Kumar v Saily
[2020] NZCA 376
•31 August 2020 at 9 am
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA397/2019 [2020] NZCA 376 |
| BETWEEN | NAVDEEP KUMAR |
| AND | NEERAJ SAILY |
| Court: | French and Miller JJ |
Counsel: | K J Patterson for Appellant |
Judgment: | 31 August 2020 at 9 am |
JUDGMENT OF THE COURT
AThe appellant’s application for leave to adduce further evidence is declined.
BThe appellant must pay the respondent costs for a standard application on a band A basis with usual disbursements.
____________________________________________________________________
REASONS OF THE COURT
(Given by French J)
Introduction
Before us is an application by the appellant Mr Kumar for leave to adduce further evidence at his upcoming appeal. The application is made under r 45 of the Court of Appeal (Civil) Rules 2005. It is opposed by the respondent Mr Saily.
In accordance with a direction made by Courtney J, the application is being determined on the papers prior to the hearing of the substantive appeal.[1] That direction was necessary because of the significant impact the new evidence would be likely to have on the scope of the hearing.
[1]Kumar v Saily CA397/2019, 10 July 2020.
Before addressing the further evidence now sought to be adduced, it is necessary to provide a brief summary of the background and the High Court decision under appeal.[2]
Background
[2]Kumar v Saily [2019] NZHC 1682 [High Court judgment].
The parties are first cousins and the case concerns a dispute between them over a joint business venture. In June 2015, the two signed an agreement to purchase a bare section from a developer on terms that enabled them to take possession of the land on payment of a deposit, pay for the construction of a house on it and then pay the balance of the purchase price. Throughout the rest of this judgment, we refer to the property purchased as the Lakes property.
Mr Kumar paid the deposit. He claimed it was agreed the two would contribute equally to the costs of building the house. The High Court Judge, Katz J, found that even if that was the original agreement, it had been superseded by mid July 2015. The Judge based that finding on independent contemporaneous file notes written by a lawyer and a banker at ANZ setting out the agreed arrangements between Messrs Kumar and Saily. Those arrangements were:
(a)The construction costs would be funded by an ANZ flexi-loan secured against a residential property owned by Mr Kumar (the Amy Road property).
(b)The balance of the purchase price due once construction was completed would be funded on the basis, 80 per cent by a new ANZ loan secured over the jointly owned property itself and 20 per cent by the two men in equal contributions.
In October 2015, Mr Kumar and Mr Saily incorporated a company called New Venture Capital Ltd which they then nominated as purchaser of the Lakes property. They did this in the mistaken belief it would enable them to claim a GST refund. The shares in New Venture were held equally by the two men who were also the only directors.
The same month as the company was incorporated, construction of the house commenced. All payments for the construction costs were made from the ANZ flexi‑loan account.[3]
[3]Mr Kumar made one payment out of his own funds but was reimbursed and one payment was made by New Venture.
By March 2016, the house was completed. A valuation was then obtained. It showed the Lakes property was now worth more than the purchase price to an extent that meant ANZ no longer required the two men to contribute any of their own funds towards the purchase price.
ANZ had already approved a loan to New Venture which had been personally guaranteed by the two men and which had been drawn down. The next step was for New Venture to refinance so that the flexi-loan could be transferred to New Venture and secured over the Lakes property.
However, before the re-financing was completed, Mr Kumar’s father discovered that the Amy Road property had been mortgaged without his knowledge. It was the family home and had previously been jointly owned by him, his wife and Mr Kumar.
Then followed two angry meetings between the respective families held on 25 April 2016. There was a conflict in the evidence as to the outcome of the meetings. Mr Kumar and his father claimed that Mr Saily verbally agreed to transfer his shares in New Venture to Mr Kumar for a nominal consideration and resign as director. For his part, Mr Saily says there was never any such agreement and that he was totally surprised to receive a lawyer’s letter on 28 June 2016 claiming that because he had not contributed his share towards the house construction, he had agreed to transfer his interest in the property to Mr Kumar.
Tensions escalated. Both families attended the same Hindu temple and in December 2016, some of the temple trustees organised a meeting to try and resolve the dispute.
The outcome of the December meeting was that a written agreement was signed by Mr Kumar and Mr Saily and witnessed by 15 members of the temple community. The terms of the written agreement were that the equity in the property would be divided 65/35 in favour of Mr Kumar, with Mr Saily having the first option to purchase. Subsequently on 13 December 2016, Mr Saily purported to exercise his option.
Mr Kumar disputed his right to do so and in September 2017 issued proceedings in the High Court, seeking specific performance of the alleged oral agreement reached in April 2016.
