Brannigan v Smith

[2017] NSWSC 1201

Supreme Court

New South Wales

Medium Neutral Citation:	Brannigan v Smith [2017] NSWSC 1201
Hearing dates:	28 – 29 August 2017
Date of orders:	08 September 2017
Decision date:	08 September 2017
Jurisdiction:	Equity
Before:	Darke J
Decision:	Plaintiff validly exercised option to purchase.
Catchwords:	LAND LAW – conveyancing – options – option to purchase – date of exchange – defendants claim exchange of counterparts occurred using email copy of execution page – plaintiff claims exchange occurred using original counterparts at later time – whether agreed that exchange would occur using email copy of signature page – date of exchange held to be date of exchange of original counterparts LAND LAW – conveyancing – service of notices – whether service on agent valid – whether service by facsimile effective – whether Conveyancing Act 1919 (NSW), s 170 facultative or mandatory
Legislation Cited:	Conveyancing Act 1919 (NSW), ss 66ZG, 170
Cases Cited:	Bressan v Squires [1974] 2 NSWLR 460 Ex parte Dally-Watkins; Re Wilson (1955) 72 WN (NSW) 454 FAI General Insurance Company Ltd (in liquidation) v Parras (2002) 55 NSWLR 498; [2002] NSWCA 334 Jones v Dunkel (1959) 101 CLR 298 Mineaplenty Pty Ltd v Trek 31 Pty Ltd (2006) 17 BPR 32,645; [2006] NSWSC 1203 Sindel v Georgiou (1984) 154 CLR 661 Stonewall Hotel Pty Ltd v Papantoniou [2017] NSWSC 964 Young v Lamb (2001) 10 BPR 18,553; [2001] NSWCA 225
Category:	Principal judgment
Parties:	Laura Diane Brannigan (Plaintiff) Adam Douglas Smith (First Defendant) Heath David Jamieson (Second Defendant)
Representation:	Counsel: Mr CJM Palmer (Plaintiff) Mr P Kondich (Defendants)   Solicitors: Cordato Partners Lawyers (Plaintiff) Safe Harbour Lawyers (Defendants)
File Number(s):	2016/257193
Publication restriction:	None

Judgment

Introduction

1. These proceedings concern an agreement containing an option to purchase granted to the plaintiff by the defendants in respect of a one bedroom unit in Arcadia Street, Coogee.

2. The agreement provides for the option to be exercised by the service on the Grantor of a Notice of Intent to Purchase executed by the Grantee (or their assignee or nominee), at any time from 42 days after the date of the agreement until 5pm on the third anniversary of the date of the agreement. The plaintiff claims to have exercised the option on 2 June 2016.

3. Whilst it is common ground that a valid and binding option was entered into, there is a dispute about when that occurred, and thus the date of the agreement. The plaintiff contends that the option was entered into on about 7 June 2013. The defendants contend that it was entered into on 28 May 2013. On that basis, they contend that the option had expired before the plaintiff sought to exercise it. The plaintiff maintains an alternative claim that the defendants are estopped, by their conduct, from asserting that the plaintiff was not entitled to exercise the option after 28 May 2016.

4. There is also a dispute concerning service of the notice of exercise of option. The defendants contend that the plaintiff failed to properly serve the notice, which they say was required to be effected in accordance with s 170 of the Conveyancing Act 1919 (NSW). The plaintiff contends that service in accordance with s 170 of the Conveyancing Act is not required, and that in any event service in accordance with s 170(1)(b) was effected. The plaintiff further contends that service of the notice was validly effected by way of facsimile transmission upon the defendants’ conveyancer.

Summary of relevant facts

5. The option agreement was negotiated between the parties during a period within which the plaintiff was negotiating another option agreement (with Starlink International Pty Ltd) in respect of a unit in Alfreda Street, Coogee. Both option agreements were negotiated in conjunction with a grant of a residential lease of the relevant property to the plaintiff. The plaintiff, who lives and works in Dubai, retained Cordato Partners Lawyers to act for her in the transactions. The defendants retained a licensed conveyancer, Mr Mel Ciampa, to act for them. Mr Ciampa was also retained by Starlink International Pty Ltd in relation to the Alfreda Street transaction. Mr Michael Kelly, a real estate agent, also acted as agents for the defendants and Starlink International Pty Ltd in the transactions.

