While electronic transfer is considered a faster and more direct method of payment than the traditional cheque, the recent case of Long v Hijazi1 suggests that parties to a property transaction may need to allow more time for payment of deposits where the contract provides for electronic transfer of funds.
The buyer and the seller were parties to a contract of sale for a property in Queensland.
The contract of sale:
At 2.08pm on 19 October 2016, the seller’s real estate agent advised the buyer by email of the seller’s acceptance of the buyer’s offer to purchase.
The buyer forwarded the sale contract to her conveyancer, who responded later that evening, advising the buyer to pay the deposit.
The deposit was paid by electronic transfer to the deposit holder’s account at approximately 8.30pm and receipted into the deposit holder’s account the following day, 20 October 2016.
On 21 October 2016, the seller’s conveyancer advised the buyer by email that the buyer had breached the contract by not paying the deposit on the day the contract was signed and, accordingly, the seller terminated the contract.
On 25 October 2016:
Later the same day, the seller’s conveyancer sent a further email to the buyer’s conveyancer advising that the seller could not proceed with the sale contract because the seller would suffer financial hardship if she did so.
The buyer commenced an action for a claim for specific performance and damages in the District Court of Queensland.
The seller relied upon the High Court’s decision in Brien v Dwyer2 as authority for the proposition that the earliest practical time for payment of the deposit after the communication of acceptance on 19 October 2016 was that afternoon.
In Brien v Dwyer, the purchaser was required to pay the deposit “upon the signing” of the sale contract. The majority of Barwick CJ, Gibbs and Aicken JJ found that the deposit should have been paid at the time the offer was signed by the purchaser for transmission to the vendor, with Gibbs and Aicken JJ finding that it should have been paid at least before the exchange of signed counterparