Venkataswamy v Kodoor
[2023] NZHC 55
•1 February 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2016-404-2374
[2023] NZHC 55
BETWEEN SHYLA VENKATASWAMY
Plaintiff
AND
MURALI GANESH KODOOR and GEETA MURALI GANESH
Defendants
Hearing: On the papers Counsel:
CM Fisher for plaintiff
MIS Phillipps for defendants
Judgment:
1 February 2023
JUDGMENT OF ASSOCIATE JUDGE SUSSOCK
[Costs]
This judgment was delivered by me on 1 February 2023 at 3pm pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors:
Fortune Manning, Auckland
Vicki Ammundsen Trust Law Limited, Auckland
VENKATASWAMY v KODOOR [2023] NZHC 55 [1 February 2023]
Introduction
[1] The plaintiff filed an application dated 3 May 2022 to strike out the affidavit of Muralidhar JS affirmed on 19 January 2022 and filed by the defendants in opposition to the plaintiff’s application for an interim payment. In addition to issues as to form, the plaintiff alleged that the affidavit was a forgery as it was not signed or approved by Muralidhar JS.
[2]Orders were made by consent by Toogood J on 19 May 2022:
(a)removing the affidavit of Muralidhar JS from the court file pending the determination of the interim payment and security for costs applications, due to be heard on 16 June 2022;
(b)confirming there was no need for any change to the timetable directions for the fixture for those applications;
(c)further confirming that no directions were required regarding the filing of papers in opposition to the application for strike out; and
(d)setting out a timetable for the filing of costs submissions on the application to strike out.
[3] Costs submissions were filed by the plaintiff on 2 June 2022 as directed by Toogood J. The defendants sent a copy of their submissions to the previous case officer’s address but not the generic court email address on 16 June 2022. Unfortunately, the submissions did not come to the registry’s attention at that time.
[4] I issued my decision on the interim payment and security for costs applications on 2 November 2022, a copy of which is being kept separate from the Court file, so it is not disclosed to the trial judge to prevent disclosure as required by r 7.74 of the High Court Rules 2016. In that decision I referred to the fact that the defendants appeared
not to have filed any submissions in response to the plaintiff’s memorandum on costs.1 Despite this, the defendants did not follow up with the Court.
[5] Newly appointed counsel for the plaintiff followed up with the Registry in December 2022 for a decision on costs for the strike out application. I issued a minute on 14 December 2022 extending the time by which the defendants were able to file any memorandum in response to the plaintiff’s costs memorandum to 19 December 2022.
[6] Counsel for the defendants then filed a short memorandum dated 15 December 2022 referring to their earlier memorandum dated 16 June 2022. The defendants’ position is that costs ought to be reserved on the application as the application to strike out has not yet been determined and nor has the question of whether the affidavit is a forgery.
[7] I consider below whether costs ought to be ordered at this stage or reserved for determination following the substantive proceeding.
Factual background
[8] In the substantive proceeding, the plaintiff is seeking to recover sums loaned to the defendants in September 2010 of USD 740,000, plus USD 258,551 loaned between October 2010 to February 2011, alleged bonus payments of NZD 600,000, interest and costs. The proceeding was filed in 2016 but has not progressed smoothly. A six-day substantive hearing is finally scheduled to commence on 13 March 2023.
[9] The defendants accept USD 740,000 was paid by the plaintiff to the defendants in September 2010 but the terms are in dispute. The defendants’ primary defence is that they have repaid this amount by making payment to a third party, Muralidhar JS. A key issue is therefore the payments made by the defendants to Muralidhar JS.
1 Venkataswamy v Kodoor [2022] NZHC 2737 at [25]. Judgment is confidential to the parties with the outcome not to be disclosed to the trial judge.
[10] The plaintiff filed an application for an interim payment order under r 7.69 of the High Court Rules on 15 November 2021 together with affidavits by both her and her husband in support.
[11] On 2 February 2022, the defendants filed a notice of opposition to the application, together with affidavits by the first-named defendant, Mr Murali Ganesh Kodoor, his mother-in-law, Ms Hemathala Murthy, and Muralidhar JS. The affidavit by Muralidhar JS had been affirmed before a notary in Bangalore, India, as that is where Muralidhar JS resides. The affidavit filed, however, did not have the correct front sheet but instead had the front sheet of Ms Hemathala Murthy’s affidavit.
