In Grandview Ausbuilder Pty Ltd v Budget Demolitions Pty Ltd [2018] NSWCA 336, a company, which had filed a summons seeking leave to appeal from a decision dismissing its application to set aside a creditor’s statutory demand, sought an order under s 459F(2)(a)(i) of the Corporations Act 2001 (Cth) (“CA”) for an extension of time in which to comply with the statutory demand. The New South Wales Court of Appeal (constituted by Beazley P) extended the time for compliance with the statutory demand until 7 days after judgment was delivered on the summons seeking leave to appeal and, if leave be granted, on the appeal.

Section 459F

Section 459F(1) of the CA provides that, if as at the end of the period for compliance with a statutory demand, the demand is still in effect and the company has not complied with it, the company is taken to fail to comply with the demand at the end of that period. Section 459F(2) then relevantly provides as follows:

“(2) The period for compliance with a statutory demand is:

(a) if the company applies in accordance with section 459G for an order setting aside the demand:

(i) if, on hearing the application under section 459G, or on an application by the company under this paragraph, the Court makes an order that extends the period for compliance with the demand  —  the period specified in the order, or in the last such order, as the case requires, as the period for such compliance;  …”

Background

A building company undertaking a development entered into a sub-contract with B for demolition and excavation work. The sub-contract was subject to the Building and Construction Industry Security of Payment Act 1999 (NSW) (“SOP Act”). The works were still incomplete on the date of completion and the company subsequently required B to cease work on the site immediately.  B later gave notice to the company of suspension of works pursuant to the SOP Act on the ground of failure to pay two progress claims, and served a statutory demand on the company in relation to the two progress claims.

The company filed an application to set aside the statutory demand under s 459G of the CA. It was accepted that the effect of the SOP Act was that the company was indebted to B in the amounts specified in the two unpaid progress claims. However, the company maintained that it had three separate offsetting claims which exceeded the amount of the statutory demand, being a liquidated damages claim for delay in completing the works, a liquidated damages ‘milestones’ claim because of failure to perform certain works at certain times, and a damages claim for the costs to complete the works. The application was dismissed.

The company filed a summons seeking leave to appeal and, by notice of motion, sought an extension of time for compliance with the statutory demand pursuant to s 459F(2)(a)(i) of the CA.

Applicable legal principles for an extension of time

Beazley P said that, on an extension of time application under s 459F(2)(a)(i) of the CA, it was well-established that there were three matters which needed to be addressed by the Court. Those three matters were as follows (at [28]). References to the cases have been omitted.

• First, the general question of the prospects of success in the appeal and whether an arguable case had been shown.
• Second, whether the appeal would be rendered nugatory unless the extension was granted.
• Third, the prejudice which the respective parties would suffer if the extension was either refused or granted.

Her Honour then referred to a number of cases which had made the following points (at [30]-[32]):

• The application should be approached by close analogy with the case where a stay of execution was sought pending appeal. In a stay case, an applicant was required to show that the appeal raised serious issues for the determination of the appellate Court and that there was a real risk that the applicant would suffer prejudice or damage if a stay was not granted, which prejudice or damage would not be redressed by a successful appeal. This requirement would be satisfied if the appeal would be rendered abortive or nugatory unless a stay was granted. If these pre-conditions were established the Court would then consider the balance of convenience.
• If the Court was satisfied that an extension of time should be granted, in considering the terms, if any, that should be imposed on the granting of the extension, an applicant should not be required to pay the full amount of the demand into Court. This was because the statutory demand process was not a debt recovery action. A company on which a statutory demand was served was not required to comply with the demand and could, if it wished, allow the statutory presumption of insolvency to arise by not paying the sum demanded. If a winding up application then followed, the company could seek to show that it was, in fact, solvent so that a winding up order was not justified. Thus, the statutory demand process merely defined where the burden of proof lay in winding up proceedings.
• If an extension order was not made and an applicant failed to comply with the statutory demand, a presumption of insolvency would arise unless the contrary was shown. That presumption would probably be available to any creditor who applied for winding up within the time specified by s 459C of the CA. In any such winding up proceeding, the applicant (as defendant in the winding-up proceeding) would bear the burden of demonstrating solvency and would be subject to the restrictions contained in s 459S of the CA which prevented the company, without the leave of the Court, from opposing the application on grounds that the company relied on for the purposes of an application to set aside the demand or could have relied on but did not rely on. These disadvantages would apply to the applicant even if it succeeded in its appeal, because under s 459C(2)(a), the presumption of insolvency arose if, during the defined period, the company failed (as defined by s 459F) to comply with a statutory demand, and s 459F(1) provided that the company was taken to fail to comply with the demand at the end of the compliance period if the demand was still in effect and the company had not complied with it.

