Jinghua Investment Limited v Marakanti
[2025] NZHC 1430
•3 June 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2024-404-340
[2025] NZHC 1430
BETWEEN JINGHUA INVESTMENT LIMITED
Appellant
AND
SARITHA MARAKANTI
Respondent
Hearing: 8 August 2024 Appearances:
D Liu and H Woodhouse for the Appellant J Strauss for the Respondent
Judgment:
3 June 2025
JUDGMENT OF ROBINSON J
This judgment was delivered by me on 3 June 2025 at 4:00 pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors/Counsel:
Heritage Law, Auckland
Bird & Yang, Auckland | J Strauss, Auckland
JINGHUA INVESTMENT LIMITED v MARAKANTI [2025] NZHC 1430 [3 June 2025]
Introduction and background
[1] The appellant Jinghua Investment Limited (JIL) leased retail premises to Kahlon Banee Holdings Limited (KBHL) from which it operated a liquor store. Before doing so JIL required KBHL’s two shareholders, Saritha Marakanti and Ritika Paul, to guarantee KBHL’s obligations under the lease.
[2] The terms of the guarantees are included within a Deed of Assignment pursuant to which Lion Liquor Retail Limited (Lion), with JIL’s consent, assigned the lease to KBHL (Deed). The Deed appears to have been executed by Ms Marakanti and Ms Paul as guarantors. Each of their signatures appear to have been witnessed by Ms Paul’s husband, Mr Kahlon.
[3] KBHL fell into arrears. JIL re-entered and terminated the lease. KBHL went into liquidation. There is no dispute that JIL is liable to KBHL for $140,336.70 for rental arrears and other losses covered by the terms of the guarantees.
[4] JIL issued proceedings to enforce the guarantees against Ms Marakanti and Ms Paul. Ms Marakanti defended JIL’s claim on the basis that she did not sign the Deed.1 JIL brought an alternative claim against Mr Kahlon in deceit for having falsely witnessed Ms Marakanti’s signature.
[5] Following a two-day trial in the District Court at Auckland, Judge D J Clark dismissed JIL’s claim against Ms Marakanti.2 Despite having some reservations about Ms Marakanti’s evidence, the Judge found JIL had not discharged its burden of proving Ms Marakanti had signed the guarantee.3 Mr Kahlon took no steps and Judge Clark entered judgment against him.4
[6] Although JIL’s claim against Ms Marakanti failed, the Judge reduced the costs payable by JIL to her and made a Sanderson order that 75 per cent of those costs are
1 Ms Paul took no steps to defend the proceeding and judgment was entered against her on 21 July 2021.
2 Jinghua Investment Ltd v Marakanti & Ors [2023] NZDC 27849 [District Court Judgment].
3 At [81].
4 At [87].
to be paid by Mr Kahlon.5 The Judge also made a Bullock order in favour of JIL enabling it to recover from Mr Kahlon the 25 per cent portion of the costs it was required to pay Ms Marakanti.6
[7] JIL appeals. JIL says the District Court was wrong to find it had not discharged the burden of proving that Ms Marakanti had signed the Deed. JIL submits that the strength of the evidence and the inconsistencies in Ms Marakanti’s evidence should have satisfied the Judge, on the balance of probabilities, that she had signed the Deed. JIL says the Judge should have drawn adverse inferences against Ms Marakanti for not calling Mr Kahlon as a witness or discovering her communications.
[8] Ms Marakanti cross-appeals on costs. She says the Sanderson order should be set aside so that JIL is obliged to pay all the costs awarded to her; and the Bullock order extended so that JIL can recover all those costs from Mr Kahlon.
[9] Both parties also sought leave to adduce further evidence on appeal. Both of those applications are opposed.
Approach to appeal
[10] JIL has a general right of appeal. To determine that appeal I must conduct my own assessment of the evidence, in accordance with the principles set out in Austin, Nichols & Co Inc v Stichting Lodestar.7 JIL has the onus of satisfying the Court on appeal that it should differ from the District Court.8 The appeal proceeds by way of rehearing.9 I am to make my own assessment of the facts and the merits without deference to the assessment of the District Court.10
5 Jinghua Investment Ltd v Marakanti & Ors [2024] NZDC 5180 [Costs Decision]. Citing and applying Sanderson v Blyth Theatre Co [1903] 2 KB 533 as applied in Brown v Heathcote County Council (No.2) [1982] 2 NZLR 618.
