kea92402

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY OF AUSTRALIA

SC No. 233 of 1991

BETWEEN:

MARK ANDREW BROOKS and JACLYN BROOKS
Plaintiffs

AND:

JAMES ALFRED WILLIAM WYATT
Defendant

CORAM:	KEARNEY J

REASONS FOR DECISION

(Delivered 30 December 1992)

In these proceedings the plaintiffs seek, inter alia, specific performance of a contract for the sale of Lot
267 in the Town of Tennant Creek.	The defendant is the registered proprietor of that land; the plaintiffs currently hold over as lessees, under a registered lease by the defendant.
Clauses 5.1, 5.2, 5.5 and 5.8	of the plaintiffs' lease provide:-
"5.1	IN CONSIDERATION of the premises the Lessor grants to the Lessee an option to purchase the demised premises for a consideration to be then

agreed upon between the parties and failing agreement to be determined by a Real Estate valuer carrying on business in the Northern Territory of Australia, such Real Estate valuer to be appointed by agreement between the parties such option to commence on the date hereof and to expire at 4.00
p.m. on the 31st of October 1991.

5.2 The Lessee shall give to the Lessor notice in writing of his intention to exercise the said option.

- - -

5.5	Upon the Lessee exercising the said option in the manner hereinbefore contained the agreement for sale and purchase as contained in Schedule A annexed hereto shall immediately come into effect.

- - -

5.8	The parties agree that one half of the rental payments made by the Lessee hereunder as at the date of the exercise of the option to purchase shall form part of the agreed or determined purchase price and shall be the amount of deposit to be paid and incorporated into the agreement for sale and purchase contained in Schedule A."

As to clause 5.5, the contract of sale in Schedule A to the lease provides in clauses 1, 2 and 3:-
"1. The Vendor will sell and the Purchaser will purchase the Vendor's right title and interest in and to ALL THAT piece or parcel of land being Lot
267 Town of Tennant Creek comprised in Certificate of Title Volume 48 Folio 160 together with the improvements thereon and chattels therein (if any) as specified in the First Schedule hereto (hereinafter referred to as "the property") for a consideration of ........ (hereinafter called "the purchase money") upon and subject to the terms and conditions hereinafter contained.

The purchase money shall be paid as follows:

As to the sum of .... already had and received by the Vendor by way of deposit.

As to the balance namely .... in cash or by Bank Cheque or by such other method acceptable to the Vendor's Solicitors upon completion such balance to be paid to the Vendor's Solicitor or as they may in writing direct.

Completion will take place within (30) days of the date hereof.

Upon completion the Vendor will tender to the Purchaser a duly executed Memorandum of Transfer in registrable form free from encumbrances other than those disclosed pursuant to Clause 6 hereof together with the relevant instrument of Title and such other documents as may be reasonably required to vest the property in the Purchaser."

The plaintiffs' case as pleaded
The plaintiffs contend that on 23 July 1990 (or, alternatively, on 15 April 1991) they gave notice in writing as required by clause 5.2	to the defendant of their intention to exercise the option in clause 5.1.
They contend that they could not agree with the defendant on the consideration for the sale and purchase of the land, but that the parties orally agreed in terms of clause 5.1 on or about 23 June 1990 that Mr Weeks, a real estate valuer, be appointed to determine the value of the property.	It will be noted that this agreement was allegedly reached one month before the plaintiffs exercised their option to purchase on 23 July 1990.	It is implicit in the plaintiffs' case that the value as determined by
Mr Weeks was to be the "consideration - - - determined" for the sale and purchase of the property, in terms of clause
5.1.	The plaintiffs say that pursuant to that oral agreement of about 23 June 1990 they instructed Mr Weeks to value the property, he did so, and a copy of his written valuation was forwarded to the defendant.

They further contend that, although they were willing and able at all material times to complete the purchase, the defendant, in breach of clause 5.5 of the lease, failed to execute a contract in the agreed form, or a memorandum of transfer in terms of clause 3.2 of the Schedule A agreement, after those documents had been tendered to him.
In the alternative, the plaintiffs contend that if the defendant did not agree with them on or about 23 June 1990 to appoint Mr Weeks to value the land, the defendant has since refused to join in appointing a valuer, in terms of clause 5.1, and his refusal amounts to a breach on his part of a subsidiary obligation implied in clause 5, that he would do all that was reasonably necessary to ensure that a proper purchase price was determined when the plaintiffs exercised their option.	They contend that in those circumstances they are entitled now to have the Court fix the purchase price and, for this purpose, they seek that the value of the property be now assessed.
In their Reply the plaintiffs contend that the defendant is estopped from denying that on or about 23 June 1990 he agreed with the plaintiffs that Mr Weeks be appointed to value the property, his valuation to bind the parties.	This estoppel arises from the defendant's conduct in failing to reply to the plaintiffs' letter of 23 July 1990 (set out below).	However, Mr Waters of counsel for the plaintiffs indicated in his final address that the plaintiffs do not press the estoppel, or their claim for damages for breach of contract, in the absence of any claim by the defendant based on the plaintiffs' holding-over rent free after the lease expired on 31 October 1991.
The defendant's case as pleaded
The defendant admits the terms of the lease set out on pp1 and 2.	He admits receiving the written notices of 23 July 1990 and 15 April 1991, but contends that neither

