Rushton (SA) Pty Ltd & Ors v Holzberger & Ors [2003] QCA 106

SUPREME COURT OF QUEENSLAND

CITATION: Rushton (SA) P/L & Ors v Holzberger & Ors [2003] QCA 106

PARTIES: RUSHTON (SA) PTY LTD ACN 079 164 177 (first plaintiff/first appellant) RUSHTON (VIC) PTY LTD ACN 079 140 419 (second plaintiff/second appellant) PETER GEORGE ROGAN (third plaintiff/third appellant) v PHILLIP MICHAEL HOLZBERGER (first defendant/first respondent) RUSHTON (QLD) PTY LTD ACN 079 140 364 (second defendant/second respondent) SENMEAD PTY LTD ACN 053 308 008 (third defendant/third respondent)

FILE NO/S: Appeal No 3592 of 2002 SC No 816 of 2002

DIVISION: Court of Appeal

PROCEEDING: General Civil Appeal

ORIGINATING COURT: Supreme Court at Brisbane

DELIVERED ON: 14 March 2003

DELIVERED AT: Brisbane

HEARING DATE: 6 March 2003

JUDGES: McMurdo P, Williams JA and Philippides J Separate reasons for judgment of each member of the Court, each concurring as to the order made

ORDER: Appeal dismissed with costs

CATCHWORDS: CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – OFFER AND ACCEPTANCE – OFFER – OPTION FOR VALUABLE CONSIDERATION OR UNDER SEAL – EXERCISE OF OPTION – METHOD OF EXERCISE – where agreement between parties contained option to acquire name rights – where agreement contained explicit provisions which set out requirements of notice exercising option – where it was a requirement that the notice be sent to a specific person at a specific address – where notice was sent by appellants to a different address – whether the option was validly exercised by the notice / Duncan Properties Pty Ltd v Hunter [1991] 1 Qd R 101, followed United Dominions Trust (Commercial) Ltd v Eagle Aircraft Services Ltd [1968] 1 WLR 74, followed United Scientific Holdings Ltd v Burnley Borough Council (1978) AC 904, followed

COUNSEL: G Beacham for the appellants M Martin for the respondents

SOLICITORS: Macrossans Lawyers for the appellants Bennett & Philp for the respondents

1. MCMURDO P: I agree with the reasons for judgment of Williams JA and with the order proposed.

2. WILLIAMS JA: The appellants commenced proceedings seeking principally a declaration that they had “properly exercised the option contained in clause 12.1” of an agreement between the parties and consequential relief. The respondents filed a defence and counter-claim, essentially for present purposes asserting that the option in question had not been validly exercised by the appellants. The respondents then successfully applied for summary judgment; the appellants’ action was dismissed. From that decision the appellants have appealed asserting that the primary judge erred in law in holding that the appellants had no real prospect of succeeding with their argument that the option had been validly exercised.

3. The dispute between the parties arises out of a Sale of Business Interests Agreement made between the parties on 22 October 1999. The document was drafted by the solicitors for the appellants and it must be said that it is a very detailed document containing very explicit provisions. There are a number of clauses in it which define in very precise terms expressions used therein.

4. The parties to the Agreement are described as the Holzberger Group and the Rogan Group. In describing those parties in the heading thereof the address of the Holzberger Group is given as “c/- Bennett & Philp, Solicitors, 17th Level National Bank House, 255 Adelaide Street, Brisbane Queensland 4000” and that for the Rogan Group “c/- Freehill Hollingdale & Page, 101 Collins Street, Melbourne Victoria 3000”.

5. For present purposes the “Holzberger Group” are the respondents, and the “Rogan Group” the appellants. Those Groups are defined in Schedule 1 of the Agreement, and as defined the membership coincides with the entities constituting respectively the Seller and Buyer as those terms are defined in the Agreement.

6. The proceedings are essentially concerned with the purported exercise by the appellants of an option granted in the Agreement by the respondents. The relevant clauses are as follows:

“12.1 Option to acquire name

The Holzberger Group irrevocably grants an option to the Rogan Group to acquire the Holzberger Name Rights for the Option Price.

12.2 Exercise of Option

The option may be exercised by the Rogan Group by notice in writing to Senmead Pty Ltd within 30 days of the happening of a Trigger Event.”

7. “Trigger Event” is precisely defined in clause 12.6, and it can be assumed for present purposes that such an event occurred on or about 29 August 2001 as alleged by the appellants in their Statement of Claim. It can also be assumed that the appellants did not become aware of that event until pleadings in another action were delivered to them on 30 November 2001, and that latter date became the date of the happening of a Trigger Event. “Option Price” and “Holzberger Name Rights” are also expressly defined.

8. The term “Seller” is defined in clause 1.1 as meaning “the member or members of the Holzberger Group described in Item 4 of Schedule 1”. Clause 1.2, an interpretation provision, provides that “words importing the singular include the plural and vice versa”. Schedule 1, item 4, then lists the following as constituting the “Seller”:

Rushton (Qld) Pty Ltd ACN 079 140 364

Senmead Pty Ltd ACN 053 308 008 in its own capacity and in its capacity as trustee for the Holzberger (NSW) Trust and the Rushton (Qld) Employee Benefits Trust and all other capacities Phillip Michael Holzberger

9. It therefore follows that Senmead Pty Ltd is, for purposes of the Agreement, a Seller and a party to the Agreement.

10. That Schedule lists the following as constituting the “Buyer”:

Peter George Rogan in his own capacity and in his capacity as trustee of the Peter George Rogan Trust.

Rushton (SA) Pty Ltd ACN 079 164 177 as trustee of the Rushton (Interstate) Trust.

Rushton (Vic) Pty Ltd ACN 079 140 419 in its own capacity and in its capacity as trustee of the Rushton (Vic) Trust and a trustee of the Rushton (Vic) Employee Benefit Trust.

11. The critical clause for present purposes is clause 20.1:

“20.1 Notices

(a)Any notice or other communication including, but not limited to, any request, demand, consent or approval, to or by a party to this agreement:

(1)must be in legible writing and in English addressed as shown below:

(A)if to the Seller:

Address:Level 11, 127 Creeke (sic) Street, Brisbane

Attention:Phillip Holzberger

Facsimile:(07) 3229 9918:

(B)if to the Buyer:

Address:420 Collins Street, Melbourne

Attention:Peter Rogan

Facsimile:(03) 9670 2786.

or as specified to the sender by any party by notice:

(2)where the sender is a company, must be signed by an officer or under the common seal of the sender:

(3)is regarded as being given by the sender and received by the addressee:

(A)if by delivery in person, when delivered to the addressee:

(B)if by post, 3 business Days from and including the date of postage; or

(C)if by facsimile transmission, whether or not legibly received, when transmitted to the addressee.

(4)can be relied upon by the addressee and the addressee is not liable to any other person for any consequences of that reliance if the addressee believes it to be genuine, correct and authorised by the sender.

(b)A facsimile transmission is regarded as legible unless the addressee telephones the sender within 2 hours after the transmission is received or regarded as received under clause 20.1(a)(3) and informs the sender that it is not legible.

(c)In this clause 20.1, reference to an addressee includes a reference to an addressee’s officers, agents or employees”.

12. The appellants assert that a letter sent by facsimile on 20 December 2001 from Macrossans Lawyers, the solicitors for the appellants, to Bennett & Philp, the solicitors for the respondents, containing the statement: “By this letter our clients exercise their option to acquire the Holzberger Name Rights for the Option Price under clause 12.1” constituted a valid exercise of the option.

13. It can immediately be said that the letter relied on by the appellants was not addressed to Senmead Pty Ltd, was not sent to Senmead Pty Ltd, was not addressed as provided for by clause 20.1(a)(1)(A), nor was it signed by an officer of or under the common seal of the sender as required by clause 20.1(a)(2). The learned primary judge held that clause 20.1 required the notice to be given to the “Seller” at “a particular address”. He held that those terms were mandatory: “I cannot see any reason why clause 20.1 should not be read as mandating the manner of giving the notice of exercise of option provided for by clause 12.2.”