6 At [38].
7 Austin, Nichols & Co v Stichting Lodestar [2008] 2 NZLR 141 (SC).
8 At [4].
9 At [13].
10 At [5] and [16].
[11] I set out the relevant evidence below. For clarity I deal first with the evidence adduced at trial, and then the evidence JIL adduced after trial while judgment was reserved.
The Evidence
The Deed
[12] The Deed was signed in three counterparts. One counterpart was signed by Lion as assignor. Another was signed by Ms Paul, as the sole director of KBHL and personally as guarantor, and — apparently but disputedly — by Ms Marakanti as guarantor. Mr Kahlon appears to have witnessed his wife Ms Paul’s signatures, as well as Ms Marakanti’s. A third counterpart was signed by JIL as landlord. Like Judge Clark, I will refer to these as A, B and C respectively.
[13] Execution and exchange by counterpart was provided for in clause 20 of the Deed:
20. Counterparts: This deed may be executed in any number of counterparts each of which is to be deemed an original, but all of which together will constitute a single instrument. A party may enter into this deed by executing any counterpart. This deed may be executed on the basis of an exchange of facsimile copies or scanned and emailed copies and execution of this deed by such means is to be a valid and sufficient execution.
The signatures
[14] Despite appearances, Ms Marakanti denies signing the Deed. Her evidence is that she did not sign the Deed and did not authorise anybody to append her signature to it. JIL is unable to produce an original signed by her. JIL’s manager, Yu Xiao, accepted in evidence that he was unable to respond to Ms Marakanti’s evidence that she did not sign the Deed. He says JIL simply accepted and signed the Deed after it was delivered by the Lion’s solicitors.
[15] Curiously, the signature blocks on each of the different counterparts are different:
(a)On copy A:
(i)the first page has the signed signature block for Lion at the top of the page and the unsigned signature block for KBHL at the bottom;
(ii)the second page has an unsigned signature block for one director of JIL at the top, and for Ms Marakanti at the bottom; and
(iii)the third page has the signature block for Ms Paul at the top.
(b)On copy B:
(i)The first page has, from top to bottom: the signed signature block for KBHL; the unsigned signature block for Lion; a different signature block for signing by two directors of JIL; and part of the signature block for Ms Marakanti. The signature block for the two directors of JIL has been manually crossed out.
(ii)On the second page it has the rest of the signature block for Ms Marakanti at the top with the signed signature block for Ms Paul underneath. Ms Marakanti’s signature appears to be right at the top of the page.
(iii)Page 3 is the unsigned signature block for one director of JIL.
(c)Copy C is the same as copy B save that page 3 is signed by one director of JIL.
[16] I also note that copy A has a document reference number 3562903 v2, whereas copy B and copy C are 3562903 v1, save for page 3 which has the JIL signature block and is 3578917 v1.
The handwriting experts
[17] To support her position Ms Marakanti called a handwriting expert, Michael Maran. Mr Maran compared the signature on the Deed with four other samples including from her passport and driver’s licence. He concluded that the signature on the Deed was “probably not” hers, although he explained in cross-examination that he meant this to express a “neutral” position, in that it could be Ms Marakanti’s signature, or it could not be. He noted that the signature in question was a scanned photocopy which is a limiting factor. He considers that original documents are always preferred for a more positive opinion.
[18] To rebut this, JIL called Linda Morrell. Ms Morrell compared the signature in question with 17 reference documents known to contain Ms Marakanti’s signature. Ms Morell was critical of Mr Maran’s analysis which used only four comparator signatures. She agreed with Mr Maran that limitations arose because the documents were available only in copy form. Nevertheless, she was able to assess the major details of the signature.
[19] Ms Morrell’s opinion was that Ms Marakanti had “probably completed the questioned signature in her name on the DEED dated 2018”.
[20]Ms Morell’s report continued:
One possibility that cannot be totally discounted owing to the copy quality and presence of trash marks on the questioned DEED, is the signature is a genuine signature but has been manipulated perhaps by using computer software to make it appear that the writer signed it. The only way to prove or disprove this is to examine the original of the document or locate the signature used for such a manipulation.
[21] Following questions from the Court Ms Morrell confirmed that in her opinion it was more probable than not that it was Ms Marakanti’s signature but that, due to the sample on the Deed being a copy document, she could not “entirely exclude the possibility” that a copy of the signature had been photocopied or scanned on to the signature page. Ms Morell considered that the slant of the signature meant that the signature and the baseline would have to be removed from one document, not just the signature.
