Grubisa v Zhou

[2025] NSWSC 942

Supreme Court

New South Wales

Medium Neutral Citation:

Grubisa v Zhou [2025] NSWSC 942

Hearing dates:

23 July 2025

Date of orders:

20 August 2025

Decision date:

20 August 2025

Jurisdiction:

Equity - Real Property List

Before:

Pike J

Decision:

Statement of claim dismissed. Parties to seek to agree remaining orders.

Catchwords:

CONTRACTS – Rectification – Intention – Common intention – whether the date of the contract is 17 May 2024 or 23 May 2024

LAND LAW – Conveyancing – Contract for sale – Deposit – relief against forfeiture of deposit – whether deposit should be returned pursuant to Conveyancing Act 1919 (NSW), s 55(2A) – no question of principle

Legislation Cited:

Conveyancing Act 1919 (NSW), s 55(2A)

Real Property Act 1900 (NSW), s 74P

Cases Cited:

1128 CG Pty Ltd v MH Affordable Homes on Kelly Pty Ltd [2025] NSWSC 563

Akrawe v Culjak [2023] NSWCA 171

Allen v Carbone (1975) 132 CLR 528; [1975] HCA 14

Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603; [2009] NSWCA 407

Havyn Pty Ltd v Webster (2005) 12 BPR 22,837; [2005] NSWCA 182

Lewington v Dulyakarn [2025] NSWSC 635

Rushcutters Bay Developments Pty Ltd v Dragon Asset Investment Pty Ltd (No 2) (2017) 18 BPR 37,025; [2017] NSWSC 866

Simic v NSW Land and Housing Corporation (2016) 260 CLR 85; [2016] HCA 47

The J& P Marlow (No 2) Pty Ltd v Hayes and McCabe (2023) 112 NSWLR 29; [2023] NSWCA 117

Texts Cited:

Nil

Category:

Principal judgment

Parties:

Kevin Micha Grubisa (Plaintiff/Cross-Defendant)
Siyang Zhou (Defendant/Cross-Claimant)

Representation:

Counsel:
J O’Sullivan (Plaintiff/Cross-Defendant)
S Philips (Defendant/Cross-Claimant)

Solicitors:
Murphy Lyons Solicitors (Plaintiff/Cross-Defendant)
MurdockCheng Legal Practice (Defendant/Cross-Claimant)

File Number(s):

2025/00014750

Publication restriction:

Nil

JUDGMENT

1. The essence of the dispute between the parties is the date of a contract for sale of a property at Brighton Drive, Bella Vista, New South Wales (the Property) owned by the defendant which the plaintiff agreed to buy for $3,700,000.

2. The defendant contends that the date of the contract is 17 May 2024 whereas the plaintiff contends that it was 23 May 2024. The issue arises in the context of it not being disputed that the contract required settlement 26 weeks from the “contract date”. On 20 November 2024, the defendant served a notice to complete on the plaintiff requiring completion by 4 December 2024. This was subsequently extended to 11 December 2024. Completion did not occur by then and on 11 December 2024 the defendant issued a notice purporting to terminate the contract.

3. The plaintiff contends, in essence, that the notice to complete is invalid because it was issued less than 26 weeks after the contract date of 23 May 2024 and as such the purported termination based on the notice was invalid.

4. Prior to the day before the hearing, the plaintiff’s primary case was for specific performance of the contract. The plaintiff had lodged two caveats on the title to the Property. By cross-summons, the defendant sought an order removing the caveats and an order for compensation pursuant to s 74P of the Real Property Act 1900 (NSW) (RPA). The defendant has entered into a contract to sell the Property to a third party for $3.8 million. If settlement does not occur by 15 September 2025, the purchaser has a right to rescind the contract.

5. The proceeding was heard on 23 July 2025. Shortly after 4pm on 22 July 2025, counsel for the plaintiff notified the Court and the defendant that the plaintiff no longer pressed his claim for specific performance but sought refund of the deposit, including pursuant to s 55(2A) of the Conveyancing Act 1919 (NSW) (CA).

6. The plaintiff withdrew the first caveat on 14 July 2025 and consented to an order that the second caveat be forthwith withdrawn. I made an order to this effect on 23 July 2025.

7. The defendant contended that it was not open to the plaintiff to seek return of the deposit pursuant to s 55(2A) of the CA. Having heard argument on 23 July 2025 including as to how the plaintiff put this aspect of the case, I ruled that the plaintiff should be permitted to rely on s 55(2A) essentially for the reason that the defendant was able to meet the case put. Once counsel for the plaintiff clarified the matters relied on in support of the new s 55(2A) claim, counsel for the defendant candidly accepted that he could not identify any prejudice.

