Evolution Living Property Management Pty Ltd v CSP Australia Pty Ltd [2010] NSWSC 65

New South Wales Supreme Court

CITATION : Evolution Living Property Management Pty Ltd v CSP Australia Pty Ltd [2010] NSWSC 65

HEARING DATE(S) : 12/02/10

JUDGMENT DATE : 12 February 2010

JURISDICTION : Equity Division

JUDGMENT OF : Barrett J

DECISION : Separate question answered.

CATCHWORDS : CONTRACTS - general contractual principles - illegal and void contracts - call option for purchase of residential property made void by statute - call option and put option created by same deed - period within which prospective vendor may put commences after period within which prospective purchaser may call - whether statutory provision making call option void affects put option - whether contract severable

Conveyancing Act 1919, ss 66ZE, 66ZG LEGISLATION CITED : Conveyancing (Sale of Land) Amendment Act 1990 Uniform Civil Procedure Rules 2005, rule 28.2

CATEGORY : Separate question

Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Pty Ltd (No 2) (1975) 133 CLR 331 CASES CITED : Kelly v Kosuga 358 US 516 (1959) Vam Ltd v McDonald Industries Ltd [1970] 3 NSWR 3

PARTIES : Evolution Living Property Management Pty Limited - Plaintiff CSP Australia Pty Ltd - Defendant

FILE NUMBER(S) : SC 2009/00289812

COUNSEL : Mr M E Gildea, Solicitor - Plaintiff Mr R W Tregenza - Defendant

SOLICITORS : Klimt & Associates - Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

BARRETT J

FRIDAY 12 FEBRUARY 2010

2009/00289812 EVOLUTION LIVING PROPERTY MANAGEMENT PTY LIMITED v CSP AUSTRALIA PTY LTD JUDGMENT 1 These proceedings concern 46 deeds each of which is entitled "option deed" and is made between the defendant (therein called "Vendor") and the plaintiff ("Purchaser"). It will be convenient to refer to the parties as the Vendor and the Purchaser accordingly. 2 Mr Brett Collins is also a party to each deed but only for the purpose of guaranteeing due and punctual performance by the Purchaser. 3 Some of the deeds were made on 1 September 2008 and bear that date. The others were made on 2 September 2008 and bear that date. 4 The Purchaser seeks a declaration that each of the deeds is void and an order that the Vendor pay to it $312,500, by way of return of moneys paid by the Purchaser to the Vendor under or in connection with the deeds. 5 Now before me for determination is a question ordered pursuant to rule 28.2 of the Uniform Civil Procedure Rules 2005 to be determined separately from any other question and before trial. At the start of the hearing of the separate question this morning, Mr Gildea, solicitor, announced his appearance for the plaintiff and sought an adjournment, which I refused. Mr Gildea did not have instructions to make submissions on the separate question. I therefore heard submissions from counsel for the defendant only. 6 The separate question is: "Whether, on the proper construction of the Option Deeds as defined in paragraph 3 of the Amended Statement of Claim filed 11 August 2009 the call option purported to be granted pursuant to clause 2.1 of each of the Option Deeds, and in consequence the put option purported to be granted pursuant to clause 3.1 of each of the Option Deeds, are void, unenforceable and/or of no legal effect, by reason of section 66ZG of the Conveyancing Act 1919 (NSW)." 7 Each of the 46 deeds is in the same form, except for the description of the property to which it relates. Each contains these recitals: "A. The Vendor has agreed to grant and the Purchaser has agreed to accept a Call Option to purchase the Property on the terms and conditions contained in this Deed. B. The Purchaser has agreed to grant and the Vendor has agreed to accept a Put Option to require the Purchaser to purchase the property on the terms and conditions contained in this Deed." 8 The "Property" is, in each case, a particular lot in a strata subdivision at Narooma. 9 Clauses 2 and 3 of each deed are as follows: "2. GRANT OF CALL OPTION 2.1 Call Option In consideration of payment of the Call Option Fee by the Purchaser to the Vendor (receipt of which is acknowledged), the Vendor grants a Call Option to the Purchaser to purchase the Property. 2.2 Exercise of Call Option The Purchaser may, at any time during the Call Option Period, exercise the Call Option by: (a) delivering the Call Option Notice to the vendor; and (b) the Call Option Fee will be taken to be the deposit under the Contract. 3. GRANT OF PUT OPTION 3.1 Put Option In consideration of payment of the Put Option Fee by the Vendor to the Purchaser (receipt of which is acknowledged), the Purchaser grants a Put Option to the Vendor to require the Purchaser to purchase the Property. 3.2 Exercise of Put Option The Vendor may, at any time during the Put Option Period, exercise the Put Option by delivering the Put Option Notice to the Purchaser." 10 The definitions of "Call Option" and "Put Option" are: " Call Option means the option to purchase the Property granted in clause 2.1." " Put Option means the option to purchase the Property granted in clause 3.1." 11 There is an element of circularity in each of clause 2.1 and clause 3.1. Clause 2.1 says that the Vendor grants to the Purchaser the option to purchase the Property granted in clause 2.1; and clause 3.1 says that the Purchaser grants to the Vendor the option to purchase the property granted in clause 3.1 to require the Purchaser to purchase the Property. The sense is nevertheless sufficiently clear. Under clause 2, the Purchaser has an option to purchase, while under clause 3, the Vendor has an option to require the Purchaser to purchase; and in each case the sense of the clause is confirmed by clause 5 which, referring to an annexed form of contract for sale and purchase defined as the "Contract", says: "5.1 Formation of contract As soon as either the Put or Call Option has been exercised, a contract for the sale and purchase of the Property in the form of the Contract will immediately be taken to be operative and effective." 12 Each deed, as I have said, is dated either 1 or 2 September 2008. This has particular relevance because of the definition of "Call Option Period": " Call Option Period means the period commencing after the date of this Deed and ending at 12:00 noon on 28 November 2008." 13 "Put Option Period" is defined as follows: " Put Option Period means the period commencing at 12:01pm on 28 November 2008 and ending at 5 pm on 1 December 2008." 14 The separate question concerns the effect of s 66ZG of the Conveyancing Act 1919. That section is in these terms: "(1) An option granted for the purchase of residential property is void: (a) unless it is granted by way of exchange of counterparts, one of which is signed by the purchaser and the other signed by the vendor, or (b) if it is exercisable within 42 days after it is granted or, if a different period is prescribed, within that period.