Ms Marakanti’s evidence
[22] As noted, JIL says that the Judge was wrong to find that JIL had failed to discharge the burden of proof. Counsel for JIL, Mr Liu, submits that Ms Marakanti’s evidence was inconsistent and lacked cogency, particularly given her theory that someone may have forged her signature. He submits further that the Court should make adverse credibility or reliability findings against Ms Marakanti. He says the Court should draw adverse inferences from Ms Marakanti’s failure to call Mr Kahlon and her husband as witnesses.
[23] Ms Marakanti is adamant she did not sign the lease. Mr Liu responsibly put it to Ms Marakanti that she did, but she denied doing so. She says she would never agree to guarantee the obligations of a company of which she was not a director, or actively involved in operating.
[24] Ms Marakanti is (or has been) a shareholder, and in some cases a director, of six other companies that have operated liquor stores. Her husband also owns companies that operate liquor stores. She acknowledged the importance of a lease. She has provided guarantees to some other landlords, but not all of them. She said not all landlords require guarantees.
[25] Ms Marakanti’s evidence was that her husband and Mr Kahlon are good friends. They have known each other since 2012. Ms Marakanti and her husband invested $60,000 in KBHL because they are friends and because Mr Kahlon has also operated other liquor stores successfully.
[26] Mr Liu was highly critical of various aspects of Ms Marakanti’s evidence in cross-examination. For the first time, Ms Marakanti stated in cross-examination that Mr Kahlon had asked her to guarantee KBHL’s lease but, following a discussion with her husband, she refused. Mr Liu questioned Ms Marakanti about her statement in an earlier affidavit that she had such little involvement in the business that she did not realise the lease had been terminated and the store closed until January 2020, sometime after it had closed. However, Ms Marakanti accepted that she was a signatory to KBHL’s bank accounts.
[27] In an earlier affidavit filed in opposition to an application for better discovery, Ms Marakanti said that after she found out the store had closed she asked Mr Kahlon to send “all information about the lease and my signature”. Mr Liu asked Ms Marakanti why she did that if she had not signed the Deed. Ms Marakanti said that once they realised the store was closed they wanted to “make sure they were not in trouble”, which is why they asked for all the documents. Ms Marakanti said that by then they knew they had lost some money.
[28] Ms Marakanti also said in cross-examination that she had asked Mr Kahlon to give evidence to support her case. She said that they exchanged WhatsApp and text messages. She was questioned as follows:
Q. But didn’t you say earlier in your previous affidavits that you couldn’t contact him at all?
A. Initially we couldn’t. Later on, he got into communication.
Q. Okay when did he get into communications with you?
A.I don’t remember exact date but later on, like maybe a few months ago we started, a month or two months ago he started responding. He is quite on and off. Sometimes he responds, sometimes he don’t respond. [sic]
[29]The Court questioned Ms Marakanti further:
Q.I don’t think you ended up answering the question Mr Liu put to you, he asked the question about whether Arshvir had said no about coming to give evidence. Is that –
A. He’s not in the country so he’s –
Q. So do I understand that you asked him to give evidence but he refused.
A. He said he can if it is acceptable.
Q. Right but he’s obviously not here and he’s not going to give evidence.
A. Yeah.
Supplementary evidence
[30] Shortly after the hearing, the District Court granted JIL leave to adduce further evidence about the different counterparts and the varied arrangements of the signing
blocks. Leave was granted on the grounds JIL had not previously been alerted to the issue by Ms Marakanti.11
[31]This evidence showed that:
(a)At 12:48 pm on 20 July 2018 Lion’s solicitors emailed JIL’s solicitors attaching the Deed and asked for confirmation this was satisfactory for JIL to provide consent to the assignment.
(b)At 2:43 pm on the same day Lion’s solicitors emailed JIL as follows:
Hi Anita,
Apologies, please find attached a partially executed deed of assignment for signing by your client. Please note the signing blocks have been amended.
Please let me know if you have any questions.
(c)At 3:41 pm Lion’s solicitors emailed KBHL’s solicitors as follows:
Hi Neomal
…
I understand that your clients have signed the deed of assignment. Could you please confirm authorisation on behalf of Kahlon Banee Holdings Limited, Saritha Marakanti and Ritika Paul to the following amendments (as attached):
·Striking out the landlord signing block on page 7;
·Insertion of a final page with a new landlord signing page.
