NORTHWEST DEVELOPMENTS LTD v ZHANG, JUNG and SO [2020] NZHC 1151

NORTHWEST DEVELOPMENTS LTD v ZHANG, JUNG and SO [2020] NZHC 1151 [28 May 2020]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2017-404-936[2020] NZHC 1151BETWEEN NORTHWEST DEVELOPMENTSLIMITEDPlaintiffAND CHENG ZHANG, JIN KUK JUNG andPILL SOON SODefendantsAND SANLI HOMES LIMITED and SANLIGROUP LIMITEDThird PartiesContinued Hearing: 17, 18, 19, 20, 21, 24, 25 and 26 February 2020 (furthersubmissions on 4 March 2020)Appearances: M J Fisher and J J Yoon for the Plaintiff in CIV-2017-404-936J Burley and S Pala for the Defendants in both proceedingsK J Crossland and J K Boparoy for the Third Parties in CIV-2017-404-936 and the Plaintiffs in CIV-2017-404-980 (excused from21 February 2020)Judgment: 28 May 2020JUDGMENT OF GAULT JThis judgment was delivered by me on 28 May 2020 at 3:30 p.m.pursuant to r 11.5 of the High Court Rules 2016.Registrar/Deputy RegistrarContinued CIV-2017-404-980BETWEEN SANLI HOMES LIMITED and SANLIGROUP LIMITEDPlaintiffsAND CHENG ZHANG, JIN KUK JUNG andPILL SOON SODefendants[1] These two proceedings concern a three-way dispute in a subdivisiondevelopment known as the Huapai Triangle, an area comprising approximately 65hectares of land on the south side of State Highway 16 near Huapai in west Auckland.[2] In broad terms, the two sets of issues raised in the proceedings relate to liabilityfor infrastructure costs and consequential loss incurred by Northwest DevelopmentsLtd (Northwest),1 and responsibility for the failure to settle an agreement for sale andpurchase between the defendants and Sanli Homes Ltd or Sanli Group Ltd (togetherSanli).2[3] Some disputed issues have already been determined in other proceedings,3and the outstanding issues have further narrowed during the trial.4 The remainingissues between Northwest and the defendants concern liability for contractual intereston the infrastructure costs, and claims for consequential loss and solicitor client costs.It is still necessary to set out the background circumstances in some detail.Parties[4] Northwest is a land development company. It is the owner of the property at81 Nobilo Road, approximately 6.3 hectares in the south-eastern corner of the HuapaiTriangle. Northwest's claim against the defendants is brought under an agreementknown as the Five Owners' Agreement dated 23 June 2015.5 Northwest became anassignee of that agreement following its purchase of 81 Nobilo Road.[5] The defendants, Mr Zhang, Mr Jung and Ms So, are the owners of the propertyat 77 Nobilo Road, approximately 7 hectares in the north-eastern corner of the HuapaiTriangle.6 Mr Jung and Ms So are married and own a half share in the property.Mr Zhang, a business partner of Mr Jung's, owns the other half share. Mr Jung speaksKorean and gave evidence with an interpreter. Mr Zhang speaks Cantonese and gaveevidence with an interpreter. Ms So did not give evidence.1 The plaintiff in CIV-2017-404-936.2 Third parties in CIV-2017-404-936 and plaintiffs in CIV-2017-404-980.3 See [34] and [37] below.4 See [39] and [40] below.5 In full, the Huapai Triangle 5 Landowners Infrastructure Agreement. See [10] below.6 Approximately 7.5 hectares before the subdivision and 7.1 hectares afterwards, as a result of aroad strip transferred to the Council.[6] Sanli agreed to purchase 77 Nobilo Road from the defendants in 2016,but settlement of that sale and purchase had still not occurred before trial.Factual background[7] The Huapai Triangle is a Special Housing Area under the Housing Accords andSpecial Housing Areas Act 2013. In 2013 several landowners in the Huapai Triangle,including Northwest's predecessor in title and the defendants, decided to combinetogether to apply for a variation to the District Plan for the Huapai Triangle. Thisenvisaged an application to rezone the Huapai Triangle from future urban to residentialzoning to enable subdivision developments to be undertaken. They entered into theHuapai Triangle agreement dated 25 November 2013.7[8] On 17 October 2014 the defendants exercised their right to withdraw from theHuapai Triangle agreement on the basis that what was proposed in the plan wascompromising the subdivision of their land because a substantial portion was not ableto be zoned for mixed housing given its propensity for flooding.[9] Subsequently, the remaining parties to the Huapai Triangle agreement appliedto Auckland Council for the proposed plan change as contemplated in the agreement.Having withdrawn from the Huapai Triangle agreement, the defendants initiallyopposed the plan change but over subsequent months negotiated with otherlandowners to change the proposed plan. A revised plan was prepared, which reducedthe size of the stormwater pond on the defendants' land and so would enable thedefendants to use a larger portion of their land for mixed housing. The negotiationsculminated in the Five Owners' Agreement.[10] On 23 June 2015, the five groups of landowners of the eastern portion of theHuapai Triangle, including Northwest's predecessor in title and the defendants,entered into the Five Owners' Agreement. This agreement set out the basis upon whichthose parties would collaborate and share costs to effect a private plan change inrespect of the Huapai Triangle. They would co-operate with each other in respect of,7 This agreement may not have been finally executed until April 2014, but nothing turns on thetiming or terms of this early agreement.and would contribute to the costs of, infrastructure (including roading, apedestrian/cycling overbridge and water and wastewater reticulation) that wasrequired to be installed to service their properties if the plan change was approved.The agreement provided for reimbursement of these costs within one month ofnotification or at the latest on or before settlement of any transfer of the land.It included reciprocal granting of easements but also prohibited the lodging of caveats.It also provided in clause 58 that the rights and obligations of each party were to beassigned or transferred to any successor in title and required parties to cause asuccessor in title to enter into a new agreement with the other parties on the same termsor a deed of novation so that the successor in title is bound on the same terms.[11] Meanwhile, on 6 May 2015, Northwest entered into an agreement to purchase81 Nobilo Road from the then owners, who were parties to the 2013 agreement.The sale and purchase agreement provided for settlement on 5 September 2016.The agreement provided that the vendor would continue to progress the plan variationapplication and enter into agreements as agent for the purchaser, and that the benefitof all agreements (and obligation of all disclosed agreements) would pass to thepurchaser on settlement.[12] The Five Owners' Agreement was executed after Northwest's sale andpurchase agreement was signed but before it settled. Northwest's vendors, rather thanNorthwest, were parties to the Five Owners' Agreement but Northwest was involvedin its preparation and the defendants now accept that Northwest became an assignee.8[13] On 13 November 2015, Auckland Council notified its approval of theapplication for the plan change. Northwest began the process of obtaining the consentsrequired for its proposed subdivision development on 81 Nobilo Road.[14] In April 2016 the defendants and other landowners consented to Northwest'ssubdivision development.8 This was determined in separate proceedings: Northwest Developments Ltd v Zhang [2018]NZHC 1736, upheld in Zhang v Northwest Developments Ltd [2019] NZCA 137, (2019) 20NZCPR 638. See [34] and [37] below.