Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Akrawe v Culjak [2023] NSWCA 171 Hearing dates: 28 March 2023 Date of orders: 27 July 2023 Decision date: 27 July 2023 Before: Bell CJ; Leeming JA; Mitchelmore JA Decision: (1) Appeal dismissed with costs. Catchwords: EQUITY — equitable remedies — specific performance — land — contract for the sale of real property — multiple agreements — failure to complete when time is of the essence — whether valid termination of contract — whether applicant was ready and willing to complete APPEALS — from exercise of discretion — whether failure to exercise discretion — no discretionary error of kind referred to in House v The King — relief against forfeiture of deposit — Conveyancing Act 1919 (NSW), s 55(2A) Legislation Cited: Conveyancing Act 1919 (NSW), s 55(2A) Cases Cited: Akins v National Australia Bank (1994) 34 NSWLR 155 Bahr v Nicolay (No 2) (1988) 164 CLR 604; [1988] HCA 16 Culjak v Akrawe [2022] NSWSC 949 Havyn Pty Ltd v Webster [2005] NSWCA 182; (2005) 12 BPR 22,837 House v The King (1936) 55 CLR 499; [1936] HCA 40 Lee v Lee (2019) 266 CLR 129; [2019] HCA 28 Lucas & Tait (Investments) Pty Ltd v Victoria Securities Ltd [1973] 2 NSWLR 268 Luu v Sovereign Developments Pty Ltd [2006] NSWCA 40; (2006) 12 BPR 23,629 Nassif v Caminer (2009) 74 NSWLR 276; [2009] NSWCA 45 Omar v El-Wakil [2001] EWCA Civ 1090; [2002] P & CR 36 Romanos v Pentagold Investments Pty Ltd (2003) 217 CLR 367; [2003] HCA 58 Searle v Commonwealth of Australia (2019) 100 NSWLR 55; [2019] NSWCA 127 Stokes v Toyne [2023] NSWCA 59 Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315; [2003] HCA 57 Category: Principal judgment Parties: Behnam Said Akrawe (Appellant) Margaret Marita Culjak (First Respondent) Ante Culjak (Second Respondent) Representation: Counsel: S Y Reuben (Appellant) M Lozina (Respondents) Solicitors: Agostino & Co, Solicitors (Appellant) Fitzpatrick Solicitors Pty Ltd (Respondents) File Number(s): 2022/222755 Publication restriction: Nil Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Division Citation: [2022] NSWSC 949 Date of Decision: 19 July 2022 Before: Darke J File Number(s): 2021/182919 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] HEADNOTE [This headnote is not to be read as part of the judgment] The applicant entered into a contract with the respondents to purchase a property in Western Sydney for $1,550,000 with a 10% deposit. The settlement date for the contract was 25 January 2021 but was extended to 22 February 2021. On 22 February 2021, completion did not occur. Although the parties commenced the process of rescinding the original contract and entering into a new contract to substitute the applicant with his son as the purchaser, the new contract was never completed. On 3 March 2021, the respondents served a Notice to Complete calling for completion of the original contract to take place at 12:00pm on 18 March 2021. Late in the afternoon of 18 March 2021, the applicant's solicitor informed the respondents' conveyancer that the applicant required further time to settle the purchase. On 22 March 2021, the respondents served a Notice of Termination of the contract upon the applicant. The parties each commenced proceedings in the Equity Division. The respondents sought a declaration that the contract was duly terminated and an order they be paid the deposit. The applicant, by cross-claim, sought a declaration that the termination of the contract was invalid and an order for specific performance. The primary judge dismissed the cross-claim, declared the contract was validly terminated and ordered that the deposit be paid to the respondents. There were seven grounds of appeal. The first six grounds related to findings of fact concerning events following the issuing of the Notice to Complete, which informed the refusal to order specific performance. By the seventh ground, the applicant contended that the factual errors caused or contributed to a miscarriage of the Court's discretionary power including pursuant to s 55(2A) of the Conveyancing Act 1919 (NSW). The Court, dismissing the appeal, held: (1) As to grounds 1 and 2, it was inherently plausible that the respondents kept open the possibility that they may agree to a course other than the completion of the original contract in accordance with their Notice to Complete: [83]. By contrast, the finding for which the applicant contended was implausible and was not squarely put to either vendor: [84]. Lee v Lee (2019) 266 CLR 129; [2019] HCA 28 considered. (2) Grounds 3 and 4 did not arise as they built upon the finding challenged in ground 1: [85]. In any event, grounds 3 and 4 were not made out. There was no direct testimonial evidence that the applicant would have complied with the Notice to Complete. The applicant had also demonstrated a history of not providing funds in accordance with his obligations: [88]. (3) Ground 5 was not separately developed from ground 6 in submissions but to the extent it is a separate point it failed for the reasons given in relation to ground 4: [90]. As to ground 6, the evidence provided to support the contention that the applicant had sufficient funds was contradictory, confusing and sat uneasily with contemporaneous emails. There was no cogent evidence adduced to establish the actual amounts of cash held at the relevant time: [98]-[99]. (4) As to ground 7, as no material error of fact was made out on grounds 1-6, the Court would not re-exercise its discretion under s 55(2A): [103]. Even if relief against forfeiture were not justified, there was no appellable error in the exercise of the primary judge's discretionary power: [104]-[107]. Stokes v Toyne [2023] NSWCA 59; Havyn Pty Ltd v Webster [2005] NSWCA 182; (2005) 12 BPR 22,837 at [137]; Luu v Sovereign Developments Pty Ltd [2006] NSWCA 40; (2006) 12 BPR 23,629; Lucas & Tait (Investments) Pty Ltd v Victoria Securities Ltd [1973] 2 NSWLR 268 at 272; Nassif v Caminer (2009) 74 NSWLR 276; [2009] NSWCA 45 at [67], [91]; Omar v El-Wakil [2001] EWCA Civ 1090; [2002] P & CR 36 at [35] applied; Romanos v Pentagold Investments Pty Ltd (2003) 217 CLR 367; [2003] HCA 58 at [27] considered. Judgment 1. THE COURT: The issues in this appeal are twofold: whether the primary judge erred in declining to order specific performance of a contract for the sale of land, and in declining to order a return of a deposit of $155,000. 2. The parties, Mr Behnam Said Akrawe as purchaser, and Mrs Margaret Marita Culjak and Mr Ante Culjak as vendors, entered into a contract for the sale of land in Cobbett Street, Wetherill Park in Western Sydney. The purchase price was $1,550,000, with a 10% deposit being paid to a stakeholder. The date for completion was 25 January 2021, but this was extended consensually to 22 February 2021. By the time of the trial, the deposit had been paid into Court, and the stakeholder played no active part in the proceedings. 3. On 3 March 2021, the Culjaks served a Notice to Complete calling for completion to take place on the PEXA platform at 12.00pm on 18 March 2021, with time to be of the essence. Settlement did not take place on 18 March 2021. Late in the afternoon of 18 March 2021, Mr Akrawe's solicitor informed the Culjaks' conveyancer that Mr Akrawe needed until 23 March 2021 to settle the purchase, and took steps to change the appointed time for settlement on PEXA to 23 March 2021. 4. On 22 March 2021, the Culjaks' conveyancer served a Notice of Termination of the contract upon Mr Akrawe, referring to Mr Akrawe's default in completing the purchase in accordance with the Notice to Complete, and stating that the contract was thereby terminated and the deposit forfeited. 5. The parties each commenced proceedings in the Equity Division. The Culjaks sought, relevantly, a declaration that the contract was duly terminated and an order that they be paid the deposit. Mr Akrawe by cross-claim sought a declaration that the termination of the contract was invalid (on the basis that the Culjaks were not ready, willing and able to perform) and an order for specific performance. However, in closing submissions Mr Akrawe accepted that the Notice to Complete was valid, and the primary judge recorded that Mr Akrawe also appeared to accept that the Culjaks were entitled at law to terminate, with the consequence that the primary issue was whether Mr Akrawe was entitled to specific performance on the basis that equity would intervene to prevent the forfeiture of Mr Akrawe's interest under the contract. Alternatively, Mr Akrawe sought, relevantly, the recovery of the deposit pursuant to s 55(2A) of the Conveyancing Act 1919 (NSW). 6. The trial took place before the primary judge on 27 and 28 June and 7 July 2022, with judgment being delivered promptly thereafter on 19 July 2022: Culjak v Akrawe [2022] NSWSC 949. The Court dismissed Mr Akrawe's cross-claim, declared the contract was validly terminated and ordered that the deposit be paid out of Court to the Culjaks. The Court also directed Mr Akrawe to remove the caveat within seven days. In November 2021, after the Culjaks had commenced a further campaign to sell their home at auction, Mr Akrawe had lodged a caveat over the land, based on his interest under the contract for sale of land. The auction did not proceed. 