Please let me know if you have any questions.
(d)On 23 July 2018 the assignor’s solicitor received the following response:
On behalf of our client Kahlon Banee Holdings, Ritika Paul and Saritha Marakanti I can confirm authorisation of the amendments as described in your attachment.
Kind rgds
11 District Court Judgment, above n 2, at [53]. I note that Mr Strauss for Ms Marakanti cross- examined Mr Xiao on the issue.
Neomal
[32] The supplementary evidence also included an explanation from Lion’s solicitors confirming that:
[T]he signature block of the deed was amended to reflect that the landlord only had one director instead of two. The solicitor acting for the assignee and guarantors approved the amendment to the landlord’s signing block on behalf of the assignee and guarantors as per the attached email correspondence.
The District Court Judgment
[33] Although the Judge had “reservations” about Ms Marakanti’s evidence, he was not satisfied that JIL had discharged its burden of proving that Ms Marakanti had signed the Deed.12
[34] As for the signature itself, the Judge preferred Ms Morrell’s evidence to Mr Maran. He accepted her evidence that the signature on the Deed is the genuine signature of Ms Marakanti.13 But because Ms Morrell could not rule out the possibility that Ms Marakanti’s signature had been electronically “cut and pasted” into the Deed, the Judge assessed the expert evidence to be inconclusive as to whether Ms Marakanti did sign the Deed.14
[35] The Judge addressed four matters that counsel for JIL submitted impeached Ms Marakanti’s direct evidence, demonstrating inconsistency and a lack of cogency. First, Ms Marakanti’s earlier evidence that, upon learning the lease had been terminated, she requested copies of “the lease and my signatures” .15 Counsel for JIL argued that if she had not signed the Deed she would not have requested a copy of it. The Judge accepted Ms Marakanti’s request might appear to be inconsistent with her assertion that she never signed as guarantor, but he considered it was natural for Ms Marakanti to want to check the position. She could not be overly criticised for wanting to be certain.16
12 District Court Judgment, above n 2, at [81].
13 At [66].
14 At [67].
15 At [70].
16 At [70].
[36] Secondly, Ms Marakanti’s evidence in cross-examination that Mr Kahlon had asked her to sign the guarantee, but she refused. The Judge found the timing of that admission surprising, but he did not consider it to give rise to significant concern.17 He found it to be consistent with her evidence that she only signs guarantees if she is a director or involved in the operational aspects of the tenant company.
[37] The Judge had more concern about two other aspects of Ms Marakanti’s evidence: her failure to call Mr Kahlon as a witness; and her failure to discover the WhatsApp messages with him.
[38] The Judge considered that while an adverse inference could be drawn against Ms Marakanti for failing to call Mr Kahlon, he did not do so due to his consideration of two possible explanations.18 First, Mr Kahlon lives in Canada, so it might not have been within Ms Marakanti’s power to call him.19 Secondly:20
If Ms Marakanti’s evidence is to be accepted, it is unlikely Mr Kahlon would have appeared because the only explanation left is he was involved in a forgery of her signature. Not only does this expose him to a civil liability but also to a potential criminal prosecution. Whild he may have had a statutory protection mechanism in refusing to give that evidence21 I find Mr Kahlon’s failure to appear more to do with his own reasons rather than Ms Marakanti having any ability to call him.
[39] Finally, the Judge was concerned that Ms Marakanti had not produced her WhatsApp exchanges with Mr Kahlon.22 He found this lack of disclosure to be “suspicious”. But he would not draw “a strong adverse inference from this non-disclosure sufficient to reach a point I find Ms Marakanti’s evidence is not believable”.23
[40] In the end, the Judge found that Ms Marakanti had a “clear motivation” to deny signing the Deed, while Mr Kahlon had a “strong motivation to be involved in a fraud regarding the signature following Ms Marakanti’s refusal to sign as guarantor”.24 If
17 At [72].
18 At [74].
19 At [75].
20 At [76].
21 Evidence Act 2016, s 60.
22 At [77].
23 At [78].
24 At [79].
the shareholders would not sign guarantees, KBHL would likely be refused the tenancy. The Judge went on:
[80] The position I am left in is the recognition there are compelling and competing motivations. However, that is an issue for JIL to resolve as it is JIL’s burden to prove Ms Marakanti did not [sic] sign the Deed of Assignment. Without direct evidence, JIL needed evidence of sufficient quality to impeach the consistency and cogency of her evidence. Despite making some inroads into her evidence, giving rise to some concern, I conclude JIL has not proved on the civil standard of probabilities Ms Marakanti signed the Deed of Assignment as guarantor. Despite that, I find further the signature is the genuine signature of Ms Marakanti which leaves the only possibility that it was cut and pasted into the Deed.
