C&P Syndicate Pty Ltd v Reddy

Judgment 1These proceedings concern the construction, and operation, of commercial conveyancing documents. 2The pivotal question for determination is whether a land owner (the plaintiff), acting through a solicitor (the second defendant), validly exercised a put option requiring a prospective purchaser (the first defendant) to acquire the land (a property located in New South Wales, near the Queensland border, at Tweed Heads West). 3The land in question (comprising Lot 666 in Deposited Plan 1094312) was at all material times a tenanted commercial property comprising several industrial warehouses and office accommodation. One of the tenants was a company, trading through a trust, associated with the first defendant and her husband. She was, herself, a trustee for another trust associated with her husband and herself. He appears, as often as not, to have been the persona through whom the first defendant, and entities associated with her, acted in dealings with her solicitor and with the plaintiff. 4Between 11-13 May 2011 or thereabouts the plaintiff, through the second defendant, took steps to exercise the option before expiry of the option period on 15 May 2011. After the expiry of that period the first defendant disputed the validity of the purported exercise of option. 5Had the first defendant accepted that the put option had been validly exercised, and complied with the resultant contractual obligation to purchase the property, she would have been required to complete the purchase (at the agreed price of $2,925,000.00) on 15 June 2011. 6As it happened, the plaintiff was left, by the first defendant's refusal to acknowledge that the put option had been validly exercised, to sell the property to another purchaser, at a later date and for a substantially lower contract price. Contracts for that sale were exchanged on 30 October 2012. The sale was completed on 20 December 2012. The sale price was $1,750,000.00. That was $1,175,000.00 less than the price for which the put option provided. 7In these proceedings the plaintiff sues the first defendant for damages for breach of contract and, if necessary, an order for specific performance in aid of that damages claim. In the alternative and upon an assumption that the option was not validly exercised, it sues its solicitor for damages for professional negligence. 8The question whether the option was validly exercised focuses attention on four categories of document. 9First, at the heart of the proceedings are the terms of the put option upon which the plaintiff relies. They are found in clauses 7-11 of an undated deed (entitled "Put and Call Option") between the plaintiff and the first defendant (as the trustee of a family trust), as varied by clause 2 of a "Deed of Variation" (dated 28 April 2011) that attributes a date of 27 October 2010 to the original deed. 10Secondly, there is an email dated 11 May 2011 (sent at or about 6.06pm on that day) addressed by the solicitor for the plaintiff (relevantly, Mark Gardiner, the Executive Director and principal of the second defendant) to the solicitor for the first defendant (relevantly, Brendan James Madigan of Blundell Madigan Lawyers) recording instructions that the put option was to be exercised. 11Thirdly, there is a disputed letter dated 11 May 2011 addressed by the solicitor for the plaintiff to the solicitors for the first defendant purporting to exercise the put option, inter alia, by enclosing a copy of a "Contract of Sale" signed by the plaintiff and a counterpart for execution and return by the first defendant. 12Fourthly, there are the two copies of the "Contract of Sale" referred to in the disputed letter. 13The letter is "disputed", simply, because: (a) the evidence of the solicitor for the plaintiff (Mr Gardiner) is that, on 11 May 2011, he posted the letter and the "Contract of Sale" documents together, in a single envelope, addressed to the first defendant's solicitors; and (b) the evidence of the solicitor for the first defendant (Mr Madigan) and the legal secretary who opened his mail (Ms Tegan Brooke) is to the effect that, when that envelope was received in their office on 13 May 2011, it was found by Ms Brooke to contain only the two "Contract of Sale" documents, without any covering letter. 14There is no dispute that the terms of the disputed letter, if received within the option period with the Contract of Sale documents, were sufficient to exercise the plaintiff's put option. They plainly were. 15Nor is there any dispute that the envelope posted by the plaintiff's solicitor was received by the first defendant's solicitor within the option period. It plainly was. 16The first critical question, a question of fact, is whether the disputed letter was or was not in the envelope received in the office of the solicitor for the first defendant on 13 May 2011. 17If that question is answered in the negative, a consequential question, equally critical, is whether the transmission of the email of 11 May 2011, together with the acknowledged receipt of the two "Contract of Sale" documents on 13 May 2011, is sufficient to constitute a valid exercise of the put option, upon the proper construction of clauses 7-11 of the option deed as varied. 18If that question is answered in the negative, a third critical question is whether (upon an assumption that the envelope received in the office of the first defendant's solicitor on 13 May 2011 did not include the disputed letter) it is open to the Court to find, and the Court should find, that the plaintiff must be taken to have validly exercised the option because the omission of the disputed letter from the envelope was, to the knowledge of the first defendant's solicitor and any objective bystander, an obvious administrative "slip". 19This last question is predicated upon an acceptance that none of the first defendant, her solicitor or his legal secretary can be said to have engaged in wrongful conduct, vis á vis the plaintiff and its solicitor, in not drawing their attention to the "slip" before expiry of the option period on 15 May 2011. 20During the course of the final hearing counsel for the plaintiff and the second defendant respectively both expressly disclaimed any case based upon an allegation that the first defendant is estopped from contending that the option was not validly exercised by, or by reference to, the email dated 11 May 2011 and the acknowledged receipt of the "Contract of Sale" documents on 13 May 2011.

THE TERMS OF THE PRIMARY DOCUMENTS 21Clauses 7-11 of the "Put and Call Option" deed, as varied, are in the following terms: "Put Option 7. In consideration of grant by the Vendor [the plaintiff] to the Purchaser [the first defendant] of the call option [for which clauses 1-6 of the deed provided], the Purchaser grants to the Vendor or his [sic] nominee an option to require the Purchaser to purchase the property and inclusions as described in the contract attached to this Deed at the price and on the terms and conditions therein contained. 8. This option may be exercised by the vendor only after the expiration of the Call Option and prior to 15 May 2011 by notice in writing of the exercise, accompanied by a duly executed contract for sale together with a counterpart thereof. Immediately following exercise of the option the Purchaser shall sign and return the counterpart contract. 9. If the call option or put option is not exercised the option fee [an amount of $150,000.00] is forfeited. 10. On delivery of the notice of exercise of this put option the parties become immediately bound as Vendor and Purchaser under the contract in accordance with the terms and conditions thereof. 11. The notices and contract shall be delivered to the Purchasers Solicitors Blundell Madigan Lawyers PO Box 6299 Tweed Heads South, NSW 2486 to exercise the put option. [Emphasis added]. 22It is common ground between the parties that the Call Option referred to in clause 8 expired without any attempt on the part of the purchaser or a nominee of the purchaser to exercise that option. It is also common ground that the form of contract referred to in clause 7 as being attached to the deed provided for a contract price of $2,925,000.00 and a completion date of 15 June 2011. 23The email of 11 May 2011, marked as having been sent at 6:06pm, by Mr Gardiner to the office of the first defendant's solicitors and addressed to "Brendan" (Mr Madigan) bore a subject heading that referred in abbreviated terms to the plaintiff, the first defendant and "sale" of the property the subject of the put option. Its text was in the following terms: "We refer to previous correspondence in this matter, in particular, the Put and Call Option Deed (as amended). We advise that we presently have instructions that the vendor (the plaintiff) intends to exercise its put option in this matter. In accordance with clause 8 of the put option we will formally provide notice to you by mail tomorrow and forward to you a duly executed contract of sale. Purusnt [sic] to the contract the completion date for the sale is 15 June 2011." 24The file of the first defendant's solicitor contains confirmation that this email came to the attention of Mr Madigan no later than the afternoon of 12 May 2011. That comes in the form of an email addressed to the first defendant and her husband, at his email address, at 3:02pm on 12 May 2011. That email was sent by Mr Madigan's conveyancing clerk (Ms Sue Elliott) in his name. Its text was in the following terms: "Further to my email of 2 May, 2011, I note I have not received confirmation that you have obtained your finance, nor in the event that you have not, that you intended to make further attempts to re-negotiate the terms of the deal with the vendor (the plaintiff). I am attaching a copy of an email received last night from the vendor's lawyers which is self explanatory. As you can see, as the vendor has not heard anything from you, it proposes to exercise the Put Option. I will let you know if the Option is exercised." 25A tax invoice prepared by the first defendant's solicitors and dated 18 May 2011 records three separate items of work done for their client on 12 May 2011: "(1) "Perusing email from vendor's lawyers advising vendor intends to exercise put option, email to client reporting"; (2) "Settling email"; and (3) "Perusing email from client advising progress with finance application". 26It is not difficult to imagine, from this, that the first defendant and her solicitor must have been keenly aware that it was in the interests of the first defendant to monitor, carefully, all mail deliveries to the office of the solicitor on 12 May 2011 (a Thursday) and 13 May 2011 (a Friday). There is no suggestion in the evidence that mail deliveries were made, or expected, on Saturday 14 May 2011 or Sunday 15 May 2011, the last day of the option period. Common experience in Australia in 2011, of which the Court can take judicial notice, is that we no longer have the weekend mail deliveries that were once (on Saturdays) commonplace. At all events, the rapid approach of the end of the option period focussed attention on mail deliveries. 27The email of the first defendant's solicitor dated 2 May 2011, referred to in his email of 12 May 2011, specifically reminded the first defendant and her husband that the plaintiff had until 15 May 2011 to exercise the put option. 28The text of the disputed letter dated 11 May 2011, which the first defendant and her solicitors deny having received before 15 May 2011, was in the following terms: "Pursuant to clause 8 of the Put and Call Option Agreement (the Agreement) executed in late October 2010, amended by the Deed of Variation dated 28 April, 2011. [sic] We formally give notice of the exercise of the Put Option by our client [the plaintiff]. We enclose a duly executed Contract of Sale and a counterpart thereof. We look forward to receipt of the signed counterpart contract. In accordance with clause 10 of the Agreement the parties become immediately bound as Vendor and Purchaser under the Contract of Sale upon delivery of this notice. The Completion Date is 15 June 2011." 29There is no dispute between the parties that Mr Gardiner personally prepared and signed the original of that letter on 11 May 2011. He was not cross examined to the effect that the letter was an ex poste facto fabrication. The object of cross examination of him was to suggest that, through inadvertence, the original of the letter was not placed in the envelope which he, personally, prepared and, personally, posted to the office of the first defendant's solicitors on the evening of 11 May 2011. 30In the course of his cross examination, Mr Gardiner exhibited some hesitancy about the relative timing of his posting of the envelope on the evening of 11 May 2011 and his despatch of the email to the first defendant's solicitor timed at 6:06pm on that date. I draw no adverse inference against him by reason of that. I accept, as his affidavit records, that he sent the email first and, having done so, personally attended a "yellow express post box" located near his office and there placed the envelope in the post box. 31This timing is consistent with evidence that, in the ordinary course, Australia Post's express post postings were generally collected from individual post boxes at 6.00pm for delivery the next day. 32The fact that the envelope was not received by the first defendant's solicitors until 13 May 2011 suggests that Mr Gardiner missed the post on 11 May 2011 and that the envelope was collected by Australia Post from the post box on 12 May 2011 for delivery the next day. 33As part of the process of preparing the envelope for despatch on the afternoon of 11 May 2011, Mr Gardiner photocopied the original of the disputed letter, appended to the photocopy a sticker bearing the Australia Post reference number matching the express post envelope in which the letter (he says) had been placed, and placed the photocopy letter on his file. 34There is no need, upon a consideration whether the put option was exercised, to notice in detail the two "Contract of Sale" documents which, undoubtedly, were enclosed in the envelope. It is sufficient to notice that, jointly and severally, they were substantial, bulky documents.

Was the disputed letter enclosed in the envelope received by the first defendant's solicitor? 35A determination of the question whether the disputed letter was, or was not, in the envelope received at the office of the first defendant's solicitor on 13 May 2011 requires an evaluation of the evidence of each of the sender (Mr Gardiner), the "first receiver" (Ms Brooke) and the ultimate "receiver" (Mr Madigan). 36Mr Madigan's conveyancing clerk (Ms Elliott) was not called to give evidence on behalf of the first defendant, although the evidence of Mr Madigan and Ms Brooke was premised upon her presence in their office on 13 May 2011. I infer that her evidence would not have assisted the first defendant: Jones v Dunkel (1959) 101 CLR 298 at 321-322. 37In my estimation, each of Mr Gardiner, Ms Brooke and Mr Madigan was an honest witness, intent upon giving evidence to the best of his or her ability. 38An evaluation of their evidence focuses, primarily, on the evidence of Mr Gardiner and Ms Brooke because, having removed the "Contract of Sale" documents from the contentious envelope on 13 May 2011, Ms Brooke threw the envelope in the bin without showing it to Mr Madigan and, when shown the two "Contract of Sale" documents, he made no personal inquiries about, or search for, the whereabouts of the envelope. 39He accepted, without any independent critical inquiry of his own, Ms Brooke's bona fide report that the "Contract of Sale" documents had been received without a covering letter. 40Accordingly, Ms Brooke's evidence that the disputed letter was not in the envelope has no independent corroboration. 41The significance of this is that Ms Brooke's evidence is, at core, to the effect that, although she examined the inside of the envelope visually, she cannot recall putting her hand in it to confirm that a covering letter was not adhering to one of the sides of the envelope; and there is no suggestion that she tore the envelope apart for a physical examination designed to eliminate the possibility of a covering letter having become stuck to one of the sides of the envelope. After she opened the envelope, and checked it visually, more than once, for a covering letter, she simply "put it in the bin with all the other mail that I opened that day". 42Although she regarded the absence of a covering letter as sufficiently unusual to fix her receipt of the envelope in her memory, she did not regard it as unusual enough to bring to Mr Madigan's immediate attention. That is not, in itself, remarkable. She was a legal secretary, not a conveyancing clerk. Her duties within Mr Madigan's office were of a more general character. The evidence does not suggest that, on 13 May 2011, she appreciated the legal significance of the absence of a covering letter. 43On 13 May 2011 Mr Madigan, however, did consciously turn his mind to the significance of the apparent non-receipt of a covering letter with the two "Contract of Sale" documents received that day. He regarded it as "fortuitous" because it provided the first defendant with an opportunity to dispute any claim by the plaintiff of an exercise of the put option. 44His evidence is that, having formed such an opinion, he did nothing about this conveyancing transaction until a few days after 15 May 2011. This too may have been "fortuitous". 45In any event, there is no evidence from which a finding can be made that he did more, on 13 May 2011, than give passing attention to the apparent non-receipt of a covering letter in the controversial envelope. There is no evidence to suggest that he discussed the developments of the day with the first defendant or her husband, a person from whom he generally obtained instructions on behalf of the first defendant. There is no evidence that he charged the first defendant for any work done on that date. And, plainly, he had no communication with the plaintiff or the plaintiff's solicitor. 46It was not until an exchange of emails on 18-19 May 2011 that, the evidence suggests, Mr Madigan turned his attention to establishing, vis á vis Mr Gardiner, an evidentiary foundation for a forensic assertion of non-receipt of any covering letter. 47Through the agency of Ms Brooke, Mr Madigan sent an email to Mr Gardiner, at noon on 18 May 2011, to the following effect: "Further to your email of 11 May, I received from you the Contract signed by your client [the plaintiff] together with the counterpart to be executed by mine [the first defendant] by themselves, without any covering letter or Notice of Exercise of Option and was just wondering what had happened to the Notice?" 48Mr Gardiner responded to Ms Brooke, by an email sent six minutes later, to the following effect: "I do apologise if a cover letter was not included. Please see attached. [I] understand that our respective clients are having discussions with respect to this matter which may require that the contract be amended. Once I have clear instructions I will advise." 49The attachment with that email was an unsigned copy of the disputed letter dated 11 May 2011, not the photocopy of the signed letter bearing the express post sticker. 50Only on 19 May 2011, by an email sent via Ms Brooke at 11:01am, did Mr Madigan explicitly place in issue the validity of the plaintiff's purported exercise of the put option. The text of that email was in the following terms: "Thank you for your email yesterday. In order to properly exercise the Put Option, clause 8 of the Put and Call Option Deed between our respective clients required your client [the plaintiff] to serve a Notice of Exercise of Put Option upon my client [the first defendant] in the manner set out in the Deed, together with an executed Contract of Sale and Counterpart. These pre-conditions were required for your client to lawfully and validly exercise the Put Option. As advised in my email to you yesterday, no Notice of Exercise of the Put Option was received with the duly executed Contract of Sale and Counterpart and, accordingly, I have had to advise my client that the Put Option was not lawfully and validly exercised by your client and, accordingly, there is no Contract for sale and purchase of the Property in existence between them. Fortunately, however, for your client, it is my understanding that my client does want to purchase the Property from your client, however, as I follow my instructions, not on the terms of the form of Contract attached to the Put and Call Option Deed. My client will be contacting your client shortly to try and negotiate the terms of a new Contract. If our respective clients can reach agreement on those terms, we can use the form of Contract attached to the Put and Call Option Deed as a precedent and adapt it accordingly. In accordance with Clause 16 of the Put and Call Option Deed, all of our respective clients obligations under the Deed are at an end. As soon as I receive my client's instructions about the outcome of its negotiations with your client for a new Contract to purchase the Property, I will relay its instructions to you." 51Mr Gardiner responded to this email, by a return email sent at 11:23am the same day, in the following terms: "I prepared the notice of exercise of option myself and personally put it in the envelope along with the contracts of sale. What happened to that notice at your office is a matter for you. I sent a copy of my letter yesterday as a courtesy only. If our clients cannot agree new contract terms, we will be relying on the exercise of the option to require completion of this matter in accordance with the terms of the contract of sale. Subject to receipt of instructions to the contrary, we look forward to this matter completing on 15 June 2011." 52Mr Madigan, in turn, responded by another email sent to Mr Gardiner (via Ms Brooke) at 4:55pm the same day. Its text was in the following terms: "Thank you for your email earlier today. With the greatest of respect to you, I can not accept the assertions contained in the first and second paragraphs of that email because: (a) In your email to me yesterday you apologised if your cover letter was not included and attached a copy. That statement entirely contradicts the statement you have made in the first paragraph of your email to me today; and (b) The fact of the matter is, your Notice of Exercise of Option was not included in the Contract. My assistant opened your express post envelope and thought it so unusual that you would be sending a counterpart Contract with no covering letter that she double checked the envelope. No covering letter was included. My client's position as articulated in my email to you earlier today will remain unchanged. It is, of course, entirely a matter for your client [the plaintiff] whether it wants to negotiate a new Contract with my client [the first defendant] however, there is clear evidence that the Put Option has not been exercised. I do not believe this [it] will be helpful for you and I to enter into any further unproductive debate about whether your client has exercised the Put Option or not. My client's position as articulated in my email to you today will not change. My client is not going to butt heads with your client and argue the toss. It will use its best endeavours to negotiate a new Contract with your client on terms satisfactory to it, in a courteous and professional manner. If that cannot be achieved my client is entirely content with its position." 53Thus, battle lines were drawn. 54In the course of cross examination of Mr Gardiner, counsel for the first defendant urged upon him that the apology expressed in his email of 18 May 2011 was, in substance, either an admission that no covering letter had been enclosed in the contentious envelope or, at least, an acknowledgement of a consciousness of a very real possibility that no covering letter had been enclosed. 55For his part, Mr Gardiner stood his ground. He maintained that he had never wavered in his personal belief that he had placed the original of the disputed letter in the contentious envelope. He denied that he had ever made any admission to the contrary. He explained his use of the word "apologise" as nothing more than an expression of politeness, a characterisation which I accept in light of the importance attached by Mr Gardiner to the maintenance of cordial relationships between the respective solicitors and their clients during ongoing negotiations between the parties for sale of the subject property. 56For my part, I accept as more probable than not that Mr Gardiner did in fact enclose a copy of the disputed letter in the contentious envelope, and that it was received at the office of the first defendant's solicitors on 13 May 2011, but not noticed by Ms Brooke. 57Her evidence does not exclude the possibility that the disputed letter adhered to one of the sides of the envelope, unnoticed by a critical examination limited to visual means unaccompanied by tactile corroboration. Mr Gardiner's evidence included a confident assertion of despatch of the disputed letter, reinforced by evidence of usual practice tending to suggest that he had despatched the letter, coupled with evidence probative of the fact that, had the letter not been despatched, he would have noticed it remaining unsent in his office. 58For these reasons, I prefer the evidence of Mr Gardiner over that of Ms Brooke and Mr Madigan on the critical issue whether the disputed letter was delivered to the latters' office. 59I proceed upon the basis that, as between the plaintiff and the first defendant, the plaintiff bears the onus of proving that the letter was duly delivered on 13 May 2011. In my judgement, that onus has been discharged. I find, as a fact, that the disputed letter and the "Contract of Sale" documents were, together in the one envelope, delivered to the office of the solicitor for the first defendant on 13 May 2011, within the option period. 60It follows from this finding that I also find that the plaintiff did duly exercise the put option and that, consequentially, the first defendant was bound to purchase the subject property on the agreed terms.

