Novadeck Pty Ltd v CK & PT Property Holdings Pty Ltd

The point of contention in this appeal was whether, upon the proper construction of a contract for the sale of land, the balance of a deposit had been paid in the time stipulated. The issue was a complicated one. Whilst the buyer had instructed its bank to pay the balance deposit to the deposit holder under the contract well within time on the date of satisfaction of the finance condition, as matters eventuated, the deposit was not received into the deposit holder’s bank account until after 5:00 pm on that date. At first instance the primary judge determined that on the proper construction of the contract, the word “pay” did not require that the deposit holder had received the funds comprising the balance deposit. In a majority judgment (Bradley JA dissenting) the Court of Appeal disagreed, holding that the primary judge erred in the proper construction, and that it was implicit in the ordinary meaning of “pay” that the deposit was not paid until such time as it was received.

Bowskill CJ, Mullins P, Bradley JA

12 September 2025

The Court of Appeal examined whether the primary judge had erred in the proper construction of the contract in two respects: [3]:

(1)by determining that the word “pay” did not require that the appellant had actually received the funds comprising the balance deposit for the purchase of a property, and

(2)by finding an implied term in the contract, namely, “that if payment of the deposit is made by EFT and notified and the purchaser does not take action to defer the payment to the deposit holder it is taken to be received by the deposit holder on the day the EFT is effected”.

The contract’s reference schedule provided that an initial deposit of $1,000 was payable at the time the buyer signed the contract, with a balance deposit of $48,990 being “payable the later of 14 days from Contract Date or upon satisfaction or waiver of the Finance Condition (if any)”. [2]. It was common ground that 16 October 2024 was the date of satisfaction of the finance. Accordingly, the respondent buyer gave instructions to its bank on 16 October 2024 to pay the balance deposit to the deposit holder, but the deposit was not received into the bank account of the deposit holder until after 5:00 pm on that date. At 6:33 pm, the solicitors for the appellant seller notified the respondent that the contract was terminated for failure to pay the balance deposit on the date of satisfaction of the finance condition. Subsequently, the respondent obtained an order for specific performance of the contract in its proceeding at first instance. [2].

Important provisions of the contract between the parties

Relevantly, the contract provided as follows:

Cl 1.3(f):

“Business Days (i) If anything under this contract must be done on a day that is not a Business Day, it must be done instead on the next Business Day. (ii) If an act is required to be done on a particular day it must be done before 5.00pm on that day or it will be considered to have been done on the following day.”

Cl 3.2:

“(a) 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. (b) The Buyer will be in default if it: (i) does not pay the Deposit when required; (ii) pays the Deposit by post-dated cheque; or (iii) pays the Deposit by cheque which is dishonoured on presentation.”

Cl 15:

“(c) This Contract is subject to and conditional upon the Buyer obtaining Finance Approval on terms satisfactory to the Buyer from a Bank or other financial institution in respect of the Lot 21 days from the date the Seller notifies the Buyer that the Property has reached practical completion (‘Finance Due Date’).

(d) The Buyer must give written notice to the Seller by 5.00pm on the Finance Due Date that: (i) The Buyer has not obtained satisfactory Finance Approval in respect of the Lot in which case the contract will be at an end; or (ii) The Buyer has obtained satisfactory Finance Approval in respect of the Lot in which case the contract will no longer be subject to this Clause 15.

(e) The Seller may terminate the Contract by notice in writing to the Buyer if no notice if given under this clause by 5.00pm on the Finance Due Date. This is the Sellers’s only remedy for the Buyers failure to give notice.

(f) The Sellers right to terminate under this clause if subject to the Buyer’s continuing right to give written notice to the Seller of satisfaction, termination or waiver under this clause.

(g) This Clause 15 has been inserted for the benefit of the Buyer and accordingly the Buyer may waive its rights under this Clause 15 at any time.”

Construction

The primary judge held the deposit had been paid when the buyer sent the funds, rather than when they were received.

The appeal raised two related issues that the court was required to resolve by construing the contract, being the meaning of “pay” in cl 3.2(a) of the contract and whether it comprised receipt of the payment; and the timing of the payment required by the terms of the contract. The Court followed the approach to the construction of commercial contracts which was endorsed by the High Court in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104, [46]–[51]. [13].

The payment of the balance deposit (which was the major portion of the deposit due under the contract in the current matter), was conditioned “upon satisfaction … of the Finance Condition” under cl 15(d). In relation to the timing of the payment of the balance deposit, the court applied the reasoning of Barwick CJ and Gibbs and Aickin JJ in Brien v Dwyer (1978) 141 CLR 378 that considered “upon” and “at the time of” to be equivalent to one another, therefore rejecting the respondent’s argument that “upon” was construed as meaning “after” and was taken to mean within a reasonable time after the event specified. The usage of “upon” in the contract at hand required that the funds be received in conjunction with satisfaction of the finance condition. [18]–[23]. The court held, Mullins P; Bowskill CJ agreeing; (Bradley JA diss) that the deposit was not paid until it was received, noting that the ordinary meaning of “pay” is generally understood to involve receipt of payment by the creditor in order to discharge a debt or obligation. [24].

The Court observed as follows [29]-[30]:

“The payment of the balance deposit was a significant step under the contract in securing the respondent’s performance of the purchase when the contract was no longer conditional ... In that context, payment must have its usual meaning and extend to receipt of the payment by the deposit holder in the manner contemplated by the contract. The respondent failed to pay the balance deposit on the due date for payment under the contract as the EFT by which the payment … was not received into the account of the deposit holder before 5.00 pm on the due date for payment date. The respondent was therefore in breach of an essential term of the contract.”

In the Court’s view, the implied term found by the primary judge was derived from a provision in a subsequent version of the REIQ contract that explicitly provides for payment of deposits by EFT, including special provision for a delay in the electronic transmission of funds resulting from circumstances beyond the purchaser’s control. [32]. The court held that the implied term formulated by the primary judge was not required for business efficacy, and that it was inconsistent with the key provisions of the contract. [33].

In a dissenting opinion, Bradley JA concluded that the preferred view was that when properly construed, the obligation to pay in cl 3.2 of the contract was performed when the buyer had taken all necessary steps to make the payment to the deposit holder’s nominated bank account. It was not the case that the buyer was required to await confirmation of the receipt of available funds in the deposit holder’s account. [39]. In his view, a reasonable businessperson in the position of the parties would have contemplated that the contract meant that the buyer had discharged its obligation to pay the balance deposit at the time at which it instructed its bank to make the same day payment by EFT. In that regard his Honour noted that:

“This was the only part of the EFT payment process that the buyer could control. It was the equivalent of depositing a cheque to the deposit holder’s account. Indeed, it was the usual means for making such a payment”. [92].

Disposition

The appeal was allowed and the respondent was ordered to pay the appellant’s costs of the appeal and the originating application.

A Jarro