[81] For the reasons set out, despite some reservations which I have expressed, I do not find JIL has discharged its burden of proving Ms Marakanti signed the Deed of Assignment. Accordingly, the claim against her is dismissed.
[41] The second respondent, Ms Paul, took no steps to defend the proceeding. Judgment had been entered against her, with costs on a solicitor-client basis.
[42] Judge Clark also entered a default judgment against Mr Kahlon, finding him liable in deceit. Having found that JIL had not proven that Ms Marakanti signed the Deed of Assignment, the Judge found that Mr Kahlon, as the witness, would have known the circumstances in which Ms Marakanti’s signature had appeared on the Deed of Assignment.25 The Judge accepted that JIL relied on what it thought was a legitimately signed Deed of Assignment, and that by relying on Mr Kahlon’s false representations JIL had suffered loss due to its inability to enforce the guarantee against Ms Marakanti.26
Applications to adduce further evidence
[43] Both parties apply to adduce further evidence on appeal. Both applications are opposed.
25 At [85].
26 At [87].
JIL’s application
[44] The appellant seeks leave to adduce an invoice from each of Ms Marakanti’s solicitors and counsel dated 22 March 2023 and 9 March 2023 respectively. These refer to the drafting of an affidavit for Mr Kahlon, and emails concerning that affidavit. Mr Liu submits that these are relevant to JIL’s submission that an adverse inference can be drawn from Ms Marakanti’s failure to call Mr Kahlon as a witness.
[45] Ms Marakanti opposes the application. She says the evidence is immaterial and in any event the contents have been known to JIL since March 2023. She relies on email correspondence between counsel in April 2023 in which Mr Liu records that Ms Marakanti has located Mr Kahlon in Canada; and Mr Strauss provides Mr Kahlon’s WhatsApp contact details on request.
[46] In the event the Court grants JIL leave to adduce these invoices, Ms Marakanti wishes to produce the unsworn draft affidavit of Mr Kahlon referred to in those invoices. That unsworn draft was attached to Ms Marakanti’s notice of opposition.
[47] I grant JIL’s application for leave to adduce the invoices. They are relevant and JIL did not have them previously. They are before the Court in any event, given that Ms Marakanti relied on them in support of her costs claims.
[48] I do not accept that the admission of these invoices into evidence entitles Ms Marakanti to adduce Mr Kahlon’s draft, unsworn affidavit. The invoices are sufficient to show an affidavit was prepared. The contents of the draft, unsworn affidavit are irrelevant and/or hearsay.
Ms Marakanti’s application
[49] Ms Marakanti applies to adduce email correspondence dated 28 and 29 June 2022 between Neomal Perera and Ms Marakanti’s solicitors. With reference to Mr Perera’s earlier correspondence (presumably to Lion’s solicitors, as set out at [31] above) in which he confirmed that he acted for KBHL and Ms Marakanti, her solicitor asks Mr Perera for a full copy of the conveyancing file, and any emails or letters of engagement confirming that he was instructed by Ms Marakanti. In reply Mr Perera
confirms that he acted for KBHL on the instructions of Ms Paul, but states that he did not receive instructions from, act for, or communicate with Ms Marakanti. On that basis Mr Perera says he has no obligation to provide the conveyancing file to Ms Marakanti’s solicitors.
[50] Ms Marakanti seeks leave to adduce that correspondence on the basis that at paragraph 2(b) of its Notice of Appeal JIL refers to the Deed having been approved by a solicitor “who purported to act for [Ms Marakanti] and [KBHL]”. As noted above, Mr Perera’s email of 23 June 2018 confirming that he acted for Ms Marakanti was accepted into evidence after the trial.
[51] JIL opposes on the basis that Mr Perera’s correspondence is not fresh, amounts to hearsay, and is neither cogent nor material. JIL points out that Ms Marakanti never sought to summons Mr Perera and is not seeking to adduce further direct evidence from him to explain the representation in his email to Lion’s solicitors that he did act for Ms Marakanti. JIL also says that the District Court gave Ms Marakanti the opportunity to respond to JIL’s request to adduce Mr Perera’s email of 23 July 2018, but she elected not to do so.
