PACIFIC RIM DEVELOPMENTS PTY LTD v Mary ANKETELL [1999] NSWSC 304

New South Wales Supreme Court CITATION : PACIFIC RIM DEVELOPMENTS PTY LTD v Mary ANKETELL [1999] NSWSC 304 CURRENT JURISDICTION : Supreme Court FILE NUMBER(S) : 12508/98 HEARING DATE(S) : 9 November 1998 JUDGMENT DATE : 9 April 1999

PARTIES : Plaintiff: Pacific Rim Developments Pty Ltd Defendant: Mary Anketell JUDGMENT OF : Hulme J at 1

LOWER COURT JURISDICTION : Local Court LOWER COURT FILE NUMBER(S) : 41 of 1996 LOWER COURT JUDICIAL OFFICER : Mr B. Bright, Magistrate

COUNSEL : Plaintiff: B. Kinsella Defendant: D. Murr SOLICITORS : Plaintiff: Attwood Marshall Defendant: Peter Brooke & Company CATCHWORDS : Sale of Land, option, "void", estoppel against statute ACTS CITED : Conveyancing Act 1919 s66ZG DECISION : Appeal allowed.

11

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

No: 12508 of 1998 Friday, 9 April 1999 HULME J PACIFIC RIM DEVELOPMENTS PTY LTD -v- Mary ANKETELL

