Mahasivam v Thuraisingham
[2023] NZHC 3418
•29 November 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-794
[2023] NZHC 3418
UNDER Partnership Law Act 2019 BETWEEN
SHYAMA MAHASIVAM
Plaintiff
AND
KUMAR THURAISINGHAM
Defendant
Hearing: On the papers Counsel:
R O Parmenter for the Plaintiff S S Khan for the Defendant
Judgment:
29 November 2023
JUDGMENT OF WOOLFORD J
This judgment was delivered by me on Wednesday, 29 November 2023 at 2:30 pm pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Solicitors: Fortune Manning (S Khan), Auckland Counsel: R Parmenter, Auckland
MAHASIVAM v THURAISINGHAM [2023] NZHC 3418 [29 November 2023]
[1] On 20 July 2023, Davison J made an order that unless the defendant gave discovery in accordance with an earlier ruling from Associate Judge Sussock dated 28 April 2023 by 5:00 pm on 3 August 2023, the defendant’s amended statement of defence would thereupon be struck out.
[2] On 15 August 2023, and on the plaintiff’s application, Gault J adjourned the hearing of the plaintiff’s claim which had been set down for two days commencing on 24 October 2023. The plaintiff also sought confirmation that the defendant’s amended statement of defence was struck out. Gault J did not give that confirmation, but directed that the defendant was to file and serve any notice of opposition and affidavit by 5:00 pm on 17 August 2023 if he considered he had complied with the discovery order.
[3] On 17 August 2023, the defendant filed a notice of opposition and affidavit in accordance with Gault J’s directions. On 4 September 2023, Gault J noted that the parties had agreed that the strike-out issue could be determined on the papers. He also made timetable orders for the filing of submissions. To protect his position, the defendant also filed an interlocutory application for relief from the consequences of the unless order on 20 September 2023 to be considered only if the Court determined that the defendant had not complied with the unless order.
[4] The strike-out issue has been referred to me as Duty Judge to determine on the papers. More particularly, I am asked to determine:
(a)whether the defendant’s second amended statement of defence has been struck out for non-compliance with Davison J’s unless order; and, if so
(b)whether relief from the consequences of that unless order should be granted.
Associate Judge Sussock’s ruling
[5]Associate Judge Sussock made orders in the following terms:
(a)The parties are to complete tailored discovery of the following categories of documents:
(i)full and complete financial reports and records associated with ownership or development of McKinstry Avenue, including details of transactions with dates, amounts, names, bank accounts and tax numbers (Category A).
(ii)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).
(iii)all correspondence and documents (including emails, letters, texts and other forms of correspondence) between the parties relating to McKinstry Avenue (Category C).
(iv)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] Davison J directed the defendant to give discovery in accordance with Associate Judge Sussock’s ruling by 5:00 pm on 3 August 2023. On 3 August 2023, the defendant provided his affidavit of documents and the documents themselves to the plaintiff. The affidavit lists 250 documents.
[7] The plaintiff complains that is not enough. Counsel says the discovery is clearly inadequate. He gives a number of examples. He notes there is no reference to tax returns or GST returns and expresses incredulity that there would be no financial reports for the purposes of informing tax obligations. He also says the defendant is wrong to narrowly define leases in Category B above as not including residential tenancies.
[8] Counsel acknowledges that some further summaries have been delivered, but says it is too little and too late. He wants the bank statements themselves, which would have allowed the plaintiff and her experts to look behind the summaries “to gather clues or leads to further information”.
Discussion
[9] The Court of Appeal in SM v LFDB provides guidance on the principles to govern the imposition of unless orders,1 the consequences of their breach and the significance of belated compliance.
The principles are these:
(a)As an unless order is an order of last resort, it is properly made only where there is a history of failure to comply with earlier orders.
(b)An unless order should be clear as to its terms. That is, it should specify clearly what is to be done, by when and what is the sanction for non-compliance. That sanction should be proportionate to the default.
