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[2026] NSWSC 769
Supreme Court of NSW
2026-07-03
Pike J
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Koh v Chhoeu [2026] NSWSC 769
Original judgment source is linked above.
Hearing dates: 2, 3 and 10 September 2025
Date of orders: 3 July 2026
Decision date: 03 July 2026
Jurisdiction: Equity - Real Property List
Before: Pike J
Decision: Binding contract for sale of land entered into. Plaintiff/Purchaser liable for damages.
Catchwords: CONTRACTS — formation — sale of land — whether binding contract formed by exchange of counterparts — counterparts not identical — whether parties were ad idem as to terms — whether omission of special condition from one counterpart prevented formation — whether agent authorised to effect exchange — exchange effected by agent holding executed counterparts for each party — whether vendor ready, willing and able to complete — failure by purchaser to complete
CONVEYANCING — cooling-off rights — whether purchaser provided certificate under s 66W of the Conveyancing Act 1919 (NSW) — whether purchaser intended to waive cooling-off rights — certificate signed and left with selling agents for use if agreement reached — whether certificate formed part of contract — whether contract should be rectified to remove s 66W certificate — purported rescission out of time
EVIDENCE — assessment of credit and reliability — conflicting oral accounts of purchaser, vendor and selling agent — reliance on contemporaneous documents
DAMAGES — sale of land — measure of damages — damages for loss of bargain and loss on resale — difference between contract price and value or resale price — mitigation — rejection of subsequent offers — whether vendor acted reasonably
Legislation Cited: Conveyancing Act 1919 (NSW), ss 66S, 66U, 66W
Cases Cited: Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205; [2012] HCA 30
Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61
Brien v Dwyer (1978) 141 CLR 378; [1978] HCA 50
Chand v Commonwealth Bank of Australia [2014] NSWSC 708
Cirrus Real Time Processing Systems Pty Ltd v Jet Aviation Australia Pty Ltd (2025) 311 FCR 408; [2025] FCAFC 85
Cole v Raykir Holdings Pty Ltd (2019) 19 BPR 39,659; [2019] NSWSC 1011
Director Office of Fair Work v CFMEU (2013) 231 IR 278; [2013] FCAFC 8
Domb v Isoz [1980] Ch 548; [1980] 1 All ER 942
Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co Ltd [1915] AC 79
Eccles v Bryant [1948] Ch 93; [1947] 2 All ER 865
ET-China.com International Holdings Limited v Cheung (2021) 150 ACSR 461; [2021] NSWCA 24
Havyn v Webster (2005) 12 BPR 22,837; [2005] NSWCA 182
Kazacos v Shuangling International Development Pty Ltd (2016) 18 BPR 36,353; [2016] NSWSC 1504
London and South of England Building Society v Stone [1983] 1 WLR 1242
Luu v Sovereign Developments Pty Ltd (2006) 12 BPR 23,629; [2006] NSWCA 40
Payne v Parker [1976] 1 NSWLR 191
S T Investment Pty Ltd v Geng (2020) 19 BPR 40,071; [2020] NSWSC 329
Sacher Investments Pty Ltd v Forma Stereo Consultants Pty Ltd [1976] 1 NSWLR 5
Sandpiper Kooragang Pty Ltd (atf Sandpiper Property Trust) v Fortis Products Pty Ltd (2020) 19 BPR 40,689; [2020] NSWSC 1256
Sindel v Georgiou (1984) 154 CLR 661; [1984] HCA 58
Wang v Garland Lot 3 Pty Ltd [2013] NSWSC 1112
Zaccardi v Caunt (2008) 15 BPR 28,403; [2008] NSWCA 202
Texts Cited: Nil
Category: Principal judgment
Parties: Kang Hong Koh (Plaintiff /Cross-Defendant)
Bun Choeung Chhoeu (Defendant /Cross-Claimant)
Representation: Counsel:
M Green SC / L James (Plaintiff /Cross-Defendant)
A C Harding SC / J A Norton (Defendant /Cross-Claimant)
Solicitors:
Heathcote & Associates (Plaintiff /Cross-Defendant)
Bell Partners Legal (Defendant /Cross-Claimant)
File Number(s): 2024/00299346
Publication restriction: Nil
The critical issue for determination is whether the plaintiff purchaser, who I will refer to as Margaret, entered into a binding contract with the defendant vendor who I will refer to as Arthur, for the purchase of a property located at River Avenue in Chatswood (Property).
I intend no disrespect or informality in referring to the parties as Margaret or Arthur – that is how they were referred to at times in the proceedings.
It is not in dispute that, on or about 15 June 2024, Margaret and Arthur each signed at least the signing page of counterpart contracts under which Margaret was to purchase the Property for $3.2 million. It is also not in dispute that on 17 June 2024, counterparts were provided to the parties, and those counterparts were not identical: one counterpart did not contain cl 46, while the other did not contain page 3.
What is in dispute is whether the counterparts included a certificate under s 66W of the Conveyancing Act 1919 (NSW) (CA), signed by Margaret and dated 13 June 2024. Associated with this point is whether Margaret intended to waive her cooling off rights in this respect.
Margaret contends that no binding agreement was formed because the counterparts were not identical. She also contends that if a contract was formed, it was formed on 17 June 2024, and she did not waive her cooling off rights. On that basis, she submits that she validly rescinded the contract on 24 June 2024 during the cooling off period. Embedded in this contention is an argument about the proper construction of the relevant provisions of the CA.
Margaret further contends that, even if she is wrong about all of the above, Arthur did not validly terminate the contract because he was not ready, willing and able to complete at the relevant time.
Margaret seeks the return of the (part) deposit she paid to Arthur.
Arthur disputes each of those contentions. He contends that the differences between the counterparts did not prevent the formation of a binding contract. He further submits that contracts were exchanged on 16 June 2024 and that Margaret waived her cooling off rights by providing a s 66W certificate. Alternatively, Arthur contends that, even if Margaret did not waive those rights, her purported recission was ineffective because it occurred outside the required statutory period of 5 business days. He also contends that he was ready, willing and able to complete when he terminated the contract.
Arthur seeks a declaration that he validly terminated the contract for the sale of the Property and sues for either liquidated damages under the contract or damages reflecting the loss he suffered on resale of the Property. He also seeks additional damages.
The proceedings were heard on 2, 3 and 10 September 2025. Mr M Green SC and Mr L James appeared for the plaintiff and Mr A C Harding SC and Mr J A Norton appeared for the defendant.
For the reasons set out below, I uphold Arthur’s contentions. He is entitled to damages. The parties should seek to agree orders, including as to costs. Failing agreement, I will determine the remaining issues on the papers.
Four witnesses were called to give evidence at the hearing – one in the plaintiff’s case, and three in the defendant’s.
Margaret was the only witness called in her own case. She was extensively cross-examined and a credit attack was levelled against her evidence in Arthur’s closing submissions. It was contended that her evidence was plagued with non-responsive and self-serving answers, as well as answers that were inconsistent, implausible and evasive.
I approach Margaret’s evidence with considerable caution. Some aspects of her evidence were difficult to accept including her suggestion that a photograph taken at dinner on Saturday, 15 June 2024, depicting Arthur signing a document had been created by AI. Another related example was that no agreement had even been reached by the time of that dinner even though Margaret was handing over a cheque and, even by her own account, had signed a contract for $3.2 million, together with the special conditions, before the dinner. I therefore place greater reliance on the objective material and the inherent probabilities than on the uncorroborated statements of Margaret.
The three witnesses called and cross-examined in Arthur’s case were Tim (one of the Agents – defined below), Arthur and Anne Gower (Ms Gower) (Arthur’s conveyancer – defined below).
I treat Tim’s evidence with caution. Some aspects of his evidence in cross-examination were particularly difficult to follow. One example concerned his evidence in relation to how changes were made to the online listing in relation to the Property on 15 June 2024. Again, I place greater reliance on the objective material and inherent probabilities. That material supports Tim’s recollection of what occurred to a greater extent than Margaret’s recollection.
Arthur was a more reliable witness. I formed the view that he was doing his best to assist the Court. For the most part, I accept his evidence, except where it is inconsistent with the objective material.
Ms Gower was also, in my view, a reliable witness. I did not understand Margaret to challenge Ms Gower’s credit; rather the challenge was directed to the reliability of her recollection of particular events. I accept her evidence.
Margaret also contended that there were witnesses who should have been called in Arthur’s case but were not. There were three absent witnesses – all from the Agents. The first was Eric (defined below), a director of Raine & Horne Lindfield. He was present during the negotiations with Margaret on Friday 14 June 2024, and sent the email on Sunday, 16 June 2024, confirming that contracts had been exchanged. No explanation was provided for his absence. Although Eric was a real estate agent engaged by Arthur in a professional, arms length capacity, and thus it may be said that he was not in Arthur’s camp, Tim was called to give evidence, and it is clear that Tim and Eric still work together. In those circumstances, I infer that it was open to Arthur to call Eric. I deal below, in the relevant parts of the factual chronology, with the significance of Eric not being called.
The second absent witness was Romina Coletta (Ms Coletta), an administrative assistant at Raine & Horne Lindfield at the time of the events in question. She was responsible for scanning the complete counterpart contracts and emailing them to the parties – which she did at 1.42pm on Monday 17 June 2024. The counterparts were not identical. It was also in issue whether, prior to Monday morning, complete counterpart contracts in fact existed. Margaret contended that Ms Coletta could have given evidence on these matters.
It was not entirely clear on the evidence whether Ms Coletta remains employed by the Agents.
The brief cross-examination of Tim in relation to Ms Coletta appeared to proceed on the basis that she was previously employed by the Agents but was no longer. There was no evidence of any recent contact between Tim or Eric and Ms Coletta. Even if there had been such contact, it is far from clear to me that Ms Coletta could be regarded as being in Arthur’s camp, an aspect of one of the matters to be considered in the operation of the rule in Jones v Dunkel – whether the missing witness would be expected to be called by one party rather than the other: see Payne v Parker [1976] 1 NSWLR 191 at p201-202.
It has been observed that where a witness has severed a relationship with a party, the degree to which the witness may be said to be in the camp of that party for Jones v Dunkel purposes will fluctuate with the circumstances and generally decline over time: see Director Office of Fair Work v CFMEU (2013) 231 IR 278; [2013] FCAFC 8 at [100]-[102] per Besanko and Perram JJ.
Ms Coletta’s position is even more removed: she never had a relationship with Arthur himself.
I am therefore not satisfied on the evidence that the principle in Jones v Dunkel has any application to Ms Coletta.
It was also contended that Junpei Yu, another employee of the Agents at the time, should have been called. The evidence was that she was no longer employed by the Agents. I am not satisfied she is in Arthur’s camp. In any event, I am not satisfied that there were any material matters on which it would be expected she would be called to give evidence. Her main involvement appears to have been limited to attending the Property at some stage during the lengthy negotiations on 14 June 2024.
