Source: Radio New Zealand
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A case in which an Australian house buyer lost more than A$100,000 because he was two days’ late with his deposit payment could happen in New Zealand, too, a banking expert says.
The Queensland Supreme Court ruled this week that Stephen Gary Evans had to forfeit his entire $98,500 deposit – plus interest.
He had tried to buy a property at Shailer Park, near Brisbane, in 2024 for A$985,000 from Yea Lan Jan.
Justice Michael Copley noted in his judgement, issued on Friday, that the contract to buy the house was subject to a building and pest inspection, and finance.
The parties agreed that the contract was formed on 23 January, 2024.
The contract required the deposit to be paid into the real estate agency trust account when both parties had signed.
But because of bank transfer limits, the full amount was not paid until two days later.
Evans was told by his bank that he had to visit a branch in person if he wanted to increase the limit on the amount he could transfer, which was set at A$50,000 a day.
There was not enough time to do so on the day the contract was signed so he rang the real estate agent that evening.
He received a text the next morning telling him he “may need to deposit today” and was able to transfer A$45,000. He sent a text saying the rest would be sent the day after.
The real estate agent replied, appearing to confirm that plan.
A building and pest inspection happened that day.
The next day, he transferred another A$50,000 and arranged for his brother to transfer the remainder of the deposit.
“In the meantime, at 1:17 pm that day the defendant’s solicitors sent an email to the plaintiff’s solicitors inviting comment about why [Jan] could not terminate the contract in view of the deposit not having being paid in accordance with the contract,” Copley noted.
“On 28 January 2024 the realtor informed the plaintiff via a text message that the defendant did not want to sell the house to him and was going to cancel the contract. On 29 January 2024 the defendant’s solicitors informed the plaintiff’s solicitors that the defendant terminated the contract because the plaintiff failed to pay the deposit by the due date in accordance with the contract.”
Evans told the court that he thought the real estate agent had the authority to represent the seller in all aspects of the sale.
“Based on the text message of 10:58 am on 24 January 2024 and the absence of any further message to the contrary, he believed the defendant had agreed to him paying the deposit on 24 and 25 January 2024. Had he not received this message from the realtor he would have attended his bank on 24 January 2024 and arranged to pay the deposit in full that day,” Copley’s judgement said.
Jan gave evidence that she never authorised the agent or requested that she agree to the extension of time for the deposit.
Copley said that the real estate agent did not have authority to agree to arrangement for the payment of the deposit that did not align with the contract.
Jan counterclaimed for the deposit plus interest from 29 January, 2024 and was successful.
“The counterclaim is based on the plaintiff having breached clause 2.2(1) of the contract by not paying the deposit by 23 January 2024. This was not a matter which was in dispute. Next, if the plaintiff failed to comply with an essential term of the contract, the defendant could terminate the contract under clause 9.1. This was not disputed … Then the defendant relied on clause 9.4(2) of the contract which provided that if the defendant terminated the contract under clause 9.1, the defendant may ‘forfeit the Deposit and any interest earned’.”
Copley ordered that the deposit be forfeited to Jan plus interest.
Banking expert Claire Matthews of Massey University said the same situation could happen here, but it was unlikely – and was likely to be an anomaly in Australia too.
“It seems the purchaser could have a case against the agent for not advising the seller.”
She said, as in Australian coverage of the case, it was “morally wrong even if legally correct”.
“I think the vendor has been unreasonable, and I wonder about their motives. However, the purchaser did have the option of visiting a branch to enable the full deposit to be made, and it’s not clear why that didn’t happen.
“It also appears the purchaser may not have had legal advice, and I’d strongly encourage both parties in a real estate transaction to get legal advice.”
Banking Ombudsman Nicola Sladden said banks’ payment limits varied.
“If a customer knows they will need to make a large or unusual transaction, it’s a good idea to contact their bank in advance. This allows the bank to work with the customer to put appropriate arrangements in place, so the payment can be made safely and on time.”
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
