Sharma v Anthony aka Reddy
[2025] NZHC 1739
•30 June 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-001757
[2025] NZHC 1739
IN THE MATTER OF A claim for negligent misstatement and misrepresentation BETWEEN
ROHINEET SHARMA
Plaintiff
AND
RAVI KUMAR REDDY KHAMBHAM ANTHONY aka ANTHONY REDDY
First Defendant
YASHWANT PATEL aka PAT PATEL
Second Defendant
Hearing: 16 June 2025 Appearances:
Plaintiff in person
No appearance by or on behalf of First Defendant Second Defendant in person
Judgment:
30 June 2025
JUDGMENT OF ANDREW J
This judgment was delivered by Justice Andrew on 30 June 2025 at 12 pm
pursuant to r 11.5 of the High Court Rules 2016 Registrar / Deputy Registrar
Date: ………………………..
SHARMA v ANTHONY [2025] NZHC 1739 [30 June 2025]
Introduction
[1] This is further litigation in relation to an investment in a Sydney-based property development project that did not proceed.
[2] In a judgment dated 31 May 2024, O’Gorman J in Mudaliar v Sharma1 dismissed claims for negligent misstatement, or alternatively, for pre-contractual misrepresentation under s 35 of the Contract and Commercial Law Act 2017 (CCLA), against the defendant, Mr Sharma (the plaintiff in the present proceedings).
[3] As the plaintiff in the current proceedings, Mr Sharma pleads the same causes of action against his co-investors in the Sydney property development, namely the defendants, Mr Anthony Reddy and Mr Yashwant Patel. During the proceedings before me, Mr Sharma and Mr Patel reached a settlement. Mr Sharma has now filed a notice of discontinuance as against Mr Patel.2 That leaves for me to determine the remaining claims against Mr Reddy. He has taken no steps in the proceedings. The claim therefore proceeded by way of formal proof.
[4] Mr Sharma seeks to recover the sum of AUD 119,000 plus interest and costs from Mr Reddy that is said to represent Mr Reddy’s contribution of costs paid by Mr Sharma towards the deposit, an engagement fee paid to a lending broker and costs paid to the building contractor.
[5] Mr Sharma says that he, Mr Reddy and Mr Patel would be equal partners in the development of the Sydney property. The intention was to construct a large apartment complex on the property in Campbelltown, Sydney, New South Wales. The original plan was for 99 units. It was intended to sell the apartments at a profit. The project did not ultimately proceed, and the deposit was forfeited when the purchaser (a Sydney incorporated company) did not complete settlement to acquire the property.
1 Mudaliar v Sharma [2024] NZHC 1432.
2 Notice of discontinuance against second defendant only dated 19 June 2025. Under r 15.19 of the High Court Rules 2016, Mr Sharma has the right to discontinue the proceedings and no further order is required from me. The restrictions on the right to discontinue provided in r 15.20 do not apply here.
Factual background
[6] Mr Sharma was previously a solicitor. In 2015, the New Zealand Lawyers and Conveyancers Disciplinary Tribunal ordered that he be removed from the Roll of Barristers and Solicitors. That was because of Mr Sharma’s misconduct during the purchase of a commercial property in Panmure, Auckland, for which Westpac Bank required a first mortgage. To facilitate this, and without authority, Mr Sharma discharged a mortgage to BNZ over his own residential property and submitted a false solicitor’s certificate to Westpac.3
[7] The first defendant, Mr Reddy, was known to Mr Sharma during the time that he practised as a solicitor.
[8] In April 2015, Mr Reddy mentioned to Mr Sharma that there was an apartment development project at Campbelltown that he was thinking of investing in with his good friend and business partner, Mr Patel, the second defendant. Mr Sharma understood Mr Patel to be a wealthy businessman in Auckland.
[9] Mr Reddy advised Mr Sharma that he had signed a sale and purchase agreement through his Sydney company, Real Sandbox Pty Ltd, to purchase the land at Campbelltown. The intention was to build apartments and to sell them.