was a notice of exercise of option within clause 5.2 of the lease because, as at their respective dates, the parties had not, as required by clause 5.1, agreed upon a purchase price or to the appointment of a valuer to determine the purchase price.	The argument is that agreement on price, or on a valuer to determine price, is a prerequisite to the giving of a valid notice of intention to exercise the option, under clause 5.2.	I might say immediately that I see no substance in this argument.
The carbon copy of the handwritten notice of
23 July 1990 (Exhibit P2) reads as follows:-
"Jim Wyatt,	23-7-90
we Mark and Jaclyn Brooks wish to take up the option to purchase the mechanics shop and equipment on Lot 267 Irvine Street Tennant Creek. As both parties cannot agree on a sale price we have engaged Terry Weeks - Licensed Valuer of
25 Todd Mall Alice Springs Phone 532111 under clause 5.1 of the lease agreement, as agreed by yourself.
(Signed) Mark Brooks"

The notice of 15 April 1991 is contained in a letter of that date from the plaintiffs' solicitors to the defendant.	As far as material it reads as follows:-
"RE: OPTION TO PURCHASE PURSUANT TO LEASE OF LOT
267 TOWN OF TENNANT CREEK, WYATT MOTORS.

We act on behalf of Mark and Jaclyn Brooks in relation to the abovementioned.

We note that Mark Brooks gave notice of his intention to purchase pursuant to the option to purchase contained in the lease of the abovementioned property by a letter dated
23rd July 1990, and that a licensed valuer was hired to value the premises as agreed by a telephone conversation between yourself and
Mr Brooks.	If you do not accept that notice we hereby give notice for and on behalf of our clients of their intention to exercise the option to purchase contained in clause 5 of the registered lease over the above premises.

As notice has been given pursuant to the lease we enclose* a Contract of Sale and a Transfer for execution by yourself.	- - -

You will note that the contract price is in accordance with the valuation of the agreed valuer [Mr Weeks] being $45,000.00 and the deposit has already been paid by way of lease payments pursuant to clause 5.8 of the lease.	- - -

Note that you are liable for half the valuation fees which were $950.00 which should be accounted for at settlement.

We ask that you have the contract and transfer executed at your earliest opportunity and that you return the same to our office in the next seven days. - - -"

The defendant's major contention is that the parties never agreed, orally or otherwise, to appoint
Mr Weeks to determine the consideration for the purposes of clause 5.1.	Consistent with this approach, the defendant admits that he refused to sign the contract and transfer submitted to him on 15 April 1991, but contends that this did not involve a breach on his part of clause 5.5, since the option had never been validly exercised by the plaintiffs in terms of clause 5.1, and because the parties had never agreed on the appointment of a valuer to determine the consideration expressed in those documents.
As to the plaintiffs' alternative contention, resting on a breach of an implied subsidiary obligation, the defendant denies the existence of the obligation; if it existed, he denies that he has refused to join with the plaintiffs in the appointment of a valuer.
The issues
The pleadings appear to give rise to 3 issues. First there is a factual issue between the parties as to whether or not they agreed to appoint Mr Weeks as the valuer

to determine the consideration under clause 5.1.		Second, if the parties did not agree to appoint Mr Weeks, are the plaintiffs now entitled to have the court complete the agreement, on the application of the principle in Sudbrook Trading Estate Ltd v Eggleton [1983] 1 AC 444?	Third, was the conduct of the defendant following the plaintiffs' appointment of Mr Weeks as valuer, and the detriment suffered by the plaintiffs from that conduct, such as to enable the plaintiffs now to rely on an equitable estoppel against the defendant in relation to an agreement to appoint Mr Weeks as valuer.	Mr Waters submitted initially that the detriment to the plaintiffs lay in the fact that they had continued to pay the full rent under the lease for some 9 or
10 months, believing that one half of it was to go in reduction of the purchase price, pursuant to clause 5.8; further, the plaintiffs had structured their business believing that they could continue to operate it at the premises after 31 October 1988 when the lease expired. However, as noted earlier, in his final address Mr Waters did not press the argument based on an equitable estoppel.

The plaintiffs' evidence
The premises in question consist of a mechanical workshop and garage.	The plaintiff Mr Brooks is the nephew of the defendant.	He had been living with the defendant for many years.
In 1988 the plaintiff and his wife took over the workshop and garage business from the defendant; they continued to trade under the name of "Wyatt Motors."	The defendant moved to South Australia.	The plaintiffs entered into a 3-year lease, dated 11 November 1988, at a rental of
$400 per week; the lease contained, inter alia, the provisions of clause 5 set out on pp1 and 2.

The only witness in the plaintiffs' case was the plaintiff Mr Brooks.	He was cross-examined at length.	I found him an apparently truthful and reliable witness.	His evidence was as follows.
He is now 30 years of age.	He had served his apprenticeship as a motor mechanic with his uncle, the defendant, from the age of 14 to 19.	Thereafter he worked for the defendant for some 7 years until 1988, apart from some 18 months spent in Brisbane.
He agreed that he had been present early in 1988 (or possibly Christmas 1987) in the Memorial Club in Alice Springs when a Mr Cox had offered the defendant $100,000 for the business he conducted at the subject premises; he said that he had then:-

"cracked up, because all my working life I'd been getting the promise that when he [the defendant] was ready to leave, it's [that is, the garage business] going to be handed to me."

