Wati v Sharma
[2021] NZHC 3601
•22 December 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2020-404-236
[2021] NZHC 3601
BETWEEN NIRMALA WATI
Applicant
AND
DEO DATT SHARMA
Respondent
Hearing: On the papers Counsel:
R O Parmenter for Applicant Respondent in person
Judgment:
22 December 2021
JUDGMENT OF PAUL DAVISON J
This judgment was delivered by me on 22 December 2021 at 3pm pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Solicitors:
Witten-Hannah Howard, Auckland
WATI v SHARMA [2021] NZHC 3601 [22 December 2021]
Introduction
[1] By Minute dated 28 October 2021, Toogood J made consent timetable orders for the filing of submissions and made a direction that the matter be determined on the papers. Mr Parmenter for the applicant and Dr Sharma (self-representing) have both filed written submissions.
[2] The background to this longstanding dispute between Ms Nirmala Wati (the applicant) and her former husband Dr Deo Sharma (the respondent) is succinctly summarised by Downs J in his judgment of 10 August 2020 in which he granted the applicant leave to seek charging orders in respect of outstanding court costs owed to her by the respondent.1 The applicant and respondent separated in August 2000, and have ever since been engaged in protracted litigation commencing in the Family Court and progressing to the High Court, Court of Appeal, and Supreme Court.
[3] In the context of bankruptcy proceedings which had been commenced by the applicant to enforce costs orders against the respondent, on 4 March 2011 he paid the sum of $21,000.00 into Court. That sum remains held by the Registrar together with accrued interest (the $21,000.00).
[4]The applicant now applies for:
(a)an order that the interim charging orders be made final.
(b)ordering the respondent to pay the costs of and incidental to the interim charging orders, on a scale 2B basis.
(c)an order for costs and disbursements on the present application.
(d)an order that the Court disburse the costs payable to the appellant from the $21,000.00 paid into Court by the respondent.
1 Wati v Sharma [2020] NZHC 2010.
(e)An order that the remaining balance of the $21,000.00 following the disbursement of the costs for which the charging order was made, be retained by the Court pending further orders to be made under r 17.59 in respect of three other proceedings (the consolidated proceedings) between the parties being:
(i) CIV 2008-404-6367/6369/6370/6371/6375.
(ii) CIV 2007-404-1513.
(iii) CIV 2006-404-2976.
Background
[5] By judgment dated 2 July 2020 Jagose J allowed an appeal by the applicant in relation to the enforcement of two Family Court costs orders.2 Justice Jagose directed the District Court to reconsider the applicant’s application for leave to issue enforcement proceedings, and made an order for costs and disbursements in her favour in the sum of $9,841.30 (the appeal costs). 3
[6] On 28 July 2020 the applicant registered a charging order over the respondent’s interest in the former family home under certificate of title NA 59C/1096 (North Auckland Registry) in respect of the appeal costs (the charging order).
[7] On 10 August 2020 the High Court granted the applicant permission for charging orders to be made in respect of the consolidated proceedings and directed the respondent to pay costs in the sum of $9,996.50. In granting the application, Downs J said:4
[15] On 4 March 2011, Dr Sharma paid $21,000 into the High Court. Dr Sharma’s covering letter refers to the amount as “payment of security” in cases in relation to Ms Wati. The Registrar issued a receipt on the same basis. Dr Sharma’s recent affidavit captures this sequence, and a related claim the
$21,000 was security for costs. So, Dr Sharma’s argument about the $21,000 appears correct. However, the story does not end 4 March 2011.
2 In relation to file: (CIV 2020-404-236).
3 Wati v Sharma [2020] NZHC 1545.
4 Wati v Sharma, above n 1 (footnotes omitted).
[16] On 9 March 2011, Mr Witten-Hannah, Ms Wati’s lawyer, asked Associate Judge Bell to order the $21,000 be paid to Ms Wati. At that time, Dr Sharma was trying to set aside the bankruptcy notices in relation to the unpaid costs orders. Associate Judge Bell asked Dr Sharma if he agreed to the $21,000 being paid to Ms Wati. Dr Sharma did not agree. The Judge concluded the money was not actually security for costs, but money paid into Court “to demonstrate to the Court that [Dr Sharma] is able to put up money amounting to the orders for costs.” The Judge continued, this was “a step taken by [Dr Sharma] to try and prove his solvency.” … In other words, Dr Sharma repudiated the $21,000 as security for costs when confronted on this very issue, by a Judge, nine years ago.
[8] There are three interim charging orders charging the “money held by the High Court at Auckland standing to the credit of the liable party in a proceeding or interlocutory application, viz. $21,000.00 paid by you into Court under CIV 2008- 404-6367.” They are:
(a)An interim charging order in this present proceeding (dated 20 October 2020) in respect of $9,841.30 being the appeal costs in this proceeding.
(b)An interim charging order (dated 20 October 2020) in respect of
$9,996.50, being the costs awarded in relation to the consolidated proceedings.
(c)An interim charging order (dated 1 October 2021) in respect of
$2,500.00 for costs ordered by the Supreme Court in connection with the consolidated proceedings.
The application
[9] Mr Parmenter notes that the $9,841.30, the $9,996.50 and the $2,500 amounts have all been paid. The $9,841.30 and the $9,996.50 were paid in order to discharge the charging orders registered over the respondent’s interest in the former matrimonial home, and the $2,500 Supreme Court costs were paid by the respondent in early November 2021.
[10] Having received payment of those three amounts of costs, the applicant now seeks:
(a)To make the three interim charging orders over the $21,000.00 sum final.
(b)An order for costs in relation to the interim charging orders and also the present application to make the interim charging orders final.
(c)An order directing the disbursement of the costs awarded from the
$21,000.00 sum being held by the Registrar.
[11] Mr Parmenter says that in relation to the “236”5 proceeding the applicant has accrued scale 2B costs of $2,390 and disbursements of $450.00 totalling $2,840.00. And in relation to the “6376”6 proceeding, scale 2B costs of $8,126.00 and disbursements of $650.00 totalling $8,776.00 in relation to the charging orders.
[12] Mr Parmenter submits that as the costs judgments which were sought to be enforced by the making of the interim charging orders were sealed, the applicant is entitled to have the interim orders made final to enable a “sale” of the charged property and distribution to the applicant.
[13] He notes however, that the $21,000.00 which is charged pursuant to the existing interim charging orders is not held by the Registrar as security for costs and therefore not amenable to an order for disposal of the funds pursuant to r 17.59(2) of the High Court Rules 2016. Mr Parmenter submits that the appropriate course in these circumstances is for the Court to “deem” that the Registrar is holding the $21,000.00 pursuant to r 17.57 as if it had been paid into Court by the respondent in accordance with and following an interim charging order. Counsel submits that as the situation is not otherwise provided for by the High Court Rules, the Court should have recourse to r 1.6 and dispose of the matter as it thinks would best promote the objective of the rules. Alternatively, he submits that the Court should exercise its inherent discretion to take whatever steps are necessary to ensure that justice is done as between the parties. As a further alternative, he submits that the Court could direct the Registrar to
5 See above, at footnote 2.
6 See above, at [8].
pay the money held into Court under r 17.57 and then make a direction under r 17.59(2) for the disbursement of the amount of the costs awarded to the applicant.
The respondent
[14] The respondent opposes the orders sought. He has filed written submissions and an affidavit in opposition to the application for orders making the interim charging orders final, and for disbursement from the $21,000.00. In his written submissions the respondent says that he had originally proposed that the Family Court and subsequent costs he had been ordered to pay, be paid from his share of the family home when it was sold.
[15] He says the applicant was supposed to sell the property by November 2013 following a decision of Allan J in 2009,7 and upon settlement of the sale all outstanding costs he owed would be deducted from his share of the net sale proceeds. He says that the applicant did not however proceed to sell the property and despite his proposal that the costs be paid from his share of the proceeds of sale of the family home, the applicant subsequently sought to enforce payment of the costs by issuing a series of bankruptcy notices which he sought to have set aside. He says that as a result of the steps taken by the applicant to enforce the costs orders while failing to take steps to sell the former family home, the amount of costs escalated, and has caused him considerable and unnecessary financial cost.
[16] He says that in the context of the bankruptcy proceedings8 and before the final hearing of the bankruptcy notices, he voluntarily deposited $21,000.00 into the High Court trust account “as security for payment of about $20,000.00, including interest owed to [the applicant] This was an assurance that all debts will be paid.”9 He says that those bankruptcy proceedings came to nothing, although the applicant continued to threaten further bankruptcy proceedings.
