provide relevant information in a timely manner, hampered Mr Wood’s overall ability to assist the parties and advise them about a possible settlement. Mr Wood describes his many requests for information, the dates on which he made the requests and the inadequacy of the responses.

[24]   Mr Wood takes issue with many of the conclusions in Mr Elms’ report. In particular, in respect of the four items Mr Elms sets out in his summary as requiring adjustment, Mr Wood’s evidence is that Mr Elms’ figures do not make sense.

Applicable principles

[25]   The starting point is s 39 of the Act which gives a party to proceedings under the Act a right of appeal to the High Court. An appeal under s 39 is a general right of appeal and is to be by way of rehearing.4

4      Property (Relationships) Act 1976, s 39(3); and District Court Act 2016, ss 124 and 127.

[26]   There is limited scope for adducing further evidence on appeal. Rule 20.16 of the High Court Rules 2016 provides the basis upon which a party to an appeal may adduce further evidence:

(1)Without leave, a party to an appeal may adduce further evidence on a question of fact if the evidence is necessary to determine an interlocutory application that relates to the appeal.

(2)In all other cases, a party to an appeal may adduce further evidence only with the leave of the court.

(3)The court may grant leave only if there are special reasons for hearing the evidence. An example of a special reason is that the evidence relates to matters that have arisen after the date of the decision appealed against and that are or may be relevant to the determination of the appeal.

(4)Further evidence under this rule must be given by affidavit, unless the court otherwise directs.

[27]   In The Foundation for Anti-Aging Research v Charities Registration Board the Court of Appeal made the following observations in the context of an application to adduce evidence on an appeal under the Charities Act 2005:5

(a)Rule 20.16, and in particular r 20.16(4) requiring any further evidence under the rule to be given by affidavit, make it plain that “the usual rule confining the appeal to the record in the court or tribunal at first instance is to apply with only limited power to permit further evidence to be admitted”.6

(b)Hearing general appeals on the record generally achieves the objective of a just and efficient hearing.7

(c)The Court will grant leave only if there are special reasons for hearing the evidence.8 Where there are special reasons for hearing further evidence the court will exercise its discretion to allow the evidence to be adduced only in “exceptional circumstances [which] need not be

5      The Foundation for Anti-Aging Research v Charities Registration Board [2015] NZCA 449.

6 At [43].

7 At [49].

8      High Court Rules 2016, r 20.16(3).

rare”.9

(d)In exercising its discretion the court will be guided by considerations of “freshness, relevance and cogency”.10

(e)Evidence will not be regarded as fresh if, with reasonable diligence, it could have been produced at trial.11

Assessment

[28]   Mr Gilkison submitted one of the difficulties in the case was that the pre-trial conference Judge Binns directed was to take place four weeks before the trial, did not in fact take place. The consequence, Mr Gilkison submitted, was that there was an absence of focus on what the case was all about. The Judge proceeded on the basis of what was before her and what she had heard, but the complete picture was not before the Family Court. Not until Mr Elms was instructed, after the trial, was there a correct focus on a global financial position.

[29] The appellant’s essential case is that a large body of written material was provided on 22 September 2017. The material comprised working sheets from Mrs Bhamidipati demonstrating there was “missing” rental derived from the parties’ investment properties amounting to some $337,000. These are the working sheets to which I have referred at [8] above.

[30]   I am not persuaded by the appellant’s evidence, nor his arguments, that he has made out a case for the admission of further evidence on appeal.

[31]   The evidence bearing on the “global position” was in fact available and the necessary analysis would have been undertaken by Mr Wood, had all the relevant information been provided to him. It was not provided, despite the obligation on the

9      The Foundation for Anti-Aging Research v Charities Registration Board, above n 5, at [51].

10 At [51].

11     At [51] citing Rae v International Insurance Brokers (Nelson Marlborough) Ltd [1998] 3 NZLR 190 (CA) at 192.

parties to ensure a complete record of their respective financial positions was placed before the Court.12

[32]   As the Court of Appeal stated in M v B, the legislative framework requires the Judge to be satisfied of a particular state of affairs based on all the evidence before the Court.   Despite the obligation on both parties to make full and frank disclosure,    Mr Bhamidipati failed to do so and failed to comply with an initial order for discovery against him.13

[33]   Importantly, all of the financial information was within Mr Bhamidipati’s control, not Mrs Bhamidipati’s. As time passed, Mrs Bhamidipati was faced with little option but to seek third party discovery to obtain the information in Mr Bhamidipati’s possession and control but which he was refusing to yield. The point was not lost on Judge Binns who observed that, at the time of the hearing, the proceedings had been before the Court for over four years.14 Judge Binns also observed that Mr Wood:15

… could have provided much more detailed assistance to the parties had he received the information he requested from Mr Bhamidipati. However, that did not happen.

[34]   In expressing her preliminary view that the circumstances of the case made it appropriate for costs in favour of Mrs Bhamidipati (although encouraging the parties to settle costs), Judge Binns said:16

This is because she had to go to extreme lengths to obtain basic disclosure, which should have been provided to her, without the expensive exercise of having  to  apply  for  discovery,  not  only  to  obtain  information  from   Mr Bhamidipati but also from third parties. She was also put to considerable expense in having to file numerous affidavits to address the issue of the date of separation. The evidence she filed was compelling and raised issues about Mr Bhamidipati’s lack of good faith. Although the dissolution proceedings were not before me, Mr Bhamidipati must have filed evidence giving an incorrect date of separation in support of his application for dissolution of marriage.

