Lewington v Dulyakarn

1. [1]

   The plaintiff and the defendant are cousins. They live next to each other on Oxford Street in Guildford.

2. [2]

   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.

3. [3]

   The plaintiff paid the defendant a deposit.

4. [4]

   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.

5. [5]

   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.

6. [6]

   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.

7. [7]

   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.

Application to amend defence

1. [8]

   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.

2. [9]

   The 25 October 2022 letter was from the plaintiff’s lawyer and is summarised later in these reasons.

3. [10]

   After hearing argument, I refused the application to amend.

4. [11]

   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.

5. [12]

   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.

6. [13]

   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.

7. [14]

   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.

8. [15]

   Accordingly, I did not regard it as being in the interests of justice to allow the amendment and refused it.

Approach to fact finding and the witnesses

1. [16]

   As set out above, four witnesses gave evidence in the proceedings – the plaintiff, her son (James) and the defendant and her son (Oak).

2. [17]

   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.

3. [18]

   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.

4. [19]

   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.

5. [20]

   The plaintiff was cross examined for a little over 90 minutes. The defendant was cross examined for nearly a day.

6. [21]

   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.

7. [22]

   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.

8. [23]

   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.

9. [24]

   Any objective material, and inherent probabilities and likelihoods, provides a surer guide as to the facts.

Factual chronology

1. [25]

   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.

2. [26]

   I now set out the factual chronology, resolving the disputed matters where necessary.

3. [27]

   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.

4. [28]

   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.

5. [29]

   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.

6. [30]

   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.

7. [31]

   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.

8. [32]

   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.

9. [33]

   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.

10. [34]

    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.

11. [35]

    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.

12. [36]

    The defendant’s account of what occurred on 13 March 2022, which I generally accept, was as follows:

13. [37]

    The plaintiff agreed in cross examination that she agreed to buy the Property for $1.15 million on 13 March 2022.

14. [38]

    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.

15. [39]

    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.

16. [40]

    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:

17. [41]

    In cross examination, the defendant gave evidence that she then went through the Agreement with the plaintiff.

18. [42]

    It was after that conversation that the defendant handwrote the following details onto the printed pro forma Agreement:

19. [43]

    The substantive terms of the Agreement are as follows:

20. [44]

    The Security Deposit on page two is described as “1st Payment: Date: 18 March 2022, Amount: $80,000 (AUD)”.

21. [45]

    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.

22. [46]

    I accept the defendant’s account of what occurred.

23. [47]

    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.

24. [48]

    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.

25. [49]

    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.

26. [50]

    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”.

27. [51]

    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.

28. [52]

    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.

29. [53]

    There is also no suggestion in later correspondence which alleges $170,000 should be refunded, that the sum was in fact $160,000.

30. [54]

    I do not accept that the extra $10,000 was returned.

31. [55]

    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.

32. [56]

    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:

33. [57]

    Each of the defendant and Oak denied there was any such discussion.

34. [58]

    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.

35. [59]

    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.

36. [60]

    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.

37. [61]

    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:

38. [62]

    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.

39. [63]

    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.

40. [64]

    The defendant made a recording of part of the conversation which I admitted over objection. The transcript of the recording was as follows:

41. [65]

    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.

42. [66]

    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.

43. [67]

    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.

44. [68]

    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.

45. [69]

    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.

46. [70]

    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.

47. [71]

    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 Conveyancing (Sale of Land) Regulation 2017 (NSW). A request to return the $170,000 deposit was made.

48. [72]

    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.

49. [73]

    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:

50. [74]

    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.

51. [75]

    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.

52. [76]

    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.

53. [77]

    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.

54. [78]

    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.

55. [79]

    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.

56. [80]

    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.

57. [81]

    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.

58. [82]

    I accept the defendant’s evidence as to the circumstances in which, and reasons why, she agreed to sell the Property to Oak.

59. [83]

    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.

60. [84]

    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.

61. [85]

    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.

62. [86]

    The proceedings were commenced by statement of claim filed 5 June 2024.

Issues for determination

1. [87]

   Against this factual background the following issues were raised by the parties on the pleadings and the submissions:

   1. (1)

      Is the Agreement void for uncertainty because it failed to specify any time for completion?

   2. (2)

      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?

   3. (3)

      Did either party engage in repudiatory conduct and was such repudiatory conduct accepted so as to bring the Agreement to an end?

   4. (4)

      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?

   5. (5)

      Is the defendant entitled to keep the deposit, either in whole or in part?

   6. (6)

      Is the plaintiff entitled to a return of the deposit under s 55(2A) of the CA?

2. [88]

   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.

3. [89]

   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.

4. [90]

   I do not accept the plaintiff’s contentions.

5. [91]

   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.

6. [92]

   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).

7. [93]

   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.

8. [94]

   In circumstances where I have found that the Agreement is not void for uncertainty, the issue does not arise.

9. [95]

   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.

10. [96]

    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:

11. [97]

    The plaintiff’s response to the defendant’s case in this regard had the following strands:

12. [98]

    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.

13. [99]

    The basic principles in this regard were not in dispute between the parties.

14. [100]

    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.

15. [101]

    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).

16. [102]

    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.