[10] Mr Sharma says that Mr Reddy subsequently set up a meeting with Mr Patel to discuss the project.
[11] In May 2015, Real Sandbox Pty Ltd entered into a sale and purchase agreement to purchase 30–36 Warby Street, Campbelltown for AUD 8 million.
[12] In June 2015, Mr Sharma visited Sydney and inspected the land for the proposed development. At that stage, he and Mr Mudaliar (an old friend from Fiji) paid the deposit of AUD 400,000. Mr Mudaliar’s share was AUD 380,000 with the balance paid by Mr Sharma.
3 Auckland Standards Committee No. 2 v Sharma [2015] NZLCDT 12 at [51].
[13] A Sydney-based company was subsequently incorporated under the name of Lambert McCabe Property Pty Ltd, which was intended to be the corporate vehicle to undertake the property development. Mr Sharma was appointed as the director and he and Mr Patel were equal shareholders in the company.
[14] Mr Sharma subsequently paid further funds towards the project. That included AUD 300,000, which he paid to the building contractor, GJ Building and Contracting Pty Ltd, AUD 22,880 as an engagement fee for a lending broker, and travel costs to Sydney and other disbursements.4
[15] Mr Sharma says that contrary to their agreement, Mr Reddy and Mr Patel did not contribute towards the purchase price to settle. He says they simply did not have the money to do so.
[16] In May 2016, the vendors cancelled the agreement for sale and purchase because the purchasers had not, and could not, settle.
The pleadings
[17] In relation to both causes of action, Mr Sharma alleges that the defendants made the following false/misleading statements and/or misrepresentations:
(a)Mr Reddy and Mr Patel had jointly purchased a 15-acre block of land at Helensville, Auckland, and were in the process of sub-dividing it to sell as individual vacant lots and as house and land packages.
(b)The company, Real Sandbox Pty Ltd, had signed a sale and purchase agreement to purchase 30–36 Warby Street, Campbelltown, Sydney, New South Wales.
(c)The purchase price of the property was AUD 8 million.
4 Mudaliar v Sharma, above n 1, at [72(c)].
(d)Mr Reddy, Mr Patel and Mr Sharma would be equal partners in the development of the property to construct and sell around 99 units.
(e)Mr Reddy, Mr Patel and Mr Sharma would each contribute AUD 1 million towards the development.
(f)Aany real profit or loss from the development would be shared equally between the parties.
(g)Mr Sharma was to pay the initial deposit of AUD 400,000 and pay further expenses related to the development prior to settlement during the planning stage.
(h)Mr Reddy and Mr Patel would pay their respective contributions to complete settlement of the transaction.
(i)That the balance of the finance required to settle the transaction had been arranged or was in the process of being finalised.
(j)There was an option not to build but to sell the development and make an instant profit once it was shovel ready to a company in Sydney known as Third Eye that was ready to purchase the project from the company by paying AUD 12 million once the company had acquired the land under its name and finalised all the construction details in order for construction to commence.
Issues
[18]I need to determine the following issues:
(a)Did Mr Patel owe a duty of care in tort to Mr Sharma?
(b)Is there a relevant contract between the parties for the purposes of s 35 of the CCLA (the plaintiff must be a party to the contract under that section)?
Analysis and decision
(a)Issue: Duty of care
[19] In Carter Holt Harvey Ltd v Minister of Education,5 the Supreme Court referred to requirements that must typically be met before a plaintiff is owed a duty of care:
… The necessary relationship between the maker of the statement and the recipient will typically arise where:
(a)the advice is required for a purpose that is made known (at least inferentially) to the adviser;
(b)the adviser knows (at least inferentially) that the advice will be communicated to the advisee specifically or as a member of an ascertainable class;
(c)the adviser knows (at least inferentially) the advice is likely to be acted on without independent inquiry; and
(d)the advisee does act on the advice to its detriment.
[20]As O’Gorman J held in Mudaliar v Sharma:6
If such a duty [of care] is owed, then liability for negligent misstatement requires breach (misrepresentation) and causation of loss. The question of reasonable reliance underlies the tort and is relevant to whether a duty arises (and if so, its scope), and causation of loss.
