Auction of a Waikuku Beach property north of Christchurch was thrown into chaos when the winning bid was subsequently found to have come from a bidder being treated for a minor mental health condition who was unable to later pay the $606,000 bid price.
Accepting liability to pay damages for breach of contract, she disputed the amount claimed.
Ordered to pay about $230,000 damages, the High Court dismissed her claim that damages for loss on resale should be reduced because she bid at auction well beyond the then market price.
One valuer assessed the Waikuku property as being worth no more than $430,000 at time of the January 2024 auction. One year later, it was sold to a new buyer for $440,000.
In the High Court, Associate Judge Paulsen ruled breach of contract damages are calculated to compensate the innocent party as if the contract had been performed. The promised contract price is relevant; market value of the land sold is not relevant.
In any event, the fact an underbidder was willing to offer $599,000 prior to her $606,000 closing bid indicates there was market interest close to the final contract price, Judge Paulsen said.
Damages totalling $230,000 included: a $110,400 loss on resale; real estate costs for the resale; and, interest for late payment calculated at the contract rate of sixteen per cent.
The court was told neither the vendors nor their real estate agent was aware of her mental health issues at time of the auction.
Tippen v. Spark – High Court (3.06.25)
25.133