It is apparent that by then Mr Farland must have realized there was a problem, although he took no steps to explain what it was.
12 As I have said the document executed by the grantor had the date 1 July 2005 on it when it was forwarded by Landerer and Company to Brooks and Company. Brooks and Company did not insert any end date in the definition in the option period. The date in the copy executed by Print National was inserted by Mr Farland as he said he would on 26 October. On 13 July 2006 Landerer and Company wrote to Mr James, as Mr Brooks was no longer authorised to practise as a solicitor, stating that the option had expired. This was disputed but in any event Print National gave notice of exercise of the option on 22 August 2006.
13 The option deed included the following clause under the heading "Background":
2. BACKGROUND
2.1 Option to be Granted
The Grantee has requested and the Grantor has agreed to grant an option to purchase the Property on the terms and conditions contained in this Deed. The grant is pursuant to a letter of agreement dated 9 January 2004 from John Youngman to David James, and conditions stipulated therein, a copy of which is annexed hereto.
Pleadings
14 The pleaded claim of the plaintiff is that the date of the deed is 23 August 2005, being the date of execution by the defendant, but in the alternative that it is 1 July 2005. In either case the plaintiff says that the option was exercised on 21 August 2006 - this may be an error - the date should probably be 22 August 2006 but nothing turns on that. The plaintiff seeks specific performance of the contract arising upon execution of the option. By its defence, Veritage, admits that the option deed is dated 1 July 2005, but denies valid exercise of the option. In essence the claim of the defendant is that notice was given after the option period had expired.
15 By cross-claim in the proceedings, Veritage seeks a declaration that (a) the definition of option period in the document executed by the parties does not express their true agreement; (b) a declaration that upon the true construction of the option the option period expired on 30 June 2006; (c) an order for rectification by altering the definition of option period so that the number 9 is substituted for the number 12; or alternatively, "by replacing the whole of clause 3.1 with the words - option period means the period commencing three months and one day from the date of the deed until 3.00 pm on the day twelve months from the date of the deed".
16 The claim for rectification is based firstly on common mistake of the parties, and that it was the common intention that the option exercise period was to commence three months and one day from the date of grant and end twelve months after the date of grant.
17 Next there is a claim for rectification for unilateral mistake based on the allegation that (i) the defendant mistakenly believed the option period definition was in terms of the letter of 9 January 2004; (ii) the plaintiff knew or suspected that the defendant held this mistaken belief at the time it signed the option document; and, (iii) that despite this knowledge or suspicion, Print National failed to alert the defendant to its mistaken belief. I should add that in the defence the defendant adds a plea of lack of clean hands on the basis of the facts set out in the cross-claim, but presumably limited to the claim for relief based on unilateral mistake.
Additional facts
18 No evidence was given for the defendant other than by affidavit of its solicitor. While I find, in the absence of any evidence to the contrary from Mr Brooks, that the date 1 July 2005 was inserted by agreement with him, there is no evidence that either the plaintiff company or the defendant agreed to this date being inserted. I should add that it would clearly have been a false date as it is difficult to see how an option could come into existence prior to it being executed by the grantor. In any event it could not be thought that the parties intended to backdate it so as to defeat to some extent the plain requirements of Sch 4 Pt 2.2 of the Conveyancing (Sales of Land) Regulation 2005 where it is sought to exclude a contract arising from exercise of option from the requirements of s52A(2) of the Conveyancing Act 1919 so far as it applied to this option.
19 Mr Farland, the solicitor for the defendant company could not say for certain that he had spoken to Mr Brooks and obtained his agreement as to the insertion of the date 30 June 2006 in the definition of option period and I find it unlikely he did as the date was not inserted.
20 Mr James gave evidence for the plaintiff company. In essence he said that prior to signing the option document on behalf of the plaintiff company, he went through it carefully with Mr Brooks and worked out the dates for the option period noting that it gave a period of 15 months or 12 months after the three months plus a one day exclusion period. He accepted that he would have seen the document which came back executed by the defendant, but he said that he gave no attention to the date of 1 July inserted in it and neither did he refer back to the letter.
Arguments and discussion
21 The first thing to realise is that, leaving aside the provisions in the letter and taking the option period as it appears in the document as signed by the parties, the plaintiff did exercise the option within time. Mr James made it clear, and I accept this evidence, that he would have been in a position to exercise it prior to 30 June 2006, but for business reasons did not wish to do so. I accept that evidence.
Construction
22 I turn now to the question of construction. This was put by the defendant as its main argument. That argument runs along the following lines: that the statement in the deed referring to the letter of 9 January 2004, the option period stated in that letter and the option period set out in the deed cannot stand together. It is said that there is an ambiguity and that on consideration of the objective surrounding circumstances, particularly the fact that the option obviously came into existence as a result of the letter there is a clear mistake so obvious that there is no need for rectification; so that properly construed the option period means a period of nine months commencing three months and one day from the date of the deed and ending 12 months from that date. I do not think that this argument can be accepted, at least as to construction although it may have more bearing on the question of rectification. Clause 2.1 is not really an operative provision but a recital. It is clause 4 which provides the grant of the option and the method of exercise during the option period. I think it impossible to hold that where the option period states that this means a period of 12 months commencing on a particular date that the deed properly construed means that the option period is one of nine months commencing on that date and that a construction to the contrary is absurd. The cases relevant to the determination of the meaning of a contract where there is a clear mistake giving rise to an absurd as opposed to unreasonable construction are I consider quite different from the claim put forward here. See Fitzgerald v Masters (1956) 95 CLR 420; Watson v Phipps (1985) 60 ALJR 1; Cooper Brookes (Wollongong) Pty Limited v Commissioner of Taxation (1981) 147 CLR 297.
Rectification
23 To some extent the argument of the defendant based on the terms of the letter of 9 January is contrary to the claim for rectification. In the letter the period of three months and the period of 12 months all refer to "the date of grant of the option" and on no basis could that mean the date of the option where that deed has been backdated.
24 As I discussed during submissions, it seems to me that if the cross-claim for rectification were to succeed then to do equity the cross-claimant would have to accept that the date of the deed should be 22 August 2005, rather than 1 July 2005. For obvious reasons the cross-claimant is not prepared to agree to that. Secondly, leaving aside that argument, there is no evidence that there was any authority given by either the grantor or grantee of the option to date the document 1 July 2005. While solicitors have authority to exchange contracts and to fill in dates relevant to exchange of contracts, in my view it is clear that they do not have authority to insert a date which is not a true date. That is another reason why rectification as claimed by the defendant could not be granted. There is no pleaded claim of or any evidence of ratification by Mr James on behalf of Print National of the date in the document. If he did notice it then he gave notice of exercise within the time specified as the option period. If the true date was 23 August 2006, then even if the option did expire 12 months from the date of the agreement it was exercised within time. There is no evidence of authority or ratification on behalf of Veritage.
Common mistake
25 The evidence of Mr James is that there was no mistake on his part. He said that he read the definition of option period prior to executing the document on behalf of the grantee. There is no evidence of the grantor on this matter. On any basis there is no evidence of common mistake.
Unilateral mistake
26 So far as unilateral mistake is concerned, the same position applies. It does not really matter what took place after the actual date of the grant. While Mr Brooks did not give evidence I do not think it possible to draw the inference that he, acting as agent for the grantee, considered that there was an error prior to forwarding the copy signed by the grantee back to the grantor's solicitors and that he purposely refrained from informing the solicitor for the grantor of this. I find Mr James was not guilty of such conduct. There is no evidence that the grantor did not read the document and consider it prior to its execution and delivery. There is no evidence the grantor believed that a term limiting the option period to 12 months was intended to be or was included. In my view the claim for rectification must fail.
27 I should add that while I expressed some doubt, I accept that the words "the date of this deed" in general mean the date which the deed is dated rather than the date of the making of the deed, illogical though that may seem. However Styles v Wardle (1825) 4 B&C 908; 107 ER 1297, which is usually taken as the starting point for this principle proceeds on the basis that "a party executing a deed agrees that the day therein-mentioned shall be the date for the purposes of computation". Here the parties agreed to no such thing, as there was no date on the deed. The case of Strickland v Grieve (1995) 7 BPR 14,376, supports this understanding of Styles v Wardle. In any event those decisions can make no difference in this case. Whether or not the parties meant to limit the period to 12 months rather than 15 months from the date of the agreement, they certainly did not mean to reduce it to a period of slightly more than 10 months.
28 It follows from this that the plaintiff is entitled to an order for specific performance and the cross-claim should be dismissed. The claim for damages could not succeed and was not pressed.
Proposed Declarations and Orders