8. Mr J O’Sullivan appeared for the plaintiff and Mr S Philips for the defendant.

9. For the reasons set out below, the plaintiff’s claim fails.

Overview of the witnesses

10. The principal witnesses were the plaintiff and the defendant. Each made two affidavits and was cross-examined.

11. I did not understand a serious credit attack to be made on either’s evidence, save for the evidence given by the plaintiff as to whether he had the finance to settle on the purchase of the Property.

12. I formed the view that each was doing their best to assist the Court.

13. For the most part their evidence is not determinative or even of much relevance to the issues I need to decide. The plaintiff’s evidence as to his ability to complete on the purchase of the Property was, perhaps understandably, more hope than expectation and did not withstand objective analysis. The simple fact is he was not able to raise the funds to complete.

14. Unsurprisingly, the more reliable evidence is the objective documentary material.

Overview of the facts

15. The defendant listed the Property for sale in February 2024 with Mountview Real Estate (Mountview). Rahul Sehgal (Mr Sehgal) and Chet Greatbatch Murphy (Mr Greatbatch Murphy) worked for Mountainview. The plaintiff (who operates a mortgage broking business) inspected the Property on or about 27 April 2024.

16. By at least 17 May 2024, the plaintiff and defendant had agreed to terms for the plaintiff to purchase the Property. The purchase price was $3,700,000. The other terms of note were:

1. the defendant would accept the 10% deposit to be paid by way of a deposit bond;

2. the settlement period was 26 weeks; and

3. the Property was permitted to be tenanted for up to 12 months.

17. Both parties had engaged solicitors to act for them on the conveyance. The defendant’s solicitor was Murdock Cheng Legal Practice who had prepared the contract for sale. The plaintiff as purchaser was represented by Assure Lawyers.

18. On 17 May 2024, Mountview sent to each of the plaintiff and defendant:

1. an Authority to Exchange; and

2. a contract for the sale of land.

19. Each was requested to execute both documents using Docusign. Each complied with that request on 17 May 2024 and returned the signed documents to Mr Sehgal.

20. In evidence before me was:

1. an Authority to Exchange executed by each of the plaintiff, the defendant and Mr Sehgal of Mountview;

2. a contract for sale of land signed by the plaintiff; and

3. a contract for sale of land signed by the defendant.

21. It appeared to be common ground that each of the contracts for sale of land were dated “17/5/2024” at the time they were received by each of the plaintiff and defendant and prior to being executed by each.

22. The Authority to Exchange is in the following terms:

23. The contracts for sale of land were in identical terms. It is not in dispute that they did not contain terms consistent with the Special Conditions set out in the Authority to Exchange.

24. On 17 May 2024, Mr Sehgal texted the plaintiff stating, relevantly:

Just to confirm that we still haven’t received the holding deposit or the deposit bond from you yet. If the deposit bond is available by tomorrow please send it otherwise we would need the 0.25% deposit to hold this property any further.

25. On the morning of Monday 20 May 2024, Mr Greatbatch Murphy emailed the plaintiff’s solicitor stating, relevantly:

In reference to the preparation of the 66w certificate, please find attached the signed copies of the contract & the authority to exchange.

With the 66W, we would need the deposit bond sent over to the other solicitor, so that the property can be finalized [sic] as sold.

26. I infer that attached to this email were copies of the contract signed respectively by the plaintiff and defendant and the authority signed by all parties.

27. On 22 May 2024 there were a series of text message exchanges between Mr Sehgal and the plaintiff as follows:

Mr Sehgal:Good morning Dominique & Kevin.

We have received multiple calls and emails from the owners and their Solicitors regarding the holding deposit receipt. Can we please arrange this asap.

Thanks

Rahul

Mr Grubisa:   Hi Rahul, we have just received the deposit bond. A copy has been sent to our solicitor. I will get them to communicate with the vendor’s solicitor. Thanks Kevin.

Mr Sehgal:…Contract can only be complete with deposit receipt or the deposit bond. Please send it to us asap. Thanks Rahul

Mr Sehgal:Can you also get your Solicitors to cc me and Chet in all correspondence.

Thanks

Rahul

Mr Sehgal:…Please send the Deposit bond on this email as soon as you have received it

Thanks

Rahul

28. At 16.34 pm on 22 May 2024, Mr Greatbatch Murphy emailed the defendant’s solicitors as follows:

Please find attached the signed contract and authority to exchange for the property: X Brighton Drive, Bella Vista.

The buyers intend to provide the deposit bond and 66w soon, if you are able to connect with their solicitor.

29. On that day the defendant was advised by his solicitor that the solicitors had received an exchanged contract for the sale of the Property from Mr Sehgal. The defendant attached to his affidavit evidence, separate counterparts of the contract signed by each of the plaintiff and defendant and the Authority to Exchange signed by the plaintiff, the defendant and Mr Sehgal.

30. At 12.26 pm on 23 May 2024, the defendant’s solicitor sent an email to the plaintiff’s solicitor and Mountview, relevantly as follows:

We are advised that both parties have agreed to the following:

1. Settlement Date to be 26 weeks after the contract date; and

2. Mark “subject to existing tenancies”.

Kindly authorise us to amend the exchanged contract for sale to reflect the same.