Alternative bases proferred for decision 61This finding is sufficient to mandate that the plaintiff's claim against the second defendant be dismissed, and that attention be turned to the question of the relief to which the plaintiff may be entitled against the first defendant. 62However, against the possibility of an appeal against my principal determination that the option was exercised, I turn my attention, first, to the alternative bases upon which the second defendant contends that the option was duly exercised. 63For its part, having sued two defendants on alternative bases, the plaintiff was content to leave much of the debate on this aspect of the proceedings to the defendants, each in competition with the other to avoid liability to the plaintiff. 64The Law relating to options. An option, such as the put option under examination in these proceedings, may be viewed, conceptually, as an irrevocable offer, made by the grantor of an option entitlement (the first defendant) to a grantee (the plaintiff), to do a particular thing if, within a nominated time, the grantee communicates its acceptance of the offer to the grantor in a stipulated manner. 65The expressions "call option" and "put option" have a common characteristic in that they relate to the disposition of property. In this case, the property the subject of both a put and call option is land. The difference between them is, essentially, that, by a "put option", a property owner can compel a prospective purchaser to buy the subject property; the prospective purchaser agrees with the property owner to purchase the property if, within a nominated time, the property owner communicates an intention to require a purchase to be effected. By a "call option" a prospective purchaser can compel a property owner to sell the subject property; the property owner agrees to sell if, within a nominated time, the prospective purchaser communicates an intention to require a sale. Conceptually, both forms of option are similar. 66The expressions "grant", "grantor" and "grantee" are the language of property law. A property owner (the grantor) "grants" to another (the grantee) a right cognisable as "property". Depending on its terms, an entitlement to exercise an option may be classified as "property". 67In the context of an option such as that presently under examination, the "irrevocable" character of an option stems from its embodiment in a contract: Goldsbrough Mort & Co Limited v Quinn (1910) 10 CLR 674 at 678 and 691; Carter v Hyde (1923) 33 CLR 115 at 122-125; Ballas v Theophilos [No 2] (1957) 98 CLR 193 at 207-209. A mere offer, made without consideration, can be withdrawn by the offeror at any time before acceptance, without notice, without giving rise to any cause of action in the offeree: The Farmers' Mercantile Union and Chaff Mills Limited v Coade (1921) 30 CLR 113 at 123. An option is, generally, contained in an agreement made between an offeror (grantor) and an offeree (grantee) in which the offeror promises, for consideration, to keep the offer open for acceptance for an agreed time. 68In contract law, it generally lies within the province of an offeror to stipulate the manner in which an offer is open for acceptance: Howard Smith & Co Limited v Varawa (1907) 5 CLR 68 at 79. If an offeree wants to accept the offer it must do so in that manner or at least (if the terms of the offer are sufficiently permissive to allow it) in a manner no less efficacious in communicating acceptance: Spectra Pty Limited v Pindari Pty Limited [1974] 2 NSWLR 617 at 622-624. Otherwise, a purported acceptance may rise no higher than a counter offer (Mooney v Williams (1906) 3 CLR 1 at 7) and, at all events, it will fall short of the formation of an agreement (a meeting of minds) enforceable as a contract. 69Whether analysed in terms of "property law" or the "law of contract", an option such as that under examination in these proceedings bears all the hallmarks of a commercial transaction. The put option on which the plaintiff relies was granted by the first defendant, for consideration. In granting the option, the first defendant bound herself by contract to keep the "offer" open for acceptance within a limited time frame (which expired on 15 May 2011) and, upon acceptance (exercise of the option), to enter into a contract to purchase the subject property via an "exchange of contracts". 70Whether the exercise of such an option, giving rise to an exchange of contracts, involves more than a single contract can assume importance in some cases. A contractual relationship may evolve from one thing to another, providing scope for debate about the character of the relationship on either side of an evolutionary step. Not uncommonly, for example, an option is open to characterisation as either an offer to make a contract or as a conditional contract: eg, Carter v Hyde (1923) 33 CLR 115 at 122-123. 71In a case such as the present, the grant of an option, rendered irrevocable by the presence of consideration, is one contract. An exercise of the option might be regarded as no more than a step along the way in performance of that contract. Alternatively, it might be regarded as bringing a new contract into existence. Which it is depends upon the intention of the parties. 72Upon an objective assessment of that intention in this case, allowance should be made for the fact, widely known and susceptible of judicial notice, that the usual method of buying and selling real estate in New South Wales is by means of the signing and exchange of contracts adapting a standard form approved by the Law Society of New South Wales and the Real Estate Institute of New South Wales: Allen v Carbone (1975) 132 CLR 528 at 532-533. On one view, that is evidently what the plaintiff and the first defendant contemplated in this case. The form of "Contract for Sale" contemplated by their deed was an adaptation of the customary standard form. 73Clause 8 of the Deed, read alone, suggests by its adoption of a procedure for the exchange of contracts, that, upon an exercise of the put option by the plaintiff, the first defendant came under a primary obligation to enter a new contract by an exchange of contracts. 74Against that, clause 10 of the Deed suggests that the exchange of contracts contemplated by clause 8 is a mere formality because, upon an exercise of the put option, the parties were to "become immediately bound as Vendor and Purchaser under the contract" to be exchanged. 75Minds might reasonably differ about the characterisation of the contractual relationship before and after an exercise of the put option. 76Such a difference is probably of little practical importance in these proceedings. It is common ground that, if the plaintiff validly exercised the put option, the defendant, by her refusal to recognise that fact, repudiated her contractual obligations to the plaintiff, and those obligations included an obligation to purchase the subject property on the terms set out in the draft Contract attached to the Deed. 77The terms upon which an option is granted, vis á vis exercise of the option, are of critical significance in each case. 78Contractual terms, including those of an option, are to be construed by reference to what a reasonable person would have understood them to mean rather than the subjective intentions of the parties. That ordinarily requires consideration not only of the text, but also the surrounding circumstances known to the parties, and the purpose and object of the transaction: Pacific Carriers Limited v BNP Paribas (2004) 218 CLR 451 at 461-462 [22]; Equuscorp Pty Limited v HGT Investments Pty Limited (2005) 218 CLR 471 at 483-484 [33]-[36]; Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165 at 177-183 [35]-[48]. 79The need to have regard to the purpose and object of a transaction effected by an option contract requires, at least, passing reference to both the general nature of such a contract and the particular form of option for which a particular contract provides. Care needs to be taken, for example, to be alive to the possibility that an option for renewal of a lease may involve considerations different from those relating to an option for the sale or purchase of property. In the former case the grantor and grantee of an option have a pre-existing contractual relationship and possibly, depending on whether or not there are holding over provisions in the lease, an ongoing relationship independent of the option. In the case of an option for sale or purchase of property there may be no pre-existing contractual relationship and none, other than the sale or purchase, in prospect. 80Where a claim to have exercised an option is contested, debate not uncommonly focuses on whether the terms upon which the option could be exercised should be construed "strictly" or "liberally". 81This debate can be a misleading diversion from the duty of the Court to construe, and give effect, to the intention of the contracting parties. It is also a debate which may reflect the dual character of an option as "property" and "a contract". 82To the extent that an option is viewed as a property right one may encounter a tendency of mind that favours an idea that a failure to effect a due exercise of the option should be treated as if within equity's general jurisdiction to grant relief against forfeiture. This predisposition might hark back to the jurisprudential origins of equitable jurisdiction which (as explained in Story's Commentaries on Equity Jurisprudence (1st English ed, London, 1884), chapter 3, by reference to the Fourth Part of Sir Edward Coke's Institutes of the Laws of England, page 84, and Blackstone's Commentaries on the Laws of England, Volume 3, page 431) focussed on a grant of relief in matters of fraud, accident or breach of confidence. The fallacy in this approach is that the existence or otherwise of a property right referable to exercise of an option depends upon the terms of the option, and those terms must be construed in their contractual context. 83The same tendency of mind can find expression, when an option is viewed as a contract, by an attribution to the contracting parties of an intention that a stipulated mode of exercise of option be treated as inessential rather than essential, permissive or facultative rather than mandatory: Spectra Pty Limited v Pindari Pty Limited [1974] 2 NSWLR 617 at 622-624. Nevertheless, it is, perhaps, more difficult to embrace such a perspective when the focus for attention is a contractual bargain, rather than an overlaid notion of a property right liable to be lost by an administrative slip or other such mistake. 84The task of construing an option contract to ascertain what is necessary for an effective exercise of the option is conceptually distinct from the task of applying the terms of the option, properly construed, to the facts attending an alleged exercise of the option. 85Nevertheless, similar considerations may arise because the terms of an option generally provide for communication, via "notice in writing", of an intention to exercise the option. The ubiquity of such provisions may owe much to the Statute of Frauds 1677 (UK) and its derivatives, including ss 23C and 54A of the Conveyancing Act 1919 NSW. It may owe not a little, too, to perceptions of the comparative efficiency of communications in writing and the evidentiary utility of writing. But for factors such as these, conceptually, an option and its exercise could as well be oral as written. 86The following passage from the judgment of Kirby P in Prudential Assurance Co Limited v Health Minders Pty Limited (1987) 9 NSWLR 673 at 677B-678A may be taken as a convenient summary of the principles to be applied when considering whether an option, properly construed, has been duly exercised: "1. The primary rule is that the purported exercise of the option must express clearly and unequivocally the fact that this is what is intended: see Dixon CJ in Ballas v Theophilos (No 2) ((1957) 98 CLR 193 at 196); see also R Fox, "Options" (1950) 24 ALJ 7 at 11. However because clarity and lack of equivocation are matters of opinion and impression, because inflexible insistence on form could lead to plain injustice and because fact situations vary almost infinitely a number of elaborations of this primary rule have been developed by the courts. 2. It is not necessary, for example, for the effective exercise of an option, that terminology conforming precisely to the terms of the option should be used: see Williams J in Ballas v Theophilos (No 2) (ibid at 205); cf Bower-Chapman v Morris [1987] NSW Conv R No 55-341. 3. The appropriate question to be asked is what anybody who received the letter, subsequently said to amount to the exercise of the option, would fairly have understood to be the meaning of it, in all the circumstances of its receipt: cf Carter v Hyde (1923) 33 CLR 115 at 126; adapting Romer J in Jones v Daniel [1894] 2 Ch 332 at 335. The addition by Isaacs J of the phrase "in the circumstances of its receipt", adds instruction that the consideration which will govern the meaning to be ascribed to the letter is not to be judged in isolation, weighing only the words used. It is to be judged against the background of the dealings between the parties: cf Braham v Walker (1961) 104 CLR 366 at 376 and Lamont v Heron (1970) 126 CLR 239. The parties did not dispute that this Court could look to those dealings, at least up to the time for the exercise of the option had expired. 