Rosengreen v Saadie Group Pty Ltd

Supreme Court of NSW|2018-07-06|Before: Lindsay J

Solicitors: Kai Ling (Australia) Pty Ltd: Ma & Company, Solicitors Saadie Group Pty Ltd : Oliveri Legal Robert Rosengreen: Stacks Champion File Number(s): 2015/003553482016/000200872018/000010642

INTRODUCTION

The questions for determination in this judgment relate to the operation and construction of an option (or, on one view of the case, two options) for the purchase of an undeveloped part of the land known as 570 Pennant Hills Road, West Pennant Hills.
Any option was (and, if it subsists, is) conditional upon subdivision approval being obtained from the local council. At issue is whether the condition precedent to an exercise of the option (subdivision approval) was required to occur within a six month, or reasonable, timeframe or was unconstrained by any time limitation.
The registered proprietor of the land is Robert Daniel Rosengreen ("Mr Rosengreen"). Saadie Group Pty Ltd ("Saadie Group") and Kai Ling (Australia) Pty Ltd ("Kai Ling") each claim to be entitled, subject to the land being subdivided with the approval of the Hills Shire Council, to a subsisting option to purchase the undeveloped part of the land contiguous to the property known as 45-55 Oratava Avenue, West Pennant Hills.
Whatever, if any, form of option contract may bind Mr Rosengreen as Grantor, the period during which the Grantee may exercise the option ("the Call Option Period") is defined as "the period of 30 days commencing from the date of approval of subdivision of the Property (Mr Rosengreen's land)".

THE ORIGINAL OPTION DEED

On 30 April 2015 Mr Rosengreen granted an option to Saadie Group "and/or nominee" by his execution of a Deed, bearing that date, styled "Deed of Put and Call Option". He was named as "the Grantor" and Saadie Group was named as "the Grantee".
As part of that Deed, Mr Rosengreen executed an undated form of "Notice of Exercise of Put Option" (attachment 3 to the deed) and an undated form of "Authority" (attachment 4 to the deed) in favour of Saadie Group "and/or nominee".
On the hearing of the proceedings, no significance was attached by any party to Mr Rosengreen's execution of attachment 3. Mr Rosengreen's put option did not arise unless and until the Grantee of the call option (Saadie Group) had declined to exercise a call option yet to arise.
Nor was reference made to attachment 4, which was in the following terms: "Attachment 4 Authority Form To The consent authority Owner Robert Rosengreen of 570 Pennant Hills Road, West Pennant Hills NSW Property Part of 570 Pennant Hills Road, West Pennant Hills NSW Authorised Saadie Group Pty Ltd and/or Nominee Person Date The owner of the property consents to the authorised person, in relation to the property: * lodging applications under the Environmental Planning and Assessment Act 1979 (NSW) (Act) including, without limitation, development applications, undertaking works on the property, applications for a complying development certificate, and applications for any Part 4A certificate; * making written and oral inquiries, and inspecting, obtaining and copying documents, even if otherwise relating to the owner's confidential information; and * signing on behalf of the owner any document necessary to give effect to this authority. The owner is not entitled to change or withdraw this consent without the written consent of the authorised person. Any term defined in the Act has the same meaning in this authority. Signed by the owner as a deed poll".
Description of the "Authorised Person" in this document as Saadie Group "and/or nominee" is consistent with identification of the "Grantee" in the Deed as Saadie Group "and/or nominee".
These references to Saadie Group "and/or nominee" explain what otherwise appears to be an administrative anomaly in the records of the Hills Shire Council. On 6 August 2015 Kai Ling lodged with the Council a Development Application dated 5 August 2015. That application appears to have incorporated an application for subdivision of Mr Rosengreen's land. Although Kai Ling lodged the application, the Council, in a letter dated 4 July 2016 giving notice of refusal of the application on 29 June 2016, described the unsuccessful applicant as Saadie Group.
Mr Rosengreen's signature on the execution page (styled "signing page") of the Deed was accompanied by no signature of a witness. His signature on each of attachments 3 and 4 purports to have been witnessed by Michael Saadie, an agent for Saadie Group,

