Mahasivam v Thuraisingham
[2024] NZHC 1715
•26 June 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-794
[2024] NZHC 1715
BETWEEN SHYAMA MAHASIVAM
Plaintiff
AND
KUMAR THURAISINGHAM
Defendant
Hearing: 20 June 2024 Appearances:
R O Parmenter for the Plaintiff M Orange for the Defendant
Judgment:
26 June 2024
REASONS JUDGMENT OF ROBINSON J
This judgment was delivered by me on 26 June 2024 at 4:00 pm pursuant to Rule 11.5 of the High Court Rules
…………………………………………………………………… Registrar/Deputy Registrar
Solicitors/Counsel:
R O Parmenter, Auckland Graham & Co, Auckland Fortune Manning, Auckland
MAHASIVAM v THURAISINGHAM [2024] NZHC 1715 [26 June 2024]
Introduction
[1] The plaintiff applies for particular discovery under r 8.19 of the High Court Rules 2016 and an unless order. The defendant (largely) opposes. He says the discovery sought is of documents that either: do not exist; are irrelevant; or have already been discovered.
Background
[2] This matter has a tortured procedural history, including in relation to discovery. The substantive disputes and the relevant procedural disputes are sufficiently set out in the judgments of Associate Judge Gardiner (dismissing a summary judgment application);1 Associate Judge Sussock (making orders for tailored discovery of defined categories of documents);2 and Woolford J (declaring that the defendant’s statement of defence is not struck-out for non-compliance with Anderson J’s unless orders, or alternatively granting relief from the effect of that order).3
[3] In short, the plaintiff alleges that she was in partnership with the defendant in respect of a property development on McKinstry Avenue, Mangere East, Auckland (McKinstry Avenue). The development involved moving an existing dwelling to the rear of the section, constructing two new dwellings at the front and then subdividing the property into three sections. The plaintiff alleges that the defendant has breached the terms of the signed partnership agreement by using partnership assets outside the ordinary course of partnership business, including by borrowing money secured against the partnership’s properties and receiving rental income derived from those properties. The plaintiff seeks an order for dissolution of the partnership and damages for breach.
[4] The defendant maintains that he was not in partnership with the plaintiff, but that she lent him $830,000 in order to develop the property at McKinstry Avenue on the basis that he would repay that amount together with a return of $55,000 once the development was completed. In any event, two new dwellings have been constructed
1 Mahasivam v Thuraisingham [2021] NZHC 3221.
2 Mahasivam v Thuraisingham [2023] NZHC 986.
3 Mahasivam v Thuraisingham [2023] NZHC 3418.
and sold but the defendant has not paid anything to the plaintiff, either by way of a loan repayment or the distribution of partnership profits.
The application
[5] Associate Judge Sussock ordered the parties to complete tailored discovery of the following categories of documents:
(a)full and complete financial reports and records associated with the ownership or development of McKinstry Avenue, including details of transactions with dates, amounts, names, bank accounts and tax numbers (Category A);
(b)all documents (including emails, letters, texts and other forms of correspondence) associated with ownership or development of McKinstry Avenue, including but not limited to sale and purchase agreements, leases, mortgages, loan offers, mortgage terms and solicitors’ reports and statements (Category B);
(c)all correspondence and documents (including emails, letters, texts and other forms of correspondence) between the parties relating to McKinstry Avenue (Category C); and
(d)all documents (including but not limited to sale and purchase agreements, leases, mortgages, loan offers, mortgage terms and solicitors’ reports and statements including emails, letters, texts and other forms of correspondence) where McKinstry Avenue has been used as a security for borrowings not connected with McKinstry Avenue (Category D).
[6] The plaintiff says the defendant’s discovery is incomplete. She seeks particular discovery of the following:
(a)loan documentation with ASB Bank (ASB) relating to the defendant’s purchase of McKinstry Avenue;
(b)to enable an “audit trail” of the plaintiff’s capital contributions, all bank statements for accounts operated by the defendant which have held that capital or which relate in any way to that capital or the McKinstry Avenue properties but particularly ASB and Kiwibank statements (redacted for non-relevant transactions only);
(c)all bank statements (redacted for non-relevant transactions only) which relate to the letting of the properties at McKinstry Avenue;
(d)the defendant’s solicitor’s files in respect of all transactions involving the McKinstry Avenue properties, including trust account records;
(e)the defendant’s GST and tax returns covering the period from the plaintiff’s first injection of capital (7 April 2019) to the present, together with all financial reports for McKinstry Avenue and any property for which the plaintiff’s money has been used in any way;
(f)should the plaintiff’s capital have been used for the purchase of one or more properties (including the use of the McKinstry Avenue land as security for borrowing to purchase any such properties), then any solicitor’s sale or purchase files for any such property, including trust account records; and
(g)in relation to the letting of any properties at McKinstry Avenue, all leases or tenancy agreements covering the period 7 April 2019 to the present and all documents relating to those properties, including invoices for outgoings such as rates.
[7] In Mr Orange’s helpful written submissions, he records that the defendant agrees to provide further discovery of:
(a)updated payment schedules and bank statements for the ASB loan that was used by the defendant to purchase the property;
(b)updated rental schedules and bank statements relating to the rental payments received for the property; and
(c)the defendant’s solicitor’s file relating to the sale of the two subdivided sections of the property that the defendant has now sold.
[8] Otherwise, Mr Orange submits that the plaintiff has failed to demonstrate that the particular discovery she seeks is of documents that exist and are relevant.
Relevant legal principles
[9] The relevant legal principles are well-established. Rule 8.19 of the High Court Rules enables orders for discovery to be made after a proceeding has commenced. Before exercising its discretion to order particular discovery, the Court must be satisfied that the documents requested are relevant; that there are grounds for belief for their existence; and that the particular discovery sought is in all the circumstances proportionate and appropriate.4
Analysis Loan documentation with ASB relating to the defendant’s purchase of McKinstry Avenue
[10] The defendant purchased McKinstry Avenue for $1.1 million. He did so with a loan from ASB in the amount of $1.328 million. The security for the loan was a mortgage over McKinstry Avenue and a guarantee and indemnity from Auckland Construction and Electrical Solutions Limited (ACES). ACES is a company related to the defendant. As discussed further below, it is also the company to which the defendant says he paid the funds he received from the plaintiff.
[11] The plaintiff wishes to establish what became of her funds, and in particular whether the defendant used them to purchase McKinstry Avenue. The defendant agrees to provide ongoing discovery of the schedule of his ongoing payments to ASB, but otherwise says the plaintiff’s application is nothing more than a fishing expedition. Moreover, he says there is sufficient evidence to show that the plaintiff’s funds were not used to purchase McKinstry Avenue. He says the opportunity for him to purchase
4 Assa Abloy New Zealand Ltd v Allegion (New Zealand) Ltd [2015] NZHC 2760 at [14].
McKinstry Avenue only came about after he had received the plaintiff’s funds and paid them to ACES.
[12] I am satisfied it is appropriate to make the order sought. Counsel explain that the loan agreement with ASB has already been discovered, but not the guarantee provided by ACES. That should be discovered, together with any other documents relating to ASB’s loan of $1.328 million to fund the defendant’s purchase of McKinstry Avenue for $1.1 million.
Bank statements which the defendant operated which have held the plaintiff ’s capital or which relate in any way to that capital or McKinstry Avenue, but particularly ASB and Kiwibank statements.
[13] Mr Orange explains that the defendant has provided discovery of his bank accounts showing receipt of funds from the plaintiff, and ACES’s bank statements showing its receipt of approximately $900,000 from the defendant. I accept Mr Parmenter’s submission for the plaintiff that the defendant should also discover his bank statements showing payments out of the funds he received from the plaintiff. Mr Orange for the defendant emphasises that he has already said in evidence that he paid those funds to ACES. However, I agree with the plaintiff that the defendant should discover the bank statements recording those payments.