[52] I grant leave for the email correspondence between Ms Marakanti’s solicitors and Mr Perera to be adduced. I accept it is not afresh, and Ms Marakanti did not respond to JIL’s request to adduce Mr Perera’s email of 23 July 2018. However, JIL only received Mr Perera’s 23 July 2018 email after the trial and they rely on it in their Notice of Appeal. I consider it is in the interests of justice for Ms Marakanti to be able to adduce Mr Perera’s subsequent (and entirely contradictory) email confirming he did not act for her.
JIL’s Submissions
[53] JIL’s primary submission is that the Judge misdirected himself and his evidential analysis was flawed.27 JIL says that if the Judge had analysed the evidence properly, he would have concluded that Ms Marakanti had signed the Deed.
27 Citing Briggs v Drylined Homes Limited [2023] EWHC 382 (KB) which set out at [14] “thirteen axioms of fact-finding”.
[54] Mr Liu submits that the Judge, having determined that the signature was Mr Marakanti’s, was faced with a binary decision: he could decide that either Ms Marakanti signed the Deed; or that a fraudster “cut and paste” the signature onto it. Mr Liu says that to make this decision the Judge needed to evaluate all the evidence and to determine which scenario was most likely, having regard to the inherent probability and improbability of each.28
[55] Instead, Mr Liu submits that the Judge incorrectly applied Gloria Jean’s Coffees and incorrectly found that for Ms Marakanti to be disbelieved JIL had to adduce “evidence of sufficient quality to impeach the consistency and cogency of her evidence”.29 Mr Liu submits that it is Ms Marakanti, not JIL, who is alleging fraud, and so she was required to adduce stronger, more cogent evidence to demonstrate this is what occurred.
[56] Mr Liu says that the Judge erred further by examining each piece of circumstantial evidence separately, rather than in combination.30 In this regard Mr Liu says that the Judge:
(a)found the expert evidence was inconclusive as to whether Ms Marakanti signed the Deed simply because Ms Morrell was unable to exclude the possibility that it had been “cut and pasted”;
(b)failed to consider the email from KBHL’s solicitors approving amendments to the Deed on behalf of Ms Marakanti;
(c)did not draw adverse inferences from Ms Marakanti’s failure to call Mr Kahlon or produce her WhatsApp messages with him, notwithstanding that the invoices from her solicitors produced in support of her costs claim show that they prepared a draft affidavit for him; and
28 Citing Z v Dental Complaints Assessment Committee [2008] NZSC 55.
29 Gloria Jean’s Coffees International Ltd v Daboko [2019] NZHC 1097.
30 Citing Zespri Group Ltd v Gao [2020] NZHC 109 at [46].
(d)found that nothing turned on inconsistencies in Ms Marakanti’s evidence, including her request for a copy of the lease and her evidence for the first time in cross-examination that Mr Kahlon had asked her to sign the guarantee.
[57] Mr Liu submits that if the Judge had analysed the relevant evidence in combination he would have found it was more likely that Ms Marakanti signed the Deed than that it had been cut and pasted.
Analysis
[58] The question is whether Ms Marakanti signed the Deed. JIL has the burden of proving on the balance of probabilities that she did. Ms Marakanti’s evidence is that she did not sign the Deed. JIL says the Court should disbelieve that evidence. Essentially, JIL appeals the Judge’s credibility findings.
[59] Like the Judge, and for the same reasons, I prefer Ms Morrell’s evidence to that of Mr Maran. Ms Morrell’s opinion is that it is more likely than not that the signature on the Deed was written by the same person who signed the various comparison documents. That is, the signature was “probably genuine”. Ms Morrell considered her examination was limited by having only copies of the comparison documents available, and the Deed itself being “poorly reproduced”. She could not exclude the possibility that the Deed has been manipulated.
[60] Mr Liu submits that, in light of this finding, the Judge was required to decide between the two mutually exclusive alternatives: either Ms Marakanti signed the Deed or it was fraudulently manipulated. I do not agree. That overlooks the fundamental point that JIL retains the burden of proof.
[61] For the same reason I reject Mr Liu’s submission, made in reliance on Z v Dental Complaints Assessment Committee, that because Ms Marakanti was alleging fraud it was for her to adduce stronger evidence to show that her signature
had been fraudulently cut and pasted. 31 Ms Marakanti is not alleging fraud. She has no burden to prove anything. It is for JIL to prove that she signed the Deed.