6. On 12 April 2013 Mr Ciampa sent an email to Mr Cordato which attached a draft option agreement in respect of the Arcadia Street property (“the Property”). The draft was accompanied by a form of Contract for Sale of Land, inserted into which was a purchase price of $498,000. Later on 12 April 2013 Mr Ciampa sent an email to Mr Cordato which attached a draft Residential Tenancy Agreement in respect of the Property.

7. On 8 May 2013 Ms Madalin Lowe, a Conveyancing Assistant at Cordato Partners, sent an email to Mr Ciampa requesting various amendments to the draft option agreement, Contract for Sale, and Residential Tenancy Agreement in respect of the Property. A request was also made for copies of recent Council rate, water rate and strata levy notices, and a loan statement in respect of the defendants’ mortgage over the Property.

8. Mr Ciampa replied by email on 13 May 2013. All bar one of the requested amendments to the draft option agreement were agreed. However, the defendants maintained that the option fee was to be released to them without any requirement that it be applied in reduction of the mortgage over the Property. Recent loan statements and rate notices were attached to the email. Mr Ciampa’s email was forwarded by Ms Lowe to the plaintiff on 15 May 2013.

9. The plaintiff sent an email to Ms Lowe on 20 May 2013. The plaintiff stated that she did not object to the defendants’ response concerning the option fee. However, she enquired about the possibility of including a provision to the effect that the mortgage debt be kept below the amount she would have to pay to purchase the property.

10. On 23 May 2013 Ms Lowe sent an email to the plaintiff in the following terms:

Please find attached the final draft Deed of Option and Residential Tenancy Agreement for signing.

I have inserted a final point in clause 5 to ensure the loan account stays below the balance price.

Aside from property and price details, the documents are identical between the properties.

Please sign on page 4 and 17 of the PDF document and return the originals to this office as soon as possible. There is no need to return the entire document. I have the originals here the signed pages can be inserted into.

I will send you the Alfreda Street documents in a second email, the attachments are quite large.

11. The draft agreement attached to the email incorporated the amendments that had been agreed on 13 May 2013, as well as the provision inserted in cl 5 concerning the level of the mortgage debt.

12. The evidence is not precise as to when “the Alfreda Street documents” were sent to the plaintiff. However, it seems that they had been received by the plaintiff by 28 May 2013. In the course of her cross-examination, the plaintiff referred to having “the Alfreda package” and “the Arcadia package” with her on the morning of 28 May 2013.

13. In the meantime, on 27 May 2013, the plaintiff made the first of ten payments of $5,000 for option fees for the two agreements. Of that amount, $30,000 was to be paid in respect of the Property and $20,000 was to be paid in respect of the Aflreda Street property. In February 2013 the plaintiff had made payments of $1,000 in respect of each property, so the total option fees were to be $31,000 for the Property and $21,000 for the Alfreda Street property.

14. At 7:52am on 28 May 2013, the plaintiff sent an email to Ms Lowe, Mr Ciampa and Mr Kelly in the following terms:

Good afternoon everyone,

Here are the documents that have been requested from me to finalise this long-standing agreement:

Signed and witnessed final page (11) of the tenancy agreement.

Signed and witnessed final page (4) of the option agreement.

A screenshot showing my scheduling of 10x payments of AUD$5,000 each to transfer the option fees to Mel Ciampa’s trust account.

The originals of the documents (x2 of each) will be dispatched with Fedex/UPS/etc (whoever is less of a headache to find…) this afternoon so you should have them by the end of the week – I’ll confirm once I know for sure.

Many thanks to everyone for their patience and perseverance with this. We’ve all been tested but I am grateful to you.

15. The plaintiff made an error with the email attachment. She explained in her evidence (the entirety of which I accept as truthful) that she attached “blank copies of the two residential tenancy agreements”, and did not attach “the signed and witnessed page 4 of the option agreement”. She stated that she had in fact signed one document (presumably an option agreement), but could not recall whether it was from the Alfreda package or the Arcadia package. The plaintiff also stated that she signed one copy of the Residential Tenancy Agreement but could not recall whether it was from the Alfreda package or the Arcadia package.

16. The plaintiff gave evidence that she “had initiated the payments so what I was doing with this email was letting the parties know that the documents were in the mail”. She said that “everyone was getting very frustrated so I was informing everybody that the documents were on their way”.

17. The plaintiff gave further evidence to the effect that she had only one signed and witnessed option agreement, and only one signed and witnessed Residential Tenancy Agreement with her at work on 28 May 2013. Accordingly, she said, further agreements would need to be signed and witnessed, and she would then need to send them by courier to Australia.