We understand that your client has made a deposit bond. Please forward us the deposit bond receipt and the signed 66w certificate for our records.

We appreciate your prompt response.

31. At 12.52 pm on 23 May 2024, the plaintiff’s new solicitor (Joey Nguyen of JT Legal Practice) sent an email to the defendant’s solicitor attaching a signed s 66W certificate and Deposit Bond. The email also included “I confirm I [sic] client has now satisfied his obligations with respect to the Contract, in which we are ready to proceed with settlement in forthcoming”.

32. There were subsequent emails later on 23 May 2024 confirming that the plaintiff was agreeable to the Property being rented out prior to settlement at a rental of $2,500 per week minimum.

33. The chronology can now be picked up shortly prior to the 26 week settlement date.

34. Settlement was scheduled for 3 pm on 18 November 2024 via the PEXA platform. At 2.38 pm on 18 November 2024, the plaintiff’s solicitor emailed the defendant’s solicitor, relevantly stating:

… due to some difficulties our client is having in finalising the loan documents with their lender, we have been instructed to request an extension on settlement until 2 December 2024, without penalty interest.

35. At 3.27 pm on 18 November 2024, the defendant’s solicitor responded to the effect that the defendant did not agree to the requested settlement extension. If settlement did not occur on 18 November 2024, it was foreshadowed that a Notice to Complete would be issued. A subsequent email from the defendant’s solicitor requested a replacement deposit bond be provided as soon as possible.

36. At 5.57 pm on 18 November 2024, a Notice of Default was served by email from the defendant’s solicitor to the plaintiff’s solicitor. The default alleged in the notice concerned the deposit bond. The plaintiff was requested to serve a replacement deposit bond and complete the settlement.

37. On 19 November 2024, the plaintiff’s solicitor emailed the defendant’s solicitor following on from a phone call between the two. The email requested for completion to be scheduled for 20 December 2024.

38. Shortly thereafter on 19 November 2024, the defendant’s solicitor responded, not agreeing to extend settlement to 20 December 2024. The email advised that if a replacement deposit bond was not provided by 5 pm that day, the defendant would terminate the contract and draw on the bond. If a replacement deposit bond is provided, the vendor would not terminate but issue a notice to complete allowing up to 14 days to settle.

39. The correspondence continued.

40. On 20 November 2024, a replacement deposit bond was provided. At 5.50 pm on 20 November 2024, the defendant issued a Notice to Complete requiring completion by 4 December 2024 and stating that time was of the essence.

41. Settlement sheets were then exchanged nominating 2 December 2024 as the intended settlement date.

42. Throughout this period, the plaintiff was continuing to seek to obtain finance to enable him to complete on the purchase.

43. In about late November 2024, the plaintiff engaged new solicitors. On 2 December 2024, the plaintiff lodged a caveat on title to the Property (First Caveat). It incorrectly described the plaintiff’s interest as a mortgage. On 3 December 2024, the plaintiff’s new solicitor wrote to the defendant’s solicitor. The email asserted that the Notice to Complete was invalid because it relied on an incorrect settlement date of 17 November 2024 based on a contract date of 17 May 2024. The email asserted for the first time, that the contract only became enforceable on 23 May 2024 when the deposit bond and s 66W certificate were provided. It was asserted that the 26 week period commenced to run on 23 May 2024.

44. The email further stated, under the heading “1.3 Readiness to Settle”:

While our client was not in a position to settle on 22 November 2024, they are actively finalising preparations and expect to be in a position to settle subject to the receipt of necessary loan documentation.

45. The plaintiff was extensively cross-examined as to his ability to raise the necessary funds to complete the purchase of the Property. The plaintiff was no doubt optimistic that he would be able to raise the necessary funds and gave evidence of potential alternative, and more expensive, sources of funds. The simple fact is that he was not able to raise the necessary funds.

46. The solicitors for the respective parties then sought to negotiate for settlement to occur on or before 4.30 pm on 11 December 2024. The plaintiff’s position was that the defendant was required to issue a new Notice to Complete which the defendant did not agree with.

47. On 4 December 2024, the plaintiff’s solicitor emailed the defendant’s solicitor contending that the valuer appointed by the plaintiff’s mortgagee was denied access to the Property to carry out their valuation further delaying settlement. There was some suggestion that this denial of access was a reason why finance was not obtained prior to termination by the defendant. I do not accept this. Shortly after the email from the plaintiff’s solicitor, the defendant’s solicitor directly communicated with the potential lender confirming that the defendant was willing for settlement to occur on or before 4 pm on 11 December 2024, subject to conditions which were set out. The email further stated that if access is requested, please arrange it directly with the agent as the Property is subject to tenancy.