He was asked:-

"Q. He [the defendant] wouldn't accept that offer [by Mr Cox], because you asked him not to?	A. That's right."

Towards the end of 1988 he and his wife entered into the lease with the defendant.	He agreed that the defendant had lent him $5000 interest-free, to commence the business; however he said that he had not used that money, which he later repaid, and that he had told the defendant he "didn't want [it] in the first place."	He agreed that the defendant had waived the first month's rental payment of
$1600.	He agreed that he was aware at the time that the defendant had mortgaged the premises to the ANZ Bank.	He also agreed that the business was prospering when he took it

over, and had continued to prosper.	He had continued to run the business at a profit, and had started another business in Tennant Creek shortly before Christmas 1991.	The profit from the garage business for the year ending 30 June 1991 had been $22,000 nett; for the previous year it had been about $25,000 nett.	He agreed that he had kept the stock in the business when he took it over in 1988, on the basis that he paid for it over the next 12 months.
He testified that on 23 June 1990 he had the following telephone conversation with the defendant, who was in South Australia:-

"Plaintiff: "I want to buy the business.	I'll offer you $85,000 for it."
Defendant:	"I'll think about it, and get back to you.""

This was the first conversation.	Then "a couple of days later" the defendant telephoned him, and said he "would accept $85,000 cash."	That conversation continued:-

"Plaintiff:	"The deposit is not coming off that?" [This was clearly a reference to the provision in
clause 5.8 of the lease]. Defendant:	"No I want it cash.""

That was the end of that conversation; it was their second conversation.	It can be seen that by this account the parties had not managed to agree on the consideration for the purchase; bearing in mind the provisions of clause 5.8, the difference between them, by this account, was some
$17,000, since the plaintiffs clearly had in mind that the deduction in clause 5.8 applied to their offer of $85,000.
In cross-examination the plaintiff revealed that in April 1990 he had approached a valuer in Tennant Creek, a Mr Carpenter, and had ascertained from him that the property

was worth about $50,000.	He agreed that he had obtained this valuation "so that I could get an idea of actually how much it was worth."	He never revealed this valuation to the defendant.	He knew that a figure of $50,000 was much less than the defendant thought the business was worth "and that's why I rang him up and offered him $85,000."	He said:-

"In all fairness I was trying to do the right thing [on 23 June 1990]; if I offered $85,000 less my deposit [in accordance with clause 5.8], it means I would be paying $60,000."

In fact, on my calculations, his effective offer was some
$68,000.
Having been told by the defendant about 23 June 1990 that he wanted $85,000 nett of the amounts referred to in clause 5.8, the plaintiff went to his bank and then started looking through the lease and found clause 5.1.	He said he had not been aware of clause 5.1 prior to this time.
He then rang the defendant saying he "wanted to get a valuer in, like the lease says."	This appears to have been around 25 June 1990; it was their third conversation.
The conversation continued:-

"Defendant:		"How much is this going to cost me?" Plaintiff:	"I don't know.	I'll have to find out.
I'll have to find a valuer, and I'll ring you back.""

On 25 June 1990 the plaintiff "got on to Terry Weeks", who quoted him "a price of about $750" to carry out a valuation.
Later, when faced in cross-examination with para6 of his affidavit of 1 October 1991, in which he had stated that initially "Mr Weeks advised me that the cost would be

approximately $1,000", he testified that Mr Weeks' initial quote was approximately $1,000.	Later on, before Mr Weeks came to Tennant Creek, the quotation "became $950", because Mr Weeks found that he had to drive from Alice Springs and not fly.		He had not known Mr Weeks before June 1990.	He agreed that he had intended to use Mr Carpenter as the valuer, but he found out from him that he was not a licensed valuer.	Mr Carpenter had then given him Mr Weeks' telephone number.
In examination in chief the plaintiff testified that he then telephoned the defendant and said that the valuation would cost $750.	In cross-examination, however, he agreed that he would have told the defendant that it would be "approximately $1,000", not $750, though later he testified that he was not "one hundred percent sure whether I told him it was $750 or $1,000."	I do not treat this matter as affecting the plaintiff's general credibility.
The conversation continued:-

"Defendant:	"I can't afford that."
Plaintiff:	"Well, I'll pay it, just to get this all over and done with."
Defendant:	"Yeah, all right, go ahead."
[In cross-examination, the plaintiff rendered this as "yes, okay."]
Plaintiff: "Well, we're supposed to put this in writing.	I'll write you a letter, you write me a letter.""

The plaintiff did not in fact write a letter until 23 July 1990; see p4. He was unable to say why he had not done so before. The defendant never wrote a letter.
I interpose that this appeared to be a vital aspect of the case because the plaintiffs claim that in terms of clause 5.1 Mr Weeks was "appointed by agreement between the parties" to determine the consideration.	It was

this conversation upon which the plaintiffs rely, to establish that agreement.	Mr Brooks agreed in cross- examination that there had been no discussion with the defendant about the competence of Mr Weeks to carry out the valuation.	He himself knew nothing of Mr Weeks other than that he was a licensed valuer "I was given the name of".		He did not recall having any discussion with the defendant as to whether Mr Weeks "was the right man for the job".	He was cross-examined to the effect that the conversation with the defendant which he said took place about 25 June 1990, in fact took place some 2 weeks later on 5 or 6 July 1990.	He denied this, saying:-

"It [that is, his conversation with the defendant] was a fortnight, roughly, after I'd spoken to the valuer, before he arrived in Tennant Creek [on 5 or 6 July]."

In cross-examination he also denied that in the early part of July 1990, shortly after 6 July and prior to his receiving the written valuation from Mr Weeks on
25 July, he had had a conversation with the defendant to the following effect:-

"Plaintiff: "I've had Mr Weeks value the property at around $45,000. I'll get the valuation written up."
Defendant:	"Well, that is up to you, but I don't agree with that valuation, or the appointment of your valuer.""

The thrust of this cross-examination was that any conversation he had had with the defendant about the appointment of Mr Weeks as valuer, was after Mr Weeks had come to Tennant Creek on 5 July 1990 and had already provided him with a verbal "ball-park" valuation of the property.	As to that suggestion, the plaintiff admitted

that on 5 July he had asked Mr Weeks what he thought the business was worth, but that Mr Weeks had said "he wouldn't know until he had gone back and checked out."	Later however, in cross-examination, the plaintiff said that
Mr Weeks had told him "that the land value was low and it would be about the same as the other sheds that were sold [in Tennant Creek]."	He said that he then expected that Mr Weeks' valuation would come in around $50,000.
He said that he had never doubted that he had the
3 conversations with the defendant in late June, as outlined above; 2 of those conversations related to the price for the business, while the last related to the appointment of the valuer.	He was cross-examined on the number of conversations he had with the defendant in relation to para7 of his affidavit of 2 July 1991 in which he had stated:-

"Also on about 23 June 1990 I telephoned the Defendant and spoke with him concerning this matter.	In the course of the conversation it became clear that we could not reach agreement as to the purchase price of the property.	I suggested that we appoint a valuer and suggested that Terry Weeks from Alice Springs would be a suitable choice.	The Defendant agreed with this suggestion and I proceeded to instruct Mr Weeks."

It was suggested that this showed there had been a single conversation, not three.		However, he testified that the price had been dealt with in the two previous conversations and that the conversation referred to in para7 of his affidavit of 2 July 1991 was "the third conversation", in the course of which, as well as the appointment of the valuer, the lack of any agreement between the parties as to the price was manifest.	I do not consider Mr Brooks' credibility is shaken by what he deposed to in para7 of his affidavit of 2 July 1991.

I return to the plaintiff's evidence in chief.
After his third conversation with the defendant late in June 1990, he proceeded to engage the valuer Mr Weeks to carry out the valuation.	He saw Mr Weeks when he came to Tennant Creek on 5 July or 6 July 1990; he showed him the shed and the equipment which had been mentioned in the lease, and "told him what it was all about and what it [that is, the valuation] was for."	It was apparently on 6 July that he formally engaged Mr Weeks' services as a valuer; Exhibit D1 reads:-

"Terry Weeks, PO Box 2108, 25 Todd Mall, ALICE SPRINGS	NT	0871
Dear Sir,
I, MARK BROOKS hereby formally engage you, in your capacity as a Licensed Valuer, to prepare a Fair Market Valuation of the property situated at Allotment No. 267, 17 Irvine Street, Tennant Creek as at 6 July 1990.
I MARK BROOKS agree to make payment of your fees for such report immediately upon its completion.

TOTAL FEES:
SIGNED:	Mark Brooks
DATED:	6th July 1990"

While Mr Weeks was in Tennant Creek that day Mr Brooks showed him clause 5 of the lease; he asked  Mr Weeks how he would go about exercising the option in
clause 5.	He testified that he "wasn't 100 percent sure" how to go about it.	He said that he already knew that he had to send a letter "but he [Mr Weeks] sort of just verified that."	In this connection it will be noted that what the plaintiffs had to do was to comply with clause 5.2 of the lease.	Mr Weeks sent the plaintiffs certain advice on 10 July 1990; the facsimile is Exhibit D2.	The handwritten cover sheet reads:-

"TO:	WYATT MOTORS ATTENTION:	MARK BROOKS FROM:	TERRY WEEKS
DATE:	10/7/90	TIME SENT:	10.30AM
- - -
COMMENTS:	RESULTS AS DISCUSSED ON VISIT
THURSDAY 5TH JULY

Regards, Terry."

The handwritten advice from Mr Weeks is in the following terms:-

"Mark, I have spoken to Mr M. Deane,, Solicitor who has advised
To officially (legally) take up the option to purchase (clause 5.1) you must write as per clause 5.2
You basically must state you wish to take up the option to purchase and as both parties cannot agree on a "sale price", you have engaged "Terry Weeks - licensed valuer" of 25 Todd Mall, Alice Springs as per clause 5.1 of the lease agreement.

If you write this letter then under the lease you are therefore bound to purchase.

So you must write the letter
- ½ of all lease payments are to be deducted from the agreed purchase price as determined by myself.

