Patel v Patel
[2024] NZHC 1223
•16 May 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2023-404-2468
[2024] NZHC 1223
IN THE MATTER of the Insolvency Act 2006 AND
IN THE MATTER
of the bankruptcy of Jayshree Ratilal Patel
BETWEEN
HEMANTKUMAR RATILAL PATEL
Judgment Creditor
RITA PATEL
Judgment CreditorKRISAJ PROPERTIES LIMITED
Judgment Creditor
AND
JAYSHREE RATILAL PATEL
Judgment Debtor
Hearing: 8 May 2024 Appearances:
K B Arthur for Judgment Creditors
J R Patel, Judgment Debtor in-person
Judgment:
16 May 2024
JUDGMENT OF ASSOCIATE JUDGE LESTER
This judgment was delivered by me on 16 May 2024 at 3:00 pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar
…………………………….
PATEL v PATEL [2024] NZHC 1223 [16 May 2024]
[1] In this judgment I refer to the parties by their first names, adopting the approach of Harland J in her substantive judgment between the parties that led to her making a costs judgment against the judgment debtor, Jayshree Patel (Jayshree).
[2] Hemantkumar Patel (Hemant) is Jayshree’s brother and Rita Patel (Rita) is Hemant’s wife. Krisaj Properties Limited (KPL) is a property owning company owned by Hemant and Rita.
[3] Jayshree issued proceedings against Hemant, Rita and KPL relating to the estate of Hemant and Jayshree’s late parents. The full background to that proceeding is set out in Harland J’s judgment of 20 December 2022.1 In that proceeding, Jayshree represented herself and she continues to do so. Jayshree sued her brother, sister-in- law and their company, as well as Hemant in his capacity as the executor of his parents’ estates.2 Jayshree was unsuccessful in her claim leading to a costs judgment issued by Harland J on 13 June 2023.
[4] The creditors have issued a bankruptcy notice against Jayshree which she has applied to set aside.
Who has the benefit of the costs order?
[5] While Hemant, as executor of his parents’ estate, was a defendant in the substantive proceedings, he did not seek an order for costs in that capacity.
[6] Paragraph [1] of Harland J’s decision, records the application for costs is by all defendants save Hemant as executor.3 The order of her Honour at [24] of the costs judgment is that:
[24] [Jayshree] is ordered to pay the first, second and third defendants’ costs and disbursements. I award costs and disbursements as outlined in appendix 1 of the application, being a total amount of $58,866.
1 Patel v Patel [2022] NZHC 3567.
2 Hemant and Jayshree’s father died many years before their mother leaving his estate to his wife. Reference to ‘the estate’ in this Judgment is to Hemant and Jayshree’s mother’s estate while both estates were in issue in the substantive proceeding.
3 Patel v Patel [2023] NZHC 1466.
[25] Interest is awarded from the date of judgment4 to the date of payment in accordance with pt 1 and ss 9 and 10 of the Interest on Money Claims Act 2016.
[7]Jayshree actively opposed the costs award.
[8] I refer to this point as the costs order as sealed, uses as it should have, the intituling for the proceeding naming all defendants. The sealed order recorded that Jayshree was to pay the defendants’ costs and disbursements without reflecting that Harland J’s judgment did not award costs in favour of Hemant’s and Jayshree’s parents’ estate. The request to issue the bankruptcy notice did not name the estate as creditor and the estate is not named as a judgment creditor in the bankruptcy notice.
[9] I raise this point as Jayshree points out there is held to the credit of her mother’s estate approximately $115,000 (apparently still subject to estate costs). Jayshree is entitled under her mother’s Will to a one-quarter share — Hemant and Jayshree’s parents left their estate to be divided equally between their four children.
[10] Had the estate been a judgment creditor seeking to bankrupt Jayshree, it could have exercised a right of set-off against the amount that will eventually be distributed to Jayshree.5 However, as the estate is not a judgment creditor, no set-off arises because of the different capacity in which Hemant is a creditor, that is a creditor in his own right, not as executor of his parents’ estates. In any event, the most Jayshree can expect from the estate is approximately $28,653 plus interest (less estate costs) against a judgment debt that now stands at $46,947.05 after a number of part payments by Jayshree.
