ut .* GUNG ENT Mo, 736, Blam CATCHWORDS CONTRACT - payment - whether in the particular circumstances of the case moneys deposited could be repaid at any time or only on request or by agreement —- whether a valid tender of a cheque had been made - whether tender of a company cheque could amount to repayment. YERBA PTY LIMITED v STIRLING PROPERTIES LIMITED No. VG 234 of 1987 Woodward, Sheppard and Jenkinson JJ. 23 December 1987 Melbourne IN THE FEDERAL COURT OF AUSTRALIA VICTORIAN DISTRICT REGISTRY GENERAL DIVISION No. VG234 of 1987 On appeal from the Supreme Court of the Australian Capital Territory BETWEEN: YERBA PTY LIMITED Appellant AND: STIRLING PROPERTIES LIMITED Respondent MINUTES OF ORDER JUDGES: Woodward, Sheppard and Jenkinson JJ. DATE PLACE Melbourne THE COURT ORDERS THAT: 23 December 1987 The appeal be dismissed with costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA VICTORIAN DISTRICT REGISTRY No. VG234 of 1987 GENERAL DIVISION On appeal from the Supreme Court of the Australian Capital Territory BETWEEN: YERBA PTY LIMITED Appellant AND: STIRLING PROPERTIES LIMITED Respondent JUDGES: Woodward, Sheppard and Jenkinson JJ. DATE : 23 December 1987 PLACE : Melbourne REASONS FOR JUDGMENT THE COURT This is an appeal from a judgment of the Supreme Court of the Australian Capital Territory (Miles CJ, Stirling Properties Ltd v Yerba Pty Ltd 1987 74 ACTR 1) in which the Supreme Court made a declaration that the respondent ("Stirling") by notice in writing dated 25 June 1987 validly exercised an option granted to it by deed dated 24 December 1985, to acquire from the applicant ("Yerba") five million units in the Stirling Property Trust. The Supreme Court also ordered that, upon payment by Stirling of the 2. purchase price by midday on Wednesday, 26 August 1987, Yerba forthwith deliver up to Stirling a duly executed transfer of such units together with the certificates relating to them. The Court also granted consequential injunctive relief restraining Yerba from dealing with the units and from exercising voting rights attached to them. Yerba was ordered to pay Stirling's costs of the proceedings. At the heart of the dispute between the parties are two agreements, one made between Stirling and a company, Scandinavian Pacific Investments Limited, which has since changed its name to Duke Securities Limited, and the other an agreement made between Yerba and Stirling. The second of these agreements was provided for in a schedule to the first agreement. We shall hereafter refer to Scandinavian Pacific Investments Limited as "SPIL" and to Duke Investments Limited as "Duke". The first agreement, which was dated 24 December 1985, recited that SPIL, at the request of Stirling, had procured Yerba to enter into an agreement with a company, Gammon Nominees Pty Limited, for the purchase of five million contributing units in the Stirling Property Trust and that in consideration therefor Stirling had agreed to make certain payments to SPIL in accordance with the provisions of the agreement. Clauses 1, 2 and 3 of the agreement were as follows:- "1. Payments and Deposits In consideration of SPIL procuring Yerba to purchase the Units from Gammon Stirling hereby agrees with SPIL: 2. 1.1 1.2 1.3 1.4 3. to pay to SPIL the sum of THREE HUNDRED AND SEVENTY-FIVE THOUSAND DOLLARS the Fee payable as to TWO HUNDRED AND FIFTY THOUSAND DOLLARS ($250,000) on the date hereof and the balance on or before 3rd January, 1986; to pay to SPIL an amount equivalent to one-half of all stamp = duty incurred and paid by Yerba in relation to the purchase and transfer of the Units; to deposit with SPIL the sum of ONE MILLION SIX HUNDRED AND TWENTY FIVE THOUSAND DOLLARS ; F on the date hereof; — to deposit with SPIL no later than 15th May, 1986 a further ONE MILLION TWO HUNDRED AND FIFTY THOUSAND DOLLARS ($1,250,000). Terms of Deposits The deposits referred to in sub-clauses 1.3 and 1.4 ("the Deposits") shall be held by SPIL subject to the following conditions: 2.1 2.2 subject to sub-clause 1.3 the Deposits shall be released by SPIL to Stirling forthwith upon receipt of a written request from Stirling: 2.1.1 at any time after the expiration of two (2) years from the date of deposit; 2.1.2 upon the exercise by Stirling or other termination of the option referred to in sub-clause 3.1; 2.1.3 upon forfeiture of the Units; or 2.1.4 upon the occurence of an event of default. SPIL shall pay interest to Stirling in an amount totalling not less than any distribution made by the Trust in respect of the Units, such amount to be paid within five (5) business days of any such distribution being made by the Trust. 3. 