Watson v Zhou - [2025] NZCA 22

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA552/2023
[2025] NZCA 22

BETWEEN	ELIZABETH WATSON Appellant
AND	LEI ZHOU AND QIUYING ZHANG Respondents

Court:	Cooke, Venning and Van Bohemen JJ
Counsel:	D M Fraundorfer and H J O Lewis for Appellant Respondents in person
Judgment: (On the papers)	24 February 2025 at 11.00 am

JUDGMENT OF THE COURT

AThe application for recall is granted.
BOrder D of this Court’s judgment in Watson v Zhou [2024] NZCA 417 is varied so that the question of costs in the High Court is to be addressed by that Court alongside the question of damages.
CThe costs of this application are to lie where they fall.

____________________________________________________________________

REASONS OF THE COURT

(Given by Cooke J)

By judgment dated 4 September 2024, this Court allowed the appellant’s appeal and the respondents’ cross-appeal in part.[1] In particular, the Court overturned the High Court’s judgment against the appellant for contractual mistake under the Contract and Commercial Law Act 2017,[2] but upheld the respondents’ cross-appeal in relation to a breach of warranty claim.[3] It remitted the case to the High Court for it to assess the damages to be awarded to the respondents. The award for breach of warranty appeared to involve a much smaller amount, however. The Court said:
[99] The relevant range for the award accordingly appears to be between approximately $15,000 and approximately $95,000.
[100] Somewhat reluctantly, we have reached the view that we are not in a position to finally resolve what the award should be. We are conscious that there is a significant need for finality in this litigation. It is being conducted between ordinary members of the community in relation to a residential property sale that has gone wrong. Mrs Watson has been in receipt of legal aid. Unfortunately, however, any attempt by us to determine the amount of the award runs the risk of being arbitrary. In these circumstances we feel we have no option but to remit this question to the High Court for determination. It is our expectation that the parties, with the assistance of their lawyers, will be able to resolve the remaining difference without further litigation, and litigation cost.
[1]Watson v Zhou [2024] NZCA 417.
[2]At [56].
[3]At [101(a)].
In relation to the costs the Court considered that the costs on appeal should lie where they fell,[4] but in relation to costs in the High Court:
[103] The High Court awarded costs in the respondents’ favour. Whilst the award of damages will now be lower we consider that this award remains appropriate.
[4]At [102].
Mrs Watson now applies to recall this Court’s judgment regarding the decision on costs in the High Court. The costs award in this Court is not challenged. Her application is supported by her affidavit dated 6 September 2024. The application is opposed, and the respondents have provided an affidavit in opposition from Qiuying (Veronica) Zhang. Both parties have filed written submissions and the application is…

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.

Continue reading Watson v Zhou

Details

AGLC: Watson v Zhou [2025] NZCA 22
Case: [2025] NZCA 22
Decision Date: 24 February 2025 at 11.00 am

CaseChat Overview and Summary

In the matter of Watson v Zhou, Elizabeth Watson, the appellant, sought to recall a prior judgment made by the Court of Appeal of New Zealand. The respondents, Lei Zhou and Qiuying Zhang, were the parties in the original case, which concerned a contractual dispute arising from the sale of a residential property. The original judgment, rendered on 4 September 2024, allowed the appellant’s appeal and the respondents’ cross-appeal in part. The Court overturned the High Court’s judgment against the appellant for contractual mistake but upheld the respondents’ cross-appeal regarding a breach of warranty claim. The case was remitted to the High Court to assess damages, with an indicated range of approximately $15,000 to $95,000.

The legal issues central to this recall application were whether the Court of Appeal had erred in its determination of the costs in the High Court, particularly in light of offers made without prejudice except as to costs. The appellant contended that these offers should have influenced the costs decision. The respondents argued that the offers were not substantial enough, especially when considering expert costs and other disbursements. The Court was required to determine whether the failure to consider these offers constituted a procedural or substantive error that would result in a miscarriage of justice.

The Court of Appeal concluded that the high threshold for recall had been met. The appellant's argument that her offers made before trial should affect the costs outcome was deemed substantively unaddressed. The Court acknowledged that the original decision on costs was made without considering these offers, which might engage relevant principles under the High Court Rules. Given that the case was already being remitted to the High Court to address the damages award, extending this hearing to include the costs consequences was seen as consistent with the Court’s earlier conclusion. The Court found that it would be a miscarriage of justice if the appellant were not allowed to argue that her offers should impact the costs outcome. Consequently, the application for recall was granted, and the matter was remitted to the High Court to address both the damages and the costs alongside each other.

Orders