[17] The respondent says that he then heard nothing more until 2018, when he says he understood that the applicant’s solicitor agreed with his earlier proposal that the
7 S v W HC Auckland CIV 2008-404-4494, 27 February 2009.
8 CIV 2008–404-6367.
9 Respondent affidavit para 1(vi).
outstanding costs be deducted from his share of the proceeds of sale of the former family home. He notes that with the additional costs of the charging orders added to the original court costs, the total costs debt amounted to $99,295.82 which was finally paid on 5 October 2021 following the sale of the former family home. The respondent says that the Supreme Court costs of $2,500 were paid separately on 2 November 2021.
[18] The respondent says that there have been four previous unsuccessful “sorties” by the applicant seeking to have the $21,000.00 applied towards meeting costs. He says that while he was willing to agree to the recent Supreme Court costs of $2,500 being deducted from his share of the sale proceeds, he was not willing to agree to the deduction of further incidental costs, including the applicant’s costs on the interim charging orders, as he considered the interim charging orders had not been necessary given the proposed sale of the house and deduction of costs from his share of the net proceeds.
[19] The respondent submits that the interim charging orders were not necessary as the outstanding costs were to be deducted from his share of the net proceeds of sale of the family home. He further submits that r 17.59(2) only applies to money paid into court pursuant under rr 17.57 or 17.58 of the High Court Rules 2016. He says that therefore the rule relied on by the applicant does not apply to the $21,000.00 he paid to the Court.
[20] He further submits that as the amounts of the interim charging orders were paid on 5 October 2021, in accordance with r 17.61(1) he should be treated as being discharged from the obligation to pay the additional costs now being sought by the applicant.
[21] In summary, the respondent submits that the application should be dismissed and no orders for costs should be made.
Discussion
[22] The first issue is the status of the $21,000.00 presently being held by the Registrar. In dismissing an application by the respondent for leave to appeal, the Supreme Court noted:10
In 2008, the respondent served bankruptcy notices on the applicant as a means of recovering these costs. The applicant unsuccessfully sought to have the notices set aside.11 In the context of that application, the applicant paid
$21,000 into the High Court. The applicant refused to consent to those funds being paid out to the respondent. Based on what the applicant told the Associate Judge about the purpose of the payment into Court, the Associate Judge said the payment into Court was not security for costs but, rather, was “a step taken by [the applicant] to try and prove his solvency”.12
[23] As I noted above, Downs J in his judgment granting the applicant leave to seek interim charging orders, noted that Bell AJ had said that the payment of the money was not as security for costs, but as a “a step taken by [the respondent] to try and prove his solvency.”13
[24] The Court Appeal in dismissing the respondent’s application for an extension of time for leave to appeal Down’s J judgment commented:14
Secondly, the Judge’s conclusion on the status of money paid into court cannot sensibly be impugned. The money is not security for costs and it is open to Dr Sharma to uplift it and pay the costs he owes.
[25] It is accordingly clear that the $21,000.00 is not held by the Registrar as security for costs, and nor was it a payment into Court pursuant to rr 17.57 or 17.58. It was paid into Court by the respondent voluntarily to demonstrate that he had the funds necessary to meet the amount of the costs then outstanding in order to resist a bankruptcy order. The effect of the respondent paying the money to the Court on that basis meant that he remained the owner of the money and any accrued interest, and could at any time request the Registrar to return the money to him together with the accrued interest.
10 Sharma v Wati [2021] NZSC 107 at [3].
11 Wati v Sharma HC Auckland CIV-2008-404-6367, 9 March 2011.
12 At [14].
13 Wati v Sharma, above n 1, at [16] citing Wati v Sharma, above n 11, at [14].
14 Sharma v Wati [2021] NZCA 220 at [7] (footnotes omitted).
[26] The funds held by the Registrar were therefore funds owing or payable by the Registrar to the respondent within the scope of r 17.53(b)(iii). Although the respondent had the right to request the Registrar to return the money to him, he had not done so at any time prior to the making of the interim charging orders. While the
$21,000.00 and accrued interest is not money held by the Registrar as security for costs, and is not money paid into court pursuant to r 17.57 it is nevertheless personal property belonging to the respondent that has been made the subject of three interim charging orders pursuant to r 17.53.
[27] Unless there is some good reason for not doing so, the interim charging orders should be made final.15 Here none of the circumstances such as are described in the commentary in McGechan on Procedure at 17.59 apply,16 and in my view there is no reason why the interim charging orders should not be made final. Upon the making of a final charging order, the Court has power pursuant to r 17.59(2) to make orders and give directions for the disposition of money paid into court under rr 17.57 or 17.58.
