Foster, Robert John v Archer, Geoffrey Lyndon by his litigation guardian Archer, Pamela Ann

Court:Full Supreme Court
Docket Number:215/2012
Judge:Crawford CJ, Tennent J, Porter J
Judgment Date:20 Nov 2012
Jurisdiction:Tasmania

[2012] TASFC 4

SUPREME COURT OF TASMANIA (FULL COURT)

Crawford CJ, Tennent and Porter JJ

215/2012

Foster, Robert John
and
Archer, Geoffrey Lyndon by his litigation guardian Archer, Pamela Ann

Conveyancing — Options — Notice exercising option — Validity of exercise of option — Means of service of notice — Sufficiency of notice — Interpretation of provisions of agreement granting option to purchase.

Aust Dig Conveyancing [1008]

REASONS FOR JUDGMENT
FULL COURT
Crawford CJ
20 November 2012
1

The action, appeal and cross-appeal concern an agreement for an option for the appellant and Garry Raymond Forward to purchase properties in Elizabeth Street, Hobart from the respondent for $3.3m. The appellant contends that he exercised the option. The respondent contends that the purported exercise of the option was ineffective.

2

The appellant sued for specific performance of the sale contract he claimed had been entered into as a result of his exercise of the option, and he also claimed damages for breach of contract. In the action, it was ordered that the question of whether the appellant validly exercised the option was to be determined before any other issue in the action.

3

Blow J conducted a trial of that issue alone. His Honour determined that the appellant's exercise of the option was not valid.Foster v Archer [2012] TASSC 5. The respondent obtained a judgment dismissing the appellant's action.

4

The appellant appealed to this Court. The respondent cross-appealed against a determination of the learned judge, but not against the outcome of the action. Put simply, the ultimate question for this Court is whether the learned judge was correct in determining that the appellant did not validly exercise the option.

5

The option agreement was made on 14 May 2009. It was entitled ‘Call Option’. In consideration of a payment of $1, the respondent granted an option to the grantees, the appellant and Mr Forward, to purchase the properties in accordance with the option agreement and a sale agreement that was attached to it.

6

By cl 3.1, the grantees had until 5pm on the ‘Call Option Expiry Date’ to exercise the option. Time was declared to be of the essence for the exercise of the option and the option was to lapse if it was not exercised by that time. The learned judge found that time expired at 5pm on 12 August 2009. Neither party challenges that finding. It is the appellant's case that the option was exercised on that day and before 5pm. It is the respondent's case that although the events relied upon by the appellant occurred on that day and before 5pm, they did not amount to a valid exercise of the option.

The appeal
7

The learned judge found that the written notice of exercise of the option relied upon by the appellant was not delivered as required by the agreement and therefore the option was not validly exercised. It was delivered to the office of the respondent's solicitors, Page Seager. His Honour held that cl 4.2(a) of the option agreement required it to be delivered to the respondent's address at 306 Sandy Bay Road, Sandy Bay. That determination is attacked by the appellant.

8

The appellant's notice purporting to exercise the option was in writing. It did not expressly state that it was being exercised on behalf of both the appellant and Mr Forward, and although it was signed by the appellant, it was not signed by Mr Forward. The cross-appeal raises an issue arising out of those aspects and I will deal with it later.

9

On 12 August 2009, the appellant believed that the option agreement would expire if the appropriate notice was not served by 5pm that day; that leaving the notice at 306 Sandy Bay Road in accordance with cl 11.1 was an appropriate method of service; that it had to be accompanied by a bank cheque for the amount of the deposit in accordance with cl 4.2(d); and that the deposit specified in the sale agreement was $30,000. He contacted his bank to arrange for the issue of the required bank cheque, and instructed an employee of his named Sparks to collect the bank cheque and deliver it and the notice to 306 Sandy Bay Road. However, after he put those arrangements in place, someone from the bank telephoned to say that the signatories for bank cheques were absent, and that the bank cheque could not be issued until later in the day. As a result, the appellant told Mr Sparks to deliver the notice to 306 Sandy Bay Road without the bank cheque. Mr Sparks went to that address. The front gates were locked and he could not gain access to the property. He did not make contact with anyone inside. He left the notice in the letter box. That would have been sufficient notice if the bank cheque had been with it, but it was not. Counsel for the appellant conceded to the learned judge that the delivery of the notice to 306 Sandy Bay Road was of no effect for that reason.