48. On 6 December 2024, the defendant’s solicitor wrote to the plaintiff’s solicitor to the effect that the defendant was agreeable to extending the settlement to 11 December 2024 on the basis that penalty interest would continue to accrue from 18 November 2024 until completion.

49. Completion did not occur by 11 December 2024. At 5.25 pm on 11 December 2024, the defendant’s solicitor served a Notice of Termination on the plaintiff’s solicitors. Later that day the plaintiff’s broker wrote to the defendant’s solicitor seeking recission of the Notice of Termination and proposing settlement on 23 December 2024.

50. The proceedings were commenced on 13 January 2025.

51. In March 2025, the defendant re-listed the Property for sale.

52. Prior to this time and since termination, the defendant had been overseas in China on holiday.

53. On 16 June 2025, the defendant exchanged contracts for the sale of the Property with new purchasers for $3.8 million. Shortly thereafter, on 26 June 2025, a second caveat was lodged by the plaintiff this time better describing the plaintiff’s caveatable interest (Second Caveat).

54. On 8 July 2025, the defendant’s solicitor wrote to the plaintiff’s solicitor requesting removal of the caveats. On 14 July 2025, the plaintiff withdrew the First Caveat.

55. As set out above, at the hearing before me on 23 July 2025, consequent upon the plaintiff no longer seeking specific performance, the plaintiff consented to an order that he withdraw the Second Caveat, which I then made on 23 July 2025.

56. Under the terms of the contract for sale of the Property entered into between the defendant and new purchasers in late June 2025, in the event that settlement does not occur by 16 September 2025 for the vendor’s default, including because the caveats are not removed, the purchasers have the right to rescind the contract.

The claims made

57. The principal claim advanced by the plaintiff is that the contract for sale entered into between the plaintiff and the defendant should be rectified “to reflect the agreed terms, including … [a] six-month settlement period commencing on 23 May 2024”: see the “Relief sought” in the statement of claim filed 13 January 2025.

58. As summarised in the plaintiff's outline of submissions dated 22 July 2025:

The contract should be rectified so as to specify a commencement date of 23 May 2024 rather than 17 May 2024 with a completion of six months, as opposed to 42 days, on the basis that the parties’ mutual intentions, objectively construed, were that the contract would not commence until the Purchaser provided a deposit bond, a certificate under s 66W of the Act and the parties reach agreement on the Terms of any tenancy, all of which did not occur until 23 May 2024.

59. So the argument ran, if the contract is so rectified, the Notice to Complete was invalid as it was issued inside the 26 week period for settlement such that the Notice of Termination in reliance on the invalid Notice to Complete was similarly invalid. The relief sought was ultimately confined to the return of the deposit which it was said would automatically follow if the termination was invalid.

60. Return of the deposit was also sought under s 55(2A) even if the defendant lawfully terminated the contract. As formulated in oral opening by counsel for the plaintiff, it was said to be unjust or inequitable for the defendant to retain the deposit in circumstances where:

1. the defendant had resold the Property for $100,000 more than the plaintiff had agreed to pay for it;

2. the defendant had leased the Property for $2,500 per week during the period since the contract between the plaintiff and the defendant; and

3. the deposit was only intended as an earnest for performance.

61. The defendant contended that there was no basis for the contract to be rectified in the manner contended for by the plaintiff. The contract is clearly dated 17 May 2024, the date that contracts were exchanged and there is nothing to suggest that notwithstanding the contract date that the parties in fact intended that the contract date would not be until the deposit bond had been provided together with a s 66W certificate.

62. In response to the newly introduced s 55(2A) return of the deposit claim, the defendant contended that there was nothing unjust or inequitable about the defendant retaining the deposit. In response to the contention that the defendant would make a gain, the defendant contended that this was not sufficient and in any event, the plaintiff had not taken into account the mortgage interest payments the defendant had made during the period since completion was to occur, together with the additional costs incurred in re-marketing the Property for sale (together exceeding $100,000).

61. By his cross-summons, the defendant sought an order for the removal of both caveats and compensation pursuant to s 74P of the CA. As I understood the position ultimately put by counsel for the defendant at the hearing, the defendant no longer pressed the claim for compensation provided the plaintiff was ordered to pay the defendant’s costs of the cross-summons in a gross sum.

Determination

64. Little attention was given by the parties during the hearing as to the relevant legal principles. This is unsurprising given that they are well settled and well known.

65. As to the principles of construction, I set out below my summary from 1128 CG Pty Ltd v MH Affordable Homes on Kelly Pty Ltd [2025] NSWSC 563 at [106]-[111]:

[106]   Three core principles emerge from what French CJ, Hayne, Crennan and Kiefel JJ said in Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 at [35]:

(1)   The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean.

(2)   That requires consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. That, in turn, is facilitated by an understanding of the genesis of the transaction, the background, the context and the market in which the parties are operating.

