Written by In Lendlease Communities (Figtree Hill) Pty Ltd v Mount Gilead Pty Ltd [2025] NSWSC 334, the Supreme Court of NSW issued a warning to commercial drafters and developers that when a contract sets out conditions precedent for exercising a put or call option, those conditions are not mere formalities. The dispute arose from an ambitious staged development at Campbelltown, where Lendlease and the landowners had already executed an agreement known as the ‘Irrevocable Offers Deed Balance Land, Mt Gilead’. The Deed was drafted to govern the sequential acquisition of 5 parcels of land (Lots 6 to 10). Lendlease had already developed adjoining Lots 1 to 5 into what is now known as Figtree Hill. The dispute was concerning the next phase of development. Under the Deed, Lendlease held a call option over the remaining five lots and could compel their sale by serving a compliant Plan of Subdivision. The key requirement was that the plan be “based upon” the draft plan annexed to the Deed (Annexure 2) though variations were allowed in limited, prescribed ways. Time was of the essence. Each lot was linked in sequence, both by timetable and intention.
However, Lendlease had a change of heart. Instead of acquiring all five lots, it submitted a plan (the 12 July Plan) that proposed to acquire only Lots 7 to 10, excluding Lot 6. The new plan also significantly altered lot boundaries and sizes, including shrinking the original 35.6-hectare Lot 6 to a mere 1.41 hectares. And although Lot 6 remained nominally “included,” the Court found that the resemblance between the original and revised plans was so minimal that the latter could no longer be said to be “based upon” the former. The definition of “Plan of Subdivision (Balance Land)” was not an invitation to redesign the proposal. It was a tightly drawn mechanism where “based upon” did not permit wholesale restructuring of the lots or selective acquisition. Drawing on principles from Fitzgerald v Masters [1956] HCA 53, the Court corrected an internal reference error in the Deed to read clause 7.3 (governing variations to easements and affectations) rather than 7.2, which spoke only to amendments. The linguistic correction mattered, and the lawful scope for variation was narrow. The 12 July Plan, proposing only four lots, could not satisfy the conditions set in clause 7.1. The change was too substantial to be a simple variation. It was a reimagining. As a result, Lendlease failed to trigger its option to purchase, and, crucially, the time limit under the Deed expired. As Lot 6 was now off the table, and because the Deed sequenced the acquisition of all five lots in order, Lendlease lost its ability to acquire Lots 7 to 10 as well. The timeline for completion of those later lots was expressly attached to the completion of the Lot 6 contract. That milestone could no longer occur. Even the Landowners’ reciprocal put option was rendered inoperative, since their right to compel a purchase depended on the same sequence. The Court read the Deed holistically, and the ultimate consequence of missing one step in the sequence was a collapse of the whole scheme.