Elysian Property Trustee Limited
[2024] NZHC 3604
•29 November 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2022-404-2167
[2024] NZHC 3604
BETWEEN ELYSIAN PROPERTY TRUSTEE LIMITED
Plaintiff
AND
DABIN WANG
Defendant
Hearing: 29 October 2024– 31 October 2024 Appearances:
S Jeffs for Plaintiff
M Davies and K L Chiu for Defendant
Judgment:
29 November 2024
Reissued:
4 December 2024
JUDGMENT OF WILKINSON-SMITH J
This judgment was delivered by me on 29/11/ 2024 at 12 pm Pursuant to Rule 11.5 of the High Court Rules
…………………………
Registrar/Deputy Registrar
Solicitors:
S Jeffs, AucklandSpeakman Law, Auckland Meredith Connell, Auckland
ELYSIAN PROPERTY TRUSTEE LIMITED v WANG [2024] NZHC 3604 [29 November 2024]
Introduction [1]
Background[9]
The pleadings as to quantum [33]
Issues[43]
Discussion[44]
The evidence[44]
Is Elysian able to rely on cl 11.4(3) in the Agreement to calculate the loss based on resale within 12 months?[67]
What is the correct date at which to assess Elysian’s loss?[75]
Failure to mitigate[91]
Chain of causation[98]
Outcome[109]
Default interest[117]
Other interest[123]
Result[135]
Costs[136]
Introduction
[1] Elysian Property Trustee Ltd (Elysian) seeks damages against Dabin Wang for breach of an agreement for sale and purchase (Agreement) in respect of two commercial properties situated at Northcroft Street, Takapuna (the Properties).
[2] On 29 June 2023, Associate Judge Taylor granted Elysian’s application for summary judgment as to liability for breach of the Agreement.1 Judgment as to damages was declined on the basis that the quantum of damages should be determined at trial. Elysian says it suffered loss because the price it was able to obtain upon resale was lower than the price in the Agreement.
[3] The purchase price in the Agreement was $15,000,000. Elysian resold the Properties for $10,500,000 in June 2023 after the application for summary judgment was heard, but before judgment was given. The resale of the Properties settled on 21 June 2023.
[4] Elysian says that its loss crystallised at the time of resale. In its opening submissions it sought damages of $2,783,454.89; plus default interest on the unpaid amount in accordance with the Agreement, from the date of settlement to the date of settlement of the resale; interest under the Interest on Money Claims Act 2016 (IOMCA); and costs. In closing submissions Elysian sought damages of
$4,482,690.44 inclusive of default interest.
[5] Mr Wang’s position is that Elysian suffered no loss for which he is liable. He pleads three affirmative defences.
[6] First, he says that Elysian’s loss should be assessed at the time it elected to retain the Properties in August 2022 at which time Mr Wang says the Properties were worth in excess of $13,000,000.
[7] Secondly, Mr Wang says Elysian failed to take reasonable steps to mitigate its loss by failing to accept an offer of $13,000,000 from LDW Ltd in February 2023.
[8] Thirdly, Mr Wang says that there was a novus actus interveniens because the Properties were sold to a third party at auction in April 2023 for $13,200,000. Although that sale did not proceed, Mr Wang says the entry into an unconditional binding contract for resale of the Properties at auction was an intervening act that broke the chain of causation of loss.
1 Elysian Property Trustee Ltd v Wang [2023] NZHC 1639.
Background
[9] Elysian is the trustee of the Elysian Property Trust. It owned the Properties which are multilevel tenanted commercial properties on separate titles. Susan Dickson is the director and sole shareholder of Elysian. Ms Dickson managed the Properties prior to the sale in June 2023.
[10]Mr Wang is a property developer based on the North Shore.
[11] In early October 2020, a Barfoot & Thompson agent, Bruce Jiao, approached Elysian on behalf of Mr Wang to make an offer to purchase the Properties.
[12] On 20 October 2020, Elysian and Mr Wang entered into the Agreement. Mr Wang agreed to purchase the Properties for $15,000,000. Mr Wang paid a deposit of $2,000,000. The Agreement became unconditional on 2 December 2020 and the settlement date was 2 June 2022.
[13] Mr Wang did not settle on 2 June 2022. The following day Elysian issued a settlement notice requiring Mr Wang to settle within 12 working days. He did not do so. On 27 June 2022, Elysian cancelled the Agreement.
[14] In July 2022, Elysian engaged Bayleys to resell the Properties. Before the Properties were listed, Elysian gave Mr Wang an opportunity to purchase the Properties on the condition that he paid a further $500,000 deposit and settled within 50 working days of payment of the deposit. Mr Wang declined.
[15] On 21 July 2022, Bayleys began marketing the Properties for sale by deadline private treaty to expire at 4 pm on 25 August 2022. By 25 August 2022, Bayleys had only received one offer to purchase the Properties. The offer was for $9,295,000. Bayleys advised Ms Dickson that no other interested party would buy the Properties for an amount that would satisfy Elysian. Elysian was still motivated to sell the Properties if a buyer could be found, and it continued to engage Bayleys for that purchase. However, the Properties were not actively marketed following the unsuccessful deadline sale process.
[16] On 10 November 2022, Elysian commenced proceedings against Mr Wang for breach of the Agreement and sought summary judgment as to liability. The quantum of loss claimed was based on the market value of the Properties being $9,295,000, which was the highest price offered for the Properties as a result of the deadline private treaty campaign.
[17] In February 2023, Bayleys received an unsolicited offer to purchase the Properties for $13,000,000 from a company called LDW Ltd. The terms included a five per cent deposit and settlement within six months. By this stage summary judgment proceedings had been commenced and there was a suspicion on the part of Elysian that the LDW Ltd offer was not genuine but was designed to assist Mr Wang’s position in the summary judgment proceedings. Elysian sought assurances including undertakings that LDW Ltd was not connected to Mr Wang. The assurances were given. Elysian counteroffered accepting the proposed purchase price but requiring a 10 per cent deposit and settlement within three months.
[18] LDW Ltd did not engage with the counteroffer and disclaimed any interest in the Properties.
[19] In February 2023, Bayleys recommended Elysian sell the Properties by auction. Bayleys shared Elysian’s concern that the LDW Ltd offer was not genuine and anticipated that there could be interference in the sale process to artificially inflate the apparent market value of the Properties.
[20] From March 2023, Bayleys began marketing the Properties for sale by auction to take place on 12 April 2023 with a reserve of $12,000,000. Mr Wang was advised of the intention to offer the Properties for sale at auction. Michael Nees, the Bayleys agent, reported to Elysian pre-auction that Bayleys was struggling to attract interest above $10,000,000.