4. For the purposes of this Clause and Clause 1 a request may be made by telex or sent by prepaid security post to SPIL at its address as set forth in this Agreement, or such other address as it may notify Stirling in writing and where sent by telex shall be deemed to have been received on the first business day following transmission and where sent by post on the second business day following posting and "business day" means a day on which the banks, as defined in section 5(1) of the Banking Act 1959 (as amended), are open for the full range of banking business in Canberra and Melbourne. Option Agreement In consideration of the making of the Deposits and the payments set out in sub-clauses 1.1 and 1.2 SPIL shall procure Yerba to: 3.1 lodge the certificates in respect of the Units together with a duly executed transfer of the Units with Stirling to secure the repayment of the Deposits; 3.2 grant an option to Stirling, or its nominee, to purchase the Units in substantially the terms of the option set out as Schedule 1; and SPIL hereby guarantees all of the obligations of Yerba pursuant to the said option agreement and agrees to indemnify Stirling in respect of any loss or damage incurred by it by reason of any default by Yerba in carrying out its obligations under the said option agreement". Clause 4 contained certain representations made by SPIL; clause 5 provided for the events which should be deemed to be "an event of for the Stirling; default" for the purposes of the agreement; clause 6 costs of default which SPIL was obliged to pay to and clause 7 for the proper law of the agreement. 5. e The second agreement was the agreement referred to in clause 3.2 of the first agreement. It was set out as a schedule to that agreement. The agreement was entered into on the same date as the first agreement, namely, 24 December 1985. The agreement recited the fact that Yerba was registered or intended to be registered as the holder of five million contributing units in the Stirling Property Trust and that it had agreed to grant to Stirling an option to purchase units on the terms and conditions provided for in the agreement. Clauses 1 and 2 of the agreement were as follows:- "1. In consideration of the payment to the Grantor [Yerba] by the Grantee of one dollar ($1.00), receipt of which is hereby acknowledged, the Grantor hereby grants to the Grantee [Stirling] an option to purchase the Units in the Trust ("the Option") for a purchase price determined in accordance with clause 3 ("the Purchase Price"), 2. The Option may be exercised by the Grantee by notice in writing delivered to the Grantor at any time prior to its termination in accordance with clause 6. Notice may be sent by prepaid security post or by telex and where sent by post shall be deemed to have been received on the third business day in the place of receipt after posting and where sent by telex on the first business day in the place of receipt after transmission. For the purposes of this clause "business day" shall mean a day on which the banks as defined in section 5(1) of the Banking Act 1959 (as amended) are open for the full range of banking business in both Melbourne and Canberra". It was common ground that the reference to clause 6 1n clause 2 should have been a reference to clause 7. 6. Clause 3 provided for the purchase price of the units. If the option were exercised prior to 15 May 1986, the price was to be 40 cents per unit; if it were exercised after 15 May 1986, but within 12 months of the date of the agreement, the price was to be $1.05 per unit; and where the option was exercised 12 months after the date of the agreement, the price was to be $1.20 per unit. Clause 4 was in the following terms:- "4, The Grantor and the Grantee acknowledge that the certificates in respect of the Units are being held by the Grantee together with a transfer in respect thereof and that upon exercise of the Option pursuant to clause 2 and payment of the Purchase Price to the Grantor the Grantee may complete the said transfer and lodge it together with the said certificates with the Trustee or Manager of the Trust for registration". It is unnecessary to refer to clauses 5 and 6. Clause 7 was as follows:- "7. This Option shall terminate upon: 7.1 the sale or other disposition of the Units by the Grantor provided that the Grantor shall not sell or otherwise dispose of the Units other than with the consent of the Grantee, which consent shall not be unreasonably withheld, and provided further that where the Units are sold for a consideration which after deduction of all reasonable selling expenses is in excess of the Purchase Price applicable at the date upon which the Units are so sold one-quarter of any such excess is forthwith paid to the Grantee; 7. 