[15] Around May 2016, Northwest entered into agreements with a large number ofpurchasers for the sale and purchase of lots or sections in its proposed subdivision.Settlement of these agreements was to take place 10 or 20 working days afterNorthwest gave notice to the purchaser that title had issued.[16] On or around 6 May 2016 the defendants agreed to sell 77 Nobilo Road toSanli. Under the agreement, settlement was to take place on 8 May 2017. This saleand purchase agreement was unconditional and contained no provision for assignmentor transfer of the defendants' rights and obligations under the Five Owners' Agreementnor for Sanli to enter into a new agreement with the other parties to the Five Owners'Agreement or a deed of novation.[17] Around the time of the 6 May 2016 agreement, Northwest learned of thedefendants' proposed sale but not the detailed terms nor even that the purchaser wasSanli. Mr Sun of Northwest was aware that Mr Gerry Li and Ms Amy Yao becameinvolved in development discussions for the purchaser. From around that time, thedefendants ceased being involved in the development discussions.[18] In early June 2016, Northwest obtained resource consent for its proposedsubdivision.[19] On 6 October 2016 Northwest settled its purchase of 81 Nobilo Road.Northwest obtained ANZ bank funding to do so. Northwest then commencedsubdivision works for the construction of the roads and installation of the water andwastewater services.[20] In October 2016 the defendants signed a Deed of Authority entitling Sanli toact on their behalf as if Sanli were the owner of 77 Nobilo Road, but subject to anindemnity in the defendants' favour "for any liability for costs that [the defendants]might incur as owner of the Property and which are incurred as a result of [Sanli's]actions". Around that time, Mr Li of Sanli told Mr Sun that the defendants had giventhe purchaser of 77 Nobilo Road a power of attorney, which Mr Sun understood tomean that the defendants had authorised their purchaser to act as their agent.[21] On 15 March 2017 Northwest notified Mr Li, Ms Yao and Mr Jung of the shareof costs of the infrastructure works applying to 77 Nobilo Road which Northwest hadincurred and sought to recover as at the end of February 2017. Northwest initiallyassumed that the purchaser was responsible and sent the invoices to Mr Li, copyingMr Jung. However, Mr Li denied liability to pay and said that the defendants wereresponsible according to the Five Owners' Agreement. In April 2017 Mr Sun ofNorthwest sent the invoices directly to the defendants as well as Sanli. Furtherinvoices followed. Neither the defendants nor Sanli paid Northwest.[22] In April/May 2017 Northwest also learned that the purchaser was not preparedto sign up to the Five Owners' Agreement. On 8 May 2017, the due settlement datefor the defendants' sale to Sanli, Northwest lodged a caveat against the 77 Nobilo Roadtitle relying on its easement under the Five Owners' Agreement.[23] On 11 May 2017 Northwest commenced the CIV-2017-404-936 proceedingseeking recovery of infrastructure costs, damages in respect of additional financingcosts, and an injunction to prevent the defendants' impending sale except incompliance with the Five Owners' Agreement. Northwest also applied for an interiminjunction similarly restraining the sale. The defendants then applied for removal ofthe caveat.9 On 17 May 2017 Northwest's solicitors sent the defendants' solicitors adeed of novation for execution.[24] On 11 August 2017 Jagose J granted an interim injunction restrainingsettlement of the sale of 77 Nobilo Road unless and until the defendants had:(i) assigned or transferred their rights and obligations under the FiveOwners' Agreement to their successor in title;(ii) caused the successor in title to enter into a new agreement with theother parties to the Five Owners' Agreement on the same terms as theFive Owners' Agreement or a deed of novation of the Five Owners'9 On 15 June 2017 Brewer J directed that this interlocutory application was deemed to be anoriginating application.Agreement so that the successor in title is bound on the same terms asthe defendants are bound by the Five Owners' Agreement; and(iii) paid any cost contribution payable under clauses 34 and/or 35 of theFive Owners' Agreement into an escrow account on terms including nodisposition without this Court's further order and otherwise as aresubmitted to the Court for approval on sealing.[25] Jagose J also refused the defendants' application to remove the caveat.[26] In relation to Northwest's subdivision of its land, the survey plan had to bedeposited before new titles could be issued. However, because the survey planprovided for a strip of the property at 77 Nobilo Road to vest in the Council as part ofthe agreed roading works for the subdivision, Northwest required the consent of thedefendants and parties with interests registered against 77 Nobilo Road. Those partiesincluded Sanli, which had registered a caveat in respect of its sale and purchaseagreement.[27] On 7 September 2017 Northwest sought the defendants' consent to deposit ofNorthwest's survey plan and sent a further deed of novation for execution.On 2 October 2017 Northwest lodged its survey plan with LINZ.[28] On 13 October 2017 Northwest's solicitors again sought the defendants'consent to the survey plan. Northwest's solicitors proposed that the defendants andSanli give consent to deposit of Northwest's survey plan without prejudice to theirrespective positions as to who was liable for the infrastructure costs.[29] On 1 November 2017 LINZ approved Northwest's survey plan.[30] On 2 November 2017 Northwest commenced separate proceedings against thedefendants and applied for summary judgment of its claim that the defendants giveconsent, and procure the consent of others with an interest on the title of 77 NobiloRoad, to deposit of Northwest's survey plan, which LINZ required before issuing newtitles. Northwest also sought an order that the defendants take steps to procure thewithdrawal of any caveat or other interest including by taking steps under s 145A ofthe Land Transfer Act 1952.[31] On 8 December 2017 Auckland Council issued its certificate under s 224(c) ofthe Resource Management Act 1991.[32] On 1 March 2018 the Court granted the defendants leave to join Sanli as a thirdparty in the CIV-2017-404-936 proceeding.10[33] On 28 March 2018 Northwest obtained a further funding facility from PearlFisher Capital Ltd (Pearl Fisher).[34] On 13 July 2018 Brewer J granted Northwest summary judgment in theseparate proceeding.11 Brewer J concluded that Northwest was entitled to enforce theFive Owners' Agreement and that the defendants had chosen to enter an unconditionalagreement for sale and purchase of their land without complying with clause 58.The Court made declarations that the defendants are bound by the Five Owners'Agreement, and made orders by way of specific performance:(a) to give their consent to Northwest's survey plan;12(b) to procure any person with a registered interest in 77 Nobilo Road orwho has lodged a caveat or other interest that has been noted on the titleto the land, including the persons named in paragraph 22 of thestatement of claim dated 2 November 2017, to consent to the SurveyPlan to deposit; and(c) to take such steps as may reasonably be required, in the event that suchconsent should not be immediately forthcoming, to procure thewithdrawal of any caveat or other interest, including the initiation and10 Northwest Developments Ltd v Zhang [2018] NZHC 298.11 Northwest Developments Ltd v Zhang [2018] NZHC 1736. In doing so, Brewer J decided that theseparate proceeding was not an abuse of process.12 In the meantime, Northwest had to amend its survey plan following the deposit of anotherneighbour's plan. The new survey plan was approved by LINZ on 20 June 2018.prosecution of procedures pursuant to s 145A of the Land Transfer Act1952.[35] On 18 July 2018 the defendants lodged an appeal against Brewer J's judgmentand applied for a stay of execution. While the stay application and appeal were stillpending, Sanli consented to deposit of Northwest's survey plan on 20 August 2018and the defendants consented on 23 August 2018.[36] On 27 September 2018 Northwest received notice from LINZ that titles for itssubdivision had issued. Northwest gave notice that title had issued to its purchasersof lots or sections in its proposed subdivision. Settlement of these sale and purchaseagreements took place in October 2018.[37] On 6 May 2019 the Court of Appeal dismissed the defendants' appeal againstsummary judgment, confirming that Northwest was entitled to sue on the Five Owners'Agreement and that the defendants were in breach of their obligations under the FiveOwners' Agreement to consent to the survey plan.13 In relation to the defendants'submission that order (b) went too far, the Court observed that order (c) made clearthat order (b) did not impose an absolute obligation. Attempting to remove a caveatunder s 145A is a step within the scope of the obligation under the Five Owners'Agreement that might enable the plan to deposit without consent of the caveators.14Partial resolution of the dispute[38] On 13 February 2020, counsel for Northwest and the defendants advised thatthe defendants' counterclaim in CIV-2017-404-936 would be discontinued with noissue as to costs.[39] At the beginning of trial on 17 February 2020, Mr Burley, for the defendants,indicated that he accepted that the Court had already determined that Northwest wasan assignee of the Five Owners' Agreement. He indicated that the defendants wouldmake admissions in respect of Northwest's claim for infrastructure costs, but the scopeof the admissions was to be finalised, particularly in relation to quantum of interest.13 Zhang v Northwest Developments Ltd [2019] NZCA 137, (2019) 20 NZCPR 638 at [33] and [39].14 At [47].[40] Later during the first week of trial, the parties reached a settlement of the claimsbetween the defendants and Sanli, which included a mechanism whereby Northwestagreed to a discharge of the interim injunction granted by Jagose J in return forundertakings so as to enable the sale and purchase of 77 Nobilo Road to settle.On 21 February 2020, I made orders by consent, including:(a) discharge of the interim injunction;(b) specific performance of the sale and purchase of 77 Nobilo Road;(c) a Tomlin order staying the CIV-2017-404-980 proceeding; and(d) discontinuance of the defendants' third party claim in the CIV-2017-404-936 proceeding with no order as to costs.Northwest's claim[41] Northwest claims reimbursement of unpaid infrastructure costs of$1,178,301.71 plus interest at the contractual default rate of 20 per cent per annum.This is calculated as being interest of $488,042.68 to 16 January 2020, thus totalling$1,666,344.39 including interest to 16 January 2020, plus interest on $1,178,301.71 at20 per cent per annum until date of payment.[42] Northwest also claims consequential losses as a result of the delay in depositingits survey plan with LINZ and obtaining new titles. Northwest claims that titles couldhave issued by early February 2018 and settlement of its lot sales would have occurredon 7 March 2018 whereas they were delayed until October 2018. In this regard,Northwest claims:(a) ANZ finance charges of $626,985.53 (reduced from $698,157.01 attrial);(b) Pearl Fisher finance charges of $507,999.91 (reduced from $823,434 attrial);(c) interest charges of $212,259.37 payable to the vendor of anotherproperty (Sinton Road); and(d) fees of $36,518.40 incurred in relation to the cost of Northwest'sreplacement survey plan after GSC Holdings Ltd (GSC Holdings), asuccessor in title to another landowner party to the Five Owners'Agreement, lodged a plan which conflicted with Northwest's plan.[43] Northwest also claims solicitor and client costs pursuant to the Five Owners'Agreement in respect of steps taken to require the defendants to pay the infrastructurecosts.[44] Northwest no longer seeks a permanent injunction following the partialresolution.Defendants' admissions[45] In opening the defendants' case, following my consent orders, Mr Burleyaccepted that issue estoppel arises insofar as this Court and the Court of Appeal havedecided that Northwest is entitled to sue on the Five Owners' Agreement and that thedefendants were in breach of their obligations under the Five Owners' Agreement toconsent to the survey plan. He confirmed that the defendants admit liability forNorthwest's infrastructure costs of $1,178,301.71 (including GST). Interest remainsdisputed at least on the basis that the contractual default rate is not accepted.The defendants also dispute liability for consequential losses on causation andremoteness of damage grounds.[46] Counsel agree that determination of which of Northwest's costs fall within thescope of the solicitor and client costs provision in the Five Owners' Agreement isbetter left to be addressed with any other issues as to costs (with affidavit evidence ifnecessary).Issues[47] Accordingly, the remaining issues to be determined now are:(a) interest accruing for the defendants' late payment of infrastructurecosts;(b) whether the defendants' breach of their obligations under the FiveOwners' Agreement to consent to the survey plan caused the categoriesof loss claimed;(c) whether the categories of loss claimed are too remote; and(d) interest on any damages under the Interest on Money Claims Act 2016.Contractual interest claim[48] Clause 42 of the Five Owners' Agreement provides that any party which failsto pay a sum payable under the agreement on the due date shall pay default interest onthe unpaid sum calculated at 20 per cent per annum, calculated on a daily basis fromthe date payment was due to the date payment is made.[49] The defendants no longer dispute that Northwest is entitled to sue on the FiveOwners' Agreement. Also, the defendants have abandoned their counterclaim andtherefore any set-off based on it.[50] In contesting this part of the claim, Mr Burley submitted that the 20 per centdefault interest rate and the period for which it is claimed are both unreasonable havingregard to clause 37(a) of the Five Owners' Agreement and the prescribed eight per centinterest rate payable in respect of the costs contribution amount for the purposes ofclauses 34–36 of the Five Owners' Agreement and generally available commercialinterest rates including those claimed to have been incurred by Northwest. Mr Burleysubmitted that there is no evidence before the Court as to how and why the 20 per centdefault interest rate was prescribed in the Five Owners' Agreement, including inrespect of any discussions directly with the defendants on that critical term.[51] I deal first with the defendants' reference to the eight per cent interest rate inthe Five Owners' Agreement. The Five Owners' Agreement provided forinfrastructure costs contribution in different ways. There were different types ofshared infrastructure – including primary roads (the East/West Road and theNorth/South Road), other roading infrastructure, and water and sewage infrastructure.Some costs were shared between all five owners; others were shared only betweenthose more directly affected.