[12] The plaintiff filed a relatively substantial affidavit in reply dated 22 February 2022, together with an affidavit by her husband dated 19 February 2022.
[13] The plaintiff then filed an application to strike out Muralidhar JS’s affidavit on 3 May 2022, filing affidavits by the plaintiff, the notary who had notarised Muralidhar JS’s affidavit and a handwriting expert in support.
[14] The plaintiff’s affidavit explains that after reading Muralidhar JS’s affidavit she became concerned that the affidavit had not been signed by him. The plaintiff obtained an affidavit from the notary, Mr V Rangaraju, who deposed:
(a)when he saw and notarised the affidavit, it did not have the front sheet as now filed in the High Court;
(b)the affidavit had been pre-signed by Muralidhar JS when he notarised it;
(c)he did not see Muralidhar JS when the affidavit was signed, and Muralidhar JS did not appear before him to sign the affidavit; and
(d)he does not know if Muralidhar JS actually signed the affidavit or if another person signed it.
[15] The plaintiff deposes that she also instructed a handwriting expert, Mr Michael Maran, who provided two reports to the plaintiff and concluded that the person who had signed the affidavit in the name of Muralidhar JS was probably not Muralidhar JS.
[16] The plaintiff’s costs memorandum (but not the plaintiff’s affidavit) records that with the evidence of the notary and the handwriting expert, the plaintiff made a complaint to the Police in Bangalore. The costs memorandum further records that the Police spoke to Muralidhar JS who denied all knowledge of the affidavit and made a formal statement to the Police confirming this.
[17] A copy of the statement to the Police in Bangalore is attached to the plaintiff’s costs memorandum. The statement is not dated but records that Muralidhar JS has no knowledge of the affidavit purportedly by him dated 19 January 2022 and that it is not signed by him and he had not been before any notary to attest it. Furthermore, the statement records that he had no email or other communications with the defendants, their lawyers or anyone related to the New Zealand case in regard to the affidavit shown to him by the Police.
[18] The plaintiff’s costs memorandum records that a copy of the statement made by Muralidhar JS to the Police was provided to counsel for the defendants on 16 May 2022 prior to the rescheduled call in the Duty Judge list on 19 May 2022. At that call the parties sought orders by consent in relation to the strike out application as set out above.
Plaintiff’s costs submissions
[19] The plaintiff submits that the fact that the defendants agreed to proceed with the application for interim payment on the basis that the affidavit of Muralidhar JS was removed from the court file, rather than filing any opposition or giving any indication of opposition, means it is reasonable to conclude that the affidavit of Muralidhar JS is a forgery. Counsel for the plaintiff (at the time the costs memorandum was filed in June 2022) submits that the application was “no doubt insurmountable”, given that Muralidhar JS had denied all knowledge of the affidavit and that he had had no communications with the defendants or their lawyers. Counsel
at that time goes so far as to say that the party who stands to benefit from that forgery is the defendants and it is the first-named defendant who, in all probability, created the affidavit. The plaintiff therefore seeks indemnity costs submitting this is precisely the type of case and the conduct of a party which the Court must condemn by such an award.
[20] The plaintiff refers to Banks v Farmer where indemnity costs were awarded by consent in relation to certain steps after it was found that the plaintiff had produced forged email documents.2 In Banks v Farmer, Moore J referred to Medtronic New Zealand Ltd v Finch where Duffy J commented that “[t]he use of, and reliance on fabricated evidence is flagrant misconduct, which is the very type of conduct that entitles an affected party to an award of indemnity costs”.3
[21]The plaintiff’s costs memorandum states that the plaintiff has incurred costs of
$16,000 plus disbursements, which will include the cost of the handwriting expert. The plaintiff therefore seeks an award of that amount as indemnity costs plus disbursements. No copies of invoices are provided.
Defendants’ costs submissions
[22] The defendants describe the plaintiff’s approach as being to ambush the defendants by not allowing sufficient time to oppose the application and then asking the Court to conclude the allegations are proven, all the while relying on Muralidhar JS’s untested evidence.
