Hsieh v Dreamhome Construction Group Limited

[2025] NZHC 2995

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-004-285

[2025] NZHC 2995

IN THE MATTER OF

a breach of contract

BETWEEN

HSIN-TSE HSIEH, CHEN-YIN YANG HSIEH, and CHD TRUSTEES No. 16

LIMITED as Trustees of the HSIEH FAMILY TRUST

Plaintiffs

AND

DREAMHOME CONSTRUCTION GROUP LIMITED

First Defendant

CHENGFAN SUN
Second Defendant

BROTHERS ALUMINIUM LIMITED
First Third Party

C&Y NZ LIMITED
Second Third Party

(Continued Overleaf)

Hearing:	On the papers
Appearances:	E St John and S P Maloney for the Plaintiffs D T Broadmore and E Lee for the Defendants
Judgment:	10 October 2025

JUDGMENT OF GARDINER J

(Costs)

This judgment was delivered by me on 10 October 2025 at 10.00 am pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

HSIEH v DREAMHOME CONSTRUCTION GROUP LTD [2025] NZHC 2995 [10 October 2025]

DOORWAYS (2009) LIMITED (DISCONTINUED)

Third Third Party

QUALITY KITCHEN NZ LIMITED
Fourth Third Party

TANK (LAST NAME UNKNOWN)
Fifth Third Party

Introduction

[1]                 On 19 June 2025, I gave judgment finding Dreamhome Construction Ltd (Dreamhome) liable for breach of contract for undue delay in completion of the construction of residential dwellings.1

[2]  The parties have attempted to reach agreement as to costs. However, certain items remain in dispute and require judgment. Overall, the plaintiffs seek $85,015.50 in costs and $57,629.79 in disbursements.

[3]                 The defendants accept that the plaintiffs were overall the successful party and entitled to costs.  However,  they  seek  reduced  costs  and  disbursements  due  to the plaintiffs’ conduct. Further, they claim costs on defending the plaintiffs’ interlocutory application for enforcement orders in the District Court in 2021.

Reduced costs

[4]                 The defendants seek a 50 per cent reduction pursuant to r 14.7(d) of  the  High Court Rules 2016 because the plaintiffs failed in relation to two causes of action which significantly increased their costs. The Court of Appeal in Weaver v Auckland Council held that a reduction of 50 per cent was appropriate where the party claiming costs succeeded for only 50 per cent of their claim.2 The Court said that reductions must reflect the time and resources incurred by the unsuccessful party to meet the ultimately unsuccessful causes of action and arguments.3

[5]                 The defendants say that in circumstances where only one out of three of the plaintiffs’ causes of action (for less than 20 per cent of the quantum claim) succeeded, the significant time and costs incurred in defending the claims should be recognised by way of reduction. The defendants also say that the ‘inflated’ claim significantly increased their costs by requiring them to call expert evidence (Fulei Zhou) and respond to the third statement of claim.

1      Hsieh v Dreamhome Construction Group Ltd [2025] NZHC 1643.

2      Weaver v Auckland Council [2017] NZCA 330, (2017) 24 PRNZ 379 at [26].

3 At [29].

[6]                 In reply, the plaintiffs say that a reduction was warranted in Weaver because the unsuccessful arguments increased the time and resources spent by the unsuccessful party by 100 per cent, or “roughly a doubling of effort and time”.4 This was not the case here. The negligence claim against Mr Sun did not materially increase the time and resources spent by the defendants and increased the time spent in legal submissions at most by 10 to 15 per cent.

[7]                 The plaintiffs deny that the cause of action relating to the construction documents was unsuccessful as the Court found Dreamhome had an obligation to deliver documents when it left the site which it did not fulfil until trial.

[8]                 They also say that Mr Zhou’s evidence was always required to address whether the costs claimed were in the scope of the contract. And it is untenable to claim that responding to a statement of claim was a significant increase.

[9]                 Further, when considering the failed causes of action, the defendants have not made any allowance for their failed counterclaims, which required the plaintiffs to expend significant time and resources in response.