[21] The night before the auction Bayleys received phone bidding forms from two women based in China, Lisa Li and Xia Yu. Bayleys had no background information on these prospective bidders, and no identification documents were provided.
[22]The auction began slowly. After 20 minutes the highest bid in the room was
$8,000,000. The auction was paused at 11.35 am for negotiation and resumed at
11.55 am with a bid of $11,000,000. Within eight minutes Ms Li and Ms Yu traded bids up to $13,200,000. Ms Yu placed the winning bid.
[23] Ms Yu did not follow through with the sale process. She did not sign the agreement for sale and purchase or pay the deposit. By 17 April 2023, Ms Yu had ceased responding to Bayleys altogether. Elysian instructed the auctioneer to sign the auction agreement on behalf of Ms Yu and subsequently cancelled it.
[24] Bayleys then followed up with the underbidder, Ms Li, but she too was disinterested and became uncontactable.
[25] Bayleys then contacted other parties that had shown interest in the Properties. Mr Nees’ evidence was that there was no serious interest in the Properties and what interest there was, was at or below $10,000,000. On 4 May 2023, Ms Dickson told Bayleys on behalf of Elysian that she was not interested in selling the Properties for a “below market bargain” and that Bayleys’ agency agreement would terminate on 11 May 2023.
[26] On 22 May 2023, Elysian amended its claim and application for summary judgment to rely upon a market valuation it had obtained for the Properties of
$9,550,000. That valuation was provided by Ben Johnson of JLL Valuers.
[27]Mr Wang filed a notice of opposition on 29 May 2023.
[28] In late May 2023, a further potential buyer emerged and on 1 June 2023 Bayleys presented Elysian with an offer by V&V NZ Ltd to purchase the Properties for $9,500,000. The summary judgment hearing was imminent, and Ms Dickson asked Bayleys to pause negotiations to allow her to deal with the litigation and with serious health issues that she was experiencing.
[29]The application for summary judgment was heard on 9 June 2023.
[30] On 16 June 2023, Bayleys presented Elysian with a further offer from V&V NZ Ltd for $10,000,000. Elysian counteroffered at $10,900,000. After further negotiation the parties reached agreement on the amount of $10,500,000. Settlement took place on 21 June 2023 and Elysian received the amount of
$10,234,210.21 —being the purchase price less commission.
[31] On 29 June 2023, Associate Judge Taylor granted summary judgment as to liability.
[32] On 12 September 2023, Elysian amended its claim to account for the resale price of the Properties.
The pleadings as to quantum
[33] The original statement of claim sought $3,904,310.03 based on a market value of $9,295,000 being the amount of the only offer received as a result of the deadline sale process in August 2022.
[34] The amended statement of claim, dated 22 May 2023, varied the quantum of the claim to $3,649,310.03 based on a market value of $9,550,000 as valued by Mr Johnson in March 2023.
[35] The second amended statement of claim, dated 12 September 2023, reduced the quantum of the claim as a result of the sale price achieved in the resale of the Properties in June 2023. Elysian sought total damages of $3,025,010 broken down as follows:
(a)The $4,500,000 difference between the $15,000,000 purchase price in the Agreement and the $10,500,000 price at which the Elysian resold the Properties on 21 June 2023.
(b)Associated costs totalling $525,010 comprised of: commission paid to Barfoot & Thompson on the sale to Mr Wang ($172,500) and to Bayleys on the June 2023 resale ($241,500); wasted legal costs ($19,124.50); wasted marketing costs for campaigns to sell the
Properties ($12,117.63); the costs of the JLL valuation reports prepared for summary judgment ($12,212.33); and the costs of mortgages obtained by a different entity (Elysian Investment Ltd) relating to its purchase of a different property ($67,555.09).
(c)Less the $2,000,000 deposit paid by Mr Wang.
[36] Elysian further sought default interest at 14 per cent per annum from 2 June 2022 until satisfaction of the judgment sum; and scale costs for the proceeding.
[37] In written opening submissions, Elysian further reduced the quantum of the claim to $2,783,485.89 accepting that the Barfoot & Thompson commission and the interest costs on Elysian Investment Ltd’s mortgages could not properly be claimed. Default interest was sought from the date of settlement to the date of resale of the Properties, calculated to be $1,915,726.03 with interest also claimed under the IOMCA on the sum awarded by the Court. Costs were sought in the usual way.
[38] In oral opening submissions, Elysian changed its position in respect of the application of cl 11.4(3) of the Agreement which states:
The damages claimable by the vendor under subclause 11.4(1)(b)(ii) shall include all damages claimable at common law or in equity and shall also include (but shall not be limited to) any loss incurred by the vendor on any bona fide resale contracted within one year from the date by which the purchaser should have settled in compliance with the settlement notice. The amount of that loss may include:
(a)interest on the unpaid portion of the purchase price at the interest rate for late settlement from the settlement date to the settlement of such resale; and
(b)all costs and expenses reasonably incurred in any resale or attempted resale; and
(c)all outgoings (other than interest) on or maintenance expenses in respect of the property from the settlement date to the settlement of such resale.
[39] In its written opening submissions, Elysian said that the resale of the Properties occurred slightly over 12 months from the date when Mr Wang should have settled. As a result, it did not initially rely on cl 11.4(3) to quantify its loss as the deficiency
on a bona fide resale. Elysian said that the lack of reliance on cl 11.4(3) for that purpose did not change its entitlement to recover damages for the difference between the purchase price in the Agreement and the resale price. Elysian’s position was that the resale price was at market value, so the distinction was immaterial. It’s loss crystallised upon resale in June 2023 and was the difference between the sale price in the Agreement and the price achieved on resale plus associated costs.
[40] In oral opening submissions, Elysian submitted for the first time that the resale occurred one year to the day after Mr Wang should have settled. As a result, cl 11.4(3) applied so that the Court need only consider the bona fides of the resale and need not grapple with a determination of the market value at the time of resale.
[41] Mr Wang’s statement of defence was filed on 29 September 2023. Mr Wang pleaded three affirmative defences being:
(a)Elysian’s losses crystallised when it opted to retain the Properties on or about 25 August 2022; and at that date Elysian had suffered no loss as it retained the deposit of $2,000,000 and the Properties were worth at least $13,000,000.
(b)Elysian failed to mitigate its loss as it declined an offer of $13,000,000 for the Properties in February 2023; and resold the Properties at auction for $13,200,000 on 12 April 2023 before cancelling the unconditional agreement before settlement. Elysian then sold the Properties for
$10,500,00 in June 2023.