A RECONSTRUCTED FORM OF OPTION DEED

Mr Rosengreen had no direct, personal contact with Kai Ling or any principal of that company. Nevertheless, at the request of Michael Saadie (acting as an agent of Saadie Group), on or about 3 May 2015 he executed a single page document, styled "signing page" which was, in terms, the same as the execution page of the original deed dated 30 April 2015 save that it named Kai Ling (rather than Saadie Group) as "the Grantee".
Mr Rosengreen signed the single page "signing page", and Mr Saadie witnessed his signature on that page, at a time when the page bore signatures on behalf of Kai Ling.
Mr Rosengreen signed the "signing page" bearing Kai Ling's name in response to a conversation with Mr Saadie to the following effect: Mr Saadie said: "We may need to change the name of the Grantee but it does not change anything. Just changing the name." Mr Rosengreen said: "I trust you and nothing else should be affected." Mr Saadie said: "Can you please sign."
And with that, Mr Rosengreen signed the "signing page".
On 4 May 2015 Mr Rosengreen received from his solicitor (Mr Geoff Baldwin) a composite document which purported to be a version of the original Deed dated 30 April 2015, which: 1. in the introductory pages, named Kai Ling "and/or nominee" as grantee; 2. substituted the "signing page" signed on or about 3 May 2015 for the "signing page" incorporated in the original Deed dated 30 April 2015; and 3. named Kai Ling as the purchaser in the form of "contract for the sale of land" attached to the new form of Deed (as attachment 1) as the form of contract to come into existence upon an exercise of option by the Grantee.
The only signatures on the new form of Deed were those found on the "signing page" executed by Mr Rosengreen on or about 3 May 2015. Mr Rosengreen did not contemporaneously sign an Authority Form (attachment 4) in favour of Kai Ling as ostensibly required by clause 5(b) of the "Deed".
Even allowing for substitution of the name of Kai Ling for Saadie Group as Grantee, the new form of deed is not entirely consistent with the original deed dated 30 April 2015.
A failure to substitute the name of Kai Ling for the name of Saadie Group as "purchaser" in an annexure to the draft contract (attachment 1) attached to the new form of Deed appears to have been a clerical oversight.
A more fundamental oversight on the part of the person who prepared the new version of Deed appears to have been a failure to include in the new version of the Deed a handwritten clause (numbered 11.11) which Mr Rosengreen had inserted in the original Deed when he signed it. That clause was to the effect that "[if] the grantee decides to not continue with the purchase he should surrender documents relating to the project at 570 Pennant Hills Road, West Pennant Hills to the grantor".
The new version of the Deed was compiled without the direct involvement of Mr Rosengreen or his solicitor.
The first time Mr Rosengreen saw a copy of the reconstituted form of the Deed was when his solicitor sent it to him on 4 May 2015. After that date, there appears to have been uncertainty as to whether Kai Ling had replaced Saadie Group as grantee of an option or not.
That uncertainty was, at least on the part of Mr Rosengreen and Saadie Group, resolved by their execution of a "Deed of Variation" on 27 November 2015.
Saadie Group's case is grounded squarely upon that Deed, the execution of which does not sit comfortably with any legal effect being given to the form of Deed put together after Mr Rosengreen's execution of a "signing page" in favour of Kai Ling on or about 3 May 2015.

MATERIAL TERMS OF THE ORIGINAL DEED 30 APRIL 2015

The central provision of the original Deed dated 30 April 2015 is clause 2.1. It is in the following terms (with emphasis added): "2.1 Grant of Call Option (a) In consideration of the Grantee paying the Call Option Fee to the Grantor, the Grantor grants to the Grantee an option to purchase the Property for the Price and on the terms of the Contract, subject to this document. (b) Each Party agrees to do all such things within its power as may be necessary or convenient to secure approval of the subdivision of the Property, and the Parties intend that this be secured within six months of the date of the Deed, but, in the event that there is, in the reasonable opinion of either Party, doubt that approval will be secured within this period, the Parties must consult with a view to agreeing on action to be taken."
Clause 1.1 of the Deed contains the following definitions of significance (with emphasis added): "Call Option Fee means monies that shall form part of the Purchase Price, and are comprised as follows:- 1. Payment in the amount of $44,000 on date of this Deed; and 2. Payment comprising the amount of $343,499 to be released within 30 days following the date of approval of the application for subdivision for the Property. Call Option Period means the period of 30 days commencing from the date of approval of subdivision of the Property. Contract means the contract for the sale of the Property on the terms of the form of contract for the sale of land that is attachment 1. Development means a development application to [Hills Application Shire] Council in respect of the Grantee's proposal to develop the Property. Price means $1,937,496 Property means an undeveloped part of the land comprised in Certificates of Title folio identifier Lot 3 in Deposited Plan 1096405 and known as 570 Pennant Hills Road, West Pennant Hills, New South Wales, being 4,296m2 and described and recorded in the attached plan of proposed subdivision."
The form of Contract attached to the Deed as attachment 1 provided for a "completion date" 42 days after the "contract date". The Deed contemplated a formal exchange of contracts consequent upon exercise of the Grantee's option; but the contract for sale and purchase of the land was made upon exercise of the option.
In the course of argument, the parties also drew attention to the terms of clause 1.2(d) and clause 1.2(e) of the deed. Those provisions were in the following terms: "In the interpretation and application of this document, unless the context otherwise requires:… (d) the rule of interpretation which sometimes requires that a document be interpreted to the disadvantage of the party which put the document forward, does not apply; (e) a reference to this document or any other agreement, arrangement or document, includes any variation, novation, supplementation or replacement of them;…."
Other provisions of the deed require notice: 1. Clause 2.2 provided that the call option fee (in the absence of subdivision approval, $44,000) "is the Grantor's property…". 2. Clause 2.3(a) provided that the Grantee's "Call Option" can only be exercised during the Call Option Period; that is, during a 30 day period commencing from the date of subdivision approval. 3. Clause 2.4 provided that a contract for the purchase of the property (a Contract in the form of attachment 1) would be made when the Grantee exercised its call option in accordance with the deed. 4. Clause 4 of the deed allowed the Grantee to assign its interests under the deed, provided that it obtained the prior written consent of the Grantor, which could not be unreasonably withheld if the Grantee satisfied the Grantor that the proposed assignee was financially sound and capable of complying with the purchaser's obligations under the contract, and the Grantee procured the proposed assignee to enter into a deed on substantially the same terms. 5. By clause 5, the Grantor consented to the Grantee (defined, remember, as Saadie Group "and/or nominee") lodging a Development Application with Council; agreed to provide the Grantee, on the date of the deed, with an executed Authority Form (Attachment 4); and covenanted not to object to, or oppose, any development application and/or plans of subdivision "proposed in respect of the Property during the Call Option Period". 6. By clause 7.1, the Grantor agreed that the Grantee might lodge a caveat to the title to the property, but required any such caveat to be withdrawn after the deed is "rescinded or terminated" or after the end of the Put Option period if neither the Call Option nor the Put Option had been exercised. 7. Clause 8 provided a right in the Grantor to terminate the deed if the Grantee were to become the subject of insolvency proceedings. 8. Clause 11.1 provided that the deed "may only be amended, supplemented, replaced or novated by another document signed by each of the parties, whether in one or more counterparts". 9. Clause 11.2 provided that a party must not (subject to clause 4) assign, or grant any security interest in, any right under or in respect of [the deed]; or grant any general or other security interest that might otherwise affect or apply in respect of any right under [the deed]. 10. Clause 11.7 provided that the deed "contains the entire agreement between the parties about its subject matter and supersedes all prior discussions, representations, agreements and understandings between the parties in connection with a subject matter".
The drafting of the deed is awkward in several respects, principally in the deed's approach (in clauses 2.1(b), 2.3(a) and 8) to temporal limitations on the right of option conferred on the Grantee by the deed. The Call Option can be exercised only during a period of 30 days if and when a subdivision is approved: clause 2.3(a). Clause 2.1(b) records an intention that subdivision approval be secured within six months from the date of the deed; but it does not unequivocally provide for a lapse of option rights if subdivision approval is not obtained within that timeframe. Clause 8 provides for "termination" of the Option only upon the occurrence of defined insolvency events.

MATERIAL PROVISIONS OF THE DEED OF VARIATION

The formal title of the deed of variation dated 27 November 2015 was "Deed of Variation between Robert Daniel Rosengreen (Vendor) and Saadie Group Pty Ltd (Purchaser) in relation to sale of part 570 Pennant Hills Road, West Pennant Hills".
This title differs from that of the original deed dated 30 April 2015 in several respects. First, it refers to a "deed of variation". Secondly, it describes Mr Rosengreen as "vendor" rather than as "grantor". Thirdly, it describes Saadie Group as "purchaser" rather than as "grantee". Fourthly, it adds the words "in relation to sale [etc]", a descriptive element not found in the title to the original deed.
The Deed of Variation is in the following terms (with emphasis added): "DEED made this 27th day of November 2015 1. BACKGROUND 1.1 The Vendor owns the whole of the property known as 570 Pennant Hills Road West Pennant Hills ("the Land"). 1.2 The Vendor has entered into a put and call option deed ("the Deed") with the Purchaser to sell an undeveloped part of the Land ("the Property") to the Purchaser, subject to the provisions of the Deed. 1.3 The Deed provides that the sale is contingent on the approval by the Hills Shire Council ("the Council"), within a time specified in the Deed, of a plan of subdivision ("the Plan"). 1.4 The Plan has not been approved by the Council within the time specified by the Deed, so that the Vendor is not obliged to complete the sale. 1.5 Despite the fact recited at 1.4, the Vendor and the Purchaser (together, "the Parties") intend that the sale should be completed. 1.6 In consideration of the circumstances recited at 1.3, 1.4 and 1.5, the Purchaser has agreed to pay upon execution of this Deed to the vendor $100,000 ("the Sum") on the terms and conditions set out in this Deed of Variation ("Variation Deed"). 1.7 The Parties accordingly enter into the Variation Deed to record their agreement. 2. OPERATIVE PART 2.1 The Parties agree that the Variation Deed does not, except by express provision or necessary implication, vary the terms of the Deed. 2.2 The Purchaser must pay the Sum to the Vendor, on the date of execution of the Variation Deed. 2.3 The Parties agree that, if the sale of the Property is completed, the Sum forms part of the price payable for the Property. 2.4 The Parties agree that, if the contract for the sale of the Property is rescinded, or is otherwise not completed, the Vendor must (unless the failure to complete or recision of the contract, or breach of the Deed, is the fault of the Purchaser) repay the Sum to the Purchaser, upon service by the Purchaser on the Vendor of a notice in writing requiring the repayment. 2.5 The Vendor acknowledges the purchaser's interest in the land, created by the Deed and this Deed of Variation and should the purchaser wish to register it's [sic] interest in the said land by way of lodgement of a Caveat, the Vendor consents to such lodgement. 3. INTERPRETATION AND ADMINISTRATION 3.1 Terms in this Deed of Variation have the meanings ascribed to them by the Deed, unless varied by operation of the provisions of 2.1. 3.2 The Deed of Variation has effect on and from the date on which the last of the Parties to do so executes it. 3.3 The Deed of Variation is to be read and construed in accordance with the law governing the Deed [that is, the law of New South Wales]."
Clause 3.2 of the Deed of Variation has no operative significance. Both parties can be taken to have executed the Deed on the date it bears; namely, 27 November 2015.

