JPA Finance Pty Ltd v Gordon Nominees Pty Ltd [2019] VSCA 159

Notice – Whether notice of termination was valid where it did not conform strictly with the option deed's notice provision

In this case, the Victorian Court of Appeal considered, among other things, whether the termination notice requirements in an option deed required strict, as opposed to substantive, compliance.

The court held that notice provisions in a contract are to be interpreted according to the standard of what a 'reasonable commercial person' would understand to be those provisions' commercial purpose; and that on the proper construction of the option deed and the notice of termination, a notice addressed to a party’s solicitor where the notice provision required that it be addressed to the party itself (care of its solicitor) was deemed to be valid.

This case affirms the principle that the question whether strict compliance is required with notice provisions is one of construction of the contract, the terms of which should be construed by reference to the evident commercial purpose of the notice provisions in question.


In February 2017, Gordon Nominees Pty Ltd transferred 20 units in a trust to JPA Finance Pty Ltd, as consideration for the cancellation of a loan and other obligations under the deed of loan. Gordon and JPA entered into an option deed, which provided, relevantly:

  • JPA granted Gordon an option to purchase 20 units in the trust for the stipulated price and on specified terms and conditions;
  • Gordon indemnified JPA for legal costs arising out of the negotiation, preparation and execution of the option deed; and
  • JPA could terminate the deed by written notice to Gordon if an 'insolvency event' occurred in relation to Gordon at any time before Gordon exercised the call option.

The option deed provided that a termination notice 'must be addressed and delivered to the intended recipient at the address or fax number' specified. In each case, the specified address contained the formal name of the party, care of the party's solicitors.

A dispute arose between the parties in connection with the legal fees JPA incurred in relation to the option deed. JPA issued a statutory demand to Gordon for the amount owed. Gordon failed to pay the amount owing under the statutory demand or apply to have it set aside, after which JPA issued a letter to Gordon's solicitor, notifying them an insolvency event had occurred and it was terminating the deed.

Gordon claimed that the notice of termination was not served according to the notice provisions of the option deed, as the notice was addressed to Gordon's solicitor, rather than Gordon itself. It was not in doubt that the notice was delivered to the correct fax number. JPA sought a declaration from the court that that the option deed's termination was valid and effective.

At first instance, the trial judge found that the notice of termination had not been given according to the terms of the option deed, as it was not addressed to the intended recipient but to its solicitor.


The Court of Appeal allowed the appeal for the following reasons:

  • it was held that the question whether a contract requires strict compliance with provisions about notice is one of construction of the contract. The court considered that the meaning of the language of commercial contracts (and unilateral contractual notices) should be interpreted in the way in which a reasonable commercial person would construe them;
  • in this case, the court considered that even though the notice was addressed to Gordon 's solicitor, rather than Gordon, it would be unduly technical and destructive of the parties' agreement to treat the notice as ineffective on that basis. The evident commercial purpose of the address requirement of the notice provision was to ensure that the notices were directed to the attention of the parties through their respective solicitors. The court found that was what a reasonable commercial person would understand, and that it was all the notice provision in the option deed required; and
  • the court rejected the literal construction of the notice provision, which the trial judge had adopted, on the basis that no commercial purpose was achieved by requiring that the notice be formally addressed to Gordon, in circumstances where it was otherwise apparent on the face of the notice that Gordon was the intended recipient.