(c)Elysian entered into an unconditional sale and purchase agreement with a third party on 12 April 2023 with a purchase price of $13,200,000. The defendant is not liable for losses suffered by Elysian as a result of Elysian cancelling the agreement with the third party including any subsequent loss as a result of the second resale in June 2023.
[42] In respect of the application of cl 11.4(3), Mr Wang says that late reliance on that clause to quantify damages should not be permitted. It confers an advantage on
Elysian that was not pleaded because it makes it unnecessary to prove that the resale price represents the market value at the date of resale.
Issues
[43]The issues are:
(a)Is Elysian able to rely on cl 11.4(3) in the Agreement to calculate its loss as the difference between the price in the Agreement and the price achieved on resale in June 2023?
(b)If so, was the resale bona fide?
(c)If not, what is the correct date at which to assess Elysian’s loss?
(d)What was the market value of the Properties at the date the loss crystallised?
(e)Did Elysian fulfil its duty to mitigate loss?
(f)Did the unconditional agreement with Ms Yu at the auction break the chain of causation?
(g)If damages are to be awarded, what is the quantum?
(i)How is interest to be calculated?
(ii)How are the rental returns to be accounted for?
Discussion
The evidence
[44] Elysian called three witnesses, namely Ms Dickson, Mr Nees and Mr Johnson. Mr Johnson was engaged by Elysian in March 2023 to undertake a market valuation
of the Properties and provided valuation reports for each property dated 21 March 2023.
[45] Various objections were taken to the evidence of Ms Dickson by Mr Wang. Those objections primarily concerned Ms Dickson’s evidence about her suspicions as to the bona fides of the offer by LDW Ltd and the bona fides of the two overseas bidders at the auction in April 2023.
[46] Ms Dickson’s evidence on those matters is not admissible to prove that her suspicions were correct, however, the evidence is admissible to explain actions taken by her on behalf of Elysian. Had Ms Dickson believed that there were genuine buyers willing to pay in excess of $13,000,000 for the Properties, her subsequent decision to accept an offer of $10,500,000 would be difficult to explain. Ms Dickson’s evidence, that she did not regard the offer by LDW Ltd or the bids by Ms Li and Ms Yu as genuine, is relevant and admissible evidence to explain the decisions she made and is relevant to the issue of mitigation of loss.
[47] I found Ms Dickson to be an honest and credible witness who was motivated to put Elysian back in the position it would have been had Mr Wang not defaulted on the Agreement. Ms Dickson clearly had a view of what she was willing to accept for the Properties at various stages, but that view did not necessarily reflect the reality of the market at the time. During cross-examination, Mr Davis asked Ms Dickson:
Q. So, your brief is accurate? At the time –
A. Yeah.
Q. – you wanted a price of around 13 million.
A.That would’ve been perfect for everyone, wouldn’t it? We wouldn’t be here.
Q. Exactly. And that was consistent with what you considered at the time anyway was the market value of the properties.
A.I think the market was moving so much at that stage and there was just – because there was absolutely no buyer in the market, the market was just very, very hard to read.
[48] It was put to Ms Dickson that the decision to sell the Properties for $10,500,000 in June 2023 was motivated by the options available to Elysian in its legal claim against Mr Wang. Ms Dickson denied that, and I accept her evidence. When asked whether it would have been unreasonable for Elysian to accept a low offer to maximise the damages claim against Mr Wang, Ms Dickson was unhesitatingly in agreement. Further, the sale did not maximise the damages, rather it reduced the damages claimed by $1,000,000.
[49] When asked in cross-examination whether she ever had a discussion with anybody about the benefits to Elysian of having a valuation as low as possible, Ms Dickson replied “Absolutely, totally not and I never would”. I found Ms Dickson credible on that point. There was nothing in Ms Dickson’s evidence that gave any indication that she was trying to maximise the damages Elysian could claim against Mr Wang. The evidence suggests the opposite. Ms Dickson was asked if Elysian wanted to achieve a price the same as Mr Wang’s purchase price, being $15,000,000 and her response was “That would be good, again because then Mr Wang would get to keep his two million deposit so yes, that would have been perfect”.
[50] Under the Agreement, Mr Wang’s deposit (or most of it) would have been forfeit but I formed the strong impression that Ms Dickson would have done what she regarded as the right thing.2 I find no evidence whatsoever that Ms Dickson was in any way attempting to maximise the claim for damages against Mr Wang.
[51] The evidential picture that emerges is that when Mr Wang defaulted on the Agreement, Elysian made immediate efforts to market the Properties and took advice from a reputable real estate agent about the best way for the Properties to be marketed. The deadline sale process revealed a lack of interest in the Properties at anywhere near the level that would have released Mr Wang from liability. There is no criticism of the marketing process or the decision to sell the Properties by deadline sale. Nor could there realistically be. It is clear that the Properties were marketed in an entirely conventional way. Had Elysian accepted the highest offer of $9,295,000 following the deadline sale process, cl 11.4(3) would apply and Mr Wang’s liability would be greater
2 Clause 11.4(1)(b)(i) of the Agreement permits the forfeiture of the deposit paid by the purchaser, but not exceeding 10 per cent of the purchase price.
than is now claimed. If Ms Dickson were attempting to maximise the claim, the most obvious way to do that would have been to accept the offer that resulted from the deadline sale process.
[52] While the timing of the eventual sale, being exactly one year after the cancellation of the Agreement, might seem coincidental, it is self-evident that the timing was not engineered in any way. Had it been, it seems inevitable that cl 11.4(3) would have been specifically relied on in the second amended statement of claim. Further, Ms Dickson gave a credible explanation for why she decided in the end to accept an offer at a level that she had resisted accepting previously. In cross‑examination, Ms Dickson explained:
… I had quite a serious health issue happening at the time, so not only did I have a court case going on, I had a health issue that was quite serious, I needed some money to settle the mortgages I had to take out and I was wanting to build my lovely home in Waiheke which is going to be my forever home and Jason convinced me that maybe I’m best to take it on the chin and look after myself.
[53] Mr Nees, of Bayleys Real Estate was working to sell the Properties on behalf of Ms Dickson and Elysian. Mr Nees gave evidence that significant efforts were made to find another buyer for the Properties, however, the genuine interest from July 2022 until June 2023 was at or below $10,000,000. I say genuine interest because there are clear question marks around the bona fides of both the LDW Ltd offer and the bids at auction by Ms Li and Ms Yu.
