Nathu Investments & Consultants Limited v Ramachandran

[2024] NZHC 1601

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2024-409-39 [2024] NZHC 1601

BETWEEN

NATHU INVESTMENTS & CONSULTANTS LIMITED

Plaintiff

AND

KUGANESAN RAMACHANDRAN

Defendant

Hearing:	(On the papers)
Counsel:	C Mo for Plaintiff
Judgment:	18 June 2024

JUDGMENT OF ASSOCIATE JUDGE LESTER

(Judgment by default)

NATHU INVESTMENTS & CONSULTANTS LIMITED v RAMACHANDRAN [2024] NZHC 1601 [18 June 2024]

[1]                 The plaintiff, Nathu Investments & Consultants Limited (NICL) applies for leave to apply for judgment by default against an overseas defendant.

[2]                 Leave is required because r 15.11 of the High Court Rules 2016 (the Rules) provides when a  plaintiff  considers  it  was  entitled  to  serve  a  party  outside  New Zealand as of right under r 6.27 and the party served has not appeared, judgment by default cannot be sealed without leave of the Court.

[3]                 Under r 15.11 of the Rules, before granting leave the Court must be satisfied that the plaintiff was entitled to effect service without leave under r 6.27. The Court must also be satisfied there is no reason to believe that service was effected contrary where the defendant was served. There must be no reason to believe that the method of service used was not permitted in that country in domestic actions and that service was effected in sufficient time to enable the defendant to appear.

[4]                 Assuming those requirements are met then, a default judgment may be issued pursuant to r 15.7 of the Rules if the proceeding is for a liquidated demand.

[5]Rule 15.7(5) of the Rules defines “liquidated demand” as:

(5)For the purpose of this rule and rule 15.9, liquidated demand means a sum that—

(a)has been quantified in, or can be precisely calculated on the basis of, a contract relied on by the plaintiff; or

(ab)is quantified in, or can be precisely calculated on the basis of, or by reference to, an enactment relied on by the plaintiff; or

(b)has been determined by agreement, mediation, arbitration, or previous litigation between the same parties; or

(c)is a reasonable price for goods supplied or services rendered (when no contract quantifies the price).

[6]                 If a statement of claim contains several causes of action, some of which are for liquidated demands and others not, a plaintiff may seek a default judgment in respect of those causes of action which are for liquidated demands.

The requirements of r 15.11 of the Rules

[7]                 NICL seeks a judgment pursuant to a shareholders agreement for a contribution for an amount NICL has had to pay pursuant to a guarantee. NICL and the defendant, Mr Ramachandran, were co-sureties pursuant to a shareholders agreement. Under that shareholders agreement, Mr Ramachandran agreed to meet 60 per cent of the principal debtor’s liability to the creditor. NICL pleads that Mr Ramachandran has breached the shareholders agreement by failing to meet this agreed liability — being 60 per cent of the debt owed to the creditor (Kiwibank Limited) (Kiwibank).

[8]                 As I will discuss below, service of the proceedings in this case was achieved by substituted service. Rule 15.4 of the Rules provides:

15.4Affidavits to be filed

Before judgment by default can be sealed, there must be filed—

(a)an affidavit of service of the statement of claim and notice of proceeding; and

(b)if the statement of claim and notice of proceeding have not been served personally on the defendant or on a solicitor accepting service on the defendant’s behalf, an affidavit verifying the statement of claim.

[9]                 An  affidavit  filed  in  support  of  the  without  notice  application  satisfies   r 15.4(b).

[10]             The without notice  application  asserts  the  shareholders  agreement  dated  1 July 2018 was entered into in New Zealand, which is confirmed by an affidavit from the director of NICL.

[11]             Rule 6.27(2)(b)(i) of the Rules provides that a proceeding may be served out of New Zealand without leave if the proceeding concerns the enforcement of a contract which was entered into in New Zealand. As I have said, the affidavit evidence is that the shareholders agreement was entered into in New Zealand. Therefore, NICL was entitled as of right to serve Mr Ramachandran overseas.

[12]             Service was achieved by way of substituted service in accordance with an order made on 9 April 2024. Service was to be completed by email and I am satisfied the evidence filed confirms that the order for substituted service has been complied with. There is no reason to believe that the manner of service is contrary to the laws of the Netherlands, where it is understood Mr Ramachandran resides.

[13]             Service was completed on 19 April 2024. The notice of proceeding served advised Mr Ramachandran that he had to file a statement of defence within 30 working days after service. 30 working days expired on 4 June 2024. Mr Ramachandran has taken no steps. By the time that this judgment issues, Mr Ramachandran will have had at least 40 working days to have taken steps.

[14]             I am satisfied that Mr Ramachandran has had sufficient time to enable him to appear. If he considered that more time was required to file a statement of defence, then such could have been sought pursuant to r 5.47(2)(b) of the Rules.

[15]I am satisfied the requirements of r 15.11 of the Rules have been met.

Default judgment

[16]             Not all of the  causes of action in NICL’s statement of claim are suitable for  a default judgment but I am satisfied that the cause of action that seeks a contribution pursuant to the shareholders agreement is suitable for a default judgment. The first cause of action is a claim in contract for a contribution by a co-surety. The evidence is that both NICL and Mr Ramachandran were  co-sureties, that  is co-guarantors, of a debt owed by their company (the principal debtor) to Kiwibank. NICL has met the entire indebtedness.

[17]             It is settled law that NICL having met the entire debt has a right of contribution against Mr Ramachandran as they are both co-sureties. That arises by virtue of them being co-guarantors but also pursuant to their shareholders agreement.

[18]             The shareholders agreement confirms that the agreed apportionment as between the shareholders is that NICL would meet 40 per cent of the principal debtor’s liability to the creditor and Mr Ramachandran would meet 60 per cent.

[19]             It follows Mr Ramachandran’s 60 per cent share of the liability met by NICL is $1,983,593.82, being 60 per cent of the amount paid of $3,305,989.70.

[20]             That Mr Ramachandran’s contribution is a sum that can be precisely calculated on  the  basis  of  the  contract  between  him  and  NICL  satisfies  the  definition  of a liquidated demand pursuant to r 15.7(5) of the Rules.

[21]             No statement of defence having been filed, I confirm NICL is entitled to seal judgment in accordance with r 15.7 of the Rules, in terms of the first cause of action in the statement of claim dated 29 January 2024.

[22]             As to costs, there is an award of costs to NICL on a 2B basis plus disbursements as fixed.

[23]             In a practical sense, the entry of that judgment overtakes the need to address the remaining causes of action but those causes of action remain alive in the meantime.

Associate Judge Lester

Solicitors:
Saunders & Co, Christchurch