7.2 the expiration of two (2) years from the date hereof; 7.3 SPIL repaying all moneys deposited with it by the Grantee pursuant to an agreement of even date between the Grantee and SPIL". Clause 8 provided for the proper law of the agreement. His Honour made a number of findings of fact, none of which was challenged on appeal. Counsel, however, referred to some of the evidence in order to draw our attention to some additional matters. The background to the transactions may be shortly stated. In March 1985 it was resolved that a number of units and options to purchase units in the Stirling Property Trust should be issued to the public. There was a shortfall upon the issue of the units and the underwriters arranged for five million units to be taken up by a nominee company, namely Gammon, earlier referred to. Stirling was anxious that the underwriters not retain control of the shares and entered into negotiations with Yerba and SPIL (later Duke) for the purpose of bringing about a situation in which the Yerba interests would acquire the units held by the underwriters. The negotiations resulted in the execution of the two agreements on 24 December 1985. Under the option agreement Stirling acquired an option to take up the units which was to enure for a period of two years. The issues in the case raise questions as to the circumstances in which Yerba and SPIL, notwithstanding Stirling's option, could 8. . become unconditional owners of the units by repaying to Stirling the moneys which Stirling had advanced under the terms of the first agreement. The events in question occurred on 25 June 1987, some 18 months after the execution of the agreements. His Honour found that at about 12.40 p.m. on that day Mr Ramsden, who was a director of Yerba, arrived unannounced at Stirling's offices in 405 Collins Street, Melbourne. He saw there Mr Chapman who is Stirling's secretary. Mr Ramsden said that he was from Duke (formerly SPIL) and that the purpose of his visit was to collect certificates for units in the name of SPIL. Mr Chapman said that he had no immediate recollection of the matter. Mr Ramsden said that he had a cheque for $2.875 million to repay the deposit "with Duke Securities". Mr Chapman remembered that there had been transactions between Stirling and SPIL, but he could not recollect the details. He said that he was reluctant to accept the cheque because he had no precise knowledge of what it represented. In his oral evidence, not referred to by his Honour, he agreed that he did recall during the conversation that, in general terms, there had been a transaction involving units in the Trust and that units in the Trust were in Yerba's name. He had also said to Mr Ramsden, "I know about the deposit". At one point during the meeting Mr Ramsden handed Mr Chapman the cheque and he looked at it. He said that he did not read it, but only glanced at it. He did not read the amount of it. He did, however, notice that it was not a bank cheque. In the course of 9. the conversation Mr Chapman said that he was not in the habit of refusing money but he was not going to accept it. He said that he would ring Mr Ramsden back later in the afternoon. Mr Ramsden then left. Mr Chapman said that he did not know whether it was in Stirling's interests to accept the cheque or not. He wished to consider the matter and consult other people in the company about it. Between 3.00 p.m. and 3.30 p.m. on 25 June 1987, Mr Ramsden tried to telephone Mr Chapman. On two occasions he was told that Mr Chapman was at a meeting, and on a third occasion he was told he was unavailable. At about 3.40 p.m. Mr Ramsden returned to Stirling's offices and, after some discussion and a telephone call back to a director of Duke, attempted to give the cheque to a person in the reception area who was apparently a receptionist. She declined to accept it. A person engaged by Stirling in sales or marketing activities, who was apparently delegated to speak to Mr Ramsden a little later, also refused to accept the cheque. At 4.10 p.m. Mr Ramsden left the premises, still in possession of the cheque. In the course of his evidence Mr Chapman said that he had discussions with other people in Stirling and was told that it was not in Stirling's interests to accept the cheque. He gave instructions to the receptionist not to accept any cheque if an attempt were made to give one to her. During the afternoon it was decided that Stirling would exercise the option conferred on it by clause 1 of the option 10. agreement. At about 3.50 p.m., whilst Mr Ramsden was still at Stirling's offices, a letter from Stirling arrived at Yerba's offices which are also in Collins Street, Melbourne. The letter said:- "We refer to the agreement dated the 24th December, 1985 