Why a Late Deposit Can Cost You Everything

The Supreme Court of Queensland decision in Evans v Jan [2025] QSC 31 provides an important reminder for buyers to ensure they understand their rights and obligations under a contract for sale.  Relying solely on verbal assurances or informal communications from agents can lead to costly mistakes, as seen in this case.

Facts

The purchaser, Mr Evans, entered a contract for the sale of property for a purchase price of $985,000.  The contract required Mr Evans pay a 10% deposit, being $98,500, when the contract was formed.  Under the contract, paying the deposit by the due date was an “essential term” meaning that time was of the essence. 

Late payment

However, Mr Evans did not pay the deposit on the due date as his bank had a daily transfer limit.  Having contacted the realtor to explain the delay "Do apologise. Deposit today and balance tomorrow. Very sorry bank is painful to deal with” and the realtor having responded via text “Ok as long as I let seller know 2 deposits today and tmr”, Mr Evans paid the deposit in instalments over the next two days, but after the deadline.

Termination

Despite having received the full $98,500 deposit, the seller terminated the contract for breach of an essential term, for failure to pay the deposit on time.  Mr Evans sought specific performance of the contract as the deposit was paid in accordance with instructions that he claimed could be attributed to the seller via the conduct of the agent. 

Supreme Court of QLD

The Court held that the agent did not have actual or ostensible authority to agree to an extension of the deposit deadline.  Actual authority must be found in the conduct of the principal (the seller), not the conduct of the agent (the realtor).  As Mr Evans failed to pay the deposit by the date required, the seller was entitled to terminate the contract and the deposit was forfeited.  

Would this occur in WA?

Forfeiting a deposit like Mr Evans is less likely to occur in WA due to the Joint Form of General Conditions (incorporated into a standard REIWA contract for sale) requiring a notice regime for payment of a missed deposit.  If a buyer fails to pay a deposit when required, under the General Conditions, the seller is required to issue a notice giving the buyer 48 hours to pay the deposit.  If the buyer does not comply within 48 hours, the buyer is in default, and the seller may terminate the contract.

Practical WA tips to avoid forfeit of deposit

The General Conditions in WA do not expressly address whether termination of a contract following a partially paid deposit (or a deposit paid outside of a 48-hour notice) would result in a buyer forfeiting the amount already paid.  Whilst a seller may not automatically be entitled to keep a late or partially paid deposit (the General Conditions expressly exclude the operation of clause 23.1 which deals with termination following default for breach) the safest approach is to ensure the entire deposit is paid in cleared funds before the due time. 

1. Clarify deposit due dates:  ask your solicitor to explain exactly how and when the deposit must be paid, especially if you are relying on bank transfers that may have limits.

   
   

2. Build in time buffers: negotiate a deposit due date that is 5 – 10 business days after the contract is made, rather than the same day.  This gives breathing room.

   
   

3. Check transfer limits with your bank: ensure you can send the full amount by the contract deadline or organise alternative payment options.

   
   

4. If a notice has been served:  treat the 48 hours as hard and absolute, pay by electronic transfer, obtain confirmation from the agent/trust account holder that funds are cleared.

   
   

5. Amendments: if the buyer can truly not pay: seek an immediate written extension from the seller.  Get it formally documented.  Do not rely on verbal assurances from agents.

   
   

6. Get legal advice early: having a solicitor review contract wording before signing can prevent surprises later, especially around deadlines and the consequences of missing them.

The bottom line for WA buyers

In WA, whilst a notice regime exists, missing a deposit deadline can be just as serious as it is in QLD.  A strict deposit clause in a contract is legally binding once signed.  Buyers need to be proactive about timelines, funds and take legal advice.