Please ring if you have any problems.	Write that letter today on your letterhead.
Regards, Terry Weeks 9/7/90." (emphasis as in original)

He said that the "Mr M. Deane" referred to was the defendant's solicitor; it is clear that Messrs Turner & Deane had prepared the lease of the premises.
Some two weeks after receiving the advice from Mr Weeks the plaintiff wrote his letter of 23 July 1990 to
the defendant; see p4.	It parallels quite closely Mr Weeks' advice of 10 July 1990.		He said that at that time he

intended to keep paying the rent until "the lease ended or we owned it [the business]."	He said that he had "put that much into it that I couldn't afford to get out."	He said that "unless I bought the place, I don't get that money back."	It became clear in cross-examination that he regarded "as money that was owed to me" the "money from the half of the lease that goes as a deposit [under clause 5.8]."		This apparently was because he considered that his rent of $400 per week was a "lot of rent" to pay in Tennant Creek "if you're not getting anything back on it."
In evidence in chief he said that he did not think that he had spoken to Mr Weeks again.	However, in cross- examination, it appeared that Mr Weeks had telephoned him about a day before he received the written valuation on
25 July 1990, telling him that he had completed the valuation and giving him the amount of the valuation,
$45,000.	He said that he received through the mail the written valuation from Mr Weeks (Exhibit P3); the valuation is dated 24 July and appears to have been received by the plaintiff on 25 July 1990.	He then telephoned the defendant at lunch time and "told him about the value, and that it was the $45,000."	The defendant replied that he "couldn't accept that, the Bank wouldn't let him accept that."	The plaintiff said:-

"I'll send it down to you.	And you can have a look at it."

On 25 July 1990 he sent Mr Weeks' written valuation of
24 July to the defendant by mail.	For a month he had no reply.	He knew that there would be an argument about the valuation, "obviously, because it was a lot less than he [the defendant] thought it would be."	During that month

after 25 July 1990 he was awaiting the defendant's reaction to the valuation of $45,000.	He considered:-

"Then it would be a matter of trying to work out a price.	I was quite willing to go half way, or whatever."

He agreed that he knew that he defendant would not accept the valuation of $45,000.
After letting a month go past he tried on 3 or 4 occasions to telephone the defendant over the ensuing 6 weeks, August - September 1990.	He telephoned the defendant at his home at lunch time, but he was never home and no-one took the call.	Then he "just left it", but when he realised that the defendant "wasn't going to do anything" he "got on to the solicitor" in April 1991.		Until that time he had no solicitor.	He said that he went to the solicitor because:-

"I was getting no reaction and I thought that the lease is running out quick [it then had some 7 months to run], if I don't do something it's going to be too late to do anything".

During the whole of this time the business had continued to make a profit and he had continued to pay the rent under the lease.
He said that had he thought at the time of the valuation in July 1990 that he could not buy the business, he would have left the premises "because I was paying $400 per week for the rest of the lease [until 31 October 1991] for no reason".	In that event he would have got a job and "would have lost quite a bit of money."	The last observation seems to be correct; he was after all bound by his rental commitments under the lease, until 31 October 1991.

On 15 April 1991 the plaintiffs' solicitors sent a letter with a contract and transfer to the defendant; see pp4 and 5.	The plaintiff said that there was no response to this letter of 15 April and so the plaintiffs caused a Writ to issue on 27 June 1991; in cross-examination, however, he agreed that in fact there had been letters in response from the defendant's solicitor, dated 30 April and 6 May 1991.
It is clear that the plaintiffs paid the rent due under the lease to 31 October 1991, when the lease expired.
Since that date they have remained in the premises but have not paid any rent, pursuant to certain proceedings and orders made in this action.	The plaintiff said that his profit had gone, because of legal expenses and "the secretary that robbed me for $12,000."
As to the plaintiffs' alternative case outlined on pp3 and 4 - that if the parties had not agreed to appoint
Mr Weeks as valuer, the defendant has refused to join in the appointment of a valuer - the plaintiffs' solicitors' letter of 5 July 1991 (Exhibit P8) suggested that the parties now agree on a valuer, and put forward several names of valuers and estimates of valuation costs.
The defendant's evidence
The defendant's evidence in chief was brief but he was cross-examined at some length.	He appeared to me to give his evidence in a forthright manner; he was clearly greatly angered by the valuation by Mr Weeks of $45,000.
His evidence was as follows.	The premises the subject of the lease to the plaintiffs consist of a light engineering workshop for the repair of motor vehicles.	He had commenced the business of repairing motor vehicles in Tennant Creek in 1976.	He moved his business to the subject premises about 1984, by which time his business "Wyatt Motors" had built up considerable goodwill and was being conducted profitably.

He first learned that the plaintiffs wished to purchase the business when around June 1990 "he [Mr Brooks] rang up and said that he had had the place valued by this Weeks chap at $45,000."	He said that during that conversation "we discussed costs" of the valuation.	He said that this was the only conversation which he had with the plaintiffs about the sale.	It occurred shortly before he received from the plaintiffs the written valuation of
24 July 1990 by Mr Weeks.	He said that during the conversation he disputed the price of $45,000 immediately saying "it's a ridiculous valuation".
He denied that the plaintiffs had ever made an offer of $85,000; he had never considered selling at a price of $85,000 cash (that is, without taking account of the agreed deduction in clause 5.8).	He denied that he had had   a prior telephone conversation in late June with Mr Brooks, about the appointment of a valuer.	He said that  he  had never heard of Mr Weeks "until my nephew had said that it was Mr Weeks that he'd had value the place - - he was the valuer and he'd done the job."	He said:-

"I did not agree to this valuation or to the one previously [this was a reference to Mr Carpenter's valuation of April 1990].	I did not agree to
Mr Weeks at any time.	I was told of the valuation [by Mr Weeks] after the event."