between our Companies in relation to the 5,000,000 contributing units in the Stirling Property Trust. In accordance with Clause 2 of the Option Agreement, we hereby exercise our option to purchase the 5,000,000 contributing units (which have since become fully paid) for a price of $1.20 per fully paid unit, in accordance with Clause 3 of the Option Agreement. We would be grateful for acknowledgement of this notice". Mr Chapman said that he did not remember whether he had anything to do with preparing this letter but acknowledged that he was aware during the afternoon that it was important to have the letter delivered to Yerba before any cheque was delivered to Stirling. Hence he gave instructions to the receptionist not to accept the cheque. It is to be observed that, on the findings ultimately made by the learned trial judge, the critical period in the late afternoon is the initial ten minutes during which Mr Ramsden was in Stirling's offices after he arrived at 3.40 p.m. At about 4.30 p.m. Mr Ramsden returned to Stirling's offices and left the cheque with the receptionist. He was out the door before she could hand it back to him. At about 8.00 p.m. Duke 11. r caused a letter to be delivered to Stirling which referred to the events of the day and continued:- "The purported notice of exercise of the option which was delivered this afternoon is not accepted. In the first place it arises from what we consider to be deceptive conduct on the part of officers of your company. In the second place your company cannot claim to exercise the option after having refused to accept repayment of the deposit. Thirdly, the notice was not served in accordance with the option agreement. We demand on behalf of Yerba, the immediate return of the scrip relating to the 5,000,000 units and advise that if they are not delivered up to this office by 10.00 a.m. tomorrow (26 June, 1987), we shall make immediate application to the Supreme Court for the recovery". The letter concluded with the following paragraph:~ "As there is no point in continuing to run up and down Collins Street with unopened envelopes we will hold your funds in trust on your behalf until you request them". The question now to be determined is whether Stirling validly exercised the option in accordance with clause 2 of the above agreement by means of its letter delivered at approximately 3.50 p-m., or whether at that stage the option had already been terminated in accordance with clause 7.3 of the option agreement by the payment by Duke of the moneys deposited with it by Stirling. It was not contended that the notice purporting to exercise the option had not been properly served. 12. r Three substantial questions were argued on the appeal. Two of these had been determined unfavourably to Stirling by the learned trial Judge and were raised on the appeal by notice of contention filed on its behalf. The questions were as follows:- (a) (b) Was it open to SPIL (Duke), on 25 June 1987, to repay the moneys on deposit and thus put an end to the option? This question raised aspects of the construction of clause 2 of the agreement between Stirling and SPIL and clause 7.3 of the option agreement, and also their relationship to one another. Stirling's submission was that, notwithstanding the language of clause 7.3 of the option agreement, this agreement had to be read in conjunction with the Stirling/SPIL agreement and that the only circumstances in which SPIL could repay the money were provided for in clause 2.1, relevantly clause 2.1.1, of that agreement. Was there a tender of payment of the amount of the deposits? It was submitted by Stirling that there was no tender here because a tender must clearly identify the obligation to be discharged by the maker of the tender and should be made in such circumstances as to allow the person to whom it is made a reasonable opportunity to identify and understand the obligations the maker of the tender seeks to discharge. The evidence disclosed that no clear identification of the obligations to be discharged was made when Mr Ramsden spoke to Mr Chapman and no reasonable opportunity was at that time afforded Mr Chapman to understand the obligation Mr Ramsden was 13. seeking to discharge. Different considerations apply to the attempted tender to the receptionist in the afternoon. By this time the responsible officers of Stirling were fully aware of what Mr Ramsden was trying to do. (c) Was the tender required to be in cash? It was submitted by Stirling that the proffering of a cheque could not, in the circumstances, constitute a valid tender. The learned trial Judge found for Stirling because he accepted submissions made on its behalf in relation to question {b). He found