Sheikh v Sawhney Enterprises Limited - [2025] NZHC 392

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-2958

[2025] NZHC 392

BETWEEN AZAD AHMAD SHEIKH and SAIEDAH BANO SHEIKH
Plaintiffs

AND

SAWHNEY ENTERPRISES LIMITED

First Defendant

KARANVIR SAWHNEY

Second Defendant

Hearing: 3 March 2025

Counsel:

E Taia / A M Hey for the Plaintiffs

K D Puddle/ A Govind for the Second Defendant

Judgment:

5 March 2025

JUDGMENT OF ASSOCIATE JUDGE BRITTAIN

This judgment was delivered by me on 5 March 2025 at 12 midday.
Pursuant to Rule 11.5 of the High Court Rules.

…………………..
Registrar/Deputy Registrar

Solicitors:
Franklin Law, Auckland
Resolute Lawyers, Auckland

SHEIKH v SAWHNEY ENTERPRISES LTD [2025] NZHC 392 [5 March 2025]

Introduction

[1] The plaintiffs, Mr and Mrs Sheikh, owned a property in Papatoetoe. In February 2022, they signed an agreement for sale and purchase (the contract) to sell the property to the first defendant, Sawhney Enterprises Ltd (SEL). The terms of the contract were negotiated by Mr and Mrs Sheikh’s son, Zeead Sheikh, and SEL’s sole director, the second defendant, Karanvir Sawhney (Mr Sawhney).

[2] SEL failed to pay the deposit due under the contract and failed to settle. Mr and Mrs Sheikh cancelled the contract and resold the property. In this proceeding, they seek to recover the loss on the resale and related losses. They claim against SEL for breach of the contract.

[3] Mr and Mrs Sheikh also claim that SEL made the contract knowing that SEL was not able to perform its contractual obligations. They allege that:

(a)Mr Sawhney misrepresented that SEL had the means to settle, and they signed the contract in reliance on that misrepresentation, which was misleading and deceptive conduct by SEL and Mr Sawhney; and

(b)Mr Sawhney induced SEL to breach the contract (the tort claim).

[4] Mr Sawhney has applied to strike out the tort claim. The sole issue for determination is whether Mr and Mrs Sheikh’s cause of action alleging that Mr Sawhney induced SEL to breach the contract is tenable as a matter of law.

Legal principles — pleadings and strike out

[5] The correct approach to pleading in New Zealand was summarised by the Court of Appeal in Price Waterhouse v Fortex Group Ltd.1 In complex cases, properly drawn and particularised pleadings are an essential road map for the Court and the parties. The Court and opposite parties are entitled to be fairly informed of the essential basis of a claim or defence, and all necessary ingredients of it. A statement of claim must be sufficiently detailed to state a clear issue and inform the opposite

1 Price Waterhouse v Fortex Group Ltd CA179/98, 30 November 1998 at 17–19.

party of the case to be met to enable a reasonable degree of pre-trial briefing and preparation. This requires a common-sense judgment of what the pleadings convey, in the context of the case, to a sensible legal mind.

[6] Pursuant to r 15.1(1) of the High Court Rules 2016, the Court may strike…

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.

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Details

Case: [2025] NZHC 392
Decision Date: 5 March 2025

CaseChat Overview and Summary

In Sheikh v Sawhney Enterprises Limited, the plaintiffs, Mr and Mrs Sheikh, sought to recover losses from the first defendant, Sawhney Enterprises Limited (SEL), and its sole director, the second defendant, Karanvir Sawhney, arising from the sale of a property. The plaintiffs alleged that SEL breached a contract of sale and that Mr Sawhney induced SEL to breach the contract, knowing it would lead to the breach. They also claimed that Mr Sawhney misrepresented SEL's financial capacity, constituting misleading and deceptive conduct. Mr Sawhney applied to strike out the third cause of action, which was the tort claim alleging he induced the breach of contract.

The court considered whether the tort claim could succeed as a matter of law. Inducing a breach of contract requires deliberate conduct that causes loss, with the defendant knowing their conduct would induce the breach. The court found that the plaintiffs had sufficiently alleged that Mr Sawhney knew SEL would breach the contract and that his conduct induced the breach. However, the court noted that the pleadings were deficient in clearly alleging that Mr Sawhney acted in bad faith, which is necessary to found the tort claim. While the pleadings implied bad faith by alleging breaches of statutory duties, the court held that these allegations should not be assimilated with bad faith without further evidence.

The court declined Mr Sawhney's application to strike out the tort claim, finding it arguable as a matter of law. However, the court ordered the plaintiffs to amend their pleadings to clearly allege the elements of the tort, particularly bad faith. The court noted that the tort claim was difficult to prove but tenable. The plaintiffs were directed to re-plead and provide further particulars of their bad faith allegations, separate from breaches of statutory duties. The court also ordered costs to lie where they fell and set a deadline for the amended pleadings. The proceeding was adjourned pending the filing of the amended statement of claim.

Orders