Nathu Investments & Consultants Limited v Ramachandran
[2025] NZHC 1977
•18 July 2025
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2024-409-39
[2025] NZHC 1977
BETWEEN NATHU INVESTMENTS & CONSULTANTS LIMITED
Plaintiff/RespondentAND
KUGANESAN RAMACHANDRAN
Defendant/Applicant
Hearing: 14 July 2025 Appearances:
C Mo for Plaintiff/Respondent
K Ramachandran self-represented Defendant/Applicant by AVL
Judgment:
18 July 2025
JUDGMENT OF ASSOCIATE JUDGE LESTER
NATHU INVESTMENTS & CONSULTANTS LIMITED v KUGANESAN RAMACHANDRAN [2025] NZHC 1977 [18 July 2025]
[1] Mr Ramachandran applies to set aside a judgment entered against him by default.
[2] By statement of claim dated 29 January 2024, Nathu Investments & Consultants Limited (NICL) issued proceedings against Mr Ramachandran. At the time, Mr Ramachandran lived in the Netherlands.
[3] NICL was unable to personally serve Mr Ramachandran and obtained an order for substituted service from this Court in April 2024.1 The proceedings were served in accordance with that order for substituted service. Mr Ramachandran did not file a statement of defence.
[4] NICL sought to obtain judgment by default, at least in respect of its primary cause of action which I discuss below, but recognised it needed to obtain leave before doing so, as Mr Ramachandran lived in the Netherlands. But for the need for leave, judgment could have been entered by default by the Registry in respect of NICL’s primary cause of action.
[5] The application for leave came before me in June 2024. In my judgment of 18 June 2024, I recorded that NICL sought judgment pursuant to a shareholders agreement between it and Mr Ramachandran.2 NICL sought a contribution from Mr Ramachandran in respect of an amount NICL had paid, pursuant to a guarantee it had with Mr Ramachandran, in favour of Kiwibank Limited (Kiwibank). NICL and Mr Ramachandran were co-sureties, pursuant to the debt owed by their company, Komatha Impex (NZ) Limited (Komatha) to Kiwibank. Under their shareholders agreement, Mr Ramachandran agreed to meet 60 per cent of Komatha’s liability to Kiwibank (he being a 60 per cent shareholder in Komatha), with NICL owning the remaining 40 per cent of the shares and NICL agreeing to meet 40 per cent of the principal debtor’s liability to Kiwibank.
[6] As I will detail below, Kiwibank called up the indebtedness owed to it by Komatha. To protect the securities it had provided to Kiwibank, NICL paid Kiwibank
1 Nathu Investments & Consultants Ltd v Ramachandran HC Christchurch CIV-2024-409-000039, 9 April 2024.
2 Nathu Investments & Consultants Ltd v Ramachandran [2024] NZHC 1601.
$3,305,989.70 on 13 December 2021, that sum being the amount Kiwibank had demanded on 11 November 2021, plus further interest.
[7] In my judgment of 18 June 2024, I was satisfied that not all causes of action in NICL’s statement of claim were suitable for a default judgment, but that the primary cause of action based on contribution pursuant to the shareholders agreement was.3 I was satisfied on the evidence that both NICL and Mr Ramachandran were co-sureties, that is, co-guarantors of the debt owed by their company to Kiwibank, but that NICL had met the entire indebtedness to Kiwibank.
[8] I recorded it was settled law that NICL, having met the entire debt, had a right of contribution against Mr Ramachandran, as they were both co-sureties.4 As mentioned above at [5], the shareholders agreement recorded their agreed apportionment of liability between them.
[9] It is important to note that what I was dealing with in my judgment of 18 June 2024 was NICL’s application for leave to seek the entry of judgment by default by the Registry. Rule 15.11 of the High Court Rules 2016 (the Rules) provides that when a plaintiff considers it is entitled to serve a party outside of New Zealand as of right under r 6.27 of the Rules, and the party served has not appeared, judgment by default cannot be sealed without leave of the Court. The leave requirement is to ensure that it is appropriate for the Registry to enter judgment by default given the need to confirm a defendant was properly served offshore.