[21] In Attorney-General v Carter,7 the Court of Appeal held that assumption of responsibility can be viewed as the rationale for liability for negligent misstatement and the underpinning of the tort of the highest level. It also held that the concept of reliance is involved in determining whether there has, in the particular case, been an assumption of responsibly, whether actual or deemed.
[22] I find that Mr Sharma has not established the necessary elements of the tort of negligent misstatement. In particular, there is no basis here for concluding that Mr Reddy owed Mr Sharma a duty of care. There was no assumption of responsibility, as required and nor was there, in my view, any element of reasonable reliance. As
5 Carter Holt Harvey Ltd v Minister of Education [2016] NZSC 95, [2017] 1 NZLR 78 at [80] (footnote omitted).
6 Mudaliar v Sharma, above n 1, at [47] (footnote omitted).
7 Attorney-General v Carter [2003] 2 NZLR 160 (CA) at [24]–[25].
O’Gorman J concluded in Mudaliar v Sharma,8 Mr Sharma made a speculative investment in a highly leveraged project, hoping for large returns that failed to eventuate. He did not protect himself with appropriate contractual arrangements with his co-investors to allocate responsibilities and share losses in the event of failure. Furthermore, (and, again, as O’Gorman J found) the intended purpose of the investment was to share in the future profit distributions from the land-owning company, following completion of the development and the sale of the units. This is manifestly not a case of negligent misstatement.
[23] I accept that there was likely a significant element of “big talking” by Mr Reddy and that Mr Sharma may have been naïve and/or more eager to invest in the project than he should have been, given his financial circumstances (i.e. arising from the loss of his practising certificate). However, I fail to see how, in the circumstances, there was any reasonable reliance in circumstances where there was a speculative investment and Mr Sharma, a former lawyer, failed to take steps to document the appropriate contractual arrangements. It is notable that Mr Sharma did enter into a written agreement with Mr Mudaliar (a deed) which O’Gorman J refers to at [28] of her judgment.
[24] I conclude that no duty of care was owed, and the first cause of action must accordingly be dismissed.
(b)Issue: Relevant contract?
[25] Mr Sharma’s claim of misrepresentation under s 35 of the CCLA is equally flawed. The same reasoning applies. This was an undocumented, speculative investment through the vehicle of a company registered in New South Wales. Mr Sharma has failed to establish that there was a relevant contract between the parties with sufficiently certain terms to be able to determine there were misrepresentations and inducement, as alleged. Under s 35, a plaintiff must be a party to a relevant contract. Mr Sharma has failed to prove any such relevant contract.
8 Mudaliar v Sharma, above n 1, at [74]
[26] The conclusion reached by O’Gorman J in Mudaliar v Sharma in relation to Mr Mudaliar applies equally here. At [78], her Honour noted that Mr Mudaliar’s problems (and in my view also Mr Sharma’s) arose not because he paid the deposit as such (or in the case of Mr Sharma, associated expenses) but from his failure to document terms as between him and the other investors if completion did not occur and the deposit was forfeited, or indeed if other costs, risks and liabilities arose during the construction project that might lead to the company’s insolvency.
[27] Justice O’Gorman also concluded that, without any repayment commitment (e.g. loan relationship) or indemnity from Mr Sharma, Mr Mudaliar chose to become a speculative investor, taking risks that do not necessarily have any legal remedy upon commercial failure.
[28] Again, the same conclusion applies, in my view, to Mr Sharma. He failed to obtain any repayment commitment from his co-investors, including Mr Reddy. He was, as I have emphasised, a speculative investor – and the vehicle for the investment was a company in New South Wales. If there are any remedies, then they should be pursued through the insolvency laws of New South Wales.
[29]For all these reasons I also dismiss the second cause of action.
Result
[30]The two causes of action are dismissed. The proceedings are unsuccessful.
[31]There is no order as to costs.
Andrew J
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