Trustees Executors & Agency Co Ltd v Peters [1960] HCA 16; (1960) 102 CLR 537 (4 April 1960)

HIGH COURT OF AUSTRALIA

TRUSTEES EXECUTORS AND AGENCY CO. LTD. v. PETERS [1960] HCA 16; (1960) 102 CLR 537

Vendor and Purchaser

High Court of Australia
McTiernan(1), Kitto(2) and Menzies(3) JJ.

CATCHWORDS

Vendor and Purchaser - Option to purchase contained in lease - Purchase to include land other than land held in lease - Extension of period of option by deed - Period in &which exercisable - Enforceability - Termination of lease - Notice to quit - Exercise of option - Whether option rendered void by rule against perpetuities - If option exercised sale to be subject to usual terms etc. of Real Estate Institute of New South Wales - Whether uncertain - Readiness and willingness of plaintiffs in suit for specific performance of option agreement.

HEARING

Sydney, 1959, November 20, 23, 24; 1960, April 4. 4:4:1960
APPEAL from the Supreme Court of New South Wales.

DECISION

1960, April 4.
The following written judgments were delivered:-
McTIERNAN J. I am of the same opinion as Kitto J. and Menzies J. and agree

KITTO J. In 1951 the appellant Chislett and one Mullins became tenants to the respondent of a part of certain land in the whole of which the respondent was the registered proprietor under the provisions of the Real Property Act, 1900 (N.S.W.) of an estate in fee simple under two Crown Grants. The tenancy was regulated by the provisions contained in an unregistered memorandum of lease. The term agreed upon was five years from 14th May 1951. The memorandum contained a provision, in cl. 5, in the following terms: "THE LESSEES SHALL have the right at any time prior to the First day of February, 1956 by giving three months written notice to the Lessor to that effect, to purchase the whole of the land and improvements comprised in the two said Crown Grants for the sum of Three thousand pounds (3,000 pounds 0s. 0d.) in which case the following provisions shall apply: (a) With the notice of exercise of option the Lessees shall pay a deposit of Three hundred pounds (300 pounds 0. 0d.) and the balance shall be paid in cash on completion of sale which shall take place at the expiration of the said period of three months notice, but not before 1st July, 1952. (b) Such sale shall be on and subject to such of the usual terms and conditions of sale of the Real Estate Institute of New South Wales as shall be applicable to sales of land of like tenure under like circumstances". It will be observed that this provision relates to the whole of the land in the two Crown Grants and not only to the part which was (at p542)

2. No notice of exercise of the option was given before 1st February 1956, but shortly before that date, namely on 23rd January 1956, Chislett and Mullins being then the plaintiff and the defendant respectively in a partnership suit pending in the Supreme Court, provisions of which were as follows: "1. Subject to Clause 8 hereof the said Suit shall stand adjourned generally to a date to be fixed by Counsel and approved by the Court. 2. This Deed is without the subject of the tenancy. prejudice and without admissions of any kind and in particular that there is now a valid and exercisable option in an alleged Lease between the Plaintiff and the Defendant as Lessees and Peters as Lessor bearing date the Twenty-seventh day of April One thousand nine hundred and fifty-one. 3. Peters agrees that the time for exercising the alleged option if any and if now exercisable shall be and is hereby extended until the expiration of thirty days notice in writing from Peters to the Plaintiff and the Defendant or their respective Solicitors such notice not to be given prior to the First day of March One thousand nine hundred and fifty-six. 4. The Defendant agrees that the execution of this Agreement or its existence is not to be disclosed or used by him in any proceedings in which any party hereto or his assigns is a party or interested whether by pleading or offering the same in evidence in examination or cross-examination of any witness or otherwise. Peters is not to plead this Deed as alleging that the exercise of the Option after the date specified in the Lease is out of time. 5. It is agreed that if the Plaintiff is successful in the said suit on the issue that a partnership now exists between him and the defendant the said option if any shall be and is hereby agreed to be cancelled and void and not exercisable. 6. In the event of the Defendant being successful in the said Suit on the issue of dissolution of partnership raised by him then the Plaintiff agrees that he will for conformity enter into the exercise of the said Option which shall be without any admission by him of the validity thereof or of his right to join in such exercise immediately after the Defendant has indemnified him in the form and to the extent as shall be agreed upon between the parties to the Suit or shall be found and approved by the Master in Equity and the Plaintiff agrees that he will consent in the said Suit to an Order in the terms of this paragraph. 7. In the event of the Defendant being successful as aforesaid and the Plaintiff and Peters or either being a party to any proceedings by or against the Defendant or his assigns arising out of or connected with the aforesaid Option its exercise or enforcement the Defendant and his assigns will not plead or raise the question of laches acquiescence and delay on the part of the Plaintiff or Peters. This shall not apply to laches acquiescence or delay existing prior to the date hereof. 8. The Plaintiff agrees that he will consent to the Defendant making application to bring the Suit on for hearing as a matter of urgency and to consent to such application so as to enable its determination before the expiration of the time limited by any notice which may be given by Peters under Clause 3 hereof". (at p543)

