Sharma v Wati
[2022] NZCA 583
•29 November 2022 at 9.30 am
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA141/2022 [2022] NZCA 583 |
| BETWEEN | DEO DATT SHARMA |
| AND | NIRMALA WATI |
| Hearing: | 31 October 2022 |
Court: | Gilbert, Venning and Mander JJ |
Counsel: | Appellant in person |
Judgment: | 29 November 2022 at 9.30 am |
JUDGMENT OF THE COURT
AThe appeal is allowed.
BThe order making the interim charging orders final is quashed and the interim charging orders are discharged.
CThe order that the appellant pay the respondent costs and disbursements of $11,616 is quashed and replaced with an order in the sum of $2,751.
DThe order directing the Registrar of the High Court at Auckland to pay the respondent $11,616 from the $21,000 paid into court by the appellant is quashed.
EThe order directing the Registrar to pay the balance of the $21,000 and all accrued interest to the appellant remains unaffected but is to be read as a reference to the existing balance presently held by the Registrar as at the date of this judgment.
FThe appellant is entitled to disbursements to be fixed by the Registrar.
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REASONS OF THE COURT
(Given by Mander J)
The separation of Dr Deo Sharma and Ms Nirmala Wati in August 2000 resulted in litigation that has been ongoing over more than two decades. Those proceedings, which commenced in the Family Court and spawned appeals and related applications to the High Court, this Court and the Supreme Court, resulted in various costs orders against Dr Sharma.
Dr Sharma now appeals a decision of the High Court granting Ms Wati’s application for orders that interim charging orders made in respect of three costs awards against Dr Sharma be made final and that funds held by the Registrar of that Court, deposited by Dr Sharma in relation to bankruptcy proceedings, be paid to satisfy the costs Ms Wati incurred in obtaining those interim charging orders.[1]
Background
The payment into court
[1]Wati v Sharma [2021] NZHC 3601 [Judgment under appeal].
In 2011, Dr Sharma paid $21,000 into the High Court. There is no dispute this step was taken by him in an attempt to “prove his solvency” after he was served with bankruptcy notices by Ms Wati in an endeavour to recover court costs.[2] This money has been held by the Registrar ever since. Dr Sharma’s status as the owner of these funds has been confirmed both by this Court and the Supreme Court.[3]
The three costs awards
[2]Wati v Sharma HC Auckland CIV-2008-404-6367, 9 March 2011 at [14].
[3]Sharma v Wati [2021] NZCA 220 at [7]; Sharma v Wati [2021] NZSC 107 [Supreme Court judgment] at [3].
The interim charging orders, the subject of Ms Wati’s application in the High Court, related to three separate costs judgments. The first of these awards was made by Jagose J on 2 July 2020 after he allowed an appeal by Ms Wati in relation to the enforcement of two Family Court costs orders.[4] Costs and disbursements in her favour were ordered in the sum of $9,841.30 (the appeal costs).
[4]Wati v Sharma [2020] NZHC 1545, [2020] NZFLR 419.
The second costs order was made by Downs J on 10 August 2020 after he granted Ms Wati leave to place charging orders against Dr Sharma’s share in the former family home (the house charging orders costs).[5] Costs of $9,996.50 were ordered to be paid by Dr Sharma.
[5]Wati v Sharma [2020] NZHC 2010.
The third costs award was made by the Supreme Court on 30 August 2021 when it declined Dr Sharma leave to appeal the Court of Appeal’s refusal to grant him an extension of time to file an appeal from Downs J’s decision (the Supreme Court costs).[6] Dr Sharma was ordered to pay $2,500.
The interim charging orders
[6]Supreme Court judgment, above n 3.
The interim charging orders in respect of the appeal costs and the house charging orders costs were issued on 20 October 2020. An interim charging order in respect of the Supreme Court costs was issued on 1 October 2021. All three interim charging orders charged the “money held by the High Court at Auckland standing to the credit of the liable party in a proceeding or interlocutory application, viz. $21,000 paid by you into Court under CIV 2008-404-6367”, with payment of the particular amount of costs for which judgment had been entered.
The appeal costs and the house charging orders costs were paid by Mr Sharma, after settlement of the sale of the former family home on 5 October 2021. The Supreme Court costs were paid by Mr Sharma shortly thereafter in early November 2021.