against Stirling in relation to the other questions. Stirling contends that it was entitled to succeed on all questions. We proceed to deal with each of these questions in turn. (a) The learned trial judge dealt with this first issue in the following terms, "It was submitted on behalf of the plaintiff that on a proper construction of the principal agreement SPIL had no right to repay the money on deposit without a request from the plaintiff Stirling or without the consent of Stirling. To the same end it was argued that 'the commercial reality' behind the transactions was that it did not make sense of the agreement that SPIL should be entitled to repay the deposits at its whim. It is sufficient to say, with respect to this part of the argument on behalf of Stirling, that neither the terms of the agreement nor the commercial background to the transactions requires' the principal agreement to be construed subject to an implied term that SPIL was entitled to repay the deposits to Stirling only upon notice or with Stirling's consent." 14, r With respect to his Honour, we feel that the point cannot be put aside so readily. It is convenient to consider first the argument based on "commercial reality". The evidence showed that the transaction arose out of an issue of new units in the Stirling Property Trust, which was managed by a subsidiary of Stirling. The issue was not fully subscribed and underwriters had to take up five million units. Stirling was anxious, for reasons of credibility and possible future underwriting agreements, that this position should not be allowed to persist. Accordingly it entered into the agreements the subject of these proceedings. It should be noted that although the agreements revolved about Yerba's purchase of the five million units from the underwriters, Yerba was not required to fund the purchase from its own resources. The units were issued at $1.05, so the purchase price of five million units was $5.25m, payable as to $2m when the underwriters took them up and as to $3.25m on 15 May 1986. Stirling put Yerba in funds by depositing with SPIL the sum of $1.625m on the signing of the subject agreements, paying a fee of $0.375m within a week or two and making a further deposit of $1.25m on or before 15 May 1986. In addition, 1t handed three million unit certificates to Yerba to enable it to raise by mortgage the further $2m needed to pay out the underwriters. 15. r It seems that the only advantages Stirling gained from this transaction were the appearance of a successful issue of units in its property trust and the corresponding avoidance of any risk that underwriters might dump the units on the market. The advantage to Yerba (and its associated companies) was the immediate receipt of a fee of $0.375m, and if Stirling were to exercise its option to purchase the units from Yerba after more than 12 months had elapsed, it was required to pay $1.20 per unit rather than $1.05 - a profit to Yerba of $0.75m. The disadvantages to Yerba were (a) having to pay one half of the stamp duty on its purchase from the underwriters (the other half was to be refunded by Stirling); (b) receiving no distribution from the units while it held the deposits - any such distribution had to be passed on to Stirling; (c) presumably, having to bear any costs associated with the raising of $2m by mortgaging the three million units; and (d) the possibility that the units would fall in value over the two year period contemplated by the agreements, with the consequence that Stirling would not exercise its option to purchase, leaving Yerba with the units and the necessity for SPIL to repay the deposits on demand. There appears to have been no evidence on the extent of this 16. r risk. However it must be noted that Yerba was afforded some protection by clause 7(1) of the option agreement (see above), which enabled it to sell the units within the two-year period, subject to certain conditions. It is against this background that the respondent argued the commercial unreality of supposing that the parties would have contemplated that SPIL could, without the consent of Stirling, and even without notice of its intention (which would have given Stirling a chance to exercise its option), repay the deposit at any time and thus become the outright owner of the units. It certainly seems unlikely that the parties contemplated that Yerba could terminate the arrangement at an early stage and retain its $0.375m fee without having done anything to earn it. This is the clearest argument against the parties having intended that SPIL could repay the deposits without consent. Repayment without notice is really a separate point. Such notice would presumably be intended to give Stirling