I set out the relevant facts below, resolving any conflicts as they arise.
A considerable part of the dealings between the parties were recorded in writing. Some aspects were not, and the witnesses were therefore required to rely on their memory.
As is usual, the objective contemporaneous material provides the most reliable base to determine the contested factual issues: see, for example ET-China.com International Holdings Limited v Cheung (2021) 150 ACSR 461; [2021] NSWCA 24 at [25]-[30] per Bell P (Bathurst CJ and Leeming JA agreeing).
I have sought to assess the competing accounts against the contemporaneous material and the inherent probabilities. It must be acknowledged at the outset that, on a number of the key factual issues, the various pieces of evidence do not all point in the same direction. I have considered all of the relevant material to make my findings as to what occurred.
Arthur listed the Property for sale because he said he needed the money to pay out his ex-wife. On 8 December 2023, he had been ordered to pay her $988,573 within 60 days.
There was an auction of the Property in March 2024, but it failed to sell. The Property was passed in for a bid of $3.305 million, with the under-bidder having offered $3.3 million.
Arthur engaged Raine & Horne Lindfield as selling agents. The two agents principally involved were Temuqile “Tim” Boyan (Tim) and Xialong “Eric” Wei (Eric) – who I will collectively refer to as the Agents. Arthur entered into an Auction Agency Agreement dated 31 January 2024 (Agency Agreement). Margaret placed some emphasis on the fact that the Agency Agreement did not authorise the Agents to exchange contracts on behalf of Arthur. I deal with this issue later in these reasons.
On 29 May 2024, the exclusive period of the Agency Agreement was extended in writing to 24 June 2024.
The Property was to be sold by public auction scheduled for Sunday, 16 June 2024. Arthur gave express instructions to the Agents that any “pre-auction” offer had to be accompanied by a certificate under s 66W of the CA.
Margaret (who is a solicitor who acted for herself throughout the transaction) inspected the Property in late May 2024. She subsequently obtained pest and building reports and then arranged for a further pest inspection report of her own.
On 3 June 2024, Margaret received an email from a representative of the Agents enclosing a link to download a copy of the contract for the sale of the Property. She downloaded a copy of the contract, which included a number of attachments.
On 12 June 2024, Margaret made an offer to purchase the Property prior to auction for $3,083,000. She gave evidence that she was aware that if she wanted to buy the Property prior to auction, she would need to provide a s 66W certificate waiving her cooling off rights. Notwithstanding this knowledge, no s 66W certificate was provided with the offer. The offer was subject to several conditions including that Arthur rectify various defects, pay $3,300 towards what was described as the first stage of a termite elimination program, and agree to a settlement period of 10 weeks.
Tim requested that Margaret provide a s 66W certificate together with a signed contract. Later on 12 June 2024, Margaret emailed Tim an executed contract, which she said was to accompany her offer made earlier that day. Tim replied that he would still require the s 66W certificate to assist with negotiations.
At 6.27am on 13 June 2024, Margaret texted Tim to the effect that she required confirmation from her banker before signing off on the s 66W certificate. She asked Tim to speak with Arthur and said that if her offer was accepted, she would sign the certificate on 14 June 2024.
On 13 June 2024, Tim informed Margaret by telephone that her offer was not accepted.
Margaret and Tim agreed to meet on Friday, 14 June 2024 for further negotiations. Earlier that day, Margaret and Ms Gower exchanged emails concerning changes to the contract proposed by Margaret. Margaret requested that cl 7.2.1 and cll 19.2.3 and 19.2.4 be reverted to their original terms. Arthur did not agree to those amendments.
Margaret attended the Property at about 4.30pm and met with Tim and Eric. She brought with her a signed copy of a contract and a s 66W certificate which she had prepared herself, signed and dated 13 June 2024. The signed contract identified a purchase price of $3.133 million. The contract contained additional clauses prepared by Margaret: cl 46 which required Arthur to pay $3,300 for the first stage of the termite elimination program, and cl 47 which identified building work to be carried out by Arthur before settlement.
At 5.02pm, Eric sent the proposed cll 46 and 47 to Ms Gower for review. At 7.24pm, Ms Gower responded to Eric in the following terms:
We are instructed that the deposit payable under this contract is 10% of the price. The vendor accepts 5% of the price payable on the date of contract and additional clause 46 applies.
Clause 47, agreed.
Clause 48,
a. please adding the words “The floor will be replaced with standard engineering timbe floor in oak colour.
b. Please adding the words “one is two floor boards in dining room and the other one is two floor boards in master bedroom.
c. this requirement only applies to the work carried out referred in a. & b.
d. agreed.
For the purposes of exchange can you kindly:
a. Insert the attached additional clause 46, clause 47, clause 48 and s66W certificate into the Contract.
b. Ensure that a 5% deposit is received on exchange together with an executed s.66W Certificate.
It is not in dispute that the negotiations on 14 June 2024 were lengthy – lasting until around 8.30pm to 9.00pm – and did not result in a concluded deal.
Margaret made the offer set out in the contract she had signed ($3.133 million) and handed to Eric the s 66W certificate.
Margaret gave evidence that Eric then spent “a lot of time going back and forth and speaking on the phone with [Ms Gower], [Arthur] and speaking to [her] including amending the Additional Conditions by hand, to continue the negotiations.”
At some stage during the evening, one of Eric’s assistants, Junpei Yu, arrived, according to Margaret, with a laptop and another version of the contract. (It is likely that this is the version signed by Margaret, referred to below).
At 8.01pm on 14 June 2024, Ms Gower emailed Eric a contract for sale for execution which he forwarded to Margaret at 8.06pm. The contract attached to that email did not specify a purchase price but included cl 46 dealing with the deposit and cll 47 and 48 which were the clauses originally drafted by Margaret as cll 46 and 47 and subsequently renumbered by hand. Those additional conditions were also amended by hand, signed by Margaret and dated 14 June 2024. The contract appears to have been a complete copy, and to have included all attachments. The contract also included an email chain between Margaret and Ms Gower requesting certain amendments to the contract, and raising further requisitions, together with Ms Gower’s response on instructions from Arthur.
A further contract was executed by Margaret during the negotiations. Margaret said she could not recall whether the purchase price in that contract was $3,208,000 or $3,288,000. Photographs admitted in evidence suggest the price on the executed contract was $3,208,888. Margaret also signed a cheque for $160,444.40, being 5% of $3,208,888.
Margaret said that she felt pressured to accept the proposed price and remained concerned about cll 7.2.1 and 19.3.2 (although the latter reference was presumably intended to be cl 19.2.3 which was proposed to be deleted). She says that she left the Property at around 9pm or 9.30pm.
At 10.03pm, Tim texted Margaret telling her “vendor already signed” and at 10.04pm “nothing changed in the contract, they pretty much just attached condition and email correspondence at end of contract”. Contrary to this first statement, Tim did not give any evidence of Arthur signing on 14 June 2024. Arthur gave evidence of signing a contract for $3,208,888 at about 1pm on 15 June 2024 at Tim’s office.
At 10.39pm, Margaret texted Tim:
I need to look at the contract again, and may be request further amendment. Sorry you may have to do the open house tomorrow.
It seems clear that Margaret took back the signed cheque for $160,444.40 but did not keep the apparently signed contract for $3,208,888 or the signed s 66W certificate. Margaret gave evidence that she wanted the cheque back as she was concerned that if she left it with the Agents the offer of $3,208,888 could be accepted by Arthur.
Margaret said that she had forgotten that she had left the s 66W certificate with the Agents and that it was not until Monday, 17 June 2024 when she received by email the full copies of the exchanged contracts that she realised that she must have left it with the Agents. This aspect of her evidence was heavily disputed. I do not accept it for the reasons set out below.
Arthur gave evidence on affidavit that he was contacted by Tim and Eric on 14 June 2024 a number of times. Tim told him that the final price agreed was $3,208,888.80 and that Margaret wrote a 5% deposit cheque. He was told later that evening that Margaret did not sign the contract and wanted to review the updated contract terms again.
Tim’s version as to what occurred on 14 June 2024 was a little different to Margaret’s. He deposed to Arthur and Margaret agreeing on a price of $3,208,888, Margaret signing a contract for this amount and providing a cheque for $160,444.40. Tim asserts that Margaret then said words to the effect “I understand that I am waiving the cooling off period”. Margaret then left at 8.30pm and requested more time to review the updated contract. When she left, she took the cheque with her “leaving the original signed s 66W certificate with Eric to be used if final agreement was reached”. Tim said that these words were used by Margaret.
Margaret denies using any such words. She submits that she simply overlooked taking the s 66W certificate with her as she was tired and hungry having been negotiating for five hours.
In cross-examination, Margaret gave the following evidence:
Q. I’m asking you about the contract that you signed on the evening of 14 June-
A. Yeah.
Q. --with a purchase price of $3,208,888; do you understand?
A. Yeah.
Q. I want to suggest to you that at no time when or before you signed that contract did you tell either Eric or Tim that the section 66W certificate you had given at the start of the meeting did not apply to the contract that you signed?
A. Did not apply to which contract?
Q. The 3.208888 contract.
A. Did not apply?
Q. No, what I’m suggesting to you is that you never said to Mr Boyan or to Eric when you signed that contract that the section 66W certificate that you’d given at the start of the meeting didn’t apply to that contract?
A. No, because I knew if that deal gone through I was signing a contract before the auction and I knew prior to the auction I need to give section 66 certificate.
Q. You knew that any contract made before the auction would have to have a section 66W certificate, didn’t you?
A. Yes.
(Emphasis added.)
The critical area of difference in the evidence of Margaret and Tim, in relation to the events of 14 June 2024 is whether, as Margaret contends, she simply forgot that she had left the s 66W certificate with Eric and Tim or whether, as Tim contends, she expressly left the s 66W certificate with Eric and Tim to be used if final agreement was reached.
I prefer Tim’s version and reject Margaret’s for the following reasons:
(a) Margaret was an experienced solicitor, including in relation to conveyancing. She was acutely conscious of ensuring that no agreement was entered into on the Friday evening. She was aware of the significance of a s 66W certificate. It is most unlikely that she would have simply overlooked the document – on her account for a number of days – until Monday, 17 June 2024; (b) Margaret was at all times aware that if she was to buy the Property before auction, she would be required to provide a s 66W certificate. She had been pressed by the Agents to provide one and had brought one with her to the Property on 14 June 2024. At the time of leaving the Property that evening, she was on the cusp of buying it. She had agreed to terms with Arthur, signed the contract, and written out a deposit cheque. On her account she felt pressured and wanted more time. It was a very distinct possibility that a contract would be entered into the following day, and it was well known that the s 66W certificate would be required. In these circumstances, it is more likely that Margaret would have left the signed s 66W certificate with the Agents on the express basis given by Tim – to be used if final agreement was reached; (c) in none of her emails after she received the full contract containing the s 66W certificate on Monday, 17 June 2024, does Margaret assert what she now says, namely that she overlooked leaving the certificate with the Agents on 14 June 2024; (d) as set out above, I found aspects of Margaret’s evidence to be quite unsatisfactory. This causes me to be quite cautious in accepting Margaret’s evidence, particularly where it is uncorroborated; and (e) I am conscious that Eric, who was said by Tim to have been part of the relevant discussion with Margaret was not called to give evidence and no explanation was provided for this. This failure does not cause me to prefer Margaret’s version for the reasons set out above.