[52] The Five Owners' Agreement provided a mechanism for interest to accrue onsome infrastructure costs incurred before reimbursement was due, for example,because the infrastructure had not yet been connected. In particular, clause 34provided for reimbursement of infrastructure costs on the later of one year after theplan change becomes operative or one calendar month after any part of the landbenefitting from that infrastructure is developed and connected to, and is able to beserviced by, the infrastructure. In relation to a costs contribution payable under clause34, clause 37(c) provided for eight per cent interest to be payable before the due datefor payment, from 20 working days after a notice is given until the due date forpayment under clause 34. This recognised the cost of money during the periodbetween the infrastructure works and the due date for payment once the infrastructurewas connected. Notice of the cost incurred could be given, and the dispute resolutionprocedure could be initiated.[53] However, clause 34 is subject to clause 35, which provides for reimbursementwhere the infrastructure has greater capacity than is required by the developing partyon the later of one year after the plan change becomes operative or one calendar monthafter the date that the developing party has actually incurred the relevant infrastructurecosts and has given the other party notice in writing of the amount which the otherparty is required to pay. The clause 37(c) provision for interest prior to the due datefor payment does not apply to clause 35.[54] Clause 35 explicitly applied to some infrastructure whereas in relation to otherinfrastructure the agreement was silent as to the application of clause 34 or clause 35.The relevant unpaid infrastructure costs on which interest is sought in this case arecosts that have become due for payment under clause 35. This is evident from theadmitted accrual of interest one calendar month after notice. No interest is sought forthe period prior to the due date for payment under clause 37(c). The eight per centinterest rate in clause 37(c) has no application. Once a party has failed to pay the sumdue under clause 35, the 20 per cent default interest in clause 42 applies.[55] Turning to the submission that the 20 per cent default interest rate isunreasonable, the defendants have not pleaded any affirmative defence (or soughtrelief such as rectification) disputing that they are bound by the relevant terms of theFive Owners' Agreement, the effect of the contractual provision nor the default interestrate. It cannot be disputed that the defendants agreed to the terms of the Five Owners'Agreement, including clause 42. The evidence of Mr Jung that he had no intention ofdeveloping the property does not assist. While the defendants may well have intendedto sell from an early stage, and indeed they entered into an agreement to sell in May2016, there was no evidence that their intention to sell was communicated to otherparties during the negotiation of the Five Owners' Agreement let alone evidence thatthe terms of the agreement relating to shared infrastructure costs somehow would notapply to the defendants. Extrinsic evidence as to how and why the default interest ratewas included, and of discussions between the parties including the defendants aboutthe default interest rate, is unnecessary.[56] Mr Burley relied on the statement of Toogood J in Commerce Commission vSportzone Motorcycles Ltd (in liquidation):15To be reasonable, the cost the creditor seeks to recover must be sufficientlyclose and relevant to the establishment of the particular loan, to theadministration and maintenance of the particular loan, or to the actualconsequences of the particular default, such that it can reasonably be said thatthe cost was incurred in connection with or in relation to the relevant matter.[57] However, that case concerned the reasonableness of a fee under the CreditContracts and Consumer Finance Act 2003 and in particular the required nexusbetween a cost and a fee given the terms "in connection with" and "in relation to" inthat statute. Toogood J drew on the test stated by Savage J in Yurjevich vCommissioner of Inland Revenue which concerned the statutory words "incurred inconnection with" in the context of the deductibility of expenditure incurred by ataxpayer. Those cases have no application here.15 Commerce Commission v Sportzone Motorcycles Ltd (in liq) [2013] NZHC 2531, [2014] 3 NZLR355 at [66], adopting a test from Yurjevich v Commissioner of Inland Revenue (1991) 16 TRNZ118 (HC).[58] Perhaps conscious that it was not pleaded, Mr Burley's written submissions didnot explicitly claim the 20 per cent default interest rate was an unenforceable penalty,but he did refer to the Court of Appeal decision in Wilaci Pty Ltd v Torchlight FundNo 1 LP (in receivership),16 and stressed that the appropriate outcome on a case-by-case basis will be determined by the specific commercial context in which the partieshave been operating. But orally, Mr Burley's unreasonableness submission was thatthe 20 per cent default interest rate was a penalty. He went so far as to proposesubstituting a 10 per cent default interest rate.[59] Mr Fisher, for Northwest, did not take the pleading point that the defendantshad not raised an affirmative defence of unenforceable penalty, responsiblyacknowledging that Northwest was not prejudiced. But he submitted that the onusremained on the defendants to adduce evidence to support a penalty claim.17[60] Following Wilaci, and more recently 127 Hobson Street Ltd v Honey BeesPreschool Ltd,18 the primary test in New Zealand for whether a late payment fee is anunenforceable penalty is the disproportionality test.19 It may be cross-checked by thepunitive purpose test – they are two sides of the same coin.20 Thus, the question hereis whether the 20 per cent default interest rate imposes a detriment on the defendantsout of all proportion to any legitimate interest of Northwest in enforcement of theprimary obligation to pay their share of infrastructure costs.[61] As Mr Fisher submitted, a party asserting that a contractual provision is anunenforceable penalty bears the onus.21 However, the issue of whether a contractualclause is an unenforceable penalty is primarily a question of construction. As theCourt of Appeal said in Wilaci, and again in Honey Bees:2216 Wilaci Pty Ltd v Torchlight Fund No 1 LP (in rec) [2017] NZCA 152, [2017] 3 NZLR 293.17 Robophone Facilities Ltd v Blank [1966] 1 WLR 1428 (CA) at 1447.18 127 Hobson Street Ltd v Honey Bees Preschool Ltd [2019] NZCA 122, [2019] 2 NZLR 790.19 At [29]-[35].20 At [36]-[38].21 Robophone Facilities Ltd v Blank [1966] 1 WLR 1428 (CA) at 1447.22 Wilaci Pty Ltd v Torchlight Fund No 1 LP (in rec) at [8]; and 127 Hobson Street Ltd v Honey BeesPreschool Ltd [2019] NZCA 122, [2019] 2 NZLR 790 at [4].Admissible matrix evidence must therefore concentrate on facts that shed lighton the nature of the parties' legitimate commercial interests and relevanttransactional risks – including risk of loss of capital, collateral and reputation.This exercise focuses on the [promisee], but takes into account also theinterests of the [promisor].[62] The relevant evidence indicated that parties to the Five Owners' Agreementwho incurred infrastructure costs, including Northwest as an assignee, had a legitimatecommercial interest in recovering those costs and the default interest from the otherparties to the agreement, for the following reasons. The Five Owners' Agreement wasa formal commercial agreement prepared by lawyers and negotiated over a period ofmonths. The defendants were represented by lawyers at the time – Mr Jung was unsurewhether the defendants took legal advice before signing but accepted it was his moralduty and responsibility to be bound by its terms. The agreement itself contains anacknowledgment that the parties have obtained such legal advice as they considerappropriate. There was no suggestion the parties were not at arms-length.[63] The parties were not in the business of lending money but rather at least somehad borrowed to fund their purchase of the land and the development, secured againstthe land, as is common with property development. They were landowners looking tocollaborate and share infrastructure costs to effect a private plan for commercial gainby increasing their land value. In this property development context, borrowing costsuntil the development is completed and proceeds are recovered could be well abovebank borrowing rates, and the legitimate commercial interest extended to recoveringinterest reflecting such higher rates and incentivising prompt payment. That reflectsthe level of risk posed by development transactions and the need for projects to beprogressed and expenditure to be recovered as quickly as possible. Clause 37(c) ofthe Five Owners' Agreement states that the eight per cent interest is intended to offsetinflation and the holding cost of money paid and is deemed to be part of the costcontribution in respect of which penalty interest will be calculated.[64] Importantly, the benefit and obligation of clause 42 was reciprocal among theparties to the Five Owners' Agreement. If the defendants had incurred infrastructurecosts, they would have been the beneficiary of the same obligation to pay defaultinterest. It does not matter that the defendants may subjectively have not intended todevelop the land before sale or incur infrastructure costs themselves and so benefitfrom the obligation.[65] The evidence that the defendants were not property developers is of littleassistance in this context. Mr Jung and Mr Zhang both described themselves ascompany directors although in evidence Mr Zhang emphasised he was a vegetablegrower and had retired. In any event, they were landowners and property investors.They both had apparent commercial experience, and were no doubt looking forcommercial gain by selling the land, whether before the subdivision developmentproceeded, as occurred, or otherwise. Despite not speaking English as a first language,they both appeared to have a good understanding of the plan change and its effect onthe realisable value of the land in the Huapai Triangle.[66] I am far from persuaded that the 20 per cent default interest rate imposes adetriment on the defendants that is out of all proportion to Northwest's legitimateinterest in enforcing the defendants' primary obligation to pay their share of theinfrastructure costs. As a cross-check, I also do not consider the predominant purposeof this secondary obligation is to punish the promisor(s) rather than protect thelegitimate interest of the promisee(s) in performance of the primary obligation.For these reasons, I consider there is no basis to conclude that the 20 per cent defaultinterest rate in clause 42 is an unenforceable penalty.[67] The remaining issue is whether there is any basis to adjust the period overwhich interest is payable. Mr Burley submitted that the parties were involved incomplex High Court and Court of Appeal proceedings which involved a genuinedispute in the defendants' view based on legal advice from their former solicitors overthe enforceability of the Five Owners' Agreement, and that the defendants genuinelyconsidered that the Deed of Authority signed between them and Sanli was for thepurpose of assigning liability of the now admitted infrastructure costs to Sanli, andtherefore sought to make payment of the invoices Sanli's responsibility, with thatmatter not being finally determined until the Court of Appeal judgment delivered on6 May 2019. Mr Burley submitted that the delay in payment was not the result of anydeliberate action or omission of the defendants that they did not genuinely considerwas disputed.[68] I do not accept that the default interest rate ceased to apply because there wasa dispute. No issue of causation or remoteness arises. Contractual interest does notcease to accrue just because a party disputes that it is payable, genuinely or otherwise.Even if there had been evidence to support the submission that the defendants' viewwas based on legal advice, including to explain non-payment after the Court of Appealdecision on 6 May 2019, by refusing to pay the infrastructure costs the defendants tookthe risk that they were liable to pay. To avoid default interest accruing, or minimiseits effect, they could have paid under protest and/or sought some arrangement to havethe funds held in an interest-bearing bank account.[69] I consider that Northwest is entitled to recover interest in accordance with thecontractual provision including the default rate of 20 per cent per annum calculated ona daily basis. The defendants led no evidence disputing Northwest's calculation. It isbased on interest commencing to accrue 20 working days after the date of eachnotification of infrastructure costs incurred. I conclude that Northwest is entitled tocontractual interest as sought.Damages for consequential losses – causation and remoteness[70] I turn to Northwest's claim for consequential losses resulting from the delay indepositing its survey plan with LINZ, obtaining new titles and settling its sales.Northwest claims that the defendants' refusal to consent before 23 August 2018 causedNorthwest delay in settlement of its lot sales from early March 2018 until October2018.[71] The defendants accept that Northwest attempted to obtain their consent fordeposit of Northwest's survey plan from September 2017 but were unable to do so.In November 2017 Northwest commenced summary judgment proceedings seekingthe defendants' consent, which the defendants opposed. Even after Brewer J grantedsummary judgment, the defendants appealed and applied for a stay, before consentingon 23 August 2018. Mr Jung said he gave his consent form for the defendants abouta month earlier, but it was not communicated. I accept that on 10 August 2018 thedefendants made an application under s 145A of the Land Transfer Act 1952 to lapseSanli's caveat. On 20 August 2018 Sanli consented to deposit of Northwest's surveyplan.[72] Mr Burley submitted that during the relevant period between December 2017and August 2018 substantial proceedings were initiated and pursued by Northwestwhich involved a dispute over the enforceability of the Five Owners' Agreement anddirectly contributed to the delay in the defendants' compliance with the Five Owners'Agreement. He also noted that Sanli provided consent only three days prior to thedefendants in August 2018, with Northwest taking no action against them.