Analysis

[10]              I consider a 50 per cent reduction to the plaintiffs’ costs is appropriate to recognise that they were only partially successful. This is reflected in the amount they recovered against the defendants against the original amount claimed. In the statement of claim, the plaintiffs sought $1,239,000 against the defendants. This was reduced to

$1,024,000 on the basis of the evidence of Dreamhome’s expert, Mr Zhou. I found that only $654,502 of the costs were in the scope of work. The plaintiffs also recovered only modest amounts as liquidated damages and consequential loss. The award was further reduced once the amount owing to the defendants pursuant to their counterclaim was deducted.

[11]              The plaintiffs failed entirely in their claim in negligence against Dreamhome and Mr Sun.

4 At [26].

[12]              Moreover, the plaintiffs were materially unsuccessful in their claim relating to the construction documents. The plaintiffs were only able to prove that Dreamhome was responsible for a minimal number of documents set out in Mark Williams’s schedule. Further, they were unable to quantify any losses suffered arising from Dreamhome’s actions and I declined their request for a split trial to determine such. This cause of action was misconceived, and it added considerably to the time and cost involved in the proceeding.

[13]              It is also relevant that the plaintiffs did not take satisfactory steps to prove their claim. The Court was required to rely heavily on Mr Zhou and its own analysis of the evidence to arrive at the award, as opposed to positive steps taken by the plaintiff to draw explicit links between their claim and the evidence presented to the Court.

Various memoranda

[14]              The defendants dispute the plaintiffs’ claims for certain memoranda. Relying on r 14.7(f), being the Court’s discretion to refuse to make an order for costs where the party claiming costs has failed to comply with directions or taken unnecessary steps or arguments that lack merit, they maintain that costs for five memoranda filed between February 2022 and April 2025 should be declined.5

[15]              The plaintiffs say all the memoranda claimed were necessary steps of the litigation.

[16]              I consider it preferable to deal with the issue of costs at a holistic level, rather than wading into the minutiae of each claimed step. Any issues as to the costs claimed for memoranda is reflected in the reduced costs awarded to the plaintiffs.

2021 interlocutory application for enforcement orders

[17]              This relates to an interlocutory application heard before Judge Sinclair in the Auckland District Court. On 7 April 2021, the plaintiffs made an application for enforcement orders due to the defendants’ non-compliance with discovery orders for

5      The defendants rely on Khurana Trustee Ltd v Castle Backpacker K Road Ltd [2021] NZHC 2092 at [13]–[15].

documents required to be produced as found by Mr Williams. This was amended on 29 September 2021 to require any documents in Dreamhome’s possession or control.

[18]              The application was resolved by consent when Dreamhome proposed to join its subcontractors to the proceeding. The issue of any documents in Dreamhome’s control was directed to be resolved at trial. Following discontinuance, the defendants sought indemnity or increased costs which was declined by Judge Sinclair. Rather, the Judge directed that any matter of costs be reserved pending determination of the substantive trial.

[19]              Dreamhome now reasserts its claim for indemnity or increased costs following a successful defence. The defendants say that the applications were entirely without merit as could be observed in the Court’s findings following the substantive trial. And the application was vexatious in that the orders sought included that Mr Sun be committed to prison. Accordingly, the defendants are entitled to increased or indemnity costs.6 Given the significance of the relief sought (being imprisonment), the defendants say that category 3C costs (to the value of $24,534 and $173.92 in disbursements) is appropriate.

[20]              However, the plaintiffs say they are the successful party and are entitled to costs or that costs should lie where they fall. Alternatively, if costs are to be awarded, only 2B costs are appropriate.

[21]              In the judgment, I found that Dreamhome was required to provide several documents requested by the plaintiffs. However, these were all provided prior to the filing of the interlocutory application. There was no legitimate claim in the plaintiffs’ demand for the balance of the documents in Mr Williams’s schedule. The plaintiffs cannot be regarded as successful on this application and are not entitled to costs.

[22]              Dreamhome, as the successful party, is  entitled to  costs  but  an order  for  2B costs is appropriate here. The categorisation of proceedings reflects the complexity of a proceeding, rather than relating to the severity of the sought relief. I consider the matters that were raised in this interlocutory application do not bear any of the

6      District Court Rules 2014, r 14.6(4)(a); High Court Rules, r 14.6(4)(a).

hallmarks of a proceeding appropriately categorised as complex,7 nor would they warrant an increase from scale costs.