[54] The situation with LDW Ltd was unusual because LDW Ltd walked away as soon as a counteroffer was made — despite the counteroffer relating only to the level of deposit and settlement period. Mr Nees is an experienced real estate agent and gave evidence that there was no further engagement after Bayleys presented the counteroffer to LDW Ltd. Following up with LDW Ltd did not result in the sort of feedback that would usually be provided, particularly as, on Mr Nees’ assessment the counteroffer involved relatively minor changes. Mr Nees shared Ms Dickson’s suspicion that the LDW Ltd offer was not genuine. The timing is not irrelevant. At the time summary judgment proceedings were underway, in which Mr Wang’s defence, in respect of liability, was that Elysian had not suffered a loss as the Properties were still worth at least $13,000,000. It is understandable that Ms Dickson and
Mr Nees were both suspicious of the LDW Ltd offer. That offer never resulted in a completed sale and purchase agreement and I do not regard it as indicative of the Properties’ market value at the time.
[55] Mr Nees’ evidence about the auction process also reveals an undoubtedly strange situation at the auction. Prior to the auction, Elysian engaged Bayleys as the sole agents and the Properties were marketed in the usual way. There is no criticism of the marketing or of the decision to proceed by way of auction. The bidding in the room stopped well short of the reserve of $12,000,000. From about $11,000,000 up to the winning bid of $13,200,000 there were numerous bids traded by the two overseas bidders, Ms Li and Ms Yu. After the auction, the agreement for sale and purchase was sent to Ms Yu but she did not sign it and did not pay the deposit. Ms Yu proved increasingly difficult to contact. On 17 April 2023, Ms Yu stopped responding to emails and turned off her phone/s.
[56] Bayleys then made efforts to contact the underbidder Ms Li who advised that she was no longer interested in the Properties and also stopped communicating with or responding to Bayleys. Mr Nees’ assessment was that neither the bidder nor underbidder were genuine based on their behaviour after the auction. I consider that Mr Nees was qualified by virtue of his experience to give that opinion.
[57] Bayleys then engaged with other parties that had shown interest in the Properties during the auction process. However, the feedback on price was much lower than Ms Dickson hoped to achieve and much lower than the market value that Mr Wang argues for. Mr Nees gave evidence that the price indications were below
$10,000,000 which is consistent with the bids at auction except for those made by Ms Yu and Ms Li.
[58] Mr Nees confirmed that Ms Dickson’s instructions were always to sell the Properties if a reasonable price could be achieved. There is no dispute that market conditions were rapidly deteriorating in late 2022 and throughout 2023.
[59] Mr Johnson valued the Properties at Elysian’s request in March 2023 as follows:
(a)18 Northcroft Street for the amount of $4,750,000 plus GST, if any; and
(b)20 Northcroft Street for the amount of $4,800,000 plus GST, if any.
[60]Together that amounted to a valuation of $9,550,000 plus GST.
[61] Mr Johnson’s evidence was that the commercial property market and the market for the Properties at the date of valuation and at the date of sale was somewhat challenging with a limited number of comparable transactions and shortage of buyers.
[62] Mr Wang called two valuers as witnesses, Ryan Impson and David Perrow. Both were critical of the method used by Mr Johnson to value the Properties and of the fact that he valued each property separately. Both reached a valuation figure considerably in excess of that reached by Mr Johnson. Mr Impson’s valuation was
$15,000,000 which was the sale price in the Agreement. Mr Impson’s evidence was that despite the economic downturn, the underlying value of the Properties was unaffected. I found that evidence somewhat unhelpful as the whole purpose of a market valuation is to assess the price a willing buyer/willing seller transaction would achieve at a particular time. It is not the underlying long-term value that is in issue but the market value at the particular time.
[63] Mr Perrow valued the Properties at $16,270,000. I found Mr Perrow a more reliable witness than Mr Impson, but his valuation does not accord with the value suggested by the actual testing of the market through the deadline sale process and the auction.
[64] The valuation reports prepared by Mr Impson and Mr Perrow were for the purpose of obtaining mortgage finance. Mr Wang gave evidence that the valuations were arranged by his business partner, Ms Fang for the purpose of securing finance to settle the Agreement. Mr Wang was due to settle in respect of the Properties on 2 June 2022. Ms Fang only approached the valuers to obtain the valuations in late May 2022. While valuations must be current, Ms Fang and Mr Wang left it very late to obtain the necessary funding to settle.
[65] The valuation evidence relates to different points in time. The Impson and Perrow reports relate to May 2022. Mr Johnson’s report is dated March 2023. It is not disputed that the market deteriorated in the second half of 2022 and in 2023. But even acknowledging the different dates of the valuations, I prefer Mr Johnson’s evidence because it is supported by the evidence given by Mr Nees of the actual interest in the Properties, by the outcome of the deadline sale process, and by the level of bids at the auction excluding the overseas bidders. Mr Johnson’s evidence is also far more in line with the eventual sale price achieved.
[66] I did not find Mr Wang as credible a witness as Ms Dickson. Mr Wang disavowed knowledge of a number of matters saying Ms Fang was responsible, but it is clear that he has significant experience of buying and selling property. Ms Fang was the person dealing with the valuers for the purpose of obtaining mortgage finance, but I find it difficult to accept that Mr Wang was as uninvolved or naïve as he wished to present himself. Given his experience he must have been aware of the implications of signing an agreement for sale and purchase. I consider that Mr Wang was highly motivated to protect his own position.
Is Elysian able to rely on cl 11.4(3) in the Agreement to calculate the loss based on resale within 12 months?
[67] In opening oral submissions, Mr Jeffs for Elysian said that he had re-calculated the dates and that the resale occurred exactly 12 months to the day after the Agreement was cancelled. Mr Jeffs, therefore, submitted that cl 11.4(3) makes it unnecessary for Elysian to prove that the resale price represents the market value at the time. Mr Jeffs acknowledged that Elysian did not expressly plead reliance on cl 11.4(3) of the Agreement but says that matters of law do not need to be pleaded. The Agreement either applies or it does not. Elysian did plead the terms of the Agreement “as if pleaded in full”.
[68] Mr Jeffs submitted that, as there was one year between the date on which Mr Wang should have settled under the settlement notice (21 June 2022) and the date on which Elysian resold the Properties (21 June 2023), cl 11.4(3) applies regardless of whether or not it was specifically pleaded. He submits that Elysian is entitled to recover any loss incurred on the resale to V&V NZ Ltd as long as the sale was bona
fide. The position taken at trial was that Mr Wang could not avoid liability by claiming that the sale price was below market value but could only challenge Elysian’s losses on the resale if it were not a bona fide resale.