12     See Family Court Rules 2002, r 398; and M v B [economic disparity] (2006) 25 FRNZ 171 (CA) at [41]–[43].

13     Bhamidipati v Bhamidipati, above n 1, at [116].

14 At [11].

15 At [163].

16 At [165].

[35]   Mr Lakshman correctly described the position when he submitted the analysis and table which  Mrs Bhamidipati  produced  (without  Mr Wood’s  assistance  as  Mr Bhamidipati would not agree and Mrs Bhamidipati  could  not  afford  to  pay  Mr Wood) was information Mr Bhamidipati could have obtained from the property manager and provided to Mr Wood at the outset. Mr Bhamidipati could have undertaken the very analysis Mrs Bhamidipati undertook. In my view, it is completely unmeritorious for Mr Bhamidipati to complain that the working sheets comprised new information to which he had no chance to respond and to which he should now be able to respond.

[36]   The threshold for admission of further evidence on appeal is not met. The evidence which Mr Bhamidipati now seeks to adduce is evidence that could have, and should have, been available to the Family Court by the exercise of “reasonable diligence” on Mr Bhamidipati’s part. Allowing the evidence which Mr Bhamidipati seeks to adduce would be to turn the appeal into a new case when, generally speaking, that is impermissible.17

[37]   If the affidavit evidence of the two accountants were permitted, cross- examination could be required and the end result would be an appeal with contested evidence essentially becoming a new case, and a trial but at appellate level. I raised this point with Mr Gilkinson, who agreed the appeal court may decide the whole matter should be remitted back to the Family Court. He argued, however, that one way or another it is essential Mr Elms’ evidence is before whichever tribunal determines the relationship property matters.

[38]   I do not agree. That approach does not reflect the public interest in having the parties “put up their best case at trial. Any other approach would be very wasteful of public resources.”18

[39]   Far from putting up his best case at trial, it appears that Mr Elms’ first affidavit and analysis is based in part on a number of documents which Mr Bhamidipati has

17     Comalco New Zealand Ltd v Television New Zealand Ltd (1996) 10 PRNZ 563, [1997] NZAR 97 (HC) at 579.

18     Rae v International Insurance Brokers (Nelson Marlborough) Ltd, above n 11, at 192.

provided to him post-trial and which Mr Bhamidipati himself should have made available to the Family Court. Not only is this a further illustration of the failure of the appellant to discharge his obligations in the first place, but it undermines any suggestion the evidence is fresh.

[40]   Mr Bhamidipati complains he was not given a proper opportunity to defend himself at trial but the complaint is both misconceived and inaccurate. Notions of onus of proof fit uncomfortably within a legislative regime about property rights and entitlements and where the Court needs to be satisfied “about a state of events which has existed, or which exists”.19 More fundamentally, and as Judge Binns observed, Mr Bhamidipati refused to provide full and frank disclosure.

[41]   I asked Mr Gilkinson whether he took issue with Judge Binns’ finding that Mr Wood   was  unable  to  provide  detailed  assistance  to  the  parties  because    Mr Bhamidipati was not forthcoming. In reply Mr Gilkinson explained by this stage Mr Bhamidipati had come to the view that Mr Wood was not entirely independent.

[42]In response to this point I simply set out Judge Binns’ observation:20

I note that I was incredibly assisted by Mr Wood who presented as being extremely patient and measured. Mr Bhamidipati criticised Mr Wood and made accusations that he was biased, however these were quite unfounded and did not reflect well on Mr Bhamidipati.

[43]   Mr Bhamidipati has not satisfied the Court that leave should be granted to adduce further evidence on appeal. To allow the evidence which Mr Bhamidipati seeks to adduce on this appeal would be to convert the appeal into a first instance hearing relegating the Family Court hearing to little but a prelude, or “dummy run”.21

[44]   In addition to the reasons for declining the application which precede this observation, I have the strong impression the application to adduce evidence is a strategic step calculated to achieve further, and intolerable, delay. Not only had the dispute been before the Family Court for four years but Mr Bhamidipati filed his

19     M v B, above n 3, at [38]–[39].

20     Bhamidipati v Bhamidipati, above n 1, at [164].

21     Compare Telecom Corporation of New Zealand Ltd v Commerce Commission (1991) 3 PRNZ 259 at 260.

appeal out of time. The respondent took a neutral stand in relation to the application and leave was granted.22 Having been granted leave to appeal out of time in March 2018, three months later Mr Bhamidipati filed his interlocutory application for leave to file further evidence. I view the interlocutory application in light of Judge Binns’ description  of  the  “punitive  approach”  Mr Bhamidipati  had   taken   towards   Mrs Bhamidipati;23 Mr Bhamidipati’s application for an adjournment when the parties had known of the fixture for five months;24 Mr Bhamidipati’s refusal to provide full and frank disclosure;25 and the “extreme lengths” and expense which Mrs Bhamidipati was forced to undertake to obtain basic disclosure.26

Result

[45]The application is declined.

[46]The respondent has been successful and costs follow the event.

[47]   If the parties are unable to agree costs they may submit memoranda not exceeding five pages. Mr Bhamidipati’s memorandum, if any, is to be filed and served by 3 May 2019 with Mrs Bhamidipati’s to be filed and served by 17 May 2019.

Karen Clark J

Solicitors:

Mackay & Gilkison, Wellington for Appellant Idesi Legal Ltd, Johnsonville for Respondent

22     Bhamidipati v Bhamidipati [2018] NZHC 481.

23 At [80].

24 At [11].

25 At [116].

26 At [165].