JUDGMENT

1 HIS HONOUR: These Reasons concern an appeal by way of stated case from the decision of a Magistrate dismissing a claim by Pacific Rim Developments Pty Ltd, the Plaintiff in both the Local and this Court seeking recovery of a sum of $30,000.00 paid pursuant to an option agreement. So far as is presently relevant the agreement provides:- "OPTION FOR PURCHASE OF LAND . This Agreement is made on the 22nd day of July 1994 BETWEEN MARY ANKETELL of 18 Queen Street, Fingal Head New South Wales ("Optioner") of the One Part AND PACIFIC RIM DEVELOPMENTS PTY. LTD. … ("The Optionee") of the Other Part. WHEREBY it is agreed as follows: OPTION CONSIDERATION AND PROPERTY 1. In consideration of the sum of Thirty thousand dollars ($30,000.00) to be paid by the Optionee to the Optioner in the following manner, namely One thousand dollars $1,000.00 upon the execution hereof and the sum of Twenty nine thousand dollars ($29,000.00) within 30 days thereafter, the Optionee (or its nominee) shall have the option of purchasing with vacant possession all that land described in the schedule hereto and together with the improvements erected thereon (together "the property") upon the terms and conditions contained in the Contract for Sale of Land annexed hereto and marked with the letter "A". PERIOD AND EXERCISE 2. Such option shall (if exercised) be exercised by notice in writing to the Optioner on or before the date being twelve months from the date hereof and such notice shall be delivered personally to the Optioner or sent by prepaid registered post addressed to her at her last known place of abode and if by post shall be posted at such time that in the ordinary course of post it would be delivered at such address on or before the aid date being 12 months from the date hereof. A copy of such notice shall in like fashion be sent to the Optioner's solicitor or solicitors Messrs Peter Brooke & Co of 4 Seaview Street, Kingscliff.. OPTION FEE AND PURCHASE PRICE 5. It is declared that the payment of the said sum of Thirty thousand dollars ($30,000.00) as consideration for the option hereby granted by the Optioner to the Optionee is unconditional so that the Optioner is entitled to retain the aid sum whether a sale under such option shall be obtained or not. In the event of the option being exercised, the said sum of Thirty thousand dollars ($30,000.00) shall be deducted from the purchase price by deeming a deposit in the amount of the said sum of $30,000.00 had already been paid to the Optioner. RIGHT TO CAVEAT 7. The Optionee shall have the right to lodge a Caveat over the property in terms not inconsistent with the purchasers right to caveat in the Agreement for Sale of Land annexed hereto and marked with the letter "A". 2 Facts found by the Magistrate and to which reference should be made include the following:- 1. The Option Agreement was prepared by the Defendant's solicitor after a period of negotiation by the solicitors for both parties. 2. The land the subject of the option included a dwelling house that was the Defendant's place of residence. 3. The option was executed on 22 July 1994. $1,000.00 was paid on 28 July 1994. 4. On or before 17 August 1994 the Plaintiff sought and obtained an extension of time to 5 September 1994 for payment of the $29,000.00 balance of the option fee. 5. On 7 September 1994 the Plaintiff sought and obtained a further extension of time to 9 September 1994 for payment of the $29,000.00. 6. On 9 September 1994 the Plaintiff paid the Defendant the $29,000.00. 7. On 5 October 1994 the Plaintiff lodged a caveat against the title to the Defendant's property to protect its interest under the Option Agreement. 8. On 31 May 1995 the Plaintiff sought an extension of time to 21 September 1995 for the exercise of the option. 9. On 15 June 1995 the Plaintiff's solicitors wrote to the Defendant's solicitors enclosing a Notice of Rescission and requested the Defendant to refund the fee of $30,000.00. 10. At all material times the Defendant believed the option was on foot and she and the Plaintiff bound by it. This belief was induced by:- (a) The Plaintiff's requests for an extension of time within which to pay the $29,000.00. (b) The Plaintiff lodging the caveat. (c) The Plaintiff's failure to terminate the Option Agreement. (d) The Plaintiff's request for an extension of time for the exercise of the option. 11. Induced by a belief that she was bound by the option, the Defendant took her property off the market. She also suffered detriment in having the title to her property encumbered by a caveat. 3 The Magistrate records in the stated case that both parties accepted that the land fell within the definition of "residential property" in Section 66Q of the Conveyancing Act. His Worship held that on the proper construction of the agreement, the Plaintiff was not entitled to exercise the option until the balance of the option fee was paid. The date of payment of 9 September 1994 was more than 42 days after 22 July 1994. 