4. Although a notice may mis-state the terms of the option which it purports to exercise, it may nevertheless amount, depending on the circumstances, to an unqualified and unconditional exercise of the option: Quadling v Robinson (1976) 137 CLR 192 at 201. On the other hand, if the grantee of t he option sets out an erroneous understanding of it and then purports to exercise the option as so understood, the exercise will, generally speaking, be ineffective (ibid at 201): see also Oliver v Oliver (1958) 99 CLR 20. 5. Nonetheless, every case depends ultimately upon its own facts and the proper construction of the document which is in dispute. Accordingly care must be observed in laying down general rules suggested to be of inflexible operation: see Gibbs J in Quadling v Robinson (ibid at 201) and cf Hope J in Johnson v Bones ([1970] 1 NSWR 28 at 37). The foregoing guiding principles are more readily stated than applied in a way that produces but one answer. They contain within their words the necessities of evaluation and impression which typically make the conclusion reached in such cases argumentative." 87Kirby P's observations were endorsed by the Court of Appeal in Young v Lamb [2001] NSWCA 225; 10 BPR [97867] at [21]-[26]. 88The third of Kirby P's paragraphs contains an elaboration of the objective test stated by Isaacs J in Carter v Hyde (1923) 33 CLR 115 at 126: What would anybody when he received a letter (purporting to exercise an option) fairly understand to be the meaning of it, in the circumstances of its receipt? The expression "in the circumstances of its receipt" is to be judged against the background of the dealings between the parties, at least up to the time for the exercise of the option had expired. 89This elaboration of Isaac J's observation could be important in this case because the disputed email of 11 May 2011 directed the first defendant's attention to a further communication via the post which, in the ordinary course of business, arrived before expiry of the option period. 90The email and the "Contract for Sale" documents have an interconnectedness that is both temporal and spatial. The first defendant's solicitor received the documents two days after the email of the plaintiff's solicitor foreshadowed their arrival. Both forms of communication were received by the first defendant's solicitor in his office, the site for their receipt contemplated by the put option. 91However, if this interconnection is to support a finding that the related, but separate communications constituted an exercise of the put option, it is necessary for the email to be construed as "an exercise de praesenti of the option" rather than "an expression of an intention de futuro", to pick up the language of Dixon CJ in Ballas v Theophilos [No 2] (1957) 98 CLR 193 at 196-197. The email is susceptible of either construction. 92In any event, an application of the principles here set out requires, in the current proceedings, consideration of the question whether what the plaintiff's solicitor did on 11 May 2011 (by sending an email and posting an envelope) and thereby caused to be done on 13 May 2011 (namely, delivery of the envelope as foreshadowed by the email) answers the description of what was required, by the put option, to be done if the option were to be duly exercised. 93Construction of the put option. The put option on which the plaintiff relies is part of a larger arrangement in the subject Deed, not all the terms of which have been, or need to be, set out. 94Clauses 1-6 of the Deed provide (under the heading "Call Option") for the grant by the plaintiff to the first defendant of a call option over the subject property. The grant is contained in clause 1. The consideration expressed for that grant, in clause 1, is the payment of an option fee of $150,000. As demonstrated by the opening words of clause 7, the first defendant's grant of the put option was also part of the consideration provided by her for the plaintiff's grant of the call option. 95The manner for exercise of the call option, prescribed by clause 2, mirrors that for which clause 8 provides in relation to the put option, subject to a qualification. Clauses 10 and 11, relating to the put option, have their equivalents in clauses 4 and 5, relating to the call option. 96The call option provisions differ from those relating to the put option because clause 2 expressly provides for the call option to be exercised by a nominee of the first defendant and that provision needs to be read with clause 17. 97The Deed of Variation made no amendment to either clause 2 or clause 17. 98Those clauses are in the following terms: "2. This [call] option may be exercised at any time before 1 April 2011 by notice in writing of the exercise accompanied by a duly executed Contract for Sale in the form attached to this Deed together with a counterpart thereof. If a nominee exercises the option [as clause 1 allowed] then a notice of nomination signed by [the first defendant] must accompany the contract. Immediately following exercise of the option [the plaintiff] shall sign and return the counterpart contract. ... 17. Nomination. 17.1 Prior to or contemporaneously with, exercise of the Call option [the first defendant] may give a Nomination Notice to the plaintiff' nominating a third party as purchaser of the Property. 17.2 Upon receipt of the Nomination Notice [the plaintiff] must sell the Property to that nominee in accordance with [the] terms of this Deed and the Contract as if a reference to [the first defendant] were a reference to the nominee. 17.3 Where [the first defendant] nominates a nominee it is deemed by virtue of this clause to: (a) Guarantee to [the plaintiff] the nominee's performance of the nominee's obligations under this Deed and the Contract; and (b) Indemnify [the plaintiff] against any loss or damage (of any nature) that is incurred by it as a result of a breach of this Deed or the Contract by the nominee." 99Two points arise for consideration upon a contrast of these provisions with clause 8 of the Deed, relating to the put option. In my estimation, one of them may be significant, the other not. 100The point worthy of notice but not, in my estimation, significant is the contrast between use of the expression "accompany" in clauses 2 and 8 on the one hand, and, on the other hand, use of the expression "Prior to or contemporaneously with" in clause 17.1. The latter does not, ultimately, throw any light on the former because the concept of contemporaneity in clause 17.1 is tied to "exercise of the Call option" and that expression implicitly embraces the concept of accompaniment found in clause 2. It offers no clear guidance to the meaning of the word "accompanied" found in the first sentences of clauses 2 and 8 respectively. 101Of greater significance, in my estimation, is that the first sentence of each of clause 2 and clause 8 refers to conduct involving "notice in writing of the exercise" of an option, without capitalisation of the first letter of the word "notice". That provides a contrast with the expression "a notice of nomination" found in the second sentence of clause 2 (without any capitalisation referable to the word "notice"), which picks up a similar expression ("Nomination Notice", with capitalised first letters), deployed with the indefinite article in clause 17.1 and the definite article in clause 17.2. 102That difference in language may suggest that clauses 2 and 17 contemplate that "a notice of nomination" (a "Nomination Notice"), which, by virtue of clause 2, must be signed by the first defendant, was required to take the form of a particular document having force as such a document. By contrast, the expression "by notice in writing of the exercise" may be thought to focus attention, not so much on the form of the "writing", but on the fact of "notice" - forewarning - of the delivery of the formal "Contract for Sale" documents. Against that, however, clause 4 (in relation to the call option) and clause 10 (in relation to the put option) both speak of a time defined by reference to "delivery of the notice of exercise" of option. 103Clause 11 (in relation to the put option), and its call option counterpart in clause 5, both use the following expression: "The notices [sic] and contract [sic] shall be delivered to [the other side's solicitors] to exercise the ... option." That usage might suggest that each option could be exercised by "delivery" of the "notices" and "contract" within the option period even if not "delivered" at one and the same time. 104Ultimately, however, a reader is driven back to the word "accompanied" in clause 8 (and in clause 2) read as a whole, in the context of the Deed as a whole. 105Every effort to parse the language of these provisions can be countered by an alternative construction, suggesting that, ultimately, their construction is a matter of impression, informed by the purpose of the prescription of a manner for exercise of the options. 106In my opinion, the word "accompanied", in context, does not necessarily mandate that the "notice in writing" referred to in the first sentence of clause 8 be provided "contemporaneously", or physically, with the "Contract of Sale" documentation referred to in the clause. Some disconnection, in time or space or both, could still, in my opinion, serve the underlying commercial purpose of clause 8. That purpose was to provide for, and require, a communication by the plaintiff to the first defendant of the plaintiff's intention to require the first defendant to purchase the subject property. 107Whether a disconnection between delivery of "the notice in writing" and delivery of the "Contract for Sale" documentation is too great to engage the expression "accompanied by" is a question of fact and degree that might depend upon the terms of the "notice in writing" in the particular case. 108This approach is similar to the approach adopted by the Court of Appeal in Tonitto v Bassal (1992) 28 NSWLR 564 at 574G-575F in respect of an option provision (recorded at 566F) not dissimilar to the provisions of clause 8 of the subject Deed. In that case, at 575C, Sheller JA (with whom Handley JA and Hope AJA agreed) wrote the following: "Reading the option as a whole I have no doubt that the act of exercising the option required, as part of that act, the delivery of the written notice of exercise, the bank cheque and the signed contract for sale [required, by the option clause, to be delivered to the grantors of the option]. All three may not need to be delivered at precisely the same point of time provided all three are delivered, in all the circumstances, with each delivery being part of the act of exercise of the option. ...". 109On the facts of that case, the Court held that the particular option had not been duly exercised. Delivery of a document for another purpose in another year could not be treated as the same event of delivery as the subsequent event alleged to have consummated the exercise of option. The facts of that case were very much different from the facts of this. 110Was the option exercised by the email and the separate postal delivery of the "Contract of Sale" documents (without the disputed letter)? The first defendant accepts that, subject to construction of its terms, the email sent by the solicitor for the plaintiff to the solicitor for the first defendant on the evening of 11 May 2011 was capable of answering the description of notice "in writing" within the meaning of clause 8 of the subject Deed. The fact that it was an electronic communication (addressed to the email address of the first defendant's solicitors) rather than a paper document physically delivered to the solicitors' office, or the post office box identified in clause 11 of the Deed, is not suggested to be a forensic hurdle over which the plaintiff, or the second defendant, must jump. 111This approach is consistent with the policy objectives of the Electronic Transactions Act 2000 NSW, s 8, as well as modern business practice and the routine course of communications between the respective solicitors for the plaintiff and the first defendant. 112In Kavia Holdings Pty Ltd v Suntrack Holdings Pty Ltd [2011] NSWSC 716 at [33] Pembroke J accepted that a requirement that notice be given "in writing" could be satisfied by a communication via email. 113The subject Deed did not contain a provision which, in terms, authorised giving of notice via email. However, the draft "Contract for Sale" document referred to in both the call option and the put option had two provisions bearing upon this mode of communication on the facts of the case. 114Clause 20.6 of the standard, printed terms of that document provided that "[a] document under or relating to this contract is ... served ..." in a variety of ways, including: (a) by service on the solicitor for the party to be served; and (b) if it, or a copy of it, came into the possession of the person to be served. 