nsw supreme court exercises statutory discretion to order the return of a forfeited deposit

In 5 Ridge Pty Limited v Tryname Pty Limited [2017] NSWSC 371, the purchaser was induced into a contract of sale by a misrepresentation by vendor regarding the exercise of an option. The contract was later terminated, and the deposit paid by the purchaser forfeited.

Under s 55(2A) of the Conveyancing Act, the NSW Supreme Court has a statutory discretion to order the return of a forfeited deposit. In this case, the Court chose to exercise that discretion. Two key factors taken into account by the Court were that misrepresentation occurred prior to entry into contract, and was significant to the purchaser’s decision. The Court also endorsed a wide interpretation of s 55(2A) and the Court’s statutory discretion, indicating it may be willing to use the discretion in similar future cases.

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