Legal Hypothetical: Conveyancing dispute and claim for default interest

 

Conveyancing dispute and claim for default interest

ROBERT’S mother passes away and he is appointed as the executor.

Robert asks a conveyancer to draw-up a contract for the sale of his late mother’s home.

The contract includes a clause to the effect that settlement is to occur either 30 days after the exchange of contracts or 14 days after Robert obtains a grant of probate and becomes the registered proprietor for the purposes of the sale, whichever occurs later.

Michael wishes to purchase the property and after obtaining pest and building reports, pays a 10% deposit of $80,000 and contracts are exchanged.

Robert obtains a grant of probate and he is registered on title.

Michael is advised accordingly and Robert’s conveyancer nominates a date for settlement, being 30 days after the date of exchange.

An error is made in the calculation of the settlement date because the 30 day period was before the 14 day period expired.

Due to problems with his finance, Michael is not ready to settle the matter on the nominated date.

Robert serves a Notice to Complete on Michael, nominating a further date for settlement and claiming default interest in accordance with the contract.

Michael disputes the payment of interest and again refuses to complete the sale.

Robert terminates the contract and seeks to retain Michael’s deposit.

Michael argues that Robert was not willing to complete the matter, due to an incorrect assumption regarding the payment of default interest and on the basis of Robert’s “repudiation”, Michael is entitled to terminate the contract, have his deposit refunded and sue for any damages he had suffered.

The matter proceeds to a hearing and the Court concludes that despite the miscalculation of default interest, Robert was “ready and willing” to complete the sale and rules in his favour allowing him to keep the deposit and obtain additional damages for a reduction of the price of the property on resale.

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