(3)   Unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption that the parties intended to produce a commercial result. The contract is to be construed so as to avoid it making commercial nonsense or working commercial inconvenience.

[107]   Notwithstanding these three core principles, as French CJ, Nettle and Gordon JJ stated in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 at [48], “[o]rdinarily this process of construction is possible by reference to the contract alone”.

[108]   As Allsop P observed in Onesteel Manufacturing Pty Ltd v Bluescope Steel (AIS) Pty Ltd (2013) 85 NSWLR 1; [2013] NSWCA 27 at [61], the analysis is an objective one that can produce only one true meaning. The process of construction is not a process necessarily concluded by logical reason or a priori analysis. It involves the weighing of differing considerations partly logical and partly intuitive (though rational) leading to a choice. Analysis of competing arguments assists in that process, but the “correct” answer is not arrived at merely by seeing which side has the greater number of “good” points.

[109]   As Leeming JA observed in Zhang v ROC Services (NSW) Pty Ltd (2016) 93 NSWLR 561; [2016] NSWCA 370 (Zhang v ROC) at [53], the starting point is to determine the literal or grammatical meaning or meanings of the clause. Second, one determines the legal meaning of the clause. Whereas here, there are several clauses of the agreement to be construed, it is clear that every provision must be read, together and construed with the others, so as to render, as far as possible, the provisions harmonious with each other: see Herzfeld and Prince, Interpretation (3^rd ed, 2024, Thomson Reuters) at [22.30] and the cases cited therein. This is with a view to the legal meaning reflecting a measure of internal coherence: see HP Mercantile Pty Ltd v Hartnett [2016] NSWCA 342 (HP Mercantile) at [134] per Leeming JA.

[110]   Where there is more than one available legal meaning, a court looks at the text, context and purpose with a view to determining which potential meaning best accords with those considerations. An iterative process is called for – checking each of the rival meanings against the other provisions of the document and investigating its commercial consequences.

[111]   As Leeming JA further observed in HP Mercantile at [134]:

…The process of working through the consequences of the competing literal or grammatical meanings enables a court to assess whether either party’s preferred legal meaning gives rise to a result that is more or less internally consistent and avoids commercial absurdity.

(see also Zhang v ROC at [80]-[87]).

66. In relation to rectification, in Simic v NSW Land and Housing Corporation (2016) 260 CLR 85; [2016] HCA 47, Gageler, Nettle and Gordon JJ stated at [103]-[104]:

[103]   Rectification is an equitable remedy, the purpose of which is to make a written instrument “conform to the true agreement of the parties where the writing by common mistake fails to express that agreement accurately”. For relief by rectification, it must be demonstrated that, at the time of the execution of the written instrument sought to be rectified, there was an “agreement” between the parties in the sense that the parties had a “common intention”, and that the written instrument was to conform to that agreement. Critically, it must also be demonstrated that the written instrument does not reflect the “agreement” because of a common mistake. Unless those elements are established, the “hypothesis arising from execution of the written instrument, namely, that it is the true agreement of the parties” cannot be displaced.

[104]   The issue may be approached by asking - what was the actual or true common intention of the parties? There is no requirement for communication of that common intention by express statement, but it must at least be the parties' actual intentions, viewed objectively from their words or actions, and must be correspondingly held by each party.

67. It is well to remember that rectification is only granted upon clear and convincing proof, being not only that the written document does not correctly record the common intention of the parties, but what the common intention of the parties actually was: see Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603; [2009] NSWCA 407 at [451] per Campbell JA.

68. At times during the course of the submissions advanced by counsel for the plaintiff, it was not entirely clear to me whether the case being advanced was one of rectification in the strict sense or whether it was being contended that the parties did not in fact reach a legally binding agreement until 23 May 2024. The claim as pleaded is one for rectification.

69. In any event, I am satisfied that the parties reached a concluded and binding agreement on 17 May 2024 and I am not satisfied that there is any basis to rectify the agreement in the manner contended for by the plaintiff.

70. Two documents set out the relevant intentions of the parties. First, the contract for sale of land, separate counterpart copies of which were executed by the plaintiff and the defendant. Second, the Authority to Exchange which was executed by each of the plaintiff, the defendant and the agent (Mr Sehgal) who was authorised to carry out the exchange.

71. The Authority to Exchange clearly sets out three Special Conditions:

1. the vendor agrees to buyers exchanging with a deposit bond;

2. the vendor agrees to a 26-week settlement period from contract date;

3. the purchaser agrees to allow the vendor to lease the property out, up to a 12-month period, in which the purchaser will take on the property subject to the new tenancy, at settlement.

72. There was no suggestion that these terms were not in fact agreed prior to execution of the Authority to Exchange. They were. In any event, the parties’ execution of the Authority to Exchange manifests their agreement.

