Du v Youn
[2025] NZHC 1540
•12 June 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2023-404-001801 [2025] NZHC 1540
IN THE MATTER of a claim for specific performance for breach of contract BETWEEN
NINGFEI DU
Plaintiff
AND
DAVID YOUN and MIJI SUNWOO
defendants
On the papers Counsel:
D J Chisholm KC, M Singh and P S Kim for the Plaintiff P J Napier and J Y Leenoh for the Defendants
Judgment:
12 June 2025
JUDGMENT OF VAN BOHEMEN J
[on costs]
This judgment was delivered by me on 12 June 2025 at 12 pm pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar
……………………………..
Counsel/Solicitors:
D J Chisholm KC, Auckland Glaister Keegan, Auckland K3 Legal Ltd, Auckland
DU v YOUN [2025] NZHC 1540 [12 June 2025]
[1] Following a hearing in February 2025, in a judgment issued on 24 March 2025, I upheld the claim of the plaintiff, Ningfei Du, seeking the return of the deposit of
$1,063,000.00, which he paid following his successful tender to purchase the property at 149A Arney Road, Remuera, Auckland (the Arney Road Property) from the defendants, David Youn and his wife, Miji Sunwoo, in accordance with an agreement for the sale and purchase of the Arney Road Property (the ASP).1
[2] I also dismissed the defendants’ counterclaim for damages of $391,764.19, which had been reduced from $1,646,042.87, for losses they say they suffered as a result of Mr Du’s repudiation of the ASP and for interest on those losses.2
[3] My decision was based on my finding the Arney Road Property to be untenantable on the settlement date of 31 January 2023, as well as in March 2023, and that Mr Du was entitled to cancel the ASP and to the return of his deposit plus interest.3 In reaching that finding, I rejected the defendants’ argument that the defendants had varied the settlement date by giving notice under cl 5.15 of the ASP.4 I also held that the defendants had not issued a late settlement notice under cl 13 of the ASP.5 For these reasons, the settlement date remained 31 January 2023.6
[4] I held that, as the successful party, Mr Du was entitled to costs and made timetable directions for counsel to file memoranda on costs if they could not agree.7
Memoranda of counsel for the parties
[5]Counsel for Mr Du have filed a memorandum in which they seek costs of
$78,511.50, comprising 2B costs with an uplift of 50 per cent on costs incurred after May 2024, and disbursements of $96,850.87. Mr Du seeks the uplift because, on 28 May 2024, the defendants rejected a Calderbank offer to settle the proceeding on terms that were more beneficial to the defendants than they obtained under the
1 Du v Youn [2025] NZHC 621 [Substantive Judgment].
2 At [162].
3 At [159]–[161].
4 At [141].
5 At [146].
6 At [146].
7 At [165]–[166].
Substantive Judgment.8 The memorandum states that Mr Du’s actual costs from the commencement of the proceeding totalled $409,057.31 (incl GST) and disbursements, and that the sum claimed would amount to less than half of Mr Du’s legal costs.
[6] Counsel for Mr Du also say the defendants’ counterclaim was materially flawed and note that, in closing submissions, defence counsel accepted that the deposit had to be accounted for and advised that the counterclaim had reduced from over
$1.6 million to $391,764.19, as recorded at footnote 1 of the Substantive Judgment.
[7] Trinee Tennant, a legal executive at Glaister Keegan, solicitors for Mr Du, has affirmed an affidavit to which are annexed correspondence between Glaister Ennor and K3 Legal Ltd, solicitors for the defendants, and copies of invoices in support of Mr Du’s claim for disbursements.9
[8] Counsel for the defendants have filed a memorandum in which they say Mr Du should be awarded 2B costs of $60,467.00 and disbursements of $34,131.94. Counsel for the defendants do not dispute that a Calderbank offer was made. Rather, they submit that no uplift should be made because legal uncertainty surrounding the interpretation of “untenantable” in sale and purchase contexts meant the defendants were not in a position to assess accurately the strength of Mr Du’s position when the offer was made and that, consequently, it was reasonable for the defendants not to accept the offer.