NO CONTRACT BETWEEN MR ROSENGREEN AND KAI LING

For several reasons, I find that there was no contractual relationship between Mr Rosengreen and Kai Ling.
First, there was no personal contact between Mr Rosengreen and any representative of Kai Ling. Mr Rosengreen signed a single page "signing page" at the request of Mr Michael Saadie acting as agent for Saadie Group.
Secondly, Mr Rosengreen signed the "signing page", at the request of Mr Saadie, against the possibility (not the certainty) of a change in the name of the grantee of the option. His execution of the " signing page" did not, of itself, effect a change in the contractual relationship between him and Saadie Group.
Thirdly, it is not suggested against Mr Rosengreen that Saadie Group executed the original deed as an agent for Kai Ling or that, in subsequently inviting Mr Rosengreen to execute the "signing page", Mr Saadie was acting as an agent of Kai Ling.
Fourthly, the original option deed contained provisions governing an assignment or novation of rights which provided procedural safeguards not complied with by either Saadie Group or Kai Ling: 1. as an exception to a covenant against assignment found in clause 11.2 of the deed, clause 4 permitted the grantee to assign its interest under the deed provided it obtained the prior written consent of the grantor, not to be unreasonably withheld in certain circumstances. Even if Mr Rosengreen's execution of the "signing page" be taken as a consent to an assignment of Saadie Group's interests under the deed, there is no evidence of an assignment. 2. clause 11.1 of the deed provided that "[this] document may only be amended, supplemented, replaced or novated by another document signed by each of the parties, whether in one or more counterparts". There is no evidence of any such "other" document affecting the deed. The "signing page" signed by Mr Rosengreen lacked content, and it was not signed by or on behalf of Saadie Group.
Fifthly, Kai Ling must be taken to have been aware of these procedural impediments to an assignment or novation affecting the deed, given that its case is that it became a party to the deed, or an equivalent of the deed, either in substitution for Saadie Group or by way of a new agreement.
An impediment to either possibility is that the instrument under which Kai Ling grounds its claims against Mr Rosengreen was never sighted by Mr Rosengreen before the instrument was created; and, as clause 11.1 of the original deed demonstrates, the disputed instrument is not in the same terms as the original deed.
Mr Rosengreen cannot be taken to have authorised either Saadie Group or Kai Ling to bind him to terms other than the terms of the original deed, if he authorised them to do anything at all by his execution of the "signing page".
There is no factual foundation for a finding that Mr Rosengreen, Saadie Group and Kai Ling all informally agreed to a novation of the original deed in favour of Kai Ling as a substitute for Saadie Group: Cf, Fu Tian Fortune Pty Ltd v Park Cho Pty Ltd [2018] NSWSC 528 at [73]-[78]. Mr Rosengreen continued to deal with Saadie Group, albeit that Kai Ling appears to have acted as a nominee of Saadie Group in seeking subdivision approval.
Sixthly, Kai Ling's submission of a composite form of deed, incorporating the "signing page", was, at most, an offer to Mr Rosengreen to make a contract with Kai Ling, which he did not accept.
Seventhly, although the "signing page" is expressed to have been "signed, sealed and delivered as a deed", as a single page document it lacked any content.
Eighthly, even if (which can be accepted) Kai Ling had put the Saadie Group in funds to pay the call option fee under the original deed, no consideration moved from Kai Ling to Mr Rosengreen in support of a grant of option rights by Mr Rosengreen to Kai Ling.
Kai Ling may have had rights against Saadie Group. It did not, merely by funding Saadie Group, acquire any rights against Mr Rosengreen. His execution of the "signing page" was unattended by the provision of any further payment, or other consideration, to him.
Ninthly, there is no factual foundation for a contention that, in signing the "signing page" executed by Kai Ling, Mr Rosengreen intended, or could reasonably be taken to have intended, to grant two separate, competing options to Saadie Group and Kai Ling. He only received one call option fee, and that was from Saadie Group.
Tenthly, any uncertainty about the identity of the grantee was resolved when, in its own interests and right, Saadie Group executed the variation deed dated 27 November 2015.
Eleventhly, given the joint venture relationship between Saadie Group and Kai Ling, and ongoing discussions between the parties as to whether or not Mr Rosengreen's property could be the subject of redevelopment, nothing indicative of a contractual relationship between Mr Rosengreen and Kai Ling can reasonably be drawn from the facts that: 1. the Hills Shire Council having refused a development application of Saadie Group on or about 4 July 2016 because of a lack of information relating to contamination on the property, on 23 June 2017 Mr Rosengreen granted to Kai Ling access to the property, for a period of 30 days, for the purposes of assessment of any contamination on the property and to obtain quotations for any remedial work required. 2. Kai Ling lodged a caveat, on the title to Mr Rosengreen's property (in addition to a caveat lodged by Saadie Group).
Kai Ling might have had rights of redress against Saadie Group, who dealt with Mr Rosengreen. However, that, of itself, was insufficient to establish for Kai Ling rights in contract against Mr Rosengreen.
Even if (contrary to my finding) Kai Ling did have a contract with Mr Rosengreen, it avails the company of nothing. Subdivision approval was not obtained within the six month period referred to in clause 2.1(b) of the composite "deed" and, if Mr Rosengreen was required thereafter to "consult" with Kai Ling, Kai Ling relieved him of any such obligation by standing by without itself actively engaging in a consultation process, thereby allowing Mr Rosengreen to enter the deed of variation with its joint venture partner, Saadie Group. Kai Ling has not contended that Mr Rosengreen was not entitled to enter that deed; an instrument via which, having settled with Saadie Group, it seeks advantage in these proceedings.

