LUONG DINH LUU v SOVEREIGN DEVELOPMENTS PTY LTD & 2 ORS [2006] NSWCA 40

Reported Decision : (2006) NSW ConvR 56-146

New South Wales Court of Appeal

CITATION: LUONG DINH LUU v SOVEREIGN DEVELOPMENTS PTY LTD & 2 ORS [2006] NSWCA 40

HEARING DATE(S): 20 February 2005

JUDGMENT DATE: 10 March 2006

JUDGMENT OF: Handley JA at 1; McColl JA at 2; Bryson JA at 3

DECISION: 1. Appeal allowed with costs.; 2 .Set aside orders 1, 2 and 3 of the orders of Judge Truss of 10 December 2004.; 3. In lieu thereof give judgment for the defendants with costs.

CATCHWORDS: VENDOR AND PURCHASER – Deposit – nature of deposit – identification of deposit on construction of inconsistent references in Contract – forfeiture of deposit on failure to complete – exemption of forfeiture of reasonable deposit from law avoiding contractual penalties – whether liquidated damages – contract on proper construction provided for deposit less than 1% of p.p. – Special Condition 5 provided that if purchaser committed a default 10% deposit should become due and payable – reference in SC 5 to that payment as a deposit was a misdescription – the provision of SC 5 relating to further payment on default was void as a penalty. - PENALTY – what constitutes penalty – deposit on sale of land – a provision requiring payment of up to 10% of purchase price to be made on any default by purchaser where contract established that the deposit was about 1%, was a penalty and was void notwithstanding that, if the contractual deposit had been 10% that would have been a reasonable deposit and not a penalty – consideration whether the provision was liquidated damages – held that it was not.

LEGISLATION CITED: Conveyancing Act 1919 ss.55 & 55(2A).

Acron Pacific Ltd v Offshore Oil NL (1985) 157 CLR 514 AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170 Ashdown v Kirk [1999] 2 Qd R 1 Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 Brien v Dwyer (1978) 141 CLR 378 Brien v Dwyer [1976] 2 NSWLR 420 CASES CITED: Dunlop Pneumatic Tyre Co. Ltd v New Garage & Motor Co Ltd [1915] AC 79 Freedom v A H R Constructions Pty Ltd [1987] 1 Qd R 59 Howe v Smith (1884) 27 Ch D 89 Mehmet v Benson (1963) 81 WN (Pt 1) (NSW) 188 Mehmet v Benson (1965) 113 CLR 295 PC Developments Pty Ltd v Revell (1991) 22 NSWLR 615 Ringrow Pty Ltd v BP Australia Pty Ltd [2005] HCA 71, 80 ALJR 219 Romanos v Pentagold Investments Pty Ltd (2003) 217 CLR 367