After he received a copy of Mr Weeks' written valuation of 24 July 1990 (Exhibit P2) from the plaintiffs he contacted Mr Weeks, complaining about the "ridiculous valuation".
He had received the plaintiffs' letter of 23 July 1990 (see p4), about 29 July.	He did not respond to it because "I could see no point in responding to it", having already made his point clear in their telephone conversation that he had never agreed with the valuation amount or the employment of Mr Weeks to value the business.	He said "I

19

had no say in the matter of setting the valuation [by Mr Weeks] up".
The next letter he received was some 8½ months later, the plaintiffs' solicitors' letter of 15 April 1991.
He then immediately instructed his solicitor Mr Clark, who responded to it formally on 30 April and in substance on
6 May 1991.
In the 8½ months between the letters of 23 July 1990 and 15 April 1991 he had never sought to have the business valued, because "I had no reason to have it valued".	He said:-

"I had rejected his valuation [of $45,000] right from the start.	There was no further correspondence from my nephew [after the letter of
23 July 1990].	I didn't know what was happening."

He said that there had never been any attempt to negotiate a price; there was "no discussion, no sitting down talking about prices".	It appears from his evidence that the first he heard of the plaintiffs' alleged offer of $85,000 was when he saw a reference to it in the plaintiff's affidavit of 1 October 1991.
In cross-examination he said that he did not dispute that the plaintiff had exercised his option "because I got it in writing, after".	He said he wanted "a fair and reasonable price", that he owed more "on the place" than the valuation of $45,000 "which I had explained to my nephew
[Mr Brooks] at the time - - - in the phone call when he rang me and said that the valuation was $45,000."	He said he thought that:-

"Maybe he [Mr Brooks] might negotiate, it's not as though he didn't have enough time, it's not up to me to start the ball rolling, they're the couple that wished to purchase."

He said that the plaintiffs "already knew how much I wanted for the property, prior to them going ahead and getting their two valuations", because they were present "when I was offered the $100,000" by Mr Cox.	After Mr Cox had made his offer, apparently around December 1987, he discussed it with the plaintiffs on the way home that night.	At the house of a friend Tony Singh his nephew had become most upset, his wife told the defendant why, and they had discussed the matter when they got home.	It was then decided that the defendant would "not sell it, we'll keep it and set up a lease or however they want to do it; they knew the figure [the defendant wanted]".	He said that that figure was
$100,000.	He said that the offer by Mr Cox of $100,000 "just for the land and buildings", was made no more than 12 months prior "to the lease being drawn up".	He said that he had hoped that after their single telephone conversation the plaintiffs would "get back to me with a sensible offer and some discussion on a sale - - it's not up to me to chase them and hassle them into buying it".
He still considered Mr Weeks' valuation of 24 July 1990 was "ridiculous".	Para10 of his affidavit of
1 October 1991 was put to him; in it he said, inter alia:-

"I do not recall the date when the plaintiff Mark Brooks did speak to me by telephone. I do recall a telephone conversation during which Brooks said "I have had Mr Weeks value the property at around
$45,000.00".	I said	"I did not accept such a ridiculous figure for a valuation".		Brooks then said	"Well I will get it valued".	I said	"Well that is up to you but I don't agree with that valuation or the appointment of your valuer".	To that extent I agree with Brooks contention that it became clear that we could not reach agreement as to the purchase price of the property."

He was questioned as to what he understood by the plaintiff's words "Well I will get it valued".	He said he understood those words, in their context, as meaning that the plaintiff was waiting on the paperwork, because "he had told me that he had already had it valued.	He was waiting on the actual valuation to arrive, to send me a copy".
He was cross-examined at length as to why he had never attempted to negotiate a price after his nephew had told him of the valuation of $45,000, yet was able to say in para10 of his affidavit of 1 October 1991 that he agreed that it was clear "that we could not reach agreement as to the purchase price."	He responded:-

"I had no say in the matter [of Mr Weeks' valuation].	Of course, I was annoyed.	Of course, with a valuation like that; as I explained on the phone that I would not accept it.	It's exactly the reason why I didn't do anything about it.	I thought that he [Mr Brooks] would have accepted the fact that I said "I don't accept it, I cannot sell it for that, I owe more than that on it"."

He said that he thought "perhaps they might come back to me with a better offer".	He denied that when he said "it became clear that we could not reach agreement as to the purchase price", this referred to the respective offers of
$85,000 about which the plaintiff had testified.
Mr Tippett also relied on the plaintiffs' answers to interrogatories numbers 14 and 18 of 7 May 1992.	In their answer to interrogatory number 14 the plaintiffs stated that they had received approval from the ANZ Bank in late July 1990 to borrow a minimum of $20,000 on the security of the subject land.	In answer to interrogatory number 18 the plaintiffs said that Mr Weeks had been orally instructed to prepare a valuation "giving the fair market value of the land", and that this instruction -

"- - - was given after an initial telephone conversation with the defendant in about July 1990 during which the defendant agreed of [sic] the instruction to the valuer."