14. There are numerous cases establishing the proposition that the terms of an option clause must be strictly complied with. One of the most frequently quoted passages in that regard is from the judgment of Lord Denning M.R. in United Dominions Trust (Commercial) Ltd v Eagle Aircraft Services Ltd [1968] 1 WLR 74 at 81:

“In order to exercise the option, the lessee must give the notice in the specified time and he must fulfil the covenants to repair according to their terms. He is not entitled to excuse himself by saying that the want of repair is trifling. … In point of legal analysis, the grant of an option in such cases, is an irrevocable offer (being supported by consideration so that it cannot be revoked). In order to be turned into a binding contract, the offer must be accepted in exact compliance with its terms. The acceptance must correspond with the offer.”

15. In the same case Edmund Davies LJ said at 87 that “strict compliance with the conditions was essential if UDT chose to exercise their right to call upon Eagle to repurchase. That compliance being absent, the obligation of Eagle to repurchase never came into existence”.

16. There was reference in that case to the earlier decision of the Court of Appeal in Hare v Nicoll (1966) 2 QB 130. Both Willmer LJ at 141 and Winn LJ at 148 spoke of the necessity to comply strictly with the conditions stipulated for the exercise of an option.

17. Lord Diplock quoted the passage referred to above from the judgment of Lord Denning MR with approval in United Scientific Holdings Ltd v Burnley Borough Council (1978) AC 904 at 929. His Lordship went on to say: “Exact compliance with the terms of the offer in an “if contract” had been required in courts of equity as well in courts of common law; see Weston v Collins (1865) 12 LT 4; Finch v Underwood (1876) 2 Ch D 310.” (See also per Lord Simon of Glaisdale at 945 and Lord Salmon at 951).

18. Those principles, and the reasoning involved, have been followed in Australia. That was essentially the approach of the Full Court of New South Wales in Gilbert J McCaul (Aust) Pty Ltd v Pitt Club Ltd (1959) SR (NSW) 122 and of de Jersey J (as he then was) in Duncan Properties Pty Ltd v Hunter [1991] 1 Qd R 101 especially at 103. In the latter case the learned judge said that the “due exercise of the option of renewal … depended on exact compliance with its notice requirement.”

19. In this court counsel for the appellants did not challenge those statements of principle. His submissions concentrated on the terms of the Agreement and he developed an argument that the address requirements in clause 20.1 did not apply to a notice given pursuant to clause 12.2. He also argued that the address requirement in clause 20.1 was not mandatory. On similar grounds he argued that the corporation requirement in clause 20.1(a)(2) did not apply to the notice required to be given pursuant to clause 12.2, and in any event submitted that the corporation requirement was not mandatory. It is necessary to refer to each of those arguments in turn.

20. The appellants’ contention was that as clause 12.2 expressly referred to giving notice to Senmead Pty Ltd, clause 20.1(a)(1)(A) did not apply because it only related to notices to “the Seller”. In my view there is no substance in the argument because, by the detailed, explicit definitions, “Seller” includes each of the three constituent members individually, and one of those is Senmead Pty Ltd. It therefore follows that the relevant provision in clause 20.1 applies to a notice required to be given to either the constituent members of “the Seller” collectively, or any one of them individually.

21. But it is difficult to see how that submission advances the appellants’ cause. Even if clause 20.1(a)(1)(A) did not apply to a notice required to be given pursuant to clause 12.2, the notice in question was not given to Senmead Pty Ltd. The facsimile letter of 20 December 2001 is not addressed to Senmead Pty Ltd, it does not specifically assert that Bennett & Philp were given the letter as solicitors for Senmead Pty Ltd, and the sentence by which it is contended the option was exercised does not refer to Senmead Pty Ltd. In those circumstances clause 12.2 was not complied with even if clause 20.1 was irrelevant.