7. Mr Akrawe appeals as of right. There are seven grounds of appeal. In oral submissions, his counsel, who had also appeared at trial, proceeded on the basis that there were two issues: whether equity would relieve against forfeiture, and whether there was appellable error in the discretionary decision by the primary judge not to order the return of the deposit. The first six grounds of appeal relate to the findings of fact concerning the events of March 2021 following the issuing of the Notice to Complete, and it will be necessary to address the evidence bearing upon that period in some detail. By way of summary: 1. The principal complaint was that the primary judge erred in failing to find that by 11 March 2021 the Culjaks had made up their minds not to proceed but failed to tell Mr Akrawe as much. The primary judge said that the proposition was not put to the Culjaks in cross-examination, and that the correspondence made it clear to Mr Akrawe that they reserved the right to terminate the contract if the Notice to Complete was not complied with. The attack upon this reasoning turned upon parallel negotiations which were taking place concerning the possibility that the Culjaks might sell the property to Mr Akrawe's son. 2. The primary judge also concluded that Mr Akrawe had not persuaded him that he had sufficient funds to enable completion on 18 March 2021. This was challenged, including by an application to adduce fresh evidence on appeal. 3. Mr Akrawe also contended there was House v The King error in any decision under s 55(2A) not to order the return of the deposit of the Conveyancing Act 1919 (NSW). 1. Shortly before the hearing, Mr Akrawe swore a further affidavit concerning money (in the form of banknotes) available to him and his son stored in a vault. The affidavit was read on the limited basis that it would be necessary, in the event this Court re-exercised the discretion to order specific performance, to be satisfied that Mr Akrawe was ready, willing and able to complete. That was an appropriate course. The cross-claim had adopted the pre-Judicature approach of expressly alleging readiness, willingness and ability to perform (see the discussion in Bahr v Nicolay (No 2) (1988) 164 CLR 604 at 620; [1988] HCA 16). This was not admitted and there had been a real issue at trial as to the purchaser's ability to complete. The further evidence would permit this Court to re-exercise the discretion in the event that the appeal was allowed on the principal grounds. It may readily be seen how difficult it would have been to have the evidence adduced on any broader basis, for it was plainly available at trial: see Akins v National Australia Bank (1994) 34 NSWLR 155 at 160 and Searle v Commonwealth of Australia (2019) 100 NSWLR 55; [2019] NSWCA 127 at [169]-[175]. No such application was made. There was brief cross-examination. It will not be necessary to summarise the affidavit or the cross-examination. Factual background 1. The dealings between the parties following exchange of contract were carefully summarised by the primary judge at [9]-[60], to which no challenge was made. The following is very substantially taken from those paragraphs. 2. The contract for sale was entered into on 12 December 2020 following an auction at which Mr Akrawe was the successful bidder. The Culjaks engaged Mrs Frances Belluccini of Kingfisher Conveyancing Services Pty Ltd to act for them, while Mr Akrawe engaged Mr Kugathas Pathmathas of Path Legal to act for him. 3. On 17 December 2020, Mr Pathmathas sent an email to Mrs Belluccini stating that Mr Akrawe wanted to change the name of Mr Akrawe to that of his son, Mr Saad Saeed. The following day, Mrs Belluccini replied that the Culjaks did not agree to the request. She also sought confirmation that the balance of the 10% deposit had been paid, for it seems that only $100,000 had been paid at that stage. 4. Later on 18 December 2020, Mr Akrawe (then aged 81) and his son, Mr Saeed, went to the Culjaks' home. The primary judge recorded that there was competing evidence about a discussion concerning extending the completion date of the contract by 4 weeks, to 22 February 2021, which was unnecessary to resolve. His Honour recorded that the evidence was clear that whatever discussion occurred on 18 December 2020, an agreement was reached to extend the completion date to 22 February 2021. An exchange of emails between Mr Pathmathas and Mrs Belluccini on 19 and 23 December 2020 confirmed this, by which time the full $155,000 deposit had been paid. The primary judge stated that it seemed that Mr Saeed provided the funds for the deposit in two instalments. 5. Favourably to Mr Akrawe, and relevant to some of the submissions in the appeal, is the following passage of his Honour's reasons at [13]: I note in passing that it appears from the evidence that Mr Akrawe and Mr Saeed had various discussions, both before and after the contract was entered into, as to who should be named as purchaser. At least after the contract had been entered into, one consideration was whether it would be preferable for the purchase to be funded by a loan taken out by Mr Saeed rather than by using Mr Akrawe's funds, which were partly held in United States dollars that would need to be converted into Australian dollars at an unfavourable exchange rate. I think it is likely that Mr Saeed raised this matter on the occasion he and his father attended the [Culjaks'] home on 18 December 2020. 1. On 8 February 2021, Mr Saeed and his three children went to the Culjaks' home. There was discussion on that occasion between Mrs Culjak and Mr Saeed about the Culjaks renting the property for a period following settlement of the contract. Mr Saeed went to the Culjaks' home again on 11 February 2021. The primary judge found that "[o]n at least one of those occasions (most likely on 11 February 2021)", Mr Saeed requested that the contract be changed so that he would become the purchaser instead of his father. His Honour said that he thought it likely that Mr Saeed also said that he would want six weeks to complete the purchase, but was satisfied that both Mr and Mrs Culjak responded by saying words to the effect that they would like to help, but they would first need to speak to Mrs Belluccini about it. His Honour recorded that Mrs Culjak said in cross-examination that she went to see Mrs Belluccini shortly after 11 February 2021, and discussed with her the fact that Mr Saeed wanted a new contract in his name, but that the content of this discussion was not explored in any detail in the evidence. 2. On 12 February 2021, Mr Pathmathas sent a settlement sheet to Mrs Belluccini. On 15 February 2021, Mrs Belluccini sent an email to Mr Pathmathas in the following terms: I confirm that settlement is scheduled to take place on 22 February, 2021 at 12.30pm. Please find attached amended settlement figures. I will upload vendor destination line items to PEXA prior to settlement. Your client has been in touch with my clients and advised them that they wish to delay settlement. Please kindly confirm via return email that this matter will be proceeding to settlement on 22 February, 2021. My clients reserve their rights pursuant to the Contract. Please contact me if you have any queries. 1. At 10:35am on 16 February 2021, Mrs Belluccini sent a further email to Mr Pathmathas that included the following: My clients have instructed me to request confirmation that settlement will be taking place on Monday, 22 February, 2021 as scheduled. My clients are extremely concerned as your client has advised that they may need to obtain finance to complete the purchase and consequently have to delay settlement for another 6 weeks. Also your clients attended the property and selected certain items of furniture that they would like my clients to leave in the property following completion… I would appreciate if you would provide a reply to my email and confirm that settlement will take place Monday 22 February, 2021. 1. Mrs Belluccini sent another email to Mr Pathmathas at 4:27pm on 16 February 2021, in which she sought confirmation that Mr Akrawe had given instructions to proceed to settlement. 2. In the evening of 16 February 2021, Mrs Culjak sent a text message to Mr Saeed which included the following: Hi Saad Tried calling couldn't get through Just teaching bases [sic] with u Frances tells me that settlement is on Monday 22 Need to know if u want us to leave furniture as discussed the other night for a minimal amount $ Please let me know so as I can start packing… 1. Mrs Belluccini deposed that she had a telephone conversation with Mr Akrawe's solicitor (presumably Mr Pathmathas) on 17 February 2021 in which she was told that Mr Akrawe would not be able to settle on 22 February 2021 as he did not have the funds to complete. Mrs Belluccini sent an email to Mr Pathmathas later on 17 February 2021 in the following terms: I refer to our telephone conversation today and confirm the following: 1. Your client will be attending your office tomorrow, 18 February, 2021 to provide you with further instructions; and 2. Notwithstanding the above you have advised me that settlement will not take place on Monday, 22 February, 2021 as scheduled as your client does not have funds to complete the purchase. I note that based on your advice your client is now in breach of the terms and conditions of the Contract and as such my clients reserve their rights. My clients are ready, willing and able to settle this matter on 22 February, 2021. I confirm my advice that I respectfully request that you advise your client and his family member NOT to contact my clients to discuss this matter and that any communication is to be directed to me through yourself. I look forward to your further advices regarding your client's position. 1. On 18 February 2021, Mr Pathmathas sent an email to Mrs Belluccini in the following terms: Our client has attended our office today. He has instructed to seek two months extension on the settlement date from 22 February 2021 without any penalties. He has been also told us [sic] that he was going to meet the Vendor and the real estate agent today to speak with them directly. He had the impression that the Vendor also wanted to stay on the Property for few months. Please kindly seek your client's instruction and let us know. 1. Later on 18 February 2021, Mrs Belluccini sent an email in response that included the following: I note that completion pursuant to the exchanged Contract was to take place on 25 January, 2021. [Mr Akrawe] has already been granted an extension for completion to take place on until [sic] 22 February, 2021. Your request for a further extension is a considerable lengthy time. Please provide an explanation as to why [Mr Akrawe] requires a further 2 month extension from 22 February, 2021. I await your urgent reply. 1. Mrs Belluccini sent a further email on 19 February 2021 in the following terms: I refer to my email below to which I have not received a reply. I would appreciate a reply as a matter of urgency. Until a satisfactory reply is provided by [sic] clients reserve their rights pursuant to the Contract. Please contact me if you have any queries. 1. Mr Pathmathas responded later on 19 February 2021 in the following terms: We refer to our telephonic conversation made on even date. Our client is kindly seeking for an extension on the settlement date as discussed. We have been instructed that our client wanted to extend the settlement date for 2 months from 22 February 2021 without any penalties. As he has instructed us that he needs to organise for the money from overseas and [sic] facing some unexpected delays in getting the money at present. He has told us that he was much interested on this Property and he bought on a higher price, which he considers and he wanted to settle this matter within 2 months from 22 February 2021. Should he organises [sic] the money before two months, he will provide 5 days' notice and ready to go for an earlier settlement before 2 months. Our client has also told us by considering his age and his current health condition at this age, he kindly requesting for this extension on a humanitarian basis and expecting a satisfactory reply from the Vendor. He has told us the Culjaks were aware of this. Please explain the situation to your client and let us know your client's instruction. We appreciate your kind cooperation on this regard. 1. Mrs Belluccini replied later on 19 February 2021, stating that she would seek instructions from her clients and advise accordingly. That was the Friday before the settlement which was due to take place on Monday 22 February 2021. Completion does not occur on 22 February 2021 1. Mr Akrawe and Mr Saeed went to the Culjaks' home, uninvited, on the evening of 21 February 2021, the night before the (re)scheduled settlement. There was disputed evidence about the conversation which ensued. The primary judge was of the view that nothing turned on this, and that it was likely there was debate about whether the settlement would proceed and the possibility of cancelling the existing contract and entering into a new contract with Mr Saeed as the purchaser. The primary judge accepted the Culjaks' denials that Mr Saeed had asked why a new contract had not been forwarded to his solicitor as had been agreed. 2. Five emails passed between Mrs Belluccini and Mr Pathmathas on 22 February 2021. 3. At 12:00pm, Mrs Belluccini sent an email in the following terms: I refer to the above matter and the emails trailing below and advise that I have now received instructions from my clients. I have been instructed to advise that my clients will agree to extend the completion date until 19 April, 2021 on the following basis: 1. Unconditional release of the deposit monies currently held in the real estate agent's trust account to my clients less the agent's commission forthwith; 2. The purchaser must pay the sum of $155,00[0].00 which will be unconditionally released to the vendors. This payment will be non-refundable; 3. The completion date to be extended until 19 April, 2021 and this time is essential; 4. Interest pursuant to Special Condition 4.6 will be waived on the basis that completion takes place on or before 19 April, 2021. Should completion not take place on 19 April, 2021 the interest will be payable and will be charged on and from 22 February, 2021 up to and including the actual date of settlement; 5. A Deed of Variation must be entered into between the parties varying the terms of the Contract as indicated above; and 6. My professional fees in relation to the Deed of Variation in the sum of $550.00 will be borne by the purchaser and paid at the time of execution of the Deed. Please seek your client's instructions and revert back as a matter of urgency. My clients require a reply to this email by close of business today. My clients reserve their rights pursuant to the Contract and at law. Please contact me if you have any queries. 1. Mr Pathmathas replied by email at 1:43pm in the following terms: We refer to your email received on even date and our telephonic conversation with you on even date. We have been instructed that our client wanted to change the Contract into his son's name: Saad Saeed. We have been instructed that the vendors were aware of it. We have been also instructed that on the basis of the above request, he is agreeable to your email received at 12.00 noon today once he get the satisfactory reply from you. Please seek your client's instruction and let us know ASAP. 1. At 2:52pm, Mrs Belluccini sent an email to Mr Pathmathas that included the following: You indicated in our telephone conversation that the purchaser is now looking to obtain loan funds to complete the purchase. Please clarify if this is still the case or if your client is still awaiting funds from overseas as per your earlier email to complete the Contract. The purchaser that entered into the contract CANNOT be changed by the stroke of a pen. I suggest that you look into the option of a Transfer not in Conformity with the Contract. Once again I ask that you advise your client not to approach or communicate with my clients on any basis whatsoever. Any communication must be directed through yourself. My clients reserve their rights pursuant to the Contract and at law. 1. Mr Pathmathas replied by email at 3:43pm in the following terms: We refer to your email received on even date, as we explained over the phone. We are not requesting to simply change the name. Our client requested, to amend the contract in his son's name. Are there any possibilities to rescind the contract mutually with the current contract and enter into a new contract with the sons name with the same terms and conditions as per the current contract. We have been instructed now, they have to organise for the loan as due to the USA currency rates issues, he was not able to proceed for a cash purchase. Please seek your client's instruction and let us know ASAP. 1. Finally, at 4:32pm, Mrs Belluccini sent an email to Mr Pathmathas in the following terms: My clients have instructed me to advise that they will agree to the existing contract being rescinded and a new contract entered into between the vendors and Saad Saeed. The rescission of the existing contract and new contract would be entered into simultaneously on the following terms: 1. Deed of Rescission of existing contract with the deposit paid to the vendors; 2. New Contract with Saad Saeed. Essentially the terms and conditions will be the same except for: a) date of completion being 19 April, 2021 and time of the essence; b) unconditional release of 10% deposit to the vendors at the date of the Contract; c) reference to the deposit in rescinded Contract to be applied to new contract; and d) penalty interest. 3. My professional fees will be $990.00 to be borne by the purchaser and paid at the time of exchange of the deed of rescission and new contract. Please confirm that your client agrees to the above and I will prepare the appropriate documents. Your client has once again made contact with my clients. I respectfully request once again that your client and his family members refrain from communicating with my clients. My clients reserve their rights pursuant to the Contract and at law. Preparations to rescind the existing contract and exchange a new contract with Mr Saeed as purchaser 1. It appears that Mr Akrawe later gave instructions to Mr Pathmathas to the effect that he was agreeable to proceeding in accordance with the terms of the above email. The primary judge stated that he inferred that Mr Pathmathas communicated that to Mrs Belluccini, because she proceeded to prepare documents including a Deed of Mutual Rescission of Contract and a new contract for sale which named Mr Saeed as the purchaser. 