The application for final charging orders and further costs
On the same date the sale of the family home settled, Ms Wati applied for:
(a)an order making the three interim charging orders over the $21,000 held by the Registrar of the High Court final;
(b)costs in relation to the interim charging orders;
(c)costs on the application to make the interim charging orders final; and
(d)an order directing the disbursement of these costs from the $21,000 held by the Registrar.
The High Court decision
After acknowledging that Dr Sharma was the owner of the $21,000 and any accrued interest held by the Registrar, Davison J observed that the funds were owing or payable by the Registrar to Dr Sharma.[7] Accordingly, they fell within the scope of r 17.53(b)(iii) of the High Court Rules 2016 (the Rules) being a sum of money due to Dr Sharma (the liable party) that stood to his credit in the possession of a court officer.[8]
[7]Judgment under appeal, above n 1, at [25].
[8]At [26].
Although the three costs awards made to Ms Wati had been paid, the Judge noted the costs and disbursements incurred by her in making the application for the interim charging orders had not been paid. Consequently, the Judge considered the making of final charging orders would be of utility to Ms Wati in order to allow her to recover those costs.[9] The Judge held that, in the absence of some good reason for not doing so, the interim charging orders should be made final.[10]
[9]At [28].
[10]At [27], citing Robert Osborne and others (eds) McGechan on Procedure (online ed, Thomson Reuters) at [HR17.59]; and Parker Construction Management (NZ) Ltd (in liq) v Horizon Investments Ltd HC Wellington CIV-2007-485-1963, 20 February 2008 at [18].
The Judge further observed that, upon the making of a final charging order, the Court has power under the Rules to make orders for the disposition of money paid into court.[11] While none of those rules had direct application to the present situation, the Judge accepted Ms Wati’s argument that an approach analogous to that provided by the Rules could be adopted.[12] In particular, where a charging order has been made final, the Court has the power to order property affected by a charging order be sold and to direct the proceeds of sale be paid into court to be applied in accordance with a court order.[13]
[11]High Court Rules 2016, rr 17.59(2), 17.57 and 17.58.
[12]At [29]–[30].
[13]Rule 17.60(b).
Drawing on r 1.6, which directs the court to dispose of a case where no form of procedure is prescribed as nearly as may be practicable in accordance with the provisions of the rules affecting any similar case, an order was made directing the Registrar to disburse the $21,000 and accrued interest by paying the amount of any outstanding costs to Ms Wati and returning the surplus to Dr Sharma.[14] The Judge considered this approach would best promote the objective of the Rules and secure the just determination of the proceeding.[15]
[14]At [31] and [35].
[15]High Court Rules 2016, r 1.2.
Having decided upon this course, the High Court ordered the three interim charging orders be made final charging orders and made an order in favour of Ms Wati for costs and disbursements in relation to the application for the interim charging orders. The Registrar was directed to pay Ms Wati those costs from the $21,000 and the balance of that sum, together with all accrued interest, to Dr Sharma.[16] The Judge declined to make any order for costs in relation to Ms Wati’s application to make the interim charging orders final or on her application for orders in respect of the distribution of the $21,000.[17]
The appeal
[16]Judgment under appeal, above n 1, at [35].
[17]At [36].
Dr Sharma argued a number of grounds in support of his appeal, most of which it is not necessary for us to deal with in any great detail because of the conclusion we have reached regarding a fundamental difficulty with the interim charging orders being made final. We reject Dr Sharma’s submission that the interim charging orders should never have been made in relation to the appeal costs and the house charging orders costs because charging orders already existed relating to the same costs orders issued in respect of the former family home. The Rules contemplate concurrent enforcement processes, although recovery of costs and expenses incurred in respect of more than one such process may only be allowed with the Court’s leave.[18]
[18]Rule 17.26.
We also discount Dr Sharma’s contention that the interim charging orders had been issued “contrary to good faith” and should have been set aside because they had been made in the face of his representation these costs would be met once the former family home was sold.[19] However, we consider Dr Sharma is on stronger ground in his argument that the three interim orders should not have been made final when the underlying debts had already been paid.
Analysis
[19]Rule 17.30(c).
