Laybutt v Amoco Australia Pty Ltd

(1974) 132 CLR 57

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(Judgment by: Gibbs)

Laybutt v Amoco Australia Pty. Ltd.

Court:

Judges: Menzies and Mason JJ

Gibbs

Judgment date: 15 NOVEMBER 1974

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Judgment by:
Gibbs

This is an appeal from a judgment of the Supreme Court of New South Wales in its Equity Division by which it was declared that an option granted by Harold Ernest Laybutt (since deceased) to the respondent company to purchase property described as 143 Newton Road, Blacktown, was duly and properly exercised, that by reason of the exercise of the option there was created between the respondent and the estate of the late Harold Ernest Laybutt an agreement for the sale of that property by the estate to the respondent on the terms set out in the option and that the said agreement is valid and enforceable and ought to be specifically performed, and by which it was decreed accordingly and consequential orders were made. (at p66)

On 24th July 1972 Harold Ernest Laybutt, who was then the owner of the property at 143 Newton Road, Blacktown, signed a document headed "OPTION TO PURCHASE" which was addressed to the respondent Amoco Australia Pty. Ltd. This document was a printed form which had been completed, with some additions in handwriting; however, not every space in the form had been filled in and not all inappropriate words had been crossed out. Its provisions, so far as they are presently material, are as follows:

"IN CONSIDERATION of the sum of Ten dollars paid to me/us by you (the receipt whereof is hereby acknowledged) I/We HAROLD ERNEST LAYBUTT GRANT to you or your nominee an option to purchase from me/us the below described property for the sum of Forty Two Thousand dollars ($42,000) which sum shall include commission (payable to the above-named agent as at the Scale approved by the Real Estate Institute of New South Wales) upon the following terms and conditions:

1. This option may be exercised by you or your nominee by notice in writing handed to *me/one of us on or before 24th Oct. 1972 (Insert actual date) or within that time posted to *me/one of us by registered mail the address shown below and by payment to the said Agent within the said time of the deposit mentioned below.

2. The exercise of the option shall create a contract between me/us and you or your nominee for the sale of the said property on the terms and conditions of the Contract for the Sale of Land last issued under the approval of the Law Society of New South Wales and the Real Estate Institute of New South Wales completed with the following details:

(a)

The deposit shall be ten dollars per centum of the purchase price, the sum now paid as consideration for this option *to be/not to be credited as part of such deposit.

. . . . . .

(e)

The Second Schedule of the said contract is to be deemed to have inserted therein the correct information as at the date hereof. The Fourth Schedule to have annexed thereto *the attached Sec. 342AS Certificate, or *Paragraph 17 of the Contract for Sale and

Fourth Schedule thereto shall be deemed deleted and the Purchaser shall be deemed to have satisfied himself as to all matters relating to Town Planning and zoning of the subject land.

Such information as to the correct matter in relation to either or both schedules (as the case may be) to be obtained or deemed obtained by you prior to the exercise of this option. . . . . . .

5. Special conditions The following special conditions will be included in the Contract for Sale referred to in paragraph 2 hereof:-

(a)

The balance of purchase price shall be paid in cash on

completion in exchange for a duly executed conveyance or registerable transfer to the purchaser of the fee simple title of the said property free from all encumbrances, mortgages, charges, easements covenants, restrictions and conditions whatsoever together with all documents of title related to the said property.

. . . . . . " (at p67)

In the margin, opposite to cl. 2, appeared the following: "*Delete words that do not apply and initial", but no deletions were made in par, (e) of cl. 2. (at p67)

Although the opening words of the option refer to "the above-named agent", and cl. 1 speaks of "the said Agent", no agent was named in the document; the form, in two places, had the words "Vendor's Agent" with spaces after those words in which it was intended that the name of the agent should be written but nothing was written there; on the contrary, a line was drawn through each space. In fact no agent had been employed by Mr. Laybutt in connexion with the transaction. (at p67)

It was common ground that "the terms and conditions of the Contract for the Sale of Land" mentioned in cl. 2 of the option were those set out in the 1972 edition of the form of Contract for Sale of Land issued under the approval of the Law Society of New South Wales and the Real Estate Institute of New South Wales which was in circulation before the date on which the option was signed. The only provisions of that form which it is necessary to mention are the following:

"1. The Purchaser shall upon the signing of this agreement pay as a deposit to the Vendor's Agent herein named as stakeholder the sum of ($ ) which shall vest in the Vendor upon and by virtue of completion and which shall be accounted for to the Vendor upon receipt of an order from the Purchaser or his Solicitor authorising such payment. The deposit may be paid by cheque but if the cheque is not honoured on presentation the Purchaser shall immediately and without notice be in default under this agreement.