a chance to exercise its option in the meantime, otherwise there would be no point in the notice. Such an arrangement would have made commercial sense. It would have given Yerba a chance to cut its losses if it saw the value of the units declining while at the same time denying it any windfall profit - other than that contemplated by the agreements after one year of operation, the $0.75m referred to above - if the value of the units rose. Having considered the commercial context of the agreements, we turn now to the agreements themselves. It is appropriate to 17. © consider them together because the first included the draft of the second as a schedule and the second referred back to the first in the most vital sub-clause. The first thing to note is that the first or principal agreement, having provided in detail for the making of the deposits, makes no reference to the possibility of their being repaid by SPIL of its own volition. Under the heading "2. Terms of Deposits" are set out the four circumstances in which Stirling could, in effect, demand the return of the deposits, but there is no reference to a corresponding right in Yerba to pay back the deposits. If such a right had been intended, one might have expected some attention to the circumstances in which such a repayment might be made and the respective rights of the parties if it were made or tendered. Secondly, the only reference to the repayment of the deposits in the second, or option, agreement occurs in clause 7 which reads, "7. This option shall terminate upon: T.1l ..aeee 7.20 ca eee 7.3 SPIL repaying all moneys deposited with it by the Grantee [Stirling] pursuant to an agreement of even date between the Grantee and SPIL". It seems probable, as a matter of construction, that the phrase "pursuant to an agreement of even date ...." relates to the "moneys deposited" and not to the "repaying". If the reference is indeed to "repaying .... pursuant to an agreement of even date", that would be the end of the matter, because, as we 18. have noted, there is no reference in that agreement to voluntary repayment. If, however, the reference is merely to "moneys deposited ..... pursuant to an agreement of even date" the matter is still at large. Counsel for Yerba argued that a debtor can always repay his debt unless precluded by a specific provision in the contract from which the debt arises. They cited G.A. Investments Pty Ltd v Standard Insurance Co Ltd [1964] WAR 264. But that decision, and the reasoning on which it is based, relates only to mortgages. Different consideration apply, in our view, to a complex transaction such as the present, where it would be impossible to imply any such simple rule with confidence that it reflected the intention of the parties. Although it seems clear that possible future events were not thought through at the time the agreements were drawn up and signed, the only proper course now is to find the meaning of clause 7.3 from a consideration of its terms, read in the context of the other relevant provisions of the two agreements, and considered in the light of the surrounding circumstances already discussed. To begin with, it is necessary to compare the express provisions for repayment of the deposits on demand (Clause 2 of the first agreement) with those for the termination of the option (clause 7 of the second agreement). 19. Clause 7(2) provides for the option to terminate automatically at the expiration of two years from the date of the agreement ~ that is on or immediately after 24 December 1987. Clause 2.1.1 provides that the return of the deposits can be required after the expiration of two years from the date of the deposit - that is as to $1.625m on or immediately after 24 December 1987 and as to $1.25m on or ammediately after 15 May 1988. In either event the option would terminate before the deposits were due to be repaid and there is no room for the operation of clause 7.3. Clause 2.1.2 provides for the deposits to be released if the option is terminated. Again there is no scope for the operation of clause 7.3, which deals with the opposite sequence of events. Similarly, clause 2.1.3 relates to the situation of the deposits if the units are forfeited for non-payment of calls or otherwise (see clause 6.2). Obviously such a forfeiture would effectively put an end to Stirling's option rights, so clause 7.3 would again be deprived of any effect. This leaves only clause 2.1.4 as having any relevance to clause 7.3. This provides that if there is an 'event of default', as defined in clause 5, the deposits must be released on demand. A typical event of default would be the appointment of a receiver of the undertakings of SPIL or Yerba. If such an event