Decision

In the case in question, Beazley P found that the following considerations pointed in favour of a grant of an extension of time (at [38]):

• The company had shown, for various reasons, that it had an arguable case in support of its summons seeking leave to appeal.
• If an extension of time to comply with the demand was not granted, the summons seeking leave to appeal and any appeal would be rendered nugatory.
• The company’s position in any subsequent winding up proceedings would be governed by the provisions of the CA, including the presumption of insolvency in s 459C.

Her Honour noted, however, that there had been delay in the matter and that, when the trial judge had heard the application to set aside the statutory demand, the company had not commenced proceedings to vindicate its offsetting claims. Her Honour indicated that, had it not been that the proceedings had since been commenced, she would have dismissed the application for an extension of time because there would have been a significant prejudice to B who would have been kept out of its admitted entitlement to the two progress claims for over 12 months. Her Honour also took into account that the Court could allocate an early hearing date and so directed that the summons seeking leave to appeal and, if leave be granted, the appeal, be heard concurrently (at [39]).

Finally, her Honour indicated that, had the application been by way of a stay, she would have imposed a condition which required the amount of the progress claims to be paid into Court but had not done this because the authorities had explained, correctly in her Honour’s view, why such a condition should not be imposed (at [40]).

In conclusion, her Honour extended the time for compliance with the statutory demand until 7 days after judgment was delivered on the summons seeking leave to appeal and, if leave be granted, on the appeal.

In Epov v Epov [2018] NSWSC 1819, a case in which proceedings were brought by a very elderly widow to enforce family provision orders that she receive a legacy from the estate of her deceased husband, the Supreme Court of New South Wales has ordered the executor of the estate, who finally paid the legacy to the widow, to personally pay interest on the moneys and the widow’s costs of the enforcement proceedings on the indemnity basis without recourse to the estate.

Background

The elderly widow had been married to the deceased for over 20 years before his death and had brought a claim for family provision out of his estate. The executor of the estate was a child of the deceased from a prior marriage.

In August 2014, a judge of the New South Wales Supreme Court had made an order that the widow, at that time 86 years of age, should receive a legacy of a specified percentage from the “net proceeds of sale” of certain real property. As the “net proceeds of sale” was defined in the family provision orders to mean the sale price of the property after deducting, amongst other things, the costs and expenses of probate, and administration costs, this meant that payment of the legacy could not be finalised until the estate’s costs had been determined. The property was sold in early 2015, following which there was a partial distribution to the widow. However, a dispute arose between the parties concerning the widow’s costs of the family provision proceedings which were, on the ordinary basis, to be paid out of the estate as agreed or assessed. The costs were ultimately assessed and, by April 2016, the executor had all the information required to make the final calculations to distribute the estate, including the balance of the funds owing to the widow. However, despite the widow’s solicitor seeking payment of the funds on a number of occasions, payment was not forthcoming.

Commencement of enforcement proceedings

In late November 2017, the widow brought proceedings to enforce the family provision orders. The relief sought included interest accruing on the funds owing to the widow and the personal payment by the executor of the widow’s costs of the proceedings on the indemnity basis.

