Al Maha Pty Limited v Coplin

This dispute is about whether an option to buy land was validly exercised.

By a Put and Call Option Agreement dated 16 October 2014 (the “Agreement”), the defendant (“Mr Coplin”) granted the first plaintiff, Al Maha Pty Ltd (“Al Maha”) an option to purchase Mr Coplin’s home for $2,200,000 (the “Option”). The Agreement attached the contract for sale of land which would become binding upon exercise of the Option (the “Contract”).

The Agreement provided that one way the Option could be exercised was by Al Maha giving the requisite notice to Mr Coplin’s “solicitor/conveyancer”. The Contract identified Mr Coplin’s “solicitor/conveyancer” as V J Tait & Associates, a conveyancing firm (“Ms Tait”).

On 21 December 2017, Al Maha purported to exercise the Option by serving the necessary paperwork on Ms Tait’s office. However, by that time Ms Tait was no longer retained by Mr Coplin.

Al Maha argued that, on the proper construction of the Agreement, it had validly exercised the Option because Ms Tait remained Mr Coplin’s “solicitor/conveyancer” by reason of her being so described in the Contract. Mr Coplin, relying on a decision of Young J (as his Honour then was), submitted that those words in the Agreement referred to Mr Coplin’s “solicitor/conveyancer” retained as such at the time when the Option was purportedly exercised. He therefore submitted that service on Ms Tait was not a valid exercise of the Option.

There is much to be said for both arguments. However, the Court prefers Al Maha’s construction because:

This result gives rise to a secondary issue, being Al Maha’s application that costs owing to it by Mr Coplin under previous costs orders should be set off against the purchase price payable by Al Maha’s nominee (the second plaintiff, Ms Bechara) under the Contract. The Court is satisfied that it is in the interests of the just, quick and cheap resolution of the costs issues between the parties for such a set off to be ordered.

The Court will order that the Contract be specifically performed and that $235,000 be set off against the purchase price payable to Mr Coplin under the Contract.

Mr T M Faulkner of Senior Counsel appeared for Al Maha and Ms Bechara with Ms A F Garsia of Counsel. Ms B Oliak of Counsel appeared for Mr Coplin.

Because these proceedings were really in the nature of a construction summons, the facts were uncontroversial and were relied upon by the parties by way of background rather than as being of any legal significance for the purpose of construing the Agreement.

The Agreement was entered into between Mr Coplin and Al Maha on 16 October 2014. The Option was exercisable for 18 months from the 43rd day after the date of the Agreement. If it was not exercised in that period, Mr Coplin had a put option exercisable for seven business days after the expiry of the Option.

Ms Tait was Mr Coplin’s conveyancer for the purposes of the preparation and execution of the Agreement and was named as such in the Contract. Ms Tait witnessed Ms Coplin’s execution of the Agreement.

Ms Tait’s uncontradicted evidence was that, by reason of events which it is not necessary to record, she formed the view on or about 23 October 2014 that she was no longer retained by Mr Coplin. Nevertheless, it was common ground that both the first and second tranches of the “Security Amount” (see clause 8 of the Agreement reproduced in paragraph [28] below) were paid to Ms Tait as the “Depositholder”, the second payment occurring 12 months after the date of the Agreement.

Not long after entering into the Agreement, Mr Coplin sought to withdraw from it. It is not necessary to record his reasons for doing so.

On 14 May 2015, Mr Coplin commenced proceedings against Al Maha (and its buying agent) in this Court seeking to set aside the Agreement. Mr E Berman of E Berman & Co was Mr Coplin’s solicitor in those proceedings. Seventy five thousand dollars of the “Security Amount” was paid into Court pending resolution of the proceedings. That amount remains in Court and it was accepted by the parties that, whatever the outcome of these proceedings, there was no reason for those funds not to be released to Mr Coplin.

Because the Option would have expired in accordance with its terms while Mr Coplin’s proceedings were yet to be determined, on 12 April 2016 the parties entered into a Deed of Variation of Put and Call Option Agreement (the “Variation Deed”) which included:

Lindsay J heard Mr Coplin’s proceedings in May and June 2016. His Honour delivered judgment on 16 December 2016 and declared the Agreement to be void ab initio: Coplin v Al Maha Pty Ltd [2016] NSWSC 1745.

An appeal from Lindsay J’s decision was heard by the Court of Appeal on 28 July 2017. By judgment delivered on 11 December 2017, the appeal was allowed and Mr Coplin’s proceedings at first instance were dismissed with costs: Al Maha Pty Ltd v Coplin [2017] NSWCA 318. Mr Coplin was also ordered to pay Al Maha’s costs of the appeal.

The delivery of the Court of Appeal’s decision on 11 December 2017 started time running for the exercise of the Option in accordance with the Variation Agreement (see paragraph [16] above). It was able to be exercised until 4.00pm on 10 January 2018.

On 18 December 2017 at 10.57am, Al Maha’s solicitor emailed Mr Berman:

On 18 December 2017 at 1.43pm, Al Maha’s solicitor emailed Ms Tait:

Mr Berman replied on 19 December 2017 at 11.51am:

Ms Tait replied on 19 December 2017 at 11.59am:

At 9.14am on 21 December 2017, this letter from Al Maha’s solicitor with its enclosures was delivered by hand to Ms Tait’s office and accepted by her receptionist:

Barely an hour later, Ms Tait emailed Al Maha’s solicitor:

By letter dated 21 December 2017, Ms Tait returned the documents referred to in paragraph [24] above to Al Maha’s solicitors.

Between 21 December 2017 and 10 January 2018, Al Maha took no other steps to exercise the Option.

The relevant terms of the Agreement are (emphasis added):

The relevant provisions of the Contract are:

There was no controversy between the parties about the applicable legal principles. These are conveniently summarised in the judgment of French CJ, Nettle and Gordon JJ in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd & Anor (2015) 256 CLR 104; [2015] HCA 37:

Although not relevant to the disposition of these proceedings, I record for completeness that the question of when recourse can be had to what is sometimes referred to as the surrounding circumstances has been resolved in New South Wales by the decision of the Court of Appeal in Cherry v Steele-Park [2017] NSWCA 295 to the effect that there is no necessity for the Court to find ambiguity before regard may be had to surrounding circumstances. In this case, neither party took up the Court’s invitation to identify any such surrounding circumstances which should be taken into account in construing the Agreement. The parties confined their arguments to what was apparent from the face of the Contract.

Al Maha’s fundamental proposition was that, on its proper construction, the reference to a party’s “solicitor/conveyancer” in clause 28(a) of the Agreement meant that party’s solicitor or conveyancer as stated in the Contract. In advancing that construction, Mr Faulkner SC accepted that it was open to either party to give notice to the other of some other solicitor or conveyancer being authorised to receive notices on their behalf for the purposes of the Contract. Al Maha’s argument that, as at 21 December 2017, Ms Tait was Mr Coplin’s “solicitor/conveyancer” for the purposes of clause 28(a) of the Agreement was based on reading the provisions of the Contract in relation to the “Depositholder” together with the requirements of clause 3.2 of the Agreement for the exercise of the Option.

On behalf of Mr Coplin, Ms Oliak submitted that “solicitor/conveyancer” in clause 28(a) must be construed as the party’s solicitor or conveyancer for the time being or, putting it another way, the solicitor or conveyancer retained as such at the time of the purported exercise of the Option. She submitted that the intention of clause 28(a) was to ensure that the documents exercising the Option were received by the party for whom they were intended (in this case, Mr Coplin). A solicitor or conveyancer who is acting for a party is an agent for the party and owes duties to the party in relation to any documents received by them on the party’s behalf, including to pass on those documents to their client, or at least notify the client of their existence. The same could not be said once the solicitor or conveyancer’s retainer had been terminated. In support of her argument, Ms Oliak relied on the judgment of Young J (as his Honour then was) in Pratt & Anor v Hawkins (No 2) (1991) NSW ConvR 55-592 (“Pratt”).

Essentially for the reasons given by Mr Faulkner SC, the Court concludes that by reference to the text, context and commercial purpose of the Agreement, a reasonable business person would have understood “solicitor/conveyancer” in clause 28(a) of the Agreement to mean that party’s solicitor or conveyancer listed as such in the Contract in the absence of having received a notice under the Contract otherwise. I shall first set out the reasons for that conclusion before explaining why I do not accept the arguments put on behalf of Mr Coplin.

The Court’s reasons for accepting Al Maha’s construction Contract are:

It is convenient at this point to deal with two submissions put by Ms Oliak against Al Maha’s construction.

The first was to the effect that, if the Agreement was construed in the way in which I have construed it, it was contrary to public policy because it required Mr Coplin to retain a solicitor or conveyancer at all times. I do not accept that argument because that is not what the Agreement requires. Rather, the Agreement was entered into on the basis that each party had retained a solicitor or conveyancer who was identified as such in the Contract.

Second, Ms Oliak submitted that if Al Maha’s construction was correct, then at the time of the purported exercise of the Option, Al Maha was on constructive notice that Mr Berman was now Mr Coplin’s solicitor. This submission could be made because, on Al Maha’s interpretation, the fact that Al Maha had been put on actual notice that Mr Berman did not have instructions to accept service was irrelevant.

Nevertheless, Ms Oliak’s submission must be wrong. The definition of “solicitor” in clause 1 of the Contract provides that it is the person named as such in the Contract “or in a notice served by the party”. “Serve” is defined in the same clause to mean “serve in writing on the other party”. It is clear beyond doubt that, for the purposes of the definition of “solicitor” (and therefore in this case for the purposes of the definition of “Depositholder”), constructive notice of a change of solicitor was irrelevant.

Ms Oliak submitted that the intention of clause 28(a) was to ensure that the documents exercising the Option were received by Mr Coplin. A conveyancer acting for a party is an agent of the party and owes duties to the party in relation to any documents received by them on the party’s behalf. That could not be said where the conveyancer received documents on a former client’s behalf. In this case, clause 28(a) was intended to ensure that the documents came into Mr Coplin’s possession. That did not occur on 21 December 2017 because Ms Tait no longer acted for Mr Coplin.

It was further submitted that a construction requiring the conveyancer to be actually retained for the client at the relevant time was supported by the terms of clause 28(a), being the present possessive form of a “party’s solicitor/conveyancer”, referring to the person currently acting for the party at the time of service. It did not include a “former” solicitor or conveyancer.

In support of Mr Coplin’s argument, Ms Oliak relied heavily on the judgment of Young J (as his Honour then was) in Pratt. His Honour said:

At an abstract level, Ms Oliak’s argument is immediately attractive for its straightforwardness, especially when fortified by Young J’s judgment. It could be reinforced by at least two additional propositions. First, it might be argued that commercial parties should always be taken to have known that people can change their solicitors or conveyancers during the course of a transaction. Second, why didn’t the parties say so in terms if they wanted the solicitor or conveyancer referred to in clause 28(a) to be subject to the same kind of arrangements as the “Depositholder”?

Nevertheless, for the following four reasons, the Court does not accept the construction advanced on behalf of Mr Coplin.

First, it interprets the words “party’s solicitor/conveyancer” in isolation from the rest of the Agreement. In other words, it pays insufficient attention to the context, in particular the context provided by the terms of the Agreement relating to the “Depositholder”, the “Security Amount” and the requirements of the exercise of the Option as set out in clause 3.

Second, and closely related to the first reason, Young J’s decision in Pratt is clearly distinguishable. It is not necessary for me to agree or disagree with his Honour’s decision. It is clear from the passage which I have quoted (see paragraph [42] above) that his Honour was considering the then standard form of contract. That was the 1988 form of contract. A copy of that standard form was tendered before me and the clauses to which Young J refers in his reasons appear in that 1988 form of contract. The only conclusion open from his Honour’s judgment is that his construction was based on the clauses to which his Honour makes express reference.

The important point for present purposes is that the 1988 form of contract contained no provisions similar to the defined terms “Depositholder” and “Solicitor” in the Contract (which is in the form of the 2005 edition of the standard contract for the sale of land in New South Wales). So much may be demonstrated by reference to the provisions in relation to the deposit in the 1988 form of contract:

Third, Ms Oliak’s argument gives insufficient attention to the legal reality that the giving of the notice as referred to in clauses 3.2(a) and (b) of the Agreement is not just for the purpose of putting the other party on notice of something. Many notices in contractual arrangements are given only for that purpose, e.g. to notify the other party of a change in address for service. On the other hand, the notices referred to in clause 3.2 are given primarily to bring about a legal effect, namely the exercise of the Option. They go to the very purpose of the Agreement.

So understood, it becomes of considerably less importance whether by some process of agency or otherwise a notice referred to in clause 3.2 constructively or actually puts the addressee of the notice (in this case Mr Coplin) on notice of the matters set out therein. The law is clear that for there to be a valid exercise of an option, the terms governing the exercise of that option must be strictly complied with. Those terms generally set out a series of objectively verifiable actions solely within the control of the grantee of the option to perform in a particular way and within a particular period of time.

In the present case, that means the relevant inquiry is not whether Ms Tait in fact held instructions to act as Mr Coplin’s conveyancer on 21 December 2017, but whether she answered the description as such within the definition contained in the Agreement and Contract. For this reason, it does not matter that Ms Tait was not actually retained by Mr Coplin at the relevant time. The Agreement could just as easily have provided for the notices to be affixed to the statue of Queen Victoria in Square (assuming for the sake of argument that such an action was otherwise lawful).

The observation in the preceding paragraph is on all fours with comments made by Justice Parker in Fussell v Deigan [2018] NSWSC 1419 (“Fussell”). This decision was drawn to my attention by Mr Faulkner SC for its brief reference to Pratt. I respectfully adopt what Parker J said (emphasis added):

Fourth, accepting Mr Coplin’s construction of the Agreement would lead to a very uncommercial result. In the course of argument, I put to Ms Oliak that the consequence of this construction was that Mr Coplin could foil Al Maha’s attempt to exercise the option by removing himself from the jurisdiction (thereby preventing personal service) and terminating the retainer of his conveyancer.

Ms Oliak (correctly) responded that it would still have been open to Al Maha to deliver the relevant documents to Mr Coplin’s address and thereby satisfy the first part of clause 28(a)(i). While that is correct, it is not the point for at least two reasons.

First, Ms Oliak also submitted (as was necessary for her argument to be consistent) that the termination of Ms Tait’s retainer meant that she was no longer the “Depositholder”. If that were right (which as a matter of construction I have found it is not), in the scenario which I postulated Al Maha would not be able to exercise the Option. This would be because the “Deposit” could not be paid in accordance with clause 2.4 by being given to the “Depositholder” (on this construction there being none), the vendor (in my example out of the jurisdiction), the vendor’s agent (none in this case) or the vendor’s solicitor (none in my example).

Second, and of more general application, as Mr Faulkner SC submitted, the example which I had given drew attention to the fact that Al Maha had bargained to be able to exercise the Option by any of the several means set out in clause 28(a) of the Agreement, of which one was to be able to give all the requisite documents (including the cheque for the “Deposit”) simultaneously to the “Depositholder” who was also Mr Coplin’s conveyancer named in the Contract.

On the construction advanced for Mr Coplin, it would be open to him unilaterally and secretly to deprive Al Maha of one of its contracted means of exercising the Option by terminating the retainer of his conveyancer specified in the Contract. That would be a completely uncommercial result. I accept Mr Faulkner SC’s submission that it was not to the point, and no less uncommercial, because in this case Al Maha had been told that Ms Tait was no longer acting. A party had to be entitled to rely on the terms of its contract without further inquiry. In other words, a party was entitled to serve documents in the belief that it was good service under the relevant contract. The Agreement was not to be interpreted on the basis that a party might make inquiries to ascertain whether or not the conveyancer who had been recorded in the Contract as such was still acting in that capacity.

Because the Court has accepted Al Maha’s construction of the Agreement, it follows that it is entitled to a declaration that the Option was validly exercised and that a contract in terms of the Contract is in effect between Ms Bechara (as Al Maha’s nominee — see clause 11 of the Agreement) and Mr Coplin. As I discuss further below, the Court is also satisfied that the contract to which I have just referred should be the subject of an order for specific performance. This means that, in due course, the balance of the purchase price will be payable by Ms Bechara to Mr Coplin.

By reason of the judgment of the Court of Appeal (see paragraph [18] above), Al Maha is the beneficiary of costs orders against Mr Coplin. An affidavit from Al Maha’s current solicitor, attaching all the relevant invoices, demonstrated that (on a solicitor/client basis) Al Maha had incurred $200,880.00 (GST inc) in solicitor’s fees in respect of the proceedings before Lindsay J and in the Court of Appeal. The same affidavit proved disbursements of $151,983.12 (GST inc). For the purposes of the present exercise, I reviewed the invoices attached to the affidavit to ascertain that of the disbursements recorded, $6,569.00 were Court of Appeal filing fees and $72,970.78 (GST inc) were for counsel’s fees. I draw attention to those figures because it is the Court’s experience that disbursements of that kind are generally allowed on assessment in full.

Al Maha sought an order modelled on that made by the High Court in similar circumstances to the present (a specific performance case) in Goldsbrough Mort & Co Ltd v Quinn (1910) 10 CLR 674 at 701 that “costs of trial and of the appeal to be set off against the purchase money”.

There was no dispute between the parties that, as a matter of principle and in the exercise of the Court’s discretion, the Court could make such a set off order. The relevant principles are to found in the judgment of Ward J (as her Honour then was) in Lahoud v Lahoud [2012] NSWSC 284 at [70]–[93] and Miller v DPP [2004] NSWCA 249 at [24] (per Young CJ in Equity) to this effect:

The argument on this point proceeded pragmatically. Ms Oliak submitted that, as a matter of discretion, the Court should not make such an order in circumstances where Al Maha had already had many months in which it could have got its costs assessed. She submitted that if the Court was minded to order a set off, it should be conservative in its approach so as to ensure that if the costs are ultimately assessed, the set off has not been allowed for a greater sum than is ultimately determined as payable on assessment.

On the other hand, Mr Faulkner SC submitted that the public interest would be served by making a set off order because it might bring the question of costs between the parties to an end. In a commendably realistic submission, he argued that the smaller the gap between what was allowed to be set off and what might ultimately be the result on assessment, the more likely the parties would not bother to go to assessment and engage in no further dispute on the question of costs. Mr Faulkner SC fairly submitted that he was unable to make any submission based on concerns about Mr Coplin’s solvency. Beyond the fact that the subject of the Agreement was his home, the Court has no evidence about Mr Coplin’s financial circumstances.

Taking up the pragmatic tone of the parties, and applying the overriding purpose set out in s 56 of the Civil Procedure Act 2005 (NSW) that the Court should exercise its jurisdiction to achieve the just, quick and cheap resolution of the real issues in dispute, there is much to be said for the proposition that the Court should order a set off. Nevertheless, in circumstances where Al Maha has not had its costs assessed, I accept Ms Oliak’s submission that some caution should be demonstrated.

In the course of argument I indicated to the parties that I would be prepared to act upon the Court’s experience that, on assessment, party/party costs tend to be reduced to anywhere between two thirds and 80% of the solicitor/client costs. On that basis, and consistently with their respective positions, Ms Oliak submitted that a “safe” figure would be 50% of the solicitor/client costs, whereas Mr Faulkner SC urged 65% as the bottom of the range that I had indicated.

I accept Mr Faulkner SC’s submission that there is a real public interest in the Court doing what it can to reduce the possibility of satellite arguments in relation to costs. As I noted above, of the disbursements identified in the solicitor’s affidavit, $6,569.00 was the Court of Appeal filing fee and $72,970.78 (GST inc) was counsels’ fees. In the Court’s experience, these are items which would be allowed in full and I propose to do so, giving a total of $79,539.78 (GST inc).

This leaves the solicitor/client costs of $200,880.00 (GST inc) and the balance of the disbursements of $72,443.34 (GST inc), totalling $273,323.34 (GST inc). On the evidence before the Court, nothing more can be said about the likely amount of those additional disbursements that would be allowed on assessment. Accordingly, I propose to treat the balance of the disbursements and the solicitor/client costs together. Balancing the parties’ submissions for reduction to between 50% and 65% of the solicitor/client figure, I propose in the exercise of the Court’s discretion to allow an amount of 57.5%, being $157,160.92 (GST inc). When this is added to the figure for counsel’s fees and Court of Appeal filing fees, this becomes $236,700.70 (GST inc), which for the purposes of the order I will make I will round down to $235,000.00 (GST inc).

Accordingly, the Court will order a set off between the purchase price and the costs which the defendant owes to Al Maha in the sum of $235,000.

Ms Oliak submitted that the Option had not been exercised, because at no time had Al Maha paid the “Deposit” in accordance with the Contract. I do not agree. It follows from the construction of the Agreement which the Court has adopted that the Option was validly exercised on 21 December 2017 by delivery of the documents as described in paragraph [24] above to Ms Tait’s office. The fact that Ms Tait rejected the tender of the notices and the cheque, and returned the documents, does not have any legal effect on the validity of the exercise of the Option.

Ms Oliak also submitted that the evidence did not demonstrate that, on the assumption that the Option had been validly exercised, Ms Bechara was ready, willing and able to perform her contractual obligations. It was common ground that the first time this objection had been raised was in the course of Ms Oliak’s oral submissions, the point not having been taken in her written submissions. I accept Mr Faulkner SC’s submission that I should approach this aspect of the matter in a practical way (see Fussell at [16]) on the basis that it seems highly unlikely that the plaintiffs would have gone to the trouble of running these proceedings only to fall at the hurdle of completion of the Contract. I propose to deal with this aspect of the matter by making the Court’s order for specific performance conditional upon Al Maha or Ms Bechara paying the outstanding amount of the “Deposit” ($110,000.00) to Mr Coplin’s current solicitor within seven days for her to hold that amount as “Depositholder” and “stakeholder” under the terms of the Contract.

Third, as I noted in paragraph [15] above, the parties were agreed that the $75,000.00 paid into Court by Mr Coplin in accordance with orders made by Lindsay J can now be paid out to Mr Coplin forthwith. I will make an order to that effect.

Finally, Mr Coplin filed a cross summons in these proceedings seeking declarations to the effect that the Agreement had been terminated and for consequential relief. That cross summons would only have succeeded if Mr Coplin had persuaded the Court to accept his construction of the Agreement. Because Mr Coplin has failed in that endeavour, the cross summons will be dismissed.

The Option was validly exercised. Subject to payment of the “Deposit”, Ms Bechara is entitled to an order for specific performance. Mr Coplin is entitled to the funds held in Court.

I will hear the parties as to the precise form of orders to give effect to these reasons, and as to costs.