Should the plaintiff ’s capital have been used for the purchase of one or more properties (including the use of the McKinstry Avenue land as security for borrowing to purchase any such properties), then any solicitor’s sale or purchase files for any such property, including trust account records.
[14] This category of documents will only exist if the plaintiff’s funds were used to purchase properties unrelated to McKinstry Avenue or if McKinstry Avenue was used as security for borrowing to purchase other properties. As noted, the defendant says the plaintiff’s funds were not used for that purpose. The bank statements to be discovered as described at [13] above should resolve any outstanding issue in that regard. In the meantime, and on that basis, I make the order sought.
The remaining categories of documents sought by the plaintiff
[15] If the plaintiff can establish that there is a partnership and that the properties at McKinstry Avenue are partnership assets, then many of the documents sought will be relevant to remedies and any claim she makes for damages. For that reason, I direct that the defendant provides discovery of the following categories of documents:
(a)all bank statements (redacted for non-relevant transactions only) which relate to the letting of the properties at McKinstry Avenue;
(b)the defendant’s solicitor’s files in respect of all transactions involving the McKinstry Avenue properties, including trust account records;
(c)in relation to the letting of any properties at McKinstry Avenue, all leases or tenancy agreements covering the period 7 April 2019 to the present and all documents relating to those properties, including invoices for outgoings such as rates; and
(d)the defendant’s GST and tax returns for the period from 7 April 2019 to the present, together with all financial reports for McKinstry Avenue and any property for which the plaintiff’s money has been used in anyway.
[16] I note that Mr Orange has explained that the defendant is not GST registered, that there are no financial reports relating to McKinstry Avenue, and that the absence of any partnership records or accounts support the defendant’s position that there was no partnership. The defendant has also accepted that updated schedules and bank statements relating to rental payments should be provided, and that he should provide his solicitor’s files in relation to the sale of two of the three subdivided sections. Finally, I note that the defendant’s position that any discovery of documents enabling the plaintiff to trace her funds is unnecessary because her funds were paid to ACES and not used to purchase McKinstry Avenue.
[17] Nevertheless, I accept Mr Parmenter’s submissions that if the McKinstry Avenue was a partnership asset, then the plaintiff will be entitled to her share of any
profits derived from it. If this is the case, then the above categories of documents will all be relevant to either the plaintiff’s claim for damages, or assessing the share of profit derived from any partnership assets that she is owed.
Unless order
[18] The plaintiff seeks orders that, unless the defendant provides the particular discovery sought within 10 working days, his defence be struck out. In submissions, Mr Parmenter suggested that this part of the plaintiff’s application be adjourned until the defendant has had an opportunity to comply with the orders for particular discovery.
[19] Given the past difficulties in this matter, I agree that this is a sensible way to proceed. I also take into account Mr Orange’s submission that discovery of the defendant’s bank statements will confirm his previous evidence that the plaintiff’s funds were paid to ACES, so that no issues concerning the tracing of partnership assets can arise.
[20] Mr Orange indicated that if the orders were to be granted, the defendant would realistically require more than 10 working days to collate all the documentation, including five years of tax returns. I do not consider that is unreasonable; and I note that I am unavailable in the week of 15 July 2024. I therefore direct that the defendant’s supplementary affidavit of documents be filed and served by 5:00 pm on Friday, 19 July 2024. I will ask the Registry to convene a teleconference for the week of 22 July 2024, and deal with any residual issues when I am Duty Judge in the following week of 29 July 2024.
Result
[21] I make orders in terms of paragraph 1(a) and (b) of the plaintiff’s application dated 14 May 2024. The defendant is to comply with those orders by 5:00 pm on Friday, 19 July 2024.
[22]The plaintiff’s application for an unless order and indemnity costs is adjourned.
[23]The Registry is to convene a teleconference for the week of 22 July 2024.
Robinson J
0
4
1