Can a vendor terminate a contract for sale of land if the purchaser mistakenly pays the deposit to a cybercriminal? Which case won?
Purchaser and vendor enter into a contract for sale of land
A recent case in the NSW Supreme Court illustrates just how insidious cybercrime can be, and also how easy it is to suffer from the actions of a cybercriminal.
The vendor and purchaser entered into a contract for sale of land for a residence in NSW.
The contract was generally of the usual form, and included a clause requiring that the purchaser pay the 10% deposit, being $56,000, either by cash of up to $2000, or by cheque.
The contract required payment of the deposit by two instalments, the first instalment on the day the contract was entered into, and the second of $54,600 on a later date.
Vendor’s agent instructs purchaser to pay deposit via electronic funds transfer
Shortly before the contract was entered into, the real estate agent representing the vendor sent an email to the purchaser, directing the purchaser to pay the deposit into the agent’s trust account by electronic funds transfer.
The email included the bank account details for the agent’s trust account.
The purchaser paid the first instalment of the deposit on the contract date by electronic funds transfer to that account.
A few days before the second instalment of the deposit was due to be paid, the agent sent the purchaser another email, reminding the purchaser to make this payment, and again setting out the bank account details for the agent’s trust account.
So far, so good.
Agent’s email is hacked causing purchaser to pay deposit into fraudulent bank account
However, two days later the purchaser received another email, to which was attached an invoice for $54,600, being the amount of the second instalment of the deposit.
Both this email and the invoice had all the appearances of being from the agent and included the chain of earlier emails passing between the purchaser and the agent.
This email also included the details of a new, different bank account to which the second instalment of the deposit was directed to be paid. Not only were the details of the new bank account included in this email, but the bank account details included in the earlier emails in the chain had also been changed to the details of the new account.
So, the purchaser proceeded to pay the $54,600 second instalment of the deposit by electronic funds transfer into the new bank account as the email directed.
Unfortunately, the email with the new bank account details was fraudulent, having been sent by a hacker who had illegally accessed the agent’s email account.
As a result, the $54,600 paid by the purchaser was paid into the bank account of the cybercriminal, not into the trust account of the agent.
Vendor purports to terminate contract and purchaser applies to Supreme Court
When the vendor did not receive the second deposit instalment of $54,600, it purported to terminate the contract.
The purchaser applied to the NSW Supreme Court to restrain the vendor from dealing with the property in any manner other than by completing the sale.