Chand v Pal
[2017] NZHC 1868
•8 August 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2015-404-002619 [2017] NZHC 1868
BETWEEN SUSHILL CHAND AND SALESHNI
CHAND Plaintiffs
AND
RAZMI PAL AND SUNIL PAL Defendants
Hearing: 29 March 2017 Appearances:
S Keall for the Plaintiffs
R Chaudhry and S Kumar for the DefendantsJudgment:
8 August 2017
JUDGMENT OF ASSOCIATE JUDGE SARGISSON
This judgment was delivered by me on 8 August 2017 at 3.30 p.m. pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date.......................................
Solicitors:
Chaudhry Legal, Auckland
V Ammundsen , Auckland
N Tabb, Auckland
S Keall, Auckland
CHAND v PAL [2017] NZHC 1868 [8 August 2017]
Introduction – an issue of jurisdiction
[1] The issues to be determined in this application are essentially two-fold. Does this court have jurisdiction to hear the plaintiffs’ proceeding against the defendants? And if primary jurisdiction is established, is New Zealand or Fiji the most appropriate forum for adjudicating their dispute in the best interests of justice?
[2] The plaintiffs, Sushil and Saleshni Chand, want the matter to proceed in New Zealand. But Razmi and Sunil Pal, the defendants in this proceeding, consider the Fijian courts have the only, or at least best, claim to jurisdiction.
[3] This jurisdiction question arose after the Chands issued summary judgment proceedings against the defendants to recover a debt allegedly owed to them by the Pals. The Pals filed a protest to jurisdiction, and then subsequently filed the present application to dismiss the Chands’ summary judgment proceedings.1
[4] While I am satisfied that New Zealand has primary jurisdiction, I consider Fiji to be the forum conveniens. For the reasons that follow, I am persuaded that these New Zealand proceedings must be stayed on terms.
Does New Zealand have primary jurisdiction?
[5] The Pals insist that their filing of an appearance under protest is not a submission to jurisdiction.2 That is, of course, quite true. But New Zealand’s primary jurisdiction was established when the Chands served the Pals in 2015 with the current proceedings at their address at 76 San Valentino Drive, Henderson, Auckland.
[6] Jurisdiction, at heart, is dependent on valid service on the defendant. Primary jurisdiction is conferred on the High Court whenever personal service is effected in New Zealand on a natural person (no matter how temporary the presence of that
person in this country).3 The Pals are correct however to stress that High Court Rule
1 High Court Rules 2016, r 5.49.
2 Rule 5.49(2).
3 Discovery Geo Corp v STP Energy Pte Ltd [2012] NZHC 3549, [2013] 2 NZLR 122 at [39]
5.49 is to be read together with Rule 6.29(3), which relates to Protest to Jurisdiction and provides:
When service of process has been validly effected within New Zealand, but New Zealand is not the appropriate forum for trial of the action, the defendant may apply for a stay, or for a dismissal of the proceeding under rule 15.1.
[7] The rule raises the forum conveniens question, which remains the only real issue in this application.
Is New Zealand or Fiji the most appropriate forum?
[8] Both New Zealand and Fiji have jurisdiction to hear and determine the parties’ dispute. The forum conveniens is simply the forum in which the proceeding is more suitably tried in the interests of the parties and for the ends of justice. The onus is on the Pals to satisfy the court that Fiji is the forum conveniens.
[9] The leading authority is the decision of the House of Lords in Spiliada Maritime Corp v Cansulex Ltd,4 adopted by the New Zealand Court of Appeal in Wing Hung Printing Co Ltd v Saito Offshore Pty Ltd.5
[10] The Lords laid down the guiding test in determining the forum conveniens as the forum in which the proceeding has the most real and substantial connection.6
Within this framework, there are a number of other relevant considerations:7
(a) The relative cost and convenience of proceeding in each jurisdiction. (b) The location and availability of documents and witnesses.
(c) The existence of litigation in another jurisdiction.
citing Cockburn v Kinzie Industries Inc (1988) 1 PRNZ 243 at 245 and 246.
4 Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460 (HL).
5 Wing Hung Printing Co Ltd v Saito Offshore Pty Ltd [2010] NZCA 502, [2011] 1 NZLR 754.
6 At [45].
7 At [30].
(d)Whether all relevant parties are subject to New Zealand jurisdiction, so that all issues can be resolved in one hearing.
