[1] Mills v Ruthol [2] Tricon v Ruthol [2002] NSWSC 294

New South Wales Supreme Court

CITATION : [1] Mills v Ruthol [2] Tricon v Ruthol [2002] NSWSC 294 CURRENT JURISDICTION: Equity FILE NUMBER(S) : SC [1] 2101/99; [2] 4858/01 HEARING DATE(S) : 19 to 21 March, 2002 JUDGMENT DATE : 15 April 2002

[1] Brian Mills (First Plaintiff) [1] Elaine Mills (Second Plaintiff) [1] Ruthol Pty Ltd (Defendant) PARTIES : [2] Tricon (Aust) Pty Ltd (Plaintiff) [2] Ruthol Pty Ltd (First Defendant) [2] Brian Mills (Second Defendant) [2] Elaine Mills (Third Defendant) JUDGMENT OF : Palmer J

[1] N.A. Cotman SC with G. Colyer (Plaintiffs) [1] L.J. Aitkin (Defendant) COUNSEL : [2] Marcus W. Young (Plaintiff) [2] L.J. Aitkin (First Defendant) [2] N.A. Cotman SC with G. Colyer (Second & Third Defendants) [1] McCabe Terrill (Plaintiffs) [1] David Landa Stewart (Defendant) SOLICITORS : [2] Grahame Jackson & Assoc (Plaintiff) [2] David Landa Stewart (First Defendant) [2] McCabe Terrill (Second & Third Defendants) CATCHWORDS : REAL PROPERTY - OPTION - EXERCISE - Option to purchase land not exercised within option period because grantor deceived grantees into believing option terminated - grantees later discover deception and exercise the option almost two years out of time - whether option validly exercised. Held: the principle that a person cannot take advantage of his or her own wrongdoing operates to eliminate from the option agreement the condition as to time for exercise - the option was validly exercised. - EQUITY - PRIORITIES - EQUITABLE INTEREST - MERE EQUITY - Defendant grants two options to purchase same land - grantees of first option deceived by Defendant into not exercising option within stipulated time - grantee of second option takes option without notice of first option - both options confer equitable interests in the land - whether equitable interest of first option holders expires at end of option period - whether first option holders' right to exercise option outside option period is a "mere equity" - whether the principle that a "mere equity" cannot compete with an equitable interest taken for value without notice applies. Held: Equitable interest of first option holders did not come to an end upon expiry of option - the first option holders did not require the assistance of equity to perfect their title to their equitable interest in the land - the first option holders at all times had a prior equitable interest which prevailed against the equitable interest of the second option holder. MERE EQUITY - Nature discussed - the rule in Phillips v Phillips is a rule of policy: where the holder of a prior equitable interest needs the assistance of the equity court to perfect his or her title to that interest, that interest will be defeated if, before the title is perfected, a third party takes an equitable interest for value without notice. - Bragg v Alam [1981] 1 NSWLR 668; (1982) NSW ConvR 55-082 - Brown v Heffer (1967) 116 CLR 344 - Burns Philp Trustee Co Ltd v Viney [1981] 2 NSLWR 216 - Butler v Fairclough (1917) 23 CLR 78 - Central Trust and Safe Deposit Co v Snider [1916] 1 AC 266 - Cooper v Phibbs (1867) LR 2HL 149 - DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties [1980] 1 NSWLR 510 - Double Bay Newspapers Pty Ltd v A W Holdings Pty Ltd (1996) 42 NSWLR 409 - Eaglesfield v Marquis of Londonderry (1876) 4 Ch D 693 - Glenn v Federal Commissioner of Land Tax (1915) 20 CLR 490 - Lapin v Abigail (1930) 44 CLR 166 - Latec Investments Ltd v Hotel Terrigal Pty Ltd (In liq) (1965) 113 CLR 265 CASES CITED : - Laybutt v Amoco Australia Pty Ltd (1974) 132 CLR 57 - MacKenzie v Royal Bank of Canada [1934] AC 468 - Mackay v Wilson (1947) 47 SR(NSW) 315 - National Provincial Bank Ltd v Ainsworth [1965] AC 1175 - Phillips v Phillips (1861) 4 De GF & J 208; (1861) 45 ER 1164 - Reynell v Sprye (1852) 1 De GM&G 660; (1852) 42 ER 710 - Unatin 7 Up Co v Solomon 39 Atl 2nd 835 - Broom's Legal Maxims 10th Ed, pp.191ff - Coke's Commentary upon Littleton - Corbin on Contracts - Meagher Gummow & Lehane "Equity Doctrines and Remedies" (1992) 3rd Ed, para.428. - Megarry & Wade "The Law of Real Property" (2000) 6th Ed, para.5-013. - Snell's Equity (2000) 30th Ed, para 2-05; (1955) 71 LQR 480 - Spencer Bower, Turner & Handley "Actionable Misrepresentation" (2000) 4th Ed., paras 38 and 39 DECISION : Plaintiffs in first proceedings entitled to specific performance or damages for breach of contract, at their election; Plaintiff in second proceedings entitled to specific performance or damages for breach of contract, according to the election of the Plaintiffs in the first proceedings.