The balance of the purchase price shall be paid as stipulated in the First Schedule hereto. Any moneys payable to the Vendor hereunder by the Purchaser or the Agent shall be paid to the Vendor's Solicitor or as he may direct in writing."

"16. If the Purchaser defaults in the observance of performance of any obligation imposed on him under or by virtue of this agreement the deposit paid by him hereunder, except so much of it as exceeds 10% of the purchase price, shall be forfeited to the Vendor who shall be entitled to terminate this agreement and thereafter either to sue the Purchaser for breach of contract or to resell the property as owner and the deficiency (if any) arising on such resale and all expenses of and incidental to such resale or attempted resale and the Purchaser's default shall be recoverable by the Vendor from the Purchaser as liquidated damages provided that proceedings for the recovery thereof be commenced within 12 months of the termination of this agreement. The Vendor may retain any money paid by the Purchaser on account of the purchase other than the deposit money forfeited under this clause as security for any deficiency arising on a resale or for any damages or compensation (including any allowance by way of occupation fee or for rents or profits from a Purchaser who has been in possession of the property or in receipt of the rents or profits thereof) awarded to him for the Purchaser's default provided that proceedings for the recovery of such damages or compensation be commenced within 12 months of the termination of this agreement."

"17. Should it be established that at the date of this agreement the property was affected by any one or more of the following:

(a)

any provision of any planning scheme, whether prepared or prescribed, or any interim development order made under the provision of the Local Government Act, 1919;

(b)

any Residential District Proclamation under Section 309 of the Local Government Act, 1919;

(c)

any proposal for realignment widening siting or alteration of the level of a road or railway by any competent authority;

(d)

any mains or pipes of any water sewerage or drainage authority passing through the property;

(e)

any provisions of or under the Mines Subsidence Compensation Act, 1961;

(f)

**

*

in any manner other than as disclosed in the Fourth Schedule hereto, then the Purchaser shall be entitled to rescind this agreement but shall not be entitled to make any other objection requisition or claim for compensation in respect of any such matter. Any right of the Purchaser to rescind under this clause shall be exercised by notice in writing given to the Vendor prior to completion. In relation to paragraph (c) hereof, the property shall be deemed to be affected by a proposal if the Purchaser produces a written statement of the authority concerned, the substance of which is other than that the property is not affected by any proposal of the authority."

There was a sidenote to par. (f) as follows:

"**Any other matters.

*desired to be disclosed in the Fourth Schedule."

The 4th Sch. (to which there was a sidenote "Delete if not applicable.") read as follows: "The property is affected as shown in the copy certificate under Section 342AS of the Local Government Act, 1919, annexed hereto." Of course, no such certificate was annexed to the form of contract issued by the Law Society and the Real Estate Institute and no certificate had been annexed to the option. (at p69)

Mr. Laybutt died on 28th July 1972, leaving a will by which he appointed the appellant, his widow, to be his sole executrix and beneficiary. Probate of this will was not granted until sometime in June 1973. (at p69)

The respondent had not exercised the option before Mr. Laybutt's death. After his death the respondent, on 30th August 1972, lodged a caveat against the title to the land but did nothing in an attempt to exercise the option until 20th October 1972. On that day a director of the respondent signed two notices, each addressed to "The Executors, Estate late H.E. Laybutt"; the notices, which were identical in substance, stated that the respondent thereby exercised the option. One of these notices was on 20th October 1972 posted to the executors, c/- Messrs. Maurice Isaacs & Glass, the solicitors for the appellant; the other was on 23rd October 1972 handed to the appellant herself at 143 Newton Road, Blacktown. On 24th October an employee of the respondent delivered to Messrs. Maurice Isaacs & Glass a letter addressed to that firm which referred to the purported exercise of the option and said: "We . . . have pleasure in enclosing our cheque for $4,200 deposit to be held by you as Stakeholder, pending completion of the purchase under the said Option." With the letter was enclosed a cheque for $4,200 payable to the order of "Maurice Isaacs & Glass Trust Acc.". There is no evidence or suggestion that any member of that firm of solicitors had been authorized by the deceased or by the appellant or, if it matters, by the Public Trustee, to receive payment of the deposit. The cheque was held for some time without acknowledgment but finally on 19th January 1973 Messrs. Maurice Isaacs & Glass returned the cheque to the respondent with a letter stating that the option had not been properly exercised and asking for the withdrawal of the caveat. (at p70)

In these circumstances the respondent's claim to be entitled to specific performance of a contract to sell the land depended upon the following questions all of which were answered by the learned primary judge favourably to the respondent:

1.

Could the option still be exercised notwithstanding the death of the grantor?

2.

If so, was the notice in writing which was necessary to exercise the option properly given to the appellant as executrix of the deceased although probate had not been granted to her when the notice was given?

3.

Did the option provide with sufficient certainty for payment of the deposit, and if so, was payment to the solicitors sufficient to satisfy its requirements?

4.

If the option was validly exercised, were the terms of the agreement so uncertain that there was no binding contract? (at p70)

The question whether an option to purchase land may be exercised after the death of the grantor does not appear to be the subject of much authority. When I use the expression "option to purchase" throughout the present judgment I intend to refer to such an option granted inter vivos and for valuable consideration. The only decision to which we were referred which is directly on the point is Kennewell v. Dye (1949) Ch 517. In that case a lease contained a provision in the following terms: "It is further hereby agreed and declared that the said (landlord) will sell to the said (tenant) the property for the sum of 350 pounds; subject to the said (tenant) giving to the said (landlord) three months' notice of his intention for so doing". After the death of the landlord the tenant gave to the landlord's personal representative notice in writing of his intention to exercise the option. It was held that the tenant was entitled to specific performance. Roxburgh J. relied (1949) Ch, at pp 521-522 upon the following statement of the law contained in Williams on Executors, 12th ed. (1930), at p. 1126:

"The executors or administrators so completely represent their testator or intestate, with respect to the liabilities above mentioned, that every bond, or covenant, or contract of the deceased (not being a contract personal to the deceased) includes them, though they are not named in the terms of it; for the executors or administrators of every person are implied in himself."

He went on to say that only two things would prevent the burden of the option from devolving on the grantor's personal representative, first, if upon its true construction it was not intended to do so and secondly, if the contract was personal to the grantor. He further held (1949) Ch, at p 523 that where the burden of a covenant devolves on a personal representative notice which the covenant requires to be given to the deceased "can and ought to be given to his personal representatives". It would appear that Roxburgh J. regarded the provision granting the option as a contract to sell the property subject to the necessary notice being given, and if this view was correct the conclusion reached was, with respect, plainly right. Authority is not needed for the proposition that, as a general rule, upon the death of a party to a contract his liabilities thereunder pass to his personal representatives. This rule will not apply if the performance of the contract depended upon the personal skill or judgment of the deceased party or if the contract otherwise revealed an intention that it should be enforceable only against that party personally. If it is correct to regard an option to purchase as a conditional contract of sale there is no reason why the ordinary principle as to the effect of death on contractual liabilities should not apply. (at p71)

However, there is what Dixon C.J. in Braham v. Walker (1961) 104 CLR 366 , at p 376 called a "standing controversy" as to the true nature of an option to purchase. One view is that an option to purchase is "a contract for valuable consideration, viz., to sell the property (or whatever the subject matter may be) upon condition that the other party shall within the stipulated time bind himself to perform the terms of the offer embodied in the contract": per Griffith C.J. in Goldsbrough, Mort & Co. Ltd. v. Quinn (1910) 10 CLR 674 , at p 678 . The other view is that "an option given for value is an offer, together with a contract that the offer will not be revoked during the time, if any, specified in the option": per Latham C.J. in Commissioner of Taxes (Q.) v. Camphin (1937) 57 CLR 127 , at p 132 . This difference of opinion is reflected in the judgments in Carter v. Hyde (1923) 33 CLR 115 , where it was held that the personal representatives of the grantee of an option to purchase a lease were, upon giving notice in writing as required by the option, entitled to specific performance of a contract of sale. In that case the option took the form of an offer coupled with a promise not to revoke it (1923) 33 CLR, at p 119 . The majority of the Court treated the option as being, in effect, a conditional contract of sale: Knox C.J. said (1923) 33 CLR, at p 120 : "In effect it amounts to an agreement by the appellant to sell the lease, & c., for $3,000 to Hyde if within three months the latter signifies his assent to purchase." Higgins J. (1923) 33 CLR, at p 128 expressed the same view.

Their judgments are consistent with and support the decision in Kennewell v. Dye (1949) Ch 517. The third member of the Court, Isaacs J., took a different view; he said (1923) 33 CLR, at p 123 that the words of the document in question placed it "within the category of an offer created by a contract and irrevocable, and not in the category of an instant sale of the property as it then stood, subject to a subsequently performed condition". However, he held that the option created a proprietary right which passed on the death of the grantee to his personal representatives. Higgins J. agreed with this reasoning also; he said (1923) 33 CLR, at p 132 : "The position may be regarded in either of two aspects - contract and property; and in either aspect the result is the same, that the executors may sue." However, where it is the grantor, not the grantee, who has died the result may not be the same in either aspect. If there is a conditional contract for sale, the personal representatives of the grantor are bound by it, subject to the qualifications mentioned. If there is no such contract, but the grantee has a proprietary right, it does not necessarily follow that the right is enforceable against the personal representatives of the grantor. If the grant of an option amounts to an offer to sell coupled with a contract not to revoke the offer, the question will arise whether in spite of that contract the offer will lapse on the death of the offeror.

In considering this matter, it would be necessary to decide whether an offer lapses upon the death of the offeror, at least if the offeree has notice of the death - a proposition which, as Blackburn J. pointed out in Fong v. Cilli (1968) 11 FLR 495 , at p 498 , "has been repeatedly stated in a dogmatic form (for example, by Mellish L.J. in Dickinson v. Dodds (1876) 2 Ch D 463, at p 475 ), and is accepted in the textbooks, though it is hard to find a decision on the point" - and if that is true as a general rule whether, as Denning L.J. suggested in Errington v. Errington (1952) 1 KB 290 , at p 295 the position will be different if the offer was one which could not have been revoked during the lifetime of the offeror. (at p73)

Dicta abound in favour of both of the contending views as to the nature of an option to purchase, but it has usually proved immaterial which view was adopted. An option to purchase may assume various forms - it may be expressed as an agreement to sell upon condition (as in Kennewell v. Dye (1949) Ch 517), or as an offer together with an agreement not to revoke it (as in Carter v. Hyde (1923) 33 CLR 115 ) or as the grant of an option so called (as in the present case). Although it may be undesirable that these differences in form should lead to different consequences, when the result intended to be effectuated is the same, it is unnecessary, in the present case, to consider whether one form of option is different in nature from another; we are concerned only with an option of the third kind.

The Australian cases in which the nature of options to purchase have been discussed were reviewed in Ballas v. Theophilos (1958) VR 576, at pp 578-581 , by Smith J. who advanced cogent reasons in favour of the view that an option similar in form to that in the present case is a conditional contract of sale. His judgment was affirmed on appeal to this Court, but it was not thought necessary to resolve this question: Ballas v. Theophilos (No. 2) (1957) 98 CLR 193 , esp at pp 207-209 . More recently, in two cases in the Equity Division of the Supreme Court of New South Wales, it has been held that an option of that kind constitutes an irrevocable offer rather than a conditional contract: Johnson v. Bones (1970) 1 NSWR 28 , at pp 36-37 ; Westminster Estates Pty. Ltd. v. Calleja (1970) 1 NSWR 526 , at pp 530-531 . In England there is a similar conflict of opinion. In Griffith v. Pelton (1958) Ch 205, at p 225 , Jenkins L.J., delivering the judgment of the Court of Appeal, described an option to purchase land as "a conditional contract for such purchase by the grantee of the option from the grantor, which the grantee is entitled to convert into a concluded contract of purchase, and to have carried to completion by the grantor, upon giving the prescribed notice and otherwise complying with the conditions upon which the option is made exercisable in any particular case". In Beesly v. Hallwood Estates Ltd. [1960] 1 WLR 549 , at pp 555-556 , Buckley J. declined to follow those dicta , which he regarded as at variance with what had been said in Helby v. Matthews [1895] AC 471 , at pp 477, 479-480 , and held that an option to renew a lease did not constitute a contract, but constituted an offer to grant a further term which the lessor was contractually precluded from withdrawing so long as the option remained exerciseable.

His decision was affirmed in the Court of Appeal but on grounds that did not involve a decision on this point - Beesly v. Hallwood Estates Ltd. (1961) Ch 105 - and his view of the nature of an option was accepted as correct by Plowman J. in In re Button's Lease (1964) Ch 263, at pp 270-271 . In Helby v. Matthews [1895] AC 471 it was decided that a hirer who had an option to buy the goods hired was not "a person having agreed to buy goods" within s. 9 of the Factors Act 1889 (U.K.). It is easy to see that the hirer, who was free to buy or not as he pleased, could not be said to have agreed to buy the goods within the meaning of the statute. However, Lord Herschell L.C., in rejecting the view expressed in the Court of Appeal that the owner of the goods had agreed to sell them, and that this connoted an agreement by the hirer to buy them, said (1895) AC, at p 477:

"This is undoubtedly true if the words 'agreement to sell' be used in their strict legal sense; but when a person has, for valuable consideration, bound himself to sell to another on certain terms, if the other chooses to avail himself of the binding offer, he may, in popular language, be said to have agreed to sell, though an agreement to sell in this sense, which is in truth merely an offer which cannot be withdrawn, certainly does not connote an agreement to buy, and it is only in this sense that there can be said to have been an agreement to sell in the present case." (at p74)

