Thomas Developments v Setlee - [2002] NSWSC 816

Reported Decision:
(2003) NSW ConvR 56-032

New South Wales

Supreme Court

CITATION: Thomas Developments v Setlee [2002] NSWSC 816

CURRENT JURISDICTION: Equity Division

FILE NUMBER(S): SC 2688 of 2002

HEARING DATE(S): 4 July 2002

JUDGMENT DATE: 4 July 2002

PARTIES :

Thomas Developments Pty Ltd (Plaintiff/Cross Defendant)
Setlee Pty Ltd (Defendant/Cross Claimant)

JUDGMENT OF: Windeyer J at 1

COUNSEL : Mr M W Young (Plaintiff/Cross Defendant)
Mr J A Trebeck (Defendant/Cross Claimant)

SOLICITORS: Peter Chamberlain & Co (Plaintiff/Cross Defendant)
B E McCann & Co (Defendant/Cross Claimant)

CATCHWORDS: CONTRACTS - option agreement - whether an extension of the call option period was granted - whether silence amounted to the granting of the extension

DECISION: See paragraphs 28 to 34

- 6 -

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

WINDEYER J

THURSDAY 4 JULY 2002

2688/02 THOMAS DEVELOPMENTS PTY LIMITED v SETLEE PTY LIMITED

JUDGMENT

1 HIS HONOUR: The plaintiff, Thomas Developments Pty Limited, is the owner of land at Colyton. The particular land in question has now been sub-divided into 23 lots.

2 The defendant company, Setlee Pty Limited, entered into separate option agreements with the plaintiff company on 9 October 2001, each of which gave it, as grantee or its nominee, the option to purchase from the plaintiff/grantors one of the lots. The option was to be exercised within five business days after advice was given by the plaintiff's solicitor to the defendant's solicitor of registration of the plan of subdivision. Notification of registration was given on 12 April 2002. It is accepted, therefore, that the expiry date for the exercise of the options was 19 April 2002.

3 On Tuesday 16 April Mr McCann, solicitor, a sole practitioner, but with one client only, Wincrest Homes Pty Limited, contacted Mr Li, the solicitor for Thomas Developments Pty Limited. Setlee Pty Ltd, is a company associated with Wincrest and Mr Li knew that Mr McCann was authorized to deal with him direct on the options. Mr Li and his wife are directors of Thomas Developments Pty Ltd, as is Mr Li senior, the father of the solicitor.

4 According to Mr McCann, he said to Mr Li, the solicitor:

"Can we have an extension of the call option period to allow as many of the nominees as possible to purchase? They are awaiting finance approval and understandably their solicitors will not exchange without finance approval. An extension to 3 May 2002 will be enough time."

5 To which he said that Mr Li said:

"Put the request in writing. I want to speak to the directors. One is on holidays. I can't see it being a problem."

6 To which Mr McCann said:

"Thank you I will send a letter."

7 Mr Li accepts this evidence, apart from the sentence "I can't see it being a problem" which he denies. Mr McCann made a contemporaneous note of their conversation which supported his evidence. I have no doubt that his evidence is correct and I accept it.…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2002] NSWSC 816
Decision Date: 4 July 2002

CaseChat Overview and Summary

The matter before the court involved a dispute between Thomas Developments and Setlee regarding the existence of an extension of a call option period. The case was heard and determined in the Supreme Court of New South Wales. Thomas Developments alleged that Setlee had granted an extension of the call option period, which had expired, and sought specific performance of the option. Setlee, on the other hand, denied that an extension had been granted and argued that the option had expired without any further action.

The primary legal issue the court needed to address was whether the silence of Setlee, in response to a request from Thomas Developments, constituted the granting of an extension of the call option period. The court had to consider the terms of the option agreement, the conduct of the parties, and the applicable principles of contract law in determining whether there was a valid extension of the call option period.

In its judgment, the court examined the terms of the option agreement and the relevant correspondence between the parties. The court found that the option agreement did not provide for the automatic extension of the call option period upon request. The court also noted that there was no evidence of any express agreement between the parties that would have resulted in an extension of the call option period. The court held that Setlee's silence in response to the request for an extension did not amount to the granting of an extension. Consequently, the court ruled that the call option had expired without any further action and dismissed Thomas Developments' claim for specific performance.

The court's final order was that Thomas Developments' claim for specific performance of the call option be dismissed with costs. The court held that Setlee was not obligated to extend the call option period and that the option had expired without any further action. The court also noted that Thomas Developments had not demonstrated any prejudice or loss as a result of Setlee's silence and therefore did not award any damages to Thomas Developments.

Orders