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Newlander Development Pty Ltd v Han[2023] QSC 94

Reported at (2023) 14 QR 156

Newlander Development Pty Ltd v Han[2023] QSC 94

Reported at (2023) 14 QR 156

SUPREME COURT OF QUEENSLAND

CITATION:

Newlander Development Pty Ltd v Jung Kyun Han and Anor [2023] QSC 94

PARTIES:

NEWLANDER DEVELOPMENT PTY LTD ACN 614 377 221

Plaintiff

v

JUNG KYUN HAN AND GYU YOUNG CHAE

Defendant

FILE NO/S:

16287 of 2022

DIVISION:

Trial Division

PROCEEDING:

Application

DELIVERED ON:

4 May 2023

DELIVERED AT:

Brisbane

HEARING DATE:

27 April 2023

JUDGE:

Bowskill CJ

ORDERS:

  1. THE COURT DECLARES THAT:
  1. 1.
    The defendants’ termination of the Contract dated 4 May 2021 on 29 September 2022 was lawful.
  1. 2.
    The defendants were entitled to forfeit the deposit pursuant to clause 2.4(1) of the standard terms of the Contract.
  1. THE COURT ORDERS THAT:
  1. 3.
    There be judgment for the defendants on the Claim and Counterclaim.
  1. 4.
    The Caveat number 722007319 lodged on 30 September 2022 by the plaintiff be removed.
  1. 5.
    The plaintiff pay the defendants’ costs of the proceeding.

CATCHWORDS:

CONVEYANCING – THE CONTRACT AND CONDITIONS OF SALE – DEPOSIT – WHAT CONSTITUTES – where in accordance with the special condition of a contract for the purchase of land, the deposit was described as “non-refundable” – whether the payment remained a “deposit” and whether the contract is an “instalment contract” within the meaning of those terms in s 71 of the Property Law Act 1974 (Qld)

Property Law Act 1974 (Qld), s 71, s 72

Amnico Holdings v Griese [2016] 2 Qd R 512; [2014] QSC 247

CCP Australian Airships Ltd v Primus Telecommunications Pty Ltd (2005) ASAL 55-139; [2004] VSCA 232

Phillips & Anor v Scotdale Pty Ltd (2008) Q ConvR 54-692; [2008] QCA 127

Starco Developments Pty Ltd v Ladd [1999] 2 Qd R 542; [1998] QCA 344

COUNSEL:

P Hackett, for the applicants (defendants)

S Hogg, for the respondent (plaintiff)

SOLICITORS:

H W Litigation Pty Ltd, for the applicants (defendants)

Fenson & Co Lawyers, for the respondent (plaintiff)