Lord Watson (1895) AC, at p 480 , also said that the owner of the goods "was in exactly the same position as if he had made an offer to sell on certain terms, and had undertaken to keep it open for a definite period"; he added that the owner's obligation was "nothing more than a binding offer to sell". These remarks do of course support the view later taken by Buckley J. and by Plowman J., but they did not receive the concurrence of all of the members of the House of Lords, and cannot be regarded as expressing the ratio decidendi of that case. Lord Macnaghten, although agreeing with the conclusion that the hirer had not agreed to buy, said that "the contract . . . on the part of the dealer was a contract of hiring coupled with a conditional contract or undertaking to sell" (1895) AC, at p 482 . Lord Shand may have been of the same opinion; he said that "although there was an obligation to sell if the hirer should avail himself of the right of option to purchase, there was no obligation or agreement to purchase" (1895) AC, at p 484 . Lord Morris expressed no opinion on the matter. Helby v. Matthews [1895] AC 471 contains weighty dicta on both sides of the controversy, but does not settle the question what is the nature of an option to purchase. (at p74)

There are two other cases in which it was held that an option to purchase is a conditional contract, and which may be mentioned because a different result might have been reached if the option had been treated as an irrevocable offer. The earlier of these decisions is Weeding v. Weeding (1861) 1 J & H 424 (70 ER 812) . In that case the testator made a will devising his real estate on certain trusts and bequeathing the residuary personal estate on different trusts. Thereafter he entered into a contract giving an option of purchase over part of the real estate, which option was exercised after his death. It was held that the property was converted from the date of the exercise of the option and went to the residuary legatees. Page Wood V-C. said (1861) 1 J & H, at pp 430-431 (70 ER, at p 815) : "I cannot agree with the argument that there is no contract. It is as much a conditional contract as if it depended on any other contingency than the exercise of an option by a third person, such as, for example, the failure of issue of a particular person." In Re Mulholland's Will Trusts [1949] 1 All ER 460 , the testator had demised property to a bank for a term and by the lease had given the bank an option to purchase. By his will the testator appointed the bank to be one of his executors and trustees. After the deceased's death the bank exercised the option. It was objected that the bank, as trustee, could not purchase the property and in support of this argument it was said that "the option here amounted to no more than an offer by the testator which, as consideration had passed, could not be withdrawn; that, if the option should be exercised, the offer would be accepted and a contract to purchase would spring into existence; but that at the date of that contract the fiduciary relationship had come into existence and, therefore, the bank was not entitled effectively to exercise the option", (1949) 1 All ER, at p 464 .

This argument was rejected by Wynn-Parry J. who held that the notice exercising the option did not lead to the creation of any fresh contractual relationship between the parties; since the only contractual right had been created before the fiduciary duty arose, the bank, notwithstanding its acceptance of the executorship and trusteeship of the testator's will, was entitled to exercise the option. (at p75)

If this question were to be decided upon authority, it might be thought that in Australia the decision in Carter v. Hyde (1923) 33 CLR 115 established that even an option which has the form of an irrevocable offer is in substance a conditional contract. If the question is approached from the point of view of principle, there are several reasons which in my opinion lead to the same conclusion, although as I have already said I need not consider whether the position will be different if the option takes the form of an offer coupled with a contract not to revoke it. In the first place, it is clear that the option itself creates an equitable interest in the land to which it relates: see London & South Western Railway Co. v. Gomm (1882) 20 Ch D 562, at pp 580-581 ; Carter v. Hyde (1923) 33 CLR, at pp 125, 132 ; Commissioner of Taxes (Q.) v. Camphin (1937) 57 CLR, at pp 132-134 ; In re Button's Lease (1964) Ch, at p 271 , to cite only some of the authorities. An equitable interest cannot be created by a mere offer; it is necessary to find a contract which gives the grantee a right to call for a conveyance of the land. Of course, on either view of the nature of an option, there is a contract, but it seems very artificial to treat a contract which does no more than provide that an offer shall not be revoked as giving the party to whom the offer is made a right to call for a conveyance of the land and an equitable interest in it. On the other hand, a conditional contract to sell the land would clearly create a contingent equitable interest in the land. (at p76)

Moreover, it is established by Goldsbrough, Mort & Co. Ltd. v. Quinn (1910) 10 CLR 674 that the grantee of an option may effectually exercise it notwithstanding that the grantor has purported to revoke it. If the only contract were not to revoke the offer, a wrongful revocation would entitle the grantee to damages for breach of contract but it might well be thought that once revoked, whether wrongfully or not, it could not thereafter be accepted. It is also difficult to see how it would be possible to grant specific performance of a contract not to revoke an offer, after the offer had already been revoked. In Goldsbrough, Mort & Co. Ltd. v. Quinn, Isaacs J. (1910) 10 CLR, at p 691 , and, as an alternative to the primary reason for his decision, O'Connor J. (1910) 10 CLR, at p 686 held that the law will treat the wrongful revocation as ineffectual. Since there is certainly no general principle that an act may be disregarded simply because it was done in breach of contract this explanation of the legal result is less satisfactory than holding an offer to be a contract subject to a condition whose fulfilment cannot be prevented by any act of the grantor. (at p76)

For these reasons I consider that an option to purchase (at least one in a form similar to that in the present case) is a contract to sell the land upon condition that the grantee gives the notice and does the other things stipulated in the option. An option to purchase, regarded in that way, is not an agreement which gives one of the parties the right to perform it or not as he chooses; it gives the grantee the right, if he performs the stipulated conditions, to become the purchaser. With respect, therefore, I regard the reasoning in Kennewell v. Dye (1949) Ch 517, and that of the majority of the Court in Carter v. Hyde (1923) 33 CLR 115 , as correct. The burden of the option in the present case was a contractual obligation which devolved upon the appellant as personal representative of the deceased, since it does not appear from the provisions of the option that it was intended not to do so, or that the contract was personal to the deceased. I hold, therefore, that notwithstanding the death of Mr. Laybutt the appellant still had the right to exercise the option, assuming it to be otherwise valid. (at p76)

The question that then arises is whether the notice handed to the appellant on 23rd October 1972 satisfied the requirements of the option. Once it has been decided that the option was binding on the personal representatives of the grantor, it is clear that apart from any statutory requirement to the contrary, notice to the appellant as executrix would have been sufficient to satisfy the requirements of the option although she had not then been granted probate: Kennewell v. Dye (1949) Ch 517, and see Kelsey v. Kelsey (1922) 91 LJ Ch 382, at p 384 , and Ballas v. Theophilos (No. 2) (1957) 98 CLR, at p 204 . However, on behalf of the appellant it was submitted that the provisions of s. 61 of the Wills, Probate and Administration Act, 1898 (N.S.W.), as amended, had the effect that the option could not be exercised by notice given to the appellant as executrix but had to be given to the Public Trustee. Section 61 provides as follows:

"From and after the decease of any person dying testate or intestate, and until probate, or administration, or an order to collect is granted in respect of his estate, the real and personal estate of such deceased person shall be deemed to be vested in the Public Trustee in the same manner and to the same extent as aforetime the personal estate and effects vested in the Ordinary in England."

Section 44 of the same statute provides:

"Upon the grant of probate of the will or administration of the estate of any person dying after the passing of this Act, all real and personal estate which any such person dies seised or possessed of or entitled to in New South Wales, shall as from the death of such person pass to and become vested in the executor to whom probate has been granted or administrator for all his estate and interest therein . . ."

There is no doubt that at the time when the notice was given the estate of the deceased had by virtue of the operation of s. 61 become formally vested in the Public Trustee, although it is not altogether clear what capacity and powers the Public Trustee had as a result: cf. Holloway v. Public Trustee (1959) SR (NSW) 308, at p311 . At the date of the hearing, however, probate had been granted and s. 44 had taken effect; the estate of the deceased was then vested in the appellant whose title had related back to the time of death. Moreover, although s. 61 provides for the vesting of the deceased's property pending probate, it does not alter the rule that an executor derives his title from the will and that the probate merely authenticates his title and is not the source of it. At the time when the notice was given the appellant was therefore the executrix of the deceased's estate and in that capacity was competent to receive the notice exercising the option; the fact that the property of the deceased was not then vested in her provides no reason why she could not do so. In support of the argument that the notice was not properly given to the appellant reliance was placed on Holland v. King (1848) 6 CB 727 (136 ER 1433) . In that case a partnership deed provided that the executor or administrator of a deceased partner should have the option of succeeding to that partner's share upon giving notice to the surviving partners within three months of the death. A partner died interstate and his widow gave notice to the surviving partners within the three months but did not obtain letters of administration until after that period had expired.

It was held that there was no effectual notice under the deed. No reasons were given for the decision but it may be explained on the ground that when the notice was given it was of no validity, since the widow was not then the administratrix of the deceased partner, and that it could not be ratified by the administratrix after the time allowed for the exercise of the option had expired: see Dibbins v. Dibbins (1896) 2 Ch 348 . In the present case, however, no ratification was necessary. The appellant was the executrix at the time when she received the notice and was therefore the appropriate person to receive it. In any case, she did not perform any act which required ratification; she was merely the recipient of the notice. Reliance was also placed on Andrews v. Hogan (1952) 86 CLR 223 , where a notice to quit was held validly served on the Public Trustee as successor in title to the estate of a deceased tenant, but that case is distinguishable, first, because the question there was in whom the premises had vested and secondly, because in that case no probate was ever granted. The conclusion that the notice was properly given to the appellant in the present case is supported by the actual decision in Carter v. Hyde (1923) 33 CLR 115 , although this question does not seem to have been discussed; the notice exercising the option was there given by the executors of the deceased grantee although, as the learned trial judge in the present case has pointed out, it appears from the report of the proceedings in the Supreme Court of New South Wales (Hyde v. Carter (1922) 23 SR (NSW) 125, at pp 128, 140 ) that probate was not granted until after the notice had been given. For these reasons, in my opinion the notice given to the appellant will have been effectual for the purpose of exercising the option if the option was valid and its other requirements were satisfied. (at p78)

