Man Tries to Exit Contract by Claiming He is Mentally Ill

Man Tries to Exit Contract by Claiming He is Mentally Ill

A man (“the purchaser”) bought a property and negotiated a 13-month settlement period. The contract included a clause that said that if a party became mentally ill they could pull out of the contract. The purchaser took possession of the land before settlement, and everything appeared to be going smoothly. The purchaser himself was a savvy investor because he already had 8 properties to his name.

While the purchaser was moving into the new property, a large fight erupted between him and a neighbour. Later the purchaser claimed that he was harassed constantly by the neighbour and on one occasion was told that “we are going to run you off the island or drive you to hang yourself”. Then, the Global Financial Crisis struck, and the purchaser was forced to sell all 8 other properties just to have the funds to complete the purchase of the new property.

The purchaser had kept secret that he suffered from a range of mental illnesses including anxiety, depression, and bi-polar disorder. His lawyer was not aware of this. The stress of fighting with the neighbour and his financial difficulties made his condition far worse. As a result of this the purchaser served a notice on the vendor that he was not going to complete the purchase of the property and demanded the return of the deposit he paid. The vendor sued the purchaser.  

At Court the purchaser argued that he had “become mentally ill” and therefore was entitled to pull out of the contract. The issue for the Court was whether the purchaser had become mentally ill after the exchange of contracts. However, the Court found that the purchaser was in fact able to manage his own affairs despite his mental illness, and that the contract was binding.