It notes the origin of the word as being old French, pourchacier , meaning "seek to obtain, procure" . I mention these dictionary definitions only for the purpose of showing how wide a range of possible meanings the word can have.
32 Even in a legal context, the word "purchase" can have a range of meanings. A devise of lands "purchased" can include lands acquired by exchange for other land: Doe d Meyrick v Meyrick [1833] 2 LJ Ex 259; (1833) 1 Cr & M 820 at 826-7. Sometimes a "purchaser" can be someone who has acquired a right through compromising a claim: In Re Pope; Ex parte Dicksee [1908] 2 KB 169. In conveyancing, "purchased" sometimes has "the technical legal meaning of acquisition otherwise than by descent or escheat" (per Denning LJ, H L Bolton (Engineering) Co Ltd v T J Graham & Sons Ltd [1957] 1 QB 159 at 170). Sometimes a "purchaser" can include a mortgagee: District Bank, Limited v Luigi Grill, Limited and Others [1943] 1 Ch 78 at 80.
33 In deciding the present question, the expression "intention to purchase" should not be looked at in isolation. What Clause 11.1 requires a notice to inform the Lessor of, is the Lessee's "intention to purchase the said premises at the same price and on the same terms of any such offer". Considering the Parkview Option Deed only as an offer to sell the premises, when a lessee notifies its intention to purchase the premises at the same price and on the same terms as that offer, it is only an intention to purchase on the terms of the Option Deed which meets the language of the Clause. The contention of the Parkview defendants that an effective exercise of the right would require BP to notify its intention to purchase the premises on the terms of the contract which is annexed to the Parkview Option Deed would result in BP not notifying an intention to purchase "at the same price and on the same terms" as the Parkview Option Deed. The significant differences between the terms on which the land could be acquired under the Parkview Option Deed, and the terms on which it could be acquired under the contract annexed to that deed, inevitably lead to that conclusion. Further, it is only by construing Clause 11.1 in the way for which Mr Sahade and BP contend that the commercial objective of the clause can be achieved. I accept the submission of Mr Sahade and BP about what is the commercial objective of the clause.
34 For these reasons, I do not accept the submissions of the Parkview defendants concerning whether the 11 December 2003 letter was an effective exercise of the rights under Clause 11.
35 No submission was addressed to me that, if I rejected the submission of the Parkview defendants on this topic, I should come to any other conclusion than that BP was entitled to require Cantoni to grant it an option to purchase the premises on the terms of the Parkview Option Deed, but excluding Clause 1A. Hence I answer Question 1 "Yes".
Question 2 - If BP was entitled to require Cantoni to grant it an Option Deed was the letter from Clayton Utz of 11 December 2003 sufficient notice of the exercise by BP of its rights under Clause 11 of the lease?
36 This question was included in the order for separate determination of questions at a time when it seemed that the second defendant might contend for a negative answer. Now that the second defendant has been excused from the litigation, there is no live issue concerning it between the remaining parties. They are agreed that the answer should be in the affirmative.
Question 3 - If the answers to questions 1 and 2 are in the affirmative, what are the relative priorities of the interests of BP, Parkview and Davids in the land
37 It is common ground that the Parkview Option Deed created an option in Parkview to purchase the land. It is also common ground that an option to purchase land creates an equitable interest in that land, even before the option is exercised: Laybutt v Amoco Australia Pty Limited (1974) 132 CLR 57 at 75-76; Melacare Industries of Australia Pty Ltd v Daley Investments Pty Ltd (1995) 9 BPR 17,079 at 17,091-2; Ruthol Pty Ltd v Mills [2003] NSWCA 56; (2003) 11 BPR 20,793 at [83]. That the option created an equitable interest even before it was exercised is consistent with the decisions which hold that a contract, where the obligation to convey is subject to a condition, creates an equitable interest even before that condition has been performed: Kuper & Kuper v Keywest Constructions Pty Limited and Another (1990) 3 WAR 419; Jessica Holdings Pty Ltd v Anglican Property Trust Diocese of Sydney (1992) 27 NSWLR 140; Re Henderson's Caveat [1998] 1 QdR 632; Forder and Others v Cemcorp Pty Ltd [2001] NSWSC 281; (2001) 51 NSWLR 486; (2001) 10 BPR 18,615.