115Special condition 11 (entitled "Execution by facsimile and pdf") was in the following terms: "The parties may enter into this Contract by executing a facsimile or emailed pdf copy. Upon receipt by the Vendor [the plaintiff] of a facsimile or pdf copy of the copy so executed by the Purchaser [the first defendant] the Vendor may enter into this Contract by executing such facsimile copy and communicating such execution to the Purchaser (or the Purchaser's solicitor) by facsimile. This Contract shall thereupon be binding on the parties and in full force and effect. The parties shall within 7 days thereafter co-operate to see that an original Contract in duplicate is executed, and one original distributed to the Vendor and the other to the Purchaser. A failure to execute and distribute the original shall not annul this Contract." 116Neither the Deed nor the draft Contract identified an email address for the parties or their respective solicitors. However, clause 8 of the Deed, read in the context of Special Condition 11 of the draft Contract, must be taken as evidencing the contemplation of the parties that exercise of the put option could be effected via email, as could the giving of "notice in writing" within the meaning of clause 8 of the Deed. 117The option provisions (clauses 2 and 8) of the Deed do not sit entirely comfortably with special condition 11 but, in light of the contractual documentation as a whole, the first defendant's concession that "notice in writing" within the meaning of clause 8 could be given via email is a concession properly made. 118In any event, each of the email and the "Contract of Sale" documents was actually received by the first defendant's solicitor before expiry of the option period and could, by reference to clause 20.6 of the Contract document, be taken to have been served in the manner contemplated by the contracting parties. 119The email must be construed as a whole and in all the circumstances of its receipt. 120One of those circumstances was that it was sent (to paraphrase Hodgson JA in Young v Lamb [2001] NSWCA 225; 10 BPR [97867] at [64]) "a matter of days before expiry of the time for exercise of the option", and that fact might be regarded as confirmation that "it disclosed an intention to exercise the option and not merely to foreshadow a future exercise". The email was not a casual or social communication. Objectively, it was intended by the sender to have, and it would have been construed by the recipient as having, a purpose defined by reference to the put option. 121In the course of argument counsel drew to attention the following paragraph in the judgment of Smith J, in Ballas v Theophilos [1958] VR 576 at 581, which I am content (with emphasis added) to adopt: "It is clear, however, that, unless otherwise provided no particular form of words is necessary to constitute such an election [to exercise an option]: see Nicholson v Smith (1882), 22 Ch. D. 640, at p. 659. A statement that the option holder wishes, or desires, or intends, or agrees, to purchase under the option, or to exercise the option, will ordinarily be sufficient, if it be unqualified : compare the forms of expression employed in Nicholson v Smith, supra, at p. 658; Green v Low (1856), 22 Beav. 625; Carter v Hyde, [(1923) 33 CLR 115] at pp. 120 and 128; Sharp v Union Trustee Co. of Australia Ltd. (1944), 69 CLR 539, at p 555; MacDonald v Robins, [(1953) 90 CLR 515] at p. 525. But this is only so because such a statement sufficiently conveys, by implication, the meaning that the option holder has made an unqualified election to be thenceforth entitled to the rights, and bound by the obligations, of a purchaser upon the terms set out in the option agreement. Accordingly, if the statement includes anything which negatives such an implication it will not be effective to exercise the option: compare Simpson v Hughes (1897), 66 L.J. Ch. 335; Carter v Hyde, supra, at pp 121 and 133; Carello v Jordan, [1935] St. R. Qd. 294, at p. 319; Cavallari v Premier Refrigeration Co. Pty Ltd [(1952) 85 CLR 20]. But a purported exercise of an option should, I think, be fairly and not pedantically construed : compare Harris' Case (1872), 7 Ch. App. 587. One looks at the character of the document or other communication and the information that it conveys : MacDonald v. Robins, supra, at p. 525; and the appropriate question to be asked for the purpose of judging its sufficiency is, 'What would anybody receiving it fairly understand to be the meaning of it?' : see Carter v Hyde, supra, at p. 126; Nicholson v Smith (1882), 22 Ch. D. 640, at p. 659." 122Three points are to be emphasised in this statement of the law. First, unless an option contract otherwise provides, no particular form of words is necessary to constitute an exercise of an option. Secondly, a purported exercise of an option should be fairly and not pedantically construed. Thirdly, the focus for attention is whether, objectively, the option holder has communicated an intention to exercise the option. 123Read as a whole, and objectively, the email must be construed as a statement of intention on behalf of the plaintiff that the put option was in the process of being exercised; the email was part of that process; and that process would be completed by the service, by post, of a "formal" notice and a duly executed "Contract of Sale". The reminder, in the last sentence of the email, that "[pursuant] to the contract the completion date for the sale is 15 June 2011" colours preceding sentences. Use of the present tense, "is", underscored an operative intention to exercise the option by a process commencing immediately. 124Paraphrasing Barwick CJ in Lamont v Heron (1970) 126 CLR 239 at 243, I cannot read the email as no more than a preliminary announcement of an intention on the part of the plaintiff subsequently to exercise the put option. Moreover, the reference in the email to formal provision of notice by following mail does not, in my opinion, indicate that the plaintiff's intention to exercise the put option was, in any sense, qualified or deferred. The language of the email reflects an intention to exercise the put option by a process of communication commencing with the email and culminating with receipt by the first defendant's solicitor of a duly executed "Contract of Sale". 125Read objectively, and fairly, the email would have served no material purpose, in the mind of either sender or receiver, if not so construed. 126The fact that the email foreshadowed delivery of "a duly executed contract of sale", "by mail tomorrow", put the first defendant's solicitor (and, via him, the first defendant herself) on notice to watch out for the post. The proximity in time of the first defendant's receipt of the "Contract for Sale" documents to the email could not, objectively, have left the first defendant's solicitor, or the first defendant, in any doubt about the plaintiff's intention to exercise the put option. 127If any confirmation of this objective reading of the facts be necessary, it can be found in the conscious thought of the first defendant's solicitor, on 13 May 2011, that the (apparent) absence of the disputed letter was "fortuitous". It could only have been "fortuitous" because the fact that the plaintiff had an actual intention to exercise the option was patently obvious. 128In these circumstances, I find that, applying the terms of the put option to the events of 11-13 May 2011, the plaintiff must be found to have duly exercised the option by transmission of its solicitor's email on 11 May 2011 in combination with delivery of the two "Contract of Sale" documents to the solicitor for the first defendant on 13 May 2011. 129Can or must the plaintiff be taken to have validly exercised the option because the (alleged) omission of the disputed letter from the envelope received by the first defendant's solicitor on 13 May 2011 was, to the knowledge of the first defendant's solicitor and any objective bystander, an obvious administrative "slip"? The second defendant's contention that this question should be answered in the affirmative must fail for three interconnected reasons. 130First, it is based upon a misreading of the judgment of the Full Court of the Supreme Court of Western Australia in Phillips Fox (a firm) v Westgold Resources NL [2000] WASCA 85. Secondly, and in a similar vein, it attributes too much significance to the terms in which Lord Hoffmann, in Manai Investment Co Limited v Eagle Star Life Assurance Co Limited [1997] AC 749 at 774B-778E and 779F-780G (esp at 780B-C), urged the House of Lords to adopt a commonsense approach to the construction of an option clause, and correspondence purporting to exercise an option, in a commercial lease. Thirdly, the case for a finding that the put option was duly exercised was advanced on the basis that: (a) none of the first defendant, her solicitor or his legal secretary can be said to have engaged in wrongful conduct, vis á vis the plaintiff and its solicitor, in not drawing to their attention the "slip" said to have occurred; and (b) the plaintiff and the second defendant both disclaimed any case based on an allegation of estoppel. 131Phillips Fox (a firm) v Westgold Resources NL did not establish any principle to the effect that a procedural "slip" in attending to exercise of an option can be overlooked, or excused, without reference to the terms of the option contract, properly construed. The word "slip" did find its way into the Full Court's judgment (in paragraphs 79, 113 and 149) but only in the context of a finding of fact that a disconformity between the option contract and purported exercise of an option was not "the result of a slip", the grantee of the option having "in truth" made "no attempt at all to conform" to the requirements of the terms of the option. 132Lord Hoffmann's speech in Manai Investment Co Limited v Eagle Star Life Assurance Co Limited embraced an approach to construction not materially different from that summarised by Kirby P in Prudential Assurance Co Limited v Health Minders Pty Limited, extracted in paragraph 86 above. His Lordship criticised a narrower, more artificial, approach to construction said to have been derived from old English will construction cases. Specifically, he urged the Lords to overrule Hankey v Clavering [1942] 2 KP 326, where a landlord's mistake as to date in a notice to quit was held sufficient to invalidate the notice even though the mistake was "obviously due to a slip on the part of the landlord". 133Lord Hoffmann was not overly concerned by the traditional, "technical nature" of a notice to quit as a non-consensual instrument by which a lessor might unilaterally terminate a lease. He had a different focus. At [1977] AC 780B-C, he wrote: "The consequence of such a construction (as that found in Hankey v Clavering) is only to allow one party to take an unmeritorious advantage of another's verbal error, an adventitious bonus ...". 134Neither that observation, nor the broader context in which it appears, can justify the elevation of disdain for one party "taking advantage" of another's "slip" into a statement of principle per se. Whether Lord Hoffmann was right or wrong in his restatement of principles of construction, or in his application of them to the particular facts before him, is of no consequence in these proceedings. The principles to be applied in this case are authoritatively, and uncontroversially, summarised in Prudential Assurance Co Limited v Health Minders Pty Limited. An application of those principles, once identified, depends on the particular facts of the case. 135The concept of a "slip" has no distinct, operative significance at either level. The fact that the first defendant's solicitor consciously thought that the (apparent) absence of the disputed letter from the documentation he reviewed on 13 May 2011 was "fortuitous" may corroborate an objective assessment of the facts; but it does not rise higher than that. 136In the absence of any allegation of wrongful conduct or estoppel based on the facts of the case, an administrative "slip" has no legal significance independently of the terms of the option contract, properly construed, to the facts said to constitute an exercise of option. Nor is this a case, such as that dealt with in Bragg v Alam [1981] 1 NSLR 668, in which the first defendant could be said to have attempted to evade service of notice of exercise of the put option or contributed to such, if any, deficiency as there may have been in the plaintiff's process of exercising the option.

Summary: The Put Option was Exercised 137I have found in favour of a valid exercise of option on the first two of the three grounds advanced in favour of that case. Those two grounds are, jointly and severally, sufficient to ground the plaintiff's case against the first defendant and a dismissal of its claim against the second defendant. There is nothing in the third ground which can contribute to that outcome.

