Cullinane v McGuigan
Cullinane v McGuigan is a cited case in New Zealand regarding the requirement under section 7 of the Contractual Remedies Act 1979 that a breach of contract must be "substantial" for a contract to be cancelled, and that "substantial" was not limited to a comparison of monetary values.
Background
The Cullinanes in 1995 auctioned their unfinished Christchurch house, that due to matrimonial problems, had remained an unfinished shell since 1991.On the day of the auction, McGuigan was the winning bidder at the auction for $370,000.
Later, after the Auction and before settlement McGuigan checked the propertys Council records and found thaat there were several uninspected building features which were of concern including defects in the construction and exterior cladding that needed to be rectified and council approved so he canceled the contract and sought the refund of his $37,000 deposit.
The Cullinanes claimed it was not a substantial breach to justify the cancelling of the sale contract, adding that the argument was immaterial anyway, as they claimed one of the letters by McGuigan's solicitors discussing settlement amounted to affirmation.
In the District Court, it was ruled the solicitors letter amounted to affirmation of the contract. However, on appeal, the High Court ruled that the contents of the letter could have been interpreted in numerous ways, setting aside the affirmation ruling, and instead ruling that the defects involved were substantial in nature, and that McGuigan was entitled to cancel the contract, and was duly awarded a refund of his deposit.
The Cullianes appealed.