[10] I determined that Mr Ramachandran had been properly served offshore, pursuant to r 6.27(2)(b)(i) of the Rules, because the proceeding concerned the enforcement of a shareholders agreement which, as indicated by the affidavit evidence, was entered into in New Zealand.
[11] On that basis, I confirmed the Registry was entitled to seal judgment in accordance with r 15.7 of the Rules. Judgment was entered by the Registry pursuant
3 Above n 2 at [16].
4 Above n 2 at [17].
to r 15.7(1) of the Rules, that rule providing that if no defence is filed “the plaintiff may seal judgment in accordance with (r 15.7)”.
[12] I make this point as it was suggested by Mr Ramachandran that I did not have jurisdiction to grant a default judgment. My judgment granted leave for NICL to seek judgment by default and confirmed that the amount claimed was a liquidated sum for the purposes of r 15.7, but it was the Registry that entered judgment.
[13] Accordingly, lack of jurisdiction is not a valid ground to challenge the entry of judgment. The threshold for setting aside a default judgment is laid out in r 15.10 which states:
15.10 Judgment may be set aside or varied
Any judgment obtained by default under rule 15.7, 15.8, or 15.9 may be set aside or varied by the court on such terms as it thinks just, if it appears to the court that there has been, or may have been, a miscarriage of justice.
The pleaded grounds for setting aside the default judgment
[14] The first ground is that Mr Ramachandran was not served with initial disclosure under r 8.4 of the Rules, and that leave was not obtained to serve the proceedings out of New Zealand.
[15] Mr Ramachandran was served with a list that identified the documents included in NICL’s initial disclosure, but not the documents themselves. However, there is no automatic consequence specified in r 8.4 of the Rules for a failure to provide the documents as opposed to a list of the documents. No protest was raised by Mr Ramachandran at the time he was served. A failure to provide initial disclosure is not expressed as being a barrier to the entry of judgment by default—but, in my view, such a failure, if it has caused prejudice to a defendant, will be relevant to whether the overall interests of justice require a judgment to be set aside.
[16] Rule 1.5(1)(b)(iii) of the Rules provides that a failure to comply with the Rules does not nullify a judgment in a proceeding—it therefore follows that the failure to serve the documents does not without more mean the default judgment should be set aside.
[17] The sealed order of the Court is dated 23 July 2024. The bundle of documents referred to in NICL’s list was served on Mr Ramachandran’s solicitor on 9 July 2024. While that solicitor had not provided an address for service in this proceeding, it is not disputed by Mr Ramachandran that the solicitor was acting on his behalf. Accordingly, Mr Ramachandran had access to the documents on or shortly after 9 July 2024 and judgment, as I have said, was not entered until 23 July 2024.
[18] Mr Ramachandran does not suggest he was prejudiced by not having been served with the documents as opposed to the list.
[19] It would appear that there is merit in the submission of Ms Mo, counsel for NICL, that Mr Ramachandran only took the entry of judgment against him seriously when NICL took steps to register its New Zealand judgment in the Netherlands.
[20] Accordingly, I am satisfied that to the extent that there is noncompliance with r 8.4 of the Rules, it was immaterial and practically cured on 9 July 2024. In any event, the absence of initial disclosure was not the reason why Mr Ramachandran did not file a defence—he asserts it was due to a lack of resources.
Leave not obtained to serve the proceedings outside of New Zealand
[21] I determined in my judgment of 18 June 2024 that NICL was entitled as of right to serve Mr Ramachandran overseas. There has been no challenge to that judgment. Again, that judgment is separate from the entry of judgment by default.
[22] Even if there had been an issue as to where the shareholders agreement was entered into, cl 8.6 of the shareholders agreement records the agreement is governed by New Zealand law. Rule 6.27(2)(b)(iv) of the Rules states that an originating document may be served out of New Zealand without leave where the contract sought to be enforced was by its terms or by implication to be governed by New Zealand law. The agreement is express that it is governed by New Zealand law. Service was therefore valid under r 6.27(2)(b)(iv), even if the contract was not made in New Zealand. This ground for setting aside the judgment is not accepted.