10

The appellant obtained the bank cheque once the required signatories became available. He printed and signed another copy of the notice, identical to the one delivered to 306 Sandy Bay Road. He delivered it and the bank cheque to the office of the respondent's solicitors, Page Seager, at about 2.44pm on 12 August 2009.

11

I will quote the material clauses of the option agreement. I will leave in the headings of the clauses for the convenience of readers. However, cl 1.3(a) provided that headings do not affect the interpretation of the option agreement. The material clauses are:

‘1. Definitions and interpretation

1.1 Definitions

In this Agreement, unless the context otherwise requires:

Notice means a notice or other communication for the purposes of this Agreement.

4. Exercise of Call Option

4.1 Procedure

If the Grantee wishes to exercise the Call Option it must give notice (Call Option Exercise Notice) in writing to the Grantor exercising the Call Option and that notice must be given to the Grantor before 5.00 pm on the Call Option Expiry Date.

4.2 Call Option Exercise Notice requirements

A Call Option Exercise Notice:

(a) must be delivered to the Grantor's address for the receiving of Notices;

(b) must state that it is a Call Option Exercise Notice;

(c) must be given on a Business Day during normal business hours;

(d) must be accompanied by a bank cheque for the amount of the Deposit (less any credit for the Call Option Fee); and

(e) subject to this clause 4.2, must otherwise comply with clause 11.

11. Notices

11.1 Place for giving Notice

Subject to clause 11.2, the addresses and facsimile numbers of the parties for the service of any Notice are as set out below or as specified from time to time by the party receiving the Notice to the party giving the Notice.

Grantor: 306 Sandy Bay Road, Sandy Bay in Tasmania

Grantee: 83 Salamanca Place Hobart in Tasmania

11.2 Service of Notices by and on lawyer

The lawyer for a party may give a Notice on behalf of the party for whom the lawyer acts. A Notice that is given to the lawyer for a party is taken to have been given to that party.

11.3 Service of Notices

A Notice may be served by: delivering it by hand to the addressee; leaving it at the addressee's address for service; sending it by facsimile transmission to the addressee's facsimile number; or sending it by prepaid ordinary post to the addressee's address for service.

11.4 Date of receipt of Notices

A Notice is deemed to have been received by the intended addressee:

(a) if hand delivered to the addressee, when delivered to the addressee;

(b) if left at the addressee's address for service, when left;

(c) if sent by facsimile transmission to the addressee's facsimile number (provided that the sending facsimile machine produces a print out of the time, date and uninterrupted transmission record of the sending of the Notice), upon completion of sending;

(d) if sent by post to the addressee's address for service on the fifth Business Day after the day of posting.

11.5 Notice requirements

A Notice must be in legible writing in the English language. The execution of a Notice is effective in the case of any party that is a corporation, if it is signed by a director or secretary of that party. A printed or copied signature is sufficient for the purposes of sending any Notice by facsimile transmission.

11.6 Other modes of service

Nothing in this Agreement prejudices or excludes any other mode or place of service required, permitted or authorised by an applicable law.’

12

The appellant's contention is that the notice and cheque delivered to the respondent's solicitors amounted to effective service by reason of cl 11.2 of the option agreement. The learned judge observed that the second sentence of that clause in isolation might give the impression that notice to the legal firm was sufficient for it provided that ‘A Notice that is given to the lawyer for the party is taken to have been given to that party’. Nevertheless, his Honour found against the appellant for reasons that are attacked by the appeal. The reasons were:

‘[30] But cl 11 is a provision that relates to notices in general, whereas cl 4.2 is a specific provision in relation to a Call Option Exercise Notice.Generalia specialibus non derogant. General things do not derogate from special things. Clause 4.2(a) requires a Call Option Exercise Notice to be “delivered to the Grantor's address for the receiving of Notices”, and that was his home address, as specified in cl 11.1. Clause 4.2 listed four specific requirements relating to a Call Option Exercise Notice, and then went on to provide, in par(e), that such a notice “subject to this clause 4.2, must otherwise comply with clause 11'. Paragraph (e) must have been put there for a purpose. Its purpose must have been to give cl 4.2(a) to (d) precedence over any inconsistent provisions in cl 11. It follows that, although notices in general could be given, for the purposes of the agreement, by giving them to a party's lawyer in accordance with cl 11.2, that requirement was superseded...

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