Adams & Staff Pty Ltd v Bennett [1994] QSC 371

I ~~~lA se q4j 3 T1 !Jrf/1 State Reporting Bureau I TRANSCRIPT OF PROCEEDINGS (Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau.) SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION AMBROSE J No 134 of 1994 ADAMS AND STAFF PTY LTD and JACK BENNETT CAIRNS .. DATE 06/12/94 JUDGMENT REVlSED COPIES ISSUED State Reporting Bureau _..,.- Date ..) Plaintiff Defendant -- 1 of 7 -- 061294 HIS HONOUR: In this matter I make an order in terms of the minute of order which is attached to the summons and marked "A". I order that the defendant pay to the plaintiff its costs of and incidental to the application for summary judgment to be taxed. I publish my reasons. 2 JUDGMENT 10 20 C' c 30 c 40 (_ 50 60 -------------- -- 2 of 7 -- d.~~ IN THE SUPREME COURT OF QUEENSLAND Writ No. 134 OF 1994 CAIRNS DISTRICT REGISTRY BETWEEN: ADAMS & STAFF PTY.LTD. A.C.N. 010 673 202 Plaintiff AND: JACK BENNETT Defendant REASONS FOR JUDGMENT BEFORE THE HONOURABLE MR.. JUSTICE AMBROSE DELIVERED THE 6TH DAY OF DECEMBER 1994 This is an application by the plaintiff for an order pursuant to R.S.C. 018A that the plaintiff have summary judgment in its action for special performance in terms of a Minute of Order \. / attached to the summons . The plaintiff contends that pursuant to clause 22 of a Registered lease between the defendant as lessor and the plaintiff as lessee it has taken steps required by that clause directed towards exercising an option to purchase the leased property at a price to be determined by the content of valuations to be procured under that clause as a preliminary step to the plaintiff validly exercising its rights under the option. There seems to be no contest between the parties on issues of fact. The only contest is with respect to the terms of clause -- 3 of 7 -- 2 22 of the lease. It is the defendant's case that.clause 22 is too uncertain to be enforced because it fails to provide for sufficient certainty in the fixing of the price at which the option may be exercised. Alternatively, it is contended that, upon a careful reading of clause 22, it is apparent that it is unenforceable because in essence it is merely part of an agreement to agree to the purchase price under which the option can be exercised. Many authorities have been cited on behalf of the defendant. The defendant's contention is that specific performance ought not be ordered upon this application because the terms of clause 22 are such that the question in dispute is of a kind that ought not be determined on this application. The starting point to determine the matters raised upon the application is the wording of clause 22 of the lease. The lease was made on 28 ·July 1993 for a period of 4 years. ~ Clause 22 of the lease provides:- "The lessor grants to the Lessee an option to purchase the demised premises to be exercised by the Lessee at any time after the 15th of July 1994 but before the 14th July 1997. The option may be exercised by the Lessee giving a written notice to the Lessor to determine the purchase price. The purchase price shall be determined by mutual agreement between the Lessor and the Lessee and in the event of no agreement it shall be determined by the mean value of two valuations obtained from independent Valuers in Cairns to be nominated and agreed upon by both parties and failing such agreement, as appointed by the Real Estate Institute of Queensland. The mean of the two valuations shall be the purchase price. the value shall be calculated on the basis that the property shall be used for the purpose set out herein and operating as a "going concern" less the value of the Lessee's interest in the property (if any). Once the purchase price has been determined the Lessor shall give written notice to the Lessee of such purchase -- 4 of 7 -- 3 price. Should the Lessee des~re to exercise the option to purchase after the purchase price has been determined and notified the Lessee shall celiver a written notice of exercise of option to the Lessor within 35 days after receiving the said notice of t~e purchase price together with a bank cheque for ten per cent of the purchase price by way of a deposit in favour of the Lessor. The sale shall be due for completion 30 clear days after delivering of such notice to the Lessor and payment of the deposit. If either party bound hereunder requires the execution of a formal contract that party shall prepare and execute a form of contract in duplicate (as used by the R.E.I.Q. [Real Estate Institute of Queensland] at that time) and forward it for execution to the other party and both parties shall sign same provided that that contract shall not affect the substance of the parties • obligations under this clause. •• While perhaps the wording of clause 22 has some imperfections it is my view that it is perfectly clear and certain in its ) legal effect. Clause 22 reflects the clear agreement that the plaintiff, at any time after 15 July 1994 but before 14 July 1997 will have the right to purchase the leased property at a purchase price to be determined by the taking the "mean value of two valuations obtained from independent valuers in Cairns ... " It \. -- / is the clear intention of that clause that once that mean valuation has been determined the plaintiff may then decide whether or not it wishes to finally exercise the option to purchase that property at the mean valuation figure. Under the second paragraph of clause 22 within 35 days of notification of the "mean of the two valuations" the plaintiff must deliver a written notice of exercise of option together with a bank cheque for ten per cent of the purchase price which will be the mean of the two valuations. When that has been done, it is agreed that the sale will be due for completion 30 days after delivering the notice of exercise of -- 5 of 7 -- . '\I / 4 option and payment of deposit. There is no uncertainty as to the intention of the contracting parties when executing the lease containing clause 22. In my view it is a perfectly clear and sensible provision inserted in the lease for a period of 4 years to ensure that the plaintiff, upon the exercise of the option, must do so at a purchase price which reflects market value in Cairns at about that time. In my view, there is nothing in the terms of clause 22 to suggest that, upon its purported exercise, the option requires the parties to the lease to enter into any further agreement . The plain meaning and effect of clause 22 is that if the lessee wishes to exercise an option to purchase the leased property it must proceed by taking two steps. The first step is to have ascertained the mean of two valuations of the property· by different valuers. The next step then is for the plaintiff to give a written notice exercising the option to purchase at that mean valuation figure. Clause 22 imposes time constraints both for ascertaining the purchase price to be paid and for exercising the option at that price. A significant number of authorities were cited by both parties to this application. Those authorities, insofar as they establish principles upon which a commercial document will be construed to avoid uncertainty, in my view, are so well known as to make it unnecessary for me, upon the issue of construction, to refer to citations from them. Both parties submitted written argument in this matter and I make those arguments a schedule to these Reasons for Judgment. -- 6 of 7 -- '' I 5 I make an order in terms of the Minute of Order which is attached to the summons and marked "A". I order that the defendant pay to the plaintiff its costs of and incidental to this application for summary judgment to be taxed. ( ( / -- 7 of 7 --