[62] For the following reasons I agree with the Judge that JIL has not discharged its burden of proof.
[63] As noted at [15]-[16] above, there are two versions of the Deed with quite different signature blocks. The evidence that JIL adduced after the hearing explains that the second version was created after the first went out to record that JIL only had one director to sign, not two. This explains why a new signature block for JIL was created, and the old one crossed out. The evidence does not explain why the signature blocks were re-ordered, or why there was a page break in the middle of Ms Marakanti’s signature block which meant her signature was placed right at the top of the page.
[64] There is no evidence as to whether this was raised or explained at the time. Mr Liu was critical of the issue not being raised before trial, but the differences in the signature blocks must have been apparent to both parties before then.
[65] In light of this unexplained re-ordering, I find it is significant that Ms Morrell could not exclude that the signature was cut and pasted.
[66] I also agree with the Judge that the Court should not draw adverse inferences from Ms Marakanti’s failure to call Mr Kahlon or produce her communications with him. In some circumstances the absence of evidence, including the failure of a party to call a witness, may allow an inference that the missing evidence would not have helped a party’s case.32 In the case of a missing witness such an inference can only arise when: the party would be expected to call the witness; the evidence of the witness would explain or elucidate a matter in need of explanation or elucidation (including
31 In Z v Dental Complaints Assessment Committee, above n 28, the Supreme Court explained at
[101] that the quality of evidence required to meet the fixed civil standard of proof may differ in cogency, depending on what is at stake.
32 Perry Corporation v Ithaca (Custodians) Ltd [2004] 1 NZLR 731 (CA) at [153].
where a defendant has a tactical burden to produce evidence to counter that adduced by the other party); 33 and the absence of the witness is unexplained.
[67] No doubt the Court would have been assisted by Mr Kahlon’s evidence. He appears to have witnessed the signatures, he was good friends with Ms Marakanti’s husband, and Ms Marakanti accepted in cross-examination that if the Deed did not come from her, it probably came from Mr Kahlon or Ms Paul. In answer to a question from the Court, Ms Marakanti said that Mr Kahlon “said he can [give evidence] if it is acceptable”, but he did not.
[68] However, I agree with the Judge that in the present circumstances the Court cannot infer that Mr Kahlon’s evidence would have been unhelpful to Ms Marakanti’s case. For that to be so, his evidence would have been that he had witnessed Ms Marakanti’s signature on the Deed. That evidence would have also helped Mr Kahlon’s own position, providing a complete answer to JIL’s deceit claim against him. But Mr Kahlon’s absence can also be explained on the basis that JIL’s claim against him is correct, and his evidence would have required an admission exposing him to civil and potentially criminal liability.
[69] Seen in this context I do not draw any inference from Mr Kahlon’s absence that is adverse to Ms Marakanti. Nor do I place any particular significance on her somewhat vague explanation that Mr Kahlon said he could give evidence “if it was acceptable”.
[70] Finally, on its face, Ms Marakanti’s affidavit evidence that she asked Mr Kahlon for a copy of the “lease and signatures” appears strictly inconsistent with her evidence that she did not sign the lease. She explained that she wanted to be certain they were not “in trouble”. I agree with Judge Clark’s assessment that Ms Marakanti
33 The “tactical burden” is described in C R Williams “Burdens and Standards in Civil Litigation” (2003) 25 Syd LR 165 in the following terms: “At any given point in time a party who has the legal burden in respect of a particular issue may appear more or less likely to be able to discharge that burden. If that party appears likely to be able to discharge the legal burden, then the tactical burden shifts to the other party; the other party must produce contradictory evidence or run the risk of losing on that issue. If that other party produces such evidence, then the tactical burden may shift back to the party bearing the legal burden. Such swings of the forensic pendulum as a case progresses involve, however, no shift in either the legal or the evidential burden.” The article is discussed by the Court of Appeal in Perry Corporation v Ithaca (Custodians) Ltd.
should not be overly criticised for wanting to check her position and be certain.34 And Ms Marakanti’s explanation that Mr Kahlon asked her to sign the guarantee might have come for the first time in cross-examination, but it is consistent with her evidence that she did not.