38 I accept the submission of the Parkview defendants that Clause 1A of the Parkview Option Deed was a condition subsequent, rather than a condition precedent to the formation of a binding contract by the Parkview Option Deed: Perri and Another v Coolangatta Investments Proprietary Limited (1982) 149 CLR 537 at 541-542. I also accept the submission of the Parkview defendants that the equitable interest which Parkview acquired on entering the Parkview Option Deed was subject to defeasance if BP exercised its rights under Clause 11 of the Lease.
39 In circumstances where I have held that BP has exercised its rights under Clause 11 of the Lease, Clause 1A of the Parkview Option Deed has the effect that the equitable right of Parkview came to an end when BP exercised its right of first refusal on 11 December 2003. That is a sufficient reason why, as at today, BP's rights arising under Clause 11 of the Lease will be given effect to, and those which the Parkview defendants had arsing under the Parkview Option Deed will not be given effect to. In that sense, the rights of BP have priority over those of the Parkview defendants.
40 An alternative argument was put concerning this question of priority. I accept that the rights of BP under Clause 11 of the Lease were, at the time of grant, rights in the nature of a right of pre-emption.
41 Questions of what rights arise from contractual arrangements which might be classified as "options" or "rights of pre-emption" must pay close attention to the actual wording of the document by which those rights are created: Pata Nominees Pty Ltd and Another v Durnsford Pty Ltd and Others [1988] WAR 365 at 372; Beneficial Finance Corporation Ltd v Multiplex Constructions Pty Ltd (1995) 36 NSWLR 510 at 522, 529; Witham v Witham [2000] WASC 236 at [99]; Goldmaster Homes P/L & Anor v Johnson & Ors [2004] NSWCA 144. Clause 11 of the Lease did not, at the time of grant, create an equitable interest in the land: Mackay and Another v Wilson and Another (1947) 47 SR (NSW) 315 at 325. In Pritchard v Briggs and Others [1980] Ch 338 the majority (Templeman and Stephenson LJJ) held that, once the conditions on which the holder of a right of pre-emption was entitled to acquire land had arisen, the right of the holder of the right of pre-emption became an interest in the land. Though Pritchard v Briggs and Others [1980] Ch 338 was not followed in this respect by Brownie J in Walker Corporation Pty Ltd v W R Pateman Pty Ltd (1990) 20 NSWLR 624, it has been followed in this State in judgments delivered on final hearings by Kearney J in Sterns Trading Pty Limited v Shteinman & Ors (1988) NSW ConvR ¶55-414 at 57,791-2, by Santow J in Transfield Properties (Kent Street) Pty Ltd v Amos Aked Swift Pty Ltd (1994) 36 NSWLR 321 at 341-3, and by Young J in Beneficial Finance Corporation Ltd v Multiplex Constructions Pty Ltd (1995) 36 NSWLR 510 at 526. In Pata Nominees Pty Ltd and Another v Durnsford Pty Ltd and Others [1988] WAR 365 Burt CJ gave tentative, and obiter, approval to Pritchard v Briggs and Others [1980] Ch 338, at 372:
"I can understand that a right of pre-emption, so called, upon its proper construction may be a conditional option so that when the condition is satisfied there is a standing and by that time an unconditional offer to sell so that "the holder of the right of pre-emption would be entitled to buy and therefore entitled to an equitable interest". But for that to happen it would, I think, be necessary, as was the case in Pritchard v Briggs … that the price and other terms necessary to establish a completed contract to buy and sell be agreed upon and expressed within the provisions conferring the pre-emptive right. If that be the case, then it may be, the condition being satisfied, that the holder of the pre-emptive right could accept what has then become the standing offer and so conclude an agreement which could be specifically enforced." (Emphasis added)
42 In other judgments given to decide whether interlocutory relief should be granted, Pritchard v Briggs and Others [1980] Ch 338 has been regarded as providing a basis for an argument that there is a serious question to be tried concerning whether a right of pre-emption, when the conditions for its exercise are satisfied, gives rise to an equitable interest, and no reason has been given in those cases to doubt the correctness of Pritchard. Such cases are the decisions of Santow J in Jonns and Another v Tan and Others [1999] NSWSC 648; (1999) 9 BPR 17,113 at [8] and of Warren J in Bob Jane T-Marts Pty Ltd v The Baptist Union of Victoria [1999] VSC 346 at [19]. Pritchard v Briggs and Others [1980] Ch 338 continues to be applied in the English Court of Appeal: Tiffany Investments Ltd and Another v Bircham & Co Nominees (No 2) Limited and Others [2003] EWCA Civ 1759 at [14] -[15], [36].