(e) Whether the law governing aspects of the dispute is New Zealand law or foreign law: other things being equal it is preferable for the law of a jurisdiction to be applied by the courts of that jurisdiction.
(f) The existence of a contract which contains an agreement to submit to a particular jurisdiction or a clause relating to the appropriateness of a particular forum.
(g) The strength of the plaintiff's case.
(h)Where any judgment will need to be enforced. It is often more efficient to obtain judgment in the forum where enforcement will take place.
(i)Whether the defendant's application is brought to gain a tactical advantage and not because they genuinely desire a trial in the other forum.
(j) Procedural advantages in one jurisdiction.
(k) A decision in another jurisdiction that it is the forum conveniens.
[11] Before discussing these factors in the context of this case, it is helpful to
pause to discuss the parties’ dispute in more detail.
The parties’ dispute
[12] The dispute between the parties relates to the sale and purchase of a Fijian property in 2008. The property is Lot 14 at Salala Place, Namadi Heights. Prior to its sale it was owned by the Chands. In 2008 they sold it to the Pals for FJD 700,000. It would appear that the Pals intended to develop the land via Inspiron Construction Ltd, a company of which they were both directors.
[13] It is common ground that the Chands received FJD 250,000, and the title was subsequently transferred. The balance remains unpaid. Beyond these broad strokes, the finer details of both the initial transaction and subsequent events are significantly contested. I begin with the initial transaction.
The initial transaction
[14] The parties fundamentally disagree on the mechanics of this initial transaction. These factual disagreements are largely irresolvable in this interlocutory application.
The Pals’ account
[15] The Pals stress that the sale and purchase was not a straightforward contractual agreement between the Pals and the Chands. For one, they say the sale and purchase was executed by their respective entities, Aldex Trading (of the Chands) and Inspiron Construction Ltd (of the Pals).
[16] Even more significant was the involvement of the finance company, Dominion Finance Limited (a Fijian company registered in Fiji). Dominion Finance was the financier of the project for developing the property. It appears to have provided finance via a revolving debt facility in the sum of FJD 1,180,000 to purchase the property – this figure included the purchase price of FJD 700,000, plus a further FJD 480,000 for construction and completion works. Dominion Finance took first mortgage over the property.
[17] The Facilities Schedule to Dominion Finance’s Offer Letter (dated
15 December 2008) outlines that the FJD 700,000 is to be paid in three instalments:
(a) 250,000 – on completion of documentation and receipt of Solicitors
Interim Certificate;
(b) 250,000 – on completion of building and duly passed by Engineers; (c) 200,000 – once building is occupied by tenants.
[18] This payment schedule appears to be confirmed by an Authority to Pay document dated 8 December 2015 and signed by Mr Pal.
[19] The Pals stress that the sale and purchase agreement arose from the
15 December Offer Letter from Dominion Finance, which was accepted the same day by both the Pals and the Chands (via Aldex Trading).
[20] The Pals also say that payments to the Chands were to be made by Dominion Finance and not by them personally. Funds were released in phases to the parties’ common solicitor, R Patel, who then released the funds to the Chands pursuant to the signing of an authority to pay document.
[21] The first phase payment of FJD 250,000 was released without issue. Problems arose sometime between December 2009 and January 2010, when Dominion Finance withheld the second instalment of FJD 250,000. This was apparently because the municipal council’s approval was not granted on account of compliance issues. The third instalment was also not paid.
[22] The implications of the Pals’ perspective are obvious. They say they were not personally liable to pay the Chands. And any payment under the sale and purchase contract had to be according to the terms set by Dominion Finance as the financier and as agreed to by the parties.
The Chands’ account
[23] The Chands see things differently. First, they contend that Aldex Trading was not a limited liability company, nor a party to the contract, but rather it was merely a trading name.
[24] The Chands say that the financing arrangement between Inspiron and Dominion Finance is a red herring. The Offer Letter dated 15 December 2008 was sent to and signed by only the Chands, as directors of Inspiron. Only the Pals were identified as guarantors. The Chands had no involvement in the agreement between Inspiron and Dominion; Inspiron simply made arrangements with Dominion Finance
so it could put the Pals in funds. But all this does not change the fact that the parties to the agreement for sale and purchase were the Pals and the Chands personally.
[25] The Chands also argue that under the sale and purchase agreement, FJD 250,000 was to be paid on 24 December 2008, and the balance of FJD 450,000 on 30 July 2009. The Pals were personally liable to pay. It follows from this account (assuming it is correct) that the Pals remain liable to pay the FJD 450,000 outstanding under the sale and purchase agreement.
Subsequent events
[26] But on the Chands’ view of the world, the contractual arrangement between the Chands and the Pals did not end here.
[27] According to the Chands, Mr Pal telephoned Mr Chand from New Zealand in January 2010 to discuss the possibility of an extension under the agreement for paying the second tranche of consideration. Mr Pal is said to have communicated during the course of this conversation that:
(a) He and his wife were living in New Zealand;
(b)He and his wife accepted their liability to pay the outstanding sum, and were only interested in discussing the method and timing of payment;
(c) They believed they would be in a position to pay in two or three
weeks’ time.
[28] Additionally the Chands say the parties have reached an agreement: the outstanding sum would be paid in New Zealand dollars (the agreed amount being NZD 340,000) into the New Zealand bank account of Mr Chand, opened specifically for that purpose.
[29] The Chands further depose that later in January Mr Chand met Mr Pal in
Suva, where Mr Pal provided Mr Chand with a letter dated 14 January 2010
apparently recording the Pals’ earlier commitment made via phone. On the Chands’ view, the Pals did not comply with this first variation, and in February there was a further telephone conversation between Mr Chand and Mr Pal. Again, Mr Pal is said to have committed to paying the outstanding amount within three weeks. Following this, Mr Pal apparently signed a document dated 19 February 2010 sent by Mr Chand which intended to record this commitment. Payment was due within three weeks on
19 February 2010, and payment was on the same terms as the original variation. The
Pals did not pay.
[30] The Chands say that both of the signed documents, of 14 and 19 January respectively, constituted variations of the original sale and purchase agreement, the consideration for which was the Chands’ undertaking not to exercise their rights of enforcement under that agreement.
[31] The Chands issued summary judgment proceedings against the defendants in October 2015. They seek to recover the contractual debt of NZD 340,000 allegedly owing under the sale and purchase agreement and the subsequent variations.
The Pals’ account
[32] The Pals deny seeing, let alone executing, the documents dated
14 January and 19 February 2010 relied on by the Chands. More generally, they deny agreeing to any variation of the original sale and purchase agreement, and certainly not any variation involving payment in New Zealand dollars.
[33] A number of submissions are made in support of this position. The Pals say, first, that the Chands’ claims are implausible in light of Dominion Finance’s involvement in the original sale and purchase transaction. This was not after all, an ordinary “bank financed” property purchase transaction where the full consideration sum is paid by the purchasers (by their bank) prior to transfer of ownership. The agreement to pay in this case, say the Pals, was contingent on certain conditions precedent. An agreement to pay NZD 340,000 would have thus required amendments to the sale and purchase agreement and/or revisions of Dominion Finance’s Offer of Finance.
[34] It does seem surprising, perhaps even a little suspicious, that no evidence has been put before the court about Dominion Finance’s involvement in, let alone support of, the two alleged variations. In making these observations I do not wish to be seen to make determinative findings about Dominion Finance’s involvement or the alleged variations, but the absence of such evidence does raise unanswered questions about the Chands’ contentions. Further, the Pals provide additional reasons to cast doubt upon the reliability of the Chands’ account. With respect to the
14 January document allegedly signed by Mr Pal in New Zealand, the Pals say this cannot be true because Mr Pal was in Fiji at the relevant time. In support, they provide documentation of his travel history obtained from the Fijian Department of Immigration. The Pals also point to an email sent by Mr Chand to Mr Patel (the parties’ solicitor) dated 31 August 2010. In the email, Mr Chand refers to an outstanding sum of FJD 450,000; there is no mention of any payment of NZD 340,000.
Discussion
[35] The Chands claim that the Court has jurisdiction for two broad reasons:
(a) All the parties were living in New Zealand at the time the proceedings were issued, and New Zealand remains the most suitable location for the parties to attend Court.
(b)Performance under the contractual variations was required in New Zealand, the acknowledgement of debt was signed in New Zealand, and the debt was to be paid in New Zealand dollars to the Chands’ New Zealand bank account.
[36] I am not persuaded the first reason carries much weight. While the Pals now live in New Zealand, it can be inferred from their case that they would be content to travel to Fiji. The Chands, now based in Brisbane, Australia, have indicated that they would be happy to travel to New Zealand for the litigation; I see no reason why travelling to Fiji would require much greater expense or inconvenience.
[37] I am also mindful that there other parties involved, at least tangentially, in these proceedings. Dominion Finance, Inspiron, and the Pals’ lawyer are all based in Fiji. There is competing evidence in relation to these parties that cannot be resolved in this interlocutory forum. But I simply note that on the Pals’ account, Aldex Trading is a limited liability company also registered in Fiji, and that Dominion Finance is registered in Fiji and operating according to Fijian laws.
[38] It appears, therefore, that the Chands’ case relies almost entirely on the court accepting their evidence as to the two contractual variations. If the Chands’ account holds water then there is certainly force to their submissions. The fact that oral variations were made – and acknowledgements signed – in New Zealand would be indicative of the application of New Zealand law. So too the alleged facts that payment was to be in New Zealand dollars into a New Zealand bank account. But on the basis of the evidence before the court I am not presently persuaded of the veracity of their account, and in particular of the genuineness of the two documents dated 14 and 19 January allegedly signed by the Pals.
[39] There is also merit in the Pals’ rhetorical question: if the Chands had possession of these documents, why would they not commence proceedings against the Pals in Fiji in 2010, or soon after, in reliance on these documents?
[40] I stress at this point that evidential problems beset the Pals as much as the Chands. There is insufficient evidence before the court to make findings as to, for instance, the involvement of Dominion Finance in the initial transaction, or the status of Aldex Trading. These evidential questions are closely intertwined and can only be safely determined in the context of a full trial.
[41] Ultimately, however, the onus remains on the Pals to off-set the primary jurisdiction established by valid service effected in New Zealand. The question becomes whether the Pals can persuade this court, on the basis of the evidence presently before the Court, that this proceeding has the most real and substantial connection with Fiji rather than New Zealand.
[42] The connection with Fiji is, on face value, quite obvious. The initial transaction was executed in Fiji between Fijian based parties concerning a Fijian property. The Chands, for their part, insist the initial transaction is of historical interest only. They say their claim is for the recovery of debt pursuant to the separate variation agreements made between the parties personally. This might well be the case if the variation agreements did, in fact, take place as recorded by the Chands. For the variation agreements would arguably function to severe what would otherwise be a very natural connection between the debt recovery and the Fiji focussed sale and purchase agreement.
[43] But the Chands have not established a sufficient evidential foundation for the court to place any secure reliance on the alleged variation agreements. Whether such agreements existed, and if so on what terms, are matters that can only be determined at trial.
[44] In addition to the initial transaction, there is the fact that the Fijian Court has already heard proceedings relating to the wider factual matrix of the parties’ dispute. In 2011 the Chands issued proceedings (against Dominion Finance, amongst others) seeking injunctive relief to stop the transfer of the title and a mortgage for FJD 450,000 being registered in favour of Dominion Finance. The Chands were unsuccessful.
[45] The Pals say that in issuing these proceedings the Chands implicitly accepted the jurisdiction of the Fijian courts. This arguably takes the argument too far. But the involvement of the Chands and Dominion Finance in a dispute concerned in part with the original sale and purchase agreement certainly provides strong reasons for the Fijian courts to adjudicate this present dispute as well. That is, the present proceeding is a natural continuation of what was and remains a very Fiji focused dispute.
[46] Finally, the Chands raise the issue of juridical advantage. It is not disputed that their claim is time-barred in Fiji. If therefore I stay the New Zealand proceedings, the Chands would lose their juridical advantage of being able to bring the proceedings in New Zealand.
[47] This issue calls for a pragmatic response. If the Chands recommence proceedings in Fiji, and the Pals raise limitation as a defence, leave is reserved for the Chands to apply to this court to lift the stay. The fact that the Pals have relied on limitation arguments will be a persuasive though not determinative factor in the court exercising its discretion as to whether to lift the stay. The Pals are thereby incentivised to allow the dispute to be adjudicated in the forum conveniens of the Fijian courts.
Decision
[48] New Zealand has primary jurisdiction, but the Pals have discharged their onus of establishing that Fiji is the forum conveniens. The summary judgment proceedings are accordingly stayed, with leave reserved to the Chands to apply to this Court to lift the stay in the event that:
(a) The Chands recommence proceedings in Fiji by 29 September 2017;
and
(b)Limitation issues are raised as a defence by the Pals in such proceedings.
[49] As costs follow the event under the statutory costs regime, costs are awarded to the Pals on a 2B basis plus disbursements as fixed by the Registrar.
Associate Judge Sargisson
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