17. [103]

    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].

18. [104]

    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:

19. [105]

    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”.

20. [106]

    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.

21. [107]

    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.

22. [108]

    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”.

23. [109]

    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.

24. [110]

    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.

25. [111]

    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.

26. [112]

    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.

27. [113]

    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.

28. [114]

    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:

29. [115]

    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.

30. [116]

    The defendant’s opening written submissions referred to the letter as evidencing the acceptance of the repudiation. The letter was admitted without objection.

31. [117]

    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.

32. [118]

    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.

33. [119]

    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.

34. [120]

    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.

35. [121]

    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.

36. [122]

    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.

37. [123]

    In Carter, the learned author states at [10-38]:

38. [124]

    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.

39. [125]

    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):

40. [126]

    Hodgson JA then observed that all of the views in Foran were obiter dicta but that he agreed with Deane J (at [62]).

41. [127]

    At [64]-[73], Hodgson JA stated:

42. [128]

    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).

43. [129]

    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.

44. [130]

    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.

45. [131]

    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.

46. [132]

    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:

47. [133]

    In Upside Property Group Pty Ltd v Tekin (2017) 19 BPR 38,137; [2017] NSWCA 336, Meagher JA (with whom McColl and Macfarlan JJA agreed) stated at [14]-[15]:

48. [134]

    In Lavigne v Kumar (2020) 19 BPR 40,377; [2020] NSWSC 1120 (Lavigne), Darke J, having set out what was said by Deane J in Foran and what was said by Hodgson JA at [64] and [68] in Sharjade stated (at [123]-[124]):

49. [135]

    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.

50. [136]

    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.

51. [137]

    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.

52. [138]

    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.

53. [139]

    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:

54. [140]

    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”.

55. [141]

    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.

56. [142]

    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.

57. [143]

    The plaintiff contended as follows:

58. [144]

    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.

59. [145]

    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.

60. [146]

    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.

61. [147]

    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.

62. [148]

    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.

63. [149]

    The case is one where the $150,000 deposit was payable in two instalments – the second being payable by the end of March 2022.

64. [150]

    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.

65. [151]

    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.

66. [152]

    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 Dojap. 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.

67. [153]

    Lord Browne-Wilkinson, who delivered the judgment, stated at 578-9:

68. [154]

    Lord Browne-Wilkinson continued at 580:

69. [155]

    At 582 Lord Browne-Wilkinson stated:

70. [156]

    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.

71. [157]

    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]:

72. [158]

    In Sydney Developments Pty Ltd v Perry Properties Pty Ltd (2016) 18 BPR 35,905; [2016] NSWSC 515, Darke J stated at [38] (emphasis added):

73. [159]

    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.

74. [160]

    I do not read the cases as laying down an in effect no more than ten percent or nothing test.

75. [161]

    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.

76. [162]

    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.

77. [163]

    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:

78. [164]

    For these reasons, save for the $20,000 fee, and the application of s 55(2A) of the CA which I turn to below, I reject the arguments advanced by the plaintiff that the defendant is not entitled to retain the deposit.

79. [165]

    The plaintiff contended that the entirety of the deposit should be returned under s 55(2A) of the CA, which provides:

80. [166]

    Recently, in Akrawe v Culjak [2023] NSWCA 171, the Court (Bell CJ, Leeming and Mitchelmore JJA) relevantly stated the test for the application of the discretion in s 55(2A) of the CA as (at [100]-[101]):

81. [167]

    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:

    1. (1)

       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;

    2. (2)

       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;

    3. (3)

       the defendant has not suffered any loss and is still living in the Property;

    4. (4)

       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;

    5. (5)

       the defendant’s election to terminate was not communicated in a clear and unequivocal manner and was unreasonably delayed.

82. [168]

    The defendant submitted that the Court should not exercise the discretion under s 55(2A) of the CA because:

    1. (1)

       none of the plaintiff’s pleaded discretionary factors give rise to any injustice or inequity;

    2. (2)

       the defendant sold the Property for less than the contracted price with the plaintiff;

    3. (3)

       the plaintiff delayed by a period of more than nine months between its first formal demand and its subsequent demand; and

    4. (4)

       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:

83. [169]

    I do not accept that it is unjust and inequitable to permit the defendant to retain the deposit. None of the matters raised by the plaintiff make it unjust or inequitable. As stated above, the plaintiff offered the larger deposit, the defendant never suggested or required a larger deposit, and the defendant did not act unconscionably in agreeing to the payment of a larger deposit. The fact that James was intended to be the ultimate purchaser is, in my view, not relevant to whether the deposit should be returned. Accordingly, it is not appropriate to make an order for the return of the deposit pursuant to s 55(2A) of the CA.

Conclusion and orders

1. [170]

   For the reasons set out above, save for the return of the $20,000, the claims made by the plaintiff fail.

2. [171]

   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.

3. [172]

   The orders of the Court are:

   1. (1)

      Direct the parties to confer and seek to agree final orders to give effect to these reasons, including as to costs.

   2. (2)

      Direct the parties to provide any agreed orders, or competing orders, to my Associate by no later than 5pm on 27 June 2025.

   3. (3)

      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.

   4. (4)

      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.