Hou v Zhang - [2024] NZHC 2434

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2022-404-2290

[2024] NZHC 2434

BETWEEN
ZHENCHANG HOU

Plaintiff

AND

KAI ZHANG

First Defendant

TAMAKI CA LIMITED

Second Defendant

Hearing: On the papers

Appearances:

M Taylor for Plaintiff

M Pang and X Lin for Defendants

Judgment:

28 August 2024

COSTS JUDGMENT OF MOORE J

This judgment was delivered by me on 28 August 2024 at 3.00 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date: …………………………..

Solicitors:
Integritas Law Firm, Auckland Maria Taylor, Auckland

HOU v ZHANG [2024] NZHC 2434 [28 August 2024]

Introduction

[1] This judgment deals with an outstanding question of costs arising out of proceedings brought by the plaintiff, Mr Hou, for the enforcement of an earlier order for specific performance made by this Court in November 2023. The application came before me on 29 May 2024 and culminated in orders being made by consent.

Background

[2] The background to this matter is set out in my minute of 29 May 2024.1 In brief, the plaintiff, Mr Hou, and the first defendant, Mr Zhang, executed an agreement between them to purchase and develop a property. The property is held by the second defendant, Tamaki CA Ltd. Mr Zhang and his wife are its directors and shareholders.

[3] The plan was to demolish the property’s existing dwelling and to construct townhouses. Mr Hou contributed $1.1 million to the endeavour while Mr Zhang contributed $50,000.

[4] Mr Hou ultimately became dissatisfied with the arrangements and progress of the development. He gave notice under their agreement that he wished to sell. This triggered a procedure in their agreement which required the parties to buy each other out.

[5] The buyout notice remained extant. Neither party exercised this option and, accordingly, Mr Hou brought proceedings for specific performance of the agreement’s sale to third parties provision. Associate Judge Sussock granted those orders subject to the parties instructing an independent solicitor for the conveyance of the property, and on condition that the proceeds of sale be paid into and held in the trust account of that independent solicitor.2

[6] Following Associate Judge Sussock’s judgment, the parties agreed in December 2023 that:

1 Hou v Zhang HC Auckland CIV-2024-404-2290, 29 May 2024 (Minute of Moore J).
2 Hou v Zhang [2023] NZHC 3102 at [80].

(a)Ms Sun of Elite Legal would act on the conveyance of the property;

(b)the property was to be sold by auction in February 2024;

(c)Kitty Long of Barfoot & Thompson would be appointed real estate agent; and

(d)the property would be sold at a reserve price of $1.2 million.

[7] Despite that agreement, glacial progress was made with selling the property. The agency agreement with Barfoot & Thompson went unsigned and no steps were taken to progress the sale.

[8] As a consequence, on 12 March 2024, Mr Hou applied for relief in this Court to enforce Associate Judge Sussock’s orders, and for relief for contempt of…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2024] NZHC 2434
Decision Date: 28 August 2024

CaseChat Overview and Summary

In the High Court of New Zealand, Auckland Registry, Mr. Zhenchang Hou, the plaintiff, brought an action against Mr. Kai Zhang and Tamaki CA Limited, the first and second defendants respectively, concerning the enforcement of a specific performance order related to the sale of a property. The legal issues involved determining whether the plaintiff was entitled to indemnity costs for bringing the application, despite it resulting in orders by consent, and whether the defendants were entitled to costs instead. The court held that the plaintiff was entitled to indemnity costs because the application was unnecessary, given the defendants' prior agreement to sell the property and their unreasonable opposition to the plaintiff's application. The court rejected the defendants' argument that costs should lie where they fell or that they were entitled to costs for agreeing to certain terms in the consent orders. The court awarded indemnity costs of $15,500 plus disbursements of $677.77 to the plaintiff.

The final orders of the court were that the plaintiff, Mr. Zhenchang Hou, was to be awarded indemnity costs of $15,500, exclusive of GST, and disbursements of $677.77. These costs were to be paid by the first and second defendants, Mr. Kai Zhang and Tamaki CA Limited. This outcome followed the court's determination that the application was necessary due to the defendants' unreasonable opposition and their failure to act in accordance with prior agreements. The court emphasized that the defendants' actions were unreasonable and contributed to the plaintiff incurring additional costs.

Orders