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[2025] NSWSC 635
General information, not legal advice.
Supreme Court of NSW
2025-06-20
Pike J
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Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Lewington v Dulyakarn [2025] NSWSC 635
Hearing dates: 5, 6 and 8 May 2025
Date of orders: 20 June 2025
Decision date: 20 June 2025
Jurisdiction: Equity - Real Property List
Before: Pike J
Decision: See [172] of judgment.
Catchwords: CONTRACTS – Construction – Interpretation – where no time specified for the completion of the contract for the sale of land – whether contract void for uncertainty – implied reasonable time for completion of contract – no question of principle
CONTRACTS – Termination – whether breach by either party – whether repudiation of contract – whether acceptance of repudiatory conduct – no question of principle
LAND LAW – Conveyancing – Contract for sale – Termination – whether necessary for vendor to show readiness, willingness and ability to perform contract at time of termination – whether vendor ready, willing and able – question of principle
LAND LAW – Conveyancing – Contract for sale – Deposit – relief against forfeiture of deposit – where deposit is 13% – whether deposit is a penalty – whether deposit should be returned pursuant to Conveyancing Act 1919 (NSW), s 55(2A) – question of principle
Legislation Cited: Conveyancing Act 1919 (NSW), s 55(2A)
Conveyancing (Sale of Land) Regulation 2017 (NSW)
Cases Cited: Akrawe v Culjak [2023] NSWCA 171
Australia City Properties Management Pty Ltd v Owners – Strata Plan No 65111 [2021] NSWCA 162
Commissioner of Taxation (Cth) v Reliance Carpet Co Pty Ltd (2008) 236 CLR 342; [2008] HCA 22
Dainford Ltd v Smith (1985) 155 CLR 342; [1985] HCA 23
DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423; [1978] HCA 12
Foran v Wight (1989) 168 CLR 385; [1989] HCA 51
Gadzikwa v Department of Human Services [2018] FWC 4878
Galafassi v Kelly (2014) 87 NSWLR 119; [2014] NSWCA 190
Gubbay v Burnet [2012] NSWCA 174
Havyn Pty Ltd v Webster (2005) 12 BPR 22,837; [2005] NSWCA 182
Holland v Wiltshire (1954) 90 CLR 409; [1954] HCA 42
Karacominakis v Big Country Developments Pty Ltd (2000) 10 BPR 18,235; [2000] NSWCA 313
Kazacos v Shuangling International Development Pty Ltd (2016) 18 BPR 36,353; [2016] NSWSC 1504
Lavigne v Kumar (2020) 19 BPR 40,377; [2020] NSWSC 1120
Luu v Sovereign Developments Pty Ltd (2006) 12 BPR 98,203; [2006] NSWCA 40
Plumor Pty Ltd v Handley (1996) 41 NSWLR 30
Rawson v Hobbs (1961) 107 CLR 466; [1961] HCA 72
Roadshow Entertainment Pty Ltd v (ACN 053 006 269) Pty Ltd (1997) 42 NSWLR 462
Sharjade Pty Ltd v Commonwealth (2009) 15 BPR 28,443; [2009] NSWCA 373
Shevill v Builders Licensing Board (1982) 149 CLR 620; [1982] HCA 47
Sydney Developments Pty Ltd v Perry Properties Pty Ltd (2016) 18 BPR 35,905; [2016] NSWSC 515
T & L Alexandria Pty Ltd v Sharvain Facades Pty Ltd [2023] NSWSC 947
Tapp v Barnett (2021) 20 BPR 41,679; [2021] NSWSC 1271
The Millstream Pty Ltd v Schultz [1980] 1 NSWLR 547
Upside Property Group Pty Ltd v Tekin (2017) 19 BPR 38,137; [2017] NSWCA 336
Vitol SA v Norelf Ltd [1996] AC 800
Workers Trust & Merchant Bank Ltd v Dojap Investments Ltd [1993] AC 573
Texts Cited: JW Carter, Carter’s Breach of Contract (3rd ed, 2024, JW Carter Publishing)
Seddon and Bigwood, Cheshire & Fifoot Law of Contract (12th ed, 2022, LexisNexis)
Category: Principal judgment
Parties: Kalaynee Lewington (Plaintiff)
Nittaya Dulyakarn (Defendant)
Representation: Counsel:
A Hopkins (Plaintiff)
S Sykes (Defendant)
Solicitors:
Brander Smith McKnight (Plaintiff)
State Law Group (Defendant)
File Number(s): 2024/00209266
Publication restriction: Nil
The plaintiff and the defendant are cousins. They live next to each other on Oxford Street in Guildford.
On 18 March 2022, the parties executed an agreement (Agreement) whereby the defendant agreed to sell to the plaintiff her home at X Oxford Street, Guildford (Property) for $1,150,000. The document executed was not in the form of the standard contract for sale of land in New South Wales. Far from it. It was a one page document in the parties native Thai language which the defendant had obtained from a website in Thailand. None of the usual documents were attached. No time for completion was set out in the Agreement.
The plaintiff paid the defendant a deposit.
As events transpired the transaction did not complete and in February 2023 the defendant sold the Property to her son for a stated price of $925,000, although 20 percent of that was returned to her son as a gift.
By these proceedings, the plaintiff seeks to recover $170,000 paid to the defendant pursuant to the Agreement, together with interest and costs. A significant number of legal arguments were deployed by the parties.
The proceedings were heard on 5, 6 and 8 May 2025. Mr A Hopkins appeared for the plaintiff and Mr S Sykes for the defendant. The plaintiff and defendant, and each of their sons, gave evidence and were cross examined.
For the reasons set out below, save for the return of $20,000 paid by the plaintiff to the defendant, the plaintiff’s claims fail. I will give the parties an opportunity to agree orders, including as to costs, failing which any remaining issues will be determined on the papers.
At the commencement of the hearing on 5 May 2025 the defendant applied to amend her defence. The proposed amendment – annexed to an affidavit of her instructing solicitor, John Ho (Mr Ho), made 5 May 2025 – alleged that the plaintiff repudiated the Agreement by purporting to terminate it in writing on 25 October 2022, which repudiation was accepted by the defendant.
The 25 October 2022 letter was from the plaintiff’s lawyer and is summarised later in these reasons.
After hearing argument, I refused the application to amend.
Whilst no reason for the amendment was set out in Mr Ho’s affidavit, I inferred that the amendment occurred to the legal team for the defendant in the course of preparing for the forthcoming hearing. Mr Sykes, for the defendant, confirmed that this was the case. There is no reason why it could not have been made earlier and every reason why it should have been.
More importantly, counsel for the plaintiff contended that if the amendment was allowed, there is evidence that he would wish to put on in response to the new allegation – particularly what was occurring in the period up to October 2022 in the discussions between the parties. Given the language difficulties with the plaintiff, he would require at least the rest of 5 May 2025 to confer with the plaintiff and separately with her son, to obtain the new evidence and also to prepare a reply to the new defence.
In these circumstances, it did not appear to be in dispute that there would be real difficulty in concluding the hearing on 6 May 2025, thus requiring the hearing to go over to at least another day. (As events transpired, the matter did not conclude on 6 May 2025 and went into a third day on 8 May 2025, but this was obviously not known or foreseen at the time.) A further alternative would have been to vacate the hearing altogether and to commence it at a later stage.
The proceedings seek the return of $170,000 plus interest and costs. Whilst this sum is obviously of the upmost importance to the parties, prolonging the proceedings to a third day or adjourning them altogether at the defendant’s cost would, in my view, be wholly disproportionate to the amount at issue.
Accordingly, I did not regard it as being in the interests of justice to allow the amendment and refused it.
As set out above, four witnesses gave evidence in the proceedings – the plaintiff, her son (James) and the defendant and her son (Oak).
James and Oak are proficient in both the Thai language and English. The plaintiff and defendant are not. The affidavits of the plaintiff and defendant were each prepared with the benefit of an interpreter, and each gave oral evidence through an interpreter.
At times during the cross examination, each of the plaintiff and defendant gave answers to questions in English and on occasion prior to the relevant question being interpreted to them. The plaintiff appeared to do this more often than the defendant. As a result, I formed the view that each of the plaintiff and defendant have an ability to understand and converse in the English language. This is not overly surprising given that each has now spent a considerable number of years living in Australia. My obvious impression was that the primary language of each of the plaintiff and defendant was Thai and each was far more comfortable conversing in that language.
Having closely observed each of the plaintiff and defendant giving their evidence and without being in any way critical of either the plaintiff or the defendant, I formed the distinct impression that neither was overly sophisticated particularly in relation to legal matters and the legal process. This is a matter that I obviously take into account in considering the evidence given by each.
The plaintiff was cross examined for a little over 90 minutes. The defendant was cross examined for nearly a day.
I formed the view that each was doing their best to assist the Court. Neither was intending to deliberately give untruthful evidence. I reject the strong credit attack levelled by counsel for the plaintiff against the defendant that the defendant was deliberately giving false evidence.
My overall impression is that the defendant had a better recollection of key events than the plaintiff. She was a more reliable historian. The defendant’s recollection is also supported more by objective material. Where their evidence conflicts and other material does not assist in the resolution of the dispute, I prefer the evidence of the defendant over that of the plaintiff.
Each of James and Oak was cross examined. Save for Oak’s denial (which I accept) of demanding an extra $60,000 from the plaintiff for stamp duty, their evidence was not of central relevance. Again, I formed the view that each was doing their best to assist the Court.
Any objective material, and inherent probabilities and likelihoods, provides a surer guide as to the facts.
Whilst a number of matters were agreed between the parties, there were a significant number of matters in dispute. Very few of those disputes went to the central issues for decision. Save for perhaps going to credit, many of the disputes were at the heart of the periphery.
I now set out the factual chronology, resolving the disputed matters where necessary.
There was no dispute on the evidence that the plaintiff and defendant were once close, although they are no more by reason of the events of these proceedings. Prior to mid-2022, the defendant would visit the plaintiff about once a week. As set out above, they are cousins.
It appears that in early 2022, the defendant received an unsolicited offer to buy the Property for $1.1 million. The defendant then formed the view that she wanted to sell the Property and spoke to real estate agents for this purpose. The plaintiff agreed in cross examination that she saw at least one real estate agent visit the Property.
There appears to then be a dispute as to who raised the issue of the plaintiff buying the Property – the plaintiff said the defendant raised it and the defendant said it was the plaintiff who raised buying the Property. Some doubt over the plaintiff’s general recollection comes from the plaintiff’s affidavit evidence that the topic was first raised on 22 February 2022. In cross examination she agreed the topic was raised prior to 22 February 2022. The statement of claim also alleges a meeting in mid-February 2022 but nothing on 22 February 2022.
The defendant also put into evidence a message apparently received from the plaintiff using the Line messaging application dated 7 February 2022 asking for the defendant to pop in and see the plaintiff. In cross examination, the plaintiff denied any knowledge of the message or ever using the Line messaging application to communicate with the defendant. The plaintiff stated that she used the application to communicate with other persons. No explanation was provided by the plaintiff as to why I should not accept that the message is what it purports to be. This all casts doubt on the plaintiff’s general recollection and provides support for the defendant’s account.
It was as early as 7 February 2022 that the defendant says that the plaintiff indicated she was interested in purchasing the Property. The Line message was relied on in this regard.
I accept the defendant’s evidence in this regard as to when the discussions first occurred, supported as it is by the Line message. I also accept the defendant’s account of the plaintiff raising the possibility of buying. This is more likely in circumstances where the defendant was otherwise proposing to use an agent and sell at auction. Absent an overture from the plaintiff, the defendant was likely to continue down the auction path.
Kalaynee: “Did you speak to Oak regarding the house.”
Me*:* “We will do the auction for the house.”
Kalaynee: “I will buy the house. Don’t sell it to anyone else. I will buy it for $1.15 million. I will pay a 15% deposit. I will give you the deposit money right now. I can use the difference between 1.2 and 1.15 to cover things like LMI.”
Me: “Okay, I will sell you the house for $1.15 million.”
Kalaynee then left the room and came back with a large handful of money. She told me words to the following effect: *“*Here is $80,000. I will pay you a deposit of $150,000. I have to get the rest from Thailand. I will pay you the rest of the deposit by the end of the month. I will be able to pay it all to you in three months.”
The plaintiff agreed in cross examination that she agreed to buy the Property for $1.15 million on 13 March 2022.
The Agreement was signed on 18 March 2022. It was prepared by the defendant who sourced it online from the Thai Department of Lands website. The pro forma document is in the Thai language, with handwritten details – address and price – inserted in hand in English by the defendant.
There was considerable dispute as to what occurred at the time of signing. The plaintiff says that the defendant required the plaintiff to immediately sign the document, which she did because she trusted the defendant. She says she did not read it.
The defendant says that she was uncomfortable, having received $80,000 from the plaintiff, in not having the sale recorded in writing. She therefore downloaded the document from the internet and then met with the plaintiff, explaining why she had prepared the document. They then had a conversation to the following effect:
Kalaynee: “If you do not sell the property to me and sell it to someone else, you must return every dollar and cent to me.”
Me: *“*If you break the contract and do not buy the property, I have the right to keep the deposit.”
Kalaynee: “Okay, that is fine. Can we make the deposit $170,000 because then I will not have to pay LMI?”
Me: “Yes, that is fine.”
In cross examination, the defendant gave evidence that she then went through the Agreement with the plaintiff.
It was after that conversation that the defendant handwrote the following details onto the printed pro forma Agreement:
a. The property address: X Oxford St, Guildford NSW 2161 AUSTRALIA and X Oxford St, Guildford NSW 2161 AUSTRALIA;
b. The sale price of the property: AUD $1,150,000 (One million one hundred fifty thousand Australian dollars);
c. The deposit amount: AUD $150,000 (One hundred fifty thousand Australian dollars);
d. The additional processing fee: $20,000;
e. The total deposit: $170,000 (One hundred seventy thousand Australian dollars);
f. The remaining payment due: AUD $1,000,000 (One million Australian dollars).
- The Seller is the owner of X Oxford Street, Guildford, NSW2161 [sic], Australia.
- The Seller agrees to sell, and the Buyer agrees to buy, the property mentioned in (1) which is free of any legally binding commitment or debt for a price of $1,150,000 AUD (one million one hundred and fifty thousand Australian dollars).
- On the date of this Contract, the Buyer agrees to make a security deposit payment to the Seller for an amount of $150,000 AUD (One hundred and fifty thousand Australian dollars) by cash payment. Details are in the back of the Contract. There is an additional payment of $20,000 for processing fee, making a total payment of 170,000 AUD (One hundred and seventy thousand dollars). The Seller has received the security deposit in full and both parties agreed that the security deposit payment is part of the total payment.
- The Buyer agrees to make the remainder payment of $1,000,000 (One million Australian dollars) by the date of
- [information crossed out and not applicable]
- If the Buyer fails to comply with Contract, the Buyer agrees to forfeit the security deposit payment in full. If the Seller fails to comply with the Contract, the Seller agrees to return the security deposit payment to the Buyer in full. [information crossed out and not applicable]
The Security Deposit on page two is described as “1st Payment: Date: 18 March 2022, Amount: $80,000 (AUD)”.
The defendant gave evidence that there was no completion date filled in on the Agreement, but that the plaintiff told her on 13 March 2022 that she would need three months to get the money for the sale.
I accept the defendant’s account of what occurred.
Whilst it may not ultimately matter, I do not accept the plaintiff’s evidence that she was simply required to sign the Agreement and did so without any real understanding of what she was being asked to sign. I find that she was aware she was being asked to sign an Agreement to give effect to buying the Property. Whether she chose to read the document was a matter for her. I make this finding having regard to a general preference for the defendant’s account over the plaintiff’s, supported as it is by the Line messages which in turn suggest to some extent, that it was the plaintiff pursuing the defendant in this regard and not the other way around. I also find that it is inherently unlikely that the plaintiff would simply sign the document without any real understanding as to what it was.
Although not obvious on the face of the Agreement or expressly stated in any of the earlier conversations, it was not really in dispute that James was intended to be the purchaser of the Property.
In late March 2022, the plaintiff travelled to Thailand and transferred $120,000 to the defendant using XWing. The defendant’s son collected the money in cash on or about 31 March 2022.
The defendant says that she realised the plaintiff transferred too much money. The plaintiff says she deliberately transferred an amount greater than that stated in the Agreement “to help cover any additional costs which [the defendant] experienced”.
There is then a dispute about the terms of a discussion which occurred whilst the plaintiff was overseas or when she returned in mid-April 2022. It is not in dispute, however that the outcome of the discussion was that $30,000 in cash was to be refunded by the defendant to the plaintiff. This occurred.
The defendant says she later gave another $10,000 to the plaintiff at the plaintiff’s request but this was denied by the plaintiff. There are no documents to evidence this additional payment of $10,000. The defendant could not give any real detail as to when it occurred.
There is also no suggestion in later correspondence which alleges $170,000 should be refunded, that the sum was in fact $160,000.
I do not accept that the extra $10,000 was returned.
On the defendant’s evidence, there does not appear to have been any discussions directly between the plaintiff and defendant during the period from April to July 2022. During this period, it appears attempts were being made by James, with the assistance of Oak, to obtain finance. Oak was apparently recommending the plaintiff’s son to mortgage brokers.
Ms Dulyakarn: “I need $60,000 more to continue with the sale.”
Me: “I have already paid you $170,000.00 why do you need this extra money when you have already told me that no other additional costs would be needed.”
Ms Dulyakarn: “I need it to pay for stamp duty and lenders mortgage insurance.”
Me: “I have already given you money to cover such costs as well as any legal fees and other costs, can you provide invoices for these extra costs?”
Each of the defendant and Oak denied there was any such discussion.
I am not satisfied that any such conversation occurred. There is no objective material to support it. The original letter from solicitors on behalf of the plaintiff in late October 2022 made no mention of it. It appears also to have occurred prior to James going overseas and thus is inconsistent with James’ evidence that at the time he went overseas the purchase was still going ahead.
There is also nothing in the Agreement requiring the defendant to pay the stamp duty. There is also no reason why the defendant would be paying for lenders mortgage insurance. Both of these would ordinarily be the responsibility of the plaintiff as purchaser.
In July 2022, James was going overseas to Europe. Shortly before leaving he said to the defendant that he would complete the purchase when he returned from Europe.
The defendant alleges that later that same day, the plaintiff came to her house and told her she was no longer willing to buy the house. The conversation was as follows:
Kalaynee: “I am no longer interested in buying the house.”
Me: “I don’t understand, James told me that you were going to buy it when he gets back from Europe.”
Kalaynee: “No, I can’t afford it. Unless you pay the stamp duty for me upfront and I will pay you back in instalments.”
Me: “No I don’t understand. No I won’t pay your stamp duty.”
Kalaynee: “Then no, I will not be buying it. You need to pay me the deposit back.”
Later that night the plaintiff confirmed to the defendant on the telephone that she could not buy the house for financial reasons and wanted her deposit back.
On 16 July 2022, there was a conversation between the plaintiff and the defendant in the plaintiff’s house. The plaintiff invited the defendant inside her house.
The defendant made a recording of part of the conversation which I admitted over objection. The transcript of the recording was as follows:
Me: *“So, he just wants to know whether or not P’*Dang [Kalayanee’s Thai nickname] wants to buy and what not so that he can let them know.”
Kalaynee: “I thought he had already spoken to them.”
Me: “He .... Umm ... He ... Not sure.”
Kalaynee: “So he went to talk ... Well, just put it all back on me. Say that the buyer ... He can say it however, whatever reason. Just put it back on me saying “She couldn’t buy. She had asked not to buy. She made a mistake thinking that she had enough money but she didn’t, so she needed to ... She had to.” What would they want me to do? It is what it is. Ask Oak to be a little more understanding of me. And then he said that all the deposit would be forfeited. So he said. How could he say that? I am old. It’s my last sum of money. Would he really take it? It can be negotiated. I’m talking about the emotional impact. I am so staggered. But I am flexible that we discuss ... Money matters can be negotiated. It can be discussed.”
Me: “When you said when the house gets sold, it [the deposit] will have to be returned. Does he have to get chased up [on the deposit] all the time? He said it was not his fault - He did not do anything wrong and had already done everything required, “And in the end when Aunty Dang doesn’t buy, I [Oak] end up in debt.” Something like that. Though on one hand he wants to know if you are definitely not going to buy, not that you’re waiting for James to return and then want to buy again.”
Kalaynee: “Can’t buy any more. Won’t be buying. This has to be cancelled. [inaudible] I don’t want to talk about it. I don’t want to talk about the past. No need to talk about the past. Don’t need to talk about the past. This is all we can do. It’s all we can do. I am at my wits end. What’s done is done. I don’t know what to do. [You] have to be more understanding.”
The plaintiff says that the recording is only a snippet of the conversation. The defendant’s position is that it is a recording of essentially all of the discussion in relation to the Property. She said in cross examination that there was discussion in the meeting before the recording started to do with matters other than the Property but that when the topic of the discussion moved to the Property she started recording it on her mobile telephone.
The plaintiff says that prior to the conversation in the recording the defendant had again requested that the plaintiff pay further amounts to her for stamp duty and lenders mortgage insurance. When she said “I can’t buy” or “Won’t be buying” this was in response to the defendant and Oak asking for more money on top of the deposit and the plaintiff being unwilling to pay these amounts.
The plaintiff also contended that in the fourth paragraph of the conversation she was referring back to the June 2022 conversation when Oak and the plaintiff first demanded the extra $60,000.
I do not accept the plaintiff’s version. As set out above, I have rejected the plaintiff’s contention that the defendant and her son demanded that the plaintiff pay an additional $60,000. Accordingly, I reject that there was any request on 16 July 2022.
I reject the contentions put to the defendant in cross examination that she deliberately chose to only record the parts of the conversation that she thought would assist her case. There was no suggestion that the recording had been edited to this effect. Rather, the suggestion was that a deliberate choice was made as to what to record. In circumstances where it is far from clear what the plaintiff would in fact say on the topic, I do not see how it would be possible to only record that which would assist. It seems relatively clear from the transcript of the recording, that a discussion was occurring. The defendant’s version that the recording started about when the topic started to be discussed is far more rational and likely. I accept it.
I also reject the submissions advanced by the plaintiff in closing submissions based on Gadzikwa v Department of Human Services [2018] FWC 4878 at [83], a decision of Deputy President Colman. The observations there made were in quite a different context and obviously are not, and I do not think were intended to be, of universal application. There is nothing in the transcript of the recording to suggest that the plaintiff was being trapped into making incriminating statements or dealt with unfairly.
Come October 2022, the plaintiff had retained lawyers. On 25 October 2022, the plaintiff’s lawyers wrote to the defendant, pointing out that the documents required by s 52A(2)(a) of the Conveyancing Act 1919 (NSW) (CA) were not attached to the Agreement and purporting to exercise a right of rescission under regulation 17(1)(a) of the (NSW). A request to return the $170,000 deposit was made.
In or around July 2022, during a discussion between our Client and Ms Lewington, Ms Lewington stated to our Client that she would not be completing the purchase because she cannot afford it.
A further letter was sent by the plaintiff’s lawyers on 12 July 2023. In that letter, the lawyers contended, amongst other things, that the plaintiff considers her rescission to be bona fide and any purported termination by the defendant to be wrongful.
The correspondence between lawyers rested with a letter from the defendant’s lawyers dated 17 August 2023. The letter again offered to resolve the dispute on the basis that the defendant keeps the deposit of $170,000. This offer was not accepted.
Whilst this correspondence was playing out between lawyers, the defendant was transferring the Property to her son, Oak. The transfer was registered on the title to the Property on 2 February 2023. A contract for the sale of land was entered into between the two, with the assistance of lawyers on each side dated 19 January 2023.
The terms of the contract make it clear that the defendant was gifting 20 percent of the purchase price back to her son. This is reflected in the settlement statement which was put into evidence by the plaintiff.
Both the defendant and Oak were heavily cross examined in relation to the transfer and the reasons for it. This cross examination took place without the benefit of the conveyancing file maintained by the defendant’s solicitor in relation to the transfer. This was called for during the defendant’s cross examination, subsequently produced and portions of it tendered before closing address commenced and without any further cross examination.
The defendant contended that she sold the Property to her son because she needed money, having not been able to work since a motor vehicle accident in May 2022. She decided to sell it to her son and not a third party in case the plaintiff still wished to purchase the Property as it would be easier to purchase it from Oak. The defendant’s evidence was that the price of $925,000 was struck based on a valuation obtained by St George Bank (the incoming mortgagee) which was put into evidence during the re-examination of Oak.
The defendant rejected the suggestion put to her in cross examination that the reason why she transferred the Property to her son was, in effect, to put the asset out of the plaintiff’s reach. Associated with this attack, the defendant was cross examined about how much money, if any, she received from the proceeds of sale. The defendant was unable to recall, saying that she was still not well in this period and her son was effectively responsible for these matters. She was able to recall, however, the approximate amount of the mortgage discharged. The settlement statement makes it clear that the defendant received $259,552.27 into her account from the proceeds.
The effect of Oak’s evidence was that the price at which he would buy the Property from his mother was agreed prior to any valuation being obtained. The St George Bank valuation is dated 18 October 2022, thus suggesting the Agreement was struck prior to then.
Against this factual background the following issues were raised by the parties on the pleadings and the submissions:
Is the Agreement void for uncertainty because it failed to specify any time for completion?
If the Agreement is void for uncertainty, is the plaintiff entitled to repayment of the $170,000 on restitutionary grounds and does the defendant have a change of position defence to any restitutionary claim?
Did either party engage in repudiatory conduct and was such repudiatory conduct accepted so as to bring the Agreement to an end?
Is it necessary for the defendant to show she was ready, willing and able to perform the Agreement at the time of her purported termination, and if she is so required, was she ready, willing and able?
Is the defendant entitled to keep the deposit, either in whole or in part?
Is the plaintiff entitled to a return of the deposit under s 55(2A) of the CA?
It is not in dispute that the Agreement failed to specify any time for completion. This was left blank in the one page document signed by both parties. On the defendant’s evidence, which I accept, this was because it was not entirely clear when the plaintiff would be able to obtain finance and the plaintiff said she should have the money within three months.
The plaintiff contended that the Agreement was void for uncertainty, the completion date being an essential term of any such bargain. The defendant contended that the Agreement was not void for uncertainty as the law would imply a term that completion occur within a reasonable time to which the plaintiff rejoined that the Court in this case could not ascertain what a reasonable time is.
I do not accept the plaintiff’s contentions.
The Agreement contained all the matters essential for a binding contract for sale – parties to the sale, the land the subject of the sale, and the price: see Tapp v Barnett (2021) 20 BPR 41,679; [2021] NSWSC 1271 at [130] and [139] per Darke J.
Further, it is clear that where the time for performance of a contractual obligation, or the exercise of a contractual right, is not specified, the law will ordinarily imply that it must be performed or exercised within a reasonable time. The legal meaning of a reasonable time is to be assessed at the date on which the contract is entered into. What is a reasonable time as a matter of fact is to be determined by reference to the circumstances existing when the obligation first falls to be performed or when the right is first capable of being exercised. What is reasonable in any given case may depend on the nature of the obligation to be performed or on the right to be exercised, including whether it is dependent on the provision of information that may need to be assessed before the right can be exercised: see T & L Alexandria Pty Ltd v Sharvain Facades Pty Ltd [2023] NSWSC 947 at [208] per Williams J (and the cases there cited).
In the circumstances of the present case, there is no occasion to have to determine what is a reasonable time. Neither party sought to force completion by service of a notice requiring completion within a particular period.
This was one of the critical issues agitated by the parties. The plaintiff contended that the defendant herself engaged in repudiatory conduct by demanding that the plaintiff pay her an additional $60,000 in order to proceed with the sale. I have dealt with this issue above. I reject the plaintiff’s contention that the defendant, either through herself or her son Oak, made such a demand.
The defendant contended that the plaintiff repudiated the Agreement orally in the various conversations deposed to by the defendant set out above where the plaintiff said that she was no longer going to buy the house. The defendant contended that she accepted the plaintiff’s repudiation in three ways:
(a) the defendant did not take steps to complete the sale of the Property; (b) the defendant sold the Property to her son – the process commenced in at least October 2022 and ended when the transfer was lodged in February 2023; (c) the letter from the defendant’s lawyer to the plaintiff’s lawyer dated 6 December 2022 which referred to the discussions in July 2022, contended that they evidenced an intention not to be bound by the Agreement and the defendant that repudiation.
(a) the plaintiff did not say unequivocally that she would no longer be buying the Property. An aspect of this was to contend that the transcript of the recorded conversation was not complete and left out a further demand from the defendant for an additional $60,000 which is what the plaintiff was dealing with when she is recorded as saying she would not buy; (b) the plaintiff was acting under a mistaken interpretation of her rights under the Agreement as evidenced in the letter dated 25 October 2022 from her solicitors, and such conduct is not repudiatory; and (c) the defendant never properly accepted any repudiatory conduct by the plaintiff.
Insofar as the defendant seeks to rely on the 6 December 2022 letter, the plaintiff contended that this is outside the pleaded case and the defendant should not be permitted to depart from the pleaded case.
The basic principles in this regard were not in dispute between the parties.
Repudiation is a serious matter and not lightly to be found or inferred: see Shevill v Builders Licensing Board (1982) 149 CLR 620; [1982] HCA 47 at 633 per Wilson J. Evidence of a sufficient absence of readiness and willingness on the part of the promisor must be clear: Plumor Pty Ltd v Handley (1996) 41 NSWLR 30 at 38 per McLelland CJ in Eq.
A contracting party repudiates (or renunciates) a contract when he or she evinces an intention no longer to be bound by that contract or to fulfil it only in a manner substantially inconsistent with that party’s obligations. The test is whether the conduct of one party is such as to convey to a reasonable person in the position of the other party renunciation either of the contract as a whole or a fundamental obligation under it: see Australia City Properties Management Pty Ltd v Owners – Strata Plan No 65111 [2021] NSWCA 162 at [286] per Bathurst CJ (Payne and McCallum JJA agreeing).
The assessment is thus an objective one. It is a question of fact and the onus is on the promisee: see Dainford Ltd v Smith (1985) 155 CLR 342; [1985] HCA 23 at 366 per Brennan J.
Where a promisor asserts an erroneous view of its rights or obligations, including a mistaken construction of a contract, and acts on that view or evinces an intention to do so, the bona fides of the promisor is relevant to whether the promisor’s lack of readiness or willingness evidences a refusal to perform: see JW Carter, Carter*’*s Breach of Contract (3rd ed, 2024, JW Carter Publishing) (Carter) at [8-26].
In DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423; [1978] HCA 12 (DTR Nominees) at 432, Stephen, Mason and Jacobs JJ said:
No doubt there are cases in which a party, by insisting on an incorrect interpretation of a contract, evinces an intention that he will not perform the contract according to its terms. But there are other cases in which a party, though asserting a wrong view of a contract because he believes it to be correct, is willing to perform the contract according to its tenor. He may be willing to recognize his heresy once the true doctrine is enunciated or he may be willing to accept an authoritative exposition of the correct interpretation. In either event, an intention to repudiate the contract could not be attributed to him. As Pearson LJ observed in Sweet v Maxwell Ltd v Universal News Services Ltd [1964] 2 QB 669 at p 734:
‘In the last resort, if the parties cannot agree, the true construction will have to be determined by the court. A party should not too readily be found to have refused to perform the agreement by contentious observations in the course of discussions or arguments …’
As Carter observes at [8-26], the question at issue remains “whether a reasonable person – informed of the circumstances – would regard what the promisor has said or done as a refusal to perform”.
Where a promisor’s repudiation gives rise to a right to terminate the performance of the contract, the promisee may exercise the right by electing to terminate, but is not obliged to do so: Carter at [10.02]. Unequivocal words or conduct are necessary and sufficient for an election to terminate the performance of a contract for repudiation: see Vitol SA v Norelf Ltd [1996] AC 800 at 810-11 per Lord Steyn and Gubbay v Burnet [2012] NSWCA 174 at [15] per Bathurst CJ (Basten JA and Tobias AJA agreeing). The clearest example of an effective election to terminate the performance of a contract is an express and unequivocal statement to the promisor: The Millstream Pty Ltd v Schultz [1980] 1 NSWLR 547 at 555.
It is not necessary however, that an election take this form. Any words or conduct are sufficient if they make the election manifest to the relevant party: Karacominakis v Big Country Developments Pty Ltd (2000) 10 BPR 18,235; [2000] NSWCA 313 at [155] per Giles JA (Handley and Stein JJA agreeing) and Seddon and Bigwood, Cheshire & Fifoot Law of Contract (12th ed, 2022, LexisNexis) at [21.23] and the cases there cited.
In Holland v Wiltshire (1954) 90 CLR 409; [1954] HCA 42, Dixon CJ said (at 416) that the vendor’s “election to treat the contract as discharged by the purchaser’s breach was sufficiently manifested by his proceeding to advertise the property for sale, and by his selling it”.
On the facts of the present case, I am satisfied that a reasonable person in the position of the defendant would be justified in concluding, by what the plaintiff said in July 2022, that she was no longer willing to purchase the Property and was not proposing to.
The plaintiff clearly stated that she would not buy and that the Agreement must be cancelled. There was nothing unequivocal about this. Thereafter, the plaintiff, consistently with what she said, acted, or more accurately failed to act, to do anything to purchase the Property.
I do not accept that the plaintiff’s conduct could fairly be described as acting in good faith on an erroneous construction of the Agreement. The statements made in July were clear and unambiguous. Whilst the 25 October 2022 letter from her solicitors purported to rescind, this was clearly erroneous in the circumstances. At no stage did the plaintiff contend that she would perform the Agreement if she was wrong in relation to her purported rescission. She had previously stated in unequivocal terms that she would not.
(a) that the plaintiff repudiated the agreement in or about July 2022 by indicating to defendant that the plaintiff would not be completing the purchase of the Property (paragraph 23(b)); and (b) that the defendant accepted the plaintiff’s repudiation of the Agreement (paragraph 23(c)).
Whilst the Particulars to paragraph 23(c) refer to the defendant’s acceptance being inferred from its conduct, including by failing to issue a notice to complete and by transferring the Property to a third party, I do not accept that the plaintiff is prejudiced by permitting the defendant to rely on the 6 December 2022 letter.
The defendant’s opening written submissions referred to the letter as evidencing the acceptance of the repudiation. The letter was admitted without objection.
The plaintiff came to meet a case that she repudiated by what she said in July 2022, and this repudiation was later accepted by the defendant. The letter is simply evidence of the acceptance.
I also do not accept that the position in relation to reliance on the 6 December 2022 letter is really no different than the application to amend made at the start of the hearing which I refused for the reasons briefly set out above. I refused the amendment at the start of the hearing based on the arguments then put having regard to the effect of allowing the defendant to allege that further conduct of the plaintiff was repudiatory. No application was thereafter made, obviously enough, for me to revisit my earlier ruling.
Further, the sale of the Property to Oak is clear evidence of acceptance of the repudiation. Whilst not immediately known, this eventually came to the notice of the plaintiff. It was known at least by May 2024, prior to the plaintiff commencing these proceedings.
I also do not accept the plaintiff’s contention that any purported acceptance on 6 December 2022 was not effective because it was not made in a reasonable time from July 2022. Whilst an election to terminate must generally occur within a reasonable time of the discovery of the circumstances giving rise to the right, there is no requirement to elect immediately. The promisee may keep its options open so long as it does nothing to affirm the contract and so long as the promisor’s position is not prejudiced on consequence of the delay: see Galafassi v Kelly (2014) 87 NSWLR 119; [2014] NSWCA 190 at [88] per Gleeson JA (with whom Bathurst CJ and Ward JA agreed). There was no affirmation by the defendant and no prejudice was pointed to by the plaintiff.
The parties were at odds as to whether the defendant was required, in order to retain the deposit, to establish that she was ready, willing and able to perform at the time that she accepted the plaintiff’s repudiation and elected to terminate the Agreement.
The plaintiff contended that the defendant was so required to establish she was ready, willing and able and she had not done so. The defendant contended that she was not required to establish her readiness, willingness and ability and, if she was, she had so demonstrated.
In Carter, the learned author states at [10-38]:
The general rule is that a promisee may elect to terminate – “accept” the repudiation – whether or not the promisee was ready and willing to perform at the time of the election. Clearly, if election precedes arrival of the time for performance by the promisee, the fact that at that time the promisee may not have been ready and willing to perform is irrelevant, and cannot impede termination. Whether the promisee would have been able to perform at the time appointed for performance can be relevant only to the assessment of damages.
The parties in the present case were agreed that the defendant was not required to prove readiness, willingness and ability to perform in order to validly terminate. The dispute was a narrower one – whether this must be proved by the defendant to retain the deposit.
The authorities in this regard were relevantly considered in Sharjade Pty Ltd v Commonwealth (2009) 15 BPR 28,443; [2009] NSWCA 373 (Sharjade). At [61], Hodgson JA stated, having previously set out the statements of Stephen, Mason and Jacobs JJ in DTR Nominees and the statements of Mason CJ and Dawson J in Foran v Wight (1989) 168 CLR 385; [1989] HCA 51 (Foran), that a contrary view was forcefully stated by Deane J in Foran at 437-8 as follows (emphasis added):
In these circumstances, it is strictly unnecessary that I express any view on the question whether one party to a contract is precluded from rescinding it by accepting a repudiation of the contract by the other party if he is not in a position to prove that he is, or but for the repudiation would have been, ready, willing and able to perform the contract. However, in view of the discussion of that question in other judgments, it would seem desirable that I indicate that, notwithstanding some statements of authority to the contrary, I do not accept the proposition that a party must incur the expense necessary to put himself in a position where he can positively demonstrate actual or potential readiness and willingness to perform a contract before he can accept the repudiation of the other party and thereby rescind. In my view, that proposition is unjustified by either principle or common sense. Absence of actual or potential readiness or willingness to perform a contract will prima facie preclude a successful action against the other party for specific enforcement of the contract or for the recovery of damages for its breach. It does not, of itself, preclude rescission of the contract by acceptance of the other party’s repudiation. Were it otherwise, the law would require the useless and futile expenditure by an innocent party of whatever time, effort or money was necessary to place himself in a position where he could positively demonstrate actual or potential ability to perform a contract in order to be able to bring it to an end on the ground that it had already been repudiated by the other party. Indeed, it is difficult to see why, as a matter of principle or common sense, actual breach or even repudiation by one party to a contract should prevent that party from rescinding the contract by accepting a repudiation of the contract by the other party. Put differently, it is difficult to see why the law should insist that, even though both parties to a contract have repudiated it, the contract must hang like an albatross around their necks unless and until they can reach a new agreement about its termination. The point can be illustrated by the hypothetical example of express repudiation by each party to a contract followed by acceptance of the other’s repudiation and unilateral rescission of each of them. How can it be said that, in those circumstances, the law continues to require that each perform the contract?
Hodgson JA then observed that all of the views in Foran were obiter dicta but that he agreed with Deane J (at [62]).
At [64]-[73], Hodgson JA stated:
[64] In my respectful opinion, the support given in Foran by Mason CJ and by Dawson J to the proposition from DTR, and similar views expressed in Foran by Brennan J, are weakened by a failure to carefully keep distinct three questions:
(1) the availability of termination to put an end to obligations to perform a contract in the future;
(2) availability of termination plus a cause of action for at least nominal damages; and
(3) availability of termination plus a cause of action for substantial damages for loss of the bargain.
[65] Mason CJ in Foran does advert to this distinction at 406–7, but he notes that Rawson v Hobbs (1961) 107 CLR 466 ; [1961] HCA 72, on which he relies, relates to “readiness and willingness as a material element in the existence of a plaintiff’s cause of action”; that is, to questions (2) and (3) above. He goes on to extend the requirement to question (1), referring to the statement in DTR quoted earlier; but then on 406, he says that “Insistence on the plaintiff being ready and willing is a means of ensuring that a plaintiff will not succeed in an action for breach of contract if the contract has gone off through his wrongful default or conduct”, a consideration applying only to questions (2) and (3), not to question (1). Then Mason CJ then goes on to comment on the more stringent requirements for readiness and willingness in the case of actual breach which, if extended beyond cases of interdependent obligations, is contrary to authorities referred to in [57] above.
[66] Brennan J’s discussion at 424–7 seems to be to similar effect; and at 430–431 Brennan J carefully distinguishes between two aspects of readiness and willingness in the case of a purchaser’s termination for anticipatory breach: to be entitled to terminate at all, the purchaser must not be substantially incapable of completing in due course; while to obtain damages, the purchaser must prove on the balance of probabilities that it would have been able to complete.
[67] Dawson J at 452–453 expresses similar views, but relates them to a statement that “a party should not be able to sue for breach if he is unable or unwilling to carry out his part of the bargain”; that is, he seems to be considering questions (2) and (3), and not question (1).
[68] As a matter of principle, it seems to me that the view of Deane J is preferable. If the only question is whether a purported termination is effective to put an end to the contract so as to discharge both parties from future performance, then anticipatory breach by one will justify termination by the other whether or not the latter is ready and willing to perform. However, if the latter wants to obtain any relief on the basis of the termination, beyond mere discharge of future obligations, then as part of its cause of action it must prove readiness, willingness and ability. It is no longer necessary to explicitly allege this (UCPR 14.10), but if it is put in issue, the onus lies on the plaintiff to prove it in order to establish such a cause of action.
[69] In my opinion, the view of Deane J in Foran is strongly supported by the following considerations, based on the decision of the High Court in Amann Aviation. In that case, the plaintiff Amann Aviation was in breach of contract, but the breach was insufficient to justify termination by the Commonwealth. The Commonwealth’s purported termination was held to be a repudiation, and Amann Aviation’s acceptance of this repudiation was held to be effective to terminate the contract. Amann Aviation’s non-essential breach did not preclude it from effectively terminating the contract for the Commonwealth’s repudiation; and indeed, its readiness, willingness and ability to perform in the future was sufficient to support its claim for damages. If however Amann Aviation’s actual breach had not been non-essential, or if Amann Aviation had been shown to be permanently unable to afford substantial performance, then the Commonwealth’s termination would have been effective; and Amann Aviation as well as the Commonwealth could have relied on the Commonwealth’s termination to resist any call for further performance.
[70] The views of Stephen, Mason and Jacobs JJ in DTR, and of Mason CJ, Brennan and Dawson JJ in Foran, in effect propose an intermediate position, where the breach by the party in the position of Amann Aviation is insufficient to have the effect that repudiation by the party in the position of the Commonwealth is effective to terminate the contract, but yet somehow too much to permit the party in Amann Aviation’s position to do what Amann Aviation did, namely treat the Commonwealth’s purported termination as a repudiation and itself terminate. In my respectful opinion there is no such intermediate position that can be justified. Suppose that the breach ultimately relied on by the party in the position of the Commonwealth were the permanent inability of the party in Amann Aviation’s position to substantially perform the contract, and it was unclear whether or not this was established. Surely the position would then be that the contract was at an end, either because of the termination by the party in the position of the Commonwealth or because of the termination by the party in the position of Amann Aviation; and so far as concerned obligations for performance in the future, it would not be necessary to determine which was the true position. It would of course be necessary to do so if either party was claiming damages, but that is not the question here under consideration.
[71] I would add that the actual decision in DTR does not support such an intermediate position, because that decision turned on a finding of fact that, in the circumstances, the purported termination by the purchaser was not a repudiation, because it conveyed only the intention not to perform the contract on the interpretation then being advanced by the vendor. That finding reflects the very reasonable reluctance of the courts to find repudiation when what is really happening is a bona fide and reasonable dispute about the true effect of the contract.
[72] The view I have been supporting (that a party in fundamental breach of contract can terminate for fundamental breach by the other party, but generally cannot claim damages for loss of the bargain) has some support from two articles that deal with the question: Andrew Beech “Terminating a contract: dispensing with the requirement of readiness and willingness” (1992) Journal of Contract Law 5 pp 47–59, and Wayne Courtney “Termination of contract by a party in breach” (2008) The Journal of Business Law 3 pp 226–45.
[73] The support from the second of those articles is more tentative than that from the first. In this article, Mr Courtney points out that, unless the fundamental breaches by each party happen to occur simultaneously, the problem would arise only where the fundamental breach occurring second cannot take effect as an acceptance of the earlier fundamental breach by the other party: if it can do so, then the contract must be at an end by virtue of the later breach operating as an acceptance of the earlier breach. Where the later breach cannot take effect as acceptance of an earlier fundamental breach by the other party, for example because the party guilty of the later breach had affirmed the contract, Mr Courtney (at 243–245) favours Deane J’s approach, but notes three objections. The first two objections seem to me to fail to keep distinct the question of discharge of future obligations from the question of availability of damages; while a third objection, namely that where both parties are repudiating neither can terminate, seems clearly incorrect. Unless the repudiatory acts happen to occur simultaneously, the later of them will as a matter of law terminate the contract, albeit that neither party will be able to claim damages for loss of the bargain.
Young JA at [141] agreed with Hodgson JA that it was important to distinguish different categories of cases where both parties have committed some breaches of contract. Category (iii) was, relevantly, where a party terminates but does not seek damages (though may seek recovery of a deposit under restitutionary principles).
At [145], Young JA stated in relation to category (iii) he agreed with Hodgson JA that the principle is as Deane J put in Foran that a party who wishes to terminate (and recover a deposit), does not have to incur the expense to put himself or herself in a position where he or she can positively demonstrate actual or potential readiness and willingness to perform the contract.
Young JA was ultimately not prepared to decide the case on the basis of Deane J’s view in Foran, but rather agreed with Sackville AJA’s proposed method of resolution of the appeal.
The third member of the Court, Sackville AJA determined the appeal on the basis of an earlier decision of a Court of Appeal in Roadshow Entertainment Pty Ltd v (ACN 053 006 269) Pty Ltd (1997) 42 NSWLR 462 applying the general principle that a party in breach of a non-essential term is not prevented from rescinding for a fundamental breach or repudiation by the other party.
At [177], Sackville AJA observed that the observations in DTR Nominees (which Hodgson JA regarded as raising difficulties with his analysis) were quoted with approval by Mason CJ (in dissent) and Dawson J in Foran. Sackville AJA then stated:
When read in context, I do not think that the statements of Mason CJ and Dawson J in Foran v Wight were intended to address a case of termination for an essential breach of a non-essential term.
[14] Generally speaking, the doctrine of anticipatory breach enables a party to an executory contract to elect to terminate it and bring an action in damages upon a counterparty’s renunciation of, or disablement from performing, the contract, notwithstanding that the time for performance had not expired at the time of termination: see Hochster v De la Tour (1853) 3 El & Bl 678 at 687–8 ; 118 ER 922 at 925. In delineating that doctrine, reference to the innocent party’s readiness and willingness (in some relevant sense) may occur in relation to three entitlements (Sharjade Pty Ltd v Commonwealth of Australia (2009) 15 BPR 28,443; [2009] NSWCA 373; BC200910666 at [64] (Hodgson JA)):
(1) the entitlement to terminate, in order to be discharged from future performance and recover any deposit;
(2) the entitlement to bring a cause of action in damages for anticipatory breach; and
(3) the entitlement to recover substantial damages for loss of bargain in such an action.
[15] The first entitlement is attended by some controversy. On one view, a party wishing to terminate a contract for anticipatory breach of a dependent obligation must be ready and willing to perform on its part at that time: DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 at 433 ; 19 ALR 223 at 231 ; BC7800034 (Stephen, Mason and Jacobs JJ); Foran v Wight (1989) 168 CLR 385 at 406–7 ; 88 ALR 413 at 427 (Mason CJ), at CLR 422; 438–9 (Brennan J), at CLR 452 (Dawson J). However, that requirement has been questioned as not justified by principle or common sense: Foran v Wight at CLR 437–8 (Deane J); Sharjade at CLR [60]–[63], [68] (Hodgson JA), CLR [176]–[177] (Sackville AJA). The respondent’s repayment of the partly paid deposit makes it unnecessary to consider this dispute any further.
[123] Applying these principles to the present case, it is my opinion that it was open to the defendant on 11 February 2020 to accept the plaintiffs’ repudiation of the contract for sale, and thereby terminate the contract so as to discharge both parties from future performance. However, the conclusion that the defendant was herself not in a position of readiness, willingness and ability to perform her obligations under the contract has the consequence that she cannot obtain any relief beyond the discharge of future obligations. Counsel for the defendant accepted that if the principles as stated by Hodgson JA in Sharjade Pty Ltd v Commonwealth (supra) were applied, and if the Court found that the defendant was not relevantly ready, willing and able to perform her obligations under the contract, the defendant could not sue for damages and would not have an entitlement to recover the deposit.
[124] I think that is correct. I therefore conclude that the contract for sale was terminated by the defendant on 11 February 2020 on account of the plaintiffs’ repudiation, but she is not entitled to recover the deposit under the contract or sue for damages for its breach.
The deposit in Lavigne was held in an account jointly controlled by the parties. The defendant/vendor sought by her cross claim, an order for recovery of the deposit.
In light of the conclusion that I reach below, that as at 6 December 2022, the defendant remained ready, willing and able to perform – in the sense of transferring the Property to the plaintiff pursuant to the Agreement – the legal issue presented above does not arise for consideration.
In any event, there is a real issue, in the present case, whether the defendant’s conduct, in resisting the plaintiff’s claim for return of the deposit, can be regarded as obtaining relief on the basis of the termination beyond the mere discharge of future obligations. It seems to me that when Hodgson JA was referring to a party obtaining relief on the basis of the termination beyond the mere discharge of future obligations, he was referring to a terminating party obtaining loss of bargain damages and the like. This emerges most clearly from [72] and [73] of his Honour’s reasons. So understood, it is clear why his Honour observed that the terminating party, as part of its cause of action, is required to prove readiness and willingness to perform. Young JA appears to have regarded Hodgson JA as not requiring proof of willingness etc to perform as necessary when what was sought was return of the deposit.
It is not clear to me, as to why an action for return or retention of the deposit includes, as an element of the cause of action, proof of readiness and willingness to perform. I agree with Carter, as set out above, that readiness and willingness to perform can be relevant only to the assessment of damages. It is not necessary, however, to express a concluded view on this.
Turning to the factual position – whether as at 6 December 2022 the defendant was ready, willing and able to perform her obligations – the position may be summarised as follows:
(a) as at mid-October 2022, no doubt by reason of what the plaintiff said to her in July 2022 and the lack of any action by or on behalf of the plaintiff to suggest that the plaintiff was at all interested in continuing to buy the Property, the defendant determined to sell the Property to her son; (b) to the extent it be relevant, the defendant was not motivated in this regard by any desire to put the Property out of the reach of the plaintiff. There was no suggestion at this stage of any claim by the plaintiff on the defendant. The defendant was motivated by the desire to free up some money to live off; (c) contrary to the plaintiff’s theory that the defendant was motivated by a desire to put the Property beyond the reach of the plaintiff, I am satisfied that the defendant would have been prepared to go through with the sale to the plaintiff had the plaintiff indicated a desire to do so. Such a preparedness is consistent with the defendant’s evidence as to why she sold the Property to her son and not to a third party – so as to make it easier for the plaintiff to buy the Property if she ultimately decided to go ahead. The defendant would also have received more money by going through with the sale to the plaintiff then selling to her son. Such a conclusion is far more likely than that pressed for by counsel for the plaintiff – the defendant would have gone ahead with a sale at an undervalue with perhaps the only person aware of the plaintiff’s prior claim; (d) once the sale to the defendant’s son was completed by execution of the contract for sale of land, it was obviously no longer possible for the defendant to perform her obligations. At all times prior to then, I am satisfied that she would have been prepared to go ahead with the Agreement, had the plaintiff been willing to do so.
In Rawson v Hobbs (1961) 107 CLR 466; [1961] HCA 72 at 481, Dixon CJ insisted on care “to see that nothing but a substantial incapacity or definitive resolve or decision against doing in the future what the contract requires is counted as an absence of readiness and willingness”.
In the present case, there was no definitive resolve on the part of the defendant not to sell to the plaintiff. The decision to sell to the defendant’s son was as a result of the plaintiff’s statements that she was no longer willing to buy, reinforced by her taking no steps to buy. Had the plaintiff indicated to the defendant prior to the contract being entered into between the defendant and Oak on 19 January 2023, the defendant would likely have gone ahead with the Agreement. It was for a higher price than she was receiving from Oak.
The plaintiff raised a number of arguments as to why, even if the defendant successfully brought an end to the Agreement by reason of the plaintiff’s repudiation, the defendant was nonetheless required to return the deposit.
The plaintiff contended as follows:
(a) first, the entire $170,000 should be returned on the basis that if a deposit constitutes an unreasonable sum and is therefore not a true deposit, it must be repaid as a whole. A deposit in excess of 10 percent was said to be unreasonable. Having regard to the decision of the Privy Council in Workers Trust & Merchant Bank Limited v Dojap Investments Limited [1993] AC 573 (Dojap) it was contended that if the deposit was unreasonable it must all be returned, not just that which exceeds a reasonable deposit of 10 percent; (b) second, the sum of $90,000 should be returned on the basis that this amount was paid well after exchange and viewed objectively was not in the nature of a deposit but a part payment towards the purchase price; (c) third, $55,000 should be returned, being the sum of the portion of the deposit that is greater than 10 percent and the “processing fee”; (d) finally, the $20,000 “processing fee” should be returned as it is not in the nature of a deposit, and the defendant has not in fact incurred any “processing fee”.
The defendant contended that the $150,000 deposit could be retained, it not being unreasonable in amount. So the argument ran, there is no requirement that a deposit be limited to 10% as the parties are open to agree to a figure payable as a deposit. The larger deposit amount was listed because it would, on the parties’ understanding, mean that the plaintiff would not have to pay lenders mortgage insurance.
I should record at the outset of this part of the judgment that the defendant effectively conceded that $20,000 of the $170,000 should be returned. Nothing was advanced by counsel for the defendant as to why the $20,000 should be regarded as part of the deposit and thus treated along with the remaining $150,000. Although at some stage, the plaintiff may have asked for the deposit to be increased to $170,000 - see the defendant’s evidence as to what was said on 18 March 2022 - the additional $20,000 was in fact regarded by the parties in the Agreement as a processing fee and not as part of the deposit. The payment of this amount by the plaintiff to the defendant appears to have been linked to whether the plaintiff would be required to obtain lenders mortgage insurance which I presume is linked to the amount to be borrowed. The $20,000 should be returned by the defendant to the plaintiff.
I proceed on the basis that the deposit is $150,000 as recorded in the Agreement. It is approximately 13 percent of the purchase price.
I deal next with the contention – raised second in the waterfall of arguments recorded above – that $90,000 should be returned on the basis that this amount was paid well after exchange and viewed objectively it was not in the nature of a deposit but a part payment towards the purchase price.
I do not accept this argument. The agreement struck between the parties, as recorded in the Agreement, is that the deposit would be $150,000. The plaintiff paid $80,000 on 13 March 2022 and indicated that she would pay the rest of the deposit by the end of the month as she had to get the rest from Thailand. The defendant agreed to this.
The case is one where the $150,000 deposit was payable in two instalments – the second being payable by the end of March 2022.
Payment of the second instalment is not conditioned on a breach of contract, rather it is in earnest performance of the Agreement: see the discussion in Kazacos v Shuangling International Development Pty Ltd (2016) 18 BPR 36,353; [2016] NSWSC 1504 at [40]-[53] per White J.
I turn now to consider the principal argument raised by the plaintiff against the defendant retaining the $150,000 deposit – namely that it constituted an unreasonable sum (being in excess of the customary ten percent) and is therefore not a true deposit and must be repaid as a whole.
Counsel for the plaintiff placed considerable reliance on the decision of the Judicial Committee of the Privy Council (on appeal from the Court of Appeal in Jamaica) in . That case considered a property sold at auction where the contract provided for payment of a deposit of 25% of the purchase price, with the remainder of the purchase money payable within 14 days of the auction. The contract further provided that the deposit was forfeited if the vendor terminated the contract consequent upon breach by the purchaser.
In general, a contractual provision which requires one party in the event of his breach of the contract to pay or forfeit a sum of money to the other party is unlawful as being a penalty, unless such provision can be justified as being a payment of liquidated damages being a genuine pre-estimate of the loss which the innocent party will incur by reason of the breach. One exception to this general rule is the provision for the payment of a deposit by the purchaser on a contract for the sale of land. Ancient law has established that the forfeiture of such a deposit (customarily 10% of the contract price) does not fall within the general rule and can be validly forfeited even though the amount of the deposit bears no reference to the anticipated loss to the vendor flowing from the breach of contract.
…
Ever since the decision in Howe v Smith, the nature of such a deposit has been settled in English law. Even in the absence of express contractual provision, it is an earnest for the performance of the contract: in the event of completion of the contract the deposit is applicable towards payment of the purchase price; in the event of the purchaser’s failure to complete in accordance with the terms of the contract, the deposit is forfeit, equity having no power to relieve against such forfeiture.
However, the special treatment afforded to deposits is plainly capable of being abused if the parties to a contract, by attaching the label “deposit” to any penalty, could escape the general rule which renders penalties unenforceable.
…
It is not possible for the parties to attach the incidents of a deposit to the payment of a sum of money unless such sum is reasonable as earnest money. The question therefore is whether or not the deposit of 25% in this case was reasonable as being in line with the traditional concept of earnest money or was in truth a penalty intended to act in terrorem.
In their Lordships’ view the correct approach is to start from the position that, without logic but by long continued usage both in the United Kingdom and formerly in Jamaica, the customary deposit has been 10%. A vendor who seeks to obtain a larger amount by way of forfeitable deposit must show special circumstances which justify such a deposit.
In the view of their Lordships, since the 25% deposit was not a true deposit by way of earnest, the provision for its forfeiture was a plain penalty. There is clear authority that in a case of a sum paid by one party to another under the contract as security for the performance of that contract, a provision for its forfeiture in the event of non-performance is a penalty from which the court will give relief by ordering repayment of the sum so paid, less any damage actually proved to have been suffered as a result of non-completion: Commissioner of Public Works v Hills [1906] A.C 368. Accordingly, there is jurisdiction in the court to order repayment of the 25% deposit.
The Court of Appeal took a middle course by ordering the repayment of 15% out of the 25% deposit, leaving the bank with its normal 10% deposit which it was entitled to forfeit. Their Lordships are unable to agree that this is the correct order. The bank has contracted for a deposit consisting of one globular sum, being 25% of the purchase price. If a deposit of 25% constitutes an unreasonable sum and is not therefore a true deposit, it must be repaid as a whole. The bank has never stipulated for a reasonable deposit of 10%: therefore it has no right to such a limited payment. If it cannot establish that the whole sum was truly a deposit, it has not contracted for a true deposit at all.
Dojap was cited with apparent approval by Santow JA (with whom Tobias JA and Brownie AJA agreed) in Havyn Pty Ltd v Webster (2005) 12 BPR 22,387; [2005] NSWCA 182 at [132] and [134]. Dojap, however, is heavily criticised in Carter at [13-54]. The fourth criticism is that although the Privy Council thought otherwise, the better view is that the payer is entitled to retain what would have been a reasonable sum. In other words, relief extends only so far as the deposit is penal in amount.
In Luu v Sovereign Developments Pty Ltd (2006) 12 BPR 98,203; [2006] NSWCA 40, Bryson JA (with who Handley and McColl JJA agreed) stated at [24]-[25]:
[24] Where parties make an agreement for a sale which is to be completed at some time in the future it is unremarkable and only to be expected that the vendor will require the purchaser to pay some part of the purchase money straight away so as to show that the purchaser is in earnest in committing himself to pay the rest, on the understanding that the purchaser will not get his earnest money back if he does not complete the sale. For contracts of sale of land it has long been customary practice and established law that the purchaser pays a deposit on account of the purchase money when the contract of sale in writing is made, and cannot recover that deposit if he later fails to complete the bargain and pay the rest; whether or not the vendor’s losses are actually more or less than the amount of the deposit. Notwithstanding the apparent inconsistency the invalidity of contractual penalties does not apply to contractual provisions for forfeiture of reasonable deposits in sales of land. In New South Wales it has long been usual to require a deposit of 10% of the purchase money, and this practice has not encountered challenge; on the other hand provisions relating to forfeiture of purchase moneys other than a reasonable deposit should be regarded as open to challenge. The assumption that provisions for forfeiture of deposits of reasonable amount are effective underlies statutory provisions for relief against their forfeiture; see s.55 of the Conveyancing Act 1919. The exception from the law relating to penalties relates and relates only to deposits, that is, to payments which truly have the character of earnest money paid on or in relation to entering into the Contract, and although provisions of contracts almost always establish what the deposit is, it is not open to parties to avoid the operation of penalties law by designating a payment or an obligation as a deposit if it does not otherwise have that character.
25 This following passage from Mehmet v Benson (1963) 81 WN (Pt 1) (NSW) 188 at 191 (Jacobs J) shows the view which has long been held and acted on in New South Wales:
In my view a provision for forfeiture of instalments under a contract for the sale of land, even when possession has been given under the contract, is in the nature of a penalty and the person penalized will be entitled to relief in equity unless there are contrary circumstances which would make it inequitable to grant such relief even upon terms.
In the present case I do not think there are any circumstances which would make relief from the forfeiture inequitable, because I think that any unfairness, which might otherwise be caused to the defendant, can be met by the imposition of suitable terms. Before dealing with these terms, I should state my conclusion that the initial deposit in this case of £3,000 goes beyond a deposit as an earnest of the bargain between the parties and must be regarded to the extent to which it exceeds a normal deposit, as an instalment of purchase money.
In my view a normal deposit is ten per cent. I realize that upon one view I should have expert evidence of what usually is the course of business in regard to the amount of deposits, but it seems to me that to require such evidence, when so many contracts are observed in these courts and generally in the community, with a deposit of ten per cent, is to substitute rigidity for reality in one’s approach to the matter.
The decision of Jacobs J. was reversed in the High Court of Australia: (1965) 113 CLR 295; but not on this ground.
However, it has long been established that the principles concerning penalties and forfeitures do not apply to stipulations in contracts for the sale of land that provide for forfeiture of reasonable deposits. That is the case even though the amount bears no reference to the actual loss that might flow from the breach that gives rise to the forfeiture. This exception applies only in respect of payments that truly have the character of a deposit, and only to the extent that such payments are reasonable, not excessive, in amount (see Havyn Pty Ltd v Webster (supra) at [134]-[137]; Luu v Sovereign Developments Pty Limited (supra) at [25]; Iannello v Sharpe (supra) at [31]; Workers Trust and Merchant Bank Limited v Dojap Investments Limited (supra) at 578-579, cited with approval by the High Court in Commissioner of Taxation v Reliance Carpet Co Pty Limited [2008] HCA 22; (2008) 236 CLR 342 at [25]-[26]; see also Andrews v Australia and New Zealand Banking Group Limited (supra) at [43]). Advantage cannot be taken of this exception merely because the parties to the contract have labelled or designated a payment as a deposit.
Central to the inquiry is whether the payment truly has the character of a deposit. As was pointed out by the High Court in Commissioner of Taxation (Cth) v Reliance Carpet Co Pty Ltd (2008) 236 CLR 342; [2008] HCA 22 at [22]-[27] a deposit in the conveyancing context has several aspects, including that a deposit is provided as an earnest to bind the bargain, and is provided as a form of security for the performance by the purchaser of its obligations under the contract. In this last aspect, the High Court went on to observe at [26] that the vendor could take the property off the market and not concern itself with other offers in case the sale should go off, with the comfort that at least the deposit is there for its security.
I do not read the cases as laying down an in effect no more than ten percent or nothing test.
While the authorities refer to a deposit customarily or ordinarily being ten percent, the relevant issue to my mind is whether the deposit is a genuine deposit in the sense discussed above and is not unreasonable in amount.
In the present case I am satisfied that the deposit is a genuine deposit. It was offered by the plaintiff and then paid in circumstances where the defendant was otherwise proposing to sell the property at auction. It was offered by the plaintiff and accepted by the defendant as security to the defendant for taking the property off the market. It is not unreasonable in amount – being 13 percent of the purchase price. It is also of some significance in my view that the bargain was struck between the plaintiff and defendant without the intervention of solicitors. There is nothing to suggest that the parties were aware of the customary 10 percent deposit.
If, contrary to the above, the correct principle is that a vendor seeking to retain a deposit of greater than 10 percent bears an onus to demonstrate special circumstances, then I am satisfied that special circumstances exist in the present case. Those special circumstances are the circumstances that I have set out above, namely:
(a) the amount of the deposit of $150,000 was nominated by the plaintiff purchaser; (b) it was nominated at a time when the defendant vendor was otherwise proposing, to the knowledge of the plaintiff purchaser, to sell the Property at public auction. It was offered so as to persuade the defendant vendor to sell the Property to the plaintiff purchaser and thus take the Property off the market. It was a true deposit in the relevant sense; (c) the amount of the deposit is not unreasonable or excessive, being only slightly larger than the ordinary deposit of 10 percent.
55 Right of purchaser to recover deposit etc
…
(2A) In every case where the court refuses to grant specific performance of a contract, or in any proceeding for the return of a deposit, the court may, if it thinks fit, order the repayment of any deposit with or without interest thereon.
[100] This power, and its relationship with contractual damages, was considered by this Court in Stokes v Toyne [2023] NSWCA 59 at [99]-[106]. It is well settled that this provision creates a power to relieve against the forfeiture of a deposit which is broader than that available in equity: Havyn Pty Ltd v Webster [2005] NSWCA 182; (2005) 12 BPR 22,837 at [137]; Luu v Sovereign Developments Pty Ltd [2006] NSWCA 40; (2006) 12 BPR 23,629. But the discretion is not unconfined. In Lucas & Tait (Investments) Pty Ltd v Victoria Securities Ltd [1973] 2 NSWLR 268, Street CJ in Eq said at 272 that the provision does not give to a court an “overall discretionary supervision of monetary adjustments between parties to a contract under which a deposit was paid but which has been terminated”. Instead, “[A] vendor who forfeits a deposit in strict enforcement of his legal rights is not to be deprived of it under s 55(2A) unless it is unjust and inequitable to permit him to retain it”. That has been confirmed by what was said in Romanos v Pentagold Investments Pty Ltd (2003) 217 CLR 367; [2003] HCA 58 at [27], although what is “unjust and inequitable” may be a contestable conclusion in any particular case.
[101] However, it is well-settled that in the exercise of that discretion, the court should not weaken the proper function of a deposit as an earnest of performance: Havyn at [150]-[151], [155]; Nassif v Caminer (2009) 74 NSWLR 276; [2009] NSWCA 45 at [67], [91]. As Arden LJ said in Omar v El-Wakil [2001] EWCA Civ 1090; [2002] P & CR 36 at [35], in a passage approved in Havyn at [151], “the court must bear in mind that the payment in question was a ’deposit’, that is an earnest for performance and that accordingly there should not be relief simply because the …contract never took place”.
In summary, the plaintiff submitted that the Court should exercise the discretion under s 55(2A) of the CA because it would be unjust for the defendant to rely on any strict legal right in circumstances where:
the nature of the written agreement was unsatisfactory; the parties conducted themselves in an informal nature; and the written document used by the defendant was not fit for purpose;
the fact that all the parties appear to have understood that James was to be the owner of the Property and, as such, the Agreement did not correctly record the parties to it;
the defendant has not suffered any loss and is still living in the Property;
the circumstances in which the plaintiff says the Agreement was signed, which explains why the Agreement was inconsistent with the bargain struck orally, including that there was no agreement as to what percentage or sum the deposit would be, there was no agreement about a processing fee and the defendant and her son would assist with obtaining finance which did not occur;
the defendant’s election to terminate was not communicated in a clear and unequivocal manner and was unreasonably delayed.
The defendant submitted that the Court should not exercise the discretion under s 55(2A) of the CA because:
none of the plaintiff’s pleaded discretionary factors give rise to any injustice or inequity;
the defendant sold the Property for less than the contracted price with the plaintiff;
the plaintiff delayed by a period of more than nine months between its first formal demand and its subsequent demand; and
none of the matters pleaded in paragraph 33 of the Statement of Claim support the exercise of the discretion under s 55(2A) of the CA:
(i) the absence of a completion date is irrelevant in circumstances when the law implies that the time for completion is a reasonable time and the plaintiff failed to take any steps to compel settlement; (ii) the absence of the documents required by the Regulations is irrelevant when the plaintiff could have rescinded within 14 days and she never requested the documents; (iii) there was no request by the defendant for additional funds and in any event the plaintiff did not accept any repudiation or take any steps to compel completion; (iv) the defendant did terminate the Agreement.
For the reasons set out above, save for the return of the $20,000, the claims made by the plaintiff fail.
I will give the parties an opportunity to agree orders to give effect to these reasons and as to costs. Failing agreement, I will determine any remaining issues on the papers.
The orders of the Court are:
Direct the parties to confer and seek to agree final orders to give effect to these reasons, including as to costs.
Direct the parties to provide any agreed orders, or competing orders, to my Associate by no later than 5pm on 27 June 2025.
In the event there is no agreement, including as to costs, direct the parties to provide to my Associate by no later than 5pm on 27 June 2025 any submissions and supporting material, such submissions not to exceed 3 pages.
Direct the parties to provide to my Associate by no later than 5pm on 9 July 2025 any submissions and supporting material in reply, such submissions not to exceed 3 pages, whereupon the remaining issues will be determined on the papers.
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Lewington
Dulyakarn [2025] NSWSC 635
(2008) 236 CLR 342
(1985) 155 CLR 342
(1978) 138 CLR 423
(1989) 168 CLR 385
(2014) 87 NSWLR 119
(1954) 90 CLR 409
(1996) 41 NSWLR 30
(1961) 107 CLR 466
(1997) 42 NSWLR 462
(1982) 149 CLR 620
(1965) 113 CLR 295
(2003) 217 CLR 367
(2009) 74 NSWLR 276
The plaintiff contended that there was a meeting on 22 February 2022 which the defendant denied. Save for seeking to tie the date of the meeting to James’ birthday, there was nothing in the objective material to support it. I do not accept that there was any meeting of any significance on or about 22 February 2022. I also do not accept the plaintiff’s evidence that there was another meeting in late February 2022.
Regardless of what occurred in February, it now seems clear that there was a further meeting on or about 13 March 2022. There was another Line message from the plaintiff to the defendant dated 12 March 2022 asking for the defendant to call in.
The plaintiff and defendant met on 13 March 2022 when the plaintiff gave $80,000 in cash to the defendant. In her affidavit evidence the plaintiff made no reference to anything occurring on 13 March, suggesting all had occurred on 18 March 2022 when the Agreement was signed. In cross examination, however, she admitted to meeting and paying the money to the defendant. She also agreed that she said to the defendant that she was to travel to Thailand to obtain the rest of the deposit and transfer it to the defendant.
The defendant’s account of what occurred on 13 March 2022, which I generally accept, was as follows:
The plaintiff’s version was quite different. She alleges that in mid-June 2022, the defendant, Oak and the plaintiff had an in person conversation at the Property to the following effect:
On 6 December 2022, the defendant’s lawyers responded. Amongst other things, the letter pointed out that the right of rescission had to have been exercised within 14 days of the Agreement which did not occur. An offer was made to resolve the matter.
The letter also asserted that by her conduct, the plaintiff had evinced an intention not to be bound by the Agreement and has accordingly repudiated, which repudiation has been accepted by the defendant. The conduct of the plaintiff referred to in the letter was:
I accept the defendant’s evidence as to the circumstances in which, and reasons why, she agreed to sell the Property to Oak.
The defendant’s account is far more likely than the competing theory advanced by the plaintiff, and put to the defendant in cross examination, to the effect that the transfer was an attempt by the defendant to put the Property out of the plaintiff’s reach.
If this was the defendant’s intention, the Property would not have been transferred to a person with knowledge of the plaintiff’s claim and not at an undervalue. The Property would likely have been sold on market to a third party arm’s length purchaser.
I do not regard the defendant’s inability to recall some details surrounding the transfer, including the amount she received, as telling strongly against her evidence as to why she sold or more generally against her credit. She was able to recall the approximate amount of the mortgage discharged.
The proceedings were commenced by statement of claim filed 5 June 2024.
I also do not accept the contention advanced by the plaintiff that if the Court found that the defendant stated to the plaintiff that the plaintiff would have to pay stamp duty of $60,000, and this is the reason the plaintiff indicated in July 2022 that she was no longer willing to buy, such conduct could not be regarded as repudiatory because the plaintiff was acting under a misapprehension as to the terms of the Agreement. Such a refusal to perform is not, in the circumstances, in any way connected with any arguable contention as to the contractual position.
I am also satisfied that the defendant accepted the plaintiff’s repudiation in the letter from the defendant’s solicitor dated 6 December 2022. That letter clearly refers to the plaintiff’s statements in July 2022 where she said she would not be completing the purchase because she could not afford it, and asserted that by this conduct, the plaintiff had evinced an intention not to be bound by the Agreement and has accordingly repudiated. The letter went on to state that the defendant “accepts that repudiation and is entitled [to] damages”. This is a clear acceptance.
I do not accept the plaintiff’s contention that it is not open to the defendant to run this case. In paragraph 23 of the defence, the defendant clearly pleads the following:
Lord Browne-Wilkinson, who delivered the judgment, stated at 578-9: