The plaintiff moved from the North Island to the bottom of the South Island after he retired. He bought a house in his name and in the names of the two defendants with whom he had stayed when he first arrived in town. The parties were longstanding friends. He paid all the purchase price. The plaintiff’s solicitor had advised the plaintiff not to make a gift to each of the defendants but to lend them the funds needed for each to make a one-third contribution to the purchase price. The plaintiff, however, then signed a document that provided for gifts of the purchase monies in favour of the defendants. The solicitor was not involved in the drafting of that document and saw it only after it had been signed and sent to him. The three parties commenced to live in the house. Within two years their relationship had deteriorated. The plaintiff wished to resile from the document he had signed, and he pleaded undue influence and unconscionability. He relied on his poor health at the time (diabetes, cardiovascular disease, a stroke, and depression).

Decision: Undue influence was not established, but unconscionability was. The gifts should be modified.

Held: (1) The principles of unconscionability were settled for New Zealand in the decisions of the Court of Appeal and the Supreme Court in Gustav & Co Ltd v Macfield Ltd [2007] NZCA 205; [2008] RLR §179 and [2008] NZSC 47; [2008] 2 NZLR 735; [2009] RLR §127, respectively. (2) The plaintiff had established that he was suffering from a “qualifying disability or disadvantage”, resting more on his physical than mental infirmities and his desire to have someone able to care for him. (3) The defendants were sufficiently aware of these infirmities, and a passive taking advantage of them could be enough to establish unconscionability. (4) The relative size of the gifts was a relevant factor, as was the fact that the gifting took place before substantial services or kindnesses had been given to the plaintiff. (5) The legal advice the plaintiff had received was incidental. (6) The remedy should not be rescission of the gifts but modification, so that the defendants could each keep one-sixth of the proceeds of the forthcoming sale of the house.