[9] Counsel for the defendants also contend that Mr Du was not successful on all points and say the defendants were successful in advancing the proposition that settlement date was not 31 January 2023.
[10] Counsel for the defendants also dispute some of the disbursements claimed by Mr Du. They say that, in the absence of further information, it is unclear whether six invoices totalling $35,567.30 relate, in whole or in part, to witnesses preparing and
8 That is, an offer as discussed in Calderbank v Calderbank [1975] 3 All ER 333 (EWCA) and provided for in r 14.10 of the High Court Rules 2016.
9 Glaister Keegan is the successor firm to Glaister Ennor, the firm which acted for Mr Du when the proceeding commenced.
giving evidence. They also say that no supporting evidence has been provided with respect to two other invoices totalling $8,969.40.
[11] Counsel for Mr Du have filed a memorandum in reply addressing the various points raised by counsel for the defendants.
Applicable rules and principles on costs
[12] As stated by the Supreme Court in Manukau Golf Club Inc v Shoye Venture Ltd and by the Court of Appeal in Bradbury v Westpac Banking Corp, and as reflected in the High Court Rules 2016 (the Rules), it is a fundamental principle that costs follow the event.10
[13] While all matters relating to costs are at the discretion of the Court,11 that general discretion is qualified by the specific costs rules in the Rules and is exercisable only in situations not contemplated or not fairly recognised by the Rules. Ordinarily, the loser pays the winner’s costs according to the scale set out in the Rules.12 The scale reflects the complexity and significance of the proceeding and is assessed at two- thirds of the daily rate considered reasonable in relation to the proceeding.13
[14] In the circumstances provided for under r 14.6(3) and (4), the Court may either make an order for increased costs or an order for indemnity costs.
[15] Under r 14.6(3)(b), the Court may order a party to pay increased costs if the party: “has contributed unnecessarily to the time or expense of the proceeding” by:
…
(v) failing, without reasonable justification, to accept an offer for settlement whether in the form of an offer under rule 14.10 or some other offer to settle or dispose of the proceeding
10 Manukau Golf Club Inc v Shoye Venture Ltd [2012] NZSC 109, [2013] 1 NZLR 305 at [8]; Bradbury v Westpac Banking Corporation [2009] NZCA 234, [2009] 3 NZLR 400 at [6]; High Court Rules 2016, r 14.2(1)(a).
11 High Court Rules, r 14.1(1).
12 Rule 14.2(1)(a).
13 Bradbury v Westpac Banking Corporation, above n 10, at [6]; Rule 14.2(1)(d).
[16]Rule 14.10 provides:
14.10 Written offers without prejudice except as to costs
(1)A party to a proceeding may make a written offer to another party at any time that—
(a)is expressly stated to be without prejudice except as to costs; and
(b)relates to an issue in the proceeding.
(2)The fact that the offer has been made must not be communicated to the court until the question of costs is to be decided.
[17] Under r 14.11, a party is entitled to costs on steps taken in a proceeding after an offer under r 14.10 is made to another party to settle the proceeding for a sum that exceeds the amount of a judgment obtained by that other party or makes an offer that would have been more beneficial to the other party than the judgment obtained by the other party. In addition, an offer that is close to the value or benefit of the judgment obtained by the other party may also be taken into account.
[18] In Gorringe v Pointon, the Court of Appeal confirmed that, to be effective for costs purposes pursuant to r 14.10, an offer needs to be clearly and unambiguously stated, capable of contractual acceptance, and more beneficial (or close in benefit) to the other party than the judgment actually obtained.14
The Calderbank offer
[19] In their letter of 22 March 2024 to K3 Legal, Glaister Ennor stated that, as the defendants would know, the Arney Road property was untenantable on the settlement date of 31 January 2023 by virtue of a red placard prohibiting access, which alone rendered it untenantable.15 They also noted that engineers’ reports left no doubt in Mr Du’s mind that the property was untenantable at the settlement date.
