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Judgment handed down in Lo v Russell

16 December 2016

The Court of Appeal today allowed an appeal against a decision that two purchasers had not validly terminated a contract of sale of land.

The purchasers and the vendor had entered into a contract of sale of land. The purchasers sought to exercise their cooling-off right under s 31 of the Sale of Land Act 1962 (‘the Act’) by emailing their notice of termination to the vendor’s estate agent within the three business day period allowed under the Act. They then demanded the return of their deposit. After the vendor refused to refund the deposit, the purchasers commenced proceedings in the Supreme Court. The trial judge dismissed their claim.

Section 31 of the Act establishes a three business day cooling-off period for certain purchases of real estate, and provides in sub-s (3) that notices of termination ‘shall be given to the vendor or his agent …’. The contract of sale, which was in substantially the same terms as the standard form contract for sale in the Estate Agents (Contracts) Regulations, included a notice that informed the purchaser of the cooling-off right and said that the purchaser ‘must either give the vendor or the vendor’s agent written notice’ of termination. On the next page the contract listed the details of the ‘vendor’s estate agent’.

The Court of Appeal agreed with the trial judge that s 31 of the Act did not authorise the vendor’s estate agent to receive the notice of termination; that is, ‘agent’ within s 31 does not designate a vendor’s estate agent. As a matter of statutory interpretation, ‘agent’ in s 31 carries its established legal meaning; it simply means a person authorised by the vendor to receive the notice for which s 31 provides (which may include an estate agent authorised by the vendor).

The Court of Appeal then considered the contract of sale and held that, as a matter of contractual interpretation, the vendor’s estate agent was authorised to receive the notice of termination. It was possible for a contract of sale to permit service of a termination notice on any person authorised to receive the notice on behalf of the vendor.  Looking at the contract in this case, the Court of Appeal commented that it was ‘natural that a reasonable person in the position of the purchaser or the vendor reading the contract would infer that the “vendor’s agent” … is the person … who is described immediately thereafter as the “vendor’s estate agent”’.  

Accordingly, the purchasers were held to have validly terminated the contract of sale and the vendor was ordered to refund their deposit.

Read the Court's full judgment on Austlii(External link)

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