Family refinancing over a decade ago was revisited in the High Court in what one side to a dispute between step-siblings described as a personal vendetta.
What started as a family bail-out to avert a liquidity crisis following the 2008 global financial crisis had its denouement fourteen years later with the High Court ruling an option to purchase an Auckland industrial property written into a will was enforceable.
On one side stood Gary Young, son of father Wayne’s first marriage; on the other, Andrew and Adrienne Giacon. Adrienne was raised by Wayne after he and her mother married when Adrienne was aged eight.
Back in 2005, the Giacons built a factory on O’Neills Road in the west Auckland suburb Swanson. They leased the premises to their manufacturing company Terazzo & Stoneworks NZ Ltd.
When they came under financial pressure following the global financial crisis, Wayne came to the rescue. He purchased both the Swanson building and the Giacons’ home, releasing cash to pay down bank debt. They paid rent on their home, before later buying it back.
Ownership of the Swanson building was taken in the name of Seaglass Holdings Ltd, then one of Wayne’s companies. Control passed to son Gary on Wayne’s death in 2014.
Nearly ten years on from Gary taking control of Seaglass, differences between the step-siblings came to a head. Seaglass was claiming some $220,000 rent arrears; the Giacons claimed the right to buy the Swanson building from Seaglass.
Terms of the lease between Seaglass and the Giacons had been varied over time. As is common with family dealings, payments due had been varied and at times deferred. Arguments about amounts due were complicated by claims of set-off, with claims of work for or on behalf of Wayne being done in lieu of rent. The Giacons said nothing was due to Seaglass; a clean slate followed their earlier sale of Terazzo.
In the High Court, Justice Gordon ruled any outstanding rent Seaglass claimed could not be recovered. Limitation Act rules meant its claims were statute-barred; out of time.
Seaglass’ legal argument that statute-barred debts had been acknowledged and again now fell due were dismissed. Lawyer’s recent letters had merely acknowledged there was a dispute. They did not admit there was a debt due.
Separately, Justice Gordon ruled the Giacons had an enforceable option to buy the Swanson building from Seaglass.
At the time he bailed out the Giacons in 2009, Wayne added a codicil to his will stating that should Seaglass choose to sell, the Giacons had first option to buy.
As with contracts for sale of land, options to buy land require evidence of a benefit provided to be enforceable; consideration in legal jargon. Giacons said they sold to Seaglass in 2009 at a price below the then market price. And after the contract was agreed, the Giacons agreed to include in the sale at no extra cost an on-site industrial gantry crane. Both amount to consideration supporting an enforceable option to buy, they said.
Terms of the option allow the Giacons to buy at $1.1 million, adjusted by increases in the consumer price index from September 2009. Seaglass paid $1.1 million to buy the Swanson property in 2009.
Seaglass Holdings Ltd v. Giacon – High Court (7.12.23)
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