Iannello & Anor. v. Sharpe [2007] NSWCA 61

Iannello & Anor. v. Sharpe [2007] NSWCA 61

The unauthorised alteration of the deposit figures did not change the amounts payable or the circumstances in which they were payable: before and after alteration, $225,000 was payable on exchange and a further $225,000 was payable only on default. The alteration was therefore immaterial and a contract came into existence. However, the further $225,000 payable only upon default was not a true deposit because it was not earnest money paid on or in relation to entry into the contract, and it was not a genuine pre-estimate of damage; it was an unenforceable penalty. The vendors were entitled to retain the $225,000 paid on exchange but not to recover the further $225,000, and the purchaser...

Jurisdiction
Australia
Judgment Date
23 March 2007
Procedural Posture
Appeal in Conveyancing Proceedings Concerning a Purported Contract for Sale of Land and Deposit Forfeiture / Appeal From Orders of Windeyer J in the Supreme Court Equity Division
Outcome
Appeal allowed; primary judge's orders set aside; judgment entered for the purchaser on the vendors' claim and for the vendors on the purchaser's cross-claim.
Legal Topics
['formation of Contract by Exchange of Counterparts' 'unauthorised Alterations to Signed Contract Documents' 'materiality of Alterations' 'deposit Forfeiture' 'penalties' 'amendment of Pleadings']
['conveyancing' 'contract Law' 'equity and Civil Procedure'] ['formation of Contract by Exchange of Counterparts' 'unauthorised Alterations to Signed Contract Documents' 'materiality of Alterations' 'deposit Forfeiture' 'penalties' 'amendment of Pleadings']

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Procedural Posture

Appeal in Conveyancing Proceedings Concerning a Purported Contract for Sale of Land and Deposit Forfeiture / Appeal From Orders of Windeyer J in the Supreme Court Equity Division

Legal Issues

  1. 1 ["Whether alterations made to the purchaser's signed counterpart after signature, including alteration of the deposit provision, were material so as to prevent a contract coming into existence." 'Whether the primary judge erred in refusing leave to amend to plead ratification or estoppel.' 'Whether the contractual provision requiring payment of a further $225,000.00 on purchaser default was a deposit provision or an unenforceable penalty.']

Ratio Decidendi

The unauthorised alteration of the deposit figures did not change the amounts payable or the circumstances in which they were payable: before and after alteration, $225,000 was payable on exchange and a further $225,000 was payable only on default. The alteration was therefore immaterial and a contract came into existence. However, the further $225,000 payable only upon default was not a true deposit because it was not earnest money paid on or in relation to entry into the contract, and it was not a genuine pre-estimate of damage; it was an unenforceable penalty. The vendors were entitled to retain the $225,000 paid on exchange but not to recover the further $225,000, and the purchaser...

Court Disposition

Appeal allowed; primary judge's orders set aside; judgment entered for the purchaser on the vendors' claim and for the vendors on the purchaser's cross-claim.

Orders

  • ['Appeal allowed.' "Orders of the primary judge set aside, and in lieu thereof: judgment for the purchaser on the vendors' claim." "Judgment for the vendors on the purchaser's cross-claim." "Subject to any previous orders, vendors to pay one-half the purchaser's costs of the proceedings below." "Purchaser to pay the...