The proceedings came before the Supreme Court on two occasions but there was no appearance for the executor and the matter was fixed for hearing before Kunc J in September 2018. Shortly before the hearing, the executor personally contacted the judge’s associate, indicating that he was seeking an adjournment of the proceedings to a later date.

On the hearing of the adjournment application, Kunc J considered that the executor could not identify any proper reason for not paying the funds to the widow and directed the executor to direct his solicitor to transfer forthwith the funds to the widow’s solicitor’s trust account. However, his Honour allowed the executor, who was personally represented, a further opportunity to demonstrate:

• why the funds should not be released to the widow unconditionally;
• why interest should not be paid on the funds personally; and
• why the Court should not order him personally to pay the widow’s costs of the proceedings on the indemnity basis, and why a gross sum costs order should not be made.

The funds were transferred to the trust account in September 2018 in accordance with his Honour’s direction and, in October 2018, the executor finally consented to an order that the funds be released to the widow.

His Honour then gave the executor one more opportunity to provide submissions as to why he should not pay interest and costs as sought by the widow.

Decision on interest and costs

Kunc J noted that the executor had at all material times been subject to, at least, two overlapping duties:

• his duty as a litigant to comply with the family provision orders; and
• his duty as executor to administer the estate in a timely manner (at [41]).

His Honour found that the executor had failed to fulfil those duties and had not demonstrated any reason for the failure, and said that his conclusions as to both interest and costs were based on this finding (at [41]).

The reasons given by the executor for not paying the funds to the widow were that:

• he was not satisfied that the widow was in a position to give informed instructions regarding the proper disposition of the funds without assistance from an independent third party;
• he was concerned that she might be the subject of undue influence by third parties; and
• he was concerned that her interests should be protected and her money not exhausted through legal fees and associated disbursements (at [42]-[44]).

Kunc J, however, said that:

• while the executor might have genuinely held the concerns expressed by him, the executor had completely failed to demonstrate that the concerns had any basis in fact, and the widow’s solicitor had persuasively addressed the question of the widow’s competence;
• once the provision of the costs assessment had enabled the final calculations to be done, the executor had been advised more than once by his solicitor that he had to get on with administering the estate and paying the funds; and
• if the executor had had concerns about the widow’s mental capacity, he could have sought advice from his solicitor about what action he could take (at [45]-[48]).

Accordingly, his Honour ordered the executor to pay interest on the funds from April 2016 (when the amount of the legacy had become ascertainable) up to and including the date of payment of the funds (at [49]-[54]).

On the issue of the payment of costs on the indemnity basis, Kunc J was satisfied that the executor had been unreasonable in his conduct of the proceedings because he knew, or ought to have known given the availability of legal advice, that he had no proper basis to refuse to pay over the funds and that, properly advised, he should have known that he had no chance of successfully resisting the enforcement proceedings. Accordingly, his Honour ordered the executor to pay the widow’s costs on the indemnity basis (at [57]).

His Honour was also satisfied that the case was an appropriate one for a gross sum costs order for the following reasons:

• the matter had been relatively confined and the widow’s costs were readily ascertainable;
• the widow should never have been required to commence the enforcement proceedings; and
• there ought to be no further delay in bringing the proceedings to a definitive conclusion, especially given that the widow was now nearly 91 years old (at [58]).

Finally, because the executor had incurred the liabilities to pay the interest and costs as a result of his failure to fulfil his obligations both as a litigant and as an executor, Kunc J concluded that the executor was not entitled to an indemnity from the estate for those liabilities. His Honour made a declaration to make it clear that the executor was personally liable for the interest and the widow’s costs of the proceedings on the indemnity basis without recourse to the estate (at [72]).

The New South Wales Court of Appeal in Chief Commissioner of State Revenue v Boss Constructions (NSW) Pty Ltd [2018] NSWCA 270 has found that an estoppel cannot operate to effectively extend the time limitation imposed by s 459G(2) of the Corporations Act 2001 (Cth) (“CA”).

Section 459G(1) of the CA enables a company which has been served with a creditor’s statutory demand under s 459E of the CA to apply to the Court for an order setting aside the demand. However, by s 459G(2), the application “may only” be made within 21 days after the demand is served. Section 459G is contained in Pt 5.4 of the CA (ss 459A – 459T) which establishes a regime for the winding up of a company in insolvency.

Background

The Chief Commissioner of State Revenue (“Chief Commissioner”) had served a statutory demand on a company for unpaid payroll tax and interest. The company made an application to the Supreme Court of New South Wales to set aside the demand under s 459G. A question arose as to whether the application had been made within the 21 day period referred to in s 459G(2). The application had been filed on 20 July 2017. The company maintained that the demand had been served on 29 June 2017 and, accordingly, the application had been made within the prescribed time. The Chief Commissioner, on the other hand, contended that the demand was served on 27 June 2017 and so the application was filed outside the prescribed time.

After a separate hearing of the question, the trial judge found that service of the demand had in fact been effected on the earlier date of 27 June 2017 but further found that the parties had proceeded upon the assumption that the demand had been served on 29 June 2017 and that it would be unconscionable for the Chief Commissioner to depart from that assumption. Accordingly, the trial judge concluded that the Chief Commissioner was estopped from disputing that service was not effected until 29 June 2017 or that the application to set aside the demand had been made within the prescribed time. The Chief Commissioner appealed by leave to the Court of Appeal.

Court of Appeal

Bathurst CJ (with whom Leeming JA and Sackville AJA agreed) made the following points about the legislative scheme of Pt 5.4 of the CA (at [17]-[20]). References to the cases have been omitted.

• The practical effect of the provisions relating to statutory demands was that, where a statutory demand had been served, a company which had not availed itself of the procedure in s 459G to set aside the statutory demand was not entitled to oppose the winding up application on a ground which could have been raised to set aside the demand, such as by disputing the existence of the debt, unless the Court granted leave to do so.
• The statutory demand regime constituted a carefully formulated series of interlocked steps which had substantial consequences and the objects of which required precise compliance for their attainment. The focus should be on the actual statutory provisions and what they are intended to achieve.
• The statutory demand provisions constituted a legislative scheme for quick resolution of the issue of solvency and the determination of whether the company should be wound up without the interposition of disputes about debts unless they were raised promptly.

Bathurst CJ then noted that David Grant & Co Pty Ltd v Westpac Banking Corporation [1995] HCA 43; (1995) 184 CLR 265 had rejected the proposition that the Court could extend the time limitation in s 459G(2) by an order under s 1322(4)(d) of the CA and had described the time limitation and other requirements in s 459G as a limitation or condition upon the Court’s authority to set aside the demand, indicating that the expression “may only” defined the jurisdiction of the Court by imposing a requirement as to time as an essential condition of the right conferred by s 459G (at [21]).

His Honour further noted that a similar approach had been adopted by later authorities (at [22]-[24]).

His Honour then said that it was plain that an estoppel could not operate to effectively extend the time limitation imposed by s 459G(2) for the following reasons (at [25]-[27]):

• The requirement as to time defined the Court’s jurisdiction by imposing the requirement as an essential condition of the right conferred by s 459G. Just as an order under s 1322(4)(d) of the CA could not extend the time so as to confer jurisdiction, the time could not be extended either by agreement of the parties or by the operation of an estoppel.
• The text of the legislation supported this conclusion:
  • The term “may only” in s 459G(2) told against any variation in the time limit as a result of an agreement of the parties or by the operation of an estoppel.
  • The other detailed requirements in Pt 5.4 of the CA relating to the form of the application to set aside a demand under s 459G and the limited power to extend the time in s 459F(2)(a)(i), together with the wording of s 459G, indicated that the time limit could not be varied.
• The policy behind Pt 5.4 tended against the proposition that estoppel could operate to vary the time limit. The object of the legislation was to provide a mechanism by which applications to wind up potentially insolvent companies could be dealt with promptly, with s 459R(1) of the CA requiring that such applications be finally determined within 6 months. In the case of the statutory demand procedure, this was achieved by setting out detailed steps to be taken within precise time limits. It was clear why the legislature regarded this policy to be in the public interest, and this was a further powerful reason why the time limitation should not be able to be varied by the application of doctrines such as estoppel.