73. Under the heading “DEPOSIT BY INSTALMENTS” the purchaser (plaintiff) promises on execution of the Authority to pay the vendor’s (defendant’s) agent the total deposit of $370,000. Provision is then made for the deposit to be paid by instalments with the second instalment due after the five day cooling off period.

74. Under the heading “Purchaser/s” the plaintiff, relevantly, confirms that he has executed an agreement for the sale of land. Further, the plaintiff acknowledges that he has expressly authorised the agent to attend to the exchange of contracts on his behalf, that he is aware of the five day cooling off period and that after this period the agreement is unconditional. The plaintiff also acknowledges his awareness of “the completion date of the contract as per special condition”.

75. Each of the plaintiff and defendant executed counterpart contracts in identical terms which were provided to the agent along with the Authority.

76. It is clear on the evidence that the agent then exchanged contracts, pursuant to the authority granted to him, on 17 May 2024. Both contracts are dated 17 May 2024 and it appears the agent provided the executed documents to the plaintiff’s and defendant’s solicitors on 20 and 22 May 2024 respectively. 17 May 2024 was a Friday and the Docusign records show that it was early in the evening when the defendant signed the documents and returned them to the agents.

77. The parties were clearly following the customary method of making a binding contract for the sale of land by the exchange of counterparts: see Allen v Carbone (1975) 132 CLR 528; [1975] HCA 14 at 533 per Stephen, Mason and Murphy JJ. A binding agreement was reached on exchange which took place on 17 May 2024. The fact that the agreement was not unconditional until the expiry of the cooling off period or provision of a s 66W certificate does not gainsay this. None of this provides any basis to discern a common intention of the parties that the contract date was only when the contract became unconditional. The contract date was stated on the counterparts – 17 May 2024. It was obviously not in dispute that the three Special Conditions set out in the Authority were not included in the counterpart contracts. This is of no relevant significance in my view. Whilst the exchanged “Contract for Sale of Land” was liable to be rectified to include the three Special Conditions, this would not alter the contract date of 17 May 2024.

78. The fact that the deposit was not paid at the time of execution and then exchange does not suggest that the intention of the parties was that the contract date was only when the deposit was paid and/or that there was no binding contract until the deposit was paid.

79. There is nothing to suggest that the parties did not intend to be bound in the customary way, by the exchange of counterpart contracts. The plaintiff was under an obligation to pay the deposit, and it would likely have been open to the defendant to terminate the contract if the deposit was not paid.

80. An important aspect of the plaintiff’s rectification argument was reliance on apparent commercial common sense. So the argument ran, a vendor would not want to be bound if the deposit had not been received and a purchaser would not want to be bound to buy if it was not able to pay the deposit.

81. It has often been observed that caution should be exercised by courts in attributing a particular commercial intent or understanding of commercial common sense to parties: see, for example, TheJ & P Marlow (No 2) Pty Ltd v Hayes and McCabe (2023) 112 NSWLR 29; [2023] NSWCA 117 at [76]-[80] per Bell CJ. I do not accept there is any relevant uncommercial outcome in a binding agreement having been made on 17 May 2024. Much more would also be required to demonstrate the clear and convincing proof necessary to succeed in a rectification claim.

82. Counsel for the plaintiff also sought to place reliance on the correspondence between the representatives of the parties in the period 17 May 2024 to 23 May 2024. I have set out the correspondence earlier in these reasons. For example, on 17 May 2024 the agent sent an SMS message to the purchaser requesting the deposit bond, or the 0.25% deposit “to hold this property any further” and on 20 May 2024 wrote to the plaintiff’s solicitor referring to the s 66W certificate and deposit bond being sent to the defendant’s solicitor “so that the property can be finalised as sold”. On 22 May 2024, the agent sent an SMS to the plaintiff relevantly stating that “contract can only be complete with deposit receipt or the deposit bond”.

83. I do not regard these communications as providing any clear or convincing proof of a common intention of the parties as claimed by the plaintiff. They are perfectly consistent with a binding agreement having been reached on 17 May 2024 with the agent chasing the purchaser for the s 66W certificate so that the purchaser would no longer be able to rescind in the cooling off period, and chasing the deposit - which the purchaser was contractually obliged to pay. Once these matters had been satisfied, the agent would then have the necessary comfort to remove the Property from the market. The agent was no doubt seeking to encourage the purchaser to attend to these tasks.

84. For the same reasons, and although not pleaded, I also do not regard these communications as suggesting, as appeared to be floated by counsel for the plaintiff in closing address, that the parties did not intend to be bound until the deposit had been paid and a s 66W certificate provided.