[71] There are gaps in the evidence that might have been usefully filled. Both sides might have called further evidence concerning the execution and exchange of the Deed in counterparts. KBHL’s solicitors might have clarified whether they were or were not acting for Ms Marakanti. As noted, Mr Kahlon’s evidence might have been enlightening. But standing back and assessing the evidence produced I agree with the Judge that the evidence is insufficient to prove that Ms Marakanti signed the Deed, and that her direct evidence to the contrary is wrong.
Cross-appeal
[72] Ms Marakanti cross-appeals the costs decision. She does not appeal quantum, which the Judge reduced from scale,35 but she appeals the Sanderson order requiring JIL to pay 25 per cent and Mr Kahlon 75 per cent of those costs.36 Ms Marakanti says JIL should be liable to her for all the costs award, with a Bullock order in JIL’s favour entitling JIL to recover those costs from Mr Kahlon.
[73] Ms Marakanti’s cross-appeal is against the exercise of a discretion. The criteria for a successful appeal against the exercise of discretion are more strict. Ms Marakanti must show that the Judge was wrong in law or on principle; failed to take into account a relevant matter or took into account an irrelevant one; or was plainly wrong.37
[74] The Judge found that on a commercial basis JIL was entitled initially to believe it had a binding personal guarantee from Ms Marakanti. Having failed to discharge the burden the Judge found that JIL should bear some, but not all, of Ms Marakanti’s costs in the proceeding.38 The Judge made the Sanderson order based on his finding
34 District Court Judgment, above n 2, at [70].
35 Costs Decision, at [31] – [34].
36 At [37].
37 Kacem v Bashir [2011] 2 NZLR 1 (SC) at [32], reaffirming May v May (1982) 1 NZFLR 165 (CA) at 170, cited by Asher J in Rapana McBride Street Cars Ltd [2007] DCR 551 at [5].
38 Costs Decision at [36].
that “it was Mr Kahlon who perpetuated the deceit which has occurred, and he should be responsible to meet the majority of the costs award against JIL”.39
[75] Ms Marakanti does not suggest that JIL’s decision to issue proceedings against her and Mr Kahlon was unreasonable. However, Mr Strauss submits the Judge:
(a)overlooked that Mr Kahlon had not defended the claim and that JIL could have obtained a default judgment against him earlier, obviating the need for trial;
(b)primarily granted relief to JIL because it was “innocent”, while ignoring that Ms Marakanti is also “innocent” but is now deprived of the costs she is entitled to as the successful party;
(c)did not take into account the effort and costs of recovery in a foreign jurisdiction; and
(d)was wrong to benefit JIL at the expense of Ms Marakanti.
[76] In Lane Group Ltd v Paterson the Court of Appeal considered the factors relevant to the Court’s discretion when determining costs between a plaintiff, a successful defendant, and an unsuccessful defendant.40 These include: the reasonableness of the original joinder of the successful defendant; whether the unsuccessful defendant contributed to the joinder; how the proceeding develops; and the overall justice of the matter as between the three parties concerned.41
[77] Although the Judge did not expressly refer to the fact that Mr Kahlon did not defend the claim, Mr Liu suggests that Ms Marakanti did not raise this in her costs submissions. In any event, I do not think it follows that the Judge failed to take it into account. Mr Kahlon had obviously not defended the claim, and the Judge’s view that JIL had reasonably brought and maintained its claim against Ms Marakanti is clear from the underlying costs order.
39 At [37].
40 Lane Group Ltd v D I & L Paterson Ltd [2000] 1 NZLR 129 (CA) at [84] and [91].
41 At [84] and [91].
[78] I do not accept Mr Strauss’ submission that the Judge ignored that Ms Marakanti is “innocent” while depriving her of the costs to which she is entitled. The Judge accepted that the starting point is that she is entitled to costs, which he ordered.42 The Judge also took into account the relative effort and costs of recovery, noting Mr Liu’s submission that Ms Marakanti will be better placed to recover costs from Mr Kahlon given her husband’s ongoing relationship with him.43
[79] For these reasons I do not accept that the Judge erred in the exercise of his discretion to require Mr Kahlon to pay 75 per cent of the costs award to Ms Marakanti. It reflected his assessment of the overall justice of the matter as between the parties, which was an assessment reasonably open to him.
Result
[80]The appeal and the cross-appeal are both dismissed.
Costs
[81] If the parties are unable to agree costs Ms Marakanti should file a memorandum within 15 working days and JIL within 10 working days after that. The memoranda should not be more than five pages long (excluding any attachments).
Robinson J
42 Costs Decision at [26].
43 At [23].
0
3
1