[20] Even so, Glaister Ennor proposed a full and final settlement of all past and present claims between the parties. Under the proposed settlement, the defendants
14 Gorringe v Pointon [2023] NZCA 426 at [32].
15 The terms “placard” and “sticker” are interchangeable and mean the same thing in terms of the Building Act 2024.
would retain $150,000 of the deposit and release the balance to Mr Du; Mr Du would forego any claim for interest; Mr Du would remove the caveat lodged against the Arney Road Property; and costs would lie where they fall. The offer was open for acceptance until 29 May 2024.
[21] By letter dated 28 May 2024, K3 Legal disputed that the Arney Road Property was untenantable on the settlement date of 31 January 2023 and stated propositions about the interpretation of “untenantability” drawn from various authorities, including the Supreme Court’s decision in Bahramitash v Kumar and the Court of Appeal’s decision in DFC New Zealand Ltd v Samson Corporation Ltd.16 K3 Legal acknowledged that the Arney Road Property was red stickered on the settlement date but noted that its status changed to yellow sticker status on 15 March 2023. They also stated that the defendants had a claim for damages against Mr Du as a result of his failure to settle and said the deposit had been paid to meet identified costs, which left a balance of $76,408.00.
[22] K3 Legal made a counter-proposal for settlement under which the defendants would retain the deposit and would pay Mr Du $200,000 as an ex gratia payment; Mr Du would remove the caveat; the defendants would forgo their damages claim; and costs would lie where they fall. This offer was open for acceptance until 21 June 2024.
[23] By email dated 31 May 2024 to K3 Legal, Glaister Ennor rejected the counter- proposal and recorded that Mr Du would rely on the Calderbank offer of 22 March 2024 in support of increased costs at a successful conclusion of the trial.
[24] By letter dated 4 July 2024 to K3 Legal, Glaister Ennor reiterated the offer in the letter of 22 March 2024 and stated that the offer was open until 23 July 2024. It appears there was no reply to this letter.
Analysis
[25] Under the Calderbank offer of 22 March 2024, the defendants would have returned $813,000.00 to Mr Du but would have also retained $150,000. Under the
16 Bahramitash v Kumar [2005] NZSC 39, [2006] 1 NZLR 577; DFC New Zealand Ltd v Samson Corporation Ltd CA250/92, September 1993.
Substantive Judgment, the defendants are required to pay Mr Du $1,063,000 plus interest from 28 March 2023 to the date of payment. Assuming interest at five per cent per annum, as at 28 March 2025, four days after the Substantive Judgment was issued, the defendants owed Mr Du $1,171,957.50. Under the Calderbank offer, therefore, the defendants would have been better off by $358,957.50, without taking into consideration the costs incurred in the proceeding or their liability for Mr Du’s costs.
[26] As recorded above, the defendants do not dispute that a valid Calderbank offer was made or that they rejected the offer. That is clearly the case.
[27] Plainly, the Glaister Ennor letter of 22 March 2024 met the requirements of rr 14.10 and 14.11. It:
(a)was stamped “Without Prejudice save as to Costs”;
(b)related to issues in the proceeding in the sense it proposed settlement of all past and present claims between the parties concerning the Arney Road Property;
(c)contained an offer that was clearly and unambiguously stated and capable of contractual acceptance; and
(d)the offer was obviously more beneficial to the defendants than the result Mr Du obtained under the Substantive Judgment.
[28] The principal questions, therefore, are whether the defendants’ refusal to accept the offer was made without reasonable justification or whether there are other grounds why an uplift in costs should not be ordered.