By the time Ms Wati’s application to have the three interim charging orders made final was heard, all three costs orders had been paid by Dr Sharma. Prior to these payments no order had been made fixing costs in favour of Ms Wati in respect of the interim orders or the application to make them final. Despite this being the case, Mr Parmenter, on behalf of Ms Wati, made several arguments in support of the process adopted by the High Court.
Mr Parmenter submitted that, notwithstanding the payment of the outstanding debts, the charged monies held by the Registrar still needed to be “freed” from the interim charging orders and disbursed, and that until this was done the funds remained subject to a claim by Ms Wati for costs relating to the charging orders. Absent any agreement on costs and disbursements, it was argued a process had to be followed for Ms Wati to be able to recover her expenses, which was recognised by the Judge when he observed that making the charging orders final would be of utility to her by allowing her to recover those costs.
However, a difficulty arising for Ms Wati is that, by the time she applied for the interim charging orders to be made final and for further awards of costs, the outstanding judgment debts in respect of which those orders were made had been extinguished. The interim charging orders could not be made final once the original judgment debts to which they related had been paid. Because there was no extant judgment debt that procedural step was no longer available to Ms Wati. It follows that, in the absence of there being any other existing unpaid judgment debt in respect of which the interim charging orders had been made, Dr Sharma was free to seek their discharge in order to have the $21,000 disbursed to him.
We leave open questions as to whether the charging orders could have attached to any costs orders in respect of the enforcement process made prior to the judgment debtor satisfying the original debt, or whether a charging order could be made final on the basis of an existing but unpaid costs award relating to such an order. We venture that issue would likely turn on the wording of the original interim charging order. In the present case, the charging orders only charged the monies held by the Registrar with payment of the particular sums awarded as costs and made no provision for the recovery of related enforcement costs.
Decision
We do not consider interim charging orders made in respect of debts that have been paid can be made final in order for them to be applied to further prospective costs orders, even ones arising from the same enforcement process. The Rules do not provide such a mechanism. We consider the High Court fell into error by allowing the Rules to be interpreted to permit interim charging orders, that no longer secured any extant debt, to be made final for the purpose of allowing them to be used to recover a further costs award in respect of which they were not issued.
We acknowledge the practical benefit that may have been thought to arise from adopting such a course, particularly in light of the protracted nature of this particular litigation and the successive costs orders made against Dr Sharma. But, as a matter of principle, we do not consider interim charging orders relating to debts that have been paid can be made final for the simple convenience of attaching to new judgment debts in respect of which the interim orders were not originally made.
Quantum of costs order
The order made in favour of Ms Wati requiring Dr Sharma to pay her costs and disbursements in relation to her original applications for interim charging orders remains unaffected. However, the figure identified to the High Court for those costs requires amendment. Mr Parmenter responsibly advised that the calculation of the scale 2B costs relating to the interim charging orders in the sum of $11,616 is not correct. On the information provided by Mr Parmenter, it must be amended to $2,751.
We understand the $11,616 has already been paid to Ms Wati but that there are other outstanding costs awards due to her by Dr Sharma. In the circumstances, we consider it best to direct the Registrar to pay the present or existing balance of the $21,000 sum still held by the High Court to Dr Sharma. Any remaining issues regarding monies owed between the parties is a matter for them.
Result
The appeal is allowed and the following orders made:
(a)The order that the three interim charging orders be made final charging orders is quashed and the interim charging orders are discharged.
(b)The order that Dr Sharma pay Ms Wati’s costs and disbursements in the sum of $11,616, in relation to the application for interim charging orders and sealing the orders, is quashed. It is replaced with an order to the same effect in the sum of $2,751.
(c)The order directing the Registrar to pay Ms Wati the sum of $11,616 from the sum of $21,000 paid into Court by Dr Sharma on 4 March 2011 and presently held by the Registrar, is quashed.
(d)The order directing the Registrar to pay the balance of the $21,000 sum, together with all accrued interest thereon from 4 March 2011 to the date of payment, to Dr Sharma by transfer to a bank account held in his name and nominated by him remains unaffected, but is to be read as referring to the existing balance presently held by the Registrar as at the date of this judgment.
Dr Sharma is entitled to disbursements to be fixed by the Registrar.
Solicitors:
Witten-Hannah Howard, Auckland for Respondent
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