43 In my view Pritchard v Briggs and Others [1980] Ch 338 is right in deciding that a right of first refusal can transmute from a merely contractual right to a right which confers an equitable interest in land, when the conditions for exercise of the right of first refusal have all been satisfied. An equitable interest arises in land which is the subject of an option to purchase because the grantor of the option can, in at least some circumstances, be deprived of that land without there being any further action or decision on his part. In that situation, he cannot in conscience regard the land as being completely his own. When the conditions for exercise of a right of pre-emption have arisen, the grantor of that right of pre-emption can likewise be deprived of his land without any further action or decision on his part. Further, such a situation is one where specific performance is capable of being awarded, to require the grantor of the right of first refusal to perform his agreement. While the availability of specific performance might not be the only test for whether one person has an equitable interest in land of another, it provides one test for when such an equitable interest exits.
44 I accept that, when the Parkview Option Deed was entered, that action itself satisfied the condition for the operation of the right of pre-emption under Clause 11.1 without any further action on the part of the grantor being required. Thus, when the Parkview Option Deed was entered, BP acquired an equitable interest in the land.
45 It is clear, and undisputed, that at the time Parkview entered the Parkview Option Deed, it had notice of BP's rights under Clause 11.1 of the Lease. That notice arose from the terms of Clause 1A of the Parkview Option Deed, and from the inclusion of the full text of Clause 11 in the Lease covenants which were part of the Contract for Sale annexed to the Parkview Option Deed.
46 In Sterns Trading Pty Limited v Shteinman (1988) NSW ConvR ¶55-414 at 57,791-57,792 Kearney J considered a similar fact situation to that now before me. He said:
"… although prior to the granting of the option it may be accepted for purposes of argument that the plaintiff's right under the pre-emption clause did not create any equitable interest in the land, at the moment of the grant of option this right was, in my view, transformed from a mere contractual right into a right involving an equitable interest in the land.
The event prescribed by cl 28 of the lease for the plaintiff's right to purchase to come into existence is the existence of the lessor's desire to sell the property. Whether it could be said that this desire is shown on the evidence to have been sufficiently evidenced by the oral understanding which existed as early as January 1988, certainly at the moment of such oral understanding being converted into a formal grant of option in February, the nature of the plaintiff's rights changed. In this regard, see the judgment of Lord Justice Stevenson in Briggs v Pritchard [1980] Ch 338 at p 423.
The consequence is that in my view the creation simultaneously of equitable interests in favour of the plaintiff and of the second defendant on 18 February 1988 meant that there were competing equities, neither prior in time to the other, but of which the plaintiff's equity is to be preferred as being the better equity, particularly on the basis that the equity of the second defendant was taken with knowledge and notice of the existence of the immediate creation of the plaintiff's equitable interest, by virtue of the granting of the option."