2. On 25 February 2021, Mrs Belluccini sent an email to Mr Pathmathas which included the following: I refer to the above matter and now enclose the following: 1. Deed of Mutual Rescission of Contract; and 2. New Contract. The above documents are subject to final approval by my clients and is forwarded on the basis that no binding relationship is created prior to exchange. I look forward to receipt of the following by way of exchange: 1. Duly executed Deed of Mutual Rescission of Contract; 2. Duly executed Contract; 3. Section 66W Certificate; 4. Order on the Agent; and 5. Bank cheque in favour of Kingfisher Conveyancing Services Pty Ltd Trust Account in the sum of $155,000.00. Alternatively the purchaser may wish to transfer the funds to my trust account: … 1. On 1 March 2021, Mrs Belluccini sent an email to Mr Pathmathas in which she enquired as to when she would receive the documents executed by his clients in readiness for exchange. Mrs Belluccini sent a further email to Mr Pathmathas on 2 March 2021 seeking his advice as to his client's instructions as a matter of urgency, and reserving her clients' rights pursuant to the contract. The Notice to Complete 1. On 3 March 2021, Mrs Belluccini served a Notice to Complete. Service was not disputed. It was in the following terms: This Notice to Complete is given in accordance with the Contract for Sale and Purchase of Land between Ante Culjak and Margaret Marita Culjak (as Vendors) and you (as Purchaser) dated 12 December 2020 (Contract). In accordance with the Contract you agreed to purchase and the Vendors agreed to sell the property for the price stated in the Contract. You have paid a deposit of [sic] and agreed to pay the balance of the price and adjustments on completion. Despite requests to do so you have failed to complete the purchase of the property and are in default. You are required by the Vendors to complete the purchase of the property at PEXA Workspace ID: PEXA215550550 at 12:00PM on 18 March, 2021 and in this respect time is of the essence. If you fail to comply with this Notice the Vendors may by notice in writing to you at its election do one, more or all of the following: (a) forfeit the deposit paid by you (b) terminate the Contract (c) sue you for breach of contract (d) re-sell the property and recover from you as damages any deficiency arising on resale and all expenses of and incidental to resale or attempted resale and your default. (e) claim costs, losses and expenses incurred in connection with your default (f) exercise any additional rights that the Vendors may have at law arising in connection with your default, including rights arising under the Contract. 1. On 5 March 2021, Mr Pathmathas sent an email to Mrs Belluccini in the following terms: Our client has attended our office today. He has instructed that now, that he wanted to proceed with the Deed of Mutual Rescission on the agreed terms as per your email dated 25 February 2021. He wanted to terminate the current contract and advised that the new contract should be under his son's name, Saad Behnam Saeed. He has also told me that he was sick and due to that he was not able to action as per your email dated on 25 February 2021. We have been instructed that the Purchaser wants to withdraw the Notice to Complete and [sic] ready to sign on the Deed of Mutual Rescission. On the basis of the agreed terms the settlement date for the new contract should be 19 April 2021. Please seek your client's instruction and reply to us ASAP 1. Mrs Belluccini replied later on 5 March 2021 stating that she would seek her clients' instructions. The attempt to exchange contracts to sell to Mr Saeed 1. On 8 March 2021, Mrs Belluccini sent an email to Mr Pathmathas that included the following: I have been instructed to advise that my clients will agree to proceed with the Mutual Deed of Rescission and new Contract on the basis that all the documents listed below and monies are received by no later than 5pm on 10 March, 2021. Please provide the following by way of exchange: 1. Duly executed Deed of Mutual Rescission of Contract; 2. Duly executed Contract; 3. Section 66W Certificate; 4. Order on the Agent; 5. Payment of my Tax Invoice which is attached; and 6. Bank cheque in favour of Kingfisher Conveyancing Services Pty Ltd Trust Account in the sum of $155,000.00. Alternatively the Purchaser may wish to transfer the funds to my trust account: … 1. At 1:34pm on 10 March 2021, Mr Pathmathas sent an email to Mrs Belluccini in the following terms: Our client is happy to sign on the deed of mutual rescission and Saad Behnam Saeed is ready to enter into the new contract. They wanted to amend the settlement date to be 42 days from the contract date as he need to organise for the loan purpose. Also you have to confirm that the Purchaser has paid 20% deposit in total. Please confirm the above as a matter of URGENCY. 1. Mrs Belluccini responded by email at 2:44pm that included the following: My clients will agree to settlement for the new contract to read 42 days from the contract date time being of the essence on the basis that the duly executed documents are received in my office by no later than 12pm on 11 March, 2021. Once all the monies are received I will confirm. 1. No documents were received by 12:00pm on 11 March 2021. At 12:43pm, Mr Pathmathas sent an email to Mrs Belluccini which included the following: We have been instructed that the new purchaser is awaiting for the funds to be cleared on his account in order to transfer the deposit. Unfortunately that [sic] funds are not yet ready. We have been instructed that he was not able to transfer the deposit today, may be it might takes couple of days as he instructed. 1. At 1:05pm, Mrs Belluccini sent an email in which she stated that she would seek her clients' instructions, and enquired whether Mr Pathmathas' clients had signed the required documents. 2. At 1:14pm, Mrs Belluccini sent an email to Mr Pathmathas in which she stated that she had not received the required documents and that, as such, his client had not complied with the timeframe required by her clients. 3. At 1:18pm, Mr Pathmathas sent an email in response in the following terms: My client has told me that he will come today with the cheques and suppose to deliver the contract to your office today. But, he did not come. When I contacted him, he said that he was awaiting for the funds to be cleared. I cannot send the documents without the required cheques and your fees. 1. At 4:28pm, Mrs Belluccini sent an email to Mr Pathmathas in the following terms: I am still awaiting my client's instructions. Pending my client's instructions the Notice to Complete still stands. Please contact me if you have any queries. Completion does not occur on 18 March 2021 1. The Notice to Complete called for completion to occur on 18 March 2021. 2. On 16 March 2021, Mrs Belluccini sent an email to Mr Pathmathas in the following terms: I refer to the above matter and confirm that settlement is due to take place on 18 March, 2021 at 12pm. A PEXA workspace has been created Workspace ID PEXA215550550 however you have not accepted the date and time for settlement. I confirm that the purchaser has been served a Notice to Complete which is due to expire on 18 March, 2021. Please advise if your client will be complying with the Notice to Complete and proceeding to settlement by the due date and, if so, please provide up-to-date settlement figures for my client's approval. I have been instructed to advise that if the purchaser fails to comply with the Notice to Complete the vendors will pursue their legal rights pursuant to the Notice to Complete, the contract and at law. I await your urgent reply. 1. On 17 March 2021, Mrs Belluccini received a letter from Path Legal, dated 16 March 2021, that enclosed a number of documents including a "Deed of Mutual Rescission of Contract" executed by Mr Akrawe, a Contract for Sale executed by Mr Saeed as purchaser, and cheques for the deposit and legal fees. The bank cheque for the deposit was dated 16 March 2021. The letter included a statement that there would be no legally binding relationship between the parties until "exchange of Contract" had taken place. 2. At 6:25pm on 17 March 2021, Mrs Belluccini sent an email to Mr Pathmathas in the following terms: I confirm that the Notice to Complete served on 3 March, 2021 is still enforceable and I reserve my clients' rights in relation thereto. In the interim I acknowledge receipt of your letter dated 16 March, 2021 and the contents therein. Please provide documentary evidence such as a loan approval or bank statement to confirm that, if my clients were to execute the new Contract with Saad Benham [sic] Saeed as purchaser, Mr Saeed will have the required funds to complete the Contract on 19 April, 2021. I await your urgent reply. 1. The following day, 18 March, was the further rescheduled day for completion in accordance with the Notice to Complete. Some seven emails were exchanged on that date between the parties. 2. Mr Pathmathas responded by email at 11:14am to Mrs Belluccini's last email, in the following terms: We have forwarded your email to the client and awaiting for his reply. Please note, the settlement is within 42 days from the exchange of the new contract as agreed previously. 1. At 11:31am, Mrs Belluccini sent an email in response in the following terms: I refer to your email and your comments. My clients are not bound by any offers or agreements in previous communications; no legal binding relationship exists and is subject to my clients' final instructions. At this stage my clients rely on the Notice to Complete which expires today. 1. At 12:12pm, Mr Pathmathas sent an email to Mrs Belluccini in the following terms: We seek the extension of the Notice to complete period further one week from today. As your client already agreed for the deed of mutual rescission and enter into a new contract. We have been instructed that the bank needs the exchanged contract for the loan purpose. We have been also instructed that he was [sic] started his initial process with the bank for the loan purpose. 1. Mr Pathmathas sent a further email at 2:59pm in the following terms: We have been instructed that the Purchaser, Behnam Said Akrawe wanted proceed with is settlement. We have been also instructed that he wanted to extend the Notice to Complete period till 5.00pm on Tuesday, 23 March 2021 to settle the matter. He is ready and willing to settle the matter. Please seek your client's instruction and reply to us ASAP. 1. At 3:18pm, Mrs Belluccini sent an email in the following terms: "I confirm my telephonic advice that I am awaiting my client's instructions". 2. Mr Pathmathas responded by email at 3:26pm in the following terms: We refer to our telephonic conversation with you on even date. Please tried [sic] to seek your client's instruction and reply to us before 4.30pm regarding the extension of the Notice to Complete. 1. At 4:35pm, Mr Pathmathas sent another email, in the following terms: We refer to our emails sent to you on several occasions on even date and our telephonic conversations made with you on even date. The Purchaser is still awaiting for your reply. Please seek your client's instruction and reply to us as a matter of URGENCY. As per our client's instruction he needs the time till 23 March 2021 to settle this money. He needs to organise to deposit the money in the PEXA's account. We seek your URGENT reply 1. Settlement did not occur on 18 March 2021 as called for by the Notice to Complete. As deposed by Mrs Belluccini, Mr Akrawe did not attend to the PEXA settlement on that day. It appears that Path Legal at no stage accepted the PEXA settlement date of 18 March 2021. Moreover, shortly before 5:00pm, Path Legal changed the time and date of settlement in PEXA to 1:00pm on 23 March 2021. It further appears that stamp duty had not been paid by 18 March 2021. 2. At 11:13am on 22 March 2021, Mrs Belluccini served a Notice of Termination upon Path Legal. The notice included the following: With reference to the Contract for Sale dated 12 December 2020 (Contract) and made between Ante Culjak and Margaret Marita Culjak as Vendors and you as Purchaser for the sale and purchase of property known as XXXX, Wetherill Park NSW 2164 being Lot 11 in Deposited Plan 263539 and being the whole of the land comprised in Certificate of Title 11/263539 and in consequence of your default under the said Contract in completing the purchase in accordance with the requirements thereof and of the Notice to Complete issued pursuant thereto on 3 March, 2021 the Vendors hereby gives [sic] you notice that the said deposit of $155,000.00 paid under the said Contract is hereby forfeited to the Vendors, the said sale is hereby at an end and the said Contract is hereby terminated and that the Vendors will either sue you for breach of contract or re-sell the property as owner and will claim and recover from you as liquidated damages the deficiency (if any) arising on such re-sale and all expenses of and incidental to such re-sale or attempted re-sale arising from your default and will exercise all such other rights as are conferred upon the Vendors under the said Contract or otherwise by reason of your delay and default in performing the said Contract. 1. Mrs Belluccini returned the new contract for sale and second deposit cheque to Mr Saeed. Reasons of the primary judge 1. After dealing with the factual background, the primary judge confirmed the concession that the Notice to Complete was valid and properly made, with the consequence that there was a contractual entitlement to terminate following Mr Akrawe's failure to complete by 18 March 2021. His Honour observed at [63], by reference to Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315; [2003] HCA 57 at [5] and [22], that "the true question in this context is whether equity should intervene on the basis that it would be unconscientious for the plaintiffs to insist upon their legal right to terminate the contract". For if, as his Honour put it, it would be unconscientious for the Culjaks to insist upon that right, then they could not rely upon their termination of the contract as an answer to Mr Akrawe's claim for specific performance. 2. That turned upon whether, as Mr Akrawe contended, the Culjaks had determined by 11 March 2021 not to proceed with a new contract with Mr Akrawe's son. The position as at that time was described, uncontroversially, by the primary judge at [73]: It may be accepted that by about 11 March 2021, Mr and Mrs Culjak had lost confidence in Mr Akrawe and Mr Saeed going ahead with the proposed new contract. That is hardly surprising. Draft documents had been submitted to Mr Pathmathas on 25 February 2021. Enquiries were made of Mr Pathmathas on 1 March 2021 and 2 March 2021 as to when executed documents would be sent, but those enquiries went unanswered. The Notice to Complete was then served on 3 March 2021. Mr Pathmathas explained in his email of 5 March 2021 that his client (which, read in its context, must be understood as a reference to Mr Akrawe) had been sick but had instructed that he now wanted to proceed with the Deed of Mutual Rescission on the terms set out in Mrs Belluccini's email of 25 February 2021. Mrs Belluccini, by her email of 8 March 2021, indicated that Mr and Mrs Culjak would agree to proceed accordingly, on the basis that the documents and monies were received by no later than 5:00pm on 10 March 2021. In the afternoon of 10 March 2021, that deadline was effectively extended to 12:00pm on 11 March 2021. The extended deadline was not met. Mr Pathmathas explained that the new purchaser (Mr Saeed) was waiting for funds to clear, and that this might take a couple of days. 1. It was in those circumstances that Mrs Belluccini said in her email on 11 March 2021 at 4.28pm that the Notice to Complete "still stands". The primary judge said of that email at [75]: I do not think that statement could be reasonably regarded as anything other than a statement to the purchaser that, unless and until the vendors give instructions to the contrary, the contract is required to be completed in accordance with the Notice to Complete. The [Culjaks] were of course at liberty to give, or not give, instructions to the contrary, as they saw fit. Mrs Belluccini's email thus conveyed that [Mr Akrawe] would be required to complete by 18 March 2021 unless the [Culjaks] chose to take a different approach. [Mr Akrawe] could not safely proceed on any basis other than that a failure to complete by 18 March 2021 would be a breach of the contract in an essential respect that would entitle the [Culjaks] to terminate the contract. 1. Mr Akrawe's submission at trial, and maintained on appeal, was that although the Culjaks had made up their mind not to proceed with the new contract with Mr Akrawe's son Mr Saeed, that position was not communicated. The primary judge said at [77], in a paragraph which was at the forefront of the submissions on appeal, that: In my opinion, the evidence does not go so far as to establish that on or around 11 March 2021 Mr and Mrs Culjak had come to a final decision that they would not under any circumstances agree to proceed with the proposed new contract. That proposition was not put to either Mrs or Mr Culjak in cross-examination. Nor was it put that they would not genuinely consider proceeding with the new contract if the documents and monies were later provided. In my view, unless the plaintiffs had come to a such a position, the first defendant could not reasonably have expected to be informed about their state of mind concerning the proposed new contract. That proposal remained a matter for negotiation between the parties. 1. The primary judge then observed that there was ample time between 11 and 18 March 2022 for Mr Akrawe to make funds available on the PEXA system, and that there was no explanation in Mr Akrawe's evidence for why that did not occur. His Honour then made the further finding that "the evidence given by Mr Akrawe about his financial position at that time leaves me unpersuaded that he in fact had sufficient funds to enable him to complete by 18 March 2021": at [79]. His Honour said that the evidence was imprecise, contradictory in some respects and confusing. He accepted that a considerable sum, "perhaps sufficient in [itself] to complete the purchase" was transferred by Mr Akrawe from Iraq to Australia in 2020, but there was no "cogent" evidence to establish the actual amounts of cash held at the relevant time: at [79]. Finally, his Honour noted that on 18 and 19 February 2021 Mr Pathmathas told Mrs Belluccini that Mr Akrawe did not have the funds and needed to organise funds from overseas. His Honour inferred that those statements were made on instructions from Mr Akrawe, and was unable to accept Mr Akrawe's evidence to the effect that he was unaware of them. His Honour said that the statements undermined Mr Akrawe's evidence that at all times he had sufficient money available to purchase the house: at [79]. 2. The primary judge noted that both Mr Akrawe and Mr Saeed sought to distance themselves from the email communications involving Mr Pathmathas. His Honour did not accept that Mr Pathmathas was not keeping them informed, and in any event noted that Mr Pathmathas was Mr Akrawe's agent with authority to act on the purchase: at [80]. 3. That was sufficient to reject the submission that Mr Akrawe's failure to complete by 18 March 2021 was somehow caused by or contributed to conduct by the Culjaks, including their silence, such that there was nothing unconscientious about their exercise of the right to terminate. It followed that the termination was a defence to the claim for specific performance: at [81]. 4. The primary judge addressed the return of the deposit at [82]-[88], and noted that relief under s 55(2A) was available to relieve against the forfeiture of a reasonable deposit, and it was not necessary to demonstrate special or exceptional circumstances. However, his Honour observed, by reference to Havyn Pty Ltd v Webster [2005] NSWCA 182; (2005) 12 BPR 22,837 at [150]-[157], that the proper approach to the discretion must appreciate the legal context of the established nature of a deposit as an earnest of performance in conveyancing transactions. His Honour concluded at [88]: It seems to me, applying these principles, that it would not be appropriate to make an order for the return of the deposit. The deposit (of $155,000) was forfeited due to the failure of the first defendant to perform his obligations in accordance with a Notice to Complete that made time of the essence. It has not been shown that this failure was relevantly caused or contributed to by conduct on the part of the plaintiffs. It has not been shown that were the plaintiffs to recover the deposit, they would make a windfall or profit that in "justice and equity" they ought not be permitted to enjoy. In that regard, it should not be overlooked that the termination of the contract occurred some 16 months ago. Moreover, an attempt by the plaintiffs to re-sell the property later in 2021 was stymied by the lodgement of a caveat by the first defendant. The basis of the caveat, being the existence of a contract for sale, has not been sustained. In all the circumstances, and taking into account the important role played by deposits in contracts for the sale of land, I do not consider that allowing the plaintiffs to recover the deposit, in accordance with the terms of the contract, would be unjust or inequitable to the first defendant. The claim for the return of the deposit will also be dismissed. Appeal grounds 1 and 2 1. The first ground of appeal challenged the primary judge's conclusion at [77] that the evidence did not establish that the Culjaks had, as at 11 March 2021, come to a final decision that they would not under any circumstance agree to proceed with a new contract in the name of Mr Saeed. Ground 2 was that the primary judge was wrong to say that the proposition was not put to either of the Culjaks in cross-examination. The appellant did not point to any passage where this was squarely put to either of the Culjaks, but said it was not necessary to do so having regard to their evidence, and that what had been put was sufficient. These grounds are best addressed together, as they were in Mr Akrawe's oral and written submissions. 2. The starting point for these grounds was Mrs Culjak's affidavit, which included paragraph 28: The buyer and his son failed to comply with the time limits that we set. Frances sent us an email trail which outlined what had taken place leading up to this point. We decided that we were not going to entertain any more requests from the buyer. We wanted to proceed with the original contract. Annexed and marked with the letter "F" is a copy of the email trail forwarded by Frances. 1. The appellant submitted that this paragraph, which was held out as representing the position on the afternoon of 11 March 2021, "could not be treated as anything other than [that] the Culjaks, as at 11 March 2021, would not under any relevant circumstances agree to proceed with the New Contract in the name of Mr Saeed as the purchaser". He further submitted that "the requested documents had been signed" and the "only thing outstanding was provision of the signed documents by way of exchange together with a bank cheque for the additional $155,000". 2. Mrs Culjak's affidavit was in terms inconsistent with the finding contended for. In the immediately following paragraph, Mrs Culjak referred to being informed on 17 March 2021 that a signed contract and a bank cheque had been received from Mr Saeed and stated: Due to the continued failure to meet deadlines and given that we had not received any indication that Mr Saeed was able to settle any new contract, we decided not to change our position. 1. If the final decision for which Mr Akrawe contends had been reached on 11 March, there would be no occasion for any decision making six days later when Mr Saeed's deposit and contract were provided. But the affidavit had the Culjaks making a decision after receiving that information ("we decided not to change our position"). 2. What seems to have happened is that the cross-examination of Mrs Culjak (who was the principal point of contact with Mrs Belluccini and who was cross-examined first) proceeded on the basis that a decision was made on 17 March 2021, after being told by Mrs Belluccini that Mr Saeed's documents and deposit had been received: Q. Now, did you make up your mind on 17 March that you weren't going to proceed on the new contract? A. We decided before. We decided we weren't going to do it anymore. We didn't trust - we didn't have any faith in them to go through. … A. We didn't want to keep on extending and extending and not going anywhere. Q. And do you know whether that was ever communicated to Mr Saeed? A. Very well communicated. If you need the requires by 10 March, we will enter. Q. Do you know whether after 11 March whether it was ever communicated to Mr Saeed that you would not proceed with the new contract? A. Should have been. If they were a week late. Q. No, so I'm asking, do you know if it was ever communicated after 11 March? A. That's something you'd have to talk to Frances about. 1. Mr Akrawe relied on the final question and answer in this passage as sufficing to put the proposition to Mrs Culjak. That exchange, even read with the preceding questions and answers, falls well short of putting to her the holding of an irrevocable state of mind not to treat with Mr Saeed as at 11 March 2021. 2. Mr Culjak's evidence did not alter the position. His affidavit referred to him and his wife deciding "to just go with the original contract" after yet another failure by Mr Akrawe and his son to adhere to a timetable. His affidavit was much more generally expressed, and it is not clear at precisely what time he was speaking of. 3. Mr Culjak gave this evidence in cross-examination on the point: Q. So the money still hadn't come in with the new contract - when I say "the money", I mean the deposit moneys still hadn't come in with the new contract, on 11 March, and had you made a decision by that time that you were sick of being mucked around and that you didn't want to proceed? A. When March 11 came up and things they weren't in order I wasn't happy and my idea was and I've spoken - talked to my wife that we should go to original contract. And that's - that's what I think what we did. … Q. It was your wife who would have given any instructions to Frances as to whether or not you as Culjaks were willing to proceed with the new contract? A. As - as I mention before, as far as I remember, we want to go with original thing because what we expected from the new contract, things didn't turn up, the people didn't come, what they're supposed to do and I said to Margaret, I said, we - "We're only wasting time, we go back to original contract and – and send them a letter to complete" and that's it. 1. Once again, that evidence falls well short of the final, irrevocable decision on 11 March for which Mr Akrawe contends. 2. The contemporaneous documents also tell against the finding sought on appeal. After being told at 1.18pm on Thursday 11 March by Mr Pathmathas that his client had not come with bank cheques and the contract, and that the client had said "he was awaiting funds to be cleared", Mrs Belluccini wrote at 4.28pm "I am still awaiting my client's instructions. Pending my client's instructions the Notice to Complete still stands". There is no reason to doubt the accuracy of what Mrs Belluccini said about her instructions. That is inconsistent with a final decision having been made at that point. Indeed, it was put to Mrs Belluccini in cross-examination that she had been given express instructions that the Culjaks were not prepared to consider any further extensions, a proposition with which Mrs Belluccini disagreed. The next communication between the Culjaks and Mr Akrawe was the following Tuesday 16 March at 11.15am, when Mrs Belluccini confirmed that the Notice to Complete was being relied upon. She did not receive the signed contract and bank cheque from Mr Saeed until 17 March. There is nothing to suggest there was any update from Mr Pathmathas as to his clients' position in the meantime. In those circumstances, it was not necessary for the Culjaks to reach a final decision on 11 March. Not until 17 March did Mr Pathmathas provide anything which called for a further response. 