Dear Tim,
As I explained this morning, I have tidied up the additional conditions 47 & 48, please replaced [sic] the page we worked on last night with attached page.
As explained, I need the delay settlement in 48.c as the Vendor has deleted clause 7.2.1, 19.2.3 and 19.2.4 in the contract.
Please forward the amended additional conditions to the Vendor for his approval.
I will most likely to participate the auction tomorrow with the agreed teams [sic] and conditions attached.
The attached contract was again complete and included all attachments. It contained cl 46, dealing with the deposit, and cll 47 and 48 in both their signed, handwritten amended form and a further revised typed form (to the same effect). The contract also included the email exchange between Margaret and Ms Gower on 9 and 11 June 2024 concerning Margaret’s proposed amendments and the reply to requisitions. No purchase price was included on the front page.
It is of some significance that Margaret obviously had at this time, and at all earlier times, a complete copy of the proposed contract.
In his substantive affidavit, Tim says that he telephoned Margaret and told her that the auction would be cancelled as she and the vendor had already agreed on a price and substantially on terms. He repeated the evidence in cross-examination. Margaret agreed that she had a telephone conversation with Tim prior to him arriving unannounced at her house in which Tim said:
Margaret, if you go to the auction tomorrow, it will only be you, and we will still do the same negotiation as we did last night.
At 11.25am, Eric forwarded Margaret’s email and attachments to Ms Gower.
At 11.33am, Ms Gower emailed Arthur (and his assistant Olivia Wang), copy to Eric, asking if Arthur was agreeable “to the clause 48c”? It is not entirely clear what this was a reference to – it is likely to the deletion of the words “either delay the settlement” in that subclause.
At 11.49am on 15 June 2024, Olivia Wang emailed Eric and Ms Gower as follows:
As instructed by Arthur, he does not agree change to special condition we agreed last night, delay settlement in 47 e is not agreed. The rest OK if same as what we agreed last night.
As 10 weeks settlement is already delayed compared with 42 days.
At about 4.50pm on 15 June 2024, Ms Gower responded to Margaret advising of certain changes that Arthur had agreed to – to revert cll 7.2.1 and 19.2.3 to their original terms.
At 12.39pm, Margaret then made a revised offer by text of $3.15 million. Tim responded at 12.40pm – “No price changes. I am with him now”. This was obviously a reference to Tim being with Arthur. Arthur gave evidence in cross examination that it was about this time that he signed a contract for $3,208,888 at Tim’s office. Tim had earlier texted Arthur the office address.
At 12.45pm Margaret texted Tim saying that the $3.15m offer was her final offer “but she could release $180k instead of 5%”.
Tim went to Margaret’s house at about 3.30pm on 15 June 2024. There is considerable dispute as to what transpired thereafter on that day, including at the house and later at a restaurant with Arthur.
Margaret says that Tim turned up unannounced with a bunch of flowers. Tim agreed in cross examination that he did.
More substantially, Margaret says that she checked the listing for the Property on the morning of 15 June 2024 and saw that the auction was still proceeding. She says that when Tim arrived at her house that day, he told her that the auction had been cancelled and that she then proceeded to confirm this online which was the case.
Tim disputes making this statement. He says that he never told Margaret this as the auction was never cancelled, until after the Property had been sold. He states he only changed the listing at about midnight on 15 June 2025 in light of the agreement reached that afternoon/evening.
Each party contends that there is documentary evidence to support their position as to when the auction was cancelled.
The listing data for the Property produced by Domain under subpoena shows that at 1.35pm on 15 June 2024 the “Price/Prefix” field changed from “Must be sold – Auction 16th June” to “Contact Agent”. At 23.21 on 15 June 2024 the same field was changed from “Contact Agent” to “SOLD Prior to Auction – Auction cancelled”.
Other records suggest that at 12.17am and 12.18am on 16 June 2024 Tim made changes from “Contact Agent” to “SOLD Prior to Auction” and “SOLD Prior to Auction. Auction Cancelled”.
Documents produced by Raine & Horne Lindfield under subpoena, on which Tim was cross-examined, suggest that at 2.33pm on 15 June 2024, Junpei Yu, an administrative assistant at Raine & Horne Lindfield, made the following changes to the listing:
(a) Auction Date/Time changed from 2024-06-16 10:30:00 to [Empty]; (b) Auction Venue changed from On Site to [Empty]; (c) Method of Sale changed from Auction to Private Treaty; and (d) Price Text changed from “Must be sold-Auction 16th June” to “Contact Agent”.
These documents, in my view, tend to support Margaret’s account, rather than Tim or Arthur’s. They clearly show a change from sale by auction to private treaty and to “Contact Agent”, made in the afternoon of 15 June 2024. They also clearly show that the date for the planned auction the next day had been deleted. These changes are consistent with Margaret’s evidence that the auction was cancelled prior to her meeting with Tim on the afternoon of 15 June 2024. They are also consistent with Tim’s evidence in his first affidavit that he told Margaret that the auction would be cancelled. The only slight inconsistency with Margaret’s evidence is that the revised listing at the time Tim arrived at her house is not likely to have said “Auction cancelled”. This change was not made until later in the evening.
This last fact (the change to “Auction cancelled”) which occurred late in the evening of 15 June 2024 does not assist Arthur and Tim on this point. It does not support their contention that the auction was still proceeding at the time that Tim arrived at Margaret’s house. The changes made to the listing at 2.33pm (which Arthur’s counsel sought to minimise) are consistent with the auction not proceeding at this time.
Next, there is a dispute as to whether Tim brought with him and showed Margaret two copies of the full contract. Tim says that he did. Margaret says that he did not.
His affidavit evidence in chief was to the following effect:
[16] I then took two copies of the full contract to Margaret’s home around 3:30 pm on 15 June 2024. We renegotiated some terms, reverting certain clauses to their original wording. By 4:47 pm the vendor’s conveyancer confirmed these updates via email to Margaret. She eventually agreed to a final price of $3,200,000 and updated the front page of the contract on her computer. She printed out two copies of the front page of the contract and attached those pages to the contracts I had brought with the signed s 66W Certificate she gave me on the 14th of June in it.
[17] Margaret then reviewed the whole contract reading it apparently very carefully. The contract had in it the s66W Certificate. She executed the purchaser’s copy of the contract. She did not remove the s66W Certificate but left it in the contract which she signed. When she finished reading and signed the contract I said to her, “I don’t think you need to sign a new s66W Certificate, do you?” She said, “No, what you have done is fine.”
[18] I told her in words to the effect that the contract would be exchanged unconditionally today if the vendor agreed to $3,200,000 and signed the contract today as I would have both executed contracts from the vendor and the purchase and the 5% deposit cheque from her. Margaret said, “That’s fine with me.”
[19] Margaret gave me the other front page of the contract and wrote out a cheque for $160,000 representing the 5% deposit on the purchase price.
[20] I had planned to meet the vendor to have him sign the contract straight after meeting with Margaret. I rang the vendor whilst still with Margaret and arranged a meeting with him at 195 Lanzhou Beef Noodles restaurant in Burwood.
[43] Tim then said, “Your house is very cold. Can I have a shot of your alcohol?**” He pointed to the liquors I had on top of my bar fridge. As it was June, and I do not like heaters, I usually wear thick and warm clothing. So, without thinking, I passed Tim the bottle of gin and a shot glass.
[44] Tim then showed me the printed documents titled Additional Conditions, which I recognised as the version I had emailed him in the morning as referred to above at paragraph 38, with the Defendant’s initials and signature inserted and the words “either delay the settlement’ in clause 48.c had been struck through. Tim did not show me or discuss any other pages of the contract or any other documents.
[45] I explained to Tim that as the Defendant crossed off the delayed settlement in the Additional Conditions, I need clauses 7.2.1 and 19.2.3 to revert to their original teams per the standard conditions in the contract.
[46] Tim then called the Defendant and explained to him why I needed to revert clauses 7.2.1 and 19.2.3.
[47] During the negotiation, Tim told me he would lose the listing if the Property did not sell, and the Defendant would give the listing to another agent; maybe this was another reason to cancel the auction. Tim also finished half a bottle of my gin and continued with a couple more shots of my whisky. Tim asked if I would have a shot with him. During the afternoon, I think I had two shots of gin and a shot of whisky with him.
[48] During Tim’s phone calls with the Defendant, he seemed very angry and shouted at Tim. Although Tim ‘s phone calls with him were without speaker, I still could hear the Defendant.
[49] At around 4.50 pm, Anne sent me an email stating that the Defendant would agree to revert clauses 7.2.1 and 19.2.3 to their original terms as I had requested. Exhibited on page 411 of Exhibit KHK-1 is a true copy of the email Anne sent to me.
[50] During the negotiation between Tim and I, while Tim sought instructions from the Defendant on the phone, I finally agreed to purchase the property for $3.2 million.
[51] I then went to my computer, amended the front page of the contract to change the settlement date to “10 Weeks” entered the price of the Property at $3,200,000.00 million, and printed two front pages.
[52] I also printed two copies of the execution page, and I signed one copy.
Two photographs taken by Tim at Margaret’s house on the afternoon of 15 June 2024 were admitted in evidence. One clearly depicts what appears to be a complete copy of the contract with a sale price of $3,208,888. At least this copy was therefore in Tim’s possession. In my view, there is no reason why Tim, if he had brought one or two complete copies of the contract, would have concealed them from Margaret and only shown her the Additional Conditions. Margaret also had access to a complete copy of the contract on her computer.
Margaret contended that Tim deliberately photographed the contract while she was away from the table and put it away before she returned, so that she would not know that he had brought the complete contract with him. I do not accept this contention. As set out above, there is no reason, in my view, for Tim to conceal complete copies from Margaret.
Tim attended Margaret’s house for the purpose of securing her agreement to purchase the Property. Whether or not the auction had been cancelled, there still appeared to be some urgency in seeking to conclude negotiations. Tim had gone to Margaret’s house on that Saturday afternoon for this purpose – to get her to purchase the Property. This would have obviously involved Margaret executing the contract. It would make no sense for Tim not to have complete copies with him for this purpose. Margaret is an experienced solicitor, including in relation to conveyancing. There is nothing in the subsequent correspondence from Margaret to the effect that there were no complete contracts before them on Saturday, 15 June 2024. To this point Margaret had been making offers by submitting signed complete contracts.