TEMPORAL LIMITS ON SAADIE GROUP'S OPTION RIGHTS : EXPIRY BY EFFLUXION OF TIME

Reading the original Deed dated 30 April 2015 and the Deed of Variation dated 27 November 2015 together, any continuing right of option Saadie Group has is governed, not by the original deed per se, but by the Deed of Variation incorporating provisions of the original deed.
Any uncertainty about the temporal limits of Saadie Group's option rights, consequent upon the drafting of clause 2.1(b) of the original Deed, was resolved by recital 1.4 of the Deed of Variation.
By that recital, the parties agreed that, a plan of subdivision not having been approved by a Council within the six month period specified in clause 2.1(b) of the original Deed, Mr Rosengreen was "not obliged to complete the sale". Effectively, the parties agreed that the maximum lead time for the occurrence of the Call Option Period was a period of six months from the date of the Deed (in the case of the original deed, six months from 30 April 2015); and, implicitly, that time had expired under the original Deed without fault on the part of Mr Rosenberg.
Counsel for Saadie Group accepted recital 1.4 as binding on his client; but he contended that the effect of recitals 1.3, 1.4, 1.5 and 1.6 read together was to release Saadie Group from the six months limitation found in clause 2.1(b) of the original Deed. In my opinion, that contention cannot succeed because it does not sufficiently acknowledge the character of the Variation Deed as an option agreement (rather than an agreement for sale of land) or the terms of clause 2.1 of the Deed of Variation.
The Deed of Variation was executed (on 27 November 2015) about one month after the expiry (on 30 October 2015) of the six month period referred to in clause 2.1(b) of the original Deed; that is, as the parties agreed, about one month after Saadie Group's original call option had lapsed.
The Deed of Variation constituted a fresh grant of option rights, supported by payment of a fresh option fee ("the Sum" of $100,000), subject to clause 2.4 of the Deed of Variation.
As with the original Deed, the drafting of the Deed of Variation is awkward. The awkwardness in the Deed of Variation stems from use of the word "sale" and its derivatives in the context, not of a contract for sale, but an option to purchase property.
Slippage in the use of language begins in recital 1.2, where an option is equated with a simple agreement "to sell". The slippage continues in recital 1.3 where the Option Deed is described as providing that "the sale is contingent" on subdivision approval within a particular time. Further slippage occurs in recital 1.4, where Mr Rosengreen was agreed not to be obliged "to complete the sale". The slippage continues in recital 1.5, where the parties recorded an intention that "the sale should be completed". Use of the expressions "vendor" and "purchaser" in lieu of grantor and grantee reinforce the slippage.
That said, clause 2.1 of the deed of variation explicitly provides that "the Variation Deed does not, except by express provisions or necessary implication, vary the terms of the [original] Deed".
All going well, the Deed of Variation might have culminated in a sale of Mr Rosengreen's property to Saadie Group; but clause 2.1's reference to the original Deed preserved the parties' essential character as the Grantor and Grantee of an option. Description of the parties as "vendor" and "purchaser" is not inconsistent with their essential character as "grantor" and "grantee", recognising that a sale required exercise of an option.
Despite a submission to the contrary advanced on behalf of Saadie Group, nothing of significance turns on whether the true juridical nature of an option is that of a contingent contract for sale of property or an irrevocable offer to sell property, a controversy often described by reference to competing views expressed in Goldsborough Mort & Co Ltd v Quinn (1910) 10 CLR 674 at 678 and 691. Construction of the parties' agreement is paramount, and substance prevails over form.
The parties' contract remained an option agreement. It did not transform into an agreement for sale. "The Sum" payable upon execution of the Deed of Variation (clause 2.2) retained the character of an option fee. The parties did not agree to exchange, or complete, contracts for the sale and purchase of the Property, which they could have done subject to approval of a plan of subdivision. Instead, they preserved Saadie Group's right to exercise (or to refrain from exercising) an option to purchase the Property, and Mr Rosengreen's put option. By preserving the character of the transaction as a put and call option, Saadie Group deferred any obligation to pay out more than the option fee ("the Sum") pending subdivision approval.
The effect of clause 2.1 of the Deed of Variation, reinforced by clauses 3.1 and 3.2 of the Variation Deed, was to give renewed effect to clause 2.1(b) of the original Deed - this time in the context of an agreement (recorded in recital 1.4) that, if Mr Rosengreen was to be obliged to complete a sale of his Property, it was (absent any fault on the part of Mr Rosengreen) necessary that subdivision approval be secured within six months of the date of the Deed of Variation (27 November 2015).
