Relief

Question 1

Planet Kids
SC, NZ

Answer 1

FRUSTRATION

Appellant operated a childcare business on land leased from respondent who wanted land back. They made settlement contract, inclusive of compensation, to terminate lease contract early. But prior to settlement date a fire burnt down building. The original lease contract had clause saying that if building was to be destroyed/made untenable the lease will revert to the council.

Held that the contract is not frustrated because the main purpose of the contract was already achieved and there would be significant hardship to PK.

Hardship was held not to be decisive as requiring the council to do what it originally intended to do cannot be said to be hardship.

Planet Kids set out multi-factorial test that is to be used when determining if a contract is frustrated. It is a very holistic approach and requires considering terms of the contract, contract matrix of context, parties knowledge, and the nature of the supervening event.

Question 2

FRUSTRATION

Unattainability of thing or person:

Answer 2

Taylor v Caldwell - fire burnt down music hall hired for concert. held that the hire contract was frustrated because the hall itself was the subject matter/essential to the contract - if the concert took place somewhere else it would be very different that what was planned.

Question 3

FRUSTRATION

Unattainability of purpose:

Answer 3

Krell v Henry - Kroll rented a room for the sole purpose of watching Kings coronation. When coronation was cancelled held that contract was frustrated.

vs

Herne Bay Steamboat - Hired steamboat to watch the coronation but in this instance contract was not frustrated because they boat was also hired for a day cruise (coronation was sole purpose of the contract).

Question 4

FRUSTRATION

Supervening illegality

Answer 4

Rayneon NZ v Fraser

Frazer was a dentist. He signed contract for 5 years agreeing to lease a neon advertising sign. 2 years later laws changed making the sign illegal.

Held that the contract is frustrated.

Where there is a supervening illegality that makes performance of contract illegal after contract has been entered into, the contract will be frustrated.

Question 5

FRUSTRATION

Government Intervention

Answer 5

Metropolitan Water Board v Dick

Question 6

Maritime National Fish v Ocean

Answer 6

No frustration found because they made choice not to license particular boat.

Held that where there is some choice in the matter cannot claim frustration.

Question 7

Mana Property Trustee v James Development
SC, NZ

Answer 7

CANCELATION - SERIOUS BREACH (s37)

ESSENTIALITY:

ASP of land must not be less than 4.7 ha but boundaries were to be fixed later. The final area ended up being less than 4.7 ha.

Held that the size of the land was essential to the cancelling party.

To determine whether a term is essential to the cancelling party, the question to be asked is whether the cancelling party would more probably than not have declined to enter the contract if there had been no agreement that the term in question was essential. This is an objective question - subjective intentions irrelevant.

Held that it was essential due to the wording of the contract “must not” and the land was at high value.

Held it didn’t matter how small the difference was.

Question 8

Aerial Advertising v Batchelor Peas
1938, UK

Answer 8

CANCELATION - SERIOUS BREACH (s37)

SUBSTANTIALITY:

BP had hired company to fly advertising banner with condition that pilot rings and gets consent before each take off.

On this occasion the pilot did not call and advertisement flew over a WW1 2 minute silence. Was not a substantial breach but had substantial consequences on their companies reputation. Therefore, the breach substantially reduced the benefit of the contract and held that BP entitled to cancel.

Question 9

Stine v Maiden

Answer 9

CANCELATION - SERIOUS BREACH (s37)

SUBSTANTIALITY:

Purchaser was attracted and highly persuaded to make purchase of property due to the rustic characteristics and mature garden of property. Damage occurred and was restored by vendor but it meant that the property lost its rustic character and the gardens were not mature. Purchaser sought to cancel contract because what they liked about the property was gone.

Court held that the loss of the rustic element wasn’t substantial enough for cancellation.

Question 10

Sharplin v Henderson

Answer 10

CANCELATION - SERIOUS BREACH (s37)

SUBSTANTIALITY:

Purchasers were misrepresented about citrus trees being included in the area of land for sale.

Held there was a substantial breach.

The real value of the land without the trees was 25% less than if it had the trees as a result the consequences of the misrepresentation substantially reduced the benefit for the purchasers.

Question 11

Kumar v Station Properties
NZ

Answer 11

CANCELATION - REPUDIATION (s36)

Held that “repudiation is an actual or anticipatory breach of contract by one party that manifests as a clear intention that it will not perform or complete performance of its side of the bargain”.

Station properties were developing an apartment complex in Qtown. SC held that purchasers (investors who wanted to sell them off) were entitled to cancel contract because Station was in breach of an essential term that they would provide furniture and management packages.

These together were essential because they increased the chances of sale and therefore, had they not been included they more likely than not wouldn’t have entered into contract.

Held:
Essential terms can be read together.
Cancelling party must be ready, willing and able to perform their part of the bargain.
If a party cancel for a bad reason not knowing a good reason existed at the time of cancellation the cancellation is still valid.

Question 12

Schmidt v Holland

Answer 12

CANCELATION - REPUDIATION

A couple asked if they could exit the ASP. Held that this was not repudiation because they didn’t actually say they were going to break it, they were just asking.

However, when they failed to settle on the agreed settlement date and had purchased another property it made it clear they did not intent to proceed with contract. Therefore, this was then repudiation.

Question 13

Starlight v Lapco Enterprise

Answer 13

CANCELATION - REPUDIATION

Held that a genuine dispute about the contract is not normally repudiation.

Question 14

Synge v Synge

Answer 14

CANCELATION - REPUDIATION

Selling house to someone else is a clear indication that you do not intend to fulfil your obligations.

Illustrated that repudiation can be through word and conduct, expressed or implied.

Question 15

Barry v Davis

Answer 15

EXPECTATION LOSS

Action for machine valued at 28,000 pounds without reserve. Only one bidder who bid 400 pound and then seller refused to sell.

Held that purchaser is entitled to the diminution of value being $27,600 pounds.

Question 16

Ruxley Electronics & Construction Ltd v Forsyth
1995, HOL (UK)

Answer 16

EXPECTATION LOSS

Failed to build pool to required depth.

The only loss sustained was a loss of amenity (attractiveness), the 6m depth was still deep enough to dive e.g., there was nothing that the extra depth would allow you to do that the current depth doesn’t (distinguishing point).

Although it is not for the court to be concerned what a party will do with their damages, intention is relevant to reasonableness. Held that the cost of cure (rebuilding the pool to correct depth) was not reasonable in the circumstances.

There was no difference in market value between the depth of pool and the depth it was supposed to be under contract - so diminution of value zero.

Therefore, given 2500 pounds in damages for loss of amenity.

“Common sense and common law go hand in hand”.

Question 17

Marlborough DC v Altimarloch Joint Ventures
2012, SC (NZ)

Answer 17

EXPECTATION LOSS

Contract for purchase of land that came with water right. Purchaser intended to use land for a vineyard. Vendor misrepresented the amount of water the right allowed.

The difference in value between the land with right as represented was $400,000 but in order to have enough water purchasers had to purchase some more rights and build a dam which cost them over $1M.

Held that the purchaser is entitled to damages of the full cost of cure.

Diminution of value is the normal measure but if the subject matter not readily substitutable or available on the free market, a reasonable cost of cure may be appropriate.

Question 18

McRae v Commonwealth Disposals Commission, 1951

Answer 18

RELIANCE LOSS

McRae contracted to purchase sunken oil tanker and fitted out a salvage expenditure to find it. Turns out the tank didn’t exist and because it was the subject matter of the contract held to be a breach and entitled McRae to damages.

Court awarded reliance loss of the money paid under the contract and wasted expenditure looking for the oil tanker.

It was impossible to tel how much the oil tanker would be worth so no loss of profit awarded.

Question 19

Anglia Television v Reed

Answer 19

RELIANCE LOSS

Making movie and lead actress pulled out. The whole movie had to be abandoned.

The profit expected to be made by the movie was too uncertain for the court to award expectation loss, therefore awarded reliance measure for costs already incurred on the movie.

Question 20

Ti Leaf Productions v Baikie

Answer 20

RELIANCE LOSS

Ti Leaf rented B’s farm for movie production and B made negative public comments about the movie.

Investors withdrew money and the film production had to be stopped. Reliance loss was declined by the court because held that the film wouldn’t have been produced anyway due to poor organisation.

Given $500 nominal damages.

Question 21

Attorney-General v Blake
2001, (UK)

Answer 21

RESTITUTION LOSS

UK spy wrote a book which breached confidentiality agreement. Government sued to prevent receiving profits from publisher.

Held that restitutionary damages are available because Government had a legitimate interest in preventing the information being disclosed (matter of national security importance).

There should be no financial incentive to breach spy confidentiality.

Question 22

Bloxham v Robinson
1996, HOL

Answer 22

LIMITS TO DAMAGES

Sale of dentist practise.

Illustrated that you cannot get double recovery - you have to choose between damage measures.

The rationale is that you cannot be put into a better position than you would have been had there been no breach.

Question 23

Jarvis v Swan Tours
1973, QB

Answer 23

LIMITS TO DAMAGES

J booked a Christmas skiing holiday with Swan Tours. The skiing facilities and accommodation did not live up to what was advertised in the brochure. J claimed he was entitled to damages for loss of enjoyment (on top of repaying his trip).

Normally no damages for mental distress but held that there is an exception when the contract is specifically provided for relaxation and pleasure.

As a result, J awarded almost double what he paid for the holiday.

Question 24

Paper Reclaim Ltd v Aotearoa International Ltd
2006, NZ

Answer 24

LIMITS TO DAMAGES

Held that no punitive damages in NZ.

Question 25

Turner v Superannuation and Mutual Savings Ltd

Answer 25

LIMITS TO DAMAGES

Purchased failed to settle ASP. At the time of the breach the property was valued at $1.1 M, at the time of judgement it was valued at $4M.

Held that loss is based upon the time of the breach and not the judgement - otherwise would be betterment.

Question 26

Bunge SA v Nidera
2015, SC (UK)

Answer 26

LIMITS TO DAMAGES

This case illustrates that the time that loss is accessed may be changed by the court if required to achieve a fairer and more just outcome.

Contract for the sale of wheat to Russia. Russia then put a ban on wheat sales but the seller repudiated the contract before the ban was put in place.

Held that the damages in this instance will be based on later date as it would be more just and put party in same position as if contract had been performed.

Without fixing later date would have got more than they would have got had the breach not happened.

Question 27

Hadley v Baxendale

Answer 27

H owned Mill which had broken shaft. Contract B to transport shaft to and from repairer as soon as possible. B did not know that H had to close business until shaft was returned fixed. Due to negligence returned shaft a week later than contracted.

Set out test for when damages are recoverable:
(1) Direct and natural loss arising from the breach; OR
(2) Loss reasonably foresee/contemplated by parties at the time of contracting.

Held that it was not in the normal course of business to have to close down due to the absence of a singular part. Therefore closure was not a foreseen result of the delay and B not liable for the Mill’s loss of profit.

The request to delivery quickly was not enough to notify deliver that would loss profits for slow delivery. Had unusual circumstances of their operation then B would have had it in his contemplation and liable.

Question 28

Victoria Laundry Ltd v Newman Industries
1949

Answer 28

LIMITS TO DAMAGES

Delivery of a boiler was 5 months late. Purchaser claimed loss.

Loss was recoverable as satisfied limb 2 of Hadley: reasonably foreseen/contemplated by parties at the time of contracting.

Here the importance of quick delivery was expressed to deliver and deliver had industry knowledge which meant would have foreseen and contemplated the loss.

What’s reasonably foreseen depends on knowledge of the parties - imputed (what expected of all reasonable people to know) or actual.

Question 29

Walop No 3 v Para Franchising
2004, COA (NZ)

Answer 29

LIMITS TO DAMAGES

W were franchisees of Para Franchising - contract clause said that upon ending contract they will not operate any similar business within 10km radius for any Para store. W breached this condition and were entitled to damages for Para loss due to not being able to find a new franchisee due to competing store in close proximity. They claimed there should be a discount for Para failing to reasonably mitigate the loss.

Onus is on the defendant to prove that reasonable mitigation was not taken. Mitigation is a question of fact.

Held that W evidence that reasonable steps were not taken based on only advertising on one occasion and talking to one prospective franchisee was not sufficient, and thus loss not discounted by virtue of mitigation.

Question 30

Affirmation cases:

Answer 30

White and Carter v McGregor

Gray v Thomson

Wilson v Hines