2025 interlocutory application to amend pleadings

[23]              On 18 February 2025, the plaintiffs filed an interlocutory application for leave to amend the pleadings after close of pleadings date. This was signalled to the defendants by memorandum dated 7 February 2025, and the defendants indicated they would oppose any amended claim, which led to filing of the application. The application was heard and granted by Downs J on 12 March 2025.8 The plaintiffs reference two authorities in which a respondent who opposed an application for leave to amend and lost was ordered to pay costs to the successful applicant.9

[24]              The defendants say costs should lie where they fall, particularly due to r 7.77(8) which provides:

If an amended pleading has been filed under this rule, the party filing the amended pleading must bear all the costs of and occasioned by the original pleading and any application for amendment, unless the court otherwise orders.

[25]              Further, the defendants say the authorities to which the plaintiffs refer does not assist their position. In Nellies v Mark, the successful plaintiffs were required to bear most of the costs of their application for leave (other than the filing fee).

[26]              The plaintiffs say that the costs of a defended hearing cannot be the costs as contemplated by r 7.77 as this would encourage opposition to every application to amend, regardless of the merits of that opposition, and incentivise wasting costs and judicial resources.

[27]              The application to amend was brought six weeks before trial was to commence, certainly at a point where the controversy between the parties should have been well-settled. As Downs J noted in his minute, additional evidence was required due

7      Totara Investments Ltd v Abooth Ltd (2009) 24 NZTC 23,370 at [82].

8      Hsieh v Dreamhome Construction Ltd HC Auckland CIV-2020-004-285, 12 March 2025 (Minute of Downs J).

9      Nellies v Mark [2023] NZHC 1526; and Taylor v Vernon [2024] NZHC 1483 at [21]–[25].

to the amendment. This was done well after the existing evidence had been exchanged, with the defendants  having  served  their  briefs  on  the  plaintiffs  on  15 November 2024.

[28]              An amendment following the close of pleadings is an indulgence. Taking all these factors together, I see no reason to depart from the rule and find costs should lie where they fall.

Inspection of supplementary discovery

[29]              The plaintiffs claim $3,585 in relation to inspection of discovery served in two tranches (on 16 January 2025 and 27 March 2025). The supplementary discovery contained 190 documents. Where discovery is provided in tranches, the Court may award multiple steps for inspection,10 or may order costs on Band C on the basis that discovering documents in tranches increases the costs of inspection.11 The plaintiffs say that the Court should allow either:

(a)inspection twice (once at the District Court scale and once  at  the High Court scale); or

(b)allow one step at the High Court scale under Band C.

[30]              The defendants oppose costs on inspection of the supplementary discovery. The cases relied on by the plaintiffs concern excessive volumes of discovery, often in tranches and due to insufficient discovery. Against that, the further documents discovered by the  defendants  for  which  the  plaintiffs  seek  costs  were  simply the Council’s property file for the plaintiffs’ property. Further, the defendants discovered only around 600 documents, inspection of which should fall comfortably within a single category B time allocation.

[31]              I recognise that a large number of the documents provided as supplementary discovery (as set out in the schedule to the plaintiffs’ reply memorandum) were

10     Prattley Enterprises Ltd v Vero Insurance New Zealand Ltd [2017] NZHC 1599, (2017) 23 PRNZ 484 at [15].

11     Moorhouse Commercial Park Ltd v Vero Insurance New Zealand Ltd [2023] NZHC 2377 at [40].

documents available on the Council file. However, the defendants had the documents in their possession, and they were relevant to the issues in the proceeding and therefore the defendants were obliged to discover them. The plaintiffs should receive their costs.

[32]              The second ‘tranche’ asserted by the plaintiffs contained only one invoice and only one step should be allowed. Also, reviewing the documents provided, they are certainly not a level of complexity that would warrant a Category C award. 2B costs are entirely appropriate.

Costs for ‘counterclaim’

[33]              The plaintiffs also respond to the defendants’ claim that their counterclaim was successful. The plaintiffs say that the amount awarded to the defendants is more appropriately characterised as a set-off, rather than a counterclaim, and does not entitle them to costs.

[34]              The plaintiffs’ memorandum was filed before the defendants’ and anticipated the position that the defendants would take as to costs, including on this issue. The memorandum filed by the defendants did not address costs on the counterclaim. I note that in any event the defendants’ partial success on their counterclaim is reflected in the reduced costs order to the plaintiffs.

