Venkataswamy v Kadoor
[2017] NZHC 2038
•24 August 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2016-404-002374 [2017] NZHC 2038
BETWEEN SHYLA VENKATASWAMY
Plaintiff
AND
MURALI GANESH KODOOR AND GEETA MURLI GANESH Defendants
Hearing: 18 August 2017 Appearances:
J Murray for Plaintiff
M Phillips for DefendantsJudgment:
24 August 2017
JUDGMENT OF WOOLFORD J
This judgment was delivered by me on 24 August 2017 at 3:30 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/ Deputy Registrar
Date:
Solicitors/Counsel:
J Murray, Auckland
Vicki Ammundsen Trust Law Limited, Auckland
VENKATASWAMY v KODOOR & ANOR [2017] NZHC 2038 [24 August 2017]
Introduction
[1] On 28 March 2017, Doogue AJ dismissed the defendants’ application for a stay of these proceedings.1 The defendants had argued that the plaintiff’s claim should be heard and determined in India and not in New Zealand. The Judge disagreed and found that New Zealand was the appropriate forum.
[2] The defendants say Doogue AJ got it wrong. They now seek to review his decision under r 2.3 of the High Court Rules as in force immediately before 1 March
2017.2
Approach to review
[3] Rule 2.3 provides:
2.3 Review of decision
(1) An application for a review, under section 26P(1) of the Act, of an order or a decision made by an Associate Judge must be by interlocutory application, which must fully state the grounds of review and what exactly is challenged by the applicant.
(2) Unless a Judge or an Associate Judge directs otherwise, notice of the application must be filed and served,—
(a) if it is made by a party who was present or represented when the order was made or the decision was given, within 5 working days of the order being made or the decision being given; or
(b) if it is made by a party who was not present or represented, within 5 working days after the receipt by that party of notice of the making of the order or the giving of the decision.
(3) Unless a Judge or an Associate Judge directs otherwise, the application does not operate as—
(a) a stay of the proceeding; or
(b) a step in the proceeding.
1 Venkataswamy v Kodoor & Anor [2017] NZHC 554.
2 The proceeding must be dealt with as if the provisions of the former High Court Rules 2016 referring to s 26P of the Judicature Act 1908 were in force under the Senior Courts Act 2016 s 186 and sch 5, cl 11(2). This includes r 2.3.
(4) If the order or decision being reviewed was made following a defended hearing and is supported by documented reasons,—
(a) the review proceeds as a rehearing; and
(b) the Judge may, if he or she thinks it is in the interests of justice, rehear the whole or part of the evidence or receive further evidence.
(5) In all other cases,—
(a) a review proceeds as a full rehearing; and
(b) the Judge may give the order or decision the weight he or she thinks appropriate.
[4] Under r 2.3(4), if the Associate Judge’s decision is a reasoned one following a defended hearing, being one where the interested parties have been afforded an opportunity to make full argument, the approach is essentially appellate.3 The applicant has the burden of persuading the court that the Associate Judge’s decision was wrong, in that it rested on unsupportable findings of fact or applied wrong principles of law. The court will apply the approach in Austin, Nichols & Co Ltd v
Stichting Lodestar which involves the court making its own assessment as to whether the original decision is wrong.4
Factual background
[5] The plaintiff resides in the United States of America and the defendants in
New Zealand, although all parties have a right of residence in India. In September
2010, the plaintiff advanced US$740,000 to the defendants for the purpose of purchasing a commercial building in Orewa. The transaction did not proceed. The focus of the case is on what subsequently happened to those funds.
[6] The plaintiff also says that she advanced further funds totalling US$258,551 to the defendants via third parties on various dates between October 2010 and February 2011. The defendants acknowledge receiving further funds from third
parties but maintain that these funds had nothing to do with the plaintiff.
