REASONS
(Given by Tipping J)
Introduction
[1]        This appeal concerns an agreement for the sale and purchase of substantial commercial premises in Christchurch. Both the High Court[1] and the Court of Appeal[2] refused the purchaser’s application to set the agreement aside as an unconscionable bargain. The purchaser appeals to this Court. The agreement, which is dated 3 November 2003, was entered into between the appellant, Gustav & Co Ltd, as purchaser, and the respondent, Macfield Ltd, as vendor. The person who negotiated the agreement for Gustav was its sole director, Mr David Parkinson. At the time he was suffering from terminal liver cancer. He died on 15 February 2004. The price payable under the agreement was $12.35 m. Gustav claims that this figure was substantially in excess of fair market value. Its contention that the contract represents an unconscionable bargain rests essentially on Mr Parkinson’s ill health, and what Gustav claims to be the excessive price it agreed to pay.
[1]Gustav & Co Ltd v Macfield Ltd (High Court, Christchurch, CIV 2004-409-001606, 15 July 2005, John Hansen J).
[2]     Gustav & Co Ltd v Macfield Ltd [2007] NZCA 205.
[2]        The first issue which must be addressed arises on Macfield’s cross-appeal. It concerns the time as at which the Court determines whether a transaction is unconscionable. The point arises because the agreement between the parties was conditional upon Gustav performing due diligence in respect of the premises which were the subject of the agreement. A series of detailed conditions had to be satisfied in this respect. Whereas the contract was entered into on 3 November 2003, it was not declared unconditional by Gustav until 23 January 2004. On that date Gustav also paid to Macfield the sum of $500,000 by way of part payment of the deposit. The question is whether the Court should assess the unconscionability of the contract as at the date it was entered into or as at the date it was declared unconditional. Both the High Court and the Court of Appeal decided that the appropriate date was the later one, namely when the contract was declared unconditional. Macfield challenges that conclusion. It is appropriate to deal with this point before considering Gustav’s appeal and its contention that this Court should hold that the contract was unconscionable and should be set aside and a consequential order made for the refund of the sum paid by way of deposit.
The time issue
[3]…

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 Gustav & Co Ltd v Macfield Ltd

Details

AGLC: Gustav & Co Ltd v Macfield Ltd [2008] NZSC 47
Case: [2008] NZSC 47
Decision Date: 20 June 2008

CaseChat Overview and Summary

Gustav & Co Ltd appealed against the decision of the Court of Appeal that the agreement for the sale and purchase of commercial premises in Christchurch was not an unconscionable bargain. The Court of Appeal had held that the transaction was not unconscionable when Gustav declared the contract unconditional. Gustav claimed that the contract was unconscionable when it was entered into due to the ill health of its sole director, Mr David Parkinson, and the price agreed was substantially in excess of fair market value. The Court held that the correct approach was to examine whether the transaction was unconscionable at the date it was entered into. The Court found that there was no evidence that Mr Parkinson was suffering from any disadvantage that made him unable adequately to look after Gustav’s interests. The appeal was dismissed with costs.

Orders