  1. [1]
    On 4 May 2021, the defendants (as Sellers) entered into a contract to sell a property they own at Pallara to the plaintiff (as Buyer).  The contract was in the standard REIQ form contract for houses and residential land, with special conditions.   Settlement was to take place on 28 September 2022.  The plaintiff failed to tender at settlement and, on 29 September 2022, the defendants purported to terminate the contract on the basis of the plaintiff’s failure to settle the day before.  The plaintiff contends that the effect of the special conditions, in relation to the “deposit”, was to make the contract an “instalment contract” within the meaning of s 71 of the Property Law Act 1974 (Qld).  The plaintiff further says that because the defendants failed to give the required notice to terminate under s 72 of that Act, their purported termination was invalid.  By these proceedings, the plaintiff seeks an order that the defendants specifically perform the contract of sale.  The defendants say the contract is not an “instalment contract” and, by their counterclaim, seek a declaration that their termination of the contract was lawful, and that they are entitled to forfeit the deposit pursuant to clause 2.4(1) of the standard terms of the contract, as well as an order for removal of a caveat lodged by the plaintiff.
  2. [2]
    The defendants have applied for summary judgment, dismissing the plaintiff’s claim under rule 293 of the Uniform Civil Procedure Rules 1999 (Qld) and for judgment on their counterclaim, under rule 292.
  3. [3]
    There are no disputed facts to be determined.  The outcome of the application turns on the proper construction of the contract, as to whether or not it is an “instalment contract”.  If the court finds that it is, there is no dispute that the summary judgment application should be dismissed.  If the court finds that it is not, there is no dispute that the summary judgment application should be allowed.  In either case, the parties agree costs are to follow the event.
  4. [4]
    Section 71 of the Property Law Act defines “instalment contract” as follows:
  1. “instalment contract means an executory contract for the sale of land in terms of which the purchaser is bound to make a payment or payments (other than a deposit) without becoming entitled to receive a conveyance in exchange for the payment or payments.”
  1. [5]
    In the same section:
  1. “deposit means a sum –
  1. (a)
    not exceeding the prescribed percentage of the purchase price payable under an instalment contract; and
  1. (b)
    paid or payable in 1 or more amounts; and
  1. (c)
    liable to be forfeited and retained by the vendor in the event of a breach of contract by the purchaser.”
  1. [6]
    Section 72(1) imposes a restriction on a vendor’s right to rescind an instalment contract – it cannot do so until 30 days after service on the purchaser of a notice in the approved form.
  2. [7]
    The contract is in the standard REIQ form of contract for houses and residential land. 
  3. [8]
    The contract date is 4 May 2021.  The purchase price is $3,650,000. 
  4. [9]
    The reference schedule of the contract provided for a deposit to be paid, as follows:
    1. (a)
      $30,000 – “Initial Deposit payable on the day the Buyer signs this contract unless another time is specified below”.  Handwritten below this are the words “48 hours from contract date”.
    2. (b)
      $335,000 – “Balance Deposit (if any) payable on:  48 HOURS FROM UNCONDITIONAL DATE”.
  5. [10]
    On 6 May 2021, the plaintiff paid the initial deposit of $30,000 to the deposit holder (the Seller’s agent).  On 5 July 2021, the plaintiff, by letter from its solicitors to the defendants’ solicitor, informed the defendants that it was satisfied with the due diligence condition, and “accordingly, this Contract is now unconditional”.  The following day, on 6 July 2021, the plaintiff paid the balance of the deposit of $335,000 to the deposit holder.
  6. [11]
    The standard terms forming part of the contract include the following:
  1. “2.2
    Deposit
  1. (1)
    The Buyer must pay the Deposit to the Deposit Holder at the times shown in the Reference Schedule.  The Deposit Holder will hold the Deposit until a party becomes entitled to it.

…

  1. 2.4
    Entitlement to Deposit and Interest
  1. (1)
    The party entitled to receive the Deposit is:
  1. (a)
    if this contract settles, the Seller;
  1. (b)
    if this contract is terminated without default by the Buyer, the Buyer; and
  1. (c)
    if this contract is terminated owing to the Buyer’s default, the Seller.

…

  1. 9.
    PARTIES’ DEFAULT
  1. 9.1
    Seller and Buyer May Affirm or Terminate
  1. Without limiting any other right or remedy of the parties including those under this contract or any right at law or in equity, if the Seller or Buyer, as the case may be, fails to comply with an Essential Term, or makes a fundamental breach of an intermediate term, the Seller (in the case of the Buyer’s default) or the Buyer (in the case of the Seller’s default) may affirm or terminate this contract.

…

  1. 9.4
    If Seller Terminates
  1. If the Seller terminates this contract under clause 9.1, it may do all or any of the following:
  1. (1)
    resume possession of the Property;
  1. (2)
    forfeit the Deposit and any interest earned;
  1. (3)
    sue the Buyer for damages;
  1. (4)
    resell the Property.
  1. 9.5
    If Buyer Terminates
  1. If the Buyer terminates this contract under clause 9.1, it may do all or any of the following:
  1. (1)
    recover the Deposit and any interest earned;
  1. (2)
    sue the Seller for damages.

…

  1. 10.9
    Interpretation

…

  1. (4)
    Inconsistencies
  1. If there is any inconsistency between any provision added to this contract and the printed provisions, the added provision prevails.”
  1. [12]
    There were special conditions added to the contract – in Annexure A.  The special conditions include:
  1. “1.
    Interpretation
  1. (a)
    The Standard Terms of Contract apply to this Contract except to the extent that they are excluded or modified by these Special Conditions (Terms of Contract).
  1. (b)
    If there is any inconsistency between these Special Conditions and other provision or conditions of this Contract, these Special Conditions prevail to the extent of the inconsistency.