18. It seems that during the course of the day the plaintiff discovered (by means of an email from Mr Kelly) that the attachment to her 7:52am email was incorrect. This prompted the plaintiff to send an email at 2:45pm which stated:

Oops, wrong attachment (it’s too early…)

This email attached copies of an executed page 4 from an option agreement (Exhibit F1 page 19) and an executed page 11 from a Residential Tenancy Agreement (Exhibit F1 page 18). The latter document bears the date 27 May 2013.

19. At some stage on 28 May 2013 Mr Ciampa had a telephone conversation with Ms Lowe. Mr Ciampa refers to the conversation in his affidavit of 10 October 2016 but does not depose to the contents of the conversation. However, a file note, written by Mr Ciampa during the conversation, was annexed to the affidavit. The file note, which was written on a printed copy of an email that apparently concerns the Alfreda Street property, is in the following terms:

28/5/13 T/A Madeline fr O/S.

Agreed we’d exchange

options on emailed copy

fr. purchaser, with original

to follow.

20. Ms Lowe was not called as a witness. There is evidence that her employment with Cordato Partners ceased in October 2014, about 20 months before the present dispute arose.

21. Mr Ciampa gave evidence (in his affidavits of 26 September 2016 and 27 September 2016) that he received the email from the plaintiff that was sent at 7:52am on 28 May 2013, and that, in respect of both properties, he subsequently dated the option agreement and the Residential Tenancy Agreement “with 28 May 2013”, and “subsequently exchanged the option agreements on 28 May 2013”.

22. In his affidavit of 10 October 2016, Mr Ciampa deposed that by the time he received the plaintiff’s email (that was sent at 7:52am on 28 May 2013) he had already received option agreements and residential leases with his clients’ original signatures “as well as their instructions to exchange”. Mr Ciampa further deposed:

17   I have printed full option agreements for the [Alfreda Street property] and [the Property] and substituted the signature page (No 4) with a scanned copy from the plaintiff’s email [that was sent at 7:52am on 28 May 2013].

…

19   Once I have received pages with the original Plaintiff’s signature from Cordato partners on or about 5 June 2013, I have substituted the original signature page and removed the scanned copy in the option agreements for [the Alfreda Street property] and [the Property].

23. The reference in paragraph 17 of the affidavit to the email sent by the plaintiff at 7:52am on 28 May 2013 is clearly an error. The signature page was attached to the email she sent at 2:45pm on that day.

24. On 3 June 2013 Ms Lowe received in the mail the original documents in respect of both properties. However, the plaintiff had only executed one set of documents, being the set concerning the Alfreda Street property. Ms Lowe sent an email to the plaintiff in the following terms:

The originals arrived in the mail today.

Unfortunately, only one lot of documents were signed by you! Andy King has witnessed both lots of documents, however. I’m going to need you to resend another set of documents, which will also need to be witnessed again.

I’ll forward the documents for Alfreda to Mel Ciampa for exchange.

Very sorry about this, but we need original signatures to complete exchange.

25. Later on 3 June 2013 Ms Lowe sent a letter to Mr Ciampa in respect of the Alfreda Street property. The letter stated:

We refer to the above matter and the previous correspondence.

Please now find enclosed counterpart Option Agreement and Residential Tenancy Agreement duly signed by the Purchaser, in readiness for exchange.

26. On 6 June 2013 the plaintiff sent an email to Ms Lowe which included the following:

I have re-signed/witnessed a new set and dispatched them with DHL, they are due to arrive with you tomorrow afternoon.

27. It seems that the executed documents indeed arrived in Sydney the following day. On 7 June 2013 Ms Lowe wrote a letter to Mr Ciampa in respect of the Property. The letter stated:

We refer to the above matter and the previous correspondence.

Please now find enclosed counterpart Option Agreement and Residential Tenancy Agreement duly signed by the Purchaser, in readiness for exchange.

28. The execution page of the agreement enclosed with the letter is evidently not the same as the execution page a copy of which was sent by the plaintiff by email on 28 May 2013.

29. It appears from an email sent by Ms Lowe to the plaintiff on 7 June 2013 that arrangements were made for Mr Kelly to take the documents to Mr Ciampa later that afternoon for exchange. There is no dispute that the documents were received by Mr Ciampa on or shortly after that date.

30. It appears that Mr Ciampa never sent Cordato Partners the defendants’ executed option agreement, or indeed any form of option agreement which had been dated 28 May 2013.