85. No case was pleaded that the parties were still negotiating terms until 23 May 2024. Such a case was floated in closing address. Given no such case was pleaded it need not be addressed. In any event I do not read the dealings between the parties on 17 May 2024 and thereafter to 23 May 2024 as demonstrating no agreement until 23 May 2024 when the plaintiff agreed to a minimum rental at which the Property could be rented out. Nothing that occurred after 17 May 2024 leads me to conclude that the parties were not bound by the exchange on 17 May 2024. The email at 12.26 pm on 23 May 2024 is simply recounting the agreement set out in the Authority to Exchange. Agreement had also been reached – as recorded in the Authority to Exchange – for the defendant to rent the Property out. There was nothing to suggest that the whole deal was contingent on the defendant and plaintiff agreeing on the minimum weekly rental.

86. Reliance was also placed by the plaintiff on a print out from the RP Data platform (operated by CoreLogic Limited) in relation to the Property. The evidence was that the platform “records, among other things, historical property listings and advertising campaigns”. The relevant entry for the Property referred to a campaign from 10 February 2024 to 24 May 2024 with the Property being “sold with 66W by Rahul Sehgal”.

87. The plaintiff’s contention was that this entry was likely made by the defendant’s agent (Mr Sehgal) and provided some evidence that the contract date was 23 May 2024. As I understood the submission, it was that the Property would not have been taken off the market until there was a binding contract – which was 23 May 2024 – and it would have taken the agent a day or so to take the Property off the market.

88. The print out is nothing more than an entry made by an unknown person (perhaps Mr Sehgal) as to the date on which the Property ceased to be marketed. Even if it is accepted that a property would have ceased to be marketed after it had been sold, or more accurately the contract date, this has no bearing, in my view, on the date on which the property was in fact sold. This is determined by the dealings between the parties, not an online entry by a third party even if that third party acted as a real estate agent for the vendor. The relevant entry also does not assist being one day after the plaintiff’s contended date of contract. The contention that it would have taken the agent a day or so to make the entry is pure speculation and highlights the irrelevance of the evidence.

89. I therefore conclude that the contract date was 17 May 2024 – being the date when contracts were exchanged, and the 26 week settlement period ran from this date and not 23 May 2024, as contended for by the plaintiff.

90. In light of the abandonment of the specific performance claim, it is thus not necessary for me to consider whether the plaintiff was ready, willing and able to complete. I am in no doubt that the plaintiff was willing to complete in November and December 2024. I am also in no doubt that in November and December 2024, the plaintiff was not ready or able to complete because he could not raise the necessary monies. The plaintiff was extensively cross-examined on this topic. The cross-examination demonstrated, quite clearly in my view, that whilst the plaintiff was no doubt working hard to raise the completion monies and was hopeful they would be raised, he was never able to raise the money. It is to be remembered in this regard that even after the defendant had terminated the contract and was asked to withdraw the notice, the plaintiff’s requested settlement date was still 23 December 2024.

91. In answer to various questions about finance, the plaintiff said that he had alternative sources of finance available but they were considerably more expensive. I am sceptical whether this was in fact the case but in any event, the evidence is irrelevant in circumstances where the plaintiff never obtained the necessary finance.

92. No attempt was made by the plaintiff to prove that he was ready, willing and able to complete at the time of the hearing. Whilst the claim for specific performance was abandoned, had I found in favour of the plaintiff that the termination by the defendant was wrongful and thus had to determine whether the plaintiff was contractually entitled to a return of the deposit, an issue may have arisen as to whether the plaintiff was required to demonstrate he was ready, willing and able to complete as at 22 July 2025 when the plaintiff elected to bring the contract to an end by reason of the defendant’s allegedly repudiatory conduct: see Lewington v Dulyakarn [2025] NSWSC 635 at [121]-[138].

Return of the deposit – s 55(2A) of the CA

93. There was no dispute as to the relevant principles.

94. In Akrawe v Culjak [2023] NSWCA 171, the Court (Bell CJ, Leeming and Mitchelmore JJA) relevantly stated at [100]-[101]:

[100]   This power, and its relationship with contractual damages, was considered by this Court in Stokes v Toyne [2023] NSWCA 59 at [99]-[106]. It is well settled that this provision creates a power to relieve against the forfeiture of a deposit which is broader than that available in equity: Havyn Pty Ltd v Webster [2005] NSWCA 182; (2005) 12 BPR 22,837 at [137]; Luu v Sovereign Developments Pty Ltd [2006] NSWCA 40; (2006) 12 BPR 23,629. But the discretion is not unconfined. In Lucas & Tait (Investments) Pty Ltd v Victoria Securities Ltd [1973] 2 NSWLR 268, Street CJ in Eq said at 272 that the provision does not give to a court an “overall discretionary supervision of monetary adjustments between parties to a contract under which a deposit was paid but which has been terminated”. Instead, “[A] vendor who forfeits a deposit in strict enforcement of his legal rights is not to be deprived of it under s 55(2A) unless it is unjust and inequitable to permit him to retain it”. That has been confirmed by what was said in Romanos v Pentagold Investments Pty Ltd (2003) 217 CLR 367; [2003] HCA 58 at [27], although what is “unjust and inequitable” may be a contestable conclusion in any particular case.