3. As to cl. 2, and the words "if any and if now exercisable" in cl. 3, it seems clear that 1st February 1956 was the last day for giving the notice and not the last day on which the three months might be made to expire. No reason appears for doubting that the option was in existence and exercisable at the date of the deed. (at p544)

4. The respondent never gave any notice under cl. 3 of this deed. The term of the lease expired on 14th May 1956, but Chislett and Mullins held over. On 26th June 1956 the respondent gave them a notice to quit which was effectual to bring the relationship of landlord and tenant to an end on 27th July 1956. (at p544)

5. The partnership suit between Chislett and Mullins was settled on 26th September 1956, a decree being made by consent. The decree declared that the partnership had become dissolved (as Mullins had asserted that it had) as from a date in 1951, and that Chislett held all his right title and interest in the lease as trustee for Mullins. Chislett, in consideration of the settlement, gave Mullins certain undertakings. One was to execute all such documents and do all such things as Mullins might reasonably require to enable Mullins to secure the benefit of the option of purchase contained in the memorandum of lease. Another undertaking was that if Mullins should require to join Chislett's name in any proceedings against the present respondent to enforce the provisions of the option, Chislett would be agreeable to that course subject to being indemnified against costs. (at p544)

6. Two days later, on 28th September 1956, a document was served on the respondent, signed by Chislett and Mullins, reciting the terms of the clause of the memorandum of lease which conferred the option, and stating that the signatories, in pursuance of the clause, exercised the option. The operative portion of the document did not say anything about three months' notice, but there was a clear enough implication from the recitals to satisfy the requirement of the clause. The requisite deposit was tendered, but the respondent rejected it. (at p544)

7. On 10th October 1956 Mullins died, and thereafter the appellant company became the administrator of his estate. On 28th December 1956, that is to say at the expiration of the three months fixed by the option clause for completion, a solicitor acting for the appellant company, and having Chislett's authority also, made a fruitless attempt to tender the purchase price to the respondent together with a proper form of transfer for execution. On 31st December he succeeded in tendering them, but the respondent refused to have anything to do with them. The appellants instituted a suit for specific performance on 11th March 1957. It came on to be heard before Myers J., who dismissed it. From the decree dismissing it this appeal is brought. (at p544)

8. The respondent defended the suit on a number of grounds. Most of them were rejected by the learned judge, and in my opinion rightly rejected. One was that the deed of 23rd January 1956, because of the provision in cl. 4, could not be relied upon by Mullins, and therefore could not be relied upon by the administrator of his estate, in legal proceedings to enforce a contract of purchase and sale arising from or made absolute by an exercise of the option. It is a sufficient answer that the deed must be read as a whole, and that so read it simply cannot be given this meaning. Whatever may have been the proceedings to which cl. 4 was intended to refer, one thing is clear: the extension of the option, so solemnly granted and so carefully limited, was meant to be a legally effectual extension, so that if the option should be exercised within the extended time an enforceable contract of purchase and sale should result. Clauses 6 and 7 in particular are quite incompatible with the notion, inherently absurd as in any case it is, that if Mullins should be found in the partnership suit to be entitled to the benefit of the option, and, if it should be exercised for his benefit, he should be disentitled to produce the deed in a court in order to establish that the option was extended and accordingly that the exercise of it was within time. The absurdity of the notion is heavily underlined by the fact that no similar restriction upon Chislett could arise under cl. 4 in the event of his succeeding in the partnership suit, and that, whoever should succeed in that suit, the present respondent was not precluded from producing the deed in order to enforce a contract resulting from an exercise of the option. (at p545)

9. Another ground of defence was that there was to be discovered in the deed an implication that even if the respondent should not give a notice bringing the time for exercising the option to an end the time should nevertheless be limited to the period of the lease, or alternatively to the period during which the relation of landlord and tenant should subsist between the respondent on the one hand and Chislett and Mullins on the other. In my opinion such a limitation of time is not a necessary or proper implication in the deed. I do not rely so much upon the fact that the land to which the option related included land of which Chislett and Mullins were never lessees, for it was nevertheless as lessees of portion of the land included that they got the option, and it was as lessees of that portion that they dealt with the respondent over the matter of the extension. But in the deed, as in the memorandum of lease, the parties made express provision as to the duration of the option, and the provision they made had no reference or specific relation of any kind to the continuance of the lease or of the landlord and tenant relationship. The deed, moreover, was made at a time so close to the end of the five year term that the decision of the parties to let the lessor fix the duration of the option subject to a specified minimum period suggests a deliberate choice not to tie the option to the lease. Whatever probability there might have been in the opposite view if the deed had been executed in the circumstances of a different age, it is hard to see any probability about it when one remembers that if the parties had adverted at all to the duration of the lease, or of their landlord and tenant relationship, they would almost certainly have been struck by the need either to include or to exclude by express provision any period during which the lessees might be in enjoyment of statutory rights superadded to their contractual rights. Moreover, the pending suit was to stand adjourned generally (cl. 1), and the parties must have realized that it might well not come on for hearing until after the end of the lease and any period of holding over. Yet cls. 5, 6 and 8 show that the parties contemplated the option being still exercisable after the suit had been disposed of. It seems to me that everything points to their having intended their stipulation as to the duration of the option to be definitive. (at p546)