The language of clause 2.4 of the Deed of Variation (particularly the words "or is otherwise not completed", "the failure to complete" and "or breach of the deed") in my opinion manifests an intention that, should subdivision approval not be secured within six months of 27 November 2015 then, absent fault on the part of Saadie Group, Mr Rosengreen, if required to do so, was obliged to repay "the Sum" of $100,000 paid to him upon execution of the Deed of Variation.
Clause 2.4 is not, in terms, limited to a case in which, an option having been exercised and contracts (in the form of attachment 1 to the original Deed) having been exchanged, the contract goes off. It speaks, not only to a contract in the form of attachment 1, but also to performance of the Deed (that is, the original Deed, as varied by the Variation Deed), so as to make clear that, if a sale of the property is (without fault on the part of Saadie Group) "not completed" , Saadie Group can call upon Mr Rosengreen to repay the sum of $100,000.
It is only the $100,000 which can be made the subject of a requirement for repayment. The option fee of $44,000 paid in support of the original Deed was acknowledged, by clause 2.2 of the original Deed, to be property of the Grantor.
The parties agree that, if the Deed of Variation is properly construed as providing for a six month period for subdivision approval to be obtained, Saadie Group's defence to Mr Rosengreen's amended statement of cross-claim (both filed on 6 July 2018) constitutes a written notice (within the meaning of clause 2.4 of the Deed of Variation) having the effect of requiring Mr Rosengreen to repay the sum of $100,000 to Saadie Group.
In my opinion, upon the proper construction of the Deed of Variation, read with the original Deed, Saadie Group's call option came to an end "by effluxion of time" six months after the date of the Deed of Variation (that is, six months after 27 November 2015) absent any approval for subdivision of Mr Rosengreen's land.
It is not necessary to this conclusion that there be a term implied in the contractual documentation. It follows from the express terms of that documentation. As here construed, those express terms are inconsistent with implication of a term as to "reasonableness" of the duration of the option: Cf, Ballas v Theophilos (No. 2) (1957) 98 CLR 193; Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537. Clause 2.1(b) of the original Deed, as agreed in recital 1.4 of the Variation Deed, provided for an option of six months (plus 30 days) duration. That period was sufficiently short not to accommodate a shorter period as "reasonable" in the factual setting of the case. The express right of termination found in clause 8 of the original Deed did not extend beyond insolvency events. Upon a proper construction of the deed of variation, incorporating provisions of the original Deed, there was no room for, or need of, the implied term for which Mr Rosengreen contended.
Nor is it necessary for Mr Rosengreen to have identified repudiatory conduct on the part of Saadie Group, or to have served notice of an intention to regard Saadie Group's option rights as at an end. The option expired (and, to put the same point in different language, automatically lapsed) by effluxion of time: Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537. The condition precedent to Saadie Group's right to exercise a call option (subdivision approval within six months) did not occur; its non-occurrence was without fault on the part of Mr Rosengreen.
Had the option not had an expiry limit of six months, Saadie Group's failure (matched by a failure on the part of Kai Ling) to press for subdivision of Mr Rosengreen's Property after Council's refusal of subdivision approval on or about 4 July 2016 might well have constituted a fundamental breach of the grantee's contractual obligations to Mr Rosengreen (referable primarily to clause 2.1(b) of the original deed), justifying Mr Rosengreen's election to treat the option agreement as at an end. There was no impediment to such an election being made.
There is no basis for holding Mr Rosengreen to have been in breach of an obligation to obtain subdivision approval or to lend his aid to an application for subdivision approval by Saadie Group or Kai Ling. Clause 2.1(b) of the original deed cast obligations on both Grantor and Grantee; but the intention of the parties, reflected in clause 5, was that the Grantee of the option would apply for subdivision approval. The Grantee bore primary responsibility for securing subdivision approval. Mr Rosengreen did what was required of him in consenting to an application being made and allowing access to his Property. Saadie Group (in conjunction with Kai Ling) had carriage of the application for subdivision approval.
Expiry of the option "by effluxion of time" (that is, without fault on the part of Mr Rosengreen) was the effective cause of any option entitlements the grantee had coming to an end.