[28] Although the amount of the costs awarded to the applicant have now been paid, the costs and disbursements incurred by the applicant in making the applications for the interim charging orders have not been paid, and consequently the making of final charging orders is of utility to the applicant in order to recover those costs.
[29] Where a charging order is made in respect of any personal property,17 the Court has power to order that the property be sold and direct that the proceeds of sale be paid into Court to be paid or applied in accordance with an order of the Court.18 Here, where the property which was made the subject of the interim charging order was a sum of money being held by the Registrar, the usual process whereby the creditor would seek an order for sale and for the proceeds to be paid to and held by the Court pending orders for distribution of the funds does not apply.
15 Parker Construction Management (NZ) Ltd (in liq) v Horizon Investments Ltd HC Wellington CIV-2007-485-1963, CIV-2007-485-2104, 20 February 2008 at [18].
16 Andrew Beck and others (eds) McGechan on Procedure (online ed, Thomson Reuters) at [HR17.59].
17 High Court Rules, 2016, r 17.53.
18 Rule 17.60(b)
[30] Had the property belonging to the respondent been a physical item of property, such as a motor vehicle, the applicant could have applied first for an interim charging order and then final charging order followed by an order for sale with the proceeds to be held by the Registrar. Here the unusual situation wherein the respondent made what he himself described as a “voluntary” payment to the Registrar, meant that the applicant sought and obtained interim charging orders over the respondent’s property being held by the Registrar. Although not specifically provided for in the rules, this situation although unusual is closely analogous to the way in which other forms of property belonging to a debtor can be made the subject of an interim charging order and thereafter a final charging order and orders made for the distribution of the proceeds of sale to the creditor.
[31] In my view this is an appropriate situation for the application of r 1.6. The making of an order directing the Registrar to disburse the $21,000.00 sum and accrued interest by paying the amount of the outstanding costs to the applicant and returning any surplus to the respondent will promote the objective of the rules, and secure the just determination of the proceeding.19
[32] Here the charging orders were founded on orders for costs which had been sealed and there is no question that the debts were payable by the respondent. The arrangement that the respondent proposed for the costs to be deducted from the sale proceeds of the former family home had not been accepted by the applicant, and although she could expect to be in a position to recover any outstanding costs upon sale of the property, she was not bound to do so or to wait until the house had been sold before insisting on being paid the costs owed to her by the respondent.
[33] Accordingly, for these reasons I shall make an order that the interim charging orders be made final charging orders. I am satisfied that scale 2B costs are appropriate in respect of the proceedings, and I shall make an order directing the Registrar to pay the applicant the sum of $2,840.00 as costs and disbursements in respect of the “236” proceeding and the sum of $8,776.00 as costs and disbursements in respect of the “6376” proceeding – a total of $11,616.00.
19 Rule 1.2.
[34] However, seeking costs on the application to make the interim charging orders final, in order to enforce costs orders, is in effect seeking costs on costs. While the Court has power to award such costs, it is generally reluctant to do so.20 Here the original orders for costs have been compounded by further costs incurred in relation to steps taken by the applicant to enforce the original costs orders. I consider that the point has been reached where the interests of justice will best be met by an order that the costs of the present application lie where they fall, and I decline to award the applicant any costs in relation to the present application for final charging orders and distribution of the funds held by the Registrar.
Result
[35]I make the following orders:
(a)An order that the three interim charging orders be made final charging orders.
(b)An order that the respondent pay the applicant costs and disbursements in the sum of $11,616.00 in relation to the applications for interim charging orders and sealing the orders.
(c)An order directing the Registrar to pay the applicant the sum of
$11,616.00 from the sum of $21,000.00 paid into Court by the respondent on 4 March 2011 and presently being held by the Registrar.
(d)An order directing the Registrar to pay the balance of the $21,000.00 sum together with all accrued interest thereon from 4 March 2011 to the date of payment, to the respondent by transfer to a bank account held in his name and nominated by him.
[36] I make no order for costs in relation to the applicant’s application for costs on her present application to make the interim charging orders final or as regards her
20 See for example Jeffreys v Morgenstern [2013] NZHC 1361 at [40]; Epsom Woods Ltd v Waitakere Farms Ltd [2020] NZHC 3137 at [4]; and Combined Property Maintenance Limited v Singh [2021] NZHC 621.
application for orders for distribution of the $21,000.00 sum presently held by the Registrar.
Paul Davison J
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