This was referred to with approval by the High Court in MYT Engineering Pty Ltd v Mulcon Pty Ltd [1999] HCA 24; (1999) 195 CLR 636 at [9]. In Terrapin International Ltd v Inland Revenue Commissioners (1976) 1 WLR 665, Walton J said (at 670) that " execution of a deed is a process rather than a single matter at a single instant of time. It consists of signature, sealing and unconditional delivery. "
57 However, even in the case of deeds it is natural to speak of the deed being "executed" under seal prior to delivery, although in some cases delivery may be intended by the act of affixing the seal to the deed. One often speaks of a deed being "executed" before it "acquires validity" by delivery. It is in that sense, that Parliament, in s 51A(1) of the Conveyancing Act 1919 (NSW), refers to a deed being "duly executed" (Hooker Industrial Developments Pty Ltd v Trustees of the Christian Brothers [1977] 2 NSWLR 109 at 119, 122-123; see also Xenos v Wickham (1866) LR 2 HL 296 at 312; Beesly v Hallwood Estates Ltd [1960] All ER 314 at 325; Staple of England v Bank of England (1887) 21 QBD 160 at 165, 166; Windsor Refrigerator Co Ltd v Branch Nominees Ltd [1961] Ch 88 at 98; MYT Engineering Pty Ltd v Mulcon Pty Ltd at [10], [11]). By clause 4.1 of the Agreement for Lease the Lessee was required to "execute" the Lease and hand it over to the Lessor's solicitor to be held in escrow. Clearly, in that clause "execute" meant the act of the Lessee's affixing its seal to the Memorandum of Lease.
58 It is thus clearly arguable that in clause 26 of the Lease the phrase "date of execution" means the date on or by which the parties affixed their seals to the document. However, clause 26 must be read as a whole. Where the condition is satisfied it gives the Lessee the right to terminate the Lease within three months of the date of execution of the Lease. This necessarily assumes that the Lease has been entered into, even if its operative effect may have been suspended. But, as explained earlier in these reasons, clauses 4.2 and 5.1 of the Agreement for Lease provide that the Lease is to be entered into on satisfaction of the escrow condition. The parties are not taken to have entered into the Lease by affixing their seals to it. Even though, in one sense, they thereby "executed" the Lease, that is not the sense in which clause 26 refers to the "date of execution" of the Lease. In clause 26, the "date of execution" is the date the parties are taken to have entered into the Lease. Otherwise, the clause would confer a right on the Lessee to terminate that which might not, and in this case, did not, then exist.
59 Moreover, clause 26 contemplates that Caversham will be seeking out a third party to take an assignment of the Lease. That assumes that the Lease will be in existence so that it can be assigned.
60 Counsel for EJ Knight submitted that there could be no assignment under clause 9 prior to the "Certificate Date", being the date of practical completion of the works to be constructed. Assuming this to be so, it does not change the fact that clause 26 contemplates that prior to the right of termination being exercisable, the Lease is to be in existence and capable of being assigned, even if the date for assignment is postponed until practical completion of the works.
61 I have reached this view as to the preferred construction of clause 26 without regard to what may be the more commercially reasonable outcome. The parties have conflicting interests and a construction which is more reasonable in the interests of one party would adversely affect the other. Nonetheless, considering the matter objectively, I consider that the preferred construction of clause 26 is the more reasonable. Clause 26 recognises that Caversham was not expected to be the long-term Lessee of the development. If it could not find a suitable party to take over the development within three months of the date of execution of the Lease, it was to have the right to terminate. Until it was known whether development consent could be obtained, and until the conditions of such a consent were known, it would be at least problematic whether any third party could be expected to commit to taking an assignment of the Lease.
62 For these reasons, I conclude that Caversham's notice of termination of the Lease was effective. No question arises of Caversham being required to pay conceded rent because it failed to pay rent claimed in EJ Knight's cross-claim as having fallen due in January 2009.
Conclusion
63 For these reasons, it appears to me that the appropriate orders are to direct the entry of judgment for Elders against EJ Knight for $1.5 million plus interest pursuant to s 100 of the Civil Procedure Act at the rates prescribed by Schedule 5 to the Uniform Civil Procedure Rules, to dismiss EJ Knight's cross-claim, and to declare that by its notice of 12 November 2008 Caversham terminated the Lease effective on 12 December 2008. However, I was asked not to make final orders until after the parties had the opportunity to consider my reasons. I will stand the matter over to a convenient time for that to be done. I will then hear argument on costs if there is any dispute about costs. I direct counsel for Elders and Caversham to bring in short minutes of order in accordance with these reasons.