Conclusions
Did clause 5.1 create a valid option to 
purchase?
Mr Tippett submitted that clause 5.1 upon its proper construction involved an "agreement to agree" upon the consideration for the purchase, and therefore could not create a valid option to purchase.	That is not in my opinion the proper construction of clause 5.1, which provides for the purchase price to be agreed between the parties but "failing agreement to be determined by a Real Estate Valuer - - to be appointed by agreement between the parties."	In that respect it is similar to the provision considered by the House of Lords in Sudbrook Trading Estate Ltd v Eggleton (supra).
In Sudbrook an option in a lease by which the lessees could purchase the property provided for the purchase price to be -

"- - - as may be agreed upon by two valuers one to be nominated by the lessor and the other by the lessees or in default of such agreement by an umpire appointed by the valuers."

Lord Diplock said at pp476-9:-

(p476)	"The option clause in each lease was obviously intended by both parties to the lease to have legal effect; that is to say, to create legally enforceable rights and obligations.	What other reason could there be for going to the trouble of inserting those elaborate and carefully drafted provisions in the lease?

(p477)	The option clause cannot be classified as a mere "agreement to make an agreement."	There are not any terms left to be agreed between the parties. In modern terminology, it is to be classified as a unilateral or "if" contract.	Although it creates from the outset a right on the part of the lessees, which they will be entitled, but not bound, to exercise against the lessors at a future date, it does not give rise to any legal obligations on the part of either party unless and until the lessees give notice in writing to the lessors, within the stipulated period, of their desire to purchase the freehold reversion to the lease.	The giving of such notice, however, converts the "if" contract into a synallagmatic or bilateral contract, which creates mutual legal rights and obligations on the part of both lessors and lessees.

The first obligation upon each of them, once the contract has become synallagmatic, is to appoint their respective valuers to fix what is the fair and reasonable price for the reversion.	That this is a primary obligation under the contract follows from the use of the words "to be nominated", but it would, in my view, also be a necessary implication to give business efficacy to the option clause.	The requirement that the price to be so fixed is one that will be fair and reasonable as between lessors and lessees, appears to me to be a necessary implication from the description "Valuers" applied to the persons by whom the price is to be fixed by agreement between them, if possible, and from the description "Umpire" applied to the person by whom the price is to be fixed if the valuers cannot agree.	The term "Valuer" (with a capital "V" at any rate) is used nowadays to denote a member of a recognised profession comprised of persons possessed of skill and experience in assessing the market price of property, particularly real property.

- - -

(p478)	- - - if both lessors and lessees carry out their primary contractual obligations to one	another under the option clause, the result will be a conveyance by the lessors to the lessees - - - . What Templeman L.J. [in the Court of Appeal] refers to in his summary of the effect of the

authorities as the one central proposition from which the three principles that he states all stem, viz. until the price has been fixed by the method provided for in the contract "there is no complete agreement to enforce," involved a fundamental fallacy.	A contract is complete as a contract as soon as the parties have reached agreement as to what each of its essential terms is or can with certainty be ascertained: for it is an elementary principle of the English law of contract id certum est quod certum reddi potest.
True it is that the agreement for the sale of land remains executory until transfer of title to the land and payment of the purchase price; but if this is the sense in which the agreement is said not to be complete it is only executory contracts that do require enforcement by the courts; and such enforcement may either take the form of requiring a party to perform his primary obligation to the other party under it (specific performance) or, if he has failed to perform a primary obligation, of requiring him to perform the secondary obligation, that arises only upon such failure, to pay monetary compensation (damages) to the other party for the resulting loss that he has sustained.

My Lords, the real issue in this case is not whether the option clause when brought into operation by written notice given by the lessees to the lessors converted an "if" contract into a synallagmatic contract for the sale of the reversion in fee simple in the premises that are the subject of the lease, of which the lessors were in breach at the date of the commencement of the proceedings before Lawson J by their refusal to appoint a valuer and are now in further breach by their failure to convey the fee simple to the lessees on the date fixed for completion by that clause.	For reasons that I have already given I have no doubt that it did; but the real issue is whether the court has jurisdiction to enforce the lessors' primary obligation under the contract to convey the fee simple by decreeing specific performance of that primary obligation, or whether its jurisdiction is limited to enforcing the secondary obligation arising on failure to fulfil that primary obligation, by awarding the lessees damages to an amount equivalent to the monetary loss they have sustained by their inability to acquire the fee simply at a fair and reasonable

price, i.e. for what the fee simple was worth. Since if they do not acquire the fee simple they will not have to pay that price, the damages for loss of such a bargain would be negligible and, as in most cases of breach of contract for the sale of land at a market price by refusal to convey it, would constitute a wholly inadequate and unjust remedy for the breach.	That is why the normal remedy is by a decree for specific performance by the vendor of his primary obligation to convey, upon the purchaser's performing or being willing to perform his own primary obligations under the contract.

(p479)	Why should the presence in the option clause of a convenient and sensible machinery for ascertaining what is a fair and reasonable price, which the lessors, in breach of their contractual duty, prevent from operating, deprive the lessees of the only remedy which would result in justice being done to them?	- - - the contract upon its true construction is in my view a contract for sale at a fair and reasonable price assessed by applying objective standards.	In the second place the only thing that has prevented the machinery provided by the option clause for ascertaining the fair and reasonable price from operating is the lessors' own breach of contract in refusing to appoint their valuer.	So if the synallagmatic contract created by the exercise of the option were allowed to be treated by the lessors as frustrated the frustration would be self-induced, a circumstance which English law does not allow a party to a contract to rely on to his own advantage.	So I see no reason why, because they have broken one contractual obligation the lessors should not be ordered by the court to perform another contractual obligation on their part namely to convey the fee simply in the premises to the lessees against payment of a fair and reasonable price assessed by applying the objective standards to which I have referred.

- - -

- - when honest parties to a contract for the sale of land or an option to enter into such a contract have in the past inserted provisions for the ascertainment of the purchase price similar to the italicised words included in the option clause in the instant case they must have intended to create

legal rights to have those provisions acted on by both parties and not flouted by either party at his own sweet will; otherwise there is no point in inserting them at all."
(emphasis mine)
The thrust of Lord Diplock's reasoning in Sudbrook was apparently approved by Gibbs C.J., Murphy and Wilson JJ the High Court in Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd (1983) 149 CLR 600 at 606.	In Booker there was an option to renew a lease at a rental to be agreed; failing agreement the rental was to be fixed by arbitration.
The High Court held that in order to give business efficacy to the option, a term was to be implied that failing agreement on the rent, both parties would do all that was reasonably necessary to procure the appointment of an arbitrator.	Specific performance of that implied term was ordered.
I respectfully adopt what Lord Diplock said in Sudbrook; applying those observations to clause 5.1, I consider that it creates a valid option to purchase.
Did the parties agree to appoint Mr Weeks as Valuer?
The next question is the factual dispute which occupied most of the trial; was Mr Weeks jointly appointed by the plaintiffs and defendant as the valuer?	As to that, I accept the plaintiff's account in preference to that of the defendant.	I consider that the plaintiff was a credible and cogent witness, whereas the defendant was clearly inflamed and embittered by receiving what he obviously considers to have been unjust treatment, particularly in the amount of the valuation by Mr Weeks of 24 July 1990.	I consider that this has coloured and distorted his recollection of events.
I accept the plaintiff's account that late in June 1990 he made an offer of $85,000 minus one half of the

rental payments as per clause 5.8; and that the defendant counter-offered, seeking $85,000 nett.	The plaintiff then accepted that they could not agree on the price and sought to avail himself of the alternative means of arriving at the purchase price, as set out in clause 5.1.	I accept
Mr Brooks' evidence of his three telephone conversations with the defendant late in June, including the topic of appointing a valuer, and of the defendant agreeing to the valuer being appointed at the plaintiffs' expense.
A question arises as to whether the arrangements then put in hand, accord with what is required by clause
5.1.	As Jordan CJ said in Mackay v Wilson (1947) 47 SR(NSW)
315 at 318: "An option is nearly always a ticklish thing." The plaintiffs did not exercise their option until they wrote to the defendant in accordance with clause 5.2 on
23 July 1990.	As Lord Diplock pointed out in the passage from Sudbrook emphasised at p477, an option provision gives rise to no legal obligations "unless and until the lessees give notice in writing to the lessors - - of their desire to purchase - - ."	It is clear that at the time the defendant received the letter of 23 July 1990 the parties could not agree on the consideration for the purchase.	Upon receiving the notice of 23 July 1990 the defendant came under the obligation in clause 5.1 to join in appointing "a Real Estate Valuer"; he had been under no legal obligation to do so, before that time.	However, although that is when he first came under a legal obligation to do so, I consider that he had already agreed to the appointment of Mr Weeks as Valuer, and he is bound by his earlier agreement.
The plaintiffs' alternative case - breach of a subsidiary implied obligation
Since I have concluded that the defendant joined in the appointment of Mr Weeks as the valuer for the purposes of clause 5.1, it is unnecessary to deal with the

submissions directed to the plaintiffs' alternative case (pp3-4), which predicated that Mr Weeks had not been jointly appointed.	However, I observe that it seems clear enough, applying Lord Diplock's analysis in Sudbrook, particularly at p479, that should the defendant have refused to join in the appointment of a valuer the plaintiffs could have obtained relief by way of an order for the specific performance of the contract of sale in Schedule A to the lease, coupled with an order that an enquiry be carried out to determine a fair and reasonable price for the property, with consequential orders to achieve completion of the sale.
I respectfully agree with the observations of McPherson J
in Kinivan v Maoudis (1988) ANZ Conv. Rep. 320 at 322, that in circumstances such as obtained here -

"- - - the court will enforce performance of the subsidiary implied obligation in such an agreement to do what is necessary to procure the fixing of the price - - [to] enforce the implied subsidiary obligation of the parties to join in appointing a valuer."

Disposition
The plaintiffs validly and effectively exercised their option to purchase by notice dated 23 July 1990.	They are now entitled to an order that the contract constituted by the exercise of that option, in the form of the contract in Annexure A to the lease, be specifically performed and carried into execution.
However, I think that prior to making any formal orders, I should adjourn for one week to enable the parties to this unfortunate litigation to have further discussions and to agree, if possible, upon draft minutes of orders in the light of this judgment.	In this connection I note in passing that the question whether the valuation of 24 July 1990 was correctly arrived at so as to constitute the fair

and reasonable price which is the object of that provision in clause 5.1, was not agitated before me.	It is far from self-evident that Mr Weeks was properly instructed by both parties as to what he was to take into account in his valuation: for example, was his valuation to have taken into account any business or local goodwill attached to the name "Wyatt Motors", or any other intangible business assets?