THE PLAINTIFF'S ENTITLEMENT TO RELIEF AGAINST THE FIRST DEFENDANT

The Nature of Relief to be granted 138Introduction. In substance, the plaintiff's claim for relief against the first defendant in these proceedings is a claim for common law damages, for loss of a contractual bargain, arising from the first defendant's repudiation of her contractual obligation to purchase the subject land, following upon the plaintiff's acceptance of her repudiatory conduct as putting an end to the contract. 139The plaintiff's claim is for damages for breach of contract under the general law. It is not a claim, on exercise of a contractual right, to recover a deficiency in the sale price on re-sale of the land (within 12 months after the termination of the contract) after service of a notice of "termination" of the contract for the first defendant's breach. 140The "contract attached to" the Option Deed, incorporated by reference in the Put Option by virtue of clauses 7, 8 and 10 of the Deed, includes (in clause 9) such a contractual right. It is in the standard form of the 2005 edition of the "Contract for the Sale of Land" published by the Law Society of New South Wales and the Real Estate Institute of New South Wales. Conceptually, that right is similar to that for which clause 9 of the 1982 and 1996 editions provided. A standard commentary on those earlier forms of the clause can be found in PJ Butt, The Standard Contract for Sale of Land in New South Wales (Law Book Co, Sydney, 1st ed, 1985), pp lxxvii, 487-498, 519 and 530-551; (LBC Information Services, Sydney, 2nd ed, 1998), pp ciii, 436-454). 141Clause 9 of the (2005) standard form contract, enlivened by the plaintiff's exercise of the Put Option, contains a contractual right to recover a deficiency on resale. However, that right was not exercised by the plaintiff. No notice of termination purporting to do so was served by the plaintiff. Nor did it articulate its claim for relief in these proceedings by reference to the contractual right it might have invoked. It pursued a claim for damages under the general law. 142The Facts, in Context. It is plain enough that the first defendant repudiated her contractual obligations on 19 May 2011, by the email of that date (extracted at paragraph 50 above) sent by her solicitor to the plaintiff's solicitor. That communication served both to dispute the validity of the plaintiff's exercise of the put option and to assert that all the parties' obligations under the Option Deed were at an end. 143True enough, the same email served as an invitation to treat; but the negotiations it foreshadowed were firmly predicated upon an assertion that the first defendant was under no current contractual obligation to purchase the property. In classic terms, the first defendant renounced any liability she may have had under, or by reference to, the Option Deed and, thereby, repudiated the contract; she evinced an intention not to be bound by the contract: Shevill v Builders Licensing Board (1982) 149 CLR 620 at 625-626. 144An entitlement to "loss of bargain" damages does not, however, arise simply from a wrongdoer's repudiation of a contract. The "bargain" is not lost until the innocent party "accepts" the wrongdoer's repudiation as putting an end to the contract: Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245 at 260-261 and 273; Ronnoc Finance v Spectrum Network Systems Ltd (1997) 45 NSWLR 624 at 633A and 636D-E; RP Meagher, "Future Directions in Equity" in R Megarry and RP Meagher, Whither Equity? (College of Law, Sydney, 1985), pp 26-27. Until such time as it has elected to treat the contract as at an end, the innocent party can seek an order against the wrongdoer that the contract be specifically performed: Ogle v Comboyuro Investments Pty Limited (1976) 136 CLR 444 at 461-462. 145After such an election is made, the fact that the innocent party has elected to treat the contract as at an end operates, generally, as a bar to any application by it for an order for specific performance: PW Young, C Croft and ML Smith, On Equity (Law Book Co, Sydney, 2009), para [14.300], citing Fry, A Treatise on the Specific Performance of Contracts (Stevens & Sons, London, 6th ed, 1921), p 477 (and, by implication, pp 495-497); G Jones and W Goodhart, Specific Performance (Butterworths, London, 1986), p 232 n 20, citing Johnson v Agnew [1980] AC 367 at 392 E-H. 146When, upon the other party's breach of a condition, an innocent party elects to treat their contract as no longer binding on him, both parties are discharged from further performance of the contract, but rights are not divested or discharged which have already been unconditionally acquired. Rights and obligations which arise from the partial execution of the contract and causes of action which have accrued from its breach continue unaffected: McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 476-477, cited by Johnson v Agnew at [1980] AC 396 D-H. 147That leaves open the possibility that, although an order for specific performance will not be granted to compel performance of a whole contract discharged by election upon breach, a limited form of order for specific performance might be able to be made, exceptionally, in aid of enforcement of an accrued right referable to the contract: Chan v Cresdon Pty Ltd (1989) 168 CLR 242 at 250-256, especially at 254-255, citing P Sparkes, "Back-dating Specific Performance" (1989) 10 Journal of Legal History 33. 148Between 19 May 2011 and 19 July 2011 or thereabouts, the plaintiff hovered between remedies available to it without unequivocally accepting the first defendant's repudiatory conduct as discharging the contract. 149The plaintiff, via its solicitor and its principal, tried to coax the first defendant (or, in commercial reality, the husband of the first defendant acting as agent for her and the entities associated with them both) to commit to a purchase of the land on the terms for which the Option Deed provided or on a variation of those terms. 150In retrospect, a turning point in the process of the parties' manoeuvring for position in negotiations that they may have hoped would end in accord, but they feared would end in litigation, occurred on 9-10 June 2011. 151On 9 June 2011 the first defendant's solicitor sent two letters to the plaintiff's solicitor via email. One was an open letter. The other was marked "without prejudice except as to Costs". The open letter maintained the position adopted in the first defendant's email of 19 May 2011, with emphatic statements to the effect that the first defendant's stance would not change. The "without prejudice" letter, in response to an earlier letter of the plaintiff's solicitor marked "without prejudice", foreshadowed the possibility of compromise in ongoing negotiations. 152On 10 June 2011, in correspondence settled by the first defendant's solicitor, the first defendant's husband sent an email to the principal of the plaintiff. It did two things. First, it announced: " ... I have not, and will not change my stance on the fact that there is no contract between us [sic], due to the put option not being lawfully exercised by you." Secondly, it communicated a fresh offer for the purchase of the subject land, at a purchase price of $2.25 million, with an extended date for settlement of the purchase, conditional upon finance approval within 90 days. 153That offer was "rejected absolutely" by an email in reply (sent on 16 June 2011) which foreshadowed "legal action to enforce [the contract arising from the plaintiff's exercise of the put option]" and a claim for "costs and damages". 154The plaintiff thereafter steeled itself to litigation by instructing a new firm of solicitors, the firm which has carriage of the current proceedings. 155On 29 June 2011 the new solicitors conformed to an established pattern by writing two letters to the first defendant's solicitors; one open, the other marked "without prejudice except as to costs". The open letter foreshadowed the commencement of proceedings "for inter alia specific performance of a contract to purchase [the subject land] exercised by way of option, or in the alternative damages". The "without prejudice" letter spoke in terms more consistent with a claim for loss of bargain damages arising from the first defendant's repudiation of her obligation to purchase the land. In the interests of mitigation of the plaintiff's damages, it invited the first defendant to make a fresh offer for purchase of the land. 156The reference to specific performance in this "open letter", coupled with the absence of any express "acceptance" of the first defendant's repudiatory conduct as discharging the purchase contract, stands in the way of a finding that, before commencement of these proceedings, the purchase contract had come to an end. Suggestions in the correspondence that, contemporaneously with equivocal correspondence such as this, the plaintiff was actively looking for alternative purchasers add colour to the analysis, but not much. 157On 19 July 2011 the plaintiff commenced these proceedings by the filing of a statement of claim. By the service of that process, the plaintiff communicated to the first defendant an election to treat the purchase contract as at an end: Majik Markets Pty Limited v S&M Motor Repairs Pty Limited (No 1) (1987) 10 NSWLR 49 at 54C-F. In the absence of evidence as to the date of service of the statement of claim, I take 19 July 2011 as the date upon which the contract was discharged by election on beach. The evidence does not disclose an earlier communication to the first defendant of an unequivocal election by the plaintiff. 158Although the statement of claim did not, in terms, claim an order for specific performance, the relief it did claim against the first defendant was expressed in the following terms: "1. An order that [the first defendant] sign and return to the plaintiff the counterpart Contract referred to in the e-mail from [the first defendant's solicitors to the plaintiff's then solicitors] dated 18 May 2011 at 12.00 noon [extracted in paragraph 47 above]. 2. Damages. 3. Interest from 15 June 2011 until judgment under s 100 of the Civil Procedure Act 2005. 4. Costs. 5. Such further or other relief as shall be just." 159Read in the context of the allegations pleaded in the statement of claim, the first prayer for relief stops short of a general claim for specific performance and takes on the colour of a limited claim for specific performance, in aid of a dominant claim for common law damages, in the context of ambiguity in the parties' contractual relationship arising from the terms of clauses 8 and 10 of the Option Deed. 160Clause 8, read alone, suggests an exercise of the put option obliged the first defendant to enter into a new contract by an exchange of contracts. Clause 10 suggests that an exchange of contracts was a mere formality because, upon an exercise of the option, the parties became "immediately bound" as Vendor and Purchaser. 161The language of the allegations pleaded in the Statement of Claim is the language of the common law, not equity. The allegations against the first defendant are headed "Cause of Action Against The First Defendant". So far as is material, paragraphs 13-14 of the Statement of Claim are in the following terms: "13. As a result of the facts and matters referred to in [earlier paragraphs that pleaded the Option Deed and the plaintiff's purported exercise of the put option, the first defendant] on or about 13 May 2011 became legally bound to sign and return to the plaintiff the counterpart Contract. ... 14. [The first defendant] has failed and refused to sign and return to the plaintiff the counterpart Contract and has repudiated the obligation to purchase [the land described in the Option Deed] in accordance with the Contract and the Plaintiff has accepted such repudiation. [Emphasis added]" 162The Plaintiff's Claim to Specific Performance. The plaintiff invites the Court to make an order for specific performance (requiring an exchange of contracts notwithstanding that the plaintiff's acceptance of the first defendant's repudiatory conduct must be taken to have discharged its obligations under the contract) to make the point that the first defendant is liable for damages for breach of her obligation to purchase the subject property. 163Prima facie, an innocent party is precluded from seeking an equitable remedy (such as specific performance) where it has elected to treat a wrongdoer's repudiation of their contract as having brought the contract to an end and to claim damages. However, in this case the plaintiff seeks an order for specific performance in aid of a common law claim to damages, not in addition to or in lieu of it. 164Specific performance is a remedy sufficient flexible to permit that (Chan v Cresdon Pty Limited (1989) 168 CLR 242 at 254-255), assuming that the "doctrine in Walsh v Lonsdale", based on (1882) 21 Ch D 9 at 14-15, does not (as Chan v Cresdon Pty Limited suggests, at 168 CLR 251-254, that it does) dispense with the necessity for there to be a formal exchange of contracts to ground the plaintiff's entitlement to common law damages. 165The plaintiff contends that, upon exercise of the put option, it would have been entitled to an order for specific performance, a necessary precondition to engagement of the doctrine in Walsh v Lonsdale or anything comparable to it. Moreover, the plaintiff submits, an entitlement to damages for loss of bargain is a secondary obligation of the first defendant that arises under the contract, which continues to have legal effect notwithstanding that the plaintiff's obligations under it have been discharged: Cf, Moschi v Lep Air Services Limited [1973] AC 331 at 345G-346B, 350C-351A and 352A-B. 166Against this, the first defendant submits that an order for specific performance is not necessary because, simply, the damages for loss of bargain of the contract of sale are damages which, upon an application of the rule in Hadley v Baxendale (1854) 156 ER 145 at 151, must have been within the contemplation of the parties and, so, are recoverable by the plaintiff without any necessity for an order for specific performance: Wenham v Ella (1972) 127 CLR 454 at 471-472; Burns v Man Automotive (Aust) Pty Limited (1986) 161 CLR 653 at 657-658 and 672-673; Hungerfords v Walker (1989) 171 CLR 125 at 142 and 149; European Bank Limited v Evans (2010) 240 CLR 432 at 437-438 [11]-[13] and 442-443 [29]. 167One of the problems with the making of any order for specific performance may be that, by selling the subject property (after the commencement of these proceedings) to mitigate its damage, the plaintiff put it out of its power to sell the property to the first defendant and, ordinarily, an order for specific performance will only be made if there is "mutuality", such that the Court can enforce the obligations of the plaintiff as well as those of the defendant: Price v Strange [1978] Ch 337. 168In the circumstances of this case, however, there is no practical need for "mutuality". The plaintiff is discharged from any obligation to perform the contract. It does not seek to have the first defendant perform the contract, generally, by completion of a purchase of the subject property. It seeks only an order for an exchange of contracts which, it apprehends, is or may be necessary to ground its claim for loss of bargain damages on its uncompleted sale. 169A further impediment to an order for specific performance may be that, where specific performance has been ordered, a contract the subject of that order is under the control of the court and cannot be discharged (except by performance) without the leave of the court: Facey v Rawsthorne (1925) 35 CLR 566 at 588; JAG Investments Pty Limited v Strati [1981] 2 NSWLR 600; Sunbird Plaza Pty Limited v Maloney (1988) 166 CLR 245 at 259-260. 