3 McGechan on Procedure (online ed, Brookers) at [HR2.3.02]; Caringrace Inc v Claridge [2016] NZHC 1704 at [36].
4 Austin, Nichols & Co Ltd v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141.
[7] The defendants appear to have used the funds or some of those funds they received in a liquor business which involved the remittance of funds abroad. The plaintiff says that if this happened, it was without her consent. In about October
2011 the plaintiff asked for her money back. The defendants say that funds totalling US$736,449.18 were then repaid either directly to the plaintiff or via a third party. The plaintiff acknowledges receiving US$163,910 in repayment of the initial advance in November 2011 but denies receiving any further repayments. She therefore claims the sum of US$834,641, being the funds advanced by her, totalling US$998,551, minus the one repayment of $163,910 she acknowledges receiving.
Associate Judge’s decision
[8] After setting out the factual background to the proceedings, Doogue AJ referred to the legal principles governing the defendants’ application to stay the proceedings on the ground that New Zealand was not the appropriate forum. He stated that a litigant has the right to commence litigation where he or she chooses and it is up to the party seeking trial elsewhere to satisfy the court that there is another available forum which prima facie is more appropriate. If the court was persuaded that there was such a forum, the court would normally grant a stay unless there were circumstances by reason of which justice required that the stay should
nonetheless not be granted.5 Doogue AJ therefore found that the defendants were
required to establish that India was an available forum which was prima facie more appropriate for the trial of the action.
[9] The Associate Judge stated that a key factual issue was whether the payments by third parties to the defendants totalling US$258,551 were actually paid on behalf of the plaintiff or whether, as the defendants submitted, those payments had nothing to do with the plaintiff. The third persons who made the payments were Indian residents or were domiciled in India or carried on business in that country. The Associate Judge noted that discovery was likely to be an important aspect of
resolving the factual dispute between the parties.6 Although a New Zealand court
would not be able to make a non-party order for discovery against the third parties in
5 At [21]–[22].
India, the Associate Judge found that the documents may be required to be disclosed by more indirect means. Discovery could be ordered from the parties to the proceedings compelling them to disclose documents that they have or had under their control, the source of which were exchanges between themselves and the third parties. The Associate Judge held that the place where the documents originated was
therefore not decisive as to whether or not they would be disclosed on discovery.7
[10] The Associate Judge stated that another factor which needed to be taken into account was the ability of the plaintiff or the defendants to obtain the testimony of witnesses at any hearing. After reviewing all the options, the Associate Judge noted that witnesses resident in India could be examined by a court in India and the record of the evidence remitted to New Zealand for consideration by the trial court in this country pursuant to a letter of request procedure. Alternatively, if the witnesses were agreeable to doing so, their evidence could be taken by audio video link from India obviating the need for the witnesses to travel to this country. The Associate Judge noted that this would be a relatively convenient and inexpensive way of obtaining
such evidence.8 The Associate Judge did note one drawback of the letter of request
procedure in that a New Zealand court would not have the advantage of hearing from the witnesses in person.
[11] The Associate Judge then considered a number of other factors including considerations of efficiency and the ability to enforce any judgment.
[12] The Associate Judge concluded that although the defendants had established that there would be some advantage in the trial taking place in India, in particular that a number of witnesses would then give their evidence in person, they were not able to clearly demonstrate that India was the more appropriate forum.9
[13] Turning to the requirements of justice, Doogue AJ noted that the procedure in India involved a Police investigation. The Associate Judge was of the view that there were three potential disadvantages inherent in a procedure commenced by way
of Police investigation, those being in the area of discovery, ascertainment of facts
7 At [35].
8 At [45].
and the ability of the parties to make representations about the outcome.10 The Associate Judge concluded that assessed by a commonly held standard of justice applicable in this country, substantial justice may not be achieved if there was a change of forum and the dispute was submitted to a Police investigation in India. He therefore considered that a stay of the New Zealand proceedings ought not to be granted.
Police investigation
[14] About a month after the statement of claim was filed, the defendants made a complaint to the Indian Police. It is a strange complaint. The defendants refer to the plaintiff as the “accused”. They say they received US$730,000 from the accused. Yet in his affidavit filed in this court Mr Kodoor acknowledges receiving US$740,000 and actually annexes copies of the relevant bank documentation evidencing the transfer of two sums of US$390,000 and US$350,000 on
20 and 22 September 2010 which together total US$740,000. In the defendants’ Police complaint, Mr Kodoor goes on to list all the repayments he said the defendants made to the plaintiff and her advocate in Bangalore which total US$736,449.18. He then states:
Shyla now is not returning the overpayment made and is cheating us. She is also claiming unrelated payments made by others. Kindly investigate and take necessary action.