31. The defendants’ executed option agreement differs in some respects from the plaintiff’s executed option agreement. The former does not include at least some of the changes that were made by Ms Lowe on about 23 May 2013. Nonetheless, the parties have conducted themselves on the basis that a binding option agreement in respect of the Property had been entered into by way of exchange. The option fee was paid in full, and the plaintiff paid the weekly option fees (of $92.30) as required by cl 1 of the agreement.

32. The option agreement executed by the plaintiff relevantly provides:

1. Grant of Option to Purchase

The Grantor grants to the Grantee, on the terms of this Option to Purchase, an Option to purchase the Property at the Purchase Price in accordance with the provisions of the Contract for the Sale of Land attached. The option is granted by the Grantor to the Grantee in consideration of payment of a sum of $31,000.00 upon entering into this Option plus a sum of $92.30 per week during the term of this Option (the Option Fee). The first payment of the weekly option fee is payable on the date of this Option and subsequent weekly payments are payable on the same day of each week thereafter and the Grantee will follow any reasonable direction from the Grantor as to the means of making the ongoing weekly payments. Upon payment, the Option Fee shall immediately become the property of the Grantor but shall be applied as a credit towards the Purchase Price in the event that this option is exercised by the Grantee. This Option to Purchase is simply an option to purchase by the Grantee and the Grantee is not required to purchase the property. The Grantor will hold ownership of the Property for the period of this option specified in clause 4 hereto (the Option Period). If the Grantee does not exercise the Option to Purchase during the Option Period then the Option to Purchase expires and the Grantor is under no further obligation to the Grantee.

2. Exercise of Option

This Option is exercised by the service on the Grantor of the Notice of Intent to Purchase set out in Schedule 1 hereto executed by the Grantee or their assignee or their nominee, whereupon both parties will execute and be bound by the Contract annexed hereto (the Contract). The Option Fee paid at the date the Option is exercised will be the deposit payable pursuant to the Contract.

3. Purchase Price

The purchase price to be paid by the Grantee to the Grantor in the event that this Option is exercised by the Grantee is a sum of $498,000.00 (the Purchase Price) and this sum is to be inserted in the Contract.

4. Option Period

The Option to Purchase may be exercised at any time from forty-two (42) days after the date of this agreement until 5pm on the third anniversary from the date of this agreement.

5. Grantor’s further assistance

The grantor will assist the grantee as follows:

By not varying any loan arrangements upon the property

By allowing the grantee to protect its interest by a caveat

By signing all documents necessary to give effect to this agreement and contract for sale

By making all payments under the loan arrangements as and when they fall due

By ensuring that the amount secured by loan against the Property is less than the Balance Price under the Contract

By not allowing the loan arrangements to fall into default, and if they are in default, to rectify the default immediately

By making payments of all council rates, water rates, strata levies and land tax as and when they fall due

By not offering the Property as security for any other loan arrangement.

…

8. Right to Occupy

The Grantee, or any nominee, will take possession of the Property under a standard residential lease (the Lease) and the Grantor will be entitled to terminate this Option in the event that the Lease is terminated by the Grantor, in a valid matter [sic].

…

10. Outgoings

In consideration for the granting of this option, the purchaser will pay all outgoings payable in relation to the Property during the term of this Agreement.

33. On 10 March 2016 the plaintiff attended upon Mr Cordato and gave him instructions that she would like to exercise the option to purchase the Property. She signed a Notice of Intent to Purchase, and the front page of a Contract for Sale. Later on 10 March 2016 Mr Cordato sent a letter to Mr Ciampa which was in the following terms:

We act for Laura Brannigan, who has entered into an Option to purchase with a Residential Tenancy Agreement with your clients, Adam Douglas Smith and Heath David Jamieson.

We write to advise that our client has today instructed that she will be exercising the Option and proceeding to purchase the property.

According to our records, the counterpart Option and Residential Tenancy Agreement were forwarded to you under cover of our letter of 7 June, 2013.

Accordingly, our client will take 7 June, 2016 as the date by which the Option is to be exercised.

We are instructed that our client has been making the Option payments and the rent payments, and that they are up to date. Our client will provide a calculation of the option fee credits when exercising the Option.

Please advise whether you intend to provide a fresh Contract for Sale or fresh certificates to be attached to the Contract for Sale, so that we may be able to attach the appropriate Contract for Sale to the Notice to Exercise Option?

34. There was no response to the letter.

34. On 11 April 2016, a paralegal employed by Cordato Partners, Ms Sally Wade, telephoned Mr Ciampa. Ms Wade deposed to a conversation to the following effect:

Ms Wade:   “Hi Mel, I am just following up our letter to you of 10 March 2016 regarding the Option for 6/37 Arcadia Street Coogee.”

