Blackwell v Edmonds Judd - [2016] NZSC 40

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IN THE SUPREME COURT OF NEW ZEALAND

SC 30/2015
[2016] NZSC 40

BETWEEN	DEREK NICHOLAS BLACKWELL AND CHARLES BASIL BLACKWELL AS EXECUTORS AND TRUSTEES OF THE ESTATE OF ROSS WINSTON BLACKWELL Appellants
AND	EDMONDS JUDD Respondent

Hearing:	2 February 2016
Court:	Elias CJ, William Young, Glazebrook, Arnold and O'Regan JJ
Counsel:	C T Gudsell QC for Appellants M R Ring QC and J R Parker for Respondent
Judgment:	22 April 2016

JUDGMENT OF THE COURT

AThe appeal is allowed. Judgment is given for the appellants in the sum of $1,000,000.
BInterest of five per cent is ordered from the date of settlement by Mr and Mrs Chick of the purchase of the farm.

CThe respondent is to pay costs of $25,000 to the appellants plus all reasonable disbursements, to be fixed if necessary by the Registrar.
DThe costs order in the Court of Appeal (CA476/2013) is set aside. Costs in that Court and in the High Court should be set by those Courts in light of this judgment.

____________________________________________________________________

REASONS

(Given by Glazebrook J)

Table of Contents

Para
Introduction	[1]
Factual background	[5]
The farm and marriage	[6]
Health	[8]
The lease	[11]
Lease renewal and option	[14]
Variation in 2005	[26]
Lease renewal in 2007	[31]
Later events	[33]
High Court findings on negligence	[34]
Lease renewal and option	[37]
The 2005 variation	[39]
The 2007 renewal	[42]
The Court of Appeal judgment	[44]
Our assessment	[51]
Lease renewal and option	[55]
2005 Variation	[72]
2007 Renewal	[74]
Conclusion on the option exercise price	[79]
Result and costs	[86]

Introduction

The late Mr Ross Blackwell[1] owned a dry stock farm (known as Haupouri) at Arohena, near Te Awamutu. He was diagnosed with an inoperable brain tumour in June 2000. After his diagnosis, he leased the farm to his neighbours, Leith and Rosemary Chick, and granted them a right of first refusal and later an option to purchase the farm.
[1]As in the courts below, we will call him Ross in this judgment to distinguish him from his brothers (the appellants in this Court). Ross died on 19 September 2014.
When the Chicks gave notice that they wished to exercise the option in March 2010, the agreed option price was less than half the current market value. The agreed rental for the farm was also below market rates.[2] Ross’ brothers, Derek and Charles (in their capacity as Ross’ attorneys), refused to settle the purchase. The Chicks applied to the High Court for an order of specific performance. The Court ordered Ross to perform the agreement.[3]
[2]In the High Court the parties, after their respective valuers had conferred, agreed for the purpose of the High Court hearing on rental valuations and the market value of the farm at various critical dates. This agreement as to valuation continued for the purposes of the Court of Appeal hearing: Blackwell v Chick [2015] NZCA 34 (Ellen France P, Randerson and Harrison JJ)…

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 Edmonds Judd

Details

AGLC: Blackwell v Edmonds Judd [2016] NZSC 40
Case: [2016] NZSC 40
Decision Date: 22 April 2016

CaseChat Overview and Summary

This case involves an appeal from a decision of the Court of Appeal which held that the negligence of the law firm, Edmonds Judd, had not caused any loss to the late Ross Blackwell. Ross Blackwell, who was suffering from a terminal brain tumour, owned a dry stock farm at Arohena, near Te Awamutu. He leased the farm to his neighbours, the Chicks, and granted them an option to purchase the farm at a fixed price. Ross died in September 2014. His brothers, Derek and Charles Blackwell, who were also his executors and trustees, refused to settle the option and the Chicks sought an order of specific performance. The High Court held that Ross was not lacking in mental capacity when granting the option and the extension of time for exercising it. It further held that he understood the nature of the transactions and that the bargain was not unconscionable. Ross also made a third party claim against Edmonds Judd for negligent advice with regard to the transactions. The High Court held that the negligence of Edmonds Judd with regard to the lease agreement and the option caused him loss. It awarded damages of the difference between the agreed sale price and the market value of the farm, as well as rental shortfalls from 1 May 2007 (a total of $1,831,700). The Court of Appeal overturned that decision, holding that the firm’s negligence had not caused loss. The Supreme Court of New Zealand allowed the appeal. It held that Ross proved that he would have acted differently had he been properly advised. The Court held that had Ross been given competent advice in 2004, the option agreement would have provided that the option would not be exercised during Ross’ lifetime but that the parties would have agreed, after the initial three year period, that the option price would be at a discount of between 15 and 25 per cent on market value. The Court also held that the 2005 variation would not have taken place and that the option would have been extended on the same terms in 2007 past 30 April 2010 but with an ability to exercise the option on that date if the lease were not renewed (and even if Ross were still alive). Judgment for the appellants in the sum of $1,000,000 is ordered. The Court also awarded interest at five per cent on the judgment sum from the date of settlement by the Chicks of the purchase of the farm. The appellants, having largely succeeded in the appeal, are entitled to costs. The respondent is to pay costs of $25,000 to the appellants plus all reasonable disbursements, to be fixed if necessary by the Registrar. The costs order in the Court of Appeal is set aside. Costs in that Court and in the High Court should be set by those Courts in light of this judgment.

Orders