Blackwell v Chick

JurisdictionNew Zealand
CourtCourt of Appeal
JudgeEllen France,Randerson,Harrison
Judgment Date27 February 2015
Neutral Citation[2015] NZCA 34
Docket NumberCA481/2013
Date27 February 2015

[2015] NZCA 34

IN THE COURT OF APPEAL OF NEW ZEALAND

Court:

Ellen France P, Randerson and Harrison JJ

CA481/2013

Between
Ross Winston Blackwell
Appellant
and
Leith Roger Chick And Rosemary Chick
Respondent
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 OF THE COURT
  • A The 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]

(1)Lack of mental capacity

[22]

(a)Defence

[22]

(b)Pre-morbid intellectual capacity

[24]

(c)Subsequent medical history

[24]

(d)Opinion evidence

[31]

(e)Transactions

[38]

(i)2004 Renewal

[45]

(ii)2005 Variation

[45]

(iii)2007 Variation

[47]

(2)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

[93]

(i)Principles

[97]

(ii)Appeal

[100]

(iii)2004

[102]

(iv) 2005 and 2007

[110]

(v)Conclusion

[115]

(e)Damages

[116]

Result

[120]

Introduction
1

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.

2

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.

3

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 had acted for him on the lease transactions and who admitted negligence; for $1,831,700 being the difference between the agreed sale price and the property's then market value together with rental shortfalls (the second judgment). 2 The Judge dismissed the Chicks' separate claim against Edmonds Judd for legal costs in the event that they failed in their primary claim against Ross (the third judgment). 3

4

Ross died after trial. The Blackwells, as Ross' litigation guardians, appeal against the first judgment on the ground that Rodney Hansen J erred in dismissing each of their affirmative defences. 4 Edmonds Judd appeals against the second judgment on the ground its negligence did not cause Ross any loss. The Chicks cross appeal against the third judgment. All three appeals were heard together but, as will become apparent, it will be unnecessary for us to determine the merits of the Chicks' cross appeal.

Facts
5

By way of introduction we recite that the judgments are based on findings of fact made by Rodney Hansen J relating to the transactions. In this Court counsel have subjected the foundations for those factual findings to sustained challenges, particularly on the Blackwells' appeal against the first judgment. It is appropriate to note that the Judge heard from many witnesses, some of whom were extensively cross-examined. The trial was of three weeks duration. While we have independently reviewed the Judge's factual findings, we acknowledge immediately the particular advantage he enjoyed from presiding over the trial and absorbing the evidence as the trial progressed. 5 That observation applies particularly to the first judgment which is based primarily on direct findings of fact, some of them on credibility: by contrast, the second judgment is founded on inferences drawn from the same evidence.

6

We acknowledge also that our factual summary is taken largely from Rodney Hansen J's comprehensive narration which was in turn taken largely from evidence given by Leith Chick, whose credibility is under attack on appeal. Nevertheless, we are satisfied that our summary provides an accurate contextual setting for considering the specific grounds of both substantive appeals.

7

In 1979 Ross, who was then a 21 year old single man, bought a farm including a residence at Arohena in the Waikato. In 1993 he bought an additional property. His farm then comprised both properties, a total of 324 hectares, and was run as a dry stock operation known as Haupouri. In 1984 the Chick Family Trust bought a dry stock farm of about 200 hectares nearby.

8

A close friendship developed between Ross and the Chick family including the Chicks' son, Adam. Their houses were only a few hundred metres apart and they saw a lot of each other. Each assisted the other in operating their respective farms.

9

In 1993 Ross married Margaret Catchpole. Unfortunately she did not settle into farming life and in 1996 the couple moved to the nearby town of Te Awamutu. Nevertheless, Ross continued to commute daily to his farm.

10

In June 2000 Ross was diagnosed with an inoperable brain tumour. He was advised he had about six months to live. Shortly afterwards, he executed an enduring power of attorney in favour of his two brothers (it was not acted upon until 2008). In October and November 2000 Ross was treated with what is known as Grays whole brain radiotherapy.