[15] Presumably, the overpayment to which Mr Kodoor refers is the sum of US$6,449.18, being the difference between the US$730,000 he said the defendants received from the plaintiff and the US$736,449.18 which he said was the total of all repayments. Mr Kodoor must have known that the accusation that the plaintiff now was not returning the overpayment was wrong because there was no overpayment. The defendants have suffered no loss yet have made a complaint to the Police and referred to the plaintiff as the accused and themselves as the complainant. The defendants’ motives in so doing are questionable.
[16] Subsequent to the decision of Doogue AJ, further evidence has been filed regarding the Police investigation in India. In particular, an Indian lawyer has
10 At [68]–[70].
confirmed in an affidavit dated 6 July 2017 that the plaintiff can bring her claim in the civil courts in India. Once a civil claim is filed the Police complaint which has already been made would be investigated and form part of the civil claim. The Police may have an investigatory role in civil claims and provide a report to the civil court for use in the civil proceedings. The lawyer also states that the Police use their powers to obtain any necessary documentation or information.
[17] Further, two letters apparently from the same Police Sub-Inspector have been provided to the court. The letters contain differing opinions as to the jurisdiction of the Police to investigate the matter. The first is dated 29 July 2017 and was obtained by the plaintiff. It states:
On reviewing the complaint, it was found that Mrs. Shyla Venkataswamy is USA citizen. The financial transactions took place between USA and New Zealand for which we do not have jurisdiction and can be resolved in concerned court.
[18] The second is dated 2 August 2017 and was obtained by the defendants. It states:
On reviewing the complaint carefully filed by the complainant and the details given by Shyla Venkataswamy we now understand that the financial matters happened in India at the Union Bank of India and the State Bank of India where monies were received by Shyla Venkataswamy and Mr Muralidhar from New Zealand. I have attached the evidence obtained with this letter. Shyla made false and misleading statements to Sanjay Nagar Police.
Henceforth, this Police station has the jurisdiction to investigate and report to the appropriate courts in Bangalore.
Defendants’ submissions
[19] The defendants submit that there are two key factual issues:
(a) Were the third party payments in India of US$258,551 payments made by the plaintiff and therefore repayable by the defendants to the plaintiff?
(b)Did the defendants pay the sum of US$572,538.23 in India to the plaintiff? If so was that money returned to the defendants, as the plaintiff claims?
[20] Although they acknowledge that the funds started life as a proposed investment in New Zealand property, the defendants submit the situation changed when the investment opportunity was lost. Thereafter all the relevant events and transactions occurred in Bangalore, India. The alleged third party payments also occurred in and were effected by third parties residing in India. The defendants submit that a Mr Muralidhar is a critical witness and that the evidence overwhelmingly indicates that he is the plaintiff ’s agent in Bangalore. At this stage, there has been no affidavit evidence filed by him.
[21] The defendants submit that apart from emails and the undisputed evidence of the initial advances of US$740,000, the plaintiff provides no documentary or other witness evidence to support her claims. The defendants submit that all the evidence to support or test the plaintiff’s claims is available in India. The plaintiff regularly travels to India. The plaintiff was born in India, is a resident of Bangalore and has an Indian bank account. Despite the plaintiff’s denials of business interests in India, the defendants submit that she talked of planned investments there. The defendants also acknowledge living and having business interests in Bangalore.
[22] The defendants therefore submit that the key factual questions are best determined in Bangalore, India as the natural forum to resolve the dispute.
Discussion
[23] After careful consideration of the pleadings and the evidence as well as the submissions of counsel, I am of the view that the Associate Judge’s decision should be upheld. Doogue AJ did not get it wrong.