SAADIE GROUP'S RECOVERY OF THE $100,000 OPTION FEE ("THE SUM") PAID UNDER THE DEED OF VARIATION

In my opinion, clause 2.4 of the Deed of Variation, coupled with Saadie Group's service on Mr Rosengreen of a notice in writing requiring repayment, operates to impose upon Mr Rosengreen a contractual obligation to repay the Sum of $100,000 to Saadie Group. That is because, in my opinion, the failure of the Parties to complete a contract for sale of the Property cannot be said to have been the "fault" of Saadie Group.
An attribution of fault to Saadie Group might more readily be made if, as Saadie Group contends, Saadie Group's option rights did not expire by effluxion of time six months after the date of the Deed of Variation. Little appears to have been done towards subdivision of Mr Rosengreen's land after the Hills Shire Council, by its letter dated 4 July 2016, notified Saadie Group of its refusal (on 29 June 2016) of a proposal for subdivision of Mr Rosengreen's property. Council's decision was not made the subject of an application for a review, an appeal or a fresh application.
At various times during the course of the hearing, counsel for Mr Rosengreen made much of the absence of a formal application by Saadie Group for subdivision approval. However, in my assessment, a proper appreciation of the evidence requires an understanding that (despite their differences) there was a close working relationship between Saadie Group and Kai Ling in dealing with the Council, facilitated by the form of the original deed's identification of the Grantee of an option as Saadie Group "and/or nominee".
As Saadie Group agreed (in recital 1.4 of the Deed of Variation), its option entitlements under the original deed expired by effluxion of time on 30 October 2015. Under the Deed of Variation, as construed in this judgment, its option entitlements under the Deed of Variation expired on 27 May 2016.
Placed in the context of these dates, Saadie Group cannot reasonably be said to have been at "fault" (within the meaning of clause 2.4 of the Deed of Variation) for a sale of Mr Rosengreen's property "not being completed".
An application for development approval was lodged by Kai Ling with the Council on 6 August 2015, within the six months period contemplated by clause 2.1(b) of the original Deed dated 30 April 2015. Although lodged by Kai Ling, I infer that it was lodged by Kai Ling as a nominee of Saadie Group, conformably with the "Authority Form" signed by Mr Rosengreen when he signed the original Deed.
The original Deed expired on 30 October 2015, but Saadie Group's option entitlements were revived by the Deed of Variation on 27 November 2015.
Within the six months period provided for by the Deed of Variation (as presently construed), Saadie Group obtained an expert report dated 14 January 2016 (addressed to Mr Michael Saadie) dealing with perceived problems associated with asbestos contamination of the Property the subject of option entitlements. That report suggested that more work should be done to evaluate remediation works required.
Admittedly, it might be said that Saadie Group should have done more to persuade Council to grant subdivision approval. However, measured against the date of expiry of the company's option entitlements, it was not unreasonable for Saadie Group to wait upon Council's determination of the current development application before deciding what next to do.
The fact that Council on 29 June 2016 refused the development application, relying upon insufficient information about contamination of Mr Rosengreen's property, should not obscure the fact that, by that time, Saadie Group's option entitlements had expired by effluxion of time.

CONCLUSION

Neither Sadie Group Nor Kai Ling holds an entitlement to acquire Mr Rosengreen's Property. Neither has any right, title or interest in the Property.
Each of them is obliged to withdraw its caveat lodged against the title to Mr Rosengreen's land.
Mr Rosengreen is obliged to repay to Sadie Group the sum of $100,000 paid on execution of the deed of variation. In the course of argument, he undertook to repay that sum if required so to do.
This point having been reached, the parties have agreed that (notwithstanding an absence of explicit claims for relief in their pleadings beyond claims for declarations) the Court can, and should, make orders giving effect to them. Section 90 of the Civil Procedure Act 2005 NSW and rule 36.1 of the Uniform Civil Procedure Rules 2005 NSW, authorise the Court to give such judgment, or make such order, as the nature of the case requires.

PROPOSED ORDERS

Accordingly, reserving an opportunity to the parties to be heard on the form of the Court's orders, and costs, I propose to make orders to the following effect: 1. DECLARE that Saadie Group Pty Ltd has no right, title or interest in the land contained in folio identifier 3/1096405 ("the Land"). 2. DECLARE that Saadie Group Pty Ltd has no present or prospective entitlements to acquire the Land, or any part thereof, by reason of the deed dated 30 April 2015 and/or the deed of variation dated 27 November 2015 made between the company and Robert Daniel Rosengreen. 3. ORDER that Saadie Group Pty Ltd forthwith withdraw caveat AM593867 from the title to the Land. 4. DECLARE that Kai Ling (Australia) Pty Ltd has no right, title or interest in the Land. 5. DECLARE that the instrument purporting to be a deed made between Kai Ling (Australia) Pty Ltd and Robert Daniel Rosengreen on or about 30 April 2015 is void and of no legal effect. 6. ORDER that Kai Ling (Australia) Pty Ltd forthwith withdraw caveat AN174043 from the title to the Land. 7. ORDER that Robert Daniel Rosengreen pay to Saadie Group Pty Ltd the sum of $100,000. 8. ORDER that no interest accrue on that sum if and to the extent paid before the expiry of 28 days after the making of these orders, after which interest is to accrue (from 28 days after the making of these orders) at the rate from time to time prescribed by the Civil Procedure Act 2005 NSW, section 100. 9. ORDER, subject to further order, that order 3 be stayed pending payment of any and all moneys payable under orders 7 and 8 of these orders. 10. ORDER that the claim for relief made in prayer 1(a) of the summons filed on 20 January 2016 in proceedings numbered 2016/00020087 be dismissed. 11. ORDER that the claim for relief made in prayer 4 of the relief claimed in the amended statement of claim filed on 2 June 2017 in proceedings numbered 2015/00355348 be dismissed.

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: 12 July 2018

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