4 His Worship also held that on the basis of his findings recorded in paragraphs 10 and 11 above, the Defendant had made out a defence of equitable estoppel and the Plaintiff was estopped from asserting its entitlement to the return of the option fee. 5 Section 66ZG of the Conveyancing Act and some other sections to which it is desirable to have regard, as in force in April 1994, relevantly provided:- "66ZD (1) The purchaser under an option to purchase residential property may serve a written notice to the effect that the purchaser rescinds the option. (2) The notice may only be served during the cooling off period. (3) The notice of rescission must be signed by: (a) The purchaser or the purchaser's solicitor; or (b) If there is more than one purchaser, each of the purchasers or their respective solicitors. (4) The notice of rescission must be served on: (a) The vendor or the vendor's solicitor; or (b) If there is more than one vendor, any one of the vendors or the solicitor of any one of them; or (c) The agent of the vendor or vendors. (5) … 66ZE (1) On service of an effective notice of rescission in accordance with Section 66ZD in relation to an option to purchase residential property, the option is to be taken to be rescinded ab initio, but subject to the rights and obligations conferred with by this section. (2) The purchaser forfeits 0.25% of the purchase price of the property to the vendor. (3) … (5) The balance of the consideration or deposit remaining after deduction of any amount forfeited is payable to the purchaser. (6) Subject to sub-section (7), neither the Vendor nor the purchaser is liable to pay any other sum for damages, costs or expenses. (7) Either party is entitled to make a claim for: (a) Such compensation… where the purchaser has received the benefit of possession of the property; or (b) the payment of damages, costs or expenses arising out of a breach of any term, condition or warranty contained or implied in the option, but not so as to affect rights and obligations arising under this Division. (8) … 66ZG (1) An option granted for the purchase of residential property is void if: (a) it is not signed in duplicate by both parties; or (b) it is exercisable within 42 days after it is granted or, if a different period is prescribed, within that period. (2) If an option is void under this section, section 66ZE applies as if an effective notice of rescission of the option had been served under this Division, except that: (a) the purchaser is not liable to the forfeiture provided for under that section, and (b) that section has effect as if it provided that the whole of the consideration paid in relation to the option and the whole of any deposit paid in relation to the purchase of the property are payable to the purchaser. 66ZH (1) A statement in the form prescribed by the regulations, relating to the cooling off period is required to be included in every option to purchase residential property. (2) If an option does not contain the statement required under this section, either party may serve a written notice to the effect that the party rescinds the option or (if the option had been exercised) the contract resulting from the exercise of the option. (3) On service of the effected notice of rescission under this Section, Section 66ZE or (if relevant) Section 66V applies, except that… 66ZI (1) If an option to purchase residential property is granted and the required documents are not attached to the option document at the time it is granted, either party may service a written notice to the effect that the party rescinds the option or (if the option has been exercised) the contract resulting from the exercise of the option. (2) For the purposes of this Section, the required documents are: … (3) On service of an effective notice of rescission under this Section, Section 66ZE or (if relevant) Section 66V applies, except that …" 6 Section 66ZJ then goes on to stipulate matters with which a notice of rescission under Sections 66ZH or 66ZI must comply. 7 The first question which arises is whether "void" means "void" or "voidable". As was recognised in Victoria v Sutton [1998] HCA 56 at [38], "'void' has never been an easy word". See also National Acceptance Corp Pty Ltd v Benson and Ors (1988) 12 NSWLR 213 at 218. 8 The differences between Section 66ZG on the one hand and the parts of the other sections which I have quoted are noteworthy. Section 66ZG merely declares an option void in the circumstances to which it refers and specifies the rights which follow. Under other sections a notice of rescission which, to be effective, must comply with statutory requirements must be served. These other sections thus make it clear that there must be a decision or election on the part of a party wishing to bring the legal arrangement effected by the option agreement to an end. This difference argues strongly for the view that "void" in Section 66ZG should be given its natural meaning rather than that of "voidable", at the option of one of the parties. 9 The terms of s66ZG(2) argue in the same direction. It is impossible to see how the stipulation that "Section 66ZE applies …" can operate until the option has come to an end. If "void" means "voidable" that will be only after one of the parties has elected to avoid it. Thus one is required to read the opening words in sub-section (2) as if they provided "if an option is void under this section and has been avoided" or to regard the word "void" in sub-section (2) as meaning "void" and thus having a meaning different from that which, on the argument advanced, it bears in sub-section (1). Ordinary canons of statutory construction make both of these possibilities unlikely as ones reflecting the intention of Parliament. 10 Although these remarks are not confined to s66ZG, it should be noticed also that any failure to comply with its requirements will commonly be the fault of both parties. The absence of a duplicate or, at least if the document(s) are signed by both parties, failure to have the option drafted so as to preclude it being exercisable within 42 days will fall into this category. When regard is had to the general principal that a person in a contractual relationship cannot, in connection with the contract, take advantage of his or her own wrong, nothing is to be gained in those situations if "void" is construed as "voidable". 