occurred, and Stirling elected to require repayment of its 20. r deposits without first exercising its option, the effect of clause 7.3 would be that it would lose its option once repayment was made. It seems most unlikely that clause 7.3 was included in the agreement to deal only with this contingency. A much more likely explanation is that the parties also contemplated a situation where the moneys might be repaid within two years by mutual arrangement, without the option first being exercised. In sucha situation it would be only fair that the option should be terminated. We think this contingency 1s covered by clause 7.3. But that still leaves to be decided whether clause 7.3 imports into the arrangement between the parties an entitlement on the part of SPIL to repay the deposits without the agreement of Stirling. With respect to the opinion of the learned trial judge, we take the view that the parties did not intend SPIL to have a unilateral right of repayment. There is no mention of it in either agreement; it would be inconsistent with the commercial realities of the transaction, as explained above, and the presence of clause 7.3 is fully explained by the possibility of repayments under clause 2.1.4 or by mutual arrangement. This would be enough to dispose of the appeal; but it is desirable that we also refer to the other matters raised before us. 21. a (b) So far as the purported tender some time after 12.30 p.m. on 25 June 1987 was concerned, it was submitted by counsel for Stirling that a tender should clearly identify the obligations to be discharged by the maker of the tender, and should be made in such circumstances as to allow the person to whom it is made a reasonable opportunity to identify and understand the obligations the maker seeks to discharge. We accept this submission. Circumstances will vary greatly from case to case. Sometimes the recipient of a tender will know immediately what it concerns, what precise amount is owing and under what conditions payment may be made. The learned trial judge accepted that Mr Chapman was genuinely caught by surprise, and could not remember the details of the transactions between the parties. This is not surprising, given the lapse of time and the rather cavalier approach of Mr Ramsden to his task of repaying $2.875m dollars. The obvious way to have made tender of such an amount in such circumstances would have been by way of a covering letter, referring to the original transactions and stating by what right and with what intention the payment was being made. Accordingly we agree with the learned trial judge that there was no valid tender of the deposit moneys on this occasion. The later attempted tender, at some time after 3.40 p.m., might have been successful (leaving aside for the moment its form - a company cheque) if Mr Ramsden had persevered. By this time the senior officers of Stirling knew what was happening and, it seems, were concerned that no tender should be accepted. These ) 22. r tactics were successful. By his own account, Mr Ramsden merely asked a receptionist "Would you take this?" and she declined. A little later (which may well have been after the notice exercising the option had been served at 3.50 p.m.) Mr Ramsden "tried to give .... the cheque" to another junior officer of Stirling "but he said he could not take it and that I would need to give it to the company secretary". Mr Ramsden accepted this reply and left the premises. When Mr Ramsden returned a third time, at 4.30, left the cheque with the receptionist and hurried from the building, he was already too late, and so it is unnecessary to consider the possible effect of that action had it occurred earlier. For these reasons we are satisfied that there was no effective tender of the cheque by Mr Ramsden at any time on 25 June 1987. (c) The final question to be considered is whether the proffering of a company cheque could constitute a valid tender, amounting to payment, in the circumstances of this case. The submissions made by the parties cannot be properly considered unless the following assumptions are made:— (i) Contrary to our conclusions, SPIL was entitled to repay the money on 25 June 1987. (ii) Again contrary to our conclusions, Mr Ramsden made a proper tender of the cheque prior to the purported exercise of the option by Stirling. ,ee Ass 23. r Clause 7.3, if it were to be construed so as to entitle SPIL to pay at any time within the period of two years from 24 December 1985, could only operate to terminate the option if and when the money was in fact paid. The relevant words of the clause are 'repay all moneys deposited with it' (SPIL). So the question is not whether SPIL was entitled to tender a company cheque