10. Then it was said that on the construction thus given to the deed the option was void for perpetuity. But this is a case in which the option was exercised by the original grantees giving notice to the original grantor. We are concerned, therefore, with a question of personal contract, not depending in any respect upon the creation, by the granting of the option, of any binding effect upon the land. In my opinion the judgment of Jenkins J. (as he then was) in Hutton v. Watling (1948) Ch 26 should be accepted as establishing that in proceedings such as the present the fact that the option was unlimited in point of time affords no bar to relief under the rule against perpetuities. (The case was affirmed by the Court of Appeal on other grounds: (1948) Ch 398 . See also Griffith v. Pelton (1958) Ch 205, at p 225 ). (at p546)

11. Next, it was suggested that the notice to quit which the respondent served on 26th June 1956 should be treated as having been sufficient to bring the option to an end under cl. 3 of the deed. But it was a notice given alio intuitu, and not by any straining of its language could it be construed as intended to have any bearing upon the availability of the option. (at p546)

12. Two points raised by the respondent remain. On each of them Myers J. was in his favour. One, which may be dealt with first because it is the shorter, was that Chislett was not shown to be ready and willing to perform the contract on his part. He gave no evidence in the case, although the manager of the appellant company, his co-plaintiff, deposed to the company's readiness and willingness. The learned judge said that his being joined as a plaintiff and being represented by counsel at the hearing provided the only evidence of his readiness and willingness, and his Honour thought this unconvincing in view of the circumstances in which he was made a party and the terms on which his agreement to be a plaintiff was procured. The reference is to the making and the terms of the deed of 23rd January 1956. With great respect, I do not feel able to support this view of the case. Chislett was bound by the deed to perform the contract, subject to being indemnified, and the proved readiness and willingness of the plaintiff company to do everything on its part to perform the contract included readiness and willingness to exercise to the full the power which the deed gave it to make Chislett (if he were to become unwilling at any stage) do everything necessary to be done by him for that purpose. Even if Chislett had gone into the witness-box and said that he was unwilling to perform the contract, the answer would have been that the Court had means of overcoming the difficulty, and would not allow any recalcitrance on Chislett's part to prevent the company from achieving the result to which it was entitled. (at p547)

13. The final point, and that to which the learned judge devoted most attention in his judgment, was that the terms of the option were so uncertain that no enforceable contract resulted from the exercise of it. The critical part of the option clause in the memorandum of lease was par. (b). This paragraph the learned judge construed in a sense which I may summarize by saying that, in order to decide what terms and conditions the parties intended, it was necessary to ascertain by evidence what terms and conditions sponsored or approved by the Real Estate Institute were, at the date of the exercise of the option, usually employed in contracts for the sale of fee simple estates in land for cash, and that in addition it was necessary, where those terms and conditions were in a form which required a choice between alternatives, to find that the parties had made their choice and what the choice was. (at p547)