[29] As Katz J said in Weaver v HML Nominees Ltd, in a passage referenced by counsel for the defendants:17
[30] A successful Calderbank offer does not of itself give rise to an entitlement to increased or indemnity costs, as this remains at the Court’s discretion. There are good policy reasons, however, why the making of a successful Calderbank offer will often lead to an award of increased costs. Regard must be had to the factors in r 14.6, as with any increased costs application. Rule 14.6(3)(b)(v) provides that increased costs may be awarded where a party fails to accept an offer of settlement without reasonable justification with the result that they contribute unnecessarily to the time or expense of the proceeding or step in it. Each case is necessarily fact specific. The assessment of whether increased costs should be awarded, and the extent of any increase, can be impacted by a number of factors. These include (but are not limited to):
(a)the size of the offer relative to the actual costs of counsel;
(b)the amount of the claim;
(c)the reasonable expectations of the party that refuses the offer;
(d)the amount of preparation for trial already undertaken;
(e)whether the proceeding concerns an uncertain area of law;
(f)whether the parties were in a position to assess the merits when the offer was received;
(g)the information available to the party who receives the offer and the extent to which they can assess the offer;
(h)the timing of the offer;
(i) the conduct of the offeror. (footnotes omitted)
[30] Most of the above factors support an award of increased costs. I note the following, in particular:
(a)The proceeding was commenced in August 2023.
(b)By minute dated 7 November 2023, Associate Judge Brittain recorded that the issues in the proceeding were whether the Arney Road Property was untenantable as at the settlement date and whether Mr Du had
17 Weaver v HML Nominees Ltd [2016] NZHC 473.
validly terminated the ASP. He also directed the Registry to allocate a four-day trial at the first available date after 1 February 2025.18
(c)A trial date of 24–27 February 2025 was subsequently ordered.
(d)By minute dated 13 March 2024, Associate Judge Brittain made timetable directions under which:19
(i)the close of pleadings date was 1 May 2024;
(ii)Mr Du’s briefs of evidence, documents to be included in the common bundle and draft chronology were to be served by 25 October 2024;
(iii)the defendants’ briefs of evidence, further documents to be included in the common bundle and responses to the draft chronology were to be served by 20 December 2024;
(iv)Mr Du’s counsels’ synopsis of submissions were to be filed and served by 17 February 2025.
[31] By 29 May 2024, the closing date for acceptance of the Calderbank offer, the issues to be decided in the proceeding had been identified for some months and the pleadings had been closed for four weeks. However, to that date, neither party had incurred the major costs of preparing for trial. Even so, by that date, the defendants were well aware of the state of the Arney Road Property after the 2023 Auckland Anniversary Day weekend storms and had commissioned and received structural and geotechnical reports on the extent of the damage. Like the plaintiffs in Weaver, therefore, they should have been well-placed to undertake a realistic assessment of the offer, in conjunction with their expert consultants and legal advisers.20
18 Du v Youn HC Auckland CIV-2023-404-1801, 7 November 2023 (Minute of Associate Judge Brittain).
19 Du v Youn HC Auckland CIV-2023-404-1801, 13 March 2024 (Minute of Associate Judge Brittain).
20 Weaver v HML Nominees Ltd, above n 17, at [31].
[32] Had the defendants accepted the offer, they and Mr Du would also have avoided significant legal costs, as is confirmed by the amount claimed by Mr Du and the advice that this sum amounts to less than half of Mr Du’s legal costs.
[33] The defendants base their position principally on the proposition that there was legal uncertainty surrounding “untenantable” in sale and purchase contexts at the time of the offer. I do not accept that to be so, particularly given the position advanced in the K3 Legal letter of 28 May 2024.
[34] A significant aspect of the position advanced in the K3 Legal letter of 28 May 2024 is that the defendants accepted that the settlement date was 31 January 2023. That was not the defendants’ position at trial, where they argued that the settlement date was not 31 January 2023 because the parties did not settle on that date. If the settlement date was 31 January 2023, as I held to be the case (despite the submission to the contrary in the memorandum of counsel for the defendants), there was little uncertainty about the meaning of “untenantable” in the context of the ASP.
[35] As recorded in the Substantive Judgment,21 in Bahramitash the Supreme Court held as apt the statement by D W McMorland that the test for untenantability would seem to be whether the property as a whole had been rendered unfit for the occupation and use of someone assumed to want the property for the same purposes as the purchaser.22 While the statement was obiter, it was a statement by the Supreme Court and it endorsed the position articulated by one of New Zealand’s foremost authorities on land law. Further, the fact there was little legal precedent on the meaning of untenantability does not avail the defendants when the application of the term to the facts of this case was not difficult.
[36] It was plain from the language of cl 7.2(1) of the ASP that the date for assessing whether the Arney Road Property was tenantable was the settlement date. The effect of the red placard, in its own terms and in accordance with s 133BT(1) of the Building Act 2004, was that access to the property on the settlement date was not permitted
21 Substantive Judgment, above n 1, at [101].
22 Bahramitash v Kumar, above n 16 at [14]. See D W McMorland Sale of Land (4th ed, 2022), Cathcart Trust, at 10.13.
without written authorisation from the Civil Defence Emergency Management Controller or other Responsible Person. It is plain, therefore, that, on the settlement date, the property was unfit for the occupation and use of anyone let alone someone who was assumed to want the property for the same purposes as Mr Du; namely as a family home. It should have been obvious, therefore, that the defendants were running a considerable litigation risk in running a defence that the property was tenantable on the settlement date.
[37] At trial, the defendants modified their position to argue, unsuccessfully, that the settlement date had changed. Their fall back argument, was that “tenantable” has a temporal element. That is, a property is not untenantable if the damage is only of a transitory or temporary nature and can be repaired within a period of a few weeks — as was held to be the case in Samson Corporation.23
[38] However, that decision did not concern the sale and purchase context. As stated in the Substantive Judgment:24
[150] Samson Corporation concerned a tenant’s right to cancel a lease on the grounds the premises had become untenantable. That is, it concerned the right of the tenant to exit an existing situation. That is very different from cancelling a contract to purchase a property; that is, to commence a new undertaking. In addition, in Samson Corporation, the question of tenantability under the lease was not linked to the state of the premises at a particular point in time. That is very different from the ASP, which specifically requires tenantability to be assessed at settlement date. Most importantly, settlement date is the date at which possession is to be given and taken in accordance with cl 5.3 of the ASP and the point at which settlement and the exchange of the interdependent obligations set out at cl 5.8 are to be performed. It would be quite inconsistent with the scheme of the ASP if the question of whether or not the property was untenantable for the purposes of cl 7.2 was to be determined other than as at settlement date.
[39] In relying on Samson Corporation, the defendants were seeking to expand the boundaries of tenantability in the sale and purchase context. There was, however, no real legal uncertainty surrounding “untenantable” in that context, particularly when the ASP both specified that whether the property was untenantable was to be determined on the settlement date and prescribed the circumstances when the settlement date could be changed.
23 DFC New Zealand Ltd v Samson Corporation Ltd, above n 16, at 12.
24 Substantive Judgment, above n 1.
[40] It is difficult to avoid the conclusion that, in asserting that position, the defendants were hoping to avoid the consequences of a straightforward application of the terms of the ASP and, perhaps, hoping to persuade Mr Du to make a more generous settlement offer. But whether or not the defendants were looking to improve the settlement offer, I consider their rejection of the Calderbank offer was unreasonable when it was plain Mr Du had the right to cancel the ASP and the right to the return of his deposit because the Arney Road Property was untenantable on the Settlement Date.