[24] The legal principles are not in dispute. Both the Associate Judge and the defendants cited the following passage from Longbeach Holdings Ltd v Bhanabhai
& Co Ltd, in which the Court of Appeal referred to the House of Lords decision in
Spiliada Maritime Corporation v Cansulex Ltd:11
The Court must be satisfied that there is another available forum for the trial of the case that is the more appropriate forum, in that the case may be tried there more suitably for the interests of the parties and the ends of justice. The burden of proof of that rests on the defendant. Relevant considerations will be convenience and expense, the places where the parties respectively reside or carry on business, the law governing the transaction, what is the “natural forum”, ie, that with which the action ahs the most real and established connection, and whether a New Zealand forum offers the plaintiff a “legitimate personal or juridical advantage”. Put shortly, the Court’s task, Lord Goff of Chievely said [in Spiliada], is “to identify the forum in which the case can be suitably tried for the interests of all the parties and for the ends of justice”.
[25] Associate Judge Doogue also cited Katz J’s helpful summary of the principles in Americhip Inc v Dean. Katz J listed relevant principles and summarised the position thus:12
A stay will only be granted on forum conveniens grounds where the court is satisfied that there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of the action. In other words, there is an available and competent forum in which the case may be tried more suitably for the interests of all the parties and the ends of justice.
[26] The defendants focus only on two key factual issues. In my view, there are two other key factual issues relevant to the decision. The first key factual issue is the basis on which the plaintiff advanced US$740,000 to the defendants in New Zealand in September 2010. Mr Kodoor alleges that this advance was in fact a repayment of monies the plaintiff had earlier borrowed from his family in India to invest in the USA and although it was a repayment of debt the advance would be used for an
investment on the plaintiff’s behalf.
11 Longbeach Holdings Ltd v Bhanabhai & Co Ltd [1994] 2 NZLR 28 at 35, citing Spiliada
Maritime Corporation v Cansulex Ltd [1987] AC 460 (HL) at 480.
12 Americhip, Inc v Dean [2015] NZHC 700, [2015] 3 NZLR 498 at [14]. See also Schumacher v Summergrove Estates Ltd [2014] NZCA 412, [2014] 3 NZLR 599; Expotrade Corp v Irie Blue NZ Ltd [2013] NZCA 675, (2013) 21 PRNZ 680 at [39].
[27] When the proposal for a commercial property investment was still on foot, Mr Kodoor emailed the plaintiff on 12 September 2010 and offered the plaintiff:
Guaranteed 60% more money on your money invested. i.e. if you invest
$500,000NZD, you will get back NZD$800,000 in 2 years time (minimum period) plus you will get NZD$37,500 (7.5% return on NZD$500,000) in 12 equal instalments on 1st of every month. This return is guaranteed. Please let me know your participation and how much money you want to invest?
[28] On the same day the plaintiff replied:
I will get you 750-1 ml USD.
[29] On 13 September 2010, the defendants advised the plaintiff that they would form a trust, the trustee of which would be a company incorporated for the plaintiff (corporate trustee) to protect the plaintiff’s interests. The defendants said that their company would have an investment relationship with the plaintiff’s company and trust thus protecting her investment. The plaintiff then advanced the sum of US$740,000 to the defendants in two separate transfers on 20 and 22 September
2010.
[30] On 6 October 2010, the defendants asked their lawyer to document the advance of US$740,000 as a loan, but it seems that no loan documentation was ever completed. Stella & Bella Investments Limited was then incorporated on 14 October
2010 with the plaintiff and the second defendant as directors and equal shareholders. The company was, however, removed from the companies register on 26 July 2011 after the commercial property investment did not proceed. The appropriate forum to determine the first key issue as to the basis of the initial $740,000 transfer is clearly New Zealand as the money was transferred to New Zealand in the context of discussions about investment here.
[31] The second key factual issue is what happened to the US$740,000 when the commercial property investment did not proceed. Mr Kodoor alleges that he and his wife then agreed with the plaintiff in March 2011 that the funds received from the plaintiff would be invested in their liquor business and transferred to India for the purposes of such an investment.
[32] Although he attaches a number of emails to his affidavit which show communication with the plaintiff about aspects of the liquor business Mr Kodoor does not disclose any documentation which explains the basis of the agreement. In his Police complaint, Mr Kordoor states that he told the plaintiff that in the worst case scenario, the principal amount was guaranteed but not the profits. For her part, the plaintiff says that she was never at any time involved in their liquor business and never agreed with the defendants that they could invest her funds in the business. Again the appropriate forum to determine the second key issue is clearly New Zealand as the alleged agreement related to funds in New Zealand. The first two key factual issues have nothing to do with India.
[33] I accept that the two further key factual issues identified by the defendants do have a connection with India. These two issues are third party payments to the defendants totalling US$258,551 which allegedly originated from the plaintiff and repayments allegedly made by the defendants either directly to the plaintiff or to third parties in India totalling US$572,538.23.
[34] While these payments were through third parties in India, they all involved the defendants either as recipients or payers. The defendants acknowledge receiving payments totalling US$258,551 from third parties but say the payments had nothing to do with the plaintiff. Presumably, therefore, the defendants will have a different explanation. If they were payments for goods or services supplied by the defendants then presumably there will be documentation evidencing this such as contracts, invoices or bank statements which the defendants would have retained for the purposes of preparing financial accounts and tax returns. If they were loans or advances not from the plaintiff but from the third parties themselves, then again there should be some documentation evidencing this, even if only emails. In fact, Mr Kodoor alleges that substantial payments in February 2011 totalling US$102,000 came from his wife, his daughter and his father-in-law and was money advanced to him as a family loan for business purposes. If that is the case, then his wife, his daughter and his father-in-law would presumably be able and willing to give evidence for the defendants either personally in a New Zealand court or by way of audio visual link from India.
[35] Similarly, as to the alleged repayments, the defendants will have access to documentation because they themselves are the payers. In fact, Mr Kodoor annexes evidence such as ANZ Direct Online International Payments Batch documents and an ASB Foreign Currency Account – Withdrawal Form which show each payment and the beneficiary of each payment. In respect of one of the alleged repayments of US$200,000 on 30 July 2012, Mr Kodoor also annexes a copy of a bank statement from the Union Bank of India in Bangalore in the plaintiff’s name which shows the receipt of US$200,000 into the plaintiff’s account on 31 July 2012, although the plaintiff challenges the entitlement of the defendants to the copy.
[36] This supports the Associate Judge’s finding that discovery could be ordered from the parties compelling them to disclose documents that they have or had under their control, the source of which were exchanges between them and/or the third parties. I agree with the Associate Judge that the place where the documents originated is therefore not decisive as to whether or not they will be disclosed on discovery. Again, New Zealand is just as much the appropriate forum as India to determine these two further key factual issues.
[37] As to the interest of justice, it appears that Doogue AJ was provided with only limited information about the civil justice processes in India and assumed that the dispute between the parties would be resolved by the Police investigation. It is now clear that a claim can be brought in the civil courts in India and that a report from the Police may be used in these proceedings.
[38] Neither party has, however, filed a civil claim in India nor have the defendants provided evidence about the availability of a discovery process similar to New Zealand or other relevant factors such as the average length of time to a decision in India. The defendants have therefore not been able to persuade me that
the Associate Judge was wrong when he stated:13
I consider therefore that, assessed by commonly held standards of justice in this country, substantial justice may not be achieved if there was a change of forum and the dispute was submitted to a Police investigation in India.
13 At [84].
Conclusion
[39] The natural forum to resolve this dispute is New Zealand. The significant events giving rise to the plaintiff’s claim occurred in and/or have a more real and substantial connection with New Zealand. The central witnesses, being the defendants and the plaintiff, live in New Zealand or are prepared to travel here for the hearing of the claim. The documentary evidence, such as emails and bank records, are either readily available or can be made readily available in New Zealand. Any judgment obtained by the plaintiff would be readily enforceable against the substantial assets of the defendants in New Zealand. There are no cost or convenience disadvantages to the defendants from this proceeding and there is not a clearly or distinctly more appropriate forum for trial of this proceeding. The application for review of the Associate Judge’s decision is therefore dismissed.
[40] The plaintiff is entitled to costs on a 2B basis. If the parties cannot agree, memoranda of no more than five pages should be filed within 28 days of the date of
this judgment for a decision on the papers.
Woolford J
6
0