14. Paragraph (b), it will be remembered, provides that the sale shall be on and subject to "such of the usual terms and conditions of sale of the Real Estate Institute of New South Wales as shall be applicable to sales of land of like tenure under the like circumstances". The first point to observe is that the reference is not to such of the terms and conditions of sale of the Real Estate Institute as are usual. The paragraph makes the assumption that the Real Estate Institute has some terms and conditions of sale which are its usual terms and conditions of sale. The assumption was true at the date when the memorandum of lease was signed, 14th May 1951, for there was then in existence a form of terms and conditions, which had been well known since 1920 as the form approved by the Institute. By the time the option was exercised, in 1956, the form had been superseded by another, issued in 1953. To my mind the application of par. (b) must be to one or other of these forms. There is room for argument, no doubt, as to what the parties meant. But it seems very unlikely that they were binding themselves in the dark by whatever terms and conditions might be evolved by the Institute before the exercise of the option. The more natural conclusion from the words used seems to me to be that the parties had in mind, when they put the option clause in the memorandum of lease, a set of terms and conditions which they knew as being the usual terms and conditions of the Institute, and that they intended to refer to those terms and conditions and no other. The use of the future tense, "shall be applicable", in the words describing which of those terms and conditions should apply, shows only, in my opinion, that the question of applicability was to be decided in relation to each of those terms and conditions by reference to the circumstances which should be found to exist at the time of the exercise of the option. Accordingly I am of opinion that the proper course is to turn to the Institute's form of 1920, delete any of its provisions which are inapplicable to a sale for cash of an estate in fee simple in land under the provisions of the Real Property Act, and treat the rest as the terms and conditions of the sale. It is true that when one looks at the form one finds that one clause, number 11, contains a blank. It reads: "The vendor shall be entitled to the rents and profits, and shall pay or bear all rates, taxes and outgoings up to the date of (c) from which date the Purchaser shall be entitled to or shall pay or bear the same respectively, and any necessary apportionment thereof shall be made and adjusted on completion". In the margin opposite the blank appear the words "Contract or Completion". The respondent contends that because the parties failed to agree whether the blank should be treated as filled up with the word "contract" or with the word "completion" it ought to be held that the exercise of the option did not bring about a concluded contract. I am unable to agree. The blank in cl. 11 shows that it is one of the usual terms and conditions of the Real Estate Institute that the benefit of the rents and profits and the burden of the rates, taxes and outgoings are to pass together. But it also shows that there is no usual term or condition of the Institute as to whether they shall pass on the date of contract or on the date of completion. This is not a case in which the parties have shown that they are agreed on one or other of those dates but have not enabled the Court to ascertain which date that is. It is simply a case in which the parties have adopted a form containing no provision as to the date, and have left the date to be supplied by the general principles of the law: see Carrodus v. Sharp [1855] EngR 242; (1855) 20 Beav 56 (52 ER 523) , Barsht v. Tagg (1900) 1 Ch 231, at pp 234-235 , Myers v. Witham (1924) VLR 470 . (at p549)

15. In my opinion, the appeal should be allowed and specific performance should be decreed. (at p549)

MENZIES J. The present appellants failed in a suit which they, as purchasers, brought in the Supreme Court of New South Wales against the respondent for specific performance of a contract of sale, a suit in which the appellant company sued as the administrator of an estate of one Mullins, who died on 10th October 1956. The contract of sale relied upon was constituted, as the appellants claimed, by the effective exercise of an option conferred by one of the terms of a lease from the respondent Peters to Mullins and Chislett; but Myers J. decided that by the option clause the parties had explicitly agreed that any sale pursuant thereto should be subject to some terms and conditions and had failed to identify those terms and conditions, with the consequence that the exercise of the option did not result in a binding contract of sale. His Honour also held that if there was a contract, it had not been proved to his satisfaction that Chislett was ready and willing to carry out his obligations thereunder. Issues as to whether the time for the exercise of the option had been extended, whether the option had been exercised within the time limited for its effective exercise, and whether the rule against perpetuities applied to the option, were all decided in favour of the present appellants. The arguments before us covered the whole of the field. (at p549)

2. The respondent, being the owner of land at Forbes comprised in two Crown Grants (that registered in vol. 4227 fol. 128 and that registered in vol. 3317 fol. 142), by a lease dated 27th April 1951, leased part of this land to Mullins and Chislett for a term of five years from 14th May 1951, i.e. to expire on 14th May 1956. This document contained an option to purchase the whole of the land comprised in the two Crown Grants. It was in these terms: "The Lessees shall have the right at any time prior to the first day of February, 1956, by giving three months written notice to the lessor to that effect, to purchase the whole of the land and improvements comprised in the two said Crown Grants, for the sum of three thousand pounds (3,000 pounds 0s. 0d.) in which case the following provisions shall apply: (a) With the notice of exercise of option the lessees shall pay a deposit of three hundred pounds (300 pounds 0s. 0d.) and the balance shall be paid in cash on completion of sale which shall take place at the expiration of the said period of three months notice, but not before 1st July 1952. (b) Such sale shall be on and subject to such of the usual terms and conditions of sale of the Real Estate Institute of New South Wales as shall be applicable to sales of land of like tenure under like circumstances." At the time the lease was granted, Mullins and Chislett were partners and they carried on their partnership business upon the land so leased to them, but in 1955 Chislett commenced a suit against Mullins in which it was eventually determined by a decree dated 26th September 1956, that the partnership was dissolved as from 22nd October 1951. While this suit was pending, and seemingly because the differences between Mullins and Chislett made the immediate exercise of the option impossible, a deed was executed on 23rd January 1956, by Chislett (called the Plaintiff), Mullins (called the Defendant) and Peters. Clause 3 of this deed was as follows: "Peters agrees that the time for exercising the alleged option if any and if now exercisable shall be and is hereby extended until the expiration of thirty days notice in writing from Peters to the Plaintiff and the Defendant or their respective Solicitors such notice not to be given prior to the First day of March One thousand nine hundred and fifty-six." Peters never gave any notice pursuant to this clause but on 25th June 1956, he did give Mullins and Chislett a notice to quit expiring on 27th July 1956. This notice to quit was given pursuant to s. 62(5)(g)(ii) of the Landlord and Tenant (Amendment) Act 1948-1954 on this ground, "that the premises - not being a dwelling house - are reasonably required for occupation by the lessor". As to this, Myers J. made the following finding: "The defendant has established that ground before me, and therefore it follows that on the expiration of the notice to quit any relationship of landlord and tenant which may have existed between the parties came to an end." This finding was, I think, justified by s. 67 of the Landlord and Tenant (Amendment) Act: Read v. Morris (1952) 53 SR (NSW) 39; 70 WN 53 . On 26th September 1956, Mullins and Chislett, describing themselves as lessees, gave the respondent a notice purporting to exercise the option and tendered a sum of 300 pounds. The respondent refused to treat this as an effective exercise of the option, and it was to enforce the contract of sale which the appellants claimed to have been constituted thereby that this suit for specific performance was brought. Before the suit was brought, the balance of purchase money, namely 2,700 pounds, was tendered to and rejected by the respondent. (at p551)