[41] In that respect, I do not see any parallel between the position of the defendants in the present case and that of the defendants in Barghav v First Trust Ltd, where Hinton J observed, correctly, that failure to accept a settlement offer does not automatically point to an uplift.25 As Her Honour went on to note, where such failure is unreasonable, an uplift will be justified.26 As I have already held, I consider the defendants’ failure to accept the Calderbank offer to have been unreasonable.
[42] For these reasons, I am satisfied the defendants’ rejection of the Calderbank offer in the Glaister Ennor letter of 22 March 2024 was without reasonable justification. I am also satisfied that an uplift of 50 per cent on scale costs incurred by Mr Du after the defendants’ rejection of that offer is appropriate and properly reflects the defendants’ conduct in prolonging the proceeding and causing Mr Du to incur unnecessary expense. I also consider there are no other reasons for not ordering the uplift, especially when the defendants have been on notice since 31 May 2024 that an uplift would be sought if Mr Du’s claim was successful.
[43] I reach these conclusions without taking into consideration the defendants’ abandonment of over 75 per cent of the value of their counterclaim on the last day of trial.
25 Barghav v First Trust Ltd [2024] NZHC 2128 at [49].
26 At [49].
Mr Du’s claim for disbursements
[44] The assertion by counsel for the defendants that it is unclear the invoiced amounts in six disputed invoices relate to witnesses preparing and giving evidence is baseless.
[45] All the invoices relate to the period 25 September 2024 to 28 February 2025 when trial preparation and the trial itself were under way.
[46] As counsel for Mr Du say in their memorandum in reply, even a cursory review of the invoices shows they all relate to witnesses preparing and giving evidence. For example:
(a)Markplan Consulting Ltd – Invoice 37762, dated 25 September 2024. The narration includes “review of discovery documentation and initial meeting”.
(b)Markplan Consulting Ltd – Invoice 37965, dated 30 October 2024. The narration includes:
· “Co-ordination meeting with David Chisholm KC and solicitors from Glaister Ennor to go through the current status of the evidence”.
· “Preparation of evidence, review and add to amended version”.
· “Review and sign updated evidence”.
(c)Solid Rock Consultants – Invoice I049401, dated 31 October 2024. The narration includes “Review supplied documents, prepare initial affidavit, ‘Teams’ meeting with Glaister Ennor and David Chisholm”.
(d)Extensor Advisory Ltd – Invoice 5580, dated 31 October 2024. The narration includes:
(i)“149a Arney Road, Remuera. Valuation advice to 31 October 2024 (attached)”.
(ii)Ian McGowan:
· Property and environs inspection
· Sales Research
· Sales Inspection
· Reviewing engineering report and property file.
· Report preparation, checking and submitting draft.
(iii)Gary Cheyne (who gave evidence):
· Initial meeting, further scoping
· Property and environs inspection
· Discussions about approach, review draft, further sections of report
(e)Extensor Advisory Ltd – Invoice 5659, dated 28 February 2024. The narration includes “149a Arney Road, Remuera. Further valuation advice to 28 February 2025”.
(f)Markplan Consulting Ltd – Invoice 38592, dated 28 February 2025. The narration includes:
· Review of additional statements of evidence in reply to draft evidence
· Review draft Opening Statements as proposed by legal team
· Review Brief of evidence of Nick Calvert (who gave evidence)
· Review own brief of evidence.
[47] I am also satisfied there is no basis to the defendants’ challenge to the disbursements relating to the preparation of common bundles for the trial or the fee paid for a witness summons to be issued to Mr Oh.27
27 Mr Oh was a geotechnical engineer, who had provided advice to Mr Youn about how to stabilise the slope surface at the Arney Road Property, but whom the defendants elected not to call.
Result
[48]I am satisfied that Mr Du has made out his claim for costs and disbursements.
[49]Accordingly, I order the defendants to pay Mr Du:
(a)costs of $78,511.50, comprising 2B costs with an uplift of 50 per cent on costs incurred after May 2024; and
(b)disbursements of $96,850.87.
G J van Bohemen J
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