…

  1. 2.
    Settlement Date

The Settlement Date is 360 450[1] days after the Buyer gives notice of satisfaction / waiver of the DD Provision and Development Condition.

  1. 3.
    Due Diligence
  1. 3.1
    Due Diligence

This Contract is subject to the Buyer completing a due diligence investigation of the Property (and any mattes concerning the Property as determined by the Buyer) and being totally satisfied with the results of that investigation on or before the date that is 90 days 60 days from the Contract Date (Due Diligence Date) failing which the Buyer may terminate this Contract by notice to the Seller.  If this happens the Deposit will be refunded to the Buyer (DD Provision).[2]

…

  1. 3.4
    Seller’s Rights
  1. (a)
    If the Buyer:
  1. (i)
    does not terminate this Contract under the DD Provision;
  1. (ii)
    does not waive the benefit of the DD Provision; or
  1. (iii)
    does not give notice that the DD Provision is satisfied,

by 5.00 pm on the Due Diligence Date, then the Seller may terminate this Contract by notice to the Buyer.  If this happens, the Deposit will be refunded to the Buyer.[3]

  1. 7.0
    Non-Refundable Deposit

First part of the $30,000 deposit is non-refundable after 48 hours from the contract date.

Balance Deposit of $335,000 is non-refundable after satisfactory [sic] of due diligence.  Seller would be able to access the fund upon agreement with buyer.”[4]

  1. [13]
    There was agreement subsequently reached, on about 14 September 2021, for the agent (deposit holder) to release the deposit to the Sellers (defendants), after deduction of the agent’s commission.
  2. [14]
    It is the plaintiff’s case that, because the deposit was expressed in the contract to be “non-refundable” (special condition 7), it was not liable to be forfeited and retained by the Seller in the event of the plaintiff’s (Buyer’s) default (cf standard conditions 2.4(1)(c) and 9.4).  The plaintiff submits that, once the plaintiff had paid the deposit, it lost its estate or interest in that money.  The deposit was therefore not a “deposit” as defined in s 71 of the Property Law Act. It was a payment the plaintiff was bound to make under the contract without becoming entitled to receive a conveyance in exchange, so that the contract was an “instalment contract” as defined in s 71.
  3. [15]
    The plaintiff emphasises both the express terms of special condition 7 as well as the interpretation provisions in standard condition 10.9(4) and special conditions 1(a) and (b).  The plaintiff submits that, although standard condition 9.4 provides that, if the Seller terminates the contract it “may … forfeit the Deposit”, that has to be read with special condition 7, which provides that the Deposit was “non-refundable” after satisfaction of the due diligence condition.   To the extent it is argued that, after that time, the deposit was still only liable to be forfeited (according to standard conditions 2.4(1)(c) and 9.4), as opposed to entitlement to it passing then to the Seller (without waiting to see if the Buyer did breach the contract), the plaintiff says the conditions are inconsistent and special condition 7 prevails.
  4. [16]
    The defendants contend that there is no inconsistency and that despite the use of the word “non-refundable” in special condition 7, the deposit was still “liable to be forfeited”.  They rely on the decision in Phillips & Anor v Scotdale Pty Ltd (2008) Q ConvR 54-692 to support their argument.
  5. [17]
    In Phillips, there was a special condition dealing with payment of the deposit, although it was in different terms.  As recorded in the reasons of Keane JA in Phillips,

“[8] Special condition 1 of the contract, as varied, provided:

‘Despite any other clause contained in this Contract (including the Terms of Contract) the parties agree the Purchase Price of $3,500,000.00 is to be paid to the Seller as follows:

  1. (a)
    $100,000.00 by way of part deposit payable as set out in the Reference Schedule; and
  1. (b)
    $100,000.00 by way of further part deposit payable on 4 September, 2007 to be released immediately to the Sellers (and for the purposes of clarity the parties agree that Special Condition 13 shall also apply to this further part deposit); and
  1. (c)
    $800,000.00 on the Settlement Date; and
  1. (d)
    $2,500,000.00 (Balance Price) on or before 17 July 2008 (Repayment Date), and in accordance with these Special Conditions and the first registered mortgage granted to the Seller, a copy of which is annexed to this Contract as Annexure ‘B’ (Mortgage).’

[9]  Special condition 13 of the contract contemplated that when the purchaser had paid the total amount of the deposit, ie $200,000 to the deposit holder, that sum would be paid over to the vendors forthwith. The special condition provided:

‘The parties mutually acknowledge, authorise and agree that as soon as practicable after the payment of the balance deposit the deposit holder shall pay to the Seller the Deposit (less the agents commission and any GST payable on that commission which sums shall be retained in the Agent's Trust Account pending settlement or earlier termination of the contract) and the Buyers shall have no claim against the Sellers (provided the Sellers are not in breach of the provisions hereof) or the deposit holder except where the Seller is in breach of its obligations under this Contract in which case nothing will prevent the Buyer from recovering from the Seller any amounts entitled to it under this Contract or at law.’” [emphasis added]

  1. [18]
    The purchaser in Phillips ran the same argument as the defendants here – arguing that the terms of special condition 13 entitled the vendors to be paid the “deposit” moneys immediately, without waiting to see if the purchaser did breach the contract.  The purchaser argued that special condition 13 “defeat[ed] the possibility of there being a forfeiture”.  The sellers resisted that argument, arguing that special condition 13 did not effect an immediate forfeiture of the moneys in question.  The sellers argued that the sellers became entitled “to forfeit and retain” those moneys in accordance with special condition 13 only if they did not breach the contract (see at [14], [15], [20]).
  2. [19]
    The Court of Appeal (Keane JA (as his Honour then was), de Jersey CJ and White J agreeing) found in favour of the sellers.
  3. [20]
    At [21],  Keane JA said that:
  1. “One difficulty with [the purchaser’s] argument is that it fails to recognise that, at least until Centrepoint [the deposit holder] paid the moneys (less the authorised deductions) over to the vendors, the purchaser had an interest in, or a claim to, the moneys. The extent of the purchaser’s beneficial interest in the moneys while they were held in trust by Centrepoint can be measured by the orders which a court of equity might make to vindicate or protect the purchaser’s interest in the moneys. Here, the purchaser’s contingent beneficial interest in the fund could have been protected by an injunction to restrain the payment to the vendors by Centrepoint, if there were evidence that, after the $200,000 had been received by Centrepoint, the vendors had decided not to complete the contract, eg, if they had entered into a contract to sell the property to a third party for a higher price. On this basis, for at least a scintilla temporis, the $200,000 was not immediately the absolute property of the vendors.”
  1. [21]
    The same would be said here – although the plaintiff emphasises that the deposit (less the agent’s commission) was paid over to the defendants, on or about 14 September 2021.
  2. [22]
    But as Keane JA went on to say:
  1. [22]
    A second, and perhaps more substantial, difficulty with the purchaser’s argument is that it ignores the contractual right of the purchaser as against the vendors to recover the amount of the moneys from the vendors if the vendors failed to comply with their obligations to complete the contract. Even after the moneys held by Centrepoint had been paid over to the vendors, in conformity with special condition 13, the purchaser would have been entitled to sue the vendors to recover that sum if the vendors breached the contract. It is unnecessary to pause here to consider whether the purchaser would have been entitled to a proprietary remedy to enforce this right, eg, by tracing the funds. It is sufficient for present purposes to recognise that the purchaser was entitled, albeit contingently, to recover from the vendors the amount of the moneys. That right was recognised, if not created by, the terms of special condition 13.
  1. [23]
    The existence of such an entitlement in the purchaser is inconsistent with the proposition that the purchaser had once and for all lost all entitlement to that sum when it was paid to the vendors under special condition 13:  the purchaser’s right to recover this sum from the vendors, even if it be properly described as contingent, was not to be finally extinguished before the termination of the contract. Indeed, it is at least arguable that special condition 13 meant that it would be extinguished, even upon breach by the purchaser, only if the vendors were not themselves in breach of contract.
  1. [24]
    Whatever the shades of meaning of ‘forfeiture’ or ‘liability to forfeiture’ under the general law or in other statutory contexts, there can be no doubt that, when s 71 of the PLA speaks of the sum in question being ‘liable to be forfeited and retained by the vendor’, the liability referred to is a liability to the loss of the sum which is final and absolute, not provisional or defeasible. One must give force to the words ‘and retained by the vendor’ in paragraph (c) of the definition of ‘deposit’. These words confirm that the liability to forfeiture there referred to is a liability in the purchaser to lose the sum finally and absolutely to the vendor. Special condition 13 did not operate of its own terms finally and absolutely to extinguish the purchaser’s entitlement to the moneys payable by the purchaser under special condition 1. That loss of entitlement could only occur upon the occurrence of subsequent events, one of which was breach of the contract by the purchaser.” [emphasis added; references omitted]
  1. [23]
    As Keane JA also observed, at [27]:
  1. “It has long been recognised that the essential characteristic of a deposit in a contract for the sale of land is that it is susceptible to being forfeited by a buyer to a seller upon the buyer’s breach. Its essential character is that of a payment guaranteed to the vendor in the event that the purchaser fails to complete the contract.  The possibility that the deposit might be lost to the buyer for other reasons as well is not apt to deny its essential character as a guaranteed payment. The circumstance that the purchaser’s entitlement to recover the payment may be lost by virtue of events other than the breach of contract by the purchaser does not detract from the character of the payment as a guaranteed payment to the vendor. Indeed, the circumstance that a payment made by a buyer may be forfeited to the seller by reason of events additional to the buyer’s breach serves to strengthen the character of the payment by the buyer as a guaranteed payment to the vendor.”
  1. [24]
    The same conclusion was reached in Watpac Developments Pty Ltd v Latrobe King Commercial Pty Ltd & Anor [2012] 1 Qd R 498, in which McMurdo J (as his Honour then was) described the contract as indistinguishable from that in Phillips.  The relevant condition in Watpac provided for the (increased) deposit to be “immediately released to the seller on the condition that the deposit is to be refunded to the purchaser if the contract is terminated due to default by Watpac [the seller]”.
  2. [25]
    The defendants rely on Phillips as authority for the proposition that the deposit remained susceptible to being forfeited, despite special condition 7, and as such the contract here is not an “instalment contract”.
  3. [26]
    The plaintiff distinguishes Phillips on the basis of the differently worded special condition.  Here, special condition 7 does not include the added words “except where the Seller is in breach of its obligations…” (or something similar).  Accordingly, the plaintiff submits, the effect of the word “non-refundable” in special condition 7, was that the plaintiff did “lose the sum finally and absolutely to the vendor” (cf Phillips at [24]).
  4. [27]
    The plaintiff also referred to two other cases, Starco Developments Pty Ltd v Ladd [1999] 2 Qd R 542 and Amnico Holdings v Griese [2016] 2 Qd R 512, not as directly supporting its argument, but as “touch[ing] on the issue”.
  5. [28]
    The contractual provisions in Starco were quite different, and as such the decision does not directly assist in resolving the construction issue in this case.  In Starco, there was a variation to the contract, under which the buyer agreed to make interest payments on the deposit, which were to be immediately released and retained by the seller, regardless of what happened with the contract.  The Court of Appeal held that, as varied, the contract became an instalment contract, because the buyer become bound to make payments (particularly, of interest) without becoming entitled to receive a conveyance in exchange for the payment; and the payments were not a “deposit” as defined.[5] 
  6. [29]
    Of note, however, is McPherson JA’s observation, in Starco at [21]:
  1. “Clause 1 of the addendum [by which the variation to the contract was effected] changed this state of affairs [that is, the original provisions of the contract in relation to the holding of the deposit by the agent as trustee].  By its terms, the vendor and the purchasers jointly authorised the trustee ‘to forthwith pay the deposit of $19,000 plus all interest earned by the investment thereof to the vendor’.  Some question was raised as to whether this provision had the effect of forfeiting the deposit, together with interest, to the vendor.  I doubt that it had that effect.  But, even if it did not, cl 1 of the addendum clearly altered the prevailing legal regime under which the deposit and interest were being held.  Previously they were held by the solicitor as trustee for both parties.  Upon execution of the addendum, the parties authorised payment of that money to the vendor.  The Purchasers ceased to be beneficiaries having even a contingent equitable interest in a trust fund and became entitled only in certain events, such as the vendor’s default, to claim recovery from the vendor of the amount of the deposit and interest as money had and received or by way of restitution, which would give rise to no more than a claim in personam by the purchasers against the vendor.” [emphasis added]
