Strand Estates Pty Ltd v Yamamoto

[1999] NSWSC 572

Reported Decision: (1999) NSW ConvR 55-911

New South Wales

Supreme Court

CITATION:	Strand Estates Pty Ltd v Yamamoto [1999] NSWSC 572
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	1677/99
HEARING DATE(S):	31 March 1999; 1 & 6 April 1999
JUDGMENT DATE:	14 April 1999
PARTIES :	STRAND ESTATES PTY LTD (Plaintiff) YAMAMOTO (Defendant)
JUDGMENT OF:	Bergin J

COUNSEL :	Mr P McEwen SC (Plaintiff) Mr G Cummins (Defendant)
SOLICITORS:	Messrs Somerville & Co (Plaintiff) Messrs Coyne Whittemore Solicitors (Defendant)
CATCHWORDS:	Validity of deed of option - whether deed documents were counterparts at time of exchange - grant of option - whether grant made at time of exchange or at time of receipt of exchanged document by vendor (ss66ZC, 66ZG, 66ZH, 66ZI); Credit - effect of abandonment of claims by defendant; Agency - implied actual authority - whether vendor, by her conduct, authorised plaintiff's solicitor to undertake all such things necessary as to effect valid exchange - ratification of agency relationship by vendor; Rescission - purchaser to give vendor cooling-off certificate pursuant to s66ZC - entitlement to rescind in absence of certificate (s66ZH) - requirement that notice of cooling-off period be attached to contract or either party can rescind (s66ZH) - non-attachment of documents to contract (s66ZI); Law Reform - s66ZH Conveyancing Act 1919 (NSW) - benefit of cooling-off attaches to grantee - rights of rescission also given to grantor - unjust and inappropriate.
ACTS CITED:	1919 (NSW): s52A, ss66ZB, 66ZC, 66ZD, 66ZF, 66ZG, 66ZH, 66ZI
CASES CITED:	Koenigsblatt v Sweet (1923) 2 Ch 314 Nunin Holdings v Tullamarine Estates Pty Ltd (1994) 1 VR 76 Domb v Isoz (1980) Ch 548 Empirnall Holdings v Machon Paull (1988) 14 NSWLR 523 Henderson v Hopkins (Unreported, Supreme Court of NSW, Windeyer J, 6 October 1995)
DECISION:	Deed of option found to be valid

- 20 -

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BERGIN J
WEDNESDAY 14 APRIL 1999
1677/99 - STRAND ESTATES PTY LTD v YAMAMOTO
JUDGMENT
1 This case is about the validity of a deed of option dated 15 September 1998. The plaintiff Strand Estates Pty Ltd seeks a declaration that the option was granted to it to purchase the property known as 4A Starkey Street Forestville (the property) on 15 September 1998. It also seeks declarations that the option is not void pursuant to s 66ZG of the Conveyancing Act 1919 (NSW) and that it has extended the option until 15 September 1999. The plaintiff also seeks a declaration that the purported rescission of the option pursuant to a letter dated 5 March 1999 from the defendant’s solicitors is void.
2 The defendant Miako Yamamoto is the registered proprietor of the property and by cross claim seeks a declaration that the deed of option is not in force.
3 The hearing of this matter has been expedited. The summons was filed on 16 March 1999 and it was listed for urgent hearing on Wednesday 31 March 1999. Evidence was concluded by 4 pm on 1 April 1999 and final submissions were made on the afternoon of 6 April 1999, Easter intervening. Leave was granted to both counsel to provide any further submissions in writing by 4pm on 8 April 1999.This leave related to any matters arising out of the detailed outlines that had been provided by each counsel on 6 April 1999 (Tr 176 l 17-22). I listed the matter again on 9 April 1999 for reasons with which I will deal later and I then reserved my judgment in the matter.
The parties and their history
4 The plaintiff company is a property developer and was represented in its negotiations with the defendant by a firm of solicitors Messrs Somerville & Co. The solicitor at the firm handling the conveyancing matters for the plaintiff was Mr Robert John Picone.
5 The defendant is married to Mr Francis Joseph Mansfield who is an accountant and, although not legally qualified, has handled some 20 conveyances for various members of his family. Mr Mansfield acted for and/or assisted the defendant in her dealings with the plaintiff in respect of the option agreement. The defendant instructed Mr Coyne, solicitor, of Messrs Coyne Whittemore solicitors in respect of the purported rescission of the option and to act for her in these proceedings.
6 The history between the parties can be conveniently summarised as follows:

6.1 On 23 August 1997 an option was granted by the defendant to the plaintiff to purchase the property for $430,000 (the first option).The deed of option provided for an extension of the option for a further 6 months for a fee of $5,000. When the defendant granted the first option she understood that the plaintiff would be attempting to have the property rezoned as commercial as it was hoping to develop it.
6.2 On 18 February 1998 the first option was extended to 23 August 1998 by the plaintiff serving a notice of extension of the option together with the $5,000 fee (the extended first option).
6.3 On 13 August 1998 the defendant agreed to grant to the plaintiff a further option to purchase the property for $485,000 (the second option). The defendant wrote to the plaintiff’s real estate agents in early August 1998 and stated that the 1307M2 land value (VG) has increased by $74,000 in the past 12 months, and will be rezoned COMMERCIAL in a matter of weeks .
6.4 A draft option agreement was prepared by Mr Picone and forwarded to the defendant on 1 September 1998. Mr Picone’s letter requested the defendant to please sign the option and return it to us for exchange. Once exchanged, we shall forward the option fees to you forthwith . This draft was unacceptable to the defendant as cl 14 referred to option fees forming part of the purchase price and the completion date in the draft contract was stated as twelve weeks instead of the agreed six weeks.
6.5 On 4 September 1998 after receiving advice of these matters from the defendant via Messrs Colliers Jardine Mr Picone prepared an amended deed of option reflecting the amendments sought by the defendant.
6.6 On 6 September 1998, prior to receiving the amended deed prepared by Mr Picone, Mr Mansfield forwarded a fax to him in which he stated that the grantor can sign proposed deed of option and contracts can be exchanged tomorrow morning if cl 14 and completion date is amended. Please phone to confirm.
6.7 On 7 September 1998 Mr Mansfield and the defendant received Mr Picone’s amended deed under cover of his letter of 4 September 1998. That letter enclosed the amended deed of option and requested the defendant to remove the previous deed and attach the enclosed deed to the contract for the sale of the property which was already in the defendant’s possession. As there was a lease referred to in the draft contract Mr Picone asked the defendant to ensure that a copy of the lease was attached to it. Mr Picone’s letter stated once again please sign the option and return it to us for exchange. Once exchanged, we shall forward the option fees to you forthwith.
6.8 On 8 September 1998 Mr Mansfield attended Mr Picone’s office. The versions of the parties as to the reason for this attendance differs and I will deal with these later. However although Mr Mansfield did not see Mr Picone on that day he left the deed of option executed by the defendant at Mr Picone’s office. The deed was dated eighth September 1998 and was with a covering letter signed by the defendant which stated enclosed is executed deed of option, witnessed by my husband, for exchange.
6.9 On 11 September a telephone conversation took place between Mr Picone and Mr Mansfield. The parties’ versions of this communication differ. The plaintiff claims that its version supports its assertion that Mr Picone was authorised to exchange the deeds in Mr Mansfield’s absence and, for the purposes of the exchange, as agent for the defendant. The defendant claims her version supports her assertion that an exchange was to take place in Mr Mansfield’s presence who was to be her agent for the purposes of the exchange.
6.10 On 15 September 1998 Mr Picone purported to exchange the deeds of option and date the counterpart executed by his client 15 September 1998. He also changed the date on the deed of option provided to him by Mr Mansfield from eighth September to 15 September 1998.
6.11 On 16 September 1998 Mr Picone forwarded the exchanged deed executed by his client together with the $5,000 fee to the defendant under cover of a letter of that date which stated in part we refer to exchange of options in this matter, which took place on 15 September 1998. We enclose duly exchanged grantee’s counterpart.
6.12 On 16 September 1998 a further telephone conversation between Mr Picone and Mr Mansfield occurred. Once again the versions of the conversation differ. The plaintiff claims that Mr Mansfield was informed that the exchange had been completed the previous day and that the deed and cheque were being sent to the defendant that day. The defendant claims that Mr Mansfield was not informed the exchange had taken place and further that he asked Mr Picone to get back to him with a time for what he understood would be an exchange at which he would be present.
6.13 On 17 September 1998 the defendant received Mr Picone’s letter of 16 September enclosing the exchanged deed of option signed by the plaintiff together with the option fee of $5,000. The defendant banked the cheque the following day.
6.14 There was apparently no communication between the plaintiff and the defendant until March 1999 but during that period the defendant was approached by a number of other parties in respect of the possible purchase of the property.
6.15 On 26 February 1999 the defendant entered into a contract with Emesco Agents Pty Ltd (Emesco) for the sale of the property for $650,000 subject to the option with Strand Estates.
6.16 On 4 March 1999 Strand Estates purported to extend the second option to 15 September 1999 by serving on the defendant a written notice of extension of the option together with the required fee of $5,000.
6.17 On 5 March 1999 a local newspaper, Northern Beaches Weekender, reported that Coles had that week lodged a development application with the Warringah Council for a $10 million retail development which would incorporate a state of the art Coles Supermarket on property adjacent to the defendant’s property.
6.18 On 5 March 1999 Mr Coyne faxed a letter to Mr Picone purporting to rescind the second option and enclosed a cheque for $5,000 payable to the plaintiff purporting to be a refund of the option fee paid in September 1998. The purported rescission was claimed to be pursuant to s.66ZI(1) of the Conveyancing Act 1919 (the Act) in that certain documents required by s 52A of the act to be attached to the option were not so attached.
6.19 On 8 March 1999 Mr Picone wrote to Mr Coyne advising him that all the relevant documents were attached to the second option and requested a withdrawal of the purported notice of rescission.
6.20 On 8 March 1999 Mr Coyne advised Mr Picone by letter that the notice of rescission was not to be withdrawn and that if the plaintiff commenced proceedings the defendant would rely upon a further ground for rescission that the deed did not contain the Cooling off Notice as required by Section 66ZH(1) of the Conveyancing Act . The letter also stated that the defendant rejects your application to extend the period of the option and returned the $5,000 fee that had been forwarded to the defendant with the notice of extension on 4 March 1999.

7 These proceedings were then commenced. Mr McEwen SC appeared for the plaintiff. Mr G Cummins of counsel appeared for the defendant.
The law
8 Options for the purchase of residential property are governed by Part 4 Division 9 of the Conveyancing Act 1919 (the Act).
9 Every option is required to have attached to it a copy of the proposed contract for the sale of the property and the documents required by s52A of the Act (S 66ZI of the Act).
10 The documents required by s52A of the Act include relevantly a certificate issued under s 149(2) of the Environmental Planning and Assessment Act 1979; a diagram for the land from the appropriate sewerage authority; a copy of the folio of the register or an original or a copy of the computer folio certificate for the land; a copy of the plan of the land; a copy of all deeds, dealings and instruments creating easements and covenants burdening the land and a copy of a notice entitled Important Notice to Vendors and Purchasers referring to significant rights and obligations affecting the contract. (Clause 4 Conveyancing (Vendor Disclosure and Warranty) Regulation 1986).
11 If the documents required to be attached are not attached either party may rescind the contract (s66ZI of the Act).
12 Subject to s66ZC of the Act to which I will refer shortly, there is a cooling off period for every option commencing at the time the option is granted and concluding at 5 pm of the fifth business day after the day on which the option was granted. The purchaser is entitled to rescind the option during the cooling off period (s66ZB and s66ZD of the Act).
13 Every option not affected by s66ZC must include a statement in the prescribed form relating to the cooling off period. (s66ZH of the Act and Clause 8 Conveyancing (Sale of Land) Regulation 1988). If this statement is not included in the option either party may rescind the option (s66ZH of the Act).
14 However there is no cooling off period in relation to an option to purchase residential property if at or before the time the option is granted, the purchaser gives to the vendor (or the vendor’s solicitor or agent) a certificate that complies with s66ZF (s66ZC of the Act).
15 A certificate complies with s66ZF if it is in writing and is signed by a solicitor or barrister other than; -
i a solicitor acting for the vendor; or

ii any other solicitor employed in the legal practice of a solicitor acting for the vendor; or any other solicitor who is a member or employee of a firm of which a solicitor acting for the vendor is a member or employee; and
iii indicates the purpose for which the certificate is given; and
iv contains a statement to the effect that the solicitor or barrister explained to the purchaser the effect of the option and the proposed contract attached to the option, the nature of the certificate and the effect of giving the certificate to the vendor.

16 If the certificate does not comply with s66ZF or if it does comply and is not served in accordance with s66ZC then there is a cooling off period and a requirement for inclusion of the prescribed form of statement with the consequent right of rescission if it is not included.
17 An option granted for the purchase of residential property is void in the following circumstances;
(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) it is exercisable within 42 days after it is granted or, if a different period is prescribed, within that period (s66ZG of the Act).
Abandonment of ground for rescission that s 52A documents were not attached

18 A great deal of time was spent in this case in testing the defendant’s claim that when she received the deed for the second option from Mr Picone on 17 September 1999 only one document required by s 52A to be attached to the deed was attached. This claim formed a most important part of the defendant’s case as it was the original ground for rescission of the second option.
19 After the evidence was closed and at the commencement of final submissions I was informed by Mr Cummins that the defendant no longer relied upon this ground as it was accepted she would not be able to establish that the prescribed documents were not attached (Tr. 162 l 7-9).
Remaining grounds claimed by the defendant
20 Notwithstanding this abandonment the defendant claims that she is still entitled to rescind the option pursuant to s 66ZH because:
(a) at or before the time the second option was granted she did not receive a s 66ZF certificate from the plaintiff ( s 66ZC); and

(b) in those circumstances the second option should have included but did not include a statement in the prescribed form relating to the cooling off period (s66ZH).

21 A further basis for rescission is claimed because Mr Picone rather than the defendant prepared the draft option and contract and attached the required documents thereto. It is submitted by Mr Cummins that s 66ZI of the act should be read as requiring the grantee/vendor to attach the required documents. As this did not occur in this case it is submitted the defendant is entitled to rescind the contract.
22 Additionally the defendant claims that the second option is void because;
(a) at the time of the purported exchange on 15 September 1998 by Mr Picone, even if it is accepted the exchange could take place in this fashion, the documents he purported to exchange were not counterparts; and

(b) the option was not granted until the deed was received by the defendant on 17 September 1998 and is therefore void because it was exercisable within 42 days after it was granted. This is said to be so because clause 11 of the second option provides that the option shall not be exercised within 42 days of the date of the deed (s 66ZG).
Plaintiff’s claims

23 The plaintiff claims that the second option is valid and binding on the parties and that it has been validly extended to 15 September 1999.The plaintiff submits that;
(a) exchange of counterparts took place on 15 September 1998 at which time Mr Picone was acting for the plaintiff and was acting as the defendant’s agent for the purpose of the exchange. The second option was therefore granted on 15 September 1998 and is not void under s 66ZG;
(b) Mr Picone completed a certificate under section s 66ZF on 15 September 1998 at a time when he was acting only for the plaintiff. That certificate was inside the front page of the deed when it was exchanged. Accordingly the defendant received it by her agent, Mr Picone, at the time of exchange. It is submitted that this was when the grant was made. In those circumstances s 66ZH does not apply and the defendant is therefore not entitled to rescind the option in reliance upon that section;
(c) the defendant is estopped from denying exchange took place on 15 September 1998 and effectively that a valid option was granted on 15 September 1998.
24 The outcome of this case depends upon the answer to at least the following questions;
24.1 Was Mr Picone authorised to act as the defendant’s agent for the purpose of the exchange of the deed of option? (the agency question).
24.2 Were the documents as exchanged counterparts? (the counterparts question)
24.3 When was the option granted? ( the grant question)
The agency question
25 Mr Mansfield gave evidence that he wanted to exchange the contracts in person. He said he made contact with Mr Picone’s office and spoke with Amanda to make an appointment to attend upon Mr Picone for exchange. His affidavit evidence was that he made that contact on Tuesday 8 September in the morning. He said that Amanda had asked him whether he could come in at 9.30 am the following day to which he responded that he would be attending at that time.
26 Mr Mansfield’s affidavit evidence was that he went to Mr Picone’s office at 9.30 am on 9 September 1998 and asked for Mr Picone. He said that he was informed by Amanda that Mr Picone would be out all day. He claimed that he said to Amanda that he wanted to see Mr Picone about the exchange of options and that Amanda said leave them with me and I’ll have him phone you.
27 Mr Picone gave evidence that although he was attending to a rather large settlement on 8 September 1998 he was in the office most of the day. He had a meeting with a client outside the office on the 9 September 1998.
28 When Mr Mansfield gave his oral evidence he said that he went to Mr Picone’s office on 8 September not 9 September 1998. The person referred to as Amanda was called to give evidence. Her name is Amanda Louise Brownrigg. She denied ever having a conversation with Mr Mansfield in which she was alleged to have asked him whether he could come into the office the following morning. She said that she had no recollection of any of the other conversations alleged by Mr Mansfield to have taken place. She was firm in her evidence that she has never made an appointment for Mr Robert Picone that she can recall. Although a legal secretary at the time she gave her oral evidence Ms Brownrigg was the receptionist as at 8 September 1998.
29 Mr Mansfield maintained throughout his evidence that he understood that the exchange of the options was to take place whilst he was physically present. He claimed that notwithstanding Mr Picone’s letter in which he requested the return of the executed option agreement for exchange he still wanted to be present.
30 The defendant also gave evidence that she understood that her husband, Mr Mansfield, would be present at the exchange.
31 A conversation between Mr Mansfield and Mr Picone occurred on 11 September 1998. Mr Mansfield’s version of the conversation is that he informed Mr Picone that he couldn’t attach a copy of the lease because the tenants had gone. In response to this Mr Mansfield said that Mr Picone told me that he would now attend to exchange as stated in par 9 of his affidavit sworn 12 March 1999.
32 Paragraph 9 of Mr Picone’s affidavit of 12 March 1999 states that Mr Mansfield said you can disregard my letter regarding cl 14 as I see it has already been deleted. There is no tenant and the property will be sold with vacant possession. Mr Picone claimed that he said to Mr Mansfield I’ll mark the contract accordingly and attend to exchange to which Mr Mansfield allegedly responded OK.
33 As to this last matter Mr Mansfield gave evidence that he did not say OK to any such suggestion about exchange but he said please get back to me ASAP to arrange an appointment for exchange to which he claims Mr Picone said I will.
34 Although the plaintiff had executed the deed of option and returned it to Mr Picone under cover of a letter dated 8 September 1998 Mr Picone did not have final instructions from his client to exchange nor did he have instructions from his client to issue the cooling off certificate as required by the legislation.
35 On 15 September 1998 Mr Picone obtained those instructions from his client and attended to exchange in his office. Prior to doing so he made no further contact with Mr Mansfield or the defendant.
36 He gave evidence that at the time of the exchange of the contracts he perused the deeds and executed the s 66ZF certificate in duplicate and made a comparison of both copies making sure they were identical. He then altered the date from eighth September to 15 September on the executed copy provided by the defendant and made a file note of having exchanged the options. That file note reads 15.9.98 10 mins exchange and amendments. Mr Picone then forwarded the plaintiff’s executed deed of option as described in par 6.11 above. The deed contained the s 66ZF certificate signed by Mr Picone.
37 A further conversation of relevance is alleged to have occurred on 16 September 1998. Mr Mansfield says that he telephoned Mr Picone on that date because he hadn’t heard from him since 11 September 1998 about the exchange of contracts. He said to Mr Picone what’s happening about the exchange to which he claimed Mr Picone said everything’s in hand. You will hear from me in a couple of days.
38 Mr Picone claimed that on 16 September 1998 he said to Mr Mansfield I exchanged the options on 15 September. We are sending your counterpart to you in today’s mail to which he claimed Mr Mansfield said OK. The file note relied upon by Mr Picone in respect of this conversation reads Strand Estates 16/9/99 To Frank Mansfield - options exchanged 15/9/99- we sent option to him today- he said OK (emphasis added).
39 Mr Picone was not cross examined about this file note which was attached to his affidavit of 12 March 1999. No suggestion was put to him that this file note was not made on 16 September 1998 although it is curiously dated 16 September 1999 and refers to exchange on 15 September 1999.
40 However Mr Mansfield denied that Mr Picone told him that he had exchanged the option and he denied that he said that he had dated it 15 September 1998.
41 The plaintiff submits the delivery of the executed Deed on 8 September 1998 to Mr Picone’s office was in response to Mr Picone’s request in his letters of 1 and 4 September 1998 for it be returned to him for exchange. It is important to note that these letters informed the defendant that once exchanged the option fees would be forwarded to her. There would be no reason to forward anything to the defendant if it was anticipated that she (or her agent) were to be present at the exchange.
42 The defendant submits that Mr Mansfield did not by delivery of the executed option authorise such an exchange and that I should not be satisfied that any authorisation was given to Mr Picone to effect exchange in Mr Mansfield’s absence and certainly not as agent for the defendant.
43 The evidence dealing with the understanding of the parties up to 17 September 1998 is in direct conflict. The plaintiff claims that there was authorisation for the exchange in Mr Mansfield’s absence and the defendant claims that exchange in Mr Mansfield’s presence was necessary.
44 The plaintiff submits that an analysis of the defendant’s conduct between 17 September 1998 and the date of the purported rescission supports the plaintiff’s claim that the exchange was authorised.
45 Mr Mansfield and the defendant gave evidence that they received the executed deed of option on 17 September 1998 in the mail. Each claimed in evidence that the only relevant s 52A document with the contract was the s 149 Certificate. They each claimed that they noticed this on 17 September 1998. Mr Mansfield claimed that he advised the defendant that the missing documents could be provided in the contract should the option be exercised. He said that the defendant instructed him not to worry Mr Picone about it because he (Mr Picone) was such a busy man.
46 Quite a deal of evidence of conversation between the defendant and Mr Mansfield was tendered in evidence and some of it was not the subject of objection. At no stage was there any suggestion that either Mr Mansfield or the defendant said to each other or more importantly to Mr Picone that they were surprised or annoyed that Mr Picone had exchanged the contracts in Mr Mansfield’s absence. There is no evidence of any protest. Certainly there was nothing preventing the defendant from making contact with Mr Picone to register such a protest. It was not done. Mr Mansfield and the defendant banked the $5,000 cheque and remained silent.
47 The defendant entered into the contract with Emesco in February 1999. Correspondence with those representing Emesco, Minter Ellison solicitors, included the provision of a copy of the option. In his covering fax of 27 January 1999 Mr Mansfield stated as requested copy of option with Strand Estates Pty Ltd dated 15 September 1998 follows.
48 On 28 January 1999 Mr Mansfield forwarded a further fax to Minter Ellison in which he said:
The deed of option WAS executed 15 September 1998. Initially six months. We are aware that the negotiations must remain confidential and agree with your comments in this regard. Grantee COULD send a notice of extension of option to purchase, with a further $5,000 prior to 14 March 1999 and the option period would be extended a further six months.
49 It is apparent there was some question about the date of exchange or grant of the option because on 28 January 1999 Mr Mansfield forwarded a further fax to Minter Ellison in which he stated letter from your colleague, Robert Picone, Somerville & Co confirms that the exchange of options with Strand Estates Pty Ltd took place on 15 September last.
50 Special conditions in the contract with Emesco also refer to the option as follows;
33.1 The vendor discloses to the purchaser that it has granted an option to purchase the property to (the plaintiff)..pursuant to an agreement dated 15 September 1998.

33.2 If (the plaintiff)..exercises the option on or before 14 March 1999 the vendor must within 2 business days of receipt of notice of exercise of Option notify the purchaser…and this contract will immediately come to an end…

51 These clauses recognise 15 September 1998 as the date of the grant of the option in particular by reason of the choice of the date until which the plaintiff had to exercise the option, any extension aside.
52 There are two matters to which I need to make reference in weighing up the parties different versions of events because they are relied upon by each party to attack the reliability of the evidence of the other or to suggest that less weight would be given to that evidence by me.
53 The plaintiff points to the defendant’s dogged adherence in her evidence and reliance upon Mr Mansfield’s evidence of the claim that the s52A documents were not attached to the option. It submits that this adherence and subsequent abandonment of such reliance as a ground for rescission is a circumstance which should cause me to have some doubt about the reliability of the evidence of the defendant and Mr Mansfield generally.
54 The detail into which the defendant, but more particularly Mr Mansfield, descended to convince me that the s52A documents were not attached was minute. I was told of clips, drawers, plastic sleeves, attendances upon the documents, difficulties with clips, the use of implements to remove clips, the replacement of clips, the return of the plastic sleeves and the locking of drawers. I heard appropriately detailed cross examination of this process which took up the better part of a day.
55 The abandonment of claims made during the course of litigation will not always entitle a judge to view the evidence of the abandoning party with suspicion or to afford it less weight. It will depend upon the circumstances of the case. In this case the abandonment of the evidence relating to this aspect of the matter with the explanation that the defendant accepted that she would not be able to establish that the documents were not attached convinces me that I should place less weight on Mr Mansfield’s evidence than I otherwise would have but for the abandonment.
56 The defendant on the other hand claims that the curious date on the file note (16.9.99) will cause me to give its contents no weight.
57 The date of the file note was not referred to by anyone prior to my raising it with counsel in final addresses. Mr Picone attached it to his affidavit of 12 March 1999 in support of his version of the conversation of 16 September 1998. He said it was a contemporaneous file note.
58 Mr McEwen SC submitted that no challenge had been made to the claim that it was contemporaneous in Mr Picone’s cross examination and in the circumstances I should accept that it was made on that day although curiously dated a year later than the conversation and six months later than the affidavit.
59 In oral submissions on 6 April 1999 Mr Cummins accepted that there had been no cross examination of Mr Picone in respect of the file note but pointed to Mr Mansfield’s denial that he had been told of the exchange the day before this conversation. In his written submission received on the afternoon of 8 April 1999 Mr Cummins submitted that the file note is simply irrelevant having regard to its date.
60 Mr Cummins further submitted that there was no impediment to the plaintiff reopening its case to recall Mr Picone to give the necessary evidence regarding the typographical error so the file note can be treated as contemporaneous. He submitted that the defendant supports and invites that reopening. Failing such an application by the plaintiff he submitted the file note should be disregarded.
61 In the light of these submissions I had the matter relisted at 2 pm on 9 April 1999 when Mr McEwen SC advised the court there would be no application by the Plaintiff. I asked Mr Coyne, who appeared for the defendant on that day, whether there was any application by the defendant to further cross examine Mr Picone. There was no application.
62 The date of the file note is curious and because this is so I do not intend to rely upon the existence of the file note in weighing up the competing versions of the 16 September 1998 conversation. However I should say that having regard to the way the evidence has been left and the submission that I should merely disregard it there is no inference adverse to Mr Picone and the plaintiff drawn in respect of the date of the note.
63 I invited the defendant to put any submissions or give any explanation as to why Mr Picone would refuse to exchange the option in Mr Mansfield’s presence if such a request was being pressed upon him. No explanation could be given. I also issued the same invitation as to why on 16 September 1998 Mr Picone would not inform Mr Mansfield that he had exchanged the options the day before. No explanation could be given. Certainly there was no challenge to Mr Picone’s evidence that he did exchange the options on 15 September 1998.
64 Mr Picone’s letters of 1 & 4 September 1998 are in my opinion requests for the defendant to allow Mr Picone to exchange the contracts in the absence of the defendant. If the defendant was to be present (personally or by her agent) there would be no need for the statement that the fees would be forwarded after exchange.
65 I am satisfied that the delivery of the executed deed dated 8 September 1998 together with the covering letter from the defendant was in response to Mr Picone’s letters.
66 I am satisfied that on 11 September 1998 Mr Picone informed Mr Mansfield that he would mark the contracts accordingly and attend to exchange and that Mr Mansfield did not ask Mr Picone to get back to him to arrange an appointment for exchange. I am also satisfied Mr Picone informed Mr Mansfield on 16 September 1998 that the options had been exchanged. Mr Picone’s letter of that date does not refer to the conversation between the two men. That suggests to me that the letter had been prepared by the time the conversation took place and is supportive of Mr Picone’s version that he told Mr Mansfield that he was sending the document to the defendant that day.
67 The defendant’s contract with Emesco has a purchase price of $165,000 more than the purchase price agreed upon with the plaintiff. This is pointed to by the plaintiff as a motive in the defendant to suggest so long after the event that Mr Picone was not authorised to exchange the option. In this regard I am presented with a similar situation to that which was presented to Lord Sterndale in Koenigsblatt v Sweet (1923) 2 Ch 314 at 324 where His Lordship said the defendant wishes to get out of a contract which he undoubtedly made and approved, because he could make more money by repudiating it than by fulfilling it.
68 In all the circumstances I prefer the evidence of the plaintiff over that of the defendant.
69 I am satisfied that the defendant authorised the plaintiff to exchange the options on her behalf and to do all such things as necessary to effect that exchange. The conduct of the defendant in delivering an executed option to Mr Picone in response to his two letters and the conversation of 11 September 1998 gave him that authority.
70 This is not a case of telephone exchange or postal exchange in which there is a need to assess by what act and when a concluded and binding agreement is reached.(Nunin Holdings v Tullamarine Estates Pty Ltd (1994) 1 VR 76 at 81-83;Domb v Isoz (1980) Ch at 548 at 557; Henderson v Hopkins (unreported Young J 22/2/98). In this case Mr Picone had implied actual authority to act as the defendants agent at exchange and upon the exchange the binding agreement was concluded.
71 If I am wrong in respect of the implied actual authority given to Mr Picone prior to exchange I am satisfied that the defendant ratified that authority to act as her agent on exchange by her conversations (through Mr Mansfield) and conduct thereafter referred to above. ( Koenigsblatt v Sweet (1923) 2 Ch 31).
72 This is certainly not a case of mere silence being relied upon for such ratification. It includes the positive conduct in taking the benefit of the option fees and banking them. It also includes the conversation of 16 September 1998 (see Empirnall Holdings v Machon Paull (1988) 14 NSWLR 523) and the subsequent conduct outlined above. This ratification is subject to the option not falling foul of s66ZG to which I shall now refer.
The counterpart question
73 Mr Cummins submits that even if I am satisfied that Mr Picone was authorised to act as the defendant’s agent for the purpose of the exchange he was not authorised to complete the blank s66ZF certificate within the deed of option which the defendant had executed and delivered to him on 8 September 1998. If that is so he submits that the certificate should not have been filled out and therefore there would not be an exchange of counterparts as required by s66ZG and the option is void.
74 Mr Cummins further submits that Mr Picone was not authorised to change the date on the option executed by the defendant from eighth September 1998 to 15 September 1998. In those circumstances the documents were not counterparts.
75 As to the matter of the filling out of the certificate in the defendant’s executed option Mr Picone said that he did this prior to the exchange. There is no requirement for such a certificate to be given by the vendor to the purchaser. The legislation requires the purchaser to give it to the vendor to remove the cooling off period.
76 Assuming that there was no need to complete the certificate - as it is of no effect in the defendant’s executed copy - I regard it as superfluous and not affecting the status of the option as a counterpart.
77 As to the changing of the date on the defendant’s executed copy from eighth to 15 I am of the opinion that Mr Picone was authorised as agent to do such things as necessary to effect a valid exchange which included the dating of the defendant’s copy as at the date of exchange. Mr Mansfield said in evidence I’m not worried about dates (Tr.99 l 41). Although I am satisfied that Mr Picone had the implied authority to attend to this change, in my opinion the ratification of Mr Picone’s authority to exchange the option would also encompass that change.
78 In the circumstances of Mr Picone being authorised to act as the defendant’s agent at exchange I am satisfied that he received a counterpart of the option as exchanged on 15 September 1998.
79 I am therefore satisfied that the option is not void under s66ZG(1)(a).
The grant question
80 I am also satisfied that the option was granted on 15 September 1998. An exchange of counterparts took place on that day and the defendant, by her agent, Mr Picone, received the counterpart that day. This much is effectively recognised in the special conditions to the Emesco contract and the pre-contractual correspondence between the defendant and Emesco.
81 The timing of the grant is relevant to the submission that the option is void because it was able to be exercised within 42 days of its grant. This would only be a valid argument if I had found that the option was granted after 15 September 1998.
82 I am therefore satisfied that the option is not void under s66ZG (1)(b).
Rescission pursuant to s66ZH
83 A further question for decision is whether the defendant is entitled to rescind the contract pursuant to s66ZH because she did not receive a certificate which complied with s66ZF at or before the time the option was granted (see s66ZC). If this was so then the option should have included a statement in relation to the cooling off period which it did not contain.
84 I have found the option was granted at the time of exchange of counterparts with Mr Picone acting for the plaintiff and as agent for the defendant. The certificate was within the plaintiff’s executed counterpart. The defendant received the certificate at the time of the exchange/grant by her agent Mr Picone. In those circumstances there is no cooling off period and no ground for rescission of the option under s66ZH.
85 If I had found for the defendant on this issue it would have meant that notwithstanding that a valid option had been granted a party which is given no benefit by the certificate would have been entitled to rescind the option. This seems unjust and inappropriate.
86 It is now over three years since Windeyer J suggested some reform to this aspect of the law. His Honour’s suggestion was:
At the very least the rights under s 66ZH(2) should be restricted to the grantee, if only the grantee has rights.