rather than cash or bank cheque, but whether' the constructive receipt by Stirling of the cheque constituted payment to it of the moneys in question. That a personal cheque may in some circumstances constitute payment is established by the judgments of Barwick CJ, and Mason and Aickin JJ in George v Cluning (1979) 28 ALR 57. That was a case relating to the exercise of an option, but the exercise of it, and the payment of the moneys, occurred well within the period of the option. Notwithstanding what was said by members of the Court concerning payment by cheque, the case was decided in favour of the appellant because a majority of judges were of opinion that, upon the proper construction of the agreement in question, the option was exercised by the giving of the written notice, and the payment of a sum of money was not a necessary element for the exercise of the option. George v Cluning needs to be considered along with a later decision of the High Court in Lewes Nominees Pty Limited v Stran (1983) 57 ALJR 823. The grantee of an option had purported to exercise it on the last day of the period of the option. On that day he posted to the grantor a notice together with a bank cheque for the sum which was required to be paid. These did not reach 24. e the grantor until the next day but photostat copies of the notice and bank cheque were given to the grantor on the day that the option expired. The High Court held that the clause in question in that case made payment of the moneys a condition of the exercise of the option and distinguished Cluning's case on this ground. In the course of his judgment, in which the other Judges agreed, Gibbs CJ said (p.824):- "On behalf of the appellant it was submitted that guidance for the decision of the present case can be found in George v Cluning (1979), 28 ALR 57. In that case the option agreement " contained a provision, cl. 6, which was in substance identical with cl. 3 in the present case, but it also contained two other provisions, cll. 2 and 3, which have no counterpart in the_ present agreement, and which influenced the majority of the Court in that case to hold that payment was not an element of the exercise of the option. That decision depended on the particular provisions of the agreement there in question which, as all the members of the Court pointed out, were carelessly drafted and it does not govern the present case where the agreement, although still not without its obscurities, does not contain some of the provisions that were regarded as relevant in that case". In our opinion these cases demonstrate that each case must be considered in the light of the relevant contractual documents and its own particular circumstances. What needs to be emphasized in the present case is that, upon the assumptions we have made, the payment, if it were to terminate the option, had to be made before 3.50 p.m. on 25 June 1987. The question is, therefore, whether the proffering of the cheque by Mr Ramsden was, on our assumptions, a 'repayment' for the purposes of clause 7.3. Ww 25. e One needs to consider what the common intention of the parties, as revealed by the documents, was; or, if no common intention is expressed, what the ordinary course of commercial dealing required in such a case. In view of the very large sum involved, the parties could hardly have contemplated repayment in cash. In our opinion the requirement was for the tender of a bank cheque, or the tender of a company cheque on the understanding that no repayment would be regarded as taking effect until the cheque had been cleared in the ordinary course of business. Stirling could not have been expected to accept a company cheque as unconditional repayment of the deposits. If it was tendered on this basis (as Mr Ramsden clearly intended, because he said he wanted to collect the unit certificates) Stirling could have refused it on that ground. Since the cheque tendered was a company one and the time of the tender would have prevented it from being cleared before 3.50 p.m. on 25 June 1987, the tendering of the cheque, even on the assumptions we have made, would not have constituted repayment in this case. We would therefore answer question (c) favourably to Stirling. For the reasons given, the appeal should be dismissed with costs. I certify that this and the twenty-four (24) preceding pages are a true and accurate copy of the Reasons for Judgment herein of The Court The Hon Mr Justice Woodward Dated: 23 December 1987 eae ae Counsel for the Applicants: 26. é Mr J. Fajgenbaum QC & Mr J. Strong Solicitors for the Applicants: Middletons Oswald Burt Counsel for the Respondents: Mr A.J. Myers QC & Mr W. Martin Solicitors for the Respondents: Messrs Clayton Utz