Disbursements

[35]              The defendants say that the plaintiffs should only be entitled to disbursements less the following disputed items, for a total of $38,697.79:

(a)a $10,000 reduction to the fees for the plaintiffs’ expert, Mark Williams (which they say should only be awarded as $25,000.26);12 and

(b)a reduction to the hearing fee (to $7,200).

12     This comprise of invoices dated 30 March 2025, 50 per cent of an invoice dated 27 April 2025 and 50 per cent of an invoice dated 25 May 2025.

Expert’s fees

[36]              Regarding Mr Williams’s fees, the defendants say that disbursements claimed must be reasonably necessary for the conduct of the proceeding and disproportionate disbursements can be reduced.13 Mr Williams’s costs should not be recoverable to the extent they relate to the Auckland Council inspections and attending the hearing for three days.

[37]              The plaintiffs dispute that a reduction in Mr Williams’s fees is justified. All of the costs incurred were reasonable and necessary to the central issues of the proceeding.

[38]              I agree that a reduction to Mr Williams’s fees is appropriate. The defendants raise a valid concern as to whether his costs were properly incurred as they relate to the Council inspections. The plaintiffs relied on Mr Williams’s evidence as to the requirements for obtaining code compliance certificates. Council inspections are completed before owners can apply for CCCs. Mr Williams’s evidence on these inspections was not necessary to assist the Court to resolve the issues and in any event Council officers gave evidence of inspections.

[39]              I also consider it is not appropriate to claim for all three days that Mr Williams was present at the trial. The costs for giving his evidence at trial and observing the other expert, Paul Moodie’s, evidence are properly claimed but I consider any claim beyond that excessive. This accounted for approximately one and a half days of the trial.

[40]              I was not provided with the invoices and so cannot quantify the appropriate claim. The parties should confirm between themselves and file a sealed order reflecting the correct amount.

13     High Court Rules, r 14.12(2) and (3).

Hearing fee

[41]              The defendants also say a 50 per cent reduction should be applied to the hearing fee as this is approximate proportion of the hearing time which was dedicated to causes of action on which the plaintiffs did not succeed.

[42]              The plaintiffs accept that disbursements should be reduced where it is disproportionate in the circumstances of the proceeding. However, all parties consented to a five-day hearing and, in any event, a five-day hearing cannot be considered disproportionate for a hearing of this nature.

[43]              I agree with the plaintiffs’ submission. The reduction sought is not warranted and the plaintiffs are entitled to the hearing fee in full.

Costs on costs

[44]The plaintiffs seek costs on two sets of costs submissions:

(a)the present submissions; and

(b)the costs submissions before Judge Sinclair.

[45]              Both sets of costs submissions were necessary steps in the litigation. The plaintiffs say that with respect to the costs submissions before Judge Sinclair, they were necessary to respond to lengthy and aggressive submissions from Dreamhome seeking indemnity costs (which was ultimately declined). For the present memorandum, once more, further work was necessitated by the defendants’ misconceived insistence on indemnity costs and incorrect claim they are entitled to costs for a successful counterclaim. Costs should follow.

[46]              The defendants dispute that the present circumstances fall within those where the Court would contemplate costs on costs. The defendants highlight that no such order would be made where the parties are seen to both have had a measure of success,

or to have both contributed to the inability to resolve costs issues without the Court’s assistance.14 It follows no orders should be made for costs on costs.

[47]              The issues traversed in this judgment make apparent that both parties have contributed to the inability to resolve costs out of Court. Accordingly, I do not consider it appropriate to order costs on costs in these circumstances.

Result

[48]              I order that the defendants are to pay the plaintiffs costs of $31,775 and disbursements of $21,979.53.

[49]              The order for disbursements excludes Mr Williams’s fees. Counsel are to confer on the appropriate adjustment to the plaintiffs’ entitlement for his costs, pursuant to [37]–[38] of this judgment which should be reflected in the order for sealing.

Gardiner J

Solicitors/Counsel:

Heritage Law, Auckland Buddle Findlay, Auckland

E St John, Barrister, Auckland S Maloney, Barrister, Auckland

14     Combined Property Maintenance Ltd v Singh [2021] NZHC 621 at [19].