3. Separately, shortly after receipt of the second deposit and executed contract in the name of Mr Saeed, Mrs Belluccini asked for confirmation of Mr Saeed's ability to complete, in the event that the new contract was exchanged. So far as the evidence discloses, there was no response to that email. It may readily be inferred that the email was sent on instructions. The email is once again inconsistent with the Culjaks having made a final decision not to enter into a contract with Mr Saeed on 11 March 2021. 4. There is an underlying difficulty with the finding for which Mr Akrawe seeks. The finding urged upon the primary judge and upon this Court was that "Mr and Mrs Culjak as Vendor had come to a final decision that they would not under any relevant circumstances agree to proceed with the new contract in the name of Mr Saeed as Purchaser". What precisely that meant was not fully explored by the parties. It was not possible for the Culjaks unilaterally to bind themselves so as to prevent themselves considering a new contract offered to them in the future by Mr Akrawe or his son. Insofar as they had given instructions to Mrs Belluccini, it was always open to them to countermand those instructions. And indeed, it does not appear even that Mr Akrawe contended for a literal meaning of the finding. What might occur if Mr Saeed had made an offer to acquire the property for an additional $100,000, conditional upon the existing contract being rescinded, was unexplored. The best way, which is also the way most favourable to Mr Akrawe, to understand the finding for which he contended was that it amounted to a finding that the Culjaks would not contemplate any alternative offer by the father or son at the same price if it meant giving up their existing entitlements under the extant contract for sale, such that the efforts taken to negotiate the deed and to obtain a bank cheque for the second deposit were entirely wasted. The questions are whether that was the Culjaks' state of mind, and if so whether not communicating that stance affected the Culjaks' entitlement to rely on the Notice to Complete. 5. The finding by the primary judge is appropriately nuanced and reflects the reality of the position. The reasoning at [76] and [77] was to the effect that the Culjaks were "keeping open the possibility that they might agree to a course other than their present insistence upon completion of the contract in accordance with the Notice to Complete". That is inherently plausible. Many vendors, faced with the circumstances presented by a purchaser who seemed unable to complete on time and was uncertain of the identity of the transferee, would give some accommodation, even after service of a Notice to Complete, in order to avoid the cost and delay and risk of the dispute which would likely follow terminating the contract. 6. The finding by the primary judge was self-evidently one which was likely affected by an assessment of Mrs and Mr Culjak giving evidence; cf Lee v Lee (2019) 266 CLR 129; [2019] HCA 28 at [55]. Far from being glaringly improbable, it is inherently plausible. The finding for which Mr Akrawe contends is itself implausible and was not squarely put to either vendor. These grounds are not made out. Grounds 3 and 4. 1. Grounds 3 and 4 built upon the finding sought in ground 1, and maintained that in circumstances where the Culjaks had reached a final decision on 11 March not to proceed with negotiations with the son, which was not communicated to Mr Akrawe, that caused or contributed to his not bringing in funds to complete by 18 March. These grounds do not arise. 2. But in any event, they are not made out. Let it be assumed that the Culjaks had more or less irrevocably determined by 11 March not to treat with Mr Saeed, but to enforce the existing contract with Mr Akrawe. There was no testimonial evidence that if Mr Akrawe or Mr Saeed had been told as much on 11 March, to the effect that any efforts to make a separate offer involving rescission of the extant contract were simply wasted time, it would have made any difference. In particular there was no direct testimonial evidence that Mr Akrawe would have complied with the Notice to Complete. 3. Counsel for the appellant acknowledged the absence of direct testimonial evidence on this point, but sought to rely on the fact that Mr Pathmathas scheduled an appointment on the PEXA platform for 23 March. The inference which was invited to be drawn was that completion as rescheduled by Mr Pathmathas would have occurred on 23 March, being only a few days later, when it was clear that the Culjaks would not sell to Mr Saeed. Thus, so it was put, if the Culjaks had communicated an implacable unpreparedness to treat with Mr Saeed on 11 March, it is to be inferred that funds would have been available on 18 March. 4. The difficulty with Mr Akrawe's submission is its premise. Mr Akrawe had a demonstrated history of being unable to provide funds in accordance with promises binding him. There is nothing to suggest that the mere rescheduling of a PEXA appointment is anything like a secure foundation for the inference that Mr Akrawe would have funds enabling completion to occur on 18 March had he been told firmly on 11 March that no transaction with his son was possible. The point may be tested this way. The contract had already been extended, and settlement had not proceeded. The clearest possible communication that the Culjaks were insisting upon performance of the extant contract was the service of a Notice to Complete and the statements reiterated by Mrs Belluccini that the notice stood. It is known that Mr Akrawe nonetheless did not complete in accordance with the notice. Why ever would it be inferred that had he also been told on 11 March something less formal, namely, that the Culjaks would not sell to his son, that would cause him to comply with his contractual obligations? 5. These grounds are not made out. Grounds 5 and 6 1. Ground 5 was that where Mr Akrawe had requested an additional three business days to bring his money into PEXA in order to complete, it was unconscientious conduct on the part of the Culjaks to terminate. It was not separately developed in submissions, but was combined with ground 6. To the extent it is a separate point, it falls for the reasons given in relation to ground 4. Ground 6 challenged the finding made in the alternative that Mr Akrawe did not have sufficient funds at the date of the hearing to complete, and this was developed at some length. It is necessary to attend to the evidence bearing upon it. 2. Mr Akrawe's principal affidavit annexed documents recording international transfers of some $1.9 million into Australia in the second half of 2020. But there was, as the primary judge observed, a lack of clarity as to what had occurred to the money. For example, although Mr Akrawe was identified as the beneficiary, his bank account details and the SWIFT transaction numbers were left blank on five receipts from "Crystal Money Transfer". Mr Saeed gave evidence in his principal affidavit that "Some of the amount transferred from Iraq to Australia were paid to me into my personal accounts, and some to company accounts", while "Hundreds of thousands of USD dollars representing some of proceeds of sale of my father's properties in Iraq were deposited in cash in a security box in a vault licensed from Kuber Vault". Mr Akrawe's affidavit was to the same effect, and likewise lacked specificity. Neither affidavit established any specific amount of money that was available to fund a purchase at any time, let alone as at the date of trial. The closest the affidavit evidence came was paragraph 95 of Mr Saeed's affidavit of 12 November 2021, to which no objection was made, which stated: My father to my knowledge holds sufficient funds to settle on the balance of the Contract price. 1. Mr Akrawe made an updating affidavit on 22 June 2022, in which he said he had sufficient funds of his own to complete the purchase, and added: My funds are in cash and include cash in both Australian dollars and US dollars (which I would convert into Australian Dollars to complete the purchase) deposited in a safety deposit box in a vault licensed from Kuber Vaults located at Castle Hill. 1. That statement was admitted without objection, and was the subject of cross-examination. The cross-examination established that Mr Akrawe had A$470,000 in an ANZ bank account (Mr Akrawe said he had a bank statement, but "Nobody asked me to provide it") and US$50,000 in a Commonwealth bank account. He also confirmed that he had taken all of his money out of the safety deposit box, as follows (Tcpt, 28 June 2022, p 92): Q. Do you have access to that account, that box now? A. INTERPRETER: No. It's personal, in my son's name. Q. So, you've taken all your money out of that box. A. INTERPRETER: Yes. 1. Mr Akrawe added that he also had "around 350,000 as cash money, American dollar with me, here in Australia". 