[69] Mr Wang says that Elysian changed its case in its oral opening address by seeking to rely on cl 11.4(3) in this way. Mr Wang objects to such a late change in position and says that he is prejudiced in how his case has been prepared and advanced. Mr Wang points out that if Elysian’s case is not based on cl 11.4(3) then general damages principles apply and the Court must consider the appropriate date for assessing loss. Mr Wang says that the correct loss assessment date is on or about 25 August 2022 when Elysian first elected to retain the Properties. Mr Wang says if that date is accepted, Elysian will have suffered no loss based on the valuation evidence and his case must succeed.
[70] Mr Wang points out that despite the June 2023 resale, the second amended statement of claim did not change the original basis of the claim for damages. Elysian claimed common law damages. The second amended statement of claim amended the reference to the Properties being retained to reflect the fact that the Properties were sold but the pleadings were not amended to change the basis of Elysian’s claim for damages.
[71] Mr Wang’s position is that Elysian cannot rely on cl 11.4(3) of the Agreement to quantify the loss and can only establish actual loss if the market value of the Properties, at the date the loss crystallised, was less than $13,000,000. Mr Wang says that at all times the value of the Properties was at least $13,000,000.
[72] Mr Wang does not accept Elysian’s position that if cl 11.4(3) does not apply it is still entitled to recover damages based on the June 2023 resale of the Properties. Mr Wang says that, if cl 11.4(3) does not apply, both the date for the assessment of damages and whether the June 2023 resale price represents the market value of the Properties, are live issues.
[73] Mr Wang prepared his case on the basis of the claim as pleaded. Evidence was called from two valuers as to market value between May and August 2022. The
submissions were directed to determining the date for the assessment of loss and the market value at that date. The issue of the bona fides of the sale was not specifically examined or addressed because the issues, based on the pleadings, were the date upon which the loss crystallised and the market value at that date.
[74] Because of the way Elysian pleaded its case, I find that the issue of quantum must be determined in accordance with the common law rather than the contractual term in cl 11.4(3) of the Agreement. That is because, not only did Elysian fail to plead that the sale occurred within 12 months, but it specifically submitted that the sale was outside the 12-month time limit at every stage of the proceeding prior to oral opening submissions. Mr Wang had no notice of the change of position and prepared his case on the basis that the assessment of quantum based on a 12-month resale provided for in cl 11.4(3), did not apply. It would be quite unfair to permit such late reliance on cl 11.4(3) of the Agreement in the way now sought.
What is the correct date at which to assess Elysian’s loss?
[75] Elysian says that even if it cannot rely upon cl 11.4(3) of the Agreement, there is no material difference to its entitlement to damages. It says that the correct date to assess damages is at the time of the resale in June 2023.
[76] Clause 11.4(3) states that following cancellation, the vendor can recover damages claimable at common law. Elysian says it is entitled to be restored to the position it would have been in had the breach of contract not occurred in so far as money can do so. It says that damages do not need to be assessed at the date of breach. Instead, damages should be assessed on a date that is fair to Elysian as the innocent party.
[77]Elysian relies on the proposition from Sale of Land that:3
The flexibility in the date of assessment operates to make the assessment fair only to the innocent party; the date will not be shifted from the date of cancellation of the contract to benefit the defaulting party.
3 DW McMorland Sale of Land (4th ed, Cathcart Trust, Auckland, 2022) at 550. See Stirling v Poulgrain [1980] 2 NZLR 402 (CA); and Turner v Superannuation & Mutual Savings Ltd [1987] 1 NZLR 218 (HC) at 231.
(footnotes omitted)
[78] Mr Wang submits that the usual approach to the date for calculation of damages is to take the date of breach or cancellation. The date of breach was 21 June 2022. The Agreement was cancelled by Elysian on 27 June 2022 following Mr Wang’s breach.
[79] In Hooper v Oates, the English Court of Appeal said that the breach date would only be appropriate to assess damages for breach of a contract to acquire land if there were an immediately available market or purchaser.4 That will almost never be the case. The appropriate date at which to assess damages for breach of an agreement for sale and purchase of land will typically be when the properties are retained or sold.5
[80]In Williams v Kirk Bisson J stated:6
If there is a resale of the property within a reasonable time of the breach that may well be the best evidence of the market value of the property at the date of the breach of contract. That will be a question of fact for determination in each case and one issue may be whether the market was sufficiently explored and another issue may be whether the resale was unreasonably delayed at a time when prices of such properties were falling.
…
But if the property takes some time to resell and over that time market prices fall it is again a question for the Court to assess damages, and the Court will strive to do justice to both parties, fixing a date other than the date of breach if that be necessary to provide appropriate compensation to the innocent party.
[81] Elysian initially pleaded that its loss crystallised when it elected to retain the Properties in August 2022 following the deadline sale process. Mr Wang argues that the only evidence of the market value as at August 2022 comes from Mr Impson and Mr Perrow and their evidence is that that the market value was considerably in excess of $13,000,000.
[82] In Masterton Investments Ltd v Watson, which concerned default on a commercial property later resold, Ellis J commented that valuation evidence “about
4 Hooper v Oates [2013] EWCA Civ 91, [2014] Ch 287 at [38].
5 At [39].
6 Williams v Kirk [1988] 1 NZLR 452 (CA) at 463.
the market value of the property at the time is of little moment” and “[m]arket value is meaningless in the absence of potential buyers”.7
[83]In Sullivan v Darkin, Somers J observed that:8
While the price at which a vendor resells is not a substitute for the market price yet the result of a resale by a vendor within a reasonable time will frequently afford sufficient, and often the best, evidence of the market value.
(citations omitted)
[84] The date for determining damages is a question of fact in each case. Under common law damages principles, it is the market value, not the actual sale price, that is important.9
[85] I do not agree with the position taken by Mr Wang as to the market value in August 2022. Where a property has been sold, the resale price will often be the best evidence of the property’s value. Valuation evidence is generally less relevant than the price actually obtained following a properly conducted sale process. It is impossible to reconcile the valuations upon which Mr Wang relies with the reality of the market as revealed by the deadline sale process. Mr Nees gave evidence as to the level of the interest in the Properties at the time of the deadline sale campaign. That level of interest was determined following a properly conducted marketing. The offer of $9,250,000 following the deadline sale process is informative of market value at the relevant time.
[86] If I were to find that Elysian’s loss crystallised at the date of either breach or cancellation in June 2022; or when it elected to retain the Properties in August 2022, my view of the market value would be heavily influenced by the outcome of the deadline sale process. This includes not only consideration of the only actual offer received as a result of that process, but the feedback from prospective purchasers. Despite the valuations arrived at by Mr Impson and Mr Perrow, the evidence suggests that the market value was likely below $10,000,000.
