Sharma v Mundath - [2019] NZHC 24

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-572

[2019] NZHC 24

BETWEEN
DATA RAM SHARMA and

GANESH DIXIT as Trustees of the SHARMA FAMILY TRUST

First Plaintiffs and 33 others

AND

MUJEEB RAHIMAN MUNDATH

First Defendant

AFSHEEN MUJEEB
Second Defendant

FULCRUM MANAGEMENT CONSTRUCTION LIMITED

Third Defendant

MUDRA INVESTMENTS NZ LIMITED
Fourth Defendant

SUJIN HWANG
Fifth Defendant

KOYAMA PTY LIMITED

Sixth Defendant

Hearing: 4 December 2018

Appearances:

Brent O’Callahan and Julie Ding for the Plaintiffs

Trevor Hall (by audiolink from Sydney) for the First Defendant

Judgment:

24 January 2019

JUDGMENT OF ASSOCIATE JUDGE R M BELL

This judgment was delivered by me on 24 January 2019 at 2:15pm
pursuant to Rule 11.5 of the High Court Rules.

…………………………………
Deputy Registrar

SHARMA and ORS v MUNDATH [2019] NZHC 24 [24 January 2019]

CONTENTS

Paragraph

Some procedural matters [7]

The plaintiffs’ evidence  [12]
Alleged third party supply payments  [15]
Transfer payments  [23]
Inland Revenue refunds  [24]
Payroll payments  [25]
Rakesh Kumar Sharma  [30]
Mayank Sharma  [35]
Dr Vinod Sharma  [36]

Mr Mundath’s response  [37]
Third party supplier payments  [51]
Transfer payments  [59]
IRD refunds  [60]
Payroll payments  [61]

The Sharma reply evidence  [66]
Mayank Sharma  [66]
Rakesh Sharma  [70]
Loan returns  [74]
IRD refunds  [75]
Payroll payments  [76]

Kare Johnstone
Payments by Mr Mundath to other Sharma entities  [77]
Supplier payments  [78]
Cash payments  [80]
Payments received in the year ending 31 March 2018  [81]

Contestable matters [82]

The claim for breach of fiduciary duty [84]

The “cash” explanation [91]

Accountability for “authorised” payments [95]

Payments from Inland Revenue [96]

Allegations of unsavoury business practices [99]

Summary on claim for breach of fiduciary duty [104]

The deceit cause of action [110]

Outcome [118]

Schedule

[1] The 34 plaintiffs say that Mr Mundath has embezzled at least $5,411,622.05. They apply for summary judgment against him for parts of their claims. The plaintiffs are companies, trustees and individuals associated with three brothers - Rakesh Sharma, Dr Vinod Sharma and Ashok Sharma - and their families. The plaintiffs and associated companies have business interests in hotels, motels, restaurants, property developments, service and procurement businesses. Together, they form the Sharma Group. Mr Mujeeb Mundath worked in and for the Sharma Group. He was an employee, but there is a dispute as to who in the Sharma Group employed him. The other defendants are:

Afsheen Mujeeb (Mr Mundath’s wife);

Fulcrum Management Construction Ltd (of which Mr Mundath was director until April 2018);

Mudra Investments New Zealand Ltd (of which Mr Mundath was the only director);

Sujin Hwang (said to be an associate of Mr Mundath); and Koyama Pty Ltd (an Australian corporation).

[2] In their amended statement of claim, the Sharma Group plaintiffs plead these causes of actions:

[a]against Mr Mundath - breach of fiduciary duty;

[b]against Mr Mundath - deceit;

[c]against Afsheen Mujeeb, Afsheen Mundath and Mr Mundath jointly, Fulcrum and Mudra – knowing receipt;

[d]against Mr Mundath, his wife, Fulcrum, and Mudra - money had…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Sharma v Mundath

Details

AGLC: Sharma v Mundath [2019] NZHC 24
Case: [2019] NZHC 24
Decision Date: 24 January 2019

CaseChat Overview and Summary

The Sharma family, through their companies and trustees, sued Mujeeb Rahman Mundath for breach of fiduciary duty and deceit. They said that Mr Mundath, who was an employee of theirs, had embezzled at least $5,411,622.05. They applied for summary judgment against him. The Sharmas rely on evidence from a forensic accountant, Kare Johnstone. She says that Mr Mundath arranged for payments to be made from the Sharmas’ bank accounts to bank accounts in his control. The payments totalled $9,224,327.00. The Sharmas’ claim for summary judgment is for $5,411,622.05. They acknowledge that there are some arguable defences for some payments, but they say that they can show that at least for some payments there is no arguable defence. The Sharmas have not satisfied the summary judgment test for their claim in deceit. On the claim for breach of fiduciary duty, Mr Mundath has arguable defences to parts of the plaintiffs’ claim which they have not allowed for. I am nevertheless satisfied that there is a minimum amount for which he is liable and for which he has no arguable defence – $4,696,758.31. Judgment will be given to each plaintiff for the amount in the schedule to the judgment without prejudice to their rights to continue their claims against him for other amounts. The plaintiffs are entitled to interest under the Interest on Money Claims Act 2016. The plaintiffs are entitled to costs on the summary judgment application. They seek indemnity costs. They are to file and serve a memorandum as to costs with all supporting information by 15 February 2019. Any submission in response by Mr Mundath is to be filed and served by 1 March 2019.

Orders