11 It is clear also from the second reading speech of the Minister who introduced the Conveyancing (Sale of Land) Amendment Bill in March 1990 to the Legislative Council that the section was intended to provide protection for both grantors of, and grantees under, an option. The requirement that the grantee sign the option agreement was designed to avoid a situation whereby a grantee could stand to lose possibly a large fee without seeing the agreement. The requirement that the document be signed in duplicate was an attempt to ensure that both parties received a copy of it. 12 I am unable to see anything in the description of the mischief to which the section was directed or the circumstances in which it is likely to come into play to incline one to the view that "void" should be construed as "voidable". The term should thus be given the operation which the context in which it appears suggests, i.e. "void". 13 The next question is whether the subject option was, within the terms of sub-paragraph (1)(b) "exercisable within 42 days after it was granted". This depends upon the proper construction of clause 1 of the Option Agreement and in my view it was so exercisable. In this regard I disagree with a number of conclusions of the learned Magistrate. 14 The principal rights of the parties were defined in such part of clause 1 as provided "in consideration of the sum of $30,000.00 to be paid by the Optionee to the Optioner …, the Optionee … shall have the option of purchasing" the land. The words which followed the reference to $30,000.00 "to be paid … in the following manner …" were directed merely to the time of payment and though failure to make the payments as stipulated may have amounted to a fundamental breach of the contractual provisions, I can see nothing to indicate that prior payment of the $29,000.00 was a condition precedent to the exercise of the option. In this regard, the terms of the subject agreement differ from those commonly found in option agreements and statements to which I was referred such as are contained in Bristow v Manning (1988) 4 BPR 9337 and Ferraro v Smith & Ors (1991) NSW Conv R 55-581 that "it is quite clear that if the consideration for the grant of an option is not paid then effectively there is no option" have no application. It follows that the Option Agreement was, from its inception, void. 15 Even if the view was taken that payment of the full sum of $30,000.00 was a condition precedent to the exercise of the option, the same conclusion would follow. The legislation is directed to the form and terms and rights given by the option agreement rather than to the actions of the parties. Under the document it was open to the grantee to pay the $30,000.00 on or at any time after execution of it and thus, even if full payment was a condition precedent thereto, to exercise the option within the 42 day period. 16 I turn to the question of estoppel. The conclusion at which I have arrived to the effect that "void" means "void" carries with it the consequence that there is no room for the operation of this doctrine. As was said in Roach v Bickle (1915) 20 CLR 663 at 671:- "In any case, where an act of Parliament lays down a rule of public policy it is impossible for private individuals to abrogate it at will… . Where that rule of public policy takes the form of express declaration of invalidity no Court can permit personal relations to effect a virtual repeal of the enactment." 17 See also Spencer Bower and Turner "Estoppel by Representation", 3rd ed., para 141 and the cases referred to therein. It seems to me that there is a general public policy apparent in s66ZG and in the group of sections of which it forms part. The general policy is to provide protection to particularly purchasers of residential land by defining in some detail the steps to be taken, and the consequences if they are not, for there to be binding contracts relating to the sale of residential land. S66ZG in part reproduces s66U of the Conveyancing Act as introduced in 1987, and both in its reflection of that earlier section and in its further provision, it is a reflection of that policy. The existence of such a policy behind a statutory provision is inconsistent with any estoppel being allowed to operate to defeat it - Kok Hoong v Leong Cheong Kweng Mines Ltd (1964) AC 993 at 1016. 18 This conclusion makes it unnecessary for me to consider at length the Appellant's other criticisms of the Magistrate's findings on the topic of estoppel. It is sufficient for me to say, however, firstly that some of those criticisms were directed to findings of fact by the Magistrate which it is not open to this court to review: secondly the Appellant's submissions paid insufficient attention to the fact that the Appellant had, by lodging a caveat, exercised rights under the Option Agreement. Had the option been merely voidable, the exercise of those rights would have precluded the Appellant from relying on matters within the Appellant's knowledge at the time of the exercise of those rights to avoid it - see Elder's Trustee and Executor Company Limited v Commonwealth Homes and Investment Co Ltd (1942) 65 CLR 603 at 618 Kadner v Brune Holdings Pty Ltd (1973) 1 NSWLR 498. 19 It follows from my conclusions and the terms of s66ZG and s66ZE that the consideration paid by the Appellant for the grant of the option is returnable to him. Appropriate orders are:- 1. Quash the verdict and judgment for the Defendant Mary Anketell given in the Local Court at Tweed Heads on 12 February 1998. 2. Remit the matter to the Local Court to be determined in accordance with these Reasons. 3. Order the Respondent Mary Anketell to pay the costs of the Appellant in this Court. **********