Mr Ciampa:   “I have to follow-up with my clients and get back to you.”

36. In cross-examination, Mr Ciampa said that he had no recollection of the telephone conversation.

37. Ms Wade made a file note of the conversation in the following terms:

11/4/16 T/A with Mel Ciampa

Rang to follow up a response

to our letter of 10 March, 2016

Mel to follow up his client & get

back to us.

38. Ms Wade had another telephone conversation with Mr Ciampa on 15 April 2016. She deposed that she was unable to recall the substance of the conversation “apart from what I have written in my file note on 15 April 2016”. That file note reads:

15/4/16 T/A with Mel.

OK to proceed with Contract.

39. Mr Ciampa had no recollection of this conversation either.

40. However, Mr Ciampa agreed in cross-examination that at no time between 10 March 2016 and 9 June 2016 did he inform Cordato Partners that 7 June 2016 was not the date by which the option to purchase the Property had to be exercised, or that he had exchanged the option agreements on 28 May 2013.

41. On 31 May 2016 Mr Cordato sent a letter to Mr Ciampa which was in the following terms:

We refer to our letter of 10 March, 2016 and to our subsequent telephone conversation.

We confirm that the Option period extends until close of business Tuesday, 7 June, 2016.

Do you desire to forward an updated title search and s 149 Planning Certificate for substitution into the Contract before we exercise the Option?

We advise that on our calculations, the following amount is to be credited against the deposit and is to represent the deposit payable under the Contract:

The Option fee paid on 7 June, 2013         $31,000.00

The weekly option fee paid of $92.30 (x156)      $14,398.80

Total:  $45,398.80

Please confirm this is in order.

42. I accept that on 2 June 2016 Cordato Partners sent a letter by express post to the defendants. The letter was addressed to the defendants at the Property. That was the address given for the defendants in the initial draft option agreement forwarded by Mr Ciampa on 12 April 2013. The letter and its enclosures were also sent by facsimile to Mr Ciampa on 2 June 2016. There is no dispute that he received the facsimile. The letter included the following:

We have been instructed to exercise the Option to Purchase 6/37 Arcadia Street, Coogee, pursuant to the Option Deed dated June 2013.

Please find enclosed by way of service, the following:

Notice of Intent to Purchase (exercise of Option)

Executed Contract for Sale of Land

We confirm the following amount is to be credited against the deposit and is to represent the deposit payable under the Contract:

The Option fee paid on 7 June, 2013         $31,000.00

The weekly option fee paid of $92.30 (x156)      $14,398.80

Total:  $45,398.80

Please confirm this is in order.

43. A Notice of Intent to Purchase, signed by the plaintiff, and a Contract for Sale executed by the plaintiff, were enclosed with the letter of 2 June 2016.

44. On 9 June 2016 Mr Ciampa sent a letter to Cordato Partners in the following terms:

Further to your purported letter to my client dated 2 June, 2016, I confirm that the option entered into by the parties was dated 28 May, 2013 and it expired on 28 May, 2016.

Notwithstanding the fact that your letter forwarding the signed option was dated 3 June, 2013 it was actually received by my office on 28 May, 2013, and that was the date on which the parties entered the option and the date on which the signed and dated original option was forwarded to your office.

In any case, I note that neither I nor my clients have received the notice exercising the option nor the signed contract. I note that your letter of 2 June, 2016 is addressed to my clients at the subject property address and, as you are aware that property has been occupied by a tenant, which is managed by your client, since the date of the option.

The option has expired and can no longer be exercised by the former grantee. My client will be re-taking control of the property.

45. The reference to the letter dated 3 June 2013 is incorrect. That is the date of the letter which enclosed the Alfreda Street property documents. The statement in the letter that the signed and dated original option was forwarded to Cordato Partners on 28 May 2013 (or indeed at any other time) is also incorrect.

46. The plaintiff lodged a caveat over the Property on about 9 June 2016. These proceedings were commenced on 26 August 2016 following the service by the defendants of a lapsing notice in respect of the caveat.

Determination

47. It is first necessary to ascertain the period within which the option remained open for exercise. Clause 4 of the option agreement provides that the option may be exercised within a period that is defined by reference to “the date of this agreement”. The opening words of the agreement are:

THIS AGREEMENT is made on the _______ day of _____20___

48. It is evidently intended that the date of the agreement will be the date upon which the agreement is made. Further, given that the subject matter of the agreement is residential property such that Division 9 of Part 4 of the Conveyancing Act applies, the parties may be taken to have contemplated that the option agreement be created upon an exchange of counterparts. The conduct of Cordato Partners and Mr Ciampa is consistent with a contemplation that an exchange of agreements would take place. In these circumstances, the date upon which the agreement is made should be taken to be the date when the exchange occurred. Both parties conducted the case on that basis. The central point of the dispute concerned when the exchange should be held to have occurred.

49. Broadly, the defendants submitted that exchange occurred on 28 May 2013 in the manner described by Mr Ciampa; the plaintiff submitted that exchange occurred on (or perhaps shortly after) the delivery of the plaintiff’s executed agreement to Mr Ciampa on 7 June 2013.

50. In the course of his cross-examination, Mr Ciampa gave evidence about the existence of an agreement with Cordato Partners concerning how the exchange would be effected. Mr Ciampa said that it was agreed that the documents that were emailed by the plaintiff on 28 May 2013 “were to be used for the exchange of the options”. He said that it was his recollection that this was agreed in respect of both option agreements. Mr Ciampa also stated that it was agreed that, because the plaintiff was overseas, “we were going to accept the emailed copy of the signature pages to effect the exchange of the option”. Later in his cross-examination Mr Ciampa said that it was agreed “that the option was to be dated on the date that we received the email signed execution papers”.

51. I accept that Mr Ciampa was doing his best to recall the events of late May/early June 2013. However, and not surprisingly, Mr Ciampa did not seem to possess a good recollection of the detail of those events, or of the events of 2016 leading up to the plaintiff’s attempt to exercise the option. I consider that there is a significant risk that the evidence given by Mr Ciampa in cross-examination about the agreement with Cordato Partners is, no doubt unconsciously, heavily reconstructed. It is noteworthy that in his affidavit of 10 October 2016 Mr Ciampa refers to his file note of his conversation with Ms Lowe, but does not otherwise depose to the contents of the conversation. When asked about any file note of the conversation about the dating of the option agreement, Mr Ciampa answered that he could not recall. In these circumstances I am unable to afford much weight to this aspect of Mr Ciampa’s evidence. I do not consider it to be reliable.

52. The file note establishes that there was a conversation between Mr Ciampa and Ms Lowe at some time on 28 May 2013. It is likely that the note summarises, with reasonable accuracy, the substance of the discussion. In the absence of any testimony from Ms Lowe, and reliable testimony from Mr Ciampa, the file note stands as the best available evidence of the contents of the conversation. Counsel for the defendants did not make any suggestion to the contrary.

53. The file note does not record the time the conversation took place. The emails sent by the plaintiff on 28 May 2013 were apparently sent at 7:52am and 2:45pm in Dubai. Given the time difference, it is likely that the conversation occurred before the second email (which had a signed execution page attached) was received. The conversation may have occurred following receipt of the first email, but this is far from clear.

54. The file note refers to exchanging “options on emailed copy fr purchaser, with original to follow”. The reference to options in the plural does not clearly pertain to options in respect of both properties, as opposed to option agreements in respect of one property. Whilst the presence of the file note on a document that relates to the Alfreda Street property provides some support for the latter view, I tend to think that Mr Ciampa’s evidence to the effect that the conversation concerned “the mechanics of getting both transactions exchanged” is likely to be correct. There was no obvious reason to treat the transactions differently in that regard as at 28 May 2013. The plaintiff’s error in executing only one set of documents did not emerge until 3 June 2013. I think that the conversation is more likely to have concerned both properties, not merely the Alfreda Street property.

55. However, I have difficulty regarding the reference to an emailed copy from the purchaser as pertaining only to an emailed copy of a signature page, as opposed to an emailed copy of an option agreement (including a signature page). To my mind, a statement about exchanging options on an emailed copy from the purchaser more naturally suggests effecting exchange using an emailed copy of the agreement rather than the original agreement as would customarily be the case. If the agreement was that exchange would be effected using an emailed copy of the plaintiff’s signature, it is likely that the terms of the file note would include some reference to the signature, or the signature page.

56. I have not overlooked Mr Ciampa’s evidence that in his experience option agreements can in certain circumstances be exchanged using electronic copies of signature pages with the originals to follow. Again, however, if such an arrangement was spoken of in this case, it is likely that the note would refer to signature pages or execution pages. Moreover, such an arrangement would still involve an exchange of counterpart agreements as envisaged by s 66ZG of the Conveyancing Act. Some arrangements would have to be made as to how that was to physically occur. There is nothing in the file note of that nature.