11

Over this period Ross approached the Chicks to enquire whether they would lease Haupouri. In November 2000 the parties signed an agreement to lease the farm at an annual rental of $63,000 (reduced from a market rental of $65,900 pa because the Chicks did not wish to rent the farm house). The lease was for a term of three years commencing on 1 April 2001 with rights of renewal for a further three years and also of first refusal should Ross decide to sell the property. The Chicks suggested both rights because they planned to invest some $250,000 in extra stock and wanted certainty that if Ross died Haupouri would not be sold to their detriment. The Blackwells do not challenge Ross' capacity to enter into that transaction, which was outwardly on commercial terms.

12

In September 2001 Ross executed a will appointing his brothers as his executors and trustees. He gave life interests in his estate to his wife and his brothers, with the residue to go to the latter two.

13

Ross confounded the medical profession. As Rodney Hansen J noted 6 the seizures which Ross suffered following treatment steadily diminished and he progressively recovered to the point where from November 2002 he had resumed work on his farm.

14

In early February 2004 Ross and Mr Chick discussed a renewal of the lease. They agreed on a rental for the next three years of $65,900 which included the

house. By then Adam Chick and his partner, Jana, were living there. Adam had resumed a fencing contract business and Jana worked for Mr Chick.
15

What happened next was described by the Judge as follows:

  • [17] In February 2004, while Mr and Mrs Chick were away in the South Island, Ross Blackwell suggested to Adam and Jana that they could buy his farm. …. Adam said he was “gobsmacked” as he had always assumed that Ross' brothers would get the farm. He asked Ross what his reasons were. Ross said he did not want to talk about it but would tell him one day. He told Adam he wanted to talk to his father as soon as he returned. (Adam said Ross told him the reasons many years later, in August 2007, when they were coming back from Auckland together. Ross told him the reason was that his brothers and their families had been “horrible to Margaret” (Ross' wife).)

  • [18] Ross Blackwell and Mr Chick met after the Chicks returned from the South Island. Mr Chick said Ross said to him, “I want you guys to have my farm. I would really like to leave it to Adam in my will”. Mr Chick said he told Ross he could not do that; he had Margaret to consider and his will could be challenged. Ross then asked him, “How do we do it then?” After discussion, Mr Chick suggested an option to purchase. Mr Chick said Ross made it clear to him that he wanted to continue owning the farm while he was still alive and that, in the end, he would like Adam to have it. Mr Chick was to be “the caretaker”.

  • [19] They discussed a purchase price. At this time the government valuation was $1,165,000. Ross told Mr Chick that he had spoken to the valuer who had previously valued the lease. He had estimated a value for the farm of $1.8m. Mr Chick said Ross was concerned that the farm should be affordable for Adam and suggested a price of $900,000 based on the productive worth of the land. Mr Chick said he told him that was too low. After some discussion, a price for the option of $1.5m was agreed. Ross Blackwell asked that nothing be said about the option, specifically saying that his brothers should not be told.

16

Ross and Mr Chick...

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2 cases
  • Scutts v R
    • New Zealand
    • Court of Appeal
    • 10 December 2015
    ...2 NZLR 141 at [13]; Rae v International Insurance Brokers (Nelson and Marlborough) Ltd [1998] 3 NZLR 190 (CA) at 197 and 199; and Blackwell v Chick [2015] NZCA 34 at 27R v REM [2008] 3 SCR 3 at [67]. 21 See generally Evidence Act 2006, s 130 (authenticity) and s 9 (consent). 22 Section 71(1......
  • Derek Nicholas Blackwell and Charles Basil Blackwell as Executors and Trustees of The Estate of Ross Winston Blackwell v Edmonds Judd
    • New Zealand
    • Supreme Court
    • 22 April 2016
    ...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) [ Blackwell (CA)] at 3 Chick v Blackwell [2013] NZHC 1525 (Rodney Hansen J) [ B......

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