[101]   However, it is well-settled that in the exercise of that discretion, the court should not weaken the proper function of a deposit as an earnest of performance: Havyn at [150]-[151], [155]; Nassif v Caminer (2009) 74 NSWLR 276; [2009] NSWCA 45 at [67], [91]. As Arden LJ said in Omar v El-Wakil [2001] EWCA Civ 1090; [2002] P & CR 36 at [35], in a passage approved in Havyn at [151], “the court must bear in mind that the payment in question was a ‘deposit’, that is an earnest for performance and that accordingly there should not be relief simply because the …contract never took place”.

95. In Havyn Pty Ltd v Webster (2005) 12 BPR 22,837; [2005] NSWCA 182 (Havyn), Santow JA stated at [155]:

[155]   For these reasons, I do not consider that there is anything controversial in the submission of the vendor that the grounds in support of an application to repay the deposit must be sufficient to warrant a departure from holding the purchaser to its obligations under the contract. Indeed, this goes to the “justice and equity” of the case, drawing on the observations of Street CJ in Eq in Lucas & Tait . That conclusion must be correct, if the notions of justice and equity conditioning the discretion are to have some meaning drawn from the purpose of a deposit and the circumstances in which it is forfeited. The purchaser must therefore do more than merely show that the deposit has been forfeited, and that it will thus result in a “windfall” to the vendor as will usually be the case. The court should not take an approach to ordering the return of deposits under s 55(2A) which weakens the proper function of a deposit in providing a sanction so that purchasers treat the making and completing of contracts with due seriousness: Wilson v Kingsgate Mining Industries Pty Ltd [1973] 2 NSWLR 713 at 735 ; Fraser v L O’Malley & Sons Pty Ltd (1975) 2 BPR 9133 at 9139–40 . In so saying, I am not to be understood as putting a gloss upon the plain words of s 55(2A), but merely highlighting the critical importance of a judge exercising the wide discretion according to its plainly beneficial purpose to consider “justice” and “fairness” in their proper context.

96. The essence of the matters relied on by the plaintiff is that the defendant will be in a better position now – assuming the sale at $3.8 million completes – than if the plaintiff completed on his purchase. The Property will be sold for $100,000 more than the plaintiff agreed to pay and the defendant has also received $2,500 per week in rent since early July 2024. Against this, the defendant has continued to pay interest on his borrowings in relation to the Property and has incurred costs in marketing and selling the Property again.

97. Whilst it is likely that having regard to these matters the defendant will be slightly better off I do not accept that it would therefore be unjust or inequitable for the defendant to keep the deposit: see Havyn at [155] extracted above and Rushcutters Bay Developments Pty Ltd v Dragon Asset Investment Pty Ltd (No 2) (2017) 18 BPR 37,025; [2017] NSWSC 866 at [93] per Darke J. The windfall is not substantial and the defendant will also likely be out of pocket to some extent in terms of the costs of these proceedings.

98. I reject the plaintiff’s claim for return of the deposit under s 55(2A).

Conclusion and orders

99. For the reasons set out above, the plaintiff’s claim fails. The statement of claim should be dismissed.

100. It is unclear to me whether any further orders are necessary on the cross-claim, save for costs. Counsel for the defendant indicated at the start of the hearing on 23 July 2025 that if the plaintiff was to consent to an order that the Second Caveat be withdrawn and consented to an order that the plaintiff pay the defendant’s costs of the cross-summons in a gross sum to be agreed or determined by the Court within 28 days, then the defendant would not press any relief in relation to the cross-summons. Later that day, the plaintiff consented to an order that the Second Caveat be withdrawn. No consent was forthcoming on costs. No submissions were ultimately advanced by the defendant in support of any other relief on the cross-summons.

101. The parties requested that I not make any orders as to costs at this stage, but rather determine the substantive issues only.

102. I am content to go along with this course although it seems to me that absent any application for a special costs order, the appropriate order is that the plaintiff/cross-defendant pay the defendant/cross-claimant’s costs of the statement of claim and the cross-claim. The defendant/cross-claimant also foreshadowed making an application for a gross sum costs order in relation to the cross claim - that is obviously a matter for the defendant/cross-claimant.

103. The orders of the Court are:

1. Statement of claim dismissed.

2. Direct the parties to confer to seek to agree any other orders to give effect to these reasons, including on the cross-claim and as to costs.

3. Direct the parties to provide to my Associate by no later than 27 August 2025 any agreed orders.

4. To the extent that orders are not agreed, direct the parties to provide to my Associate by no later than 27 August 2025, the form of orders for which each party contends together with any material and submissions (limited to three pages) in support of those orders.

5. Direct the parties to provide any material and submissions (limited to two pages) in reply by no later than 5pm on 3 September 2025 whereupon the remaining issues will be determined on the papers.

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Decision last updated: 20 August 2025