7 Masterton Investments Ltd v Watson [2022] NZHC 3113, (2022) 23 NZCPR 856 at [94].
8 Sullivan v Darkin [1986] 1 NZLR 214 (CA) at 220–221.
9 At 220–221.
[87] Elysian began marketing the Properties almost immediately after Mr Wang defaulted. It tried twice to sell the Properties, first in August 2022 by deadline sale and again in April 2023 by auction. Both of those efforts resulted in offers below
$10,000,000. It can hardly be said that the market was not tested. It clearly was and there was no buyer at or anywhere near the level Mr Wang says was the market value. The marketing understated the rental income of the properties but not to such a degree that it could be said that the properties were not properly marketed. It is true that the property market was declining through the second half of 2022 and into 2023, however, Elysian did not simply wait in a declining market before reselling the Properties. It made two genuine efforts to offer the Properties for sale and did not receive bids at a level that would have prevented the loss.
[88] It is clear from the evidence that Ms Dickson was always willing to sell the Properties if Elysian could obtain a price at or anywhere near $13,000,000. The only reason Elysian elected to retain the Properties in August 2022 was because there was no offer at a level anywhere near the valuation Mr Wang submits was the market value. To that extent I do not consider that the decision to retain the Properties in August 2022 represents anything other than a failure to obtain a price that would have satisfied Elysian and would also have protected Mr Wang from liability.
[89] The price eventually achieved at resale was $1,000,000 more than Mr Johnson’s valuation in March 2023 and over $1,000,000 more than the price offered as a result of the deadline sale process. I consider that the June 2023 resale price reflects the objective market value and was the best price reasonably obtainable at the time.
[90] The fairest approach for both parties is to assess loss at the date of resale on 21 June 2023. The market was tested at various stages over the preceding year, and the resale price reflected the market value at the date of resale.
Failure to mitigate
[91] Mr Wang submits that even if the date for assessment of damages is the resale date, the question of whether Elysian fulfilled its duty to mitigate its loss remains a live issue.
[92] The burden of proving a failure to mitigate rests with the breaching party.10 The Court in Thai Airways International Public Co Ltd v KI Holdings Co Ltd said that it is for the defendant to show that there was a course of action that a claimant could reasonably have been expected to adopt that would have avoided all or an identifiable part of the claimant’s loss.11
[93] Mr Wang submits that Elysian ceased active marketing and advertising of the Properties between the end of August 2022 and March 2023. He further says that when the Properties were marketed for auction they were marketed undervalue with an incorrect rental income. Mr Wang says that there was no evidence of any active marketing or advertising of the Properties following the auction before the offer from the eventual resale purchaser, V&V NZ Ltd. The offer from V&V NZ Ltd was made and accepted on 16 June 2023. Counsel for Mr Wang submits that there was no testing of the market, only one offer was considered, and the negotiation took place over a short period of time on 16 June 2023.
[94] I do not agree that there had been no testing of the market. Ms Dickson, on behalf of Elysian, had been attempting to resell the Properties since Mr Wang defaulted on his obligations under the Agreement. The consistent feedback from the market was that the interest was below $10,000,000. The auction process, which had not resulted in any apparently legitimate bids over $8,000,000, was only two months prior to the offer from V&V NZ Ltd. The initial offer from V&V NZ Ltd was $9,500,000. As a result of negotiations, this increased to $10,500,000 which was the highest offer that had been received throughout the year following Mr Wang’s default.
[95] Mr Wang criticises Elysian’s failure to accept LDW Ltd’s offer but the counteroffer by Elysian to LDW Ltd was completely unremarkable. Given that LDW Ltd disengaged immediately I consider it more likely than not that this was not a bona fide offer.
10 Treloar v Henderson [1968] NZLR 1085 (HC) at 1089; and Blumberg v Frucor Beverages Ltd [2018] NZHC 1876, [2018] 3 NZLR 672 at [54].
11 Thai Airways International Public Co Ltd v KI Holdings Co Ltd [2015] EWHC 1250 (Comm) at [38].
[96] In any event Elysian did not fail to mitigate its loss simply because it counter offered seeking a larger deposit and a shorter settlement. I reject Mr Wang’s submission that, at the date of resale, the best evidence of market value is Mr Impson’s opinion which places the value at $14,600,000. That submission flies in the face of reality. Ms Dickson made it clear, and I accept her evidence, that she was always willing to sell if a buyer could be found who was willing to purchase at anywhere near
$13,000,000, and in fact at $12,000,000 — the reserve at the April 2023 auction. Elysian made considerable efforts to sell the Properties in the year following Mr Wang’s default. There was simply no buyer offering anything like the price that Mr Impson says represented the market value.
[97] While it is true that market value is to be assessed objectively and does not necessarily equate to sale price, it seems to me that the market was tested and the best evidence available is the evidence of the one offer made following the deadline sale process and the bids at auction — excluding the overseas bids which I discuss below.
Chain of causation
[98]Mr Wang argues that the Properties sold under the hammer at auction for
$13,200,000 to Ms Yu. Mr Wang acknowledges there is a question as to whether the purchaser and the bid placed at auction were genuine but says the Court need not resolve that. Mr Wang says the important point is that the Properties were sold unconditionally to a third party and a fully executed and binding contract entered into. Mr Wang relies on the fact that after the auction Elysian required the auctioneer to sign the resulting agreement for sale and purchase thereby committing the parties to an unconditional sale, and that, in order to cancel that agreement, Elysian had to instruct its lawyers to do so in writing.
[99] Mr Wang says that the existence of that fully executed and binding contract constitutes an intervening event breaking the chain of causation.
[100] As stated in the Laws of New Zealand, causation is a factual issue that must be decided in accordance with common sense and the understanding of the ordinary
person on the street.12 The Courts have often applied (as a starting point only) a “but for” test of causation. Under this test:
(a)if “but for” the defendant’s action or inaction the plaintiff would not have suffered the particular loss, the defendant is liable for that loss; and
(b)if “but for” the defendant’s action or inaction the plaintiff would have suffered the loss in any case, the defendant is not liable for it.
[101] The “but for” test is more likely to be used as a negative test, excluding liability in cases where the loss would have occurred in any case had the defendant’s action or inaction not occurred. The test can be both under-inclusive and over-inclusive and is only a starting point.13 It is not sufficient for the defendant’s act or omission to have merely created or preserved the opportunity to incur loss.14 It is enough if it materially contributes to causing it, whether directly or by materially increasing the risk of injury or loss.
