BRESMIST PTY LTD v STATE RAIL AUTHORITY OF NEW SOUTH WALES [1993] NSWCA 37

BRESMIST PTY LTD v STATE RAIL AUTHORITY OF NEW SOUTH WALES

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

CLARKE, MEAGHER and CRIPPS JJA 17 June 1993, 2 July 1993

[1993] NSWCA 37

A contract to carry goods was expressed to be for "(3) years with a 3 year option". The issue on appeal was who had the benefit of the option.

Held: The option was not meaningless or uncertain, the appellant had an entitlement to exercise the option. Biotechnology (Aust) Pty Ltd v pace (1988) 15 NSWLR 130 York Air Conditioning and Refrigeration (Australasia) Pty Ltd v The Commonwealth (1949) 80 CLR 11 The Council of the Upper Hunter County District v Australian Chilling and Freezing Co Ltd (1967-1968) 118 CLR 429

Clarke JA I agree with Cripps JA.

Meagher JA In this matter I entirely agree with the judgment of Cripps JA. Each contract which the appellant had with the respondent contained the following clause:

"1. The contract shall continue in force for a period of three (3) years with a three (3) year option."

However, the contract does not condescend to inform the reader who has the benefit of the option or how or when it can be exercised.

In my opinion, if the owner of property grants an estate in that property (eg a lease) for a time certain coupled with an option to extend the time of the grant, and it is uncertain in whom the option is vested, the law will conclude that it is vested in the grantee. Likewise in the present case, where there is a grant of a franchise for a time certain and an option to extend it but no express inference as to who owns the option, the law will assume the parties intended it to belong to the franchisee.

Cripps JA This is an appeal from Giles J in the Supreme Court dismissing a claim for damages for breach of contract brought by Bresmist Pty Ltd trading as W and L Sutcliffe (Bresmist) against State Rail Authority of New South Wales (SRA). The litigation concerned two contracts: the "Tumut Contract" and the "Young Contract". The breaches alleged under both were that SRA failed to accept Bresmist's exercise of what it claimed were its options to renew contracts to carry goods. The issue under each contract was the same because the contracts were in identical terms. Henceforth, I will refer only to the "Tumut Contract".