Mr Saily filed a counter-claim seeking to enforce the terms of the written December 2016 agreement. Mr Kumar’s response to the counter-claim was that although he did sign the December agreement, he did so under duress. The duress comprised significant cultural pressure and the pressure that was put on him by the temple trustees who were running the meeting. Mr Kumar further argued the agreement was unenforceable because it made no mention of New Venture.
The High Court decision
In her decision, the Judge identified the key issues as being:[4]
(a)Did Messrs Kumar and Saily enter into a binding oral agreement on 25 April 2016 and if so what were its terms?
(b)Did Mr Kumar sign the December 2016 agreement under duress?
(c)If not, what were the terms of the December agreement? Is it unenforceable because of the absence of any reference to New Venture?
[4]High Court judgment, above n 2, at [6].
In relation to the first issue, the Judge held the evidence did not support a finding that a binding agreement was reached at the 25 April 2016 meetings. The Judge’s reasons for so finding were:
·Key aspects of the father’s evidence about an agreement lacked credibility. His evidence was evasive, discursive and contradictory.[5]
·The explanation given for the alleged agreement, namely that Mr Saily had failed to contribute to the construction costs did not make sense because the file notes of mid July 2015 showed he was not required to contribute.[6]
·It was inherently implausible that Mr Saily would agree to relinquish his interest for nothing.[7]
·In contrast, Mr Saily’s account of the meeting, namely that its focus was on getting the loan refinanced and the mortgage over the Amy Road Property (being the Kumar family home) discharged, made sense.[8]
·The fact that Mr Saily took immediate steps to get the ANZ refinancing underway and continued to deal with other matters on the basis that it was business as usual.[9]
·Evidence that Mr Kumar told ANZ a few days after the meeting to put the refinancing on hold as they might be selling the property because there was a dispute. He never told the ANZ that a binding agreement had been reached and that Mr Saily would transfer his interest.[10]
·The evidence given on both sides about the temple meeting was that neither Mr Kumar nor Mr Saily had suggested at any stage of the meeting that a binding agreement had already been reached in April 2016.[11]
[5]At [44]–[46].
[6]At [13], [44] and [47].
[7]At [47].
[8]At [48].
[9]At [49].
[10]At [50].
[11]At [51].
As regards the second issue, Mr Kumar and his father gave evidence that they were not given an opportunity to speak at the December meeting and were bullied into submission. The Judge rejected that evidence and found the claims of duress were not credible.[12]
[12]At [81].
The Judge said she preferred the evidence of Mr Saily’s account of the meeting which was supported by his mother and three other attendees.[13] The Judge described the evidence that everyone was given a chance to contribute to the discussion as overwhelming.[14] She found each of the temple attendees who gave evidence to be honest and forthright in their evidence as well as fair and measured in their response to questioning. Each had made concessions where appropriate. She was satisfied that the meeting had been arranged with a genuine aim of helping the parties resolve their differences and that a fair process had been followed.
[13]At [78].
[14]At [80].
Further, Mr Kumar had signed the agreement after a private discussion with his father.[15] There had been nothing to stop him rejecting the proposed settlement and leaving the meeting at any stage.[16] The Judge further noted the senior status of Mr Kumar’s father in the temple community. That status and the way he responded to cross-examination at trial was at odds with the suggestion he had been shut down at the meeting. The Judge said it was clear the father was a strong personality and was not a man who could be easily intimidated. Counsel for Mr Saily often struggled to get a word in edgeways.[17]
[15]At [61].
[16]At [80].
[17]At [73] and [79].
The Judge further found the December agreement was enforceable and that Mr Saily had validly exercised his option.[18] She dismissed Mr Kumar’s claim against Mr Saily and made an order for specific performance of the December agreement.[19]
The proposed new evidence
[18]At [81], [89] and [94].
[19]At [100]–[101].
At the substantive appeal hearing, Mr Kumar will be challenging all of the Judge’s key findings of fact and law including in particular her findings relating to the April 2016 and December 2016 meetings.
The proposed new evidence which Mr Kumar wants to be part of the appeal consists of an affidavit from himself as well as affidavits from five people who did not give evidence at trial. They are:
(a)Mr Barkley, an ANZ bank officer, who deposes to the meetings he held in 2015 with Messrs Kumar and Saily.
(b)Ms Drabble, who was Mr Kumar’s accountant. She deposes that according to her time sheets on 27 April 2016, Mr Kumar phoned to advise that Mr Saily had agreed to transfer his shares to Mr Kumar for $1. Mr Kumar asked her to prepare the necessary documentation including a share transfer form for Mr Saily to sign. She did this and Mr Kumar uplifted the necessary documentation.
