Liew v Barthelmess

The case of Liew v Barthelmess was brought before the Supreme Court of New South Wales, where the plaintiffs sought to recover monies paid as deposits for the purchase of a residential building in Darling Point. The building was divided into three lots, with separate contracts for each, though the contracts were interdependent and materially similar. The dispute arose after the purchasers failed to pay the final instalment of the deposit, leading the vendors to terminate all three contracts and assert their right to retain the monies paid by the purchasers. The purchasers commenced an action in restitution to recover the deposits.

The court was tasked with determining whether the purchasers' failure to pay the final instalment constituted a breach of an essential term, thereby entitling the vendors to terminate the contracts. Additionally, the court had to construe the terms regarding the payment of the deposit, consider whether the contracts were validly terminated, and assess if the deposit payment provision was unenforceable as a penalty. The court also considered whether the purchasers were estopped from resiling from the representation concerning the deposit payment provision.

In its reasoning, the court found that the purchasers' failure to pay the final instalment constituted a breach of an essential term, thus allowing the vendors to validly terminate the contracts. The court rejected the argument that the deposit payment provision was a penalty, noting that it was a genuine pre-estimate of loss. The court further found that the purchasers were not estopped from resiling from the representation concerning the deposit payment provision, as they had not made a representation that induced the vendors to act to their detriment. Consequently, the court ordered the purchasers to pay the vendors certain costs.

The final orders of the court were detailed in paragraph [185] of the judgment, which specified the costs to be paid by the purchasers to the vendors.