[73] In terms of causation, Mr Burley submitted that the delay in submitting plans,obtaining relevant consents and title issue was also dependent on Council processes,obtaining caveator consents and the like, such that there was no guarantee that thedeveloped lots at 81 Nobilo Road would have been ready for sale and sold as claimedby Northwest. He submitted it is unreasonable for the defendants to be required topay the damages claimed for a delay of eight to ten months that was not entirely oftheir making; the consequential losses were not the exclusive result of the defendants'conduct. He noted there was no expert evidence as to when the subdivided lots wouldhave sold and at what price if the defendants had consented earlier.[74] The test for causation is an effective, not exclusive, cause.23 A plaintiff neednot show that the counterfactual absent breach was guaranteed. Mr Kent-Johnson, aregistered professional surveyor who acted for Northwest, gave evidence that from8 December 2017 the only thing holding up issue of the requisite titles was the failureof the defendants providing their consent and to procure consent from the registeredcaveators. The evidence indicated that if the defendants had complied with theircontractual obligations, Northwest would likely have lodged the documents requiredfor the survey plan to deposit soon after the s 224 certificate was issued on 8 December2017. LINZ would then likely have notified the revised survey plan by early February23 See County Ltd v Girozentrale Securities [1996] 3 All ER 834 (CA). See also Bryne v Rose [2019]NZHC 273 at [232], citing Symrise AG v Baker & McKenzie [2015] EWHC 912 (QB) at [58],which approved the following passage in Chitty on Contracts (31st ed, Sweet & Maxwell, London,2012) vol 1 at [26-067]: "Two causes. If a breach of contract is one of two causes, both co-operating and both of equal efficacy in causing loss to the claimant, the party responsible for thebreach is liable to the claimant for that loss. The contract-breaker is liable so long as his breachwas 'an' effective cause of his loss: the court need not choose which cause was the more effective."2018. Northwest would then have notified purchasers that settlement was due –approximately 80 per cent of purchasers (by value) had 10 working days' notice and20 per cent had 20 working days' notice. Thus, settlement would have occurred overthat period and Northwest would have received sufficient funds to repay its loan toANZ. Northwest's claim is conservatively calculated allowing 20 working days forall settlements. Also, Northwest acknowledged that in February 2018 it would stillhave needed funds from ANZ to fund its separate purchase of Sinton Road, but I acceptthat the defendants' delay led ANZ to withdraw its offer to fund Sinton Road, makingalternative funding necessary.[75] I am satisfied on the evidence that the defendants' refusal to consent toNorthwest's survey plan to be deposited from September 2017 until August 2018 wasan effective cause of the delay encountered by Northwest in obtaining new titles, andwas an effective cause of the delay in obtaining proceeds of sale of Northwest's lotsfrom early March 2018 to October 2018. Sanli's role, its caveat and its own delay inconsenting do not negate this or amount to an intervening cause. The defendants'dispute with Sanli arose because the defendants apparently entered into anunconditional agreement for sale and purchase of their land without complying withclause 58 of the Five Owners' Agreement. As Brewer J's judgment made clear, thedefendants were required to take steps to procure the withdrawal of Sanli's caveat.I do not infer that if the defendants had consented earlier and taken steps to procureSanli's consent as required, the delay would still have occurred. Also, whether or notthe defendants followed legal advice, they opposed Northwest's summary judgmentapplication, and I do not accept the argument that the period before judgment hadnothing to do with them. Finally, no expert evidence was required as to when thesubdivided lots would have sold and at what price if the defendants had consentedearlier. The lots were under contract – only their settlement was delayed. The claimwas not complicated by lost sales at different prices.[76] In terms of remoteness, Mr Burley submitted that it could not have beenforeseeable by the defendants that:(a) the subdivisional lots of 81 Nobilo Road would be sold during theperiod contended by Northwest;(b) that Northwest would need associated second tier funding relating tothose sections;(c) that Northwest would fail to settle on the Sinton Road property; nor(d) that GSC Holdings would deposit its plan first and this would causeNorthwest to incur costs for a replacement plan.[77] He further submitted that the duty of care would not have gone so far as torequire the defendants to pay consequential costs claimed by Northwest as there wasno deliberate attempt by the defendants to cause losses to Northwest.[78] Dealing with this last submission first, a deliberate attempt by the defendantsto cause loss is not required. Nor is actual notice of the specific consequencesfollowing breach, which the defendants submitted was not given to them in their nativelanguage. In claims for interest as damages, here interest and other finance chargesincurred by Northwest, the ordinary rules as to remoteness of damages in breach ofcontract cases from Hadley v Baxendale apply, as the Court of Appeal said in Clarksonv Whangamata Metal Supplies Ltd.24 After quoting the well-known statement fromHadley v Baxendale, the Court of Appeal summarised the law:25Thus Alderson B articulated two possible grounds (or "limbs") upon whichplaintiffs could stake their claim: (1) loss reasonably considered to arisenaturally from the breach of contract; and (2) loss that could reasonably besupposed to have been in the specific contemplation of the parties when theycontracted. In Victoria Laundry (Windsor) Ltd v Newman Industries Ltd[1949] 2 KB 528 (CA) at p 539, Asquith LJ distinguished the two limbs asfollows. The first limb is dependent on foreseeability of loss arising fromknowledge that is imputed to the parties (because they are assumed to haveknowledge of the ordinary course of things). The second limb is dependentupon knowledge that, it can reasonably be supposed, the parties actuallypossessed of matters outside the ordinary course of things.24 Clarkson v Whangamata Metal Supplies Ltd [2007] NZCA 590, [2008] 3 NZLR 31 at [25],referring to Hadley v Baxendale (1854) 9 Exch 341.25 At [26]. See also Koufos v Czarnikow Ltd [1969] 1 AC 350 (HL). I keep in mind as well thewarning in McElroy Milne v Commercial Electronics Ltd [1993] 1 NZLR 39 (CA) at 45, that thetest in Hadley v Baxendale should not be regarded as a statute.[79] It is also clear since Clarkson that interest may be claimed as damages undereither limb of Hadley v Baxendale,26 and that interest claimed may include compoundinterest, if it satisfies the normal remoteness test in Hadley v Baxendale.27[80] I note that, since Clarkson, Lord Hoffmann and Lord Hope in the House ofLords formulated an alternative test of assumption of responsibility for unusual cases,in Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas).28 It may make nodifference in a case like this but unless and until that reformulation has been endorsedby the appellate courts in New Zealand, I apply the test according to Clarkson.