3. The first question of law which arises is whether the deed of 23rd January 1956 did extend the time for the exercise of the option or could be relied upon as doing so. The respondent contended that cl. 3 was ineffective and alternatively, even if it did extend the time for the exercise of the option, Mullins could not use the deed to establish the extension, and relied particularly upon cl. 2 and 4, which are as follows: "2. This Deed is without prejudice and without admissions of any kind and in particular that there is now a valid and exercisable option in an alleged Lease between the Plaintiff and the Defendant as Lessees and Peters as Lessor bearing date the Twenty-seventh day of April One thousand nine hundred and fifty-one." "4. The Defendant agrees that the execution of this Agreement or its existence is not to be disclosed or used by him in any proceedings in which any party hereto or his assigns is a party or interested whether by pleading or offering the same in evidence in examination or cross-examination of any witness or otherwise. Peters is not to plead this Deed as alleging that the exercise of the Option after the date specified in the Lease is out of time." Notwithstanding the provisions of cl. 2, it is clear that the deed was intended to have some legal effect; moreover, apart from cl. 4, it seems to me impossible to deny legal effect to cl. 3. (at p551)

4. The learned trial judge disregarded cl. 4, reading it as applicable to proceedings existing on 29th January, 1956, but as inapplicable to any proceedings commenced after that date; I cannot accept this reading of the clause. It refers to proceedings "in which any party hereto or his assigns is a party or interested", and stipulates that Peters, who was not a party to any proceedings existing on 29th January, 1956, is not to plead the deed for certain purposes. In arriving at his conclusion, I think Myers J. placed a mistaken emphasis on the use of the words "is a party" as indicating the clause related to the proceedings then instituted. I must therefore consider cl. 4 for myself. It is to be observed that it is not an undertaking by Chislett; this of itself makes it apparent that the introduction of the deed in this suit could not have been prevented by the clause. The way in which Mr. Bowen sought to use the clause was, however, to deprive cl. 3 of any legal effect in favour of Mullins. In my judgment, however, the argument claimed too much. Whatever its exact meaning, cl. 4 was directed to preventing Mullins from using the deed in some legal proceedings and this, of itself, amounts to an acknowledgment that it might have some legal effect. It is not, I think, necessary to determine just what were the proceedings in which Mullins agreed not to use the deed, but the clause certainly did not amount to a complete embargo against his using the deed in any proceedings whatever; furthermore I am disposed to think that there could be proceedings "in which any party hereto or his assigns is a party or interested" in which Mullins could use the deed, e.g., if the question had arisen later whether the option was cancelled by cl. 5 of the deed. I conclude, therefore, that notwithstanding cl. 2 and 4, cl. 3 must be given legal effect according to its proper construction. (at p552)

5. The next question is whether the notice of 26th September 1956, could amount to an effective exercise of the option or whether it was out of time. It is, of course, clear from its very terms that an effective notice under cl. 5 of the lease had to be given before 1st February 1956; it is also clear that the object of cl. 3 of the deed of 23rd January 1956 was to extend the time beyond that date. The appellant claims that the option was extended without limit save that the lessor could determine it by thirty days' notice, and until such a notice was given, and it expired, the option could be exercised. The respondent, on the other hand, claims that the extension was limited to the term of the lease or alternatively, to the time during which the relationship of landlord and tenant existed between the respondent and the appellant, i.e., until 14th May 1956, or alternatively, until 27th July 1956, and that the respondent's right to give a notice was but a means of his determining the option at an earlier date. It is of course immaterial for present purposes which of these two dates shoudl be regarded as the critical date because both were earlier than the date of the attempted exercise of the option. (at p552)

6. It is the law that an option for the renewal of a lease which is granted without any express limitation of time for its exercise, is prima facie to be exercised during the currency of the lease, or at lasts, while the relationship of landlord and tenant continues between the parties. The reasons for this implication are obvious and are of compelling weight. When parties are negotiating a lease, it is highly probable that they are dealing with their relationship as landlord and tenant and it is highly improbable that they would intend that after that relationship had ended, the tenant could exercise an option to renew a lease that had already come to an end. To bind the "landlord" to renew the "lease" when it had run out and he was no longer landlord would require very clear words indeed. (at p553)