I am satisfied, having regard to the photograph and the context set out above, that Tim brought two complete copies of the contract with him and showed them to Margaret. I do not accept Margaret’s evidence to the contrary.
It does not appear to be in dispute that on 15 June 2024 there were further negotiations and terms were reached including a sale price of $3.2 million, and a completion date of 10 weeks on the basis of Arthur’s agreement to amend cl 33(c) by deleting the words “and 7.2.1” and deleting cl 33(l), which had the effect of reinstating cl 19.2.3. It is not in dispute that these amendments were not made to the clauses themselves although the email from Ms Gower to Margaret at 4.50pm on 15 June 2024 agreeing to the changes, was included in both counterparts as emailed on 17 June 2024.
There was a minor handwritten amendment to condition 48c, to omit the words “either delay the settlement”.
It is not in dispute that Margaret updated the front page of the contract to reflect the agreed purchase price of $3.2 million and the completion date of 10 weeks after the contract date. She printed two copies of the new front page.
What then occurred in relation to the contract is disputed. Margaret says that she printed two copies of the execution page of the contract and signed one copy of the execution page and the Additional Conditions 47 and 48.
Tim gives a different account. He contends that he had brought two copies of the contract with him on 15 June 2024. When Margaret printed out the two copies of the front page with the agreed price of $3.2 million and 10 week settlement period, one was attached to each of the complete copies of the contract. Tim says that each copy contained a s 66W certificate dated 13 June 2024 and signed by Margaret. According to Tim, Margaret carefully reviewed the contract, including the s 66W certificate, before signing the purchaser’s counterpart, and leaving the certificate with the bundle.
I resolve this significant factual issue below.
It is common ground that Margaret wrote a cheque for $160,000 representing 5% of $3.2 million. She photocopied the cheque, gave it to Tim and had him acknowledge receipt of it. So much appears common ground.
At 5.46pm on 15 June 2024, Tim texted Arthur “Where can I meet you for you to sign”. He also texted “I did on purpose otherwise she is not going to go anywhere close to 3.2 m”.
Tim explained in cross examination that his first text to Arthur “I did on purpose” was telling Arthur why he had rung him – so that Margaret would know that this was a price that Arthur was willing to sell at.
Tim then invited Margaret to dinner with Arthur at a restaurant in Burwood.
In her primary affidavit, Margaret gave the following evidence:
[58] After I gave Tim the documents referred to in paragraph 53 above, Tim said he was going to Eric’s restaurant in Burwood to meet the Defendant and asked me if I wanted to go. I thought it might be good to meet the Defendant to understand the Property, as he was the one who built it. Thus, I agreed to go with Tim to the restaurant “1915” at Burwood.
[59] In the restaurant, I met the Defendant with his daughter and son, both around 10 years old. The Defendant told me he built the house with his father twenty years ago and identified some of the neighbours.
[60] During the dinner, I told the Defendant I had paid the price he wanted, so asked him to please do a good rectification job for me. I was very concerned about the termites, and he said he would rib the plasterboards in the granny flat to check every corner and ensure all termite-damaged structures would be repaired. During the dinner, no-one mentioned the waiver of any cooling off period, or any inclusion of the s66W Certificate in the contract.
[61] During the dinner, I saw Tim give my cheque to the Defendant.
(Emphasis added.)
Margaret’s evidence in cross-examination departed somewhat from the impression a reader of her primary affidavit would have been left with – namely that an agreement had been reached prior to the dinner and would be given legal effect to thereafter. (I am conscious that in her second affidavit made 13 February 2025, Margaret denied that Arthur signed the contract in her presence or that she gave any instructions to Tim to finalise the exchange on 16 June 2024.)
In cross-examination, Margaret gave evidence to the following effect:
(a) the only reason she agreed to accompany Tim to the restaurant was so that she could learn more about the Property; (b) she had no knowledge that Tim was going to ask Arthur to execute the contract at that time; (c) she did not see Arthur sign the contract at the dinner; (d) when shown the photographs of Arthur at the dinner (Exhibit 5) with a pen in his hand, Margaret said that it looked like the cheque acknowledgment that she had printed, but said that she did not see Arthur sign anything; (e) when she was first shown the photo, her first reaction to her barrister and solicitor was that the photo was created by AI. She ultimately said that she was unsure, but that the photo did not accord with her recollection of what occurred that evening; (f) Margaret denied that she might have seen Arthur at the restaurant with a bundle of papers in front of him; (g) Margaret recalled Tim giving Arthur the deposit cheque at the restaurant. She did not recall anything being said when it was handed over; (h) there was no discussion at the restaurant about the contract. She said “we were just talking with casual; just talking about neighbours, and kids, you know, all this”; (i) Margaret did not know whether Arthur had accepted her offer or not; and (j) Margaret did not instruct Tim to exchange contracts the next day. She said “No, I never give instruction for exchange because I, I will assume the other side’s solicitor or conveyancer will do the exchange, not the agent.”
Tim and Arthur gave a different account. They said that the purpose of Tim’s meeting with Arthur was to obtain Arthur’s signature on the contract, the parties having already agreed on terms of the sale, including the price. Margaret was invited to attend the dinner. According to Tim and Arthur, two copies of the contract were produced at the dinner and Arthur signed one of them.
A photograph was taken by Tim showing Arthur sitting at the table at the restaurant, in the presence of his two children and Margaret, appearing to sign a document. It is difficult to make out what document is being signed, although it appears to be an acknowledgment of the cheque deposit. Tim originally gave evidence that the photo showed Arthur signing the contract. He readily accepted in cross-examination that this was not the case when shown a clearer copy.
Tim and Arthur both gave evidence that Margaret asked that exchange occur on 16 June 2024, as 16 was a lucky number, to which Arthur apparently agreed.
Arthur’s evidence in chief was to the following effect:
[19] I went to 1915 Lanzhou Beef Noodles restaurant with my two children. Tim came with Margaret. It was the first time that I met Margaret.
[20] Tim announced. “Congratulations to both of you. Margaret has agreed to buy your home for $3.2M. Here is her signed contract and the deposit cheque. Arthur. I now need you to sign the vendor’s contract.” I signed the vendor’s counterpart while Margaret watched. Tim took a photo of the moment. A copy of the photograph is at page 1 of Exhibit BCC-1.
[21] Tim gave me the deposit cheque in front of Margaret and I signed a receipt.
[22] Margaret then said to Tim in words to the effect, “You can exchange the contracts would like you to do it tomorrow if you don’t mind. Is it ok if the date of exchange is tomorrow?” Tim said, “Why is that? We are all here.” Margaret said words to the effect, “16 is a lucky number for me”. The date of the following day was 16 June.
[23] I just smiled and gave a little nod to Tim.
Tim then said that at around midnight on 15 June 2024, he changed the online listing in relation to the Property to read “SOLD Prior to Auction, Auction Cancelled”.
Tim said that, after the dinner, he took both counterparts home with him. Tim subsequently dated both counterparts 16 June 2024. He then scanned the front two pages of each counterpart to Eric for distribution, as Eric was the listing agent. Tim maintained in cross-examination that he was authorised by both parties at the restaurant to effect an exchange of contracts on 16 June 2024, which he did.
I prefer the accounts given by Tim and Arthur (which are broadly consistent) to that given by Margaret as to what occurred after Tim arrived at Margaret’s house on 15 June 2024 and thereafter at the restaurant.
I am satisfied on the evidence that Tim took two copies of the contract to Margaret’s on the afternoon of 15 June 2024. The copies included a price of $3,208,888. One was executed by Margaret the evening before. The other had been executed by Arthur earlier in the day. Both copies contained a s 66W certificate signed by Margaret.
There were further negotiations at Margaret’s house and a price of $3.2 million was ultimately agreed. Margaret printed two copies of the front page and execution page of the contract containing the new price and a 10 week settlement period. She signed one copy. She wrote out a cheque for $160,000 (being the 5% deposit) and handed it to Tim. He executed a cheque acknowledgment which had been prepared by Margaret. The pages printed by Margaret were inserted into the counterpart contracts that Tim had brought with him.
Tim said to Margaret that he was meeting Arthur at the restaurant to have him sign the contract. He invited Margaret to join him for dinner with Arthur, and she accepted.
At the restaurant, Arthur signed the contract (vendor’s counterpart) and the cheque acknowledgment. Both Margaret and Arthur authorised Tim to exchange contracts the next day, 16 June 2024, which Tim did including by dating the two counterpart contracts.
Margaret’s evidence of those events is affected by several difficulties.
Margaret’s emails on 17 June 2024 (which I set out below) sent immediately after she received the complete counterpart contracts, did not question that exchange had taken place on 16 June 2024 via the Agents, only whether the exchange was on the basis of a s 66W certificate being included or not. This contemporaneous material supports the versions given by Tim and Arthur, and is contrary to Margaret’s version (principally given in cross-examination) which included both that she did not know whether Arthur had accepted her offer or that exchange was not to take place via the Agent but would be carried out by Arthur’s solicitor or conveyancer. It is also inconsistent with her evidence that there were no complete counterpart contracts with Tim when he attended her house on the Saturday afternoon.
Margaret’s whole account of what occurred or did not occur at the dinner is also inherently improbable. I ignore for present purposes Margaret’s evidence about the photograph and focus on her evidence that there was no discussion about the contract, let alone Arthur executing the contract at the restaurant, and an agreement for the Agents to exchange.
Margaret admitted that prior to being invited to and going to the restaurant she had agreed to purchase the Property for $3.2 million, signed a contract for this amount and written out a deposit cheque for $160,000. She gave the cheque to Tim who acknowledged receipt. Her own account also includes Tim speaking to Arthur to obtain instructions leading to the agreement at $3.2 million. Thus, even on her account, there was nothing more for Arthur to do.
The obvious next steps were for Arthur to execute the vendor’s counterpart and for exchange to occur.
The messages exchanged between Tim and Arthur on the afternoon of Saturday, 15 June 2024, make it clear that Tim wanted to meet Arthur for him to sign the contract, Margaret having already signed.
On Margaret’s account, notwithstanding the parties having agreed on all terms, her having signed her counterpart contract and handed over the deposit cheque – which was to be released to Arthur on exchange – she did not see Arthur sign the vendor’s counterpart. Nor was there any discussion about when he would sign it, or how and when exchange would occur. There was also no discussion about whether a s 66W certificate would be provided. All of this is inherently improbable and all the more so where Margaret is herself an experienced solicitor.
Margaret’s evidence to the effect that the photograph depicting Arthur signing something may have been generated by AI is also very troubling. At the very least it demonstrates that she has a propensity to give unreliable evidence. It reinforces my rejection of her evidence for the reasons set out above.
I acknowledge that there is one aspect of Tim’s evidence that is unreliable – whether or not the auction was cancelled before he went to Margaret’s house. I have found above that it was. This does not cause me to reject Tim’s evidence and accept Margaret’s account. The other evidence and inherent probabilities strongly favour Tim and Arthur’s version.
I am also conscious that the agreement between the Agents and Arthur did not authorise the Agents to exchange contracts on Arthur’s behalf. This does not prevent Arthur, and for that matter, Margaret subsequently authorising the Agents to effect exchange on their behalf. This is what occurred at dinner on 15 June 2024.
As set out above, it is of some significance in my view that even on Margaret’s account there was no discussion at all about whether a s 66W certificate was to be given. This is notwithstanding the evidence she gave in cross-examination (extracted above) about the discussion that she had with Eric and Tim the night before.
Whilst Margaret placed great reliance in her evidence on the fact that she understood that the auction had been cancelled and the significance of this for her in terms of whether a s 66W certificate was necessary, there is no suggestion that she discussed any of this with Tim or Arthur. This evidence troubles me. Had it been such a significant issue for Margaret, I cannot accept that she would have let it go unstated. As a solicitor, she knew the significance of a s 66W certificate. The more likely account is that given by Tim – namely that Margaret was content to waive her cooling off rights. I have not lost sight – as set out below – of Margaret’s email at 3.50pm on 17 June 2024 – contending that the s 66W certificate had only been provided in the context of her offer made on 14 June 2024. I have placed greater reliance on the events up to 16 June 2024 as set out above, and the inherent probabilities.
In any event, I do not accept Margaret’s evidence about the significance of the auction being cancelled – that if it had not been cancelled, she would not have negotiated with Tim on the afternoon of 15 June 2024 but would instead have gone to the auction the next day. It is clear that after sending her email at 10.15am on 15 June 2024 (and prior to being made aware the auction had been cancelled), Margaret continued to negotiate to buy the Property – she made a revised offer of $3.15 million by text at 12.39pm, repeated at 12.45pm. On Margaret’s own account, extracted above, Tim said to her in a telephone call before he arrived at her house that if she turned up at the auction, it would only be her, and they would have the same negotiation that they had the night before. There was thus no reason not to negotiate on the Saturday.
When Tim arrived at her house unannounced with flowers, she permitted him to enter and continued negotiating with him.
I do not regard the fact that the contract submitted by Margaret with her email on the morning of 15 June 2024 did not contain a s 66W certificate as overly significant. The email and the revised terms were not making an offer for Arthur to accept or reject. They were putting slightly modified terms to those discussed and agreed the previous evening for consideration by Arthur in the context that Margaret would likely turn up at the auction the next day. No s 66W certificate was required for an auction purchase.
Tim gave evidence that on Sunday, 16 June 2024, he exchanged contracts and dated both accordingly. Although he apparently had complete copies of the purchaser and vendor counterparts, he scanned, using his mobile phone, only the signed contract front and execution pages and emailed them to Eric for distribution. I accept Tim’s evidence in this regard. I do not regard it as inherently improbable, including in circumstances where it was a Sunday, he was not in the office, and he used his mobile phone to scan the documents he scanned as opposed to the complete counterparts, which would have taken a considerable period of time.
On 16 June 2024, Eric emailed Margaret and Arthur as follows:
We are pleased to confirm 10 River Ave CHATSWOOD NSW exchanged unconditional today, 16th June 2024, for $3,200,000 with a proposed settlement date on 26/08/2024.
Enclosed are copies of the contract signed pages by both the purchaser and the vendor.
Vendor has received the 5% deposit cheque from the purchaser and have enclosed a scanned copy.
Full contract will be send to you by Mondy. [sic]
Should you have any questions, please feel free to contact our office.
Attached to the email were a copy of the cheque and acknowledgement of receipt, the front page of the contract and a signed page by the vendor, together with another copy of the front page and signed page by the purchaser.
No other documents were included. Eric was not called to give evidence.
I also do not regard Eric’s failure to give evidence as overly significant on this point. The evidence is that Tim only scanned the cover pages of the two counterparts and sent them to Eric, which he then sent to the parties. There is no suggestion that Eric was ever potentially in possession of complete counterparts on 15, 16 or 17 June 2024. Any evidence from Eric on these topics would have been second hand. The fact that Ms Coletta was not called to give evidence also does not tell against Arthur. Ms Coletta was not in Arthur’s camp.
Ms Gower also gave evidence that she had a series of conversations on 16 June 2024 in which she was informed that contracts had been exchanged unconditionally on 16 June 2024. Margaret challenged this evidence, relying on the fact that Ms Gower’s invoice did not record her as carrying out any work on 16 June 2024, as opposed to 17 June 2024 where her invoice recorded half an hour of work receiving instructions. I accept Ms Gower’s evidence which she repeatedly adhered to in cross-examination. It is not inherently improbable that Ms Gower did not charge for the phone calls on 16 June 2024.
Tim says that he took both of the counterparts to the office on Monday 17 June 2024 and handed them to Ms Coletta instructing her to send the signed contracts to the parties. Tim did not supervise Ms Coletta in scanning the documents.
At around 1.42pm, Ms Coletta emailed both Margaret and Arthur confirming that exchange had occurred on 16 June 2024 and attaching “full copy contracts signed by both the purchaser and the vendor”.
Both counterparts as emailed included the signed s 66W certificate.
Both counterparts omitted the amendments of terms recorded in email correspondence between Margaret and Ms Gower on 9 and 11 June 2024. The vendor’s counterpart omitted page 3 of the contract, whilst the purchaser’s counterpart omitted special condition 46. That clause was in the same form as Margaret had emailed to the Agents on the morning of 15 June 2024.
As set out earlier in these reasons, the fact that Ms Coletta was not called as a witness does not cause me to conclude that there were no executed counterparts in existence prior to 17 June 2024. Ms Coletta was not in Arthur’s camp. The metadata in relation to the scanned copies does not cast any significant doubt on signed counterparts being in existence before Monday, 17 June 2024.
At 3.50pm on 17 June 2024, Margaret replied to the 1.42pm email as follows:
Dear All,
Please note that the s66w was signed on 13 June 2024 for $3,133,000.00.
The contract exchanged was on 16 June 2024 for $3,200,000.00.
Accordingly, the contract exchanged on 16 June 2024, attached with a 5-day cooling-off period, expired on 24 June 2024.
Dear Margaret
Thank you for your email.
Both parties have confirmed there is no cooling off period with agreed price at $3,200,000 when contract exchanged as well as contract signed with 66w provided in the signed contract.
Please feel free to reach out if you have any questions.
Dear Tim,
I explain clearly in my email below, and you notice that the s66w was signed on 13 June 2024, not 16 June 2024.
On 16 June 2024, both parties agreed to the price and the additional conditions, but there is no mention of a cooling-off period. Thus, I did not sign s66w on 16 June 2024.
I am very firm on this. You should ask the Vendor not to use the 5% deposit until the cooling-off period has expired.
Dear Margaret,
We acknowledge receipt of exchanged contract on 21 June 2024.
We check through the contract and find amended terms and the SC 46 are missing.
We attach those missing papers in this email.
Can you please authorise us to insert them to the purchaser’s counterpart.
We authorise you to do the same to the vendor’s counterpart.
At 1.30pm on 24 June 2024, Margaret texted Tim stating that she was yet to receive “preapproval” from her bank. She asked Tim to ask Arthur “to extend the cooling off until Friday”. Tim did not respond. He regarded his role as at an end.
At 2.22pm on 24 June 2024, Margaret emailed Ms Gower seeking an extension of the cooling off period until Friday, 28 June 2024. Ms Gower responded to the effect that there was no cooling off period since contracts were exchanged on 16 June 2024 with the s 66W certificate.
Margaret immediately responded disputing that exchange occurred with a s 66W certificate. She indicated that if there was no extension of the cooling off period, she would “terminate” the contract and seek a refund of $152,000 (being the part deposit of $160,000 less 0.25% of the purchase price - $8,000).
At around 4.38pm on 24 June 2024, Margaret sent an email to Ms Gower purporting to “terminate” the contract “under the cooling-off period” and demanded a refund of $152,000.
At around 5.17pm, Margaret sent an email to Ms Gower which stated that, if the contract did not have a cooling-off period, then Arthur had breached condition 47(a) by failing to pay the pest control company (AusPro) $3,300 to commence step one of the termite elimination program at the Property. Margaret demanded the return of the entire $160,000 deposit.
Ms Gower responded shortly after to the effect that Arthur had not received an invoice from AusPro for $3,300. Margaret then sent an email previously sent to Tim and Ms Gower dated 12 June 2024 which she said had attached AusPro’s invoice.
On 25 June 2024, Arthur obtained a tax invoice addressed to him from AusPro for $3,300 which was immediately paid.
On 26 June 2024, Margaret sent a lengthy email to Ms Gower, setting out the chronology of events according to her. The email ended by stating Margaret’s position that “the Purchaser has validly terminated the contract on 24 June 2024” and noted that the total funds to be refunded were $160,000 plus $3,592.60 (expenses), with daily interest of $37.42 accruing.
On 27 August 2024, Ms Gower sent a Notice to Complete to Margaret on behalf of Arthur, making time of the essence and requiring Margaret to complete the contract by 11 September 2024.
Completion did not occur on 11 September 2024. It is not in dispute that in preparation for settlement the following occurred:
(a) on 2 July 2024, Ms Gower created a PEXA property settlement workspace and sent an invitation to Margaret via the PEXA system; (b) on 9 July 2024, Ms Gower sent Margaret an email confirming that Arthur had completed the payment required by cl 47(a) and the remedial works pursuant to cl 48(a) of the contract; (c) on 23 August 2024, Ms Gower sent Margaret an email advising that settlement was to occur via PEXA on 26 August 2024, attaching settlement figures, cheque directions, a section 47 land tax clearance certificate and a foreign resident capital gains tax withholding clearance certificate; (d) on 26 August 2024, the mortgagee on title (St George Bank) confirmed its readiness to settle; (e) on 27 August 2024, the PEXA workspace financial settlement date and time were updated to 11 September 2024; and (f) on 11 September 2024, final settlement figures were uploaded to the PEXA workspace and both Arthur and St George Bank were ready for settlement.
- By contract for the sale of land dated 16 June 2024 (contract) Bun Choeng Chhoeu of 10 River Avenue, Chatwood West, NSW 2067 (vendor) agreed to sell and Kang Hong Koh of 163 Regent Street, Redfern, NSW 2016 (purchaser) agreed to purchase the property being the whole of the land in title reference 53/16042 known as 10 River Avenue, Chatswood West (property) for $3,200,000.00.
- As a result of your default under the contract and the notice to complete dated 27 August 2024 making time of the essence for completion of the contract, we give you notice that the contract is terminated and is entirely at an end. The vendor will retain the deposit and take action for recovery of damages resulting from your default.
- Further, by the purchaser’s email of 24 June 2024 at 4.38pm and email of 26 June 2024 at 3.43pm the purchaser has purported to rescind or terminate the contract when she had no entitlement to do so and has thereby evinced an intention no longer to be bound by the contract. By this conduct the purchase has repudiated the contract and the vendor relies upon this as a further ground of termination of the contract.
On 16 November 2024, the Property sold at auction for $2,620,000 being $580,000 less than the sale price agreed with Margaret.
Prior to the sale occurring there were a number of events which Margaret relied on as amounting to a failure to mitigate. The relevant events, taken from the summary in Arthur’s closing submissions, may be summarised as follows:
(a) on 9 September 2024, Arthur received a sales proposal from Jessica Cao (Ms Cao) of Ray White, which identified an estimated selling price of $3m to $3.3m; (b) on 16 September 2024, Arthur signed an exclusive auction agency agreement with Ray White in relation to the Property, which identified a price range of $2.9m to $3.19m; (c) Arthur was informed of offers of $3,000,000 (on 11 October 2024) and $3,050,000 (on 16 October 2024) from Kenny Lo (Mr Lo); (d) in respect of the first Lo offer, Arthur instructed Ms Cao to obtain a formal offer for the highest possible price as well as a shorter settlement period and better deposit terms; (e) Arthur rejected the second Lo offer because he considered the settlement period (of approximately 4 months) too long; (f) in any case, Mr Lo would not have been able to proceed with the purchase of the Property because the sale for Mr Lo’s own property fell through; (g) on 18 October 2024, Arthur instructed Ms Cao to postpone the auction planned for 19 October 2024 until 2 November 2024 and to ‘boost’ (for a fee) the Domain listing to reach more potential buyers; (h) as at 1 November 2024, after the earlier withdrawal of the Lo offer, Ray White recorded no interest whatsoever in the Property; (i) there was a significant downward revision in the estimated sale price of the Property from a range of $2.8m to $3.08m on 1 October 2024 to a range of $2.5m to $2.75m on 1 November 2024; (j) there was a further postponement of the auction from 2 November 2024 until 16 November 2024, coupled with an adjustment of the price guide to $2.5m to $2.85m; and (k) in respect of the auction scheduled for 16 November 2024 (at which Ms Cully-Hugill ultimately secured the Property), Ms Cao observed that buyers’ feedback was ‘around $2,300,000 level’ and suggested a reserve price of $2.5m.
The usual practice in New South Wales is for parties intending to enter into a contract for the sale of land to exchange counterparts: see Brien v Dwyer (1978) 141 CLR 378 at 391; [1978] HCA 50 per Gibbs J.
In Eccles v Bryant [1948] Ch 93; [1947] 2 All ER 865, Lord Greene MR, at 99-100, wrote:
When parties are proposing to enter into a contract, the manner in which the contract is to be created so as to bind them must be gathered from the intentions of the parties, express or implied. In such a contract as this, there is a well-known, common and customary method of dealing; namely, by exchange, and anyone who contemplates that method of dealing cannot contemplate the coming into existence of a binding contract before the exchange takes place.
It was argued that exchange is a mere matter of machinery, having in itself no particular importance and no particular significance. So far as significance is concerned, it appears to me that not only is it not right to say that the exchange has no significance, but it is the crucial and vital fact which brings the contract into existence. As for importance, it is of the greatest importance, and that is why in past ages this procedure came to be recognised by everybody to be the proper procedure and was adopted. When you are dealing with contracts for the sale of land, it is of the greatest importance to the vendor that he should have a document signed by the purchaser, and to the purchaser that he should have a document signed by the vendor. It is of the greatest importance that there should be no dispute whether the contract had or had not been made and that there should be no dispute as to the terms of it. This particular procedure of exchange ensures that none of those difficulties will arise.
... the essential characteristic of exchange of contracts is that each party shall have such a document signed by the other party in his possession or control so that, at his own need, he can have the document available for his own use. Exchange of a written contract for sale is in my judgment effected so soon as each part of the contract, signed by the vendor or the purchaser as the case may be, is in the actual or constructive possession of the other party or of his solicitor. Such possession need not be actual or physical possession; possession by an agent of the party or of his solicitor, in such circumstances that the party or solicitor in question has control over the document and can at any time procure its actual physical possession will, in my opinion, suffice. In such a case the possession of the agent is the possession of the principal.
(Emphasis added.)
…In such a case the importance of exchange lies not so much in the circumstance that it fixes the terms of the contract as in its function in fixing the existence of a binding contract, thereby terminating the period in which each party is free to withdraw from the negotiations. This concept of exchange enables the courts to do greater justice between the parties by precluding one party from acting on the footing that there is no binding contract when, as a result of an undetected error one part of the contract does not correspond with the other. On this view of exchange the availability of rectification is not a problem.
(Emphasis added.)
The circumstance in which lack of correspondence between the counterparts making up a contract was capable of being remedied by rectification is when there is a common intention as to what the contract shall be, of sufficient specificity to be formulated in the words of an order that identifies with precision what the counterparts should say to give effect to that common intention. As I read their Honours, what they are saying is that, in that circumstance, if the parties have agreed on the terms of their bargain, and that they will exchange counterparts to mark the entering of the contract, the exchange of counterparts would usually show that they intended thereby to enter a contract. In that situation, the law should treat the exchange as giving rise to a contract, even if the counterparts were not identical. That is not saying that any document must be rectified before the contract can be proved.
(Emphasis added.)
The effect of the decision in Zaccardi is that the paramount principle is that the evidence must establish that the parties had reached agreement on the terms of their bargain by which they intended to be bound. In a particular case the evidence may establish that the parties agreed in fact to be bound by the terms of one counterpart of a contract of sale, even though that counterpart differed in a material way from the other. It may be the general practice as between solicitors that it is the act of exchanging contracts which is mutually intended to signify that an effective and binding agreement has been achieved on the terms of identical exchanged counterpart contracts, but at most that is only a general rule. In a particular case the evidence may show that the parties have intended to be bound by the terms of one document, and that the act of exchange is only intended to signify the agreement of the parties to be bound by the terms in that document.
As I understand the competing positions, Margaret’s primary case is that no binding agreement was ever entered into because the parties were not ad idem as to the terms. This is in two respects. First and foremost, there was no agreement that a s 66W certificate was to be included. Second, it has not been demonstrated that special condition 46, in the form that it appeared in the one counterpart that contained it, was agreed.
Alternatively, Margaret submits that, even if the parties were ad idem as to the terms, they only intended to be bound on the exchange of contracts and that this did not occur at any point in time prior to at least 1.42pm on Monday, 17 June 2024, and arguably not even then. On this basis and assuming the contract was subject to Margaret’s cooling off rights, Margaret submits she validly terminated the contract on 24 June 2024. Margaret further contends that the evidence is clear that she did not intend, to the knowledge of Tim on behalf of Arthur, to include a s 66W certificate in the contract, and the contract should be rectified to remove the s 66W certificate from the contract.
Arthur, on the other hand, contends that the parties were ad idem as to the terms, including that a s 66W certificate would be included, and intended to be bound on exchange of contracts which occurred on the morning of 16 June 2024. Alternatively, if the agreement was that Margaret did not waive her cooling off rights, exchange was effected on 16 June 2024 and Margaret did not terminate the contract within the required five day period.
The starting point is to recall the facts that I have found above. First, I think it is tolerably clear, to the extent that this point is still raised, that special condition 46 in the form in which it was included in one of the counterparts (but absent from the other) was agreed. It was included in the draft contract emailed by Margaret to Tim on the morning of 15 June 2024, being first provided by Ms Gower the day before. No disagreement was ever expressed by or on behalf of Arthur to that term.
Second, I am satisfied that the parties did agree to include a s 66W certificate in the final contract. I am satisfied that Margaret deliberately left the s 66W certificate dated 13 June 2024 with Eric on the Friday evening to be used in the event, as happened, that terms could be agreed. I am also satisfied that the s 66W certificate was included in the counterparts that were before Margaret and Tim at Margaret’s house on the afternoon of Saturday 15 June 2024.
Margaret’s contention that she did not intend, to the knowledge of Tim on behalf of Arthur, to include a s 66W certificate in the contract, fails on the evidence. Even if, contrary to what I have found above, I accept that Margaret did not intend to include a s 66W certificate in the contract, there is no evidence that Tim was aware of this, let alone agreed with that position on behalf of Arthur.
If that was Margaret’s intention, there was no outward manifestation of it: Cirrus Real Time Processing Systems Pty Ltd v Jet Aviation Australia Pty Ltd (2025) 311 FCR 408; [2025] FCAFC 85 at [264] per Jackman J. I do not accept Margaret’s contention that her “desire to confirm the auction had been cancelled and subsequent negotiations was objectively clear to a person in the position of [Tim] as something distinct from her earlier negotiations for a pre-auction offer, in circumstances where both [Margaret] and [Tim] knew the significance of the need for a s 66W certificate prior to auction, but that such requirement did not translate over in respect of offers for purchase in a sale by private treaty.” A reasonable person in the position of the parties would be aware that a s 66W certificate was provided to the Agents, left with the Agents and then subsequently included in the counterpart contracts. Nothing was said by Margaret to the effect that she was not waiving her cooling off rights. The objectively ascertained common intention of the parties was for a s 66W certificate to be included in the contract.
I did not understand there to be any issue with the other differences in the counterparts in the sense that it was not suggested that the differences reflected a lack of agreement.
I am thus satisfied that the parties had reached agreement as to the terms.
It is also clear that, consistent with the usual course of conveyancing transactions, the parties intended to be bound on exchange of contracts.
I am comfortably satisfied that at dinner on 15 August 2024, both Arthur and Margaret authorised Tim to effect an exchange of contracts on Sunday 16 June 2024. I am also comfortably satisfied that Tim effected an exchange of contracts on Sunday morning. He had with him at the time complete counterparts – one executed by Margaret and the other executed by Arthur, not merely the first two pages of each counterpart and the additional special conditions. He dated the respective counterparts 16 June 2024, and scanned the first two pages of each counterpart and sent them to Eric who then emailed them to the parties. As set out above, Margaret’s subsequent correspondence did not dispute that exchange had been effected on the Sunday morning, only whether it was on the basis that Margaret had waived her cooling off rights.
The fact that the Agency Agreement did not authorise the Agents to effect exchange is no bar to the parties subsequently authorising the Agents to effect exchange. They did this on the Saturday evening. Tim was effecting an exchange of contracts as agent for each of Margaret and Arthur. After he had exchanged contracts he held each counterpart for the other.
I reject Margaret’s contention that exchange was not effected, at the earliest, until the afternoon of Monday 17 June 2024 on receipt of the Romina Coletta email, or even later on receipt of hard copy documents. Possession of an exchanged contract by the agent of a party is sufficient: Domb v Isoz at 557 (extract set out above). Tim was Margaret’s agent for this purpose.
It was not necessary for the vendor’s counterpart to be provided to Margaret, and the purchaser’s counterpart to be provided to Ms Gower, for exchange to be effected. The parties had authorised Tim to effect that exchange. This he did.
I reject the contention advanced by Margaret that concluding that exchange had been effected by Tim on 16 June 2024 would flout the policy of the five day cooling off period provided by s 66S of the CA, namely:
The purchaser can take comfort in the knowledge that five business days are available to seek advice on the contract and to attend to such matters as finalizing finance and obtaining pest and building reports, without fear of the vendor accepting a higher offer. Should the purchaser decide for any reason not to exchange contracts, for example, because of an inability to raise finance or an unsatisfactory pest inspection report, the purchaser forfeits the deposit paid on the preliminary agreement.
On the facts as I have found them Margaret, a solicitor well aware of her rights in relation to cooling off, agreed to waive those rights and then authorise the Agents (Tim) to effect exchange.
Margaret had no difficulty in authorising Tim to effect an exchange of contracts on her behalf – her only subsequent complaint was whether she had waived her cooling off rights.
In my view there is nothing in the policy underlying a purchaser having cooling off rights which is inconsistent with a purchaser, along with a vendor, authorising an agent to effect an exchange of contracts on each of their behalves. If such authority is given by a purchaser in circumstances where there has been no waiver of cooling off rights, any purchaser obviously concerned to understand the terms of the exchanged contract and whether or not to exercise their cooling off rights, needs to promptly obtain a copy of the vendor’s counterpart from their agent who effected the exchange.
If, as I have found, contracts were exchanged on Sunday 16 June 2024, the issue of whether there was a common intention to include a s 66W certificate is relevant only to whether the parties were ad idem. If the parties were ad idem that a certificate was to be included, Margaret had waived her cooling off rights. Conversely, if the parties were ad idem that a certificate was not to be included, it is clear that Margaret did not purport to terminate within the required five day cooling off period: see s 66S(3)(b) and s 66U of the CA. Notice of rescission was not given until 24 June 2024. The cooling off period expired on 21 June 2024.
As set out above, Arthur issued a notice to complete on 27 August 2024 requiring completion by 11 September 2024. The notice stated that time was of the essence.
Completion did not occur on 11 September 2024 and on 12 September 2024 the Notice of Termination was issued.
In Sandpiper Kooragang Pty Ltd (atf Sandpiper Property Trust) v Fortis Products Pty Ltd (2020) 19 BPR 40,689; [2020] NSWSC 1256 (Sandpiper v Fortis), Darke J stated at [61]:
[61] A party to a contract for sale is generally entitled to serve a Notice to Complete after the contractual date for completion has passed provided the party is an innocent party not relevantly in default, and ready, willing and able to perform its obligations as and when they are required to be performed up to and including completion (see McNally v Waitzer [1981] 1 NSWLR 294 at 296-7 and 303-304; Carrapetta v Rado (2012) 16 BPR 30,997; [2012] NSWCA 202 at [20]-[27]; Barrak Corporation Pty Ltd v Jaswil Properties Pty Ltd (2016) 18 BPR 35,759; [2016] NSWCA 32 at [33]-[35]). In Carrapetta v Rado (supra) Barrett JA (with whom Beazley P and Hoeben JA agreed) stated at [27]:
Case law thus makes it plain that the party seeking to make time of the essence must be an “innocent” party who is not “in default” or “in breach” and is “ready, willing and able” to proceed to completion in accordance with the contract. The underlying concept is that a party who gives a notice to complete and thereby calls on the other party to adhere to the contract must be in a state of both present and prospective adherence to the contract. When it is the vendor who serves the notice, he or she must be seen to be willing and able to perform, on the day the notice fixes for completion, the obligations that the vendor is required to perform on completion - predominantly, in a “cash on completion” case such as the present, the obligation of delivering a clear title in return for the money that the contract requires the purchaser to pay in cash on completion - and to have adopted up to the time of service of the notice a stance consistent with that future performance. If the vendor is in breach of contract when the notice is given, he or she is not in such a state of willingness and ability. Likewise, if the vendor has taken and made known an uncompromising stance that he or she will not deliver title on completion except in return for payment of a sum greater than that required by the contract, that vendor will be “in default” (or “in breach”) and not be “innocent” or relevantly “ready, willing and able” because the unequivocal stance inconsistent with the contract bespeaks lack of adherence in the nature of anticipatory breach.
A party seeking to rely upon the validity of a notice to complete bears the onus of establishing that fact: Sandpiper v Fortis at [64].
It is well established that not every breach of contract by a party will preclude the party from issuing a valid notice to complete. Breaches that are minor or trivial, or are not connected with the securing of completion of the contract will not so preclude the party in breach: Sandpiper v Fortis at [70].
Accepting that Arthur bears the ultimate onus, two matters were raised by Margaret to contend that Arthur was not ready, willing and able to complete at the time identified in the notice:
(a) no evidence has been led to establish that Arthur had completed his requirements under cl 48 of the contract – Ms Gower’s confirmation of her instructions by email is no proof of the actual works being conducted especially given that Margaret sought, but was not provided with, proof of those works having occurred at the time; (b) the provision by Ms Gower on 23 August 2024 to Margaret of a bundle of documents prior to settlement on 26 August 2024 including a Foreign Resident Capital Gains Withholding Clearance Certificate (FRCGTWCC). The FRCGTWCC was required to be served at least five days before the date for completion and cl 31.2 of the contract had the effect that the time for completion was extended.
Arthur disputed each of these points, contending that he was ready, willing and able to complete at the stipulated time. Alternatively, Arthur contended that he was entitled to terminate the contract for Margaret’s wrongful repudiation.
I consider each of the points in turn.
First, special condition 48.
Clause 48a required Arthur, before settlement, to carry out certain works in the “granny flat” and in the main house.
More importantly, cl 48c provided that if Arthur failed to fulfil his contractual obligation in cl 48a prior to completion, Margaret could complete the contract and claim damages for the cost of rectification. The clause did not permit Margaret to delay settlement – that option was deleted by the parties.
As such, any breach of cl 48a was not connected with the securing of completion of the contract. There is thus no need to consider the factual question of breach.
The second contention – concerning the FRCGTWCC – was only briefly addressed by the parties in submissions.
The point can, in my view, be dealt with quite shortly. It does not call into question whether, at the time nominated for completion, Arthur was ready, willing and able to complete.
Moreover, the purported termination was also justified on the basis of Margaret’s repudiation. Two emails were referred to in the Notice of Termination – 24 June 2024 and 26 June 2024. I have referred to each of them in the chronology above. In each, Margaret contended that she had validly terminated the contract.
I have found this purported termination to be wrongful.
No submission was advanced on behalf of Margaret that if I found her purported termination to be wrongful, this was not repudiatory.
(a) the unpaid balance of the deposit of $160,000 (cll 9.1 and 46.5 of the contract); (b) the deficiency on resale: $580,000 less $320,000 as credit for the deposit kept and recovered (cl 9.3.1), ie $260,000; and (c) the reasonable costs and expenses arising out of Margaret’s non-compliance with the contract and of resale, made up of the following:
(i) $62,186 in real estate agent fees associated with the eventual sale of the Property; (ii) $4,950 in styling services associated with marketing the Property to further potential buyers; (iii) $33,250.24 in interest under an order of the Federal Circuit and Family Court of Australia concerning the amount Arthur was required to pay his ex-wife; (iv) $7,700 in legal fees associated with enforcement proceedings commenced by Arthur’s ex-wife; (v) $4,008 in fees for the conveyance of the Property to another purchaser; (vi) $2,305 for cleaning the Property associated with marketing the Property to further potential buyers; (vii) $1,787 for garden work and property clean up services associated with marketing the Property to further potential buyers; (viii) $450 for issuing the notice to complete; and (ix) $195 to rectify a loss of power at the Property on 20 September 2024.
A number of issues were raised by Margaret. I consider each in turn.
First, in relation to the balance of the deposit payable under cl 46, it was contended that the terms of cl 46 are penal in nature and as such void, as the obligation to make payment of the remaining 5% is not truly in earnest of performance of the contract, and as such not a true deposit. Reference in this regard was made to Luu v Sovereign Developments Pty Ltd (2006) 12 BPR 23,629; [2006] NSWCA 40 (Luu) at [34]; Kazacos v Shuangling International Development Pty Ltd (2016) 18 BPR 36,353; [2016] NSWSC 1504 (Kazacos) at [50]-[53] and Cole v Raykir Holdings Pty Ltd (2019) 19 BPR 39,659; [2019] NSWSC 1011 (Cole) at [83].
It is not necessary for me to express a concluded view on this argument in circumstances where Arthur is entitled to recover the deficiency on resale and it is accepted that credit must be given by Arthur for any deposit received or to be received. I make the following observations on this point.
Clause 46 provides as follows:
46. DEPOSIT
46.1 The purchaser acknowledges that the deposit payable under this contract is 10% of the price.
46.2 In the event that the vendor has accepted on the making of this contract payment of an amount which is less than 10% of the price, the purchaser acknowledges that the vendor is entitled to receive and recover the balance of the deposit.
46.3 The purchaser must pay the balance of the deposit on the earlier of:-
(a) when the purchaser defaults in the observance of any obligations under this contract; or
(b) the date of completion of this contract; or
(c) when the vendor makes demand for payment of same;
and this time is essential.
46.4 The vendor agrees not to make demand for payment of the balance of the deposit before the date for completion unless the purchaser defaults in the observance of any obligations under this contract.
46.5 In the event that
(a) the purchaser defaults in the observance of any obligations hereunder:
(b) the purchaser has not paid the full deposit of 10% of the price; and
(c) the vendor terminates this contract;
the vendor shall be entitled to recover from the purchaser as liquidated damages an amount equal to the unpaid balance of the deposit and it is agreed that this right shall be in addition to and shall not limit any other remedies available to the vendor herein contained or implied notwithstanding any rule of law or equity to the contrary.
46.6 This clause shall not merge on completion of this contract.
The question of whether a provision of a contract is penal in nature is to be judged as at the date of the making of the contract, not at the time of the breach: Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co Ltd [1915] AC 79 at 86-7.
In general terms, a stipulation prima facie imposes a penalty on a party (the first party) if, as a matter of substance, it is collateral (or accessory) to a primary stipulation in favour of a second party and this collateral stipulation, upon the failure of the primary stipulation, imposes upon the first party an additional detriment, the penalty, to the benefit of the second party: Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205; [2012] HCA 30 at [10].