It next becomes necessary to consider the provisions of the option, and of the contract relating to payment of the deposit. Clause 1 of the option provided that "This option may be exercised by . . . notice in writing . . . and by payment to the said Agent within the said time of the deposit mentioned below". Clearly these words purported to make payment, as well as notice, a condition of the valid exercise of the option. However, the payment is required by the clause to be made to "the said Agent" and the option neither names any agent nor provides any machinery by which it may be ascertained what person was intended to receive the payment. The omitted detail (the name of the agent) was not of a kind that can be supplied by implication of law. Moreover, there is no extrinsic evidence - for example, as to a course of dealing between the parties - that would enable the agent to be identified. If it is not possible so to interpret the option as to determine the name of the person to whom payment of the deposit is to be made the clause requiring such payment to be made will be meaningless and void of contractual force. In Adamastos Shipping Co. Ltd. v. Anglo-Saxon Petroleum Co. Ltd. [1959] AC 133 , at pp 175-176 , Lord Reid said:

"In G. Scammell & Nephew Ltd. v. Ouston [1941] AC 251 , at p 268 , Lord Wright said: 'The object of the court is to do justice between the parties, and the court will do its best, if satisfied that there was an ascertainable and determinate intention to contract, to give effect to that intention, looking at substance and not mere form. It will not be deterred by mere difficulties of interpretation. Difficulty is not synonymous with ambiguity so long as any definite meaning can be extracted. But the test of intention is to be found in the words used. If these words, considered however broadly and untechnically and with due regard to all the just implications, fail to evince any definite meaning on which the court can safely act, the court has no choice but to say that there is no contract.' In Nicolene Ltd. v. Simmonds (1953) 1 QB 543 , that principle was applied so as to strike out of a contract a term so vague or ambiguous that no ascertainable meaning could be given to it, and to leave the rest of the contract valid." (at p79)

There is no provision of the option, or of the incorporated form of contract, that gives the least hint as to what person was intended by the parties to be the vendor's agent for the purposes of the agreement. The fact that the agent is to be paid as "stakeholder" (cl. 1 of the form) suggests that it was not intended that the deceased himself should be paid the deposit. If this view is incorrect, and if, on the proper construction of the option agreement payment of the deposit to the deceased or his personal representatives was a sufficient compliance, the fact is that no such payment was made. On behalf of the respondent it was submitted that is should be inferred that the intention of the parties was that either party was entitled to nominate an agent for the purpose of receiving the deposit, but in my opinion the words of the documents do not support such an inference. The personal qualities of the agent to whom payment was to be made was a matter of importance to the deceased. As cl. 16 showed, the deposit was intended to be, as a deposit usually is, "a security for the completion of the purchase": Howe v. Smith (1884) 27 Ch D 89, at p 98 . It is not likely that the deceased would have agreed that the deposit should be paid to anyone upon whom he could not rely to account to him for the money if he became entitled to it. For example, the deceased might have been expected to have been unwilling to appoint as his agent someone under the influence or domination of the respondent or someone who for other reasons might be inclined to display partiality towards the respondent if a dispute arose. It cannot be said with any confidence that if at the time the option agreement was made it had been suggested to the parties that they should include a provision allowing the respondent to nominate the person to whom the deposit should be paid the deceased would have agreed to the suggestion.

It is not possible to imply in the contract a term that the respondent should be entitled to select the person to whom payment should be made. (at p80)

The learned trial judge held that the respondent had the right to nominate the person to whom the deposit should be paid for the purposes of the option and of the resulting contract. He said:

"In my opinion, it was open to the plaintiff to nominate the stakeholder himself and then it would have been open to the vendor to object to the plaintiff's choice and propose a change of stakeholder which, if the plaintiff refused, would place the plaintiff at risk if the stakeholder defaulted or made off with the money: Christie v. Robinson (1907) 4 CLR 1338 , at p 1347 , per Griffith C.J. citing Fenton v. Browne (1807) 14 Ves Jun, at p 150 (33 ER, at p 478) ."

In my opinion the authorities to which his Honour referred provide no assistance in determining the present question. In Christie v. Robinson (1907) 4 CLR 1338 it was held that upon the rescission, by mutual consent, of a contract of sale, the purchaser was entitled to recover from the vendor a deposit which he had paid under the contract to the vendor's agent, although the vendor himself had never received the deposit from the agent. Griffith C.J. said that "the fact that an auctioneer may be sued for a return of the deposit in no way concludes the question so as to show that the vendor cannot be sued" (1907) 4 CLR, at p 1347 , and it was in the course of discussing that question that he cited from Smith v. Jackson (1816) 1 Madd 618 , at p 620 (56 ER 227, at p 228) the following passage in which Fenton v. Browne (1807) 14 Ves Jun 144 (33 ER 476) is mentioned:

"If then the auctioneer cannot pay over the deposit to the vendor, is he to be considered as his agent? The vendor is responsible for the loss, if any, occasioned by the auctioneer; that was determined in Fenton v. Browne (1807) 14 Ves Jun, at p 150 (33 ER, at p 478) , in which case, the Master of the Rolls says: 'Upon a sale by auction the vendor determines who is to receive the deposit. The auctioneer is not a stakeholder of the purchaser; at least not of his choice. If he were a stakeholder for both parties, either would have a right to propose to change such stakeholder; and the party refusing takes upon himself the risk.'"

This passage means no more than that if one party proposes that a stakeholder be changed and the other refuses, the latter takes the risk of loss caused by the default of the stakeholder. The matter which was decided in Fenton v. Browne was that a vendor who had resisted an application by the purchaser for payment into court of the deposit which was in the hands of the vendor's agent had to bear the loss caused by the agent's failure. Grant M.R. said (1807) 14 Ves Jun, at p 150 (33 ER, at p 478) that the refusal to concur in the proposition that the money be paid into court threw "the risk of his (the agent's) credit on the party refusing". It does not follow from this that where a contract fails to name the person intended to act as stakeholder it must be implied that either party has a right of nomination. (at p81)

A further submission on behalf of the respondent was that upon the proper construction of the documents the vendor had reserved to himself the right to nominate an agent if he wished the deposit to be paid, and that if no agent were nominated the provision for payment of the deposit did not come into operation. Alternatively it was put that although there was an obligation to pay the deposit the vendor was given the right to elect whether it should be paid by naming an agent. Both of these suggested constructions are opposed to the words of the documents which plainly require payment of a deposit to an agent but fail to indicate the identity of the person to whom payment is to be made. (at p81)

For these reasons, in my opinion it must be held that those provisions of cl. 1 of the option that relate to the payment of the deposit are meaningless. The clause cannot be construed to permit payment to any person whom the respondent might select. The payment made to the solicitors was not a compliance with the provisions of cl. 1. (at p81)

It is then necessary to decide whether it is possible to strike out of the option that part of cl. 1 which is meaningless, leaving the remainder valid, or whether the whole option fails. It is clear that an agreement is not nullified by the inclusion of a meaningless clause, provided that the latter is severable: Nicolene Ltd. v. Simmonds (1953) 1 QB, at p 552 ; Fitzgerald v. Masters (1956) 95 CLR 420 , at p 427 ; Adamastos Shipping Co. Ltd. v. Anglo-Saxon Petroleum Co. Ltd. (1959) AC, at p 176 . The question whether a meaningless clause is severable depends on the intention of the parties to be gathered from the agreement as a whole: Whitlock v. Brew (1968) 118 CLR 445 , at p 461 . The question in the present case is whether the parties intended that the option should be binding notwithstanding the failure of the provision requiring payment of a deposit. The Court will of course attempt to give efficacy to an agreement which the parties no doubt believed would be binding, and will be most reluctant to hold meaningless and void an agreement which the parties apparently intended to have legal effect. However, it seems to me impossible to say that the deceased intended that the option, which was expressed to be exerciseable on payment of the specified deposit, can be exercised without any payment being made. The receipt of a deposit, as I have already indicated, is generally regarded by a vendor as a matter of some importance and the provisions of cl. 16 of the form of contract indicate that this was so in the present case. Moreover, the payment and receipt of a deposit was basic to the relationship that would result from the exercise of the option. Clause 1 of the form of contract requires the payment of the deposit (which is obviously the same deposit as that mentioned in the option) upon the signing of the agreement and requires "the balance of the purchase price" to be paid in cash on completion. Other provisions of the form of contract speak of the deposit and of the balance of the purchase price.

The rejection of that part of cl. 1 of the option that deals with the payment of a deposit would affect the balance of the contractual relationship between the parties, since the payment of a deposit is an integral part of the working out of the contract. The provision for the payment of a deposit appears to be essential to the exercise of the option. I conclude, therefore, that the meaningless words of cl. 1 of the option agreement cannot be severed from the rest of that agreement but have the effect of invalidating it. (at p82)

For this reason, there is, in my opinion, no binding contract between the appellant and the respondent. It is accordingly unnecessary to consider the other grounds on which it was suggested that the agreement was void for uncertainty - particularly the failure to cross out unnecessary words, or fill in the gaps, as the case may be, in cll. 2(a) and (e) of the option and cl. 17 and the 4th Sch. of the form of contract - although I may say that I incline to the view that the difficulties raised by those provisions might have been overcome by a process of construction. (at p82)

I would allow the appeal. (at p82)