170This may not be a problem, however, if the order for specific performance is understood as one limited to procuring an exchange of contracts (albeit after discharge of the plaintiff's obligations) for the purpose only of reinforcing the plaintiff's entitlement to damages at law: cf, Pakenham Upper Fruit Co Ltd v Crosby (1924) 35 CLR 386 at 394-395; JC Williamson Ltd v Lukey and Mulholland (1931) 45 CLR 282 at 297-299. 171Lord Cairns' Act (SCA s 68). If an order for specific performance is required, but problematic, the middle ground may be the making of an order under the Lord Cairns' Act provisions found in s 68 of the Supreme Court Act 1970 NSW, permitting the Court to award "equitable damages" in lieu of, or in addition to, specific performance: The Millstream Pty Limited v Schultz [1980] 1 NSWLR 547 at 552-553; Madden v Kevereski [1983] 1 NSWLR 305 at 306-307; Mills v Ruthol Pty Limited (2004) 61 NSWLR 1 at 13 [61]. 172However, these authorities suggest that two questions must be addressed before s 68 can have any material operation. The first is whether, at the time of commencement of these proceedings on 19 July 2011, the circumstances were such that the Court could (not necessarily that it would) have granted specific performance to the plaintiff. The second is whether such entitlement as the plaintiff may have to Common Law damages is an adequate remedy. 173To these two questions may be added a third, previously foreshadowed. That is whether the plaintiff's acceptance of the first defendant's repudiation of her obligation to purchase the subject land precluded any claim for any form of order for specific performance. 174A working through of answers to these three questions results in s 68 being put aside as a potential remedy in these proceedings. 175Had the plaintiff not, by its statement of claim announced an "acceptance" of the first defendant's "repudiation" of her obligation to purchase the land, the first question might have been answered, uncontroversially, in the affirmative. The plaintiff only entered a contract for resale of the land after the commencement of the proceedings. A plaintiff who sues for specific performance is able, during the course of the proceedings, to elect instead to treat the contract as at an end and to claim damages for loss of bargain where the defendant's repudiatory conduct is (as here) of a continuing character: Ogle v Comboyuro Investments Pty Limited (1976) 136 CLR 444 at 461-462. 176The second question should be answered decisively against the availability of s 68 relief for four reasons. First, upon the proper construction of the Option Deed clause 10, of itself, provides a sufficient foundation for an award for loss of bargain damages referable to the first defendant's failure to complete her promised purchase of the subject land, without any need of any form of order for specific performance directed to the formality of an exchange of contracts consequent upon exercise of the put option. 177Secondly, the Option Deed itself contemplates that, upon exercise of the put option, the first defendant would come under a direct contractual obligation to purchase the subject land. Its repudiation of that obligation would be causative of loss (of the substantive bargain) to the plaintiff which, being within the express contemplation of the parties, could not be characterised (according to the rule in Hadley v Baxendale) as too remote for the recovery of damages by the plaintiff. 178Thirdly, having invited the Court to proceed directly to an assessment of loss of bargain damages at common law without any need of an intermediate order for specific performance, the first defendant could not, at a later time, complain about an award of loss of bargain damages absent an exchange of contracts. 179Fourthly, the damages available to the plaintiff at common law provide a remedy which satisfies the dictates of justice. 180Although an order for specific performance may, in theory, be available notwithstanding that a contract has come to an end (Chan v Cresdon Pty Ltd (1989) 168 CLR 242 at 254-255), the third question should in these proceedings be answered in the negative. Even if a different answer might be available in an exceptional case, the present case can and should be accommodated, on the facts, by an award of common law damages as an adequate remedy. 181Conclusion: The Plaintiff's Remedy is Damages at Common Law. The plaintiff's entitlement against the first defendant lies in an award of common law damages. An order for specific performance is neither necessary nor appropriate. An award of damages under the Supreme Court Act, s 68, is not available.

Common Law Damages : Governing Principles 182Abstract principles. The purpose of an award of damages, at common law, for breach of contract is to compensate the innocent party for loss flowing from the breach (which, in this case, was the first defendant's repudiation) of the contract: Butler v Fairclough (1917) 23 CLR 78 at 89; Gray v Motor Accident Commission (1998) 196 CLR 1 at 6-7 [13]. 183For a loss to be assessed as "flowing" from a breach of contract, there must be a causal connection between the breach and the loss: Alexander v Cambridge Credit Corporation (1987) 9 NSWLR 310. 184Where an innocent party (in this case, the plaintiff) sustains a loss by reason of a breach of contract, that party is, so far as money can do it, to be placed in the same position, by an award of damages, as if the contract had been duly performed: Robinson v Harman (1848) 1 Ex 850 at 855; 154 ER 363 at 365; Wenham v Ella (1972) 127 CLR 454 at 460; Commonwealth v Amann Aviation Pty Limited (1991) 174 CLR 64 at 80, 98, 134, 148 and 161. 185The innocent party's right to recover damages for loss caused by a breach of contract is qualified by the rule in Hadley v Baxendale. The guilty party cannot be held liable for loss which, although caused by its wrongful conduct, is too remote from what was within the contemplation of the parties at the time they made their contract to be fairly held to the wrongful party's account. 186According to settled law, the measure of common law damages in a case such as this one (where a vendor of land claims loss of bargain damages consequent upon a purchaser's repudiation of their contract for sale) is, prima facie, the difference, if any, between the contract price and the market value of the land at the time the bargain was lost, with an allowance in favour of the purchaser for any deposit paid under the contract: PJ Butt, The Standard Contract for Sale of Land in New South Wales (1985), pp 523-524; (1998), pp 437 and 507-510; Carpenter v McGrath (1996) 40 NSWLR 39 at 59E-G; Palasty v Parlby [2007] NSWCA 345; 13 BPR 25, 311 at [43]-[45]. That measure is sometimes explained by reference to Laird v Pim (1841) 7 M&W 474; 171 ER 852 at 854. 187Common law damages were traditionally said to have been assessed "as at the time of breach"; perhaps more accurately, at the time a cause of action arose. 188With misgivings expressed in some quarters (eg, by RP Meagher in Wither Equity?, cited in paragraph 145 above), the House of Lords presaged a more flexible approach in Johnson v Agnew [1980] AC 367. Since Johnson v Perez (1988) 166 CLR 351 at 355-356, 367, 371 and 380, Australian law has accepted that, although common law damages are normally assessed as at the time a cause of action arose, they can, if necessary to avoid injustice, be assessed as at such other date as may be appropriate. 189Debate about the date of assessment. In this case, the plaintiff resists an assessment of damages "at the time of breach". It contends that to adopt that approach would be to deny it just compensation in a falling market, in circumstances in which it had endeavoured conscientiously from "the time of breach" to effect a resale of the land, and its prime interest in entry into contractual relations with the first defendant was to convert land into money so that it would, on and from the agreed settlement date (15 June 2011), have cash in hand. It claims damages of $986,891 calculated as follows: Put option price $2,925,000 Re-sale price 1,750,000 Less selling expenses 38,500 ________ $ 1,712,500 Loss on sale $1,212,500 Less Deposit received 150,000 Income derived from the property pending re-sale 75,609 225,609 Net Loss on re-sale of property $ 986,891 190The plaintiff submits that to assess damages "at the date of breach" on the basis of the then value of the property would be to run counter to the High Court's rejection of an argument of "economic equivalence" in Tabcorp Holdings Limited v Bowen Investments Pty Limited (2009) 236 at 272 at 285-286 [13] and 288 [16]. It submits that "[when] a party contracts to receive cash, he is not to be satisfied with a non-monetary asset asserted to be the financial equivalent". 191I do not read anything in Tabcorp Holdings Limited v Bowen Investments Pty Limited (a case about breach of a covenant in a lease) as intended to displace the settled, prima facie measure of damages on a claim for loss of bargain damages by a vendor of land. Nor is it easy to characterise the plaintiff's contract as a "contract to receive cash". Albeit through the medium of a put option, it was an ordinary contract for the sale of land. 192The settled law remains that a vendor's loss of bargain damages is, prima facie, the difference, if any, between the contract price and the market value of the land at the time the bargain was lost, with consequential adjustments as may be required on the facts of the particular case: Statewide Developments Pty Ltd v Higgins [2011] NSWCA 35; 15 BPR 29, 195 affirming Higgins v Statewide Developments Pty Ltd [2010] NSWSC 183; 14 BPR 27, 293 at [96]-[102]. The fact that the plaintiff proceeded, with due diligence but delay, to effect a resale of the property in a falling market does not, of itself, displace the "usual" measure of a vendor's damages. 193Accepting that each case must be decided on its own facts, and that the Court's task is governed by the abstract object of the exercise to be undertaken (in the award of monetary compensation), the difference between contract price and market value at the time the bargain was lost provides an objective, fair measure of the damages to be awarded to the plaintiff in this case. 194Had the plaintiff sought to protect itself from the financial consequences of a falling market vis à vis the first defendant, it could have refrained from accepting the first defendant's repudiatory conduct as putting an end to their contract and, instead, unequivocally sought specific performance. That strategy could, ultimately, have resulted in an award of damages under the Supreme Court Act, s 68, if not at common law, assessed as at the date of hearing. The plaintiff elected, instead, to accept the first defendant's repudiatory conduct as putting an end to the contract. Its forensic choice (which affected the course of its claim against the second defendant as well as the first) carried consequences. 195The evidence adduced in the proceedings permits an application to the facts of the case of the settled law relating to assessment of a vendor's loss of bargain damages. Such an assessment meets the dictates of justice, providing (with an award of pre-judgment interest) due compensation to the plaintiff. 196The focal date for valuation evidence. In their presentation of evidence about the value of the subject land as at "the date of breach", both sides of the record treated the relevant date as the agreed date of completion for the purchase contract for which the option provided (15 June 2011) rather than the date (namely, 19 July 2011) upon which the plaintiff elected to accept the first defendant's repudiatory conduct as putting an end to the contract. 197At an abstract level, there is room for debate about which of those two dates is correct. The parties' contract required the first plaintiff to complete her purchase on 15 June 2011; any delay on her part after that date could have grounded a claim in damages to compensate the plaintiff for delay, even if the contract thereafter proceeded to completion: Louinder v Leis (1982) 149 CLR 509 at 513 and 526; Raineri v Miles [1981] AC 1050 at 1083 B, 1084 B-C, 1090 H-1091 A and 1093 D. In Castle Constructions Pty Limited v Fekala Pty Limited (2006) 65 NSWLR 648 at 651 [11] the Court of Appeal's statement of principle adopted the date of completion as the point of reference without adverting to any difference. In Johnson v Agnew [1980] AC 367 at 401B Lord Wilberforce's statement of principle opted for the date "the contract is lost" rather than the date of "the original breach". PJ Butt, The Standard Contract for Sale of Land in New South Wales (1985) at pp 523-524; (1998) at pp 509-510 notices a range of dates adopted. Ultimately, the selection of a date depends upon an application of the principle identified in Robinson v Harman (cited in paragraph 184 above) and the dictates of justice in the particular case. 198Nothing of consequence turns upon the difference between 15 June 2011 and 19 July 2011 on the facts of this case. There is no evidence of a material change in the value of the subject land between those two dates. That a falling market manifested itself over the longer period between mid 2011 and 20 December 2012 does not justify, or compel, a conclusion that the valuation evidence directed to 15 June 2011 provides an unjust foundation for quantification of the plaintiff's entitlement to damages. 199Upon an assessment of the value of the subject land, I am content to proceed, as the parties have done, on the basis of the valuation evidence directed to 15 June 2011. 200Pre-judgment interest. As a corollary of selection of "the date of breach" as the date for assessment of common law damages, the plaintiff should be allowed an award of pre-judgment interest under the Civil Procedure Act 2005 NSW, 100. That section permits the Court, in its discretion, to include in a judgment for the recovery of money an allowance for interest "for the whole or any part of the period from the time the cause of action arose until the judgment takes effect": s 100(1)(b). 201The purpose of such an award is not to compensate a plaintiff for loss arising out of a cause of action, but (subject to considerations of justice as between plaintiff and defendant) to provide compensation when a sum of money has been outstanding for a period of time: Pheeney v Doolan [No 2] [1977] 1 NSWLR 601 at 604C-605B, 613E-F and 619E-F; MBP (SA) Pty Limited v Gogic (1991) 171 CLR 657 at 663. 202In the circumstances of this case, I propose to allow in favour of the plaintiff an award of CPA s 100 interest (calculated in accordance with Practice Note SC Gen 16) from 19 July 2011, the date upon which these proceedings were commenced and, as I have determined, the date upon which the plaintiff became entitled to loss of bargain damages. 203The first defendant has submitted, but I do not accept, that, in the quantification of any judgment to be entered in favour of the plaintiff, an allowance should be made, against the interests of the plaintiff, for the fact that, had the plaintiff not applied for an adjournment, these proceedings could have been heard on a final basis a year or so ago. I have determined that the plaintiff's damages entitlement should be assessed as at "the date of breach", together with an award under CPA s 100 in the nature of interest. Quantification of the plaintiff's entitlement to damages is unaffected by any adjournment of the hearing date last year. A consequence of the adjournment has been that the plaintiff has been out of its money, and the first defendant has had the benefit of money, for a year longer than would have been the case had the proceedings been determined last year. The justice of the case requires that an allowance in the nature of interest be made in favour of the plaintiff from 19 July 2011 until judgment, without any qualification arising from adjournment of the proceedings in the interim.

