An agent’s failure to action a seller’s notification of termination of a $1.5 mil sale upon a deposit default has led to the delinquent buyers being able to get specific performance of the contract notwithstanding the late deposit.

Ian and Alexandra Lenferna signed up for the buy of the Box Hill residence in north-western Sydney in October 2021.

An agent's failure to action a seller's notification to terminate a $1.5 mil sale due to a late deposit has led to the buyer forcing the seller to completePayment of the balance of a ten per cent deposit – after having paid $3,750 on signing – was due by 9 November.

When the buyers that day requested an extension of time to pay, seller Marcus Torane gave written instructions to the agent and his conveyancer that the contract was “hereby terminated”.

Neither of them conveyed that notification and the buyers paid a further $71,250 on 10 November and the balance of the deposit on 1 December.

Marcus and his wife Jessy refused to settle and defended the buyers’ specific performance action in the NSW Supreme Court on the grounds they had “manifested an intention to terminate the contract on the grounds of the plaintiffs’ failure to pay the full deposit as required”.

That argument was swiftly rejected. Absent evidence that intention had been notified to the buyer, Justice Guy Parker ruled the termination defence did not stand up.

The sellers also contended that if forced to complete the sale and give vacant possession they would be unable to find somewhere else to live in Sydney and would be without a home.

They pleaded they had no family to rely on and may have to live in their cars and put their possessions into storage. Mr Torane also suffered depression and was concerned that being required to move would trigger a severe depressive episode.

That submission was misconceived in that it did not go to hardship in the relevant sense. “Hardship” in this context – if made out – is such that would dissuade the court from ordering the contract to be specifically performed at all.

It is not something that relates to the circumstances that might apply when completion occurs.

The court’s order is after all, in general terms, ie “that the contract be specifically performed and carried into execution under the supervision of the Court”.

Once made, the parties are to arrange the details and timing with the court retaining power to make further orders to give effect to the arrangement and with the parties at liberty to apply for directions for example, for fixing the date for completion if it is not agreed.

The sellers third submission erroneously contended that specific performance should not be ordered because damages were an adequate remedy.

“There was nothing particularly special about the property,” so ran the assertion, “and there are many properties available of a similar size and with similar features to the subject property”.

“If accepted this would be a somewhat startling proposition,” observed His Honour. “I have never heard it questioned that residential property in Sydney (or anywhere else for that matter) is insufficiently special to attract an award of specific performance”.

The hapless sellers will be obliged to complete the sale in the coming weeks.

Lenferna v Torane [2022] NSWSC 635 Parker J, 18 May 2022 Read case


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