[81] In assessing the defendants' submissions, I apply these principles anddetermine whether the loss in question is prima facie recoverable, and then considerany other factors which may operate to defeat the claim to it. As Henry J said inHerbison v Papakura Video Ltd (No 2):29it is essential to confine attention to the breaches in question, to see whetherthey have led to the losses in question and if so whether the rules as toremoteness are infringed.This is all in the context of assessing the contractual measure of damages, that isputting the plaintiff in the position as if the contract had been performed.30[82] I consider that Northwest's loss comprising Northwest's increased ANZ bankborrowing costs arising from the delay in the sale of its lots is loss arising naturally,that is in the usual course of things within the first limb of Hadley v Baxendale.Mr Burley could not really suggest otherwise. I have already referred to thecommercial context of the Five Owners' Agreement in relation to the contractualinterest claim above.31 Bank borrowing by parties to the agreement to fund their landpurchase in the Huapai Triangle and development costs was reasonably foreseeable,26 Clarkson v Whangamata Metal Supplies Ltd [2007] NZCA 590, [2008] 3 NZLR 31 at [27]-[36],following Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners[2007] UKHL 34, [2008] AC 561.27 At [49]. See for example Pegasus Group Ltd v QBE Insurance (International) Ltd HC AucklandCIV-2006-404-6941, 1 December 2009 at [255].28 Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas) [2008] UKHL 48, [2009] 1 AC61.29 Herbison v Papakura Video Ltd (No 2) [1987] 2 NZLR 720 (HC) at 730.30 At 731 and 732.31 At [62]-[65] above.whether parties incurred development costs themselves or became liable to reimburseothers under the agreement. This is irrespective of whether the defendants lacked thesophistication and property development experience of some other parties to the FiveOwners' Agreement. Mr Jung and Mr Zhang borrowed to fund their purchase.Assignment was expressly provided for in the Five Owners' Agreement and so wasreasonably foreseeable, and I accept that such borrowing by an assignee was alsoreasonably foreseeable. So was the fact that delay before lots could be sold wouldlead to the debt not being retired and hence increased borrowing costs. Mr Jung andZhang acknowledged that in a subdivisional development developers get a return oninvestment when they sell the lots and the sooner they do so the sooner they can repayborrowing and make money. As Mr Zhang acknowledged, delays cost money. I willreturn to the alleged failure to mitigate below.[83] I also consider that second tier or other funding at higher rates was alsoreasonably foreseeable and naturally arising in the circumstances such that theincreased borrowing costs paid to Pearl Fisher and the Sinton Road vendor are not tooremote. Mr Jung acknowledged that in property development second tier lending isquite normal. He also borrowed from a second tier lender, albeit in 2018. Northwestwas not required to notify the defendants of its specific funding arrangements inadvance. I note Northwest's claim appropriately adjusts for the funding costs thatwould have been incurred with ANZ if the defendants had complied with theircontractual obligations and the alternative funding were not required.[84] However, the consultant's fees revising the survey plan were the result of theaction of a third party lodging a plan (GSC Holdings). While these fees would nothave been incurred 'but for' the delay, and because the development involvedsubdivision of each parties' land it was arguably foreseeable that a delay would leadto one landowner overtaking another with the deposit of its plan, I am doubtfulwhether these additional fees were caused by the defendants' breach and whether thistype of loss was either reasonably foreseeable or reasonably in specific contemplation.I am not satisfied these fees are recoverable from the defendants.[85] Mr Burley also submitted that Northwest failed to mitigate and contributed toits own losses:(a) It did not invoke the dispute resolution provisions in the Five Owners'Agreement. Northwest issued summary judgment proceedings inNovember 2017, six months after it knew about the critical disputebetween the defendants and Sanli. Mr Burley submitted that ifNorthwest had initiated the dispute resolution procedure, a better ordifferent resolution would have been obtained.(b) The interest payments and charges incurred by Northwest are grosslyexcessive and a reasonable person would have shopped around formore attractive and less costly financial terms.(c) It failed to obtain insurance.[86] Failure to mitigate is also an affirmative defence. It must be pleaded.Mr Burley acknowledged the defendants did not do so but submitted these matterswere at least relevant to causation and remoteness, which I have already addressed.I nevertheless consider them in terms of mitigation. There was little evidence tosupport the allegations. Mr Burley accepted that the burden of proving such failurerests upon the defendants once the plaintiff has established the normal measure ofdamages.32 The test is whether Northwest acted reasonably, in the circumstances ofthe case.33[87] As to the dispute resolution procedure, it is accepted that Northwest did notinvoke it. It was not required to do so insofar as it applied to the Court for urgent reliefin May 2017. The position may have been different with its summary judgmentproceedings commenced in November 2017, but the defendants chose to defend thoseproceedings rather than seek to enforce the dispute resolution procedure. In any event,there was no evidence to support the contention that a better or different resolutionwould have been obtained.[88] As in the 20 per cent default interest rate context, there was little evidence tosupport the defendants' contention that the interest payments and charges incurred by32 Williams v K F Meates & Co Ltd (1981) 1 NZCPR 594 (CA) at 599.33 Hooker v Stewart [1989] 3 NZLR 543 (CA) at 547.Northwest were grossly excessive and a reasonable person would have shoppedaround for more attractive and less costly financial terms. There was no evidence toundermine the reasonableness of the ANZ charges. In a simplistic comparisonbetween the Pearl Fisher charges and the second tier finance charges incurred byMr Jung also in 2018, Pearl Fisher's charges compared favourably – except for theestablishment fee, which was considerably higher. Mr Fisher submitted that isunderstandable given the uncertainty the financier was facing with the pendingsummary judgment. He also responsibly drew my attention to Compania Financierav Hamoor Tanker Corporation ('The Borag'),34 where wholly unreasonable financecharges were found to be unrecoverable. Whether considered in terms of causation,remoteness or failure to mitigate, in this case I do not consider the finance chargesincurred by Northwest were unreasonable. Having found that financing, includingsecond tier financing, was foreseeable, I consider the defendants' complaint is properlycharacterised as a failure to mitigate carrying at least an evidential onus on their partto show that Northwest's borrowing costs were unreasonably high. I do not considerNorthwest failed to mitigate in relation to the finance costs incurred.[89] The reference to insurance only arose in submissions and there was noevidence to support a failure to mitigate.