Greymouth Holdings’ director Robert Dunphy claims there was no mistake when his company agreed to buy an Auckland property for $5.9 million but having to pay the vendor only $4.1 million. The vendor claims Mr Dunphy is exploiting what was an obvious mistake.
The Herne Bay property in Argyle Street is owned by Ariki Trust, part of the estate of philanthropist and business man the late Adrian Burr. Ariki owns the leasehold interest; the freehold was owned by a company called Swanson Land Ltd.
The High Court was told of negotiations in 2021 with Ariki rejecting Greymouth’s written offer to buy the leasehold interest. That same day, Greymouth signed a deal with Swanson Land, agreeing to buy the freehold interest for $1.8 million. Just over a week later, Ariki made a written offer to Greymouth offering to sell at $5.9 million. This offer was for sale of the freehold interest, and with it a right to rents from the leasehold. Greymouth accepted that day. Ariki replied within an hour, saying there had been a mistake; it was offering to sell its leasehold interest only at $5.9 million, it did not own the freehold. Greymouth says there was no mistake. Since Greymouth now owned the freehold, Ariki was told it had to pay $1.8 million to buy the freehold from Greymouth in order to transfer the freehold back to Greymouth. This legal roundabout has the effect of reducing payment to Ariki by $1.8 million with Greymouth then owning Argyle Street absolutely with the leasehold cancelled.
Ariki wants the contract cancelled. Greymouth registered a caveat against title to Argyle Street to protect its claimed rights.
After reviewing each sides disputed views of who knew what at the time the contract was entered into, Associate judge Gardiner ruled the caveat stay in place pending a full court hearing. Judge Gardiner said it was objectively clear that Ariki had made a mistake. But the legal consequences of this mistake depends upon the state of Mr Dunphy’s knowledge. Formal evidence in court is needed to resolve this question. There had been market gossip of Ariki considering buying the freehold when putting Argyle Street’s leasehold on the market in order to maximise its market value.
Greymouth Holdings Ltd v. Lundon – High Court (1.04.22)
22.071