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Blanco v Wan

Blanco v Wan

Case [2021] NSWSC 273 24 March 2021

Contract Formation

Unconscionable Conduct

Compensatory Damages

Property Law

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Supreme Court

New South Wales

Medium Neutral Citation: Blanco v Wan [2021] NSWSC 273
Hearing dates: 3 February 2021, followed by written submissions
Date of orders: 24 March 2021
Decision date: 24 March 2021
Jurisdiction: Equity
Before: Darke J
Decision:
Plaintiff entitled to recover deposit of $80,000 plus interest earned thereon, plus $330.

Catchwords:
LAND LAW – contract for sale of land – deposit – penalty doctrine – purchaser agreed to pay $205,500 (being 10% of price) by instalments as deposit – purchaser paid $80,000 soon after exchange – remaining $125,500 was payable “on or before settlement” or upon “default” – purchaser failed to complete contract – vendor terminates and seeks to recover the $80,000 paid and also the unpaid $125,500 – held that the initial $80,000 was a deposit to which the principles concerning penalties do not apply – held that the $125,000 was not truly a deposit because it was not payable at a time when it would be an earnest of performance – held that the obligation to pay the $125,000 “on or before settlement” or upon “default” is penal – amount held to be extravagant and disproportionate to the interest of the vendor sought to be protected – vendor held entitled to recover the $80,000 but not the $125,500
CONTRACTS – unfair contracts – Contracts Review Act 1980 (NSW) – contract for the sale of land – agreement made after negotiation of terms – purchaser claimed that she had been exhausted and “gave in” to vendor’s agent – whether contract should be set aside as being unjust – no material inequality of bargaining power – purchaser could protect her own interests – held that purchaser entered into contract with an adequate appreciation of its main terms – held that contract did not operate in an unconscionable, harsh or oppressive manner – held that contract should not be set aside

Legislation Cited:
Conveyancing Act 1919 (NSW), ss 66T, 66X
Contracts Review Act 1980 (NSW), ss 7, 9

Cases Cited:
Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205; [2012] HCA 30
Brien v Dwyer (1978) 141 CLR 378
Cloud Top Pty Ltd v Toma Services Pty Ltd [2008] NSWSC 568
Cole v Raykir Holdings Pty Ltd [2019] NSWSC 1017
Commissioner of Taxation v Reliance Carpet Co. Pty Ltd (2008) 236 CLR 342; [2008] HCA 22
Havyn Pty Ltd v Webster (2005) 12 BPR 22,837; [2005] NSWCA 182
Iannello v Sharpe (2007) 69 NSWLR 452; [2007] NSWCA 61
Kazacos v Shuangling International Development Pty Ltd (2016) 18 BPR 36,353; [2016] NSWSC 1504
Luu v Sovereign Developments Pty Ltd (2006) 12 BPR 23,629; [2006] NSWCA 40
Paciocco v Australia and New Zealand Banking Group Ltd (2016) 258 CLR 525; [2016] HCA 28
Provident Capital Ltd v Papa (2013) 84 NSWLR 231; [2013] NSWCA 36
Romanos v Pentagold Investments Pty Ltd (2003) 217 CLR 367; [2003] HCA 58
Simcevski v Dixon (No 2) [2017] VSC 531
West v AGC…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Blanco v Wan

Details

AGLC: Blanco v Wan [2021] NSWSC 273
Case: [2021] NSWSC 273
Decision Date: 24 March 2021

CaseChat Overview and Summary

The case of Blanco v Wan involved a dispute over the sale of land in New South Wales. The purchaser, Blanco, agreed to purchase the land for a total price of $2,055,000. As part of the agreement, Blanco paid a deposit of $80,000, with the remaining $125,500 to be paid on or before settlement. Blanco later failed to complete the purchase, and the vendor, Wan, sought to recover both the $80,000 deposit and the remaining $125,500. Blanco argued that the $125,500 was a penalty and not a true deposit, and that the contract should be set aside as being unjust.

The court had to determine whether the $125,500 was a deposit or a penalty, and if the contract should be set aside under the Contracts Review Act 1980 (NSW) as being unconscionable or oppressive. The court also considered whether there was an inequality of bargaining power between the parties.

In its reasoning, the court found that the initial $80,000 was a genuine deposit, to which the principles of the penalty doctrine did not apply. However, the remaining $125,500 was not payable at a time when it would serve as an earnest of performance, and was instead payable on or before settlement or upon default. The court held that this obligation was penal because the amount was extravagant and disproportionate to the vendor's interest in being protected. The court also found that there was no material inequality of bargaining power between the parties, and that Blanco had entered into the contract with an adequate appreciation of its main terms. Therefore, the contract should not be set aside as being unjust.

In conclusion, the court ordered that Blanco was to return the $80,000 deposit, but that Wan was not entitled to recover the $125,500. The court also found that the contract should not be set aside as being unconscionable or oppressive.

Orders