Venkataswamy v Kodoor - [2024] NZHC 833

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2016-404-002374

[2024] NZHC 833

BETWEEN
SHYLA VENKATASWAMY

Plaintiff

AND

MURALI GANESH KODOOR and GEETA MURALI GANESH

Defendants

Hearing:
29 – 30 November 2023

Further submissions: 11 and 20 December 2023

Appearances:

N J Scampion and M A Ashmore for Plaintiff M I S Phillipps for Defendants

Judgment:

17 April 2024

JUDGMENT OF ANDREW J

[Remedy and costs]

This judgment was delivered by Justice Andrew on 17 April 2024 at 3.00 pm
pursuant to r 11.5 of the High Court Rules 2016 Registrar / Deputy Registrar
Date ………………………….

VENKATASWAMY v KODOOR [2024] NZHC 833 [17 April 2024]

Introduction

[1] In my liability judgment of 18 May 2023,1 I found the defendants liable for the second and third causes of action, namely breach of trust and breach of fiduciary duty. The defendants were ordered to repay the plaintiff an outstanding principal amount of USD634,641 but remaining questions concerning remedy and costs were deferred pending either resolution between the parties or a further hearing to determine those issues.

[2] This is my judgment on remedy and costs. It follows a further two-day hearing and receipt of submissions from the parties.

The judgment of 18 May 2023

[3]In my judgment of 18 May 2023, I found that:

(a)Sums totalling USD998,551 were advanced by Ms Venkataswamy to the defendants between 21 September 2010 and February 2011.2

(b)The defendants repaid the sums of USD163,910 and USD200,000 on 16 November 2011 and 30 July 2012, leaving the sum of USD634,641 to be repaid by the defendants to Ms Venkataswamy.3

(c)The mutual understanding or expectation was that Ms Venkataswamy would receive a significant return on her investment exceeding what she might obtain from real estate investment in California. Her whole rationale for investing in New Zealand was the representation made by Mr Kodoor that very attractive rates of return on real estate investments were available in New Zealand. It was also agreed that Ms Venkataswamy would need to keep her investment for at least three years (it was originally two years, but the parties subsequently seemed to agree to a three-year minimum term).4

1      Venkataswamy v Kodoor [2023] NZHC 1189.
2      Venkataswamy v Kodoor, above n 1, at [95] and [98].
3      Venkataswamy v Kodoor, above n 1, at [27], [38], [122] and [123].
4      Venkataswamy v Kodoor, above n1, at [128].

(d)The funds were advanced for investment in commercial real estate in New Zealand. The clear expectation and consensus were that there would be a generous rate of return having regard, among other things, to the lack of a comparable capital gains tax in New Zealand.5

(e)Ms Venkataswamy made demand for return of funds before the three-year agreed investment period had expired. This must have had some impact on the rate of return that Mr Kodoor might have achieved.6

(f)Despite misgivings about the pleadings, the defendants cannot simply be allowed to keep Ms Venkataswamy’s money…

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: [2024] NZHC 833
Decision Date: 17 April 2024

CaseChat Overview and Summary

The case of Venkataswamy v Kodoor, decided on 17 April 2024, revolves around a dispute between Shyla Venkataswamy, the plaintiff, and Murali Ganesh Kodoor and Geeta Murali Ganesh, the defendants, concerning the alleged breach of trust and fiduciary duty by the defendants. The court had previously found the defendants liable for these breaches, ordering them to repay an outstanding principal amount of USD634,641 to Ms Venkataswamy. This latest judgment addresses the measure of equitable compensation and costs.

The court was tasked with determining the appropriate measure of equitable compensation, considering factors such as the start date for calculation, the impact of Ms Venkataswamy’s request for early repayment, and the appropriate currency for repayment. It was also required to decide whether any adjustment should be made for re-investment, leverage, or student loan interest payments. Furthermore, the court had to decide if general or exemplary damages could be awarded and whether the award of equitable compensation should be reduced due to any contributory conduct by Ms Venkataswamy.

The court ruled that equitable compensation should be calculated based on the profit that would have been made had the defendants invested Ms Venkataswamy’s money dutifully. The start date for the calculation should be "from day one," considering each transfer received by the defendants. The court also determined that repayment should be in US dollars and that compensation should be based on a total return of 300 per cent for the period from 1 February 2011 until 31 December 2023. The court found that some allowance should be made for re-investment but rejected claims for leverage and student loan interest payments.

Regarding damages, the court allowed Ms Venkataswamy to claim general damages of NZ$50,000 but disallowed her claim for exemplary damages due to its late introduction. The court also decided against reducing the award of equitable compensation for any contributory conduct by Ms Venkataswamy.

In terms of costs, the court ordered increased costs of 50 per cent beyond the standard basis, reflecting the defendants' unreasonable conduct throughout the proceedings. The court meticulously addressed various cost items, accepting some and disallowing others, and finally calculated the total costs, adjusting for the disallowed items and applying the 50 per cent uplift. The court also addressed disbursements, allowing certain reasonable travel and accommodation costs for Ms Venkataswamy.

The final orders include specific directions for the calculation and payment of equitable compensation and general damages, along with detailed instructions on the calculation and submission of costs. The defendants are directed to pay the specified amounts to Ms Venkataswamy, including interest and re-investment allowances, and general damages. The court also directed that counsel for Ms Venkataswamy file a memorandum proposing final calculations on quantum for approval. Costs are to be calculated on a standard basis with a 50 per cent uplift, and certain disbursements are allowed, with specific instructions on how they should be claimed and submitted for approval.

Orders