Counsel MD Branch, KA McDonald and JK Gilby-Todd for Plaintiffs
CT Gudsell QC assisted by R Southall for First Defendant
J Parker and LD Tidey for Second Defendant/Third Party

Judgment: 24 June 2013

JUDGMENT OF RODNEY HANSEN J

This judgment was delivered by me on 24 June 2013 at 4.00 p.m., pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date: ………………………….

Solicitors: Gallie Miles, Te Awamutu and Harkness Henry, Hamilton
Brent Kelly & Associates, Te Awamutu
Morrison Kent, Wellington

CHICK AND CHICK v BLACKWELL & ANOR [2013] NZHC 1525 [24 June 2013]

TABLE OF CONTENTS

Introduction [1] Background [6] Lack of capacity
The test [28] Context [31] The medical evidence [39] Anecdotal evidence [48] Conclusion [62]

The transactions

2004 lease  [68]
2005 variation  [82]
2007 renewal of lease  [88] Subsequent events  [92] Conclusion  [98]

Unconscionable bargain [99]

Special disability [103] Impropriety [121] Independent advice [130]

Plaintiffs’ claim against Ross Blackwell – conclusion [146] Plaintiffs’ claim against Edmonds Judd [147] Ross Blackwell’s claim against Edmonds Judd [154] Causation [162]
Damages [168] Limitation defence [169] Result [177]

Introduction

[1] The plaintiffs (Leith and Rosemary Chick) and the first defendant (who I will refer to as Ross to distinguish him from other members of his family) own neighbouring farms at Arohena, a district 50 kilometres south east of Te Awamutu. After Ross was stricken with what was thought to be a terminal illness in 2000, he leased his farm to Mr and Mrs Chick for three years, giving them a right of first refusal if he decided to sell the farm. Ross confounded medical prognosis, although he never recovered sufficiently to farm his property. The lease was renewed in 2004, this time associated with an option to purchase. The option and lease were extended in 2005 and 2007.

[2] By 2010 Ross Blackwell’s physical and mental health had deteriorated to the point that his affairs were taken over by his brothers, Basil and Derek Blackwell, pursuant to an enduring power of attorney Ross had signed in 2000. They declined to grant a renewal of the lease or to honour the option to purchase when Mr and Mrs Chick sought to exercise it. They believed the option to purchase to be unenforceable because at the time it was granted and extended Ross did not have sufficient capacity.

[3] In this proceeding the Chicks seek specific performance of the option to purchase, or damages. That is resisted by Basil and Derek as Ross’ litigation guardians, on the grounds that he either lacked capacity at the time the relevant instruments were executed or that the underlying agreements were unconscionable bargains.

[4] Mr and Mrs Chick bring an alternative claim against Edmonds Judd, solicitors of Te Awamutu, who acted for them and Ross…

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 Chick v Blackwell

Details

AGLC: Chick v Blackwell [2013] NZHC 1525
Case: [2013] NZHC 1525
Decision Date: 24 June 2013

CaseChat Overview and Summary

In Chick and Chick v Blackwell and Edmonds Judd, the plaintiffs, Leith and Rosemary Chick, sought specific performance of an option to purchase a farm owned by the first defendant, Ross Blackwell. They also claimed damages and costs against Ross and against Edmonds Judd, the law firm that had acted for Ross on the transactions. Ross counterclaimed against Edmonds Judd for breach of duty. The plaintiffs argued that Ross lacked the capacity to enter into the transactions and that they were unconscionable bargains. They also alleged that Edmonds Judd failed to obtain their informed consent to act for both parties, did not advise them of the risks of proceeding with the agreements, and did not advise Ross of the steps that should be taken to minimise or avoid such risks. Edmonds Judd denied a breach of duty and pleaded that the claims were statute-barred. The court found that Ross had the requisite capacity to understand the general nature of the transactions. The option price and lease rental were based on what was affordable for the Chicks and reflected Ross's concerns that the farm should remain affordable for Adam. The court found that the transactions were not unconscionable because Ross's ability to assess his best interests was not significantly diminished. The court found that Edmonds Judd was in breach of duty for acting for both parties without informed consent and for failing to properly advise Ross. However, the Chicks were not entitled to recover their legal costs from Edmonds Judd as damages because the general rule is that litigation costs cannot be claimed as damages. Ross was successful in his claim against Edmonds Judd and was awarded damages of $1,831,700. The plaintiffs' claims against Edmonds Judd and Ross's counterclaim against Edmonds Judd were dismissed.

Orders