A court has ruled that property buyers who lost their deposit to an online fraudster had no grounds to recover the lost money or enforce the terminated sale contract because they paid the deposit using a method that was not specified in the contract.
In February this year, Efthalia Deligiannidou and Patrick Thomas Sven paid a 10 per cent deposit for a A$560,000 house purchase in the Sydney suburb of Sans Souci.
But by mid-March the vendors said they were terminating the contract because the deposit had not been paid.
It all started late in January, when a representative of the vendor’s agent sent Deligiannidou an email suggesting she pay an initial holding deposit of $1400 into the agent’s trust account.
Despite the fact that the sale contract required that the deposit be paid either by cash or cheque, Deligiannidou paid by electronic funds transfer.
A week later the agent’s representative sent an email to Deligiannidou, telling her to transfer the balance of the deposit into the trust account. Two days later Deligiannidou received what appeared to be another email with payment instructions.
The last email was sent by a fraudster, who had gained access to the agent’s computer system and email account. The trust account BSB and account details had been changed.
Deligiannidou made an electronic payment of $54,600 into a “fraud account”.
After the contract was cancelled Deligiannidou and Sven took the matter to the Supreme Court of New South Wales, seeking a declaration that the contract remained valid and enforceable, an order that the vendors carry out the contract and damages from the agent by reason of misleading or deceptive conduct.
The court rejected the application. In a ruling handed down on April 23, it said: “As the contract did not provide for payment of the deposit by EFT [electronic funds transfer], the agent’s representative had no authority under the contract to direct the purchasers to pay the deposit by EFT, whether to the trust account or at all.”
The court also ruled that “the fact that a contract for sale of land authorises an agent to receive the deposit and direct the purchaser to pay the deposit to the agent does not authorise the agent to bind the vendor in dealings with respect to the deposit, but only authorises the agent to receive the deposit in accordance with the contract.”
Deligiannidou and Sven argued that the agency agreement between the vendor and the agent gave the agent authority to provide advice to the purchasers as to the method of the payment of the deposit.
The court did not accept this, saying the agent “acts under the vendor’s direction, management and control. The agency agreement does not comprise a conferral of authority on the agent.
“In any event the [agreement] speaks of the facilitation of the real estate transaction and thus contemplates facility of the transaction in accordance with the contract. The agreement does not have the effect of giving the agent authority to make directions, inconsistent with the contract, as to how the deposit is to be paid.”