“I paid the deposit on time and the vendors have to complete the property sale.” Which case won?
Property sale contract requires payment of deposit on 4th month after contract date
On 4 April 2019, a purchaser and vendors exchanged contracts for the sale of a residential property in Vaucluse, Sydney. The purchase price was $4,830,000 with a 5% deposit.
Special condition 38 of the contract provided that the deposit was payable in two instalments.
The first instalment of $150,000 was payable on exchange, while the second instalment of $91,500 was payable “on the 4th month after the contract date”.
Vendors and purchaser disagree on final date for payment of deposit
On 1 July 2019, the purchaser travelled with his family to Greece, believing that under special condition 38 he had until 31 August to pay the second instalment of the deposit.
In July, the vendors’ agent sent two emails to the purchaser regarding payment of the second instalment. One required payment “by or before 5 August” and the other required payment “on or before 4 August”.
The purchaser said that he did not see these emails until 1 August, the same date that he had sent an email to the vendors’ agent saying: “…with regards to the second part of the deposit I’m currently overseas and have been for the past 5 weeks. However I will be returning on 6th August and will be depositing the balance there shortly after.”
On 2 August, the vendors’ agent replied saying that payment was due on 4 August. However, the purchaser was in transit from Greece to Australia and said that he did not see the email until he landed in Abu Dhabi at midnight on 5 August.
Vendors terminate contract for non-payment of deposit and purchaser seeks order for completion of sale
Meanwhile, on 5 August at 6pm, the vendors’ solicitor issued a notice terminating the contract due to the purchaser’s failure to pay the second instalment of the deposit by 4 August.
The purchaser returned to Australia on 6 August.
On 7 August, he paid the second instalment of $91,500 to the vendors’ agent and notified the vendors’ solicitor of his belief that the contract was still on foot, due to the defective notice of termination.
The vendors’ solicitor responded that the contract had been terminated on 5 August and that the $241,500 deposit paid by the purchaser was forfeited.
The purchaser commenced proceedings in the NSW Supreme Court, seeking an order that the vendors complete the sale.