Jillsea Pty Ltd v George & Anor (Windeyer J unreported 6.10.95 at p 18)

87 If His Honour’s suggestion were to be followed it seems to me that some unjust outcomes may be avoided.
Preparation of draft option by the plaintiff
88 This defendant submits that because Mr Picone prepared the draft deed of option she is entitled to rescind it. The submission as I understand it is that the legislation requires the grantor/vendor to prepare the deed of option. It is submitted that this requirement is found in s52A(2)(a) which provides that a vendor, under a contract for the sale of land, shall, before the contract is signed by or on behalf of a purchaser attach the prescribed documents to the contract.
89 Even assuming this to be correct in relation to such a contract it is abundantly clear that the defendant’s conduct authorised Mr Picone to prepare the draft deed on this occasion. The defendant negotiated changes to the draft and at no stage suggested that she should put together another draft so that she could be the party to attach the prescribed documents.
90 Additionally when requested to disassemble the contract from the first draft of the second option to attach the draft contract for the sale of the property to the amended draft she did so without demur.
91 This claim is unmeritorious and is not a proper ground to rescind the option.
Estoppel
92 Although this point is not necessary to decide because of my decision in respect of the plaintiff’s other claims similar considerations to those discussed above arise in respect of the plaintiff’s claim that the defendant should be estopped from denying that Mr Picone was so authorised.
93 In my opinion the conduct of the defendant, knowing that the plaintiff was expending funds and/or not negotiating further with the defendant on the understanding that it had a binding option agreement would establish a proper basis for a finding that the defendant should be estopped from so denying Mr Picone’s authority to exchange as the defendant’s agent.
Rectification
94 Mr Cummins submits that what the defendant received was not a deed which unless rectified would be effective according to its tenure, but a nullity (Coolibah Pastoral Co v The Commonwealth (1967) 11 FLR 173 per Blackburn J at 191). Once again it is not necessary for me to decide whether rectification could apply to the deed dated 15 September 1998 however the plaintiff’s argument that it is entitled to such a remedy seems to have some force.
95 Mr McEwen SC relied upon the defendant’s evidence that there was no concern about the date of the agreement, the fact that there was consensus as to its terms and each party desired to implement the agreement.
96 Additionally it seems both parties believed the option was granted on 15 September 1998 and the defendant entered into a contract with the third party effectively stating such to be the case.
Extension of second option
97 In the circumstances of my findings in respect of the validity of the second option I am satisfied that it has been validly extended by the service of the notice pursuant to clause 10 of the second option and the tender of the $5,000 under cover of Mr Picone’s letter of 4 March 1999.
Conclusion
98 I therefore find in favour of the plaintiff in respect of the claims it makes in pars 1, 2, 3, 4, 5 of its summons. It is not necessary for me to deal with the order sought in par 6 as it seems to me to be premature. However the parties are to bring in short minutes which will include the dismissal of the cross claim. I will hear counsel in respect of any application relating to costs but I am minded to make an order that the defendant pay the plaintiff’s costs of this application.

Last Modified: 06/11/1999