[102] The question is whether, in a practical way, Elysian’s loss was attributable to or caused by Mr Wang’s breach. A defendant’s actions must be sufficiently proximate in that they must remain a substantial and operating cause of the loss. The issue is whether Mr Wang’s breach was the effective and operating cause of Elysian’s loss at the date of resale in June 2023. Loss will not be caused by the defendant’s breach if it in fact rose from a supervening event.15
[103] This assessment requires a common sense and fact specific approach. In Sew Hoy & Sons Ltd (in rec and in liq) v Coopers & Lybrand the Court of Appeal said:16
The basic question remains whether there is a causal connection between the defendant’s default and the plaintiff’s loss. Galoo provides, perhaps, a timely
12 Marcus Pawson Laws of New Zealand Damages (online ed) at [88].
13 Registrar-General of Land v Marshall [1995] 2 NZLR 189 (HC) at 197.
14 Attorney-General v Gilbert [2002] 2 NZLR 342 (CA) at 361.
15 Wiseman v Virgin Atlantic Airways Ltd [2006] EWHC 1566 (QB) at [22]–[24].
16 Sew Hoy & Sons Ltd (in rec and in liq) v Coopers & Lybrand [1996] 1 NZLR 392 (CA) at 408– 409.
reminder that the answer to this question will not be resolved by the application of a formula but by the application of a Judge’s common sense. The Judge needs to stand back from the case, examine the facts closely, and then decide whether there is a causal link between the default and the loss in issue which can be identified and supported by reasoned argument.
[104] Mr Wang says that Elysian’s loss was caused by Ms Yu not performing a fully executed sale and purchase agreement following the auction. Mr Wang say that entry into that agreement broke the chain of causation and crystallised Elysian’s loss at April 2023; and the person responsible for the loss is Ms Yu and not Mr Wang.
[105] The auction was part of Elysian’s efforts to sell the Properties and thus to mitigate its loss. The auction did not change Elysian’s position or cause any further loss. Its position before the auction was the same as its position after the auction. I do not agree that the auction resulted in a novus actus interveniens. I find it more likely than not that Ms Yu and Ms Li were not bona fide purchasers. On the balance of probabilities, the bids placed by the overseas bidders, Ms Yu and Ms Li, were not genuine bids at all but were designed to interfere with the auction process. Neither Ms Yu and Ms Li, although both showing apparent interest and bidding up to almost exactly the point where Mr Wang’s liability ended (just over $13,000,000) engaged further with the Properties following the auction. Ms Yu, as the highest bidder, refused to sign the auction contract. She did not pay the deposit nor any part of the purchase price and quite quickly became uncontactable. Ms Li took a similar stance. Neither Ms Yu nor Ms Li provided any identification documents, and neither was within the jurisdiction. It is completely artificial to argue that Elysian could have taken any legal action against either of those two bidders.
[106] I do not make any finding that Mr Wang had involvement with either Ms Li or Ms Yu or was any way connected to their bids. How they became involved and whether they had a connection to any party does not change the fact that for whatever reason, they were not genuine bidders. Had either Ms Yu or Ms Li been genuine bidders, their behaviour immediately following the auction is inexplicable.
[107] The mere fact that there was a further agreement for sale and purchase does not cancel Mr Wang’s liability for damages for his breach. The auction agreement was
only signed by the auctioneer for the purpose of cancelling it. It is clear that Ms Yu had no intention to sign it at all.
[108] There may well be circumstances where a further sale process operates as an intervening act and releases a defaulting purchaser from liability for damages for their breach. The enquiry will always be fact specific. On the facts of this case, I do not consider that the auction agreement was an intervening act that cancelled Mr Wang’s liability. That is primarily because I do not think that the bid by Ms Yu was a genuine bid. There was no practical way for Elysian to enforce the agreement with Ms Yu. In the circumstances of this case, it would not be in the interests of justice to find that the auction agreement was an intervening act. Such a finding would incentivise interference in auctions by defaulting purchasers and would disincentivise vendors from attempting to mitigate loss by reselling at auction.
Outcome
[109] It follows from the above discussion that I reject the affirmative defences raised by Mr Wang.
[110]Elysian’s claim for damages is as follows:
Type of Loss Amount ($) Legal costs relating to dispute and cancelling of Agreement 19,124.50 Marketing and advertising of the Properties 10,618.03 Bayleys commission on resale 241,500 Difference on resale of Properties 4,500,000 Less deposit (2,000,000) Less net income (204,278.12) Default interest 1,915,726.03 Total 4,482,690.44
[111] Elysian seeks interest under the IOMCA on the sum awarded by the Court from the judgment date.
[112] Mr Wang submits that the wasted legal costs of $19,124.50 are not recoverable as they are comprised of costs relating to the sale of the Properties to Mr Wang which would have been incurred in any event had the Agreement been performed. I agree that these are not recoverable where Elysian is suing for loss of its bargain.
[113] Mr Wang also submits that costs relating to advice on the process for cancelling the Agreement and counsel’s costs for attendances concerning Mr Wang’s breach and the cancellation by Elysian are not recoverable. Mr Wang says costs relating to reviewing the Barfoot & Thompson agency agreement and their entitlement to commission should not be recovered given that Elysian has abandoned its claim to the Barfoot & Thompson commission. I agree with that.
[114] The marketing costs for the campaigns to sell the Properties are recoverable. Although unrelated to the June 2023 resale, those marketing costs were incurred as a direct result of Mr Wang’s breach. That breach forced Elysian to remarket the Properties in an effort to mitigate its loss. Elysian would not have incurred those costs but for Mr Wang’s breach and Elysian incurred the costs in an effort to mitigate its loss as it was required to do.
[115] The cost of the JLL valuation reports of $12,212.33 can be recovered but only as a disbursement in respect of the summary judgment application. Costs were reserved in respect of that application and will need to be determined. That cost will not be awarded as part of this decision but should be factored into any agreement as to costs.
[116]I determine damages to be:
Damages Difference on resale of Properties $4,500,000 Marketing and advertising of the Properties $10,618.03 Bayleys commission on resale $241,500 Less deposit ($2,000,000) Total of available values $2,752,118.03 Total damages $2,752,118.03
Default interest
[117] Default interest is payable from the date of settlement to the date of resale.17 Rental income accrued by Elysian during the default period must be accounted for and offset to prevent double recovery by it retaining the benefit of the leasing income and being awarded default interest.
[118] Ms Dickson provided a breakdown of the income and expenditure of the Properties on a pro rata basis. The breakdown shows that whilst the total gross income of Elysian was $873,894, only $634,596 was attributable to the Properties. These pro rata figures were discussed during cross-examination of Ms Dickson. Ms Dickson was only asked to provide this breakdown very close to the trial. I accept that she did her best in the available time but the evidence at the hearing did not assist in quantifying, with any certainty, the Properties’ net income.