To the extent that such a conclusion might result in any harsh results, his Honour considered that this needed to be balanced against the public interest in the prompt determination of applications to wind up insolvent companies and the avoidance of injustices that might be caused by the continued trading of such companies. His Honour further considered that s 459S of the CA, which enables the Court to grant leave to raise matters which could have been raised in an application under s 459G if relevant to the question of solvency, could alleviate any harsh results (at [28]).

Bathurst CJ went on to make it clear that it did not matter how the estoppel was formulated or expressed –  the effect was to prevent the Chief Commissioner from asserting that the time limit imposed by s 459G(2) had expired, and thus, to confer jurisdiction on the Court to hear an application which it otherwise would not have. The estoppel could not operate in the face of the legislative scheme of Pt 5.4 of the CA (at [29]-[31]).

Outcome of the appeal

Although the Court of Appeal dealt with the substantive issue on the appeal, the Court did not allow the appeal and dismiss the company’s application because, at the time that leave to appeal had been granted, the Court’s attention had not been drawn to s 459C(2) of the CA which only requires the Court to presume insolvency if the company failed to comply with the statutory demand during or after the 3 months ending on the day the application for a winding up order was made. As there was nothing to suggest that an application for a winding up order had been made within the time prescribed by s 459C(2), the effect of this subsection was to render the proceedings “entirely hypothetical”. Accordingly, the order made by the Court of Appeal was to direct the parties to provide submissions within 10 days on whether leave to appeal should be revoked (at [32]-[36]).

The Supreme Court of New South Wales in In the application of Brailey Holdings Pty Limited ACN 001 190 441 [2018] NSWSC 1493 has granted judicial advice that a trustee was justified in managing and administering two family trusts in accordance with the terms of facsimile deeds in circumstances where the original or copies of the deeds had been lost.

Background

In 1973, a parent had settled trusts for the benefit of each of his three children. Despite extensive searches, the trust deeds relating to two of the trusts could not be found. The trustee made an application under s 63 of the Trustee Act 1925 (NSW) for judicial advice that it was justified in managing and administering the two trusts in accordance with ‘facsimile deeds’ which it had prepared and which were in identical terms to the one existing trust deed, save for the identity of the beneficiaries.

Evidence

The evidence provided by the trustee in support of its application included:

• Hearsay evidence by the child who was the named beneficiary in the one existing trust deed that at the same time the trust was settled in favour of her in 1973, identical trusts were settled in favour of her siblings.
• Two deeds of appointment made in 1980, one relating to the one existing trust deed and the other relating to one of the lost trust deeds, pursuant to which the then trustee retired and the present trustee was appointed.
• A 1984 deed varying settlement of the one existing trust deed together with an opinion given by counsel in 1989 on a stamp duty issue which had arisen in relation to the variation, which opinion:
  • referred to the various trust deeds (including the lost trust deeds);
  • set out the main clauses of the various trust deeds; and
  • referred to amending documents of 1984 which had been submitted to the Commissioner of Stamp Duties with the expectation that nominal duty only would be assessed in respect of the amending documents.

Decision

Kunc J of the Supreme Court was satisfied that the evidence, taken together, constituted clear and convincing proof not only of the existence of the lost trust deeds but also of the contents of the lost trust deeds – namely, that they were relevantly in the same terms as the one existing trust deed (at [2]; [17]).

His Honour indicated that he was prepared to draw the inference that where separate trusts were settled for the benefit of each of the children in a family, the likelihood was that those trusts would be in identical terms save for the identity of the particular beneficiaries. Thus, his Honour found that the lost trust deeds were in the same terms as the existing trust deed save for the identity of the beneficiaries. His Honour considered that, insofar as the contents of the lost deeds were concerned, the inference drawn by him was fortified by counsel’s opinion on the stamp duty issue because the clauses to which counsel referred in his opinion as being clauses in each of the trust deeds did appear in the one existing trust deed (at [16); [18]).

