Hearing:	12 and 13 November 2014
Court:	Ellen France P, Randerson and Harrison JJ
Counsel:	C T Gudsell QC and R J Southall for Appellant in CA481/2013 and First Respondent in CA476/2013 M G Ring QC and J Parker for Appellant in CA476/2013 M D Branch and K A McDonald for Respondent in CA481/2013 and Second Respondent in CA476/2013
Judgment:	27 February 2015 at 3 pm

JUDGMENT OF THE COURT

AThe appeal in CA481/2013 is dismissed.
B    The appellant in CA481/2013 is to pay the respondent’s costs on a standard appeal on a band A basis together with usual disbursements.
C    The cross appeal in CA481/2013 is dismissed. There is no order as to costs.
D    The appeal in CA476/2013 is allowed and the judgment in the High Court for damages and costs is set aside.
E    The respondent in CA476/2013 is to pay the appellant costs on a standard band A basis together with usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Harrison J)

Contents

Introduction  [1]
Facts  [5]
Appeal in CA481/2013  [22]

Lack of mental capacity  [22]
          (a)     Defence  [22]
          (b)     Pre-morbid intellectual capacity  [24]
          (c)     Subsequent medical history  [31]
          (d)     Opinion evidence  [38]
          (e)     Transactions  [45]
(i)     2004 Renewal  [45]
(ii)     2005 Variation  [47]
(iii)    2007 Variation  [49]
          (f)     Leith chicks evidence  [50]
          (g)     Conclusion  [62]
Unconscionable bargain  [67]
          (a)     Defence  [67]
          (b)     Special disadvantage or disability  [70]
          (c)     Impropriety  [78]
Result  [81]
Appeal in CA476/2013  [84]
          (a)     The Blackwells’ claim  [84]
          (b)     The High Court findings  [88]
          (c)     Mental capacity  [93]
          (d)     Causation  [97]
(i)     Principles  [97]
(ii)     Appeal  [100]
(iii)    2004  [102]
(iv)    2005 and 2007  [110]
(v)    Conclusion  [115]
          (e)     Damages  [116]
Result  [120]

Introduction

The late Ross Blackwell (Ross) owned a dry stock farm in the Waikato. He agreed to lease the property to his friends and neighbours, Leith and Rosemary Chick, with an option to purchase at an agreed price. It is common ground that when the option was exercised some years later the agreed price was less than half of the property’s then market value and that the agreed rental for part of the term was significantly below market rates.
Ross’ brothers, Derek and Basil (the Blackwells), who were by then managing his affairs, refused to settle when the Chicks exercised the option. In defence of the Chicks’ consequential application to the High Court for an order for specific performance the Blackwells pleaded that, first, Ross lacked mental capacity when granting the option and, second, the bargain was unconscionable.
Following trial, Rodney Hansen J dismissed the Blackwells’ defences and ordered Ross to perform the agreement (the first judgment).[1] However, he gave judgment for Ross against the firm of Edmonds Judd, his former solicitors, who…

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 Blackwell v Chick

Details

AGLC: Blackwell v Chick [2015] NZCA 34
Case: [2015] NZCA 34
Decision Date: 27 February 2015 at 3 pm

CaseChat Overview and Summary

In Blackwell v Chick, the Court of Appeal of New Zealand dismissed the appeal by the Blackwells against the decision of Rodney Hansen J in the High Court. The Blackwells sought to overturn the order for specific performance of an agreement for sale and purchase of a dry stock farm and to set aside the judgment for damages in favour of the Chicks against the former solicitors for Ross Blackwell. The Blackwells alleged that Ross lacked mental capacity when he signed the relevant transactions and that they were unconscionable bargains. They also sought indemnity from the former solicitors for the loss they claimed Ross suffered if the Chicks exercised the option to purchase. The Blackwells' appeal against the first and third judgments was dismissed, and the appeal by the former solicitors against the second judgment was allowed. The Court found that Ross was of competent mental capacity to enter into the transactions and that the Chicks had not acted improperly in exercising the option to purchase. The Blackwells had failed to prove that the former solicitors' negligence caused Ross any loss. The Court concluded that the loss suffered by Ross was inherent in the terms of the transactions which he had intended to bear. The Court set aside the judgment for damages against the former solicitors and ordered the Blackwells to pay costs to the former solicitors on a standard appeal on a band A basis together with usual disbursements.

Orders