Common Law Damages: Quantification 204The conduct of the parties, of itself, suggests that the market value of the subject land in mid-2011 was significantly less than the agreed option price of $2,925,000. The first defendant could have had the property at that price by an exercise of the call option; she allowed that opportunity to pass. She and her husband, with their solicitor, were anxious lest (as happened) the plaintiff exercised its put option. Both sides of the transaction demonstrated a perceived need for re-negotiated terms. 205The first defendant and her husband wanted the property. They also wanted to conduct negotiations from a starting point untrammelled by the Option Deed. On the other hand, the plaintiff wanted to sell the property, but wanted negotiations based on a starting point that recognised a valid exercise of the put option. 206The parties danced around one another for some time until the first defendant's husband (I infer, in consultation with her and with her agreement) offered, on 10 June 2011, to buy the property for $2.25 million on extended terms and subject to finance. 207Though caution is required in attributing any evidentiary value to an offer to purchase a property (MMAL Rentals Pty Limited v Bruning (2005) 63 NSWLR 167 at 184 [95] - 185 [102]) that offer, in this case, is not without probative value. Whether, and to what extent, it was weighted by tactical judgements associated with extracting the first defendant from her exposure to litigation at the instigation of the plaintiff is not apparent. One cannot exclude the possibility that it was intended, at least in part, to set a floor price, lower than which the plaintiff could resell the property without argument about whether it had failed to mitigate its loss. Still, the first defendant and her husband did, in fact, want to buy the property "at the right price" and, by making an apparently fresh offer to the plaintiff (albeit conditionally), they ran the risk that the plaintiff might accept it. 208As it happens, the $2.25 million offer falls near the midpoint between the expert valuations tendered in evidence by the plaintiff and the second defendant. 209Those valuations were based on methodologies that, more or less, had regard to both comparable sales evidence and the capitalisation of future rentals from the property. 210The plaintiff's valuer attributed to the property, as at 30 June 2011, a value of $2 million. 211The second defendant's valuer (whose evidence was embraced by the first defendant) came in at a valuation of $2.4 million as at both 15 May 2011 and 12 June 2011. 212Neither valuer was cross examined. The art of property valuation is not so precise as to disdain a split of the difference between two expert, but untested, valuations of a property in the context of a real time offer for purchase of that property at about the same level. 213In these circumstances, and having regard to the inter partes offer of 10 June 2011, I find that the market value of the property as at 15 June 2011 (the date of completion of the subject contract and, by the convention of the parties, near enough to the time when, on 19 July 2011, the contract was lost to the plaintiff) was $2.2 million. 214On that basis, the plaintiff's loss as at 19 July 2011 was $575,000, calculated as follows: Contract sale price $2,925,000 Less market value of land $2,200,000 Subtotal $ 725,000 Less deposit (Option fee) $ 150,000 Amount lost $ 575,000 215There is no occasion for inclusion in this calculation of any allowance for expenses incurred referable to the sale or resale of the property or other consequential loss: PJ Butt, The Standard Contract for Sale of Land in New South Wales (1985), pp 524-528; (1998), pp 510-517. 216However, the need to do substantial justice as between the parties requires that the plaintiff be allowed an award of pre-judgment interest (under CPA s 100) from 19 July 2011.

ORDERS 217The plaintiff is entitled to judgment against the first defendant in the sum of $575,000 plus an allowance for interest yet to be quantified. 218The second defendant is entitled to dismissal of the proceedings against him. 219The parties have invited the Court to entertain further submissions before making any orders as to the cost of the proceedings. 220I direct the plaintiff to bring in Short Minutes of Orders including (on notice to the parties, particularly the first defendant) an award of pre-judgment interest. 221I will hear the parties' respective contentions about the calculation of interest and costs.

ADDENDUM (3 June 2013) 222Paragraph [215] of the principal Reasons for Judgment published in these proceedings on 27 May 2013 records, inter alia, that there was no occasion to include within the plaintiff's award of damages an allowance, by way of compensation for consequential loss, for expenses incurred by the plaintiff referable to re-sale of the property. 223That statement was correct, as far as it went; but it did not go far enough. The plaintiff had not expressly claimed an allowance for expenses on re-sale upon an assessment of damages "as at the date of breach". However, it had included in its claim for damages, based on an assessment "as at the date of re-sale of the property", an allowance for $38,500. In the light of events subsequent to publication of the principal Reasons for Judgment, I am prepared to assume in favour of the plaintiff that it intended to include in its claim for damages assessed "as at the date of breach" an allowance for expenses incurred referable to re-sale of the property. That aspect of the plaintiff's case requires, in fairness and for completeness, specific consideration. 224My reference, in paragraph [215] of the principal Reasons for Judgment, to Professor Butt's second edition of The Standard Contract for Sale of Land in New South Wales included a reference to paragraphs [9.200]-[9.201] of that work. Those paragraphs, in turn, drew attention to Jampco Pty Limited v Cameron (No 2) (1986) NSW Conv Rep 55-275 at 56,582 (a more complete version of the judgment than that reported at (1985) 3 NSWLR 391). 225After publication of the principal Reasons for Judgment, but before any orders were made to give effect to them, counsel for the plaintiff invited me to reconsider paragraph [215] of the Reasons. That was a course open to him: Autodesk Inc v Dyason (1993) 176 CLR 300 at 301-303 and 308; DJL v The Central Authority (2000) 201 CLR 226 at 224 [34]; Elliot v The Queen (2007) 234 CLR 38 at 48 [31]-[32]. In any event, the Reasons for Judgment of a judge of this Court, as a superior court, can be withdrawn or amended at any time before entry of the judgment to which they relate: Fletcher Construction Australia Limited v Lines MacFarlan & Marshall Pty Limited [2001] VSCA 167; (2001) 4 VR 28 at 47 [49], citing, inter alia, In Re Harrison's Share Under a Settlement [1955] Ch 260 at 283-284. 226In order to ensure that, at the time of disposition of the proceedings by the entry of final orders, all questions in dispute will have been determined, fairly and without oversight, I invited counsel for the plaintiff and the first defendant to address me on whether the plaintiff's award of damages should include an allowance for expenses referable to its re-sale of the property. In doing so, I drew attention to paragraph [9.201] of Professor Butt's second edition; Riggall v Thomson [2010] QCA 144 at [22]; and the judgments cited in that case. 227Both counsel requested, and I agreed, that they be permitted to address the point at issue by written submissions rather than orally. 228By his written submissions, counsel for the plaintiff supported a claim for expenses on re-sale by reference, in substance, to the reasoning in Jamco Pty Limited v Cameron (No 2) (1986) NSW Conv Rep 555-275 at 56,582. 229Having been given an opportunity to contest that claim, counsel for the first defendant declined to do so, advising the Court that the parties had agreed upon quantification of the judgment (including allowances for expenses incurred on re-sale of the property and pre-judgment interest) in favour of the plaintiff. 230The appropriate course, in these circumstances, is to adopt the calculation agreed inter partes, without further inquiry. 231Accordingly, the judgment to be awarded in favour of the plaintiff comprises the amount of $575,000 identified in paragraph [214] of the principal Reasons for Judgment, together with an agreed sum of $38,500 for expenses incurred by the plaintiff in effecting a re-sale and $90,903 for pre-judgment interest. 232Having heard all parties on the question of costs, the orders to be made in disposition of the proceedings comprise the following: (1) Judgment for the plaintiff against the first defendant in the sum of $ 704,403 inclusive of interest. (2) Order that the proceedings against the second defendant be dismissed. (3) Order that the plaintiff pay the costs of the second defendant: (a) on the ordinary basis, up to and including 18 June 2012; and (b) thereafter, on the indemnity basis. (4) Order that the first defendant pay the costs of the plaintiff, including any costs paid or payable by the plaintiff to the second defendant pursuant to these orders. (5) The usual order for the return of exhibits (namely, an order that exhibits and subpoenaed material may be returned forthwith; any exhibits returned must be retained intact by the party or person that produced the material until the expiry of the time to file an appeal, or until any appeal has been determined).

Amendments 04 June 2013 - Award of damages Amended paragraphs: Addendum 04 June 2013 - Fullstop mising after reference to Elliot v The Queen. Amended paragraphs: 225 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 05 June 2013