Express Clearances Pty Ltd v The Austral Brick Company Pty Ltd

Express Clearances Pty Ltd brought an action against The Austral Brick Company Pty Ltd in the Federal Court of Australia. The dispute arose from the purported exercise of a put option under a Put and Call Option Deed. The plaintiff sought a declaration that the defendant had failed to validly exercise the option, leading to the termination of the agreement. The defendant counterclaimed for specific performance, arguing that the option was validly exercised.

The primary legal issue before the court was whether the defendant had complied with the specific method of serving notice of its intention to exercise the put option, as outlined in the deed. The deed stipulated a precise method for such notice, which the defendant argued was not mandatory but merely directory. The court had to determine if the method of service was mandatory or merely directory and, if mandatory, whether the failure to adhere to the specified method invalidated the exercise of the option.

The court found that the method of service specified in the deed was mandatory, not directory. The deed explicitly required that notice be served in a particular way, and this requirement was deemed essential for the validity of the option's exercise. As the defendant had not served notice in the manner prescribed by the deed, the court held that the option was not validly exercised. Consequently, the plaintiff's claim for a declaration that the option was not validly exercised was upheld.

The court did not need to address the defendant's counterclaim for specific performance, as the primary issue of the validity of the option's exercise had been determined in the plaintiff's favour. The court declared that the defendant had not validly exercised the put option, leading to the termination of the agreement. No orders for specific performance were made.