A buyer who failed to settle the purchase of what was claimed to be an instalment contract has lost its bid to recover a $365,000 deposit.

Newlander Development Pty Ltd signed up for the buy of a luxury residence at Pallara in May 2021 with a long settlement.

The initial $30,000 deposit it paid on signing was expressed to be “non-refundable after 48-hours from the contract date” and the balance – which was payable upon the contract becoming unconditional – “non-refundable after satisfaction of due diligence”.

The balance deposit was paid promptly when it became due but when the settlement date arrived in September 2022, the buyer failed to present at settlement to pay the purchase price which resulted in the seller terminating the contract the following day and forfeiting the deposit on the basis of that failure.

Newlander lodged a caveat and filed proceedings seeking specific performance, contending that the termination was unlawful in the context of an instalment contract in the absence of 30 days prior notice from the seller of its intention so to do.

It argued that – given the deposits were “non-refundable” – they were payments of the type contemplated by s 71 of the Property Law Act as the buyer did not become entitled to receive a conveyance in exchange.

That was particularly so – it submitted – because the “non-refundable” special condition did not include words to the effect “except in the case of the seller’s default”

Sellers Jung Kyun Han and Gyu Young Chae asserted that not to be the case by operation of standard conditions 2.4 and 9.5 of the REIQ format contract.

Those clauses, they argued, preserved the buyers right to sue the seller for a refund of the deposit should they have terminated the contract as a result of a seller breach.

Chief Justice Helen Bowskill agreed.

Because the contract had not removed Newland’s capacity to sue for recovery of the deposit in those circumstances it was not truly “non-refundable” but rather, retained the character of a deposit that was liable to be forfeited by the seller in the event of the buyer’s default.

The absence of words in the special condition to the effect “except in the case of the seller’s default” did not alter that conclusion.

Only if standard conditions 2.4 and 9.5 had also been modified with an explanation that the deposits or one of the we not to be refundable under any circumstances whatsoever, could a deposit have the character contended for by the buyer.

Chief Justice Bowskill ordered in favour of the Seller that summary judgement be entered against the buyer and that its deposit be forfeited.

Newlander Development Pty Ltd v Jung Kyun Han and Anor [2023] QSC 94 Bowskill CJ 4 May 2023