Written by The recent case of Lioncrest Capital Holdings Pty Ltd v O’Shaughnessy [2022] NSWSC 1410, involved a developer who was the holder of an option to purchase land, who brought proceedings against a landowner that claimed that the developer was too late in exercising an option to purchase land, rendering the purported exercise of the option ineffective.
The option was contained in a deed signed and entered into by the developer and landowner on 22 January 2019. In construing the deed, the Court examined the definitions used to describe three periods of time in the deed. The first was the “Due Diligence period” stipulated to be ‘a period of 84 business days commencing on 22 January 2019’, the second being the “Call Option Period” defined as the “period beginning the day after the expiry of the Due Diligence Period and ending twenty four months thereafter” and lastly, “Extension of Time” which was stipulated as “a further period of 6 months commencing on the next date, after the expiry of the Call Option Period.”
When the developer exercised their option on 24 November 202, they were one day late.
The developer unsuccessfully claimed that the first day of 22 January 2019 did not count in the time period because it was not a ‘full day’ but the Court rejected this on the basis that the deed ‘plainly’ said that it was to commence on 22 January.
There was no dispute that the Call Option Period commenced the day after the expiry of the Due Diligence Period. However, the developer also unsuccessfully argued that the ‘corresponding date rule’ ought to apply, which provides that in calculating a relevant period, ‘the day on which the [relevant] event occurs is excluded from the reckoning’ such that ‘the period ends upon the corresponding date in the appropriate subsequent month.’ The Court held that the rule did not apply to the Due Diligence Period or the Extension of Time as the periods to which they referred were ‘not expressed to be periods of a specified number of months after a particular event, but periods commencing on a particular day or dates.’
This case suggests that when dealing with periods of time stipulated in deeds, the clauses need to be considered in light of the operative language (such as any definitions), the interpretation provisions such as the Interpretation Act 1987 (NSW), the general law that applies to interpretation of contracts and deeds, and any legislative provisions which apply to the deed in question. Option deeds will be interpreted strictly.