7. Where the option granted is not to renew a lease but to buy the freehold, it has been said that it is "outside of the terms which regulate the relations between the landlord as landlord and the tenant as tenant" (per Peterson J. in In re Leeds & Batley Breweries and Bradbury's Lease; Bradbury v. Grimble & Co. (1920) 2 Ch 548, at pp 551, 552 and "is not itself one of the incidents of a tenancy strictly speaking" (per Sargant L.J. in Sherwood v. Tucker (1924) 2 Ch 440, at p 450 . In Rider v. Ford (1923) 1 Ch 541 Russell J. decided that an option in a lease to purchase the freehold without any limitation as to time exists so long as a relationship of landlord and tenant continues and could be exercised notwithstanding that the original lease had run out; in Shearer v. Wilding (1915) 15 SR (NSW) 283 , Harvey J. took a different view and decided that an option to purchase the freehold contained in a lease could be exercisable only during the currency of the lease. He said: "It is contended that in this respect the terms of the proviso are free from ambiguity, and that there is nothing to justify the Court in inferring that the option can only be exercised during the currency of the lease. In my opinion the proper conclusion is that the parties to the lease intended that the option should only be exercised during its currency. There is nothing to show that it was intended to give Dooley more than an option of purchase as incident to his lease. I think that from the reference to the subject-matter of the option as 'the said demised premises' the Court is justified in holding that the subject-matter of the purchase which the parties had in contemplation was the land while still subject to the demise. It appears to me to be unreasonable to suppose that it was intended that Dooley should have an option of purchase which could be exercised at any time during his lifetime, when the parties were dealing at arms length and negotiating in the character of prospective lessor and lessee. I think that prima facie the intention was that the option should only be exercised during the currency of the lease" (1915) 15 SR (NSW), at p 286 . For the reason I have already given, it is not necessary in these proceedings to determine which of these views should be preferred, but I may perhaps say that my own inclination is towards the view taken by Harvey J. The important point for present purposes is that in both Shearer v. Wilding (1915) 15 SR (NSW) 283 and Rider v. Ford (1923) 1 Ch 541 , cases where there was no express limitation of the time in which an option to purchase given in a lease was to be exercised, a limit was inferred, in the former during the currency of the lease, and in the latter during the relationship of landlord and tenant. In each case, the implication of a time limit rested upon the commonsense principle that general words may be limited by the character of the instrument in which they appear and that a provision in a lease is prima facie concerned with the period of the lease or the period during which the relationship of landlord and tenant continues. (at p554)

8. In general, therefore, it can be said that when in a lease an option to purchase is given without any express limitation of time, prima facie the option cannot be exercised after both the lease and any relationship of landlord and tenant following the lease have come to an end. There was no room, however, for this prima facie rule to be applied to the original lease here because so far from being unlimited in point of time its very terms made 31st January 1956, the latest day on which an option could be exercised. Coming to the deed of 23rd January, it is to be observed that it is the time for exercising the option in the lease to purchase the land demised and other land that is extended. The deed does not grant a new option. In favour of applying the prima facie rule and making an implication that the option not limited in terms had to be exercised while the lease or the relationship of landlord and tenant continued, there are the considerations that the option was given by a lease, it was extended while the lease still had some months to run, and the extension was granted to meet a temporary difficulty which the parties expected to be soon resolved. Against this there are the considerations that the parties provided the respondent with a way of bringing the option to an end at any time after 30th March and that the option was not restricted to the land demised. Upon the whole and in all the circumstances, I do not feel justified in implying any term limiting the time for the exercise of the option. Neither of the matters upon which Harvey J. relied in Shearer v. Wilding (1915) 15 SR (NSW) 283 are in strictness applicable here because the option as extended is not confined to the demised premises and it contains provisions for bringing it to an end. (at p554)

9. This brings me to the matters decided by the learned trial judge in favour of the respondent Peters, and because it is a short point, I will take first his Honour's lack of satisfaction that Chislett was ready and willing to perform the contract. Chislett, being one of the two purchasers, signed a transfer and the solicitor for the purchasers tendered that transfer and the purchase price to the vendor. This, without more, seems to me to show that Chislett was ready and willing to perform the contract. Myers J. drew an adverse inference from the calling of the manager of the trustee company to give evidence that the company was ready and willing to perform its obligations under the contract, and from the failure to call Chislett to give similar evidence, but such an inference does not seem to me to have been warranted. It may be that Chislett was a reluctant purchaser and joined in because by the deed of 23rd January 1956, he had bound himself to do so in the events which happened, but this matters not. It was unnecessary to call him to prove his readiness and willingness and the fact that he gave no evidence does not, I think, detract from the significance of the facts that he signed the transfer and that the transfer and the purchase price were tendered on his behalf as well as on behalf of Mullins. In any event it is hardly to be thought that a change of front by Chislett could prevent the trustee company from enforcing its rights. (at p555)

