Hadco Constructions v McIntosh [2003] NSWSC 689

New South Wales Supreme Court

CITATION : Hadco Constructions v McIntosh [2003] NSWSC 689 HEARING DATE(S) : 16 July 2003 JUDGMENT DATE : 30 July 2003 JURISDICTION: Equity Division JUDGMENT OF : Windeyer J at 1 DECISION : Order for specific performance

CATCHWORDS : VENDOR AND PURCHASER - Agreement for option to purchase property - agreed prior to exchange of agreement that option be granted to purchaser 'or nominee' - agreement as exchanged omitted 'or nominee' - after exchange of agreement 'or nominee' added by agreement - whether addition of words by way of agreed variation or by way of rectification - provision in agreement for extension of six months in certain events - whether new agreement required for extension of term of existing option - whether option for purchase of residential property could be valid if exercised by nominee who did not sign the option agreement LEGISLATION CITED : Conveyancing Act 1919 s66ZG, s66ZH, s66ZI, s66ZJ, Division 9 Pt 4 Hadco Constructions Pty Limited (Plaintiff) PARTIES : Robert James McIntosh (First Defendant) Kathleen Jane McIntosh (Second Defendant) FILE NUMBER(S) : SC 5514 of 2002 COUNSEL : Mr D Warren (Plaintiff) Mr G R Waugh (First Defendant) Macquarie Lawyers (Plaintiff) SOLICITORS : Sorenson & Brown (First Defendant) Mikelis Strikis (Second Defendant)

- 10 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

WINDEYER J

WEDNESDAY 30 JULY 2003

5514/02 HADCO CONSTRUCTIONS PTY LIMITED V ROBERT JAMES MCINTOSH & ANOR JUDGMENT 1 The question for decision is whether or not an option to purchase property, 281 Mona Vale Road, St Ives (the property) has been validly exercised. Facts 2 The defendants, Mr and Mrs McIntosh (the grantors) are the registered proprietors of the property which is the land in Folio Identifier 3/19088. 3 By agreement dated 30 March 2001, in consideration of the sum of $9,000 they granted an option to Arthur Haddad (the grantee) to purchase the property for the sum of $900,000. Clauses 4, 5, 6, 9, 11 and 12 of the option agreement are as follows: 4. This option may be exercised by the Grantees by written notice delivered on or before 5 pm on 30th March 2002 to 281 Mona Vale Road, St Ives or to the offices of the Grantors' solicitors named in the contract or notified before the exercise of the option by the Grantors or any solicitor purporting to act for the Grantors accompanied by:- (a) A cheque which is $9,000 less than the deposit shown in the contract in favour of the deposit holder named or ascertained under the contract; and (b) A contract in the form of the contract annexed hereto duly executed by the Grantees as purchasers and with the addition of copies of the following material in the contract: (i) Computer Folio search 3/19088 (ii) DP 19088; (iii) Section 149 Certificate for the property, copies of which are annexed hereto. 5. The contract executed by the Grantees shall be dated on the date of delivery to the address stated in Clause 4 or the offices of the Grantors' solicitor of the documents referred to in Clause 4 above. 6. The exercise of the option shall created a contract between the Grantors and the Grantees. … 9. The Grantors agree that during the term of this option granted by them the Grantees may at their own expense and in their own names make such development or, if appropriate, building applications to the relevant local government authority or to any other appropriate authority for all necessary approvals for the development of a minimum of five three bedroom villas, units or townhouses on the land. The Grantors shall upon request sign any consent to any such application so far as they affect or may affect the property. … 11. The Grantees covenant and agree to lodge the application referred to in Clause 9 above within two months of the date of this Option Agreement. 12. If consent to the application envisaged in Clause 9 above has not issued from all relevant authorities within twelve months of the date of this Option Agreement and provided the Grantees have promptly performed all of their obligations hereunder and have pursued the application diligently. The Grantors hereby agree to grant an extension of six months to this Option Agreement provided that the purchase price of the property shall increase to Nine hundred and ten thousand dollars ($910,000) and an additional option fee of One hundred dollars ($100) shall be paid by the Grantees. 4 A copy of the draft contract was annexed to the option agreement. 5 Prior to exchange of the option agreements there were negotiations pursuant to which it was agreed that the option would be granted to Arthur Haddad "or nominee". There is no doubt that this was agreed. Equally there is no doubt that the document as exchanged did not include those words although they were added subsequently. There is an issue as to whether they were added by way of agreed variation or by way of rectification. Once the alteration was made the agreement was expressed to be between the grantors and "Arthur Haddad of 9 Auburn Street Parramatta or nominee (hereinafter called the grantees)". 6 The original option period expired on 30 March 2002. Pursuant to the terms of clause 12 it was extended for an additional six months, namely to 30 September 2002. 7 By nomination dated 20 September 2002 Arthur Haddad nominated Hadco Constructions Pty Limited as grantee to exercise the option. Notice of exercise was executed on that date by that company and on 23 September 2002 notice of exercise of option was given to the grantors by serving (1) notice of nomination; (2) notice of exercise executed by the plaintiff company; (3) cheque in favour of L J Hooker & Co for $82,000; (4) contract for sale in the form annexed to the option agreement, other than it being amended so as to show the purchaser as being the plaintiff company. 8 The $82,000 was calculated as follows: