Richmond v Raju

[2012] NZHC 1286

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2009-404-007078 [2012] NZHC 1286

BETWEEN  COLLEEN MARGARET JOYCE RICHMOND

Plaintiff

ANDRAJU RAJU First Defendant

ANDKIRTI RAJU Second Defendant

ANDLALITA RAJU Third Defendant

ANDAARON SURAJ RAM KASHYAP Fourth Defendant

ANDBHARAT PARSHOTAM Fifth Defendant

Hearing:         6 June 2012

Counsel:         P Finnigan for Plaintiff

The plaintiff and C W Bright in attendance

Judgment:      8 June 2012

JUDGMENT OF POTTER J

on formal proof

In accordance with r 11.5 High Court Rules

I direct the Registrar to endorse this judgment with a delivery time of 4 p.m. on 8 June 2012.

Solicitors:           Pidgeon Law, Auckland – [email protected]

Copy to:            P Finnigan, Auckland – [email protected]

C W Bright, Auckland –  [email protected]

RICHMOND V RAJU RAJU HC AK CIV-2009-404-007078 [8 June 2012]

Introduction

[1]      The plaintiff seeks judgment against the first defendant in terms of the orders attached to this judgment, following formal proof.

[2]      The plaintiff commenced proceedings on 28 October 2009 against the first to fifth defendants.   The second to fifth defendants filed statements of defence and settlement has been reached with all of them.

[3]      The first defendant was served with the notice of proceedings and statement of claim dated 28 October 2009 but has not filed any defence and has taken no step in the proceedings.

[4]      The judgment now sought by the plaintiff against the first defendant takes account of the settlements reached with the remaining defendants as referred to in paragraph 6 of the attached orders.

High Court Rules

[5]      Rule 10.7 of the High Court Rules provides that when the plaintiff appears and the defendant does not, the plaintiff must prove the cause of action so far as the burden of proof lies on the plaintiff.[1]

[1] And see Chen v Zhang HC Auckland CIV-2010-404-001995, 14 November 2011 at [37]-[42].

[6]      Rule 15.10 provides that if the relief claimed by the plaintiff is payment of an unliquidated  demand  in  money  and  the  defendant  does  not  file  a  statement  of defence the proceeding must be tried to assess damages.

[7]      Rule 15.11 provides that on any trial for assessment of damages under the relevant rules, including r 15.10, the plaintiff may adduce evidence of the plaintiff’s damages by affidavit.  The plaintiff has adduced evidence by way of affidavits filed by the plaintiff and Colin William Bright of Auckland solicitor.  Both deponents filed

affidavits followed by second affidavits sworn respectively on 30 May 2012 and 31

May 2012 in substitution for their previous affidavits to provide a clearer chronological account of relevant events, in support of entry of judgment by way of formal proof.

Factual background

[8]      Briefly summarised, the factual background as pleaded and supported by the affidavit evidence of the plaintiff and Mr Bright is as follows.  The plaintiff is now

77 years of age.  She suffers from dyslexia and cannot read sufficiently to understand written documents unless read and explained to her.  Mr Bright, the lawyer whom Mrs Richmond consulted in late 2005, deposes to this in his affidavit.

[9]      The  events  giving  rise  to  this  proceeding  occurred  in  2004.    The  first defendant was a property developer.  He would purchase a property in the name of his wife or his daughter, the second and third defendants respectively, with a view to subdividing it and building a second dwelling on the property with both dwellings ultimately being on-sold.  The evidence is that at the relevant time the first defendant was bankrupt.

[10]     Following an approach from the first defendant the plaintiff agreed to sell her property at 19 Whitmore Road, Hillsborough to the first defendant for $350,000 (although the agreement for sale and purchase states a purchase price of $365,000 which the plaintiff denies was the agreed price).   Her evidence is that the first defendant agreed he would erect an alternative home for her at a price of $280,000.

[11]     To  that  end  the  first  defendant  secured  the  plaintiff’s  signature  to  an agreement to purchase the back lot of a property known as 38A Miranda Street, Blockhouse Bay. The agreement states a purchase price of $286,000.

[12]     At the recommendation of the first defendant, the plaintiff instructed the fourth defendant to act for her.  Subsequently the fifth defendant became her solicitor in respect of the transactions.

[13]     Settlement of the sale of the Whitmore Road property was effected on 24

March 2004.  Title to the property was taken in the name of the third defendant.  The first  defendant  induced  the  plaintiff  to  pay him  the  sum  of  $140,000  from  the proceeds of the Whitmore Road settlement.  He accompanied her to the ASB Bank where she withdrew that sum in cash and a cheque in his favour.

[14]     The Miranda Street development was not completed by 24 March 2004.  The plaintiff continued to rent the property she had sold to the first defendant for a period of about 10 weeks at a rental of $280 per week.

[15]     By the time the plaintiff moved into the Miranda Street property, which was significantly short of full completion, on or about 8 April 2005 she had paid to the first defendant further sums of money at least equivalent to the purchase price of

$280,000 plus about $25,000 for extras.   The plaintiff repaid her $9,000 of the amount she paid.

