Tan v Russell  VSC 93
On Friday 4 April 2014, Mr Tan and Dr Lo signed a contract to purchase a property in Richmond, Victoria for the sum of $3,695,000.00. A deposit in the sum of $369,500.00 was paid to the real estate agent. Later that day, Mr Tan and Dr Lo were contacted by the real estate agent, Mr Gibbons, advising another purchaser was interested in purchasing the property and a private auction would be held. Mr Tan and Dr Lo attended the private auction and they were successful with their bid to purchase the property for the sum of $4,480,000.00. The contract was amended accordingly and the balance of the deposit, in the sum of $98,000.00, was to be paid at the end of June 2014.
Mr Tan and Dr Lo had a 3 business day cooling off period (in New South Wales the cooling off period is 5 business days). The auction exception to cooling off periods did not apply to this case because it was a private and not a public auction.
On Wednesday 9 April 2014 (3 business days after entering into the contract to purchase the property), Mr Tan sent an email to the real estate agent advising he and Dr Lo wished to withdraw from the contract pursuant to the cooling off period. Mr Tan contended he also sent a text message and left a voicemail for the real estate agent which was disputed.
Mr Tan and Dr Lo sought a return of their deposit. The vendor refused to comply with the demand.
On 1 July 2014, the vendor’s solicitor served a notice of default on Mr Tan and Dr Lo for failure to pay the balance of the deposit.
The issue before the Victorian Supreme Court was whether real estate agents have the authority to receive notices of termination by purchasers exercising their cooling off rights.
In the Victorian Supreme Court, His Honour Justice Cameron indicated that Mr Tan and Dr Lo had to show to the Court that the real estate agent had authority that went beyond the established authority a vendor provides to a real estate agent.
The Court held Mr Tan and Dr Lo failed in proving this and accordingly the Court held the real estate agent had no authority to receive a notice of termination.
The vendor’s notice of default was held to be valid and it was found the vendor was entitled to the full deposit, damages and interest from the purchasers.
Be diligent when exercising your cooling off rights and read contracts carefully. If you wish to exercise your cooling off rights in a contract for the purchase of land, you should provide your notice to terminate the contract directly to the vendor or vendor’s solicitor.