[119]I direct the parties to attempt to agree the net income figure.
[120]If the parties are unable to agree I make the following directions:
(a)Elysian is to file and serve a memorandum addressing net income within 20 working days of the date of the judgment;
(b)any reply memorandum from Mr Wang is to be filed and served within a further 10 working days; and
(c)any filed memoranda are not to exceed five pages. Any filed memorandum will be dealt with on the papers.
[121] Default interest is payable on the sum of $13,000,000, at the interest rate for late settlement, 14 per cent, from the settlement date, 2 June 2022, to the settlement of resale, 21 June 2023 pursuant to cl 11.4(3) of the Agreement and s 22 of the IOMCA.
17 The submissions record the default interest as $1,915,726.03. I believe this value reflects a typing error and that the correct value is $1,914,739.73 (principal the amount unpaid from the purchase price of $13,000,000
* the interest rate for late settlement * time [384/365]).
[122] I will award default interest on the unpaid portion of the purchase price minus the net income figure agreed or determined by the Court.
Other interest
[123] Elysian, in its opening submissions, sought interest under the IOMCA on the sum awarded by the Court.
[124]Section 25 of the IOMCA provides:
25 Court may not award interest unless procedural requirements complied with
(1)A Court may not award interest under a section of this Act for a period unless the party who claims interest under the section for that period specifies the section and, as far as possible, the period in that party’s statement or notice of claim or counterclaim.
…
(2)If a party claims interest under section 17, 18, 22, or 24,—
(a)the party must specify in that party’s statement or notice of claim or counterclaim the amount or rate of interest claimed; and
(b)the court may not award interest—
(i)exceeding the amount claimed under paragraph (a); or
(ii)at a rate exceeding the rate claimed under paragraph (a).
[125] Elysian did not comply with s 25 of the IOMCA and accordingly there is no power to award interest under the IOMCA unless the pleadings are amended.
[126] This situation has arisen in a number of recent cases. Although s 25 of the IOMCA has been in force since 2016, it does not seem to be well understood. In Chen v Huang the Court of Appeal said, in respect of pleadings that did not comply with s 25(1) and (2) of the IOMCA, that:18
18 Chen v Huang [2024] NZCA 38 at [239]–[240].
… It is equally clear from s 25(4) that the court can make or accept an amendment to the statement of claim or the counterclaim.
[240] Under s 25(4) any amendment must be in accordance with the rules of the court. The relevant rule is r 1.9 in the High Court Rules 2016. It provides that the court can, before, at, or after the trial of any proceeding, amend any defects and errors in the pleadings, whether or not there is anything in writing to amend and whether or not the defect or error is that of the party applying to amend.19 Amendments can be made that are necessary for determining the real controversy between the parties.20
[127] The Court endorsed Osborne J’s approach in Davern v QBE Insurance (Australia) Ltd, in which he noted that s 25(4) permits an amendment at “any time” considering that this would include after a trial.21
[128] The Court noted that a late amendment must surmount the “three formidable hurdles” and show that: the amendment is in the interests of justice; will not significantly prejudice the other party; and will not cause significant delay.22
[129]Campbell J decided an application to amend pleadings following judgment in
Body Corporate 406198 v Property Opportunities Ltd.23 Campbell J noted that:
[13] Amendments were allowed in both Davern (after substantive judgment) and Chen v Huang (on an appeal from a substantive judgment). In each case this was because, in essence, the plaintiffs had always made it clear that they were claiming interest, there was no suggestion the defendants would have responded any differently had the claim for interest been correctly pleaded, and the amendment would not cause any delay.
[130] Campbell J did not permit an amendment to interest sought in respect of outgoings as the amendment was sought two years after judgment was satisfied; and because it could be argued that the plaintiff did not pursue its claim for interest at the time costs were agreed for the first money judgment. He considered that it would not be in the interests of justice to permit an amendment in such circumstances. However, the amendment was permitted, and interest awarded in respect of interest for rent.
19 High Court Rules 2016, r 1.9(1).
20 Rule 1.9(2).
21 Chen v Huang, above n 18, at [243]–[244] citing Davern v QBE Insurance (Australia) Ltd [2023] NZHC 3543 at [16].
22 At [242] citing Elders Pastoral Ltd v Marr (1987) 1 NZPC 91, (1987) 2 PRNZ 383 at 385.
23 Body Corporate 406198 v Property Opportunities Ltd [2024] NZHC 945.
Campbell J noted that before the substantive hearing it was clear to the defendant that interest was being sought.
[131] In the circumstances, I consider it in the interests of justice for the pleadings to be amended so that interest is pleaded in accordance with the IOMCA. Whilst, incorrectly pleaded, Elysian did state that interest was being sought until satisfaction of the judgment sum in each of its statements of claim.24 Accordingly, I consider that Mr Wang was on notice that interest on the judgment sum was being sought well before trial; and that he is not significantly prejudiced in any illegitimate way by an amendment to the pleadings.
[132] I consider it in the interests of justice to make an amendment to Elysian’s pleading to comply with the requirements under s 25 of the IOMCA.
[133] I invite the parties to confer and provide a memorandum either jointly or separately as to the appropriate rate of interest under the IOMCA.
[134] Elysian is entitled to interest on the awarded damages in accordance with the IOMCA.25 The interest period will end on the day the judgment debt is paid in full.
Result
[135]I award judgment for Elysian in the amount of:
(a) Damages of $2,752,118.03.
(b)Default interest of 14 per cent on $13,000,000 from 2 June 2022 to 21 June 2023 minus net income to be determined in accordance with [114]– [122].
24 In its statements of claim Elysian had sought “Interest at the rate of 14% per annum from 2 June 2022 until satisfaction of the judgment sum”. This pleading misconstrues the interest available to Elysian under the Agreement, being “interest on the unpaid portion of the purchase price at the interest rate for late settlement from the settlement date to the settlement of such resale”. The Agreement records the interest rate for late settlement as 14 per cent.
25 Interest on Money Claims Act 2016, s 18.
(c)Interest on the damages amount only of $2,752,118.03 in accordance with the IOMCA.
Costs
[136]I direct the parties to attempt to agree costs.
[137]If the parties are unable to agree on costs, I make the following directions:
(a)any application for costs is to be made by memorandum to be filed and served within 20 working days of the date of this judgment;
(b)any reply from Mr Wang is to be filed and served by memorandum within a further 10 working days; and
(c)memoranda as to costs are not to exceed five pages.
[138] I will deal with the issue of costs on the papers unless the parties indicate that hearing time is required.
Wilkinson-Smith J
0
4
1