2. The position changed following a re-examination which was permitted to proceed without objection, despite the seeming (so far as appears from the transcript) absence of ambiguity in those answers. The re-examiner asked these questions about the money in the safety deposit box (Tcpt, 28 June 2022, p 94): Q. Is it the case that you still have your money in that box? A. INTERPRETER: All the money that I transferred, or that my son – I transferred to my son, it's my money. So all the money, it's my money. Q. I just want to ask you, today, in that box, is there your money? A. INTERPRETER: Yes, it's my money, I sent it to my son, into his name, but it's my money, he's my son. Q. How much money do you estimate is in that box, in American dollars and Australian dollars, which is your money? A. WITNESS: Yes. When I transfer the money to my son the first time-- Q. No, no. I wish to cut you off there. A. WITNESS: Mm. Q. I want to ask you, as at today, how much money of yours do you estimate is in that box, in Australian dollars and US dollars? A. INTERPRETER: In that safety box there is 850,000 of the American dollar. A. WITNESS: American dollar. 1. The re-examiner confirmed that he had US$325,000 cash elsewhere than the vault, and then elicited the following summary: Q. So, is this the situation - you've got about 325,000 cash US dollars with you. A. WITNESS: Yes. Q. Is that right? A. WITNESS: Yes. Q. You have about 850,000 US dollars in the bank vault. A. WITNESS: Yes. This is American, all American. Q. American dollars, US dollars. Then you have got $470,000 in the ANZ bank. A. WITNESS: Was four 770, and I pay 150 for deposit on-- Q. So, how much is there now, roughly? A. WITNESS: ANZ - 215,000. Q. Okay. And you said you have some other money in the Commonwealth Bank, in US dollars. A. WITNESS: Another 50,000. Q. US dollars. A. WITNESS: Yes. Q. And do you have some other cash in Australian dollars? 35 A. WITNESS: Yes. Yes. About 50,000 as cash money with me. 1. There is no reason to doubt the concession made by Mr Akrawe that although there had been $470,000 in the ANZ bank account, after paying the deposit (and, presumably, other expenses including his lawyers) the ANZ account contained some A$215,000. Assuming the correctness of those amounts, it would have been necessary to draw upon the bank notes in the vault at Castle Hill in order to complete. According to his (seemingly) unequivocal evidence in cross-examination, he had no access to the bank notes in the bank vault, which was in his son's name, and he had taken all of his money from the vault. According to the re-examination, his son's money was treated as his own ("it's my money, he's my son"). It is difficult to determine how to reconcile those statements. Even if they were to be resolved favourably to Mr Akrawe, upon the not implausible basis that an 82 year old father regarded money provided by him but in a vault in his son's name as nonetheless money available to complete the purchase of a family home, there is merely the statement that there was US$850,000 in the vault, and assuming that were the fact, it would be necessary to obtain those banknotes, convert them into Australian dollars, and lodge the proceeds into the PEXA platform in short order. How precisely that was to occur was unexplained in the evidence. 2. His Honour was entirely correct to state that the evidence was contradictory and confusing. His Honour was also correct to state that "no cogent evidence was adduced to establish the actual amounts of cash so held at the relevant time". Finally, there is the difficulty that at a time when Mr Akrawe was contractually obliged to complete at risk of losing the deposit, Mr Pathmathas was saying, repeatedly, that he needed to organise money from overseas ("he has instructed us that he needs to organise for the money from overseas and facing some unexpected delays in getting the money at present"). It was open to Mr Akrawe and Mr Saeed to explain why that statement was made if they wished to resist the inference that it reflected the instructions given to Mr Pathmathas at the time. That did not occur. 3. It is not unlawful to possess large amounts of banknotes, rather than to use the financial system. However, doing so comes at a price if it is necessary to establish funds presently available. The conclusion by the primary judge that he was unpersuaded that Mr Akrawe had sufficient funds was plainly one which was influenced by the testimonial evidence summarised above. The way that evidence emerged was contradictory and lacking in specificity. It also sat uneasily with the contemporaneous emails which had been served as part of the Culjaks' case in chief. Mr Akrawe repeatedly failed to complete, and gave as his reason for his failure that he did not have the available funds. No error has been established in the primary judge not being satisfied that Mr Akrawe had the funds to complete the purchase. Ground 7 1. Section 55(2A) provides: In every case where the court refuses to grant specific performance of a contract, or in any proceeding for the return of a deposit, the court may, if it thinks fit, order the repayment of any deposit with or without interest thereon. 1. This power, and its relationship with contractual damages, was considered by this Court in Stokes v Toyne [2023] NSWCA 59 at [99]-[106]. It is well settled that this provision creates a power to relieve against the forfeiture of a deposit which is broader than that available in equity: Havyn Pty Ltd v Webster [2005] NSWCA 182; (2005) 12 BPR 22,837 at [137]; Luu v Sovereign Developments Pty Ltd [2006] NSWCA 40; (2006) 12 BPR 23,629. But the discretion is not unconfined. In Lucas & Tait (Investments) Pty Ltd v Victoria Securities Ltd [1973] 2 NSWLR 268, Street CJ in Eq said at 272 that the provision does not give to a court an "overall discretionary supervision of monetary adjustments between parties to a contract under which a deposit was paid but which has been terminated". Instead, "[A] vendor who forfeits a deposit in strict enforcement of his legal rights is not to be deprived of it under s 55(2A) unless it is unjust and inequitable to permit him to retain it". That has been confirmed by what was said in Romanos v Pentagold Investments Pty Ltd (2003) 217 CLR 367; [2003] HCA 58 at [27], although what is "unjust and inequitable" may be a contestable conclusion in any particular case. 2. However, it is well-settled that in the exercise of that discretion, the court should not weaken the proper function of a deposit as an earnest of performance: Havyn at [150]-[151], [155]; Nassif v Caminer (2009) 74 NSWLR 276; [2009] NSWCA 45 at [67], [91]. As Arden LJ said in Omar v El-Wakil [2001] EWCA Civ 1090; [2002] P & CR 36 at [35], in a passage approved in Havyn at [151], "the court must bear in mind that the payment in question was a 'deposit', that is an earnest for performance and that accordingly there should not be relief simply because the …contract never took place". 3. Mr Akrawe accepted that this Court would not intervene in respect of the primary judge's failure to order the return of the deposit unless House v The King error was made out. The primary submission was that if any of the factual errors in the earlier grounds were made out, the discretion would be re-exercised. The submission is sound. Success on any of the other grounds would have amounted to a material error of fact bearing upon the discretion. However, no such errors have been made out. 4. By way of fallback, it was said that even if relief against forfeiture were not justified, the facts could still justify a return of the deposit. That submission accords with the settled approach to the provision. However, it remains necessary to establish appellable error in the exercise of a discretionary power. 5. This ground was advanced, primarily in oral submissions, on the basis that the reasons of the primary judge in effect foreclosed relief under the statute by the finding that there was nothing unconscientious in exercising the legal right to terminate. It was put thus: REUBEN: … What we're submitting to your Honours is if this is a proper case for relief against forfeiture of the interest on the contract, which I submit it is, that his Honour set the bar too high in relation to not allowing the funds to be brought in. In other words, his Honour made this finding or formed this view, but he'd already closed the door-- BELL CJ: This is essentially his Honour's finding that there was nothing unconscientious about what happened? REUBEN: Yes, and that in effect the door was closed in relation to relief against forfeiture. 1. The reasoning of the primary judge was that reliance on the entitlement to terminate did not amount to the unconscientious exercise of a legal right, coupled with the fact that Mr Akrawe had not shown that forfeiture of the deposit would lead to a windfall or profit which in "justice or equity" they ought not to be permitted to enjoy. His Honour pointed in particular to the time which had elapsed and the attempt to sell the property later in 2021 which came to naught because of the caveat he lodged, and the important role played by deposits in contract for the sale of land. 2. All of those matters were relevant to the exercise of the discretion. It has not been shown that his Honour "set the bar too high" or that the discretion otherwise miscarried. 3. For those reasons, the appeal should be dismissed. There is no reason why costs should not follow the event. ********** Amendments 27 July 2023 - Amendment to Representation DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 27 July 2023