  1. [30]
    This picks up the point made by Keane JA in Phillips at [22] (set out above), that the right of the buyer to recover the deposit money from the seller, for example in the event of the seller’s default, “was recognised, if not created by, the terms of special condition 13”.  The point is that, even though the parties have agreed that the “deposit” is “non-refundable” (or, in Starco, to be paid “forthwith” to the vendor), the buyer retains a right to recover that money from the seller, in some circumstances.  On that basis, the deposit remains liable to be forfeited.
  2. [31]
    This conclusion is also supported by the third case referred to by the plaintiff, Amnico Holdings Ltd v Griese [2016] 2 Qd R 512.  That case had factual elements in common with both Phillips and Starco – in the sense that there were a number of extensions of time agreed to and, as the price for the first extension sought, the buyer agreed to release the deposit paid under the contract to the seller, and for later extensions, the buyer agreed to pay sums calculated as an amount of interest on the outstanding purchase monies.  The buyer relied on both payments to contend the contract became an “instalment contract”.
  3. [32]
    In relation to the release of the deposit, after referring to the parties’ arguments, and parts of Keane JA’s reasoning in Phillips, Jackson J said:
  1. “[30]
    The buyer in the present case seeks to distinguish Phillips on the basis that the sum in that case retained its character as a deposit, notwithstanding transfer or release to the vendor, because of the express term of the agreement that it would be repaid if the contract were terminated for the seller’s breach. The provision was that ‘nothing will prevent the Buyer from recovering from the Seller any amounts entitled to it under this Contract or at law.’
  1. [31]
    In my view, it does not have the distinguishing effect contended for by the buyer. I accept that on transfer or release of the deposit to the seller, the money or chose in action became the seller’s property at law. Yet, under the contract, it still operated as a deposit in the sense that if the contract is terminated for the buyer’s breach, then the seller is entitled to keep the sum. On the other hand, it is also true that, if the contract is terminated for the seller’s breach of contract, the buyer would be entitled to recover the deposit from the seller. That result would follow because, under a contract for sale of land, a sum paid by way of deposit and in part payment of the purchase price is part of the consideration paid by the buyer for the seller’s performance of the contract by conveying the land to the buyer. On termination of the contract by the buyer, for breach of contract by the seller, the buyer is entitled to ‘obtain restitution of the deposit which they [have] paid. Their claim for the return of the deposit [is] not founded on the rescinded contract. … It [is] a claim founded in the equitable notions of fair dealing and good conscience which require restitution of a benefit received as, or as part of, the quid pro quo for a consideration which has failed’.[6]
  1. [32]
    Accordingly, in my view, the effect of the agreement made between the buyer and the seller in the present case for the transfer or release of the deposit by the agent to the seller did not constitute the contract an instalment contract within the meaning of s 71 and s 72 of the PLA.” [emphasis added]
  1. [33]
    However, in relation to the agreement to pay interest on the outstanding purchase price, as the price for subsequent extensions of time, Jackson J found the case was analogous to Starco.  The interest payments were payments the buyer was bound to make under the contract, other than a deposit, without becoming entitled to receive a conveyance in exchange.  As a result the contract in that case was held to be an instalment contract (at [43] and [45]).  
  2. [34]
    An application of the principle referred to by Keane JA in Phillips at [22], by McPherson JA in Starco at [21] and by Jackson J in Amnico at [31] is demonstrated by the decision of the Victorian Court of Appeal in CCP Australian Airships Ltd v Primus Telecommunications Pty Ltd (2005) ASAL 55-139.  In this case, Primus entered into an Exclusive Licence for Airship for Advertising and Promotional Purposes agreement with CCP.  Primus had paid a deposit of $400,000 under the agreement, clause 4.1 of which provided that:
  1. “A non-refundable deposit of $400,000 shall be paid upon the signing of this agreement.  These monies (‘deposit’) shall be offset against the monthly payments during the months of May, June, July and August 2001.”