10. Next there is the question whether, in the circumstances, the giving of a notice exercising the option created a binding contract. Some of the difficulties are patent upon the face of the option clause; others are latent and appear only when it is attempted to apply the option clause to the facts. As I understand the option clause, the giving of a notice and the payment of 300 pounds was intended to result in a sale of the land upon some terms and conditions, but unless those terms and conditions can be ascertained by the application of the provisions of the lease to the facts without any further agreement of the vendor and purchasers, no binding contract could result. The terms and conditions are described as some of "the usual terms and conditions of sale of the Real Estate Institute of New South Wales". This I regard as a reference to such terms and conditions comprised in one or more documents. The words used are wide enough to cover terms and conditions in existence at the time when the option comes to be exercised but perhaps the reference is more naturally to terms and conditions in existence at the time of the lease. With deference to the contrary view taken by the learned trial judge, I think the word "usual" means ordinary terms and conditions as distinct from special terms and conditions and is not the equivalent of "commonly used". The terms and conditions to be taken from the document ascertained as aforesaid are those "applicable to sales of land of like tenure under like circumstances". This requires some elucidation. From the lease itself, it appears that the land is land under the Real Property Act and what is being sold is an estate in fee simple. So the tenure is ascertained. The circumstances are that the sale is a cash sale - 300 pounds payable as a deposit and 2,700 pounds payable upon completion in three months (unless the notice was given before 1st April 1952, when the date of completion is fixed as 1st July 1952). I infer, moreover, that the fee simple is to be free from encumbrances, liens and interests other than such reservations as there may be in Crown Grants. This follows from (1) the description of the respondent's title in the beginning of the deed where Peters is described as "being registered as the proprietor of an estate in fee simple in the land hereinafter described, subject, however, to such encumbrances, liens, and interests, as are notified by memorandum underwritten or endorsed hereon"; (2) the memorandum of encumbrances at the end of the lease which is confined to "Reservations (if any), in relevant Crown Grants"; and (3) the description of the special matter of the sale as "the whole of the land and improvements comprised in the two said Crown Grants". I have not been able to determine from the option understood in its context as part of the lease whether it was the obligation of the purchaser to give vacant possession. The provisions to which I have just referred may well justify the conclusion that no third person could be left with a right to possession which would amount to an encumbrance, lien or interest, but whether it was intended that the vendor should give vacant possession is something which I do not think can be derived from the document itself. It follows that on this point a sale under like circumstances is one where no stipulation has been made in the contract itself about vacant possession. (at p556)

11. Coming now to the evidence, it appears that at the time when the option was exercised, i.e., 26th September 1956, there were in existence and in use, four documents containing conditions of sale approved by the Real Estate Institute of New South Wales. Two of these can be disregarded; what is described as "Annexure to Contract for Sale on Terms" is obviously enough inapplicable to a sale for cash; the document called "Special Conditions" is to be disregarded upon the meaning I have attributed to the word "usual" in the option. The other two documents are each called "Conditions and Terms of Sale"; one was put out in 1920, the other in 1953, but both were in use in 1956. Although substantially the same, they are different in the following respects:

- 1920 - - 1953 -
Clause 8 Clause 8
The property is sold subject to The property is sold subject
the existing tenancies or occupan- to the conditions and reservations
cies (if any), and to the contained in every relative Crown
conditions
and reservations contained in Grant under which it is held.
every relative Crown Grant under
which it is held.
Clause 18
- Notwithstanding the provisions
of Clause 11 hereof the Purchaser
shall (subject to this Contract being
completed) at his own expense
comply with all notices received
from and all requirements made by
any adjoining owner or any
statutory, public or other
competent
authority after the date
hereof affecting the property, and
hereby indemnifies the Vendor
against all liability in respect
thereof.
Clause 19
- Vacant possession of the
property
sold shall be given on
completion; OR
The property is sold subject to
the existing tenancies or
occupancies,
particulars whereof, as to
periods of tenancies and rents,
being as follows:- (at p557)

12. In addition, although in both documents cl. 12 deals with covenants concerning boundary fences, whereas in the 1920 document it is required that the adjoining land be described, the 1953 document has no such requirement. As has been seen, there is no clause in the 1920 document corresponding with cl. 18 of the 1953 document, and the work which is done by cl. 8 of the 1920 document is done by cll. 8 and 19 of the 1953 document, but differently by providing the alternatives of vacant possession and subject to specified tenancies. (at p557)

13. If the 1953 document were the document applicable, I see no reason why cl. 18 could not apply, but by reason of its very form, I do not see how cl. 19 could apply when it is not known independently whether the property is sold with vacant possession or subject to existing tenancy. On the other hand, if the 1920 document were to apply, I see no reason why the whole of cl. 8 could not readily be applicable to a contract silent on the point of vacant possession or not. The result of this analysis is that if the 1920 document were the one applicable, the sale would be subject to existing tenancies but if the 1953 document were to apply, there would be no term governing the matter at all. Again, if the 1920 document were to apply, there would be no term corresponding to cl. 18 of the 1953 document. Moreover, cl. 12 of the 1920 document cannot be applied because no adjoining land has been named, whereas cl. 12 of the 1953 document could be applied because it applies to any adjoining land owned by the vendor. There would, therefore, be a substantial difference depending upon whether the 1920 or the 1953 document is to be regarded as applicable. I should add that cl. 11 of each document seems inapplicable; it assumes that a particular date has been fixed for the apportionment of profits and outgoings, but here none was fixed. (at p558)

14. In these circumstances, although it is theoretically possible to regard the option as referring to one or other or both documents, the real alternatives in my judgment are the 1920 document alone or the 1920 and 1953 documents taken together, because I see no basis upon which the 1920 document, which was in existence and used both when the option was given and when it was sought to exercise the deed, can be excluded. (at p558)

15. If the 1920 document is alone to be regarded, I see no difficulty in taking from it the terms applicable; they are cll. 5-17 inclusive but omitting cll. 11 and 12. To incorporate these terms and conditions would mean a sale subject to tenancies because there is nothing, as I have construed it, in the option to exclude any part of cl. 8. If regard be had to both documents, then the proper course would be to take such common clauses as are applicable, that is, cll. 6-10 inclusive, and 13-17 inclusive, to reject cl. 11 in each document, to reject cl. 12 in the 1920 document but not in the 1953 document, to reject cl. 19 in the 1953 document and to take in cl. 18 from that document. In this way, certainty would be achieved which would not have been possible had there been inconsistencies in the clauses applicable in the circumstances. (at p558)

16. Because, however, the contract with the clauses applicable taken only from the 1920 document would be different from the contract with the clauses applicable taken from both documents, it is necessary to make a choice between these alternatives if the requisite certainty for the existence of a binding contract is to be achieved. This difficulty is, however, not more than a matter of construction which the Court must resolve if it can and I have reached a conclusion that cl. 5(b) of the lease refers to the 1920 document only. (at p558)

17. The way in which the learned trial judge dealt with the problem I have just discussed was to accept with some hesitation the contention that it was the 1953 document by itself that applied and then enquire which of the terms and conditions that it contains are properly to be described as usual, in the sense of commonly used, but I have already explained why I take a different view. Furthermore, his Honour considered that because cll. 11 and 19 of the 1953 document could not be applied without some further agreement, uncertainty must result, but even if the 1953 document were that to which regard should be had, I have already stated my reasons for thinking that neither of these clauses is applicable. This could perhaps be illustrated by supposing that a contract were to be drawn up including these clauses as they stand; they would be meaningless and the contract would operate as though they were not there - Nicolene Ltd. v. Simmonds (1953) 1 QB 543 , Fitzgerald v. Masters [1956] HCA 53; (1956) 95 CLR 420 . (at p559)

18. In the result, therefore, I have reached the conclusion that the notice given on 26th September 1956 did result in a contract of sale incorporating cll. 5-17 inclusive of the 1920 conditions and terms of sale of the Real Estate Institute of New South Wales but omitting cll. 11 and 12 thereof. (at p559)

19. As I agree with the learned trial judge that the rule against perpetuities has no application, I have come to the conclusion that the appellants were entitled to succeed and that specific performance should have been decreed in the suit. (at p559)

ORDER

Appeal allowed with costs.

Decree of the Supreme Court set aside, except in so far as it relates to amendments to the statement of defence and the costs of such amendments.

In lieu thereof, decree as follows:

(1) Declare that the option of purchase referred to in
par. 6 of the statement of claim was effectually
extended by the deed mentioned in par. 7 thereof, and
was validly exercised on 28th September 1956 by
the notice mentioned in par. 9 thereof.
(2) Declare that upon the true construction of the
memorandum
of lease referred to in the statement of claim
the sale which took effect by the exercise of the said
option is a sale on and subject to such of the terms and
conditions of sale contained in the form issued by the
Real Estate Institute of New South Wales and being
Exhibit K in this suit as were applicble in the
circumstances of the said sale for cash of
an estate in fee simple in land under the provisions
of the Real Property Act 1900 (N.S.W.) made on
28th September 1956.
(3) Declare that the contract of sale which took effect by
the exercise of the said option ought to be specifically
performed and carried into execution, and order and
adjudge the same accordingly.
(4) Order that the defendant pay the plaintiffs' costs of the
suit up to and including this decree.

Remit the cause to the Supreme Court with liberty to all parties to apply to that court for consequent directions and otherwise as they may be advised.