The substantive defence asserted by Mr Ramachandran
[23]Mr Ramachandran’s application asserts the following defence:
2.(d)The defendant has an arguable defence to the claims (including the first cause of action which was the subject of the default judgment).
i.The judgment in question relates to funding of $3.275 million obtained from Kiwibank by the parties’ company Komatha … and the repayment of that funding by the plaintiff pursuant to a guarantee given to Kiwibank.
ii.The plaintiff company took the benefit of the Kiwibank funding, to the extent of $3,103,525.68, by way of shareholder borrowing from Komatha, and the repayment of the Kiwibank lending was therefore in discharge of the debt owed by the plaintiff to Komatha.
iii.The shareholder agreement was superseded by a Letter of Undertaking which was breached by the plaintiff taking the proceeds of the Kiwibank lending.
iv.There are other matters regarding the company’s financial affairs which require investigation, but I do not have access to all relevant documents and discovery is required for this purpose.
[24] The key proposition is contained in 2(d)ii. Mr Nathu, the sole shareholder and director of NICL, has explained the basis of the payments made to NICL by Komatha at the time of the Kiwibank advance—which took place in December 2019. Mr Ramachandran does not accept Mr Nathu’s explanation.
[25] The high point for Mr Ramachandran is that NICL owes a debt to Komatha represented by the funds Komatha paid to NICL referred to in 2(d)ii above. That debt is not owed to Mr Ramachandran. If Mr Ramachandran considers that Komatha has an entitlement to recover sums from NICL, then it is for him to seek to commence proceedings in the name of Komatha by way of derivative action. Any funds received by Komatha from NICL as a result of such an action would belong to Komatha, to be used to meet its creditors and if there are no creditors, potentially to return funds to shareholders in accordance with their shareholding. However, Mr Ramachandran as a shareholder in Komatha does not have any proprietary interest in its assets.
[26] As Mr Ramachandran has no interest in the debt he asserts NICL owes Komatha, he cannot raise that debt as a defence to the obligation that he owes directly
to NICL under the shareholders agreement. Accordingly, even if the asserted debt exists, it cannot found an application to set aside the judgment. This is not to say that I accept Mr Ramachandran’s assertions as to the existence of a debt between NICL and Komatha, or the correctness of the material produced by Mr Nathu to explain the payments received by his company. The short point is, that issue does not need to be addressed in this decision.
[27] As to point 2(d)iii, the significance of the shareholders agreement is, as I have said, that it determines the extent to which NICL can seek contribution from Mr Ramachandran. As co-sureties, NICL and Mr Ramachandran have the right to seek contribution from their co-surety in the event they have paid more than their share of the guaranteed debt as a matter of law, without the need for a shareholders agreement. However, it is the shareholders agreement that determines if NICL can check contribution for 60 per cent of what it paid, rather than an equal share.
Was the shareholders agreement “superseded”? — point 2(d)(iii)
[28] The shareholders agreement is dated 1 July 2018. It is a detailed written agreement and describes the circumstances in which it might be terminated. Clause 1.4(b)ii provides that the agreement can be terminated if “All Shareholders agree in writing that the operation of the agreement would seize [sic] from operation”.
[29] The letter of undertaking referred to is dated 20 December 2019 and does not refer to the shareholders agreement. It does not purport to supersede the shareholders agreement, vary or terminate it. The letter of undertaking is a standalone arrangement in respect of a commitment by Mr Nathu to provide working capital for Komatha. The undisputed evidence is that commitment was met.
[30] As it does not negate, cancel or otherwise set aside the shareholders agreement, I find that the letter of undertaking is irrelevant to NICL’s claim for contribution under the shareholders agreement.