Accordingly, his Honour found that the facsimile deeds reproduced the terms of the lost trust deeds and concluded that the trustee was entitled to the judicial advice which it sought.

Comment

In coming to his conclusion, his Honour relied on Barp Nominees Pty Ltd [2016] NSWSC 990, a case in which judicial advice had been given in a similar situation. Barp had briefly considered the relevant authorities, one of which was Porlock Pty Ltd [2015] NSWSC 1243 which had dealt in some detail with the question of what a trustee should do when a trust deed could not be found. Porlock is summarised in K Ottesen, “Lost trust deed: Trustee seeks judicial advice” 4 September 2015.

The New South Wales Court of Appeal in Hagerty v Hills Central Pty Ltd [2018] NSWCA 200 has overturned Slattery J’s decision that an option for the purchase of land was validly exercised in circumstances where the grantee of the option left the completion date in the contract for the sale of land blank and requested that an incorrect completion date be inserted in the contract. The Court of Appeal described the position as “quite finely balanced” but concluded that there had been no valid exercise of the option.

Background

The respondent had purported to exercise the option by delivering option exercise documents which had included a notice of exercise of the option and copies of the contract but the contracts had not specified any completion date although the option deed had provided that the completion date should be specified on the front page of the contract. Instead, the covering letter enclosing the documents had stated that “[w]e request … that [the appellants] enter the Completion Date on the front of the contract to be 192 days from the date of the contract”, citing a particular clause of the option deed. The cited clause, however, was inapplicable and the clause which was applicable in the circumstances required a completion date 42 days from the date of the contract. The appellants claimed that the option had not been exercised in accordance with the option deed and that the option had lapsed.

At first instance, Slattery J found that the option had been validly exercised for, in substance, the following reasons:

• As a matter of construction of the option deed, the requirements for the valid exercise of the option did not include the requirement for the completion date to be specified on the front page of the contract. The specification of the completion date did not have to occur upon the exercise of the option but could take place later.
• The request in the covering letter to insert an incorrect date into the contract did not amount to a counter-offer because the option could be exercised without the completion date being specified in the contract and the request was just that, a request which could be ignored by the appellants without offence or adverse legal consequences. The request did not contradict the validity of the mechanism to find the correct completion date as there was no insistence by the respondent upon an incorrect date as a condition of acceptance of its offer.
• Although there was a request to insert an incorrect date, the conduct of the respondent as a whole made it clear that the respondent intended to exercise the option and this must have been clear to the appellants.

Slattery J’s decision was summarised in K Ottesen, “Principles governing the valid exercise of an option”, 14 June 2018.

The appellants appealed and the Court of Appeal allowed the appeal.

Applicable principles

Leeming JA (McColl and Macfarlan JJA agreeing) made the following points about the principles which were to be applied to determine whether there had been a valid exercise of an option (at [36]-[47]).

• The exercise of an option, to be valid, must have been absolute and unqualified and must have bound the grantee of the option to perform the very terms set out in the option. However, it was not always easy to determine whether the purported exercise of an option should be regarded as an attempt to vary the terms of the option or as an intention to accept its terms without change, notwithstanding that they might have been misdescribed or that the grantee of the option might have indicated that he or she intended to perform the contract in a way for which the terms of the option did not provide. Therefore, although a notice might misstate the terms of the option which it purported to exercise, it could nevertheless amount to an unqualified and unconditional exercise of the option. However, if the grantee of an option set out his or her own erroneous understanding of the option, and then purported to exercise the option as so understood, there would (generally speaking) be no valid exercise of the option (see Quadling v Robinson [1976] HCA 31 at [3]; (1979) 137 CLR 192 at 200-201 per Gibbs J).
• There were relatively few rules of general application in determining whether an option had validly been exercised. While it had been said that it was generally accepted that a valid exercise of an option required strict adherence to the method prescribed in the instrument creating the option, such a general proposition was one of fact and not law, and reflected the fact that most professionally drafted option deeds specified with precision what was required for their exercise.
• The questions which needed to be addressed to determine whether there had been a valid exercise of an option were:
  • first, as a matter of construction, what had the parties agreed as to the requirements of the valid exercise of the rights created; and
  • secondly, did the conduct of the person purporting to exercise the option satisfy what was required?
• Nothing much turned on whether the subject of the option was land or a grant of some other type of property or contractual right. Both questions needed to be addressed, and they were distinct questions. The difficulty which had arisen in some cases had been one primarily of construing the document creating the option while, in other cases, the problem had arisen from qualifications in the purported exercise of the option. In the present case, both questions were problematic.

First question: construction of the option deed

Leeming JA found that the trial judge had not brought to bear the fact that the parties had expressly agreed that strict compliance with all of the conditions of the option deed was required to exercise the option. His Honour said that cl 1.2 of the deed, which provided that the option constituted an irrevocable offer “which may be accepted strictly in accordance with the provisions of this Deed”, required compliance not merely with the clause in the deed which set out the manner of exercise of the option but with other provisions of the deed and also provided that it was to be accepted “strictly” in accordance with its provisions. His Honour further said that, while there could be difficulty in some cases identifying the full legal effect of the term “strictly” as used in such clauses, the term at least was an indication that the documents purporting to exercise the option had to be clear, unambiguous and incapable of misleading, and that a non-compliance should not be considered as immaterial (at [48]).

His Honour rejected the trial judge’s construction of the option deed that the completion date did not need to be specified on the front page of the contract when the option was exercised but inclined to the view that a mere leaving of the completion date blank, while complying in all other respects with the deed, would only have been an immaterial non-compliance, notwithstanding cl 1.2’s requirement of “strict” acceptance. However, his Honour did not find it necessary to reach any final conclusion about this given the facts of the case. As to the time of completion of the contract, his Honour indicated that this would have been regarded by the parties as an important part of their bargain (at [49]-[52]).

Second question: whether the exercise documents satisfied what was required

As to whether the exercise documents satisfied what was required, Leeming JA said as follows:

• Care had to be taken in relying on passages taken from other decisions in other cases as one could be led into error if sentences taken from individual cases were transplanted into a new and different context and applied as if they were propositions of law (at [53]).
• While the covering letter was expressed in the language of a polite request, it was clear that the recipient would understand the respondent to be saying that it would pay the balance of the purchase price, and would obtain title to the land, not in 42 days, but in 192 days. The covering letter had to be read with the documents it enclosed and the request was prominent. Moreover, the covering letter made it clear that the omission to specify the completion date in the contract was deliberate (at [58]).
• Contrary to the reasons of the trial judge, it did not follow, either as a matter of ordinary English, or as a matter of law, that in all cases a request could be ignored without offence or adverse legal consequences (at [60]).
• The politely worded language of the covering letter which, given its placement and content could not be overlooked by the recipient, was important for what it was proposing, namely, a regime which was materially different from that in the option deed. It was also significant for what was left unsaid, namely, the absence of any suggestion that the unpaid balance of the purchase price would be provided within 42 days on settlement (at [61]).
• The covering letter read together with the documents provided with it fell short of a clear and unequivocal acceptance to be bound by the contract contemplated by the option deed. Contrary to cl 1.2 of the deed, the irrevocable offer contained in it had not been accepted strictly in accordance with its provisions. Instead, the documents had made it clear that the respondent was intending to be bound to a different contract, one which provided for settlement to be delayed for 192 days (at [62]).
• The parties clearly regarded the time for completion as material. The fact that the respondent was departing from the terms of the deed was not an immaterial non-compliance (at [63]).

Accordingly, his Honour concluded that the respondent had not complied with the option deed and that the option had not been validly exercised.