[23] Counsel for the defendants submits that it was clear that there was insufficient time for the defendants to respond to the application to strike out before the allocated fixture for the interim payment application on 16 June 2022, and that the obvious pragmatic response was for the affidavit to be put to one side for the purposes of the interim payment application. The defendants therefore agreed to the directions made by Toogood J on 19 May 2022, with the plaintiff seeking the order made and set out above at [2](d)] in relation to costs.
2 Banks v Farmer [2022] NZHC 458 at [23].
3 At [23], citing Medtronic New Zealand Ltd v Finch [2014] NZHC 266 at [29].
[24] Counsel for the defendants refers to r 14.8 of the High Court Rules which provides that costs on an interlocutory application must be fixed when the application is determined unless there are special reasons to the contrary. Counsel refers to several cases considering the meaning of “determined” and to the following passage from Sim’s Court Practice:4
If an interlocutory application is withdrawn the court may fix costs (if sought) or may reserve them to be determined at the conclusion of the proceeding. It would not be in the spirit of the rules to make orders for costs which would discourage the parties from sensibly concluding opposed interlocutory applications before their final determination by the court …
[25] The defendants submit that the application has not been determined as the affidavit has not been finally struck out and the defendants may still file papers in opposition. In their original 16 June 2022 memorandum the defendants say that Muralidhar JS is a key witness in the proceeding but the evidence in his affidavit was not core evidence for the hearing of the interim payment application on 16 June 2022. Nor, the defendants say, has the question of whether the affidavit is a forgery been determined. The defendants further submit that it remains open for the Court to consider making further directions for the filing of papers in opposition and for a hearing to dispose of the application to strike out the affidavit. Alternatively, the defendants submit the Court might decide to resolve the application (including the allegation of forgery) at trial.
[26] The further memorandum filed by the defendants on 15 December 2022 does not further elaborate on the defendants’ intentions in relation to the Muralidhar JS affidavit and whether they intend to seek to rely on it in the substantive hearing, despite the memorandum being filed less than three months before the substantive hearing (and close to the time by which the defendants’ briefs of evidence were required to be filed).
[27] The defendants’ costs memoranda do not expressly address or challenge the summary of steps as set out in the plaintiff’s memorandum including reporting the matter to the Police in Bangalore or the statement of Muralidhar JS to the Police or
4 Laura O’Gorman (ed) Sim’s Court Practice (online ed, LexisNexis) at [HCR14.8.3]. And see Winton v Winton [2018] NZHC 486 at [16]–[17] and [26]–[27]; and Ip v Ip [2016] NZHC 528 at [12].
that it was provided to counsel for the defendants on 16 May 2022. The defendants’ 16 June 2022 memorandum only goes so far as to record: “Counsel notes that Mr Muralidhar JS appears to be in the habit of providing conflicting statements to whoever happens to be asking.”
[28] The defendants accept that knowingly relying on a forged document would fall into the category of behaviour which would justify indemnity costs being awarded. However, counsel submits the Court would first need to determine whether the party relying on the forged document was aware it was forged. They say the defendants have had no reasonable opportunity to address either the allegation of forgery or responsibility for any such forgery, which are both matters that can properly be addressed at trial.
[29] Furthermore, the defendants refer to the fact that the plaintiff attached a notarised statement by Muralidhar JS dated 29 November 2018 to her affidavit in reply in February 2022 which the plaintiff says she received on 29 November 2018. Despite this, the defendants say the plaintiff did not disclose the 2018 Muralidhar JS statement to the defendants by way of discovery or otherwise include it in her affidavit in support of her application for an interim payment order or refer to it in any other affidavits filed post-November 2018. The defendants say that they first became aware of this statement when they received the plaintiff’s reply affidavit on 22 February 2022.
[30] The defendants submit that although the plaintiff already had the 2018 Muralidhar JS statement when she received the Muralidhar JS affidavit from the defendants on 1 February 2022, the plaintiff took over three months to put together the application to strike out and at no time communicated with the defendants about the apparent contradiction between the 2018 Muralidhar JS statement and the affidavit. The defendants say that the plaintiff’s expert was instructed in March 2022 and only on 3 May 2022 did the plaintiff file, but not serve, the application to strike out. On 9 May 2022 the defendants were advised by the Court of the first call for the application on 12 May 2022 and, upon enquiry, discovered the strike out application had been filed.