The company’s financial affairs
[31] As to 2(d)iv of the application, these matters are in the same category as sub-category 2(d)(ii). To the extent that Mr Ramachandran considers Komatha has claims against NICL in respect of the company’s financial affairs and which require investigation, that is a matter for the company to pursue against NICL.
[32] I am satisfied that Mr Ramachandran has not demonstrated he has a defence to NICL’s claim for contribution under the shareholders agreement.
[33] On that basis, I need not consider whether there is a reasonable explanation for Mr Ramachandran’s delay in bringing this application. On that point, I would have had my doubts, but it is clear that the focus of an application to set aside a judgment entered by default is whether there is a reasonably arguable defence to the plaintiff’s claim or whether it appears to the Court there has been or may have been a miscarriage of justice.5 I am satisfied here that Mr Ramachandran does not have a reasonably arguable defence.
[34]Accordingly, I dismiss the application to set aside the default judgment.
[35] On 9 July 2025, Mr Ramachandran filed a sworn affidavit that he had earlier circulated in unsworn form. Counsel for NICL opposed the unsworn affidavit being read. I issued a Minute saying that if the affidavit was sworn it would be read to the extent it was relevant to the issues raised in Mr Ramachandran’s application, but not otherwise. The affidavit raises a number of matters not relied on in the application— I comment on them only briefly.
[36] In his affidavit, Mr Ramachandran was critical of the actions of Mr Nathu personally. Such are not relevant to this application. If Mr Ramachandran believes Komatha has claims against Mr Nathu personally, rather than against NICL, such does not provide a defence to Mr Ramachandran. Any claim Mr Ramachandran believes he has against Mr Nathu personally does not provide a defence to NICL’s claim against Mr Ramachandran.
5 High Court Rules 2016, r 15.10.
[37] Mr Ramachandran raises issues with the shareholders agreement and explains his concerns about an Indian lawyer named Mr Dhanaram Ramachandran who apparently drafted the shareholders agreement. Mr Ramachandran says the agreement lacks any confirmation that it was executed in front of a Notary or witnessed.
[38] A shareholders agreement is a contract between shareholders. Mr Ramachandran speculates that the Notary seal used on the shareholders agreement is forged. He submits if that is the case then “All notarised documents provided by Mr Ramachandran to Mr Nathu should be considered equally forged and invalid”.
[39] As this claim was only raised in reply (and was not strictly in reply given the validity of the shareholders agreement was not in issue), NICL has not had a chance to respond to this claim. However, the practical point is that Mr Ramachandran confirmed at the hearing he had signed the shareholders agreement. While the shareholders agreement has provision for the parties’ signatures to be witnessed, it does not purport to be a deed. As such, any irregularity as to witnessing would not render the contract unenforceable. Given the shareholders agreement is dated 1 July 2018, this eleventh hour claim by Mr Ramachandran that the shareholders agreement is somehow invalid, is unconvincing. I also note that when NICL sought to have its New Zealand judgment registered in the Netherlands, Mr Ramachandran made no claim that the shareholders agreement was invalid.
[40] The bulk of Mr Ramachandran’s 9 July affidavit sets out matters of background, including the history of his dealings with Mr Nathu and the establishment of Komatha which do not advance Mr Ramachandran’s pleaded grounds of challenge to the default judgment.
[41] Mr Ramachandran also referred to sch 1 to the shareholders agreement which provides that he as managing director was entitled to a salary of USD$100,000. Of course, Mr Ramachandran’s reliance on this obligation in the shareholders agreement means he must accept that the shareholders agreement is binding. However, sch 1 to the shareholders agreement records an obligation to pay director’s fees owed by Komatha to its directors. It is not an obligation owed by NICL to Mr Ramachandran.
In the event the director’s salary was not paid, Mr Ramachandran’s recovery would be against Komatha.
Costs
[42] There is an award of costs against Mr Ramachandran on a 2B basis together with disbursements as fixed by the Registrar.
Associate Judge Lester
Solicitors:
Saunders & Co, Christchurch (for Plaintiff/Respondent)
Copy to:
Mr K Ramachandran (Defendant/Applicant)
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