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.