Dhani v Tenancy Tribunal [2014] NZHC 3265 (15 December 2014)

	Home \| Databases \| WorldLII \| Search \| Feedback High Court of New Zealand Decisions

BETWEEN	USHA KIRAN DHANI SURESH DHANI SASHI DHANI First Plaintiffs DHANI TRUSTEES LIMITED (as trustee of the BISH DHANI FAMILY TRUST)
AND	THE TENANCY TRIBUNAL First Defendant SASHA KUMAR SHAILENDRA KUMAR Second Defendants HAIYAN YANG Third Defendant

Hearing:	15 December 2014
Appearances:	I M Hutcheson for the Plaintiffs K T Glover for the Second Defendants N R Williams and S O'Connor for the Third Defendant
_Judgment:	_{15 December 2014}

[1] These proceedings arise out of an unfortunate family dispute. Counsel has made every endeavour to resolve that dispute by way of negotiated settlement. Unfortunately, their endeavours have been unsuccessful and it looks as though the matter will now proceed to trial.

[2] Against this background, the second and third defendants have both sought orders that the plaintiffs should give security for costs in the sum of $40,000 or such other amount as the Court deems just. Those applications are resisted by both the first and second plaintiffs.

[3] The first-named first plaintiff, Mrs Dhani, is the mother of the first-named second defendant, Mrs Kumar, and the mother-in-law of the second-named second defendant, Mr Kumar. The second-named first plaintiff, Suresh Dhani, is Mrs Kumar’s brother.

[5] In early 2013, Mrs Dhani was residing in a property in Haast Street, Remuera, with her son, Suresh Dhani, and his family. The house was owned by the second plaintiff, Dhani Trustees Ltd as trustee of the Bish Dhani Family Trust. Mrs Dhani was the sole director of, and shareholder in, Dhani Trustees Ltd.

[6] The plaintiffs collectively could not afford to meet the mortgage payments on the property. Mrs Dhani was concerned that her limited income was insufficient, and she wanted more money to spend for herself. As a result, a family meeting was convened in March 2013. After various negotiations and suggestions, it was agreed that Mr and Mrs Kumar would purchase the property. They required a mortgage to do so, and it was agreed that Mrs Dhani and Suresh Dhani, would reside in the property. They were to pay rent and outgoings in respect of the same. These

payments would allow the Kumars to service the mortgage which was required to complete the purchase.

[7] Mr and Mrs Kumar instructed their solicitor to prepare an agreement for sale and purchase. He did so and it was forwarded to Mrs Kumar so that it could be signed by Mrs Dhani, in her capacity as a director of Dhani Trustee Ltd.

[8] The third defendant, Ms Yang, had not previously acted for Mrs Dhani, but it seems that Mrs Dhani was introduced to her by Mrs Kumar. Ms Yang acted for Mrs Dhani and Dhani Trustees Ltd in relation to the sale of the property to the Kumars. There is a dispute as to the extent of Ms Yang’s involvement, and in particular, whether or not the agreement for sale and purchase had been signed by Mrs Dhani before it was presented to Ms Yang. Ms Yang says that when Mrs Dhani came to see her, the agreement for sale and purchase had already been signed. Mrs Dhani says that, as far as she can recollect, she signed the agreement in Ms Yang’s presence.

[9] There is no dispute that there were difficulties in the payment of rent and other outgoings by Mrs Dhani and Suresh Dhani. As a result, the Kumars could not afford to service the mortgage on the property. They applied to the Tenancy Tribunal for orders determining the tenancy, and following a defended hearing, the Tenancy Tribunal ruled in favour of the Kumars, and ordered Mrs Dhani and Suresh Dhani to vacate the property.

[10] Mrs Dhani and Suresh Dhani then sought judicial review of the Tenancy Tribunal’s decision. They applied for an interim injunction reinstating the tenancy on a without notice basis. This application was resolved by way of consent orders. Pursuant to the consent orders, Mrs Dhani and Suresh Dhani agreed to pay rental of

$690 per week and to meet all outgoings in respect of the property. A notice of discontinuance against the first defendant, the Tenancy Tribunal, was filed on

31 March 2014, and on the same day, an amended statement of claim was filed, which introduced the third defendant, Ms Yang, to the proceedings.

[11] There are four causes of action in the amended statement of claim. First, Mrs Dhani alleges that, as the sole director of the second plaintiff, she was subject to undue influence at the time she signed the agreement for sale and purchase by Mrs Kumar. She seeks an order that the agreement for sale and purchase and the transfer of the property to the Kumars be set aside on such terms as the Court considers appropriate. She and Dhani Trustees Limited also seek an inquiry into damages, and judgment for damages in such sum as the Court deems just, together with exemplary damages in the sum of $50,000. As an alternative, all plaintiffs allege that the agreement for sale and purchase was an unconscionable bargain. The same relief is sought. Dhani Trustees Limited alleges breach of the contract of retainer by Ms Yang and all plaintiffs allege negligence by Ms Yang.

[12] The application for security is brought pursuant to r 5.45 of the High Court

(1) Subclause (2) applies if a Judge is satisfied, on the application of a defendant,—

(b) that there is reason to believe that a plaintiff will be unable to pay the costs of the defendant if the plaintiff is unsuccessful in the plaintiff's proceeding.

(2) A Judge may, if the Judge thinks it is just in all the circumstances, order the giving of security for costs.

[13] It was common ground between counsel that before the court can order security for costs, it must be satisfied that the threshold set out in r 5.45(1)(b) is met

– namely, that there is reason to believe that the plaintiffs will be unable to pay the costs of the defendants if the plaintiffs are unsuccessful in this proceeding. What is contemplated is that there should be credible (that is believable) evidence of surrounding circumstances from which it may reasonably be inferred that the

plaintiffs will be unable to pay any costs awarded. That does not amount to proof that the party will in fact be unable to pay them.

[14] It was common ground between counsel that the threshold is met in respect of Mrs Dhani and Suresh Dhani. There have been persistent difficulties in the payment of rental to the Kumars. There have also been problems in the payment of outgoings, in particular water rates, on the property.

[16] Counsel for Mr and Mrs Kumar, Mr Glover, conceded that the threshold cannot be met on the materials before the Court in regard to the company. Counsel for the third defendant, Mr Williams, did not make this concession. Accordingly, it is necessary for me to look at the available materials.

(a) First, the obligation to pay rental and outgoings is an obligation of the first plaintiffs, and not of Dhani Trustees Ltd.

(b) Secondly, the only evidence that there has been any financial difficulty for Dhani Trustees Ltd is found in the fact that there was a brief delay in paying costs ordered by the court against both plaintiffs. However, counsel advised me from the bar that the costs ordered were paid, and within the timeframe fixed by the Court.

[18] Mrs Dhani, in an affidavit filed in support of the notice of opposition to the application for security, has stated that Dhani Trustees Ltd owns a property adjoining the house the subject of this dispute. She said that there is no mortgage on that property, and that approximately a year ago, her lawyer obtained estimates of the value of the property from local real estate agents, which ranged between $700,000 and $800,000. She deposed that property values have increased significantly since that time. She noted that the property has a current capital rating valuation of

[19] No affidavits in reply have been filed to rebut these assertions. Mr Glover this morning produced the title to the property by consent. It shows that there is a mortgage in favour of Westpac New Zealand Ltd. That mortgage was registered in March 2007. It also shows that there is a caveat by Avanti Finance Ltd, which was registered in July 2014. The caveat was also produced by consent. It is pursuant to an agreement to mortgage dated 2 July 2014 made between the second plaintiff as the registered proprietor, and Avanti Finance Ltd as the mortgagee.

[20] Mrs Dhani’s affidavit was sworn on 25 September 2014. It is troubling that she did not refer to either the registered mortgage, or to the caveat and the agreement to mortgage. Mr Hutcheson, appearing for all plaintiffs, suggested from the bar that it may be that the Westpac mortgage has been discharged. That is not apparent from the title. However, the discrepancies, which go to Mrs Dhani’s credibility, do not address the threshold issue I am required to consider under r 5.45. On the evidence which is available to me:

(a) Dhani Trustees Ltd owns the adjoining property, which has a value somewhere between $610,000 and $800,000, or perhaps more;

(b) The property is subject to a mortgage in favour of Westpac Banking Corporation, and an agreement to mortgage in favour of Avanti Finance Ltd, but there is no evidence as to the amounts owing under either the mortgage, or the agreement to mortgage.

[21] In the circumstances, I cannot infer that Dhani Trustees Ltd will be unable to pay the costs of the defendants if it is unsuccessful. The situation is not dissimilar to that discussed in Keeys v Peterson.¹

[22] Here, both the first and the second plaintiffs are suing in respect of the same interests, and both have the same solicitors and counsel. They have been treated as one for all relevant purposes to date. Although the amended statement of claim

_{which has been filed does differentiate the damages sought by each, it
seems likely}

that there will be only one set of costs as between the defendants and the plaintiffs, if the plaintiffs are unsuccessful. In such circumstances, where one of two plaintiffs can pay any costs awarded, no security is needed. I refer to Ariadne Australia Limited v Grayburn.²

[23] Moreover, in my judgment, it would be to the detriment of the solvent second plaintiff, Dhani Trustees Ltd, if security were ordered against the first plaintiffs and the proceedings were stayed until they were able to satisfy any order made. This matter has been outstanding for some considerable time, and it needs to be brought to a head.³

[24] I have concluded that the threshold test detailed in r 5.45(1)(b) is not met in this case. The applications by the Kumars and Ms Yang are declined.

[25] The proceeding is to be placed in the mentions list, on the first available date in 2015. Prior to being called in that list, I expect counsel to liaise to agree a timetable to ensure that the matter can be made ready for hearing. Counsel for Mr and Mrs Kumar has raised the possibility of a judicial settlement conference. That request is supported by counsel for Ms Yang. Mr Hutcheson’s clients have previously supported the idea. Given recent developments, Mr Hutcheson needs to obtain further instructions. Whether or not the matter is suitable for a judicial settlement conference can be canvassed in the memoranda to be filed prior to the mentions conference.

[26] I have heard from counsel in regard to costs. In my view this is a straightforward case where costs should follow the event. I order costs on a 2B basis against the Kumars and Ms Yang jointly and in favour of all plaintiffs. There is one order for costs against both and it is on a 2B basis. They are to contribute in equal

_{half shares to the costs so ordered. The plaintiffs are also entitled
to their reasonable}

³Nikau Holdings Ltd & Ors v Bank of New Zealand HC Wellington, CP130/88, 10 June 1992.

disbursements. In the event that there is any disagreement about the same, it is to be

High Court of New Zealand Decisions

Dhani v Tenancy Tribunal [2014] NZHC 3265 (15 December 2014)