(c)The sanction will apply without further order if the party in default does not comply with the order by the time specified. However, the party in default may seek relief by application to the Court.
(d)Justice may require that the party in default be relieved of the consequences of the unless order where the Court is satisfied that the breach resulted from something for which that party should not beheld responsible. The party should not assume that belated compliance will suffice.
(e)Where the unless order has been deliberately breached – that is, flouted – it is difficult to conceive of any situation where the interests of justice would require granting the flouter relief from the sanction imposed, notwithstanding belated compliance with the order.
(f)In deciding whether or not to excuse breach of an unless order the question for the Judge is: what does justice demand in the circumstances of this case? Considerations in answering that question include:
(i)The public interest in ensuring that justice is administered without unnecessary delays and costs.
(ii)The interests of the injured party, in particular in terms of delay and wasted cost.
(iii)Any injustice to the defaulting party, although that consideration is likely to carry much less weight in the circumstances than considerations (i) and (ii).
[10] I also note the comments of the Court of Appeal in Anderson v Mainland Beverages Ltd:2
1 SM v LFDB [2014] NZCA 326, [2014] 3 NZLR 494 at [31].
2 Anderson v Mainland Beverages Ltd (2005) 17 PRNZ 757 (CA) at [45].
… “unless” orders should generally be reserved for cases where breach or continued breach is objectively measurable and unchallengeable. The consequences of failing to comply with “unless” orders – striking out, stay or the like – are so significant that, in general, they should not be made in other cases, particularly where the obligations of the party in default are not unmistakably clear.
[11] Davison J was asked to deal with the issue of compliance with Associate Judge Sussock’s orders in the course of the Duty Judge list on 20 July 2023. I am advised that counsel for the plaintiff had requested that Davison J make an order that unless adequate discovery was provided, then the defendant’s statement of defence would be struck out. The issue of adequacy of discovery was discussed in Court. I am again advised that Davison J declined to make an order to that effect. Counsel for the defendant submits that Davison J declined to do so because the adequacy of discovery is inherently open to argument. Counsel notes that it is indeed the adequacy of the defendant’s discovery about which the parties are presently arguing.
[12] In all the circumstances, I am of the view that the unless order did not require the defendant to give discovery to the subjective satisfaction of the plaintiff. Nor is there an “objectively measurable and unchallengeable” standard for assessing the adequacy of discovery. Clearly, the defendant would have been in breach of the unless order if he had not provided his affidavit of documents by 3 August 2023. However, the defendant did comply with the unless order when he provided his affidavit of documents and the documents themselves on 3 August 2023.
[13] If the plaintiff still considers discovery is inadequate, she can apply for particular discovery or third-party discovery. There are often disputes over the scope of discovery. This proceeding is no different.
[14] If I am wrong and the defendant did not comply with the unless order, I would grant relief because:
(a)Davison J made no reference to a history on the part of the defendant of failure to comply with previous orders.
(b)The basis of the plaintiff’s claim is that she was in a partnership with the defendant. In a judgment dated 8 December 2021, Associate
Judge Gardiner found that the defendant had a credible defence that the arrangement between the parties was not a partnership.
(c)A strike-out of the defendant’s statement of defence would be disproportionate; and
(d)The defendant has continued to provide documents which may be relevant to the plaintiff’s claim, in particular, by way of affidavit dated 17 August 2023.
Result
[15] There will be a declaration that the defendant’s statement of defence is not struck out for non-compliance with the unless order made by Davison J on 20 July 2023.
[16] In the alternative, if the defendant was in breach of the unless order, the defendant is granted relief from the effect of the order and his statement of defence is not struck out.
[17] The proceeding stands adjourned to the Duty Judge list during the week commencing 12 February 2024 to monitor progress. Counsel are requested to file a memorandum (preferably joint) seven days before the next call of the matter setting out proposed timetable orders leading to a hearing.
Woolford J
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