[90] Mr Burley further submitted that claiming 20 per cent interest under the FiveOwners' Agreement and the interest charged by ANZ amounted to a 'double dip' byNorthwest. I do not accept this submission. I accept that neither expectation norreliance losses allow a plaintiff to recover more than its actual loss, but that is not theresult here. The default interest applies to the failure to reimburse the defendants'share of the infrastructure costs incurred by Northwest as they became due forpayment, beginning in April 2017. The borrowing costs claimed as damages relate tothe borrowing needed to cover the cost of the property for the period from March toOctober 2018 before lots could be sold, caused by the defendants' refusal to consentto the survey plan. These are distinct costs. Northwest's borrowing had to cover both.Even if an issue of overlap could arise, as Mr Fisher submitted, it was not put to34 Compania Financiera v Hamoor Tanker Corporation ('The Borag') [1981] 1 WLR 274 (CA) at285.Mr Sun and I do not infer that if the infrastructure costs had been paid when due,Northwest would have applied the payment to reduce the ANZ debt.[91] Finally, I note that the defendants' evidence complained that Northwest actedunreasonably, and intentionally to damage the defendants, in particular by lodging acaveat in May 2017. Mr Jung said that the caveat meant the defendants did not receivethe purchase price from Sanli, which was 10 times more than Northwest was owed.I do not consider Northwest acted unreasonably but, in any event, as the defendantsabandoned their counterclaim against Northwest and resolved their dispute with Sanli(including over the delayed settlement), those complaints are not relevant to the issuesremaining in dispute between Northwest and the defendants.35 Northwest's caveatpreceded the defendants' failure to consent to deposit of Northwest's survey plan fromSeptember 2017 and thus is not relevant to the alleged failure to mitigate, which I havealready addressed. Those complaints do not operate to defeat Northwest's claim torecover losses resulting from the defendants' breach of the Five Owners' Agreement.Interest on damages under the Interest on Money Claims Act 2016[92] Northwest also seeks interest on any damages under the Interest on MoneyClaims Act 2016. Mr Burley submitted this is also a 'double dip' given the claim forcontractual interest. For the reasons already given, I consider the contractual interestand damages claims to be distinct. Northwest needed to cover both shortfalls.Statutory interest is consequential on the damages claim.[93] Having established damage, Northwest is entitled to interest on damages inaccordance with the Interest on Money Claims Act 2016. As Mr Fisher acknowledged,in a case where the amount on which interest is to be awarded was not quantified atthe day on which the cause of action arose, s 9(1)(a)(ii) of that Act requires the Courtto specify the day on which the amount was quantified.35 Further, Mr Jung's allegation that Northwest acted to damage the defendants after Sanli disclosedit was not in a position to settle was not put to Mr Sun. Also, despite the settlement, Mr Jung andMr Zhang sought to give evidence on the issue between the defendants and Sanli as to whetherSanli knew of the Five Owners' Agreement. Sanli was not a party to the summary judgmentproceeding and so was not bound by Brewer J's judgment. Before their settlement, Mr Crosslandfor Sanli indicated in opening that Sanli contested Brewer J's statement that Sanli entered into itscontract knowing of the Five Owners' Agreement.[94] Mr Fisher submitted that Northwest first quantified its damages claims in itsamended statement of claim filed and served on 28 November 2018. The basis for thequantification of that claim has not changed except for a reduction in the ANZ andPearl Fisher charges at the beginning of the trial to take account of the likelihood thatNorthwest would still have needed to borrow some funds to settle the purchase of theSinton Road property.[95] Mr Fisher submitted that for the purpose of s 9(1)(a)(ii) a claim is quantifiedwhen the plaintiff notifies the defendant of all relevant particulars of the claim.He noted that r 5.32 of the High Court Rules 2016 requires a statement of claim tostate the amount sought as precisely as possible. He submitted that if a plaintiff hasfulfilled its obligations under r 5.32, it would be difficult to argue that it has notquantified the claim for the purpose of s 9(1)(a)(ii). He submitted that given the realitythat the amount awarded by the Court on claims for damages often differs from theamount sought by a plaintiff in its statement of claim as a result of the testing ofevidence that occurs in the trial process, the legislature cannot be taken to haveintended that there would be no pre-judgment interest awarded in cases where theamount claimed by the plaintiff in its pleading differs from the precise amountawarded by the Court. He submitted that s 9 calls for a sensible and robustconstruction.[96] Where the amount on which interest is to be awarded was not quantified at theday on which the cause of action arose, s 9(1)(a)(ii) requires the Court to specify inthe judgment a later day as the date at which the amount was quantified. That enablesthe Court to assess when in fact the amount was quantified. I accept Mr Fisher'ssubmission that the statutory provision calls for a sensible construction and does notrequire the quantification to match exactly the amount ultimately awarded. But theremay well be cases where an initial attempt at quantification is not treated as therelevant date of quantification, for example where new heads of damage are addedlater or the quantification is otherwise inadequate. I do not attempt to set out a hardand fast rule in the abstract.[97] Here, I accept that the amount of Northwest's damages was quantified in itspleading on 28 November 2018 notwithstanding that the amount now awarded is alesser sum. I specify that date as the date at which the amount was quantified.Result[98] Northwest is entitled to judgment against the defendants jointly and severallyfor:(a) infrastructure costs of $1,178,301.71;(b) default interest of $488,042.68 to 16 January 2020;(c) default interest on $1,178,301.71 from 16 January 2020, calculated ona daily basis at the rate of 20 per cent per annum, until date of payment;(d) damages of $1,347,244.81 (comprising ANZ finance charges of$626,985.53; Pearl Fisher finance charges of $507,999.91; and SintonRoad finance charges of $212,259.37);(e) interest on $1,347,244.81 from 28 November 2018, calculated at therelevant interest rates on a daily basis using the Internet site calculatorin accordance with the Interest on Money Claims Act 2016.Costs[99] Having largely succeeded in its claim, Northwest is entitled to costs against thedefendants in the CIV-2017-404-936 proceeding, subject to any agreement as to costsin the partial resolution. As indicated, Northwest claims solicitor and client costspursuant to the Five Owners' Agreement in respect of steps taken to require thedefendants to pay the infrastructure costs.[100] If costs (including the necessary apportionment) cannot be agreed, Northwestis to file a memorandum (not exceeding five pages) together with an affidavitaddressing the indemnity costs claim within 20 working days. The defendants are tofile a memorandum in response (not exceeding five pages) together with any affidavitaddressing the solicitor and client costs claim within 20 working days thereafter.[101] I will then deal with the issue of costs on the papers, unless I require theassistance of counsel.________________________________Gault JSolicitors / Counsel:Mr M J Fisher and Mr J J Yoon, Barristers, AucklandMr C Girven (instructing solicitor for the plaintiff in CIV-2017-404-936), Castle Brown, AucklandMr J Burley and Ms S Pala, McVeagh Fleming, AucklandMr K J Crossland and Mr J K Boparoy, Shieff Angland, Auckland