[31] Finally, the defendants submit there is no evidence of the actual costs of the plaintiff and that indemnity costs must be reasonable and actual costs. They point to the fact that scale costs are assumed notionally to be two thirds of actual costs submitting on that basis that reasonable actual costs would be around half the costs now claimed.
Discussion
[32] Rule 14.1(1) of the High Court Rules confirms that “[a]ll matters are at the discretion of the court if they relate to costs …”. The discretion vested by r 14.1 is wide but must be exercised subject to the general principles in r 14.2. The first principle set out in r 14.2(1)(a) is that the party who fails with respect to a proceeding or interlocutory application should pay costs to the party who succeeds. Rule 14.8 further provides:
14.8 Costs on Interlocutory Applications
(1)Costs on an opposed interlocutory application, unless there are special reasons to the contrary,—
(a)must be fixed in accordance with these rules when the application is determined; and
(b)become payable when they are fixed.
(2)Despite subclause (1), the court may reverse, discharge, or vary an order for costs on an interlocutory application if satisfied subsequently that the original order should not have been made.
(3)This rule does not apply to an application for summary judgment.
[33] Although the strike out application has not yet been finally determined, it appears unlikely that the defendants will require it to be. The failure by the defendants to expressly challenge the veracity of the statement from Muralidhar JS which is attached to the plaintiff’s costs memorandum, or that it was provided to the defendants on 16 May 2022 prior to the Duty Judge list on 18 May 2022, suggests that the defendants accept the plaintiff’s summary of events and that the statement to the Police provided by the plaintiff was made by Muralidhar JS. The defendants’ submissions only go so far as to say that Muralidhar JS appears to be in the habit of providing conflicting statements to whoever happens to be asking, rather than challenging the authenticity of the statement in the first place.
[34] The defendants submit that even if the affidavit is found to be a forgery, before ordering indemnity costs the Court would first need to determine whether the party relying on the forged document was aware it was forged. It is difficult to understand however who else would be responsible for the forgery, other than the defendants, if the statement to the Police is authentic, as Muralidhar JS says he has had no contact with either the defendants or the defendants’ counsel and this is not expressly disputed.
[35] The evidence in relation to the Muralidhar JS statement to the Police however is provided by memorandum rather than in an affidavit.
[36] Furthermore, it appears there is still a possibility that the defendants may seek to rely on the Muralidhar JS affidavit in the substantive hearing which will require a determination of the plaintiff’s application to strike out. If the defendants do wish to rely on Muralidhar JS’s affidavit in the substantive hearing, they will need to file a notice of opposition to the plaintiff’s application for strike out. The substantive hearing is due to commence on 13 March 2023, so there is a need for the defendants to confirm their position urgently. I therefore include a direction below for the defendants to file any notice of opposition by 9 February 2023. If a notice of opposition is filed, it may be that the most efficient way to determine the strike out application would be to do so in the context of the substantive hearing. I ask counsel to confer in that case and include a direction for a joint memorandum to be filed proposing appropriate directions (with any differences set out).
[37] Finally I note that no copies of invoices were provided with the plaintiff’s memorandum, so an assessment cannot be made of whether the amounts claimed for indemnity costs are reasonable.5
[38] For all these reasons I consider costs on the plaintiff’s strike out application in relation to Muralidhar JS’s affidavit ought to be reserved until the substantive hearing.
5 Bradbury v Westpac Banking Corp (2009) 18 PRNZ 859 (HC) at [204] and [209], as confirmed in
Edel Metals Group Ltd v Geier Ltd [2018] NZCA 494 at [62].
Result
[39]I order:
(a)Costs on the plaintiff’s application to strike out Muralidhar JS’s affidavit dated 19 January 2022 are reserved until the substantive hearing of this proceeding.
(b)The defendants are to file and serve any notice of opposition to the plaintiff’s strike out application together with any affidavits in support by 9 February 2023.
(c)If a notice of opposition is filed, the parties are to confer and file a joint memorandum proposing directions for determining the strike out application by 16 February 2023 (with any differences set out).
Associate Judge Sussock
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