57. I do not accept that on 28 May 2013 an agreement was made between Mr Ciampa and Ms Lowe to the effect that exchange of the option agreements in respect of the Property could be effected by Mr Ciampa using a copy of a signature page emailed by the plaintiff. That is to say, I do not think that any agreement was reached that would authorise Mr Ciampa to effect the exchange in the manner he says he did, or date the option agreement on the date the emailed signature page was received.

58. In my view, Mr Ciampa and Ms Lowe should be taken to have agreed no more than that an exchange using an emailed copy of the purchaser’s signed option agreement (with the original to follow) would be acceptable.

59. In reaching these conclusions I have proceeded on the basis that any evidence Ms Lowe may have been able to give would not have positively assisted the plaintiff’s case (see Jones v Dunkel (1959) 101 CLR 298 at 320-1). She is a witness who would be expected to be called by the plaintiff. She would be likely to be able to give some evidence of her dealings with Mr Ciampa, including her conversation with him on 28 May 2013. I do not think that the failure to call her was adequately explained merely by her cessation of employment with Cordato Partners.

60. Nevertheless, the conclusions I have reached are supported to a degree by the absence of any suggestion in the documents after 28 May 2013 that Ms Lowe understood that exchange was to be effected in the manner suggested by Mr Ciampa. Ms Lowe’s communications with the plaintiff after 28 May 2013 are consistent with her thinking that exchange had not yet taken place. So, too, are her letters to Mr Ciampa of 3 June 2013 (concerning Alfreda Street) and 7 June 2013 (concerning the Property) which enclosed original executed agreements “in readiness for exchange”. Ms Lowe’s email to the plaintiff on 7 June 2013 clearly proceeds on an understanding that the documents were to be taken by Mr Kelly to Mr Ciampa’s office that afternoon “for exchange”.

61. In my opinion, exchange did not take place prior to 7 June 2013. The likelihood is that the option agreement executed by the plaintiff was delivered to Mr Ciampa during the afternoon on that day. Mr Kelly’s email of congratulations to the plaintiff, sent on 8 June 2013, is consistent with him having delivered the document to Mr Ciampa as arranged. Mr Ciampa accepted that document as the plaintiff’s signed counterpart (albeit that he impermissibly dated it 28 May 2013). Mr Ciampa was already in possession of the defendant’s signed counterpart. He appears to have retained that document, and failed to send it to Cordato Partners. This would appear to have been an oversight on Mr Ciampa’s part. I note that on 17 June 2013 Mr Ciampa sent extracts of the option agreements signed by the plaintiff to Mr Kelly, describing them as “copies of exchanged options”, and as already noted, both parties have since proceeded on the basis that exchange had occurred in respect of the option to purchase the Property. In these circumstances, notwithstanding the lack of a physical exchange by the parties of counterparts, an exchange of counterparts should be taken to have occurred, and hence the option agreement should be taken to have been made, on 7 June 2013.

62. The circumstance that the plaintiff’s signed counterpart and the defendants’ signed counterpart are not identical does not mean that there has been no exchange of counterparts. The evidence is clear as to what the parties intended the terms of the agreement to be, and if necessary the instruments could be rectified to bring them into conformity with the common intention of the parties (see Sindel v Georgiou (1984) 154 CLR 661 at 667).

63. For the foregoing reasons, the option agreement in respect of the Property was made on 7 June 2013, and thus the date of the agreement must be regarded as 7 June 2013. It follows that the option was open to be exercised by the plaintiff until 5pm on 7 June 2016. It is not necessary to deal with the plaintiff’s estoppel claim which was raised in the alternative.

64. I turn now to consider whether the plaintiff validly exercised the option within the option period.

65. If the option is to be exercised, it must be effected by service of the requisite notice “on the Grantor”. The plaintiff claims to have done so by sending the letter of 2 June 2016, together with its enclosures, to Mr Ciampa. The plaintiff submits that service upon a duly authorised agent of the Grantor is sufficient.

66. The Grantor is not defined in the option agreement otherwise than by the description of “Adam Douglas Smith and Heath David Jamieson of 6/37 Arcadia Street, Coogee in the State of New South Wales”. The terms of the definition do not expressly preclude service of the notice upon an agent; neither do they expressly enable service of the notice upon an agent. The agreement does not provide a designated address for service upon the Grantor. Whilst the address of the Property forms part of the definition of the Grantor, the agreement provides for the plaintiff to take possession of the Property under a residential tenancy agreement, and it was contemplated that the lease might remain in existence for the duration of the agreement. Accordingly, I do not think that the address of the Property can itself be considered as the Grantor’s address for service. I note that the form of Notice of Intent to Purchase does not include any address.

67. In these circumstances, I think that service of the requisite notice upon a duly authorised agent of the Grantor is service “on the Grantor” within the meaning of that expression. I can discern no good reason to construe the agreement so that such service would not be effective for the purpose of exercising the option (see Young v Lamb (2001) 10 BPR 18,553; [2001] NSWCA 225 at [36]; Stonewall Hotel Pty Ltd v Papantoniou [2017] NSWSC 964 at [19]).

68. It was not suggested that Mr Ciampa was not a duly authorised agent of the defendants. In any case, it is clear on the evidence that Mr Ciampa was acting for the defendants in the period from 11 April 2016 to 9 June 2016 in relation to the option agreement, including in relation to the exercise of the option. Mr Ciampa spoke to Ms Wade of Cordato Partners about that matter on 15 April 2016. He said something to the effect that it would be “OK to proceed with the contract”. That is likely to be a statement to the effect that it would be acceptable for the plaintiff to use the existing form of contract when exercising the option. I am satisfied that Mr Ciampa had authority to receive a notice of exercise of option on behalf of the defendants (see Young v Lamb (supra) at [37]; Mineaplenty Pty Ltd v Trek 31 Pty Ltd (2006) 17 BPR 32,645; [2006] NSWSC 1203 at [38]).

69. Mr Ciampa received the notice of exercise of option by facsimile on 2 June 2016, within the option period. The defendants contend, however, that service in accordance with s 170 of the Conveyancing Act was necessary and that service by facsimile, not being in accordance with the section, is insufficient.

70. I accept that s 170 of the Conveyancing Act applies to service of a notice of exercise of option under the option agreement (see s 170(2A), and Bressan v Squires [1974] 2 NSWLR 460 at 463). Section 170 applies only if and so far as a contrary intention is not expressed in the instrument, and has effect subject to the provisions of the instrument (see s 170(4); see also FAI General Insurance Company Ltd (in liquidation) v Parras (2002) 55 NSWLR 498; [2002] NSWCA 334 at [18]). No contrary intention is expressed in the option agreement in this case, and the agreement is silent as to the means of serving the notice.

71. It does not follow, however, that s 170 provides the only means by which service of the notice of exercise can be given. It has been held that s 170 is intended to extend or widen the circumstances which will amount to sufficient service and is not an exclusive code (see Ex parte Dally-Watkins; Re Wilson (1955) 72 WN (NSW) 454 at 456-7). The relevant instrument might, of course, provide for s 170 to be the exclusive code for service. Otherwise, save for the extent to which the operation of s 170 is excluded or limited by the terms of the instrument, the section operates alongside the general law (see FIA General Insurance Company Ltd (in liquidation) v Parras (supra) at [19] and [37]).

72. In my opinion, the option agreement in this case does not require the notice of exercise of option to be served in conformity with s 170 of the Conveyancing Act. Service in accordance with general law principles is in my view sufficient. Further, it is my view that service upon the duly authorised agent of the defendants by means of facsimile transmission amounts to service on the Grantor in accordance with the general law. The notice of exercise was thereby brought to the attention of the defendants’ agent. Service in that manner upon Mr Ciampa on 2 June 2016 was sufficient service of the notice of exercise of option, within the option period. There was no suggestion that the form of the notice was in any way deficient.

48. For the foregoing reasons, I have concluded that the plaintiff validly exercised the option within the option period. It is not necessary to consider the plaintiff’s alternative argument that service was in any event effected in accordance with s 170(1)(b) of the Conveyancing Act. I should record, however, that there is considerable force in the defendant’s submission that in the circumstances the Property could not be regarded as “the last known residential or business address” of the Grantor.

Conclusion

74. Declarations should be made to the effect that the parties entered into the option agreement on 7 June 2013, and that the plaintiff validly exercised the option on 2 June 2016. Orders should also be made requiring the defendants to enter into a Contract for Sale of the Property in accordance with the option agreement, and for specific performance of the contract.

75. I direct the parties to consult and bring in Short Minutes of Orders, within 14 days, to give effect to these reasons. The Short Minutes should also deal with costs. Prima facie, the appropriate costs order would be that the defendants pay the plaintiff’s costs of the proceedings.

76. In the event that the parties are unable to agree upon the orders to be made, the Court will consider whether it is necessary to re-list the matter for further argument.

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Decision last updated: 17 April 2018