  1. [35]
    In the proceedings at first instance, Primus alleged that CCP had repudiated the agreement by failing to supply the airship in accordance with the agreement, or at all, and that Primus accepted the repudiation, bringing the agreement to an end.  It claimed the return of the $400,000 deposit paid under the agreement, or damages in the same amount.  The judge upheld Primus’ claim in that regard and gave judgment in the sum of $400,000.
  2. [36]
    CCP appealed, inter alia, on the ground that the judge erred in the construction of the agreement in holding that in the events which had occurred the deposit of $400,000 was recoverable, notwithstanding that clause 4.1 of the agreement provided that it was a “non-refundable” deposit.  CCP argued – like the plaintiff in this case – that “non-refundable” means what it says and that means non-refundable in all circumstances.  
  3. [37]
    At first instance, the judge held that the words “non-refundable deposit” meant only that the deposit was non-refundable if Primus changed its mind and decided not to proceed with the proposal to use the airship for advertising purposes; that did not mean that Primus could not recover the deposit if, for example, CCP breached the agreement.[7]  In expressing agreement with the primary judge’s analysis, Nettle JA (as his Honour then was), with the agreement of the other members of the Court, said:
  1. “9
    … It makes evident sense that the deposit should have been irrecoverable in the event that Primus refused to proceed or otherwise defaulted in the performance of its obligations. … But contrastingly it would make little sense if the deposit were not recoverable in the event of a total failure of consideration caused by CCP. Upon the appellants’ analysis, CCP would have been entitled to keep the deposit even if CCP had thrown up the agreement the instant after signing it or, to be less dramatic, if after a week of reflection CCP had decided that it could make more money by repudiating the agreement, keeping the deposit and entering into an agreement with other parties to make the airship available to them. But logically it cannot be supposed that the parties intended CCP to keep the deposit in those circumstances, or indeed in any other circumstances resulting in a total failure of consideration due to CCP’s breach of contract. Authority makes plain that elliptical expressions in mercantile contracts are to be read in no narrow spirit of construction but as the Court would suppose two honest business men would understand the words they have actually used with reference to their subject matter and the surrounding circumstances. One is thus to approach the crucial issue of construction by making the inquiry as to what reasonable business people in the position of the parties would have intended the clause to mean. In my opinion it would fly in the face of honest dealing and common sense to construe clause 4.1 in the manner suggested by the appellants.
  1. 10
    There is too a further reason to reject the appellants’ argument. It arises out of the juridical distinction between an action in quasi-contract or restitution for the recovery of a deposit as such and an action in damages assessed in the same amount. That distinction is clear. In the past it was conceived of as a distinction between an implied or imputed promise to repay money and compensation for a promise that was breached. Now it is thought of in terms of restitution. As Deane J explained in Foran v Wight[8] the return of a deposit in the event of rescission is not founded on the rescinded contract. Nor does it represent a claim for damages for the vendor’s breach of its terms. It is rather a claim founded in the equitable notions of fair dealing and good conscience which require restitution of a benefit received as, or as part of, the quid pro quo for a consideration which has failed.[9] An action in damages, even if quantified in the same amount, is something of a different kind.”[10]
  1. [38]
    Applying those principles here, whilst the deposit money became the property of the defendants (Sellers) upon the payment to them of that money, under the contract it still operated as a deposit, for the reasons explained in Phillips at [24] and Amnico at [31], and remained “liable to be forfeited and retained by the vendor” for the purposes of the definition of “deposit” in s 71 of the Property Law Act.  The fact that special condition 7 did not include words to the effect “except where the Seller is in breach” does not alter this conclusion, because the Buyer’s contingent right to recover the deposit, for example in the event of the Seller’s breach, arises as a matter of law.
  2. [39]
    The contract is not an “instalment contract” within the meaning of s 71 of the Property Law Act.
  3. [40]
    For those reasons, it is appropriate that judgment be given for the defendants on the claim and the counterclaim. 