In contracts for the sale of land, it is well established that provisions for the forfeiture of a reasonable deposit upon termination for the purchaser’s breach are regarded as standing outside the general principles of relief against penalties and forfeitures: see, for example, Havyn v Webster (2005) 12 BPR 22,837; [2005] NSWCA 182 (Havyn v Webster) at [130]-[133]. It is further established that a deposit of no more than 10% of the purchase price is regarded as reasonable in a contract for the sale of land: see Havyn v Webster at [132].
Whilst it is not necessary to decide the point, I incline to the view that cl 46 falls within the established exception to the penalties doctrine. At the time of contracting, Margaret became obliged to pay a 10% deposit that was plainly intended to be an earnest of performance. If Arthur accepted less than 10% on exchange the balance became payable in accordance with the terms of clause 46.3, including on demand from Arthur.
Clause 46 is not the same in substance as the clauses considered in each of Luu, Kazacos or Cole. Any balance of the 10% deposit in the present case is not only payable on breach by Margaret, cl 46.3(c) makes it clear that it is payable on demand by Arthur. Whether something less than 10% is accepted by the vendor on exchange (and thus whether there is any balance payable at all) is in the discretion of the vendor. The clause makes it clear that the deposit payable is 10%.
I now turn to consider what deficiency on resale Arthur is entitled to recover.
Clause 9 of the Contract provides:
After the termination the vendor can -
9.1 keep or recover the deposit (to a maximum of 10% of the price);
9.2 hold any other money paid by the purchaser under this contract as security for anything recoverable under this clause -
9.2.1 for 12 months after the termination; or
9.2.2 if the vendor commences proceedings under this clause within 12 months, until those proceedings are concluded; and
9.3 sue the purchaser either -
9.3.1 where the vendor has resold the property under a contract made within 12 months after the termination, to recover -
• the deficiency on resale (with credit for any of the deposit kept or recovered and after allowance for any capital gains tax or goods and services tax payable on anything recovered under this clause); and
• the reasonable costs and expenses arising out of the purchaser’s non-compliance with this contract or the notice and of resale and any attempted resale; or
9.3.2 to recover damages for breach of contract.
In S T Investment Pty Ltd v Geng (2020) 19 BPR 40,071; [2020] NSWSC 329, Darke J set out the principles applicable to cll 9.3.1 and 9.3.2.
Clauses 9.3.1 and 9.3.2 are alternative remedies and the vendor can keep the choice between them open until judgment. Clause 9.3.1 provides for liquidated damages, the cause of action for which arises on resale.
The liquidated damages are calculated having regard to the following:
(a) the deficiency on resale which is the price of the first contract if it had been completed according to its terms less the vendor’s cost of sale measured against the gross price on the second contract; (b) any deposit kept or recovered must be credited against any deficiency on resale.
Damages pursuant to cl 9.3.2 are governed by general law principles. In circumstances where, as here, the contract is terminated due to the purchaser’s breach, the vendor is entitled to seek damages for loss of the bargain. The general principle is that the innocent party is to be placed in the same position as if the contract had been performed. Such damages are generally assessed at the date of breach – in this context generally understood as the date of termination for breach. The prima facie measure of damages to which the plaintiff is entitled is the difference between what the plaintiff would have received under the contract had it been completed on that date, and the value of the property that in fact remained in the plaintiff’s hands.
The principal issue raised by Margaret on the loss of resale head was whether Arthur had failed to mitigate his loss. Margaret contended that he had in rejecting no less than four offers – two from a Mr Lo for $3.0 million and $3.05 million and two from Margaret herself for $2.8 million and $2.68 million respectively.
In relation to the Lo offers, Margaret contended that Arthur rejected each while they were live and did so in circumstances where those offers were in excess of the position initially taken by Arthur on his agent’s instruction that the Property ought to be marketed at a price point of $2.9 million.
Arthur disputed that he had failed to mitigate his loss in this regard. He contended that his actions were reflective of reasonable attempts to secure a purchase price for the Property comparable to one he had agreed with Margaret. The attempts failed in the context of repeated downward revisions in estimates of the value of the Property, as well as minimal interest from prospective purchasers.
There was no dispute that Margaret bore the onus of establishing that Arthur had failed to mitigate his loss. The onus is a heavy one.
Conduct in not taking steps to reduce the loss will not be weighed in nice scales at the instance of the party who has occasioned the loss: see London and South of England Building Society v Stone [1983] 1 WLR 1242 at 1262 per Stephenson LJ.
A plaintiff is not under any obligation to do anything other than in the ordinary course of business, and the standard is not a high one, since the defendant is a wrongdoer: see Sacher Investments Pty Ltd v Forma Stereo Consultants Pty Ltd [1976] 1 NSWLR 5 at 9 per Yeldham J; see also Chand v Commonwealth Bank of Australia [2014] NSWSC 708 at [330] per Robb J.
I have set out above a summary of the relevant events post termination to resale.
Dealing first with the two offers from Mr Lo, I do not regard Arthur’s rejection of them as unreasonable given the requested settlement period of 4 months. The offers were also made relatively early in the remarketing campaign and were significantly below what Margaret had agreed to pay. In any event, Mr Lo would not have been able to go through with either of his offers because the sale of his own home fell through.
Arthur did not act unreasonably in rejecting Margaret’s two offers. They were both on the basis that the $160,000 deposit already paid by Margaret would be included in the offer price and the legal proceedings dismissed with no order as to costs. Arthur would thereby be required to give up any damages for the loss on resale.
It follows that I do not accept that Arthur failed to mitigate his loss.
The loss on resale is thus $260,000 calculated on the basis that the 5% deposit is separately recovered or $420,000 if it is not.
I turn now to deal with the reasonable costs and expenses claimed.
The first item claimed is real estate agency fees of $62,186. Arthur gave evidence that he received invoices totalling $62,186 from Ray White Upper North Shore – made up of $10,310 for advertising and marketing expenses and $51,876 in commission. These all related to the eventual sale of the Property on 16 November 2024.
Margaret disputed Arthur’s entitlement to recover the commission of $51,876 on the basis that there was no evidence that Arthur was required to, and had paid, any commission in respect of the purported sale to her. Arthur had not established that he paid two agency fees and, in any event, he would always have been required to pay commission on the sale of the Property.
I accept Margaret’s contentions in this regard. Arthur has not proved that he paid commission twice – once on the original sale to Margaret and then on the sale in November 2024. He always had to pay commission on the sale. The only evidence he adduced on this point was the invoice he received from Ray White Upper North Shore. There was no evidence of any invoice from the Agents (Raine & Horne Lindfield). To permit recovery on the state of the evidence – with Arthur bearing the onus – would put Arthur in a better position than if there had been no breach.
No submissions were advanced by Margaret disputing the recovery of the advertising fees of $10,310. The evidence establishes there are costs incurred in relation to the remarketing for sale. They are recoverable.
It is convenient then to group together the amounts for styling ($4,950), cleaning ($2,305), garden work ($1,787) and rectification for loss of power on 20 September 2024 ($195). Arthur tendered invoices in respect of each of these amounts and was not cross examined on his affidavit evidence that they concerned marketing the Property to potential buyers. Margaret disputed those amounts on the basis that Arthur did not provide any evidence as to why additional costs for styling services, rectification for loss of power, garden works and property clean up works were incurred as a result of any breach by Margaret, or why those amounts were not included in the marketing expenses separately claimed. She also submitted, there was no evidence that the invoices had been paid.
I do not accept Margaret’s contentions in this regard. Arthur gave unchallenged evidence, which I accept, that he incurred those costs to assist in marketing the Property to potential buyers. The invoices, having regard to their date and content, support Arthur’s evidence in this regard. Whilst there is no evidence that the invoices have been paid, I would readily infer that Arthur has a liability to pay them.
Nothing was said by Margaret in answer to the cost of $450 for the issuing of the notice to complete. The amount is claimable under cl 39(b) of the contract. Contrary to Margaret’s submission, Arthur gave unchallenged evidence that he has paid this amount.
The claim for $4,008 in legal fees was supported by an invoice from Ms Gower and unchallenged evidence from Arthur, which I accept, that he was liable to pay it. The invoice, dated 27 November 2024, concerned the new conveyance of the Property. Arthur also put into evidence the invoice which he received and paid from Ms Gower dated 26 August 2024 in relation to the purported sale to Margaret. I am satisfied that the sum of $4,008 should be allowed.
The last two items concern interest payments to Arthur’s ex wife pursuant to orders of the Federal Circuit and Family Court of Australia and associated legal costs in dealing with enforcement proceedings brought by her. The original amount claimed for interest was $90,000 and $15,700 for legal fees. The claim was subsequently revised down to $33,250.24 on account of interest and $7,700 in respect of legal costs.
Margaret disputed these items on two principal bases. First, because no causative link with any breach by Margaret has been established. Second, because it would not have been reasonably foreseeable to Margaret that loss of this kind would be suffered as a probable result of any breach by her.
The second of these matters has force. It is thus not necessary to consider the first in any detail save to observe that, in my view, the evidence (including that tendered prior to the commencement of closing submissions) did not clearly establish the causative link.
In my view this head of loss is too remote. It was not suggested that Margaret was aware of any matters to put her on notice that such loss was likely to occur as a result of her failing to complete. A reasonable person would not likely have realised that such loss was likely to occur as a usual consequence of such a breach by Margaret failing to complete.
I do not allow these amounts.
The analysis set out above concerns damages under cl 9.3.1 of the contract. The outcome is the same if the question is approached from the position of general law damages under cl 9.3.2 of the contract.
The parties should confer to calculate the total damages in accordance with my reasons above, together with any interest thereon.
For the reasons set out above, Arthur’s claims have, in large part, succeeded.
It seems to me that in these circumstances costs should follow the event and Margaret should pay Arthur’s costs of the proceedings. I will give the parties an opportunity to seek to agree orders as to costs.
The Court orders that:
The parties confer to seek to agree orders to give effect to these reasons including as to costs.
By no later than 5pm on 17 July 2026 the parties are to provide to the Associate to Pike J any agreed orders or, failing agreement, the orders for which each party contends together with any material and submissions in support of those orders, such submissions not to exceed 5 pages.
By no later than 5pm on 24 July 2026 each party provide to the Associate to Pike J any material and submissions in reply, such submissions not to exceed 3 pages.
Unless either party requests an oral hearing, any dispute as to final orders is to be determined on the papers.
**********
Koh
Chhoeu
[2025] FCAFC 85
(2012) 247 CLR 205
(2001) 53 NSWLR 153
(1978) 141 CLR 378
(2025) 311 FCR 408
(2013) 231 IR 278
(1984) 154 CLR 661