VENDOR AND PURCHASER - ORAL AGREEMENT - NON-REFUNDABLE DEPOSIT - Proposed agreement for sale of shares - whether vendors and purchasers orally agreed that advance payment of part deposit would be non-refundable if sale agreement did not proceed - question of fact - no question of principle.
1 The Plaintiffs sue the Defendants for repayment of the sum of $150,000 which they say was part payment of a deposit pursuant to an agreement for the purchase of shares which did not proceed because a condition of the agreement was not met. 2 The Defendants say that the payment of $150,000 was agreed to be non-refundable if the share sale agreement did not proceed and that it was made as an inducement to the Defendants to continue dealing with the Plaintiffs after a previous transaction had come to nothing. 3 The agreement for the purchase of the shares was not reduced to writing in final form and executed by the parties. The agreement as to part payment of the deposit was made in one or two meetings, depending upon whether one accepts the Plaintiffs’ version of events or the Defendants’ version. No contemporaneous note of the meeting or meetings was made. The Plaintiffs’ version of the critical discussions differs radically and irreconcilably from the Defendants’ version. The resolution of the case depends entirely on the parties’ credit and accuracy of recollection.
The non-contentious facts
4 The Plaintiffs are real estate developers. The controlling director of the First Plaintiff (“Macquarie”) is Mr Gary McGraw. The controlling director of the Second Plaintiff (“Activerain”) is Mr Lopko Neskovski. 5 The Defendants are the sole shareholders of Nessena Pty Ltd (“Nessena”). They hold their shares on trust for their father, Mr John Forrester. In the negotiations which are relevant in this case, the Defendants and Mr John Forrester were assisted by Mr John Forrester’s brother, Mr Keith Forrester. 6 Mr John Forrester took up residence on Norfolk Island in 1985 and since that time he has left his affairs in Sydney increasingly in the hands of his brother, Keith, and his sons, Gregory and Bradley. However, it is clear that Mr John Forrester has retained at all times the ultimate control of his affairs and has made the significant decisions. 7 In 1985, Nessena acquired two parcels of vacant land in Hickeys Road and Coombes Road, Penrith (“the Penrith Land”). The land had been purchased for an extension of factory premises owned…
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.
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Details
AGLC
Macquarie Developments Pty Ltd v Forrester [2005] NSWSC 674
Case
[2005] NSWSC 674
Decision Date
CaseChat Overview and Summary
Macquarie Developments Pty Ltd sued Forrester regarding the sale of shares in a property development. The parties had entered into a proposed agreement for sale and purchase of shares in a property development. The proposed agreement included a non-refundable deposit, which the purchaser paid before the final agreement was executed. The purchaser later sought a refund of the deposit, which the vendor refused. The primary issue for the court was whether the parties had orally agreed that the advance payment of the deposit would be non-refundable if the sale agreement did not proceed. The court needed to determine if there was an oral agreement regarding the non-refundable nature of the deposit.
The court considered the evidence presented by both parties and the principles of contract law. It was determined that the question of whether the parties had reached an oral agreement on the non-refundable nature of the deposit was a question of fact. The court found that the evidence supported the existence of such an oral agreement. The court held that the terms of the proposed agreement, coupled with the conduct of the parties, were sufficient to establish the oral agreement. Consequently, the purchaser's claim for a refund of the deposit was dismissed.
The court's reasoning was based on the principles of contract law and the evidence presented. It found that the proposed agreement, along with the conduct of the parties, supported the existence of an oral agreement regarding the non-refundable nature of the deposit. The court held that the purchaser was bound by the terms of the proposed agreement, which included the non-refundable deposit clause. The court dismissed the purchaser's claim for a refund of the deposit, finding that the vendors were entitled to retain the deposit as per the oral agreement.