[11] The bankruptcy notice was issued in October 2023. The grounds on which Jayshree seeks to set aside the bankruptcy notice are broadly stated. Jayshree asserts she has a counterclaim and/or set-off by way of a proceeding for unjust enrichment against the judgment creditors which exceeds the amount claimed including their costs. The application alleges that Jayshree could not have set up that claim in the
4 Patel v Patel, above n 1.
5 Known as the rule in Cherry v Boultbee (1839) 4 My & CR 442 41 ER 171.
action leading to the judgment. As I will discuss below, further claims are made by Jayshree in her affidavit which are not set out in her application.
What Jayshree must show to have the bankruptcy notice set aside
[12] Jayshree must show that she has a genuine triable cross-claim that is equal to the judgment debt and that the cross-claim could not have been used as a defence in the proceeding in which the relevant judgment was entered. Essentially, Jayshree must show that she has a genuine triable cross-claim.6
[13]Applying the principles held in Robertson:
(a)the onus is on Jayshree to show that she has a genuine triable cross-claim;
(b)Jayshree must show a genuine triable claim in terms of both liability and quantum;
(c)not only must the existence of a cross-claim be established but also that it is equal to or greater than the judgment debt and could not have been used as a defence in the proceeding in which that judgment was entered;
(d)the summary nature of the present procedure is wholly unsuitable for the determination of disputed questions of fact; and
(e)the court need not accept uncritically evidence that is inherently lacking in credibility.
Jayshree’s disputes with the costs award
[14] As noted, Jayshree’s affidavit in support of the application raises grounds wider than those set out in her application. She raises a number of challenges to the components of the 2B costs calculation awarded by Harland J. As I have noted, Jayshree actively opposed the award of costs and did not raise at that time the
6 Robertson v ASB Bank [2014] NZCA 597 at [14].
objections she now relies on. The costs award made by Harland J was in terms of a schedule annexed to the application for costs. That is the amount for which the costs order was sealed. No challenge to the costs award from June 2023 has been made. It is too late for Jayshree to criticise the costs award in her affidavit.
[15] Jayshree said she relied on counsel for the applicants for costs to be correctly calculated. The disputed costs claim was just that, a dispute where Jayshree was responsible to review the matters for which costs were claimed. In any event, at least one of the disputed events for which costs were awarded is specifically addressed in the costs judgment at [5] which deals with a hearing on 16 March 2022 in respect of joinder.7
Claims that Hemant and Rita owe the estate money
[16] The next claim, and again this is not detailed in the application but is set out in the affidavit of Jayshree, is that $2,730 was withdrawn from her mother’s bank account after her mother’s death. In addition, it is said that Hemant and Rita received a funeral grant of $2,030.91 and that those two sums amount to $4,760.91. Jayshree says those amounts need to be added to the value of the estate.
[17] As to the WINZ overpayments, Hemant in his affidavit says that this issue was raised in the High Court and cross-examined on by Jayshree. Hament says the overpayments were paid back to WINZ. Both these issues were addressed at [31] and
[32] of the Court of Appeal decision where the Court said there is “nothing in these points”.8
[18] These matters, even if correct, would not give rise to a defence. These amounts, if they are payable by Hament and/or Rita, are payable to the estate. Further, Jayshree’s interest in these sums is one-quarter and so her entitlement would not exceed $1,190.22.
7 Patel v Patel, above n 2, at [5].
8 Patel v Patel [2023] NZCA 630.
Failure to distribute estate
[19] Jayshree in her submissions complains her mother’s estate has not been distributed. However, it is Jayshree who is ultimately responsible for that delay given she brought a claim against the estate. The estate funds will have been held on interest bearing deposit so interest will have accumulated, albeit not at the rate under the Interest on Money Claims Act 2016.
[20] Jayshree submits it is only just that she be awarded interest on the money owed to her by the estate because the judgment creditors were awarded interest on the costs award. The short answer is, Jayshree has no entitlement to interest on her entitlement under her parents’ estate. As I have said, those funds should have been held on interest bearing deposit pending completion of the litigation. It is Jayshree’s litigation that has delayed distribution and that litigation will have created unrecoverable costs for the estate.
[21] Jayshree unsuccessfully appealed to the Court of Appeal9 and for leave to appeal to the Supreme Court.10
Does Jayshree have an arguable counterclaim?
[22] Jayshree’s submissions do not develop the ground raised in her affidavit that she has a constructive trust claim in respect of two properties referred to in Harland J’s judgment as the Central Ave property and the Coronation Rd property. Of Central Ave, Harland J outlined the parties’ respective positions. This property was purchased in September 1986. Jayshree’s position was that it was bought as an investment property to benefit the family but Hemant said he brought this property with his own funds. Jayshree apparently provided her pay slips to support the application for mortgage finance and the loan was guaranteed by Hemant and Jayshree’s parents. However, Hemant paid all of the mortgage repayments albeit with the benefit of the rental income. This property was transferred to KPL in May 2006 and sold to a third party on 20 September 2010.
9 Patel v Patel, above n 8, at [52].
10 Patel v Patel [2024] NZSC 51.
[23] A second investment property, being the Coronation Rd property, was purchased in December 1986. Again, Jayshree and Hemant’s payslips were used to support the loan application and while Jayshree said she assisted with the purchase of the property, apart from providing her payslips for the loan, Harland J said it is not clear what this alleged assistance was. Hemant was on the title as the sole registered proprietor and he made all the mortgage repayments again, with the benefit of the rental payments. This property was transferred to KPL in May 2006 and sold to a third party in July 2011.
[24] Harland J’s judgment records that Jayshree said that she and other family members helped to maintain these investment properties. Hemant disagreed with that. Harland J accepted:11
… that Jayshree helped with the maintenance of these properties when required to do so, but this was not a regular requirement or occurrence.
[25] In Jayshree’s affidavit in support of the application to set aside the bankruptcy notice, Jayshree says of the contributions recognised by her Honour (such as they are):
4. …
With such contribution it was my understanding that I was to be a part owner of these properties, but as previously mentioned I was young and naive at the time and did not know anything about property and its dealings. As mentioned in my previous affidavits, Hemant was the boss of the household and I did what I was told to do.
[26] Jayshree refers to the value for the two properties at the time they were sold, each at approximately $400,000. She says:
6.Considering the above facts, I can set up in the action of proceedings by way of counter claim and under Unjust Enrichment against the Judgment Creditors which would be at least 4 times the amount sought
i.e. $52,947.05 by the Judgment Creditors.
In other words, my counterclaim will be in excess of $200,000.00.
[27] On this basis, Jayshree seems to claim a one-quarter ownership share in the two properties on the basis of her payslips being shown to the bank to support mortgage finance and on some irregular work on the properties.
11 Patel v Patel, above n 1, at [25].
[28] In the proceeding before Harland J, Jayshree claimed her parents had interests in the Central Ave and Coronation Rd properties to which their estate had a constructive trust claim. Again, that claim failed.
[29] There was no legal impediment to Jayshree adding a claim in her 2020 proceedings in her own name setting out the constructive trust claim she now raises. While Jayshree brought the 2020 claim as a derivative claim in equity on behalf of her late parents’ estate, there was nothing stopping her bringing her own claim in the same proceeding. The fact Jayshree’s claimed contributions to the properties were in issue before Harland J itself shows Jayshree could have brought her own claim in that proceeding.
[30] Hemant and Jayshree’s mother died in 2017 and their father, several years earlier. Jayshree was aware of the sales of the properties and that she had received nothing from those sales. Jayshree’s alleged constructive trust claim in respect of the properties disposed of in 2011 is extremely weak. I do not consider Jayshree has a reasonably arguable claim for a one-quarter share in the proceeds of the Central Ave or Coronation Rd properties. The claim is not detailed in any way — it does not meet the threshold of being a genuine triable cross-claim. If it did, it should have been brought in Jayshree’s 2020 proceeding and could have been, given Jayshree in that proceeding explained her own alleged contributions to the property.
Conclusion
[31] Jayshree continuing to pursue proceedings against her parents’ estate is delaying when the balance of the estate can be distributed. Distribution of Jayshree’s mother’s estate will require there to be finality to the litigation. This can be achieved through Jayshree formally confirming she will not bring any further claim against the estate. That discontinuance would permit the final value of the estate to be distributed and Jayshree could agree to her share being applied in reduction of the amount she owes under the costs order. However, until then, Jayshree remains liable for the full balance of the costs order.
Outcome
[32]For the above reasons, the application to set aside the bankruptcy order is
dismissed.
Costs
[33] There is no reason why costs should not follow the event on a 2B basis together with disbursements as fixed by the Registrar. I so order.
Associate Judge Lester
Solicitors:
Pidgeon Judd, Auckland (for Judgment Creditors)
Copy to:
K B Arthur (for Judgment Creditors) Ms Jayshree R Patel (Judgment Debtor)
0
4
0