(c)Three members of the temple, Mr Mazeed, Mr Ram Saily (a relation by marriage of both parties) and Mr Attri, who attended the December 2016 meeting. They say that Mr Saily’s supporters and family dominated the meeting, bullied Mr Kumar, refused to allow him and his father to speak and forced Mr Kumar to sign the agreement.
Mr Kumar’s own affidavit consists of phone and bank records as well as the letter written by his lawyers to Mr Saily in June 2016, and the response from Mr Saily’s lawyers.
Analysis
The principles governing applications to adduce further evidence in a civil appeal are well established. Litigants have a duty to adduce at trial all their evidence that was reasonably discoverable and the constraints on the admission of further evidence are very strict.[20]
[20]Rae v International Insurance Brokers (Nelson Marlborough) Ltd [1998] 3 NZLR 190 (CA) at 192; and Airwork (NZ) Ltd v Vertical Flight Management Ltd [1999] 1 NZLR 641 (CA) at 649–650.
Those constraints are that the new evidence must be fresh, credible and cogent before leave will be granted.[21] Evidence which is not fresh should only be admitted in exceptional and compelling circumstances and will also need to pass the tests of credibility and cogency.[22]
[21]Erceg v Balenia [2008] NZCA 535 at [15]; and Paper Reclaim Ltd v Aotearoa International Ltd (Further Evidence) (No 1) [2006] NZSC 59, [2007] 2 NZLR 1 at [8].
[22]Rae v International Insurance Brokers (Nelson Marlborough) Ltd, above n 20, at 193; and Airwork (NZ) Ltd v Vertical Flight Management Ltd, above n 20, at 650.
In this case, none of the further evidence sought to be adduced is fresh. All of it with reasonable diligence could have been produced at the trial. Mr Kumar seeks to overcome this difficulty by (albeit tentatively) blaming the lawyer who represented him in the High Court and relying on cases about trial counsel error in the criminal jurisdiction. However, the imperative for finality in the civil jurisdiction is greater than in the criminal jurisdiction and those cases are not readily applicable. We note further that even in the criminal jurisdiction, an appellant who is alleging trial counsel error is expected to provide a waiver of solicitor-client privilege to enable the trial counsel an opportunity to answer the criticisms of them and give evidence about their instructions. No such waiver has been provided in this case and in the absence of any evidence from trial counsel we are not prepared to treat this as a counsel error case constituting exceptional or compelling circumstances.
In terms of credibility and cogency, we consider the evidence of the bank manager and accountant, and the documentation adduced by Mr Kumar, are undoubtedly credible but in our view lack the necessary degree of cogency.
The bank manager’s evidence is consistent with the respondent’s version of events and does not take matters any further. Nor do the bank records and the fact Mr Kumar made phone calls in April 2016. The content of the lawyers’ letters is similarly not material. Mr Kumar’s instructions to his accountant and the existence of a share transfer form have greater significance but are not pivotal.
As regards the new evidence of the three temple members, we acknowledge that it is potentially capable of establishing duress if taken at face value. However, there are aspects of their evidence which raise question marks. Mr Mazeed for example says he arrived late at the temple meeting after the written agreement had been signed yet purports to give evidence about what happened before signing. The level of detail that he and Messrs Attri and Ram Saily give about a meeting they attended three and a half years ago including new details not mentioned at trial by Mr Kumar and his father is also surprising.
It is obviously not possible for us to determine whether these new witnesses are telling the truth. And nor will it be possible for the panel hearing the substantive appeal to do so without rehearing all of the evidence about the temple meeting. Reopening the door to a substantial rehearing by the calling of new evidence is however something which this Court has consistently held it will not countenance.[23] That is not the purpose of r 45. Its purpose is to supplement the evidence given at trial. We repeat litigants must put their best case at trial.
[23]See for example Sulco Ltd v E S Redit and Co Ltd [1959] NZLR 45 (CA) at 74–75; Ice SA (formerly named TKS sa) and Swatch AG (Swatch Ltd) [2013] NZCA 654 at [15]; and Sturgess v Dunphy [2014] NZCA 45 at [27].
To conclude, the evidence is not fresh. Some of it is dubious, some not cogent. There are no exceptional or compelling circumstances. Admitting it would result in a substantial re-hearing which is beyond the proper scope of r 45. The application is declined.
Outcome
The appellant’s application for leave to adduce new evidence is declined.
As regards costs, there is no reason why these should not follow the event. We accordingly order the appellant to pay the respondent costs on a standard application on a band A basis with usual disbursements.
Solicitors:
Harris Tate, Tauranga for Respondent