Footnotes

[1]  This figure was handwritten (after crossing out the printed number 360) and initialled.

[2]  The figure and words “60 days” is handwritten after crossing out the typed “90 days”.  The final sentence is struck out by hand.  Both changes are initialled.

[3]  The final sentence is struck out by hand, with the change initialled.

[4]  This clause 7 of the special conditions is hand written (the balance of the special conditions are typed) and the addition is initialled.

[5]  See Starco Developments Pty Ltd v Ladd [1999] 2 Qd R 542 at [4] and [6] per de Jersey CJ, at [21]-[22] per McPherson JA and at [42] per Thomas JA.

[6]  Referring to Foran v Wight (1989) 168 CLR 385 at 438.

[7]CCP Australian Airships Ltd v Primus Telecommunications Pty Ltd (2005) ASAL 55-139 at [6].

[8]  (1989) 168 CLR 385 at 438.

[9]  See too Foran v White (1989) 168 CLR 385 per Brennan J at 432 and per Dawson J at 455.

[10]  References omitted (other than where shown).

Close

Editorial Notes

  • Published Case Name:

    Newlander Development Pty Ltd v Jung Kyun Han and Anor

  • Shortened Case Name:

    Newlander Development Pty Ltd v Han

  • Reported Citation:

    (2023) 14 QR 156

  • MNC:

    [2023] QSC 94

  • Court:

    QSC

  • Judge(s):

    Bowskill CJ

  • Date:

    04 May 2023

  • Selected for Reporting:

    Editor's Note

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Amnico Holdings Ltd v Griese[2016] 2 Qd R 512; [2014] QSC 247
6 citations
Jump To
Cite 1 - [2014] QSC 247
Cite 2 - [2016] 2 Qd R 512
Cite 3 - [2016] 2 Qd R 512
Cite 4 - [2016] 2 Qd R 512
Cite 5 - [2016] 2 Qd R 512
Cite 6 - [2016] 2 Qd R 512
CCP Australian Airships Ltd v Primus Telecommunications Pty Ltd [2004] VSCA 232
1 citation
Jump To
Cite 1 - [2004] VSCA 232
Foran v Wight (1989) 168 CLR 385
3 citations
Jump To
Cite 1 - (1989) 168 CLR 385
Cite 2 - (1989) 168 CLR 385
Cite 3 - (1989) 168 CLR 385
Phillips & Anor v Scotdale P/L (2008) Q Conv R 54-692
5 citations
Jump To
Cite 1 - (2008) Q Conv R 54-692
Cite 2 - (2008) Q Conv R 54-692
Cite 3 - (2008) Q Conv R 54-692
Cite 4 - (2008) Q Conv R 54-692
Cite 5 - (2008) Q Conv R 54-692
Phillips v Scotdale Pty Ltd [2008] QCA 127
1 citation
Jump To
Cite 1 - [2008] QCA 127
Phillips v Scotdale Pty Ltd (2008) Q Conv R 54
1 citation
Jump To
Cite 1 - (2008) Q Conv R 54
Starco Developments Pty Ltd v Ladd[1999] 2 Qd R 542; [1998] QCA 344
6 citations
Jump To
Cite 1 - [1998] QCA 344
Cite 2 - [1999] 2 Qd R 542
Cite 3 - [1999] 2 Qd R 542
Cite 4 - [1999] 2 Qd R 542
Cite 5 - [1999] 2 Qd R 542
Cite 6 - [1999] 2 Qd R 542
Watpac Developments Pty Ltd v Latrobe King Commercial Pty Ltd[2012] 1 Qd R 498; [2011] QSC 392
1 citation
Jump To
Cite 1 - [2012] 1 Qd R 498

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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