[16]     In the latter part of 2005 the plaintiff learned that the back lot of the Miranda Street property had never been transferred into her name.  At all material times the Miranda Street property recorded the third defendant as the owner. The property was mortgaged to Bridgecorp and secured advances in excess of the value of the full Miranda Street property.   Eventually the property was sold by Bridgecorp as mortgagee.  The plaintiff in the meantime had lodged a caveat claiming her interest in the back part of the Miranda Street property but on sale by Bridgecorp she vacated the property.

[17]     The  plaintiff  received  nothing  back  from  the  funds  she  paid  to  the  first defendant for the Miranda Street development.  She never received title to that part of the Miranda Street property she contracted to purchase from the first defendant. The sum she seeks to recover in the proceedings represents the loss she has suffered: the sum of $305,000 being the sum of $280,000, the agreed purchase price, plus

$25,000  for  extras,  less  repayments  of  $9,000  made  by  the  first  plaintiff  in

2005/2006.  This equates to a sum of $296,000 but the pleaded claim is for $280,000 which is the amount for which judgment is sought.

[18]     The  evidence  of  the  plaintiff,  confirmed  by  entries  in  her ASB  account statements,  is  that  she  received  proceeds  from  the  sale  of  the Whitmore  Street property of $348,832.38 on 26 March 2004, paid to the first defendant on that date

$140,000 (comprising a cheque for $125,000 and cash of $15,000) and subsequently paid by cheque and cash further amounts bringing the total paid to $243,300.  Her evidence is that she paid further cash sums to Mr Raju at his request which he treated as payments towards the purchase price of the Miranda Street property.  He assured her that the payments she made were payment in full for all of the moneys due and owing for the new Miranda Street home and that no further payment was required from her.

[19]     The plaintiff is now living in a one bedroom Housing New Zealand unit at

16/8 Seabrook Avenue, New Lynn and has no other assets.  She says in her affidavit:

As a result of what happened to me, I found it very hard to cope.  I thought that I was losing my mind and heading for a nervous breakdown.  Raj Reddy had been so persuasive and I had trusted him so much that I had ended up losing my home and all of the assets that, I thought I had for my retirement years.  I became so depressed and unhappy that I had to seek medical help. In part I blamed myself, for being so trusting.  It took a long, long time and a lot of crying and a lot of upset for me to get to the point of accepting that I just had to get on with my life.  The loss of my home meant the breakup of my family.  I am now living by myself in a one bedroom unit.  I no longer have my family around me.

Causes of action

[20]     The statement of claim pleads six causes of action against the first defendant. They allege against the first defendant fraud, deceit and illegality and in the alternative  unconscionability and/or  undue  influence,  conspiracy,  negligence  and breach of contract.

Decision

[21]     I am satisfied, having considered the evidence of the plaintiff and Colin William Bright adduced by their affidavits, and having considered memoranda filed by Mr Finnigan counsel for the plaintiff and  heard from Mr Finnigan, that the plaintiff has proved on the balance of probabilities the pleaded causes of action in

fraud, deceit and illegality against the first defendant upon which the plaintiff principally relies.  It is unnecessary that I make findings on the alternative causes of action pleaded.

[22]     I further find that special damages has been established as claimed in the sum of $280,000.

[23]     I conclude, in the exercise of my discretion, that general damages should be awarded to the plaintiff in the sum of $25,000 for pain and suffering she has endured as a result of the dishonesty and wrongdoing of the first defendant.

[24]     I accordingly give judgment for the plaintiff against the first defendant in terms of the attached orders.

ORDERS

1.        The first defendant shall pay to the plaintiff the sum of Two Hundred and

Eighty Thousand Dollars ($280,000) by way of special damages.

2.        The first defendant shall pay to the plaintiff the sum of Twenty five Thousand

Dollars ($25,000) by way of general damages.

3.The first defendant shall pay to the plaintiff interest on the sum of $280,000 at the prescribed rate pursuant to s 87 of the Judicature Act 1908 [“prescribed rate”] from 11 June 2006, being the date on which the plaintiff vacated the property at 38 Miranda Street, Blockhouse Bay, Auckland, following a mortgagee sale, until the date of judgment, such prescribed rates being as follows:

(a)     From 11 June 2006 until 30 June 2008, at 7.5 per cent; and (b) From 1 July 2008 until 30 June 2011, at 8.4 per cent; and (c)         From 1 July 2011 until 7 June 2012 at 5 percent.

4.The first defendant shall pay to the plaintiff scale-costs pursuant to category 2 band B together with the plaintiff’s reasonable disbursements to be fixed by the Registrar.

5.The first defendant pay to the plaintiff interest on the total judgment sums at the prescribed rate pursuant to s 87 of the Judicature Act 1908 [“prescribed rate”] from the date of judgment until paid.

6.In  the  event  that  the  plaintiff  executes  the  judgment  against  the  first defendant, the plaintiff shall give credit to the first defendant for those sums received by the plaintiff as the results of settlements with the other plaintiffs, namely:

(a)     The second and third defendants, joint and several, who have agreed to pay to the plaintiff the sum of fourteen thousand four hundred dollars ($14,400) by monthly payments of four hundred dollars ($400) over 36 months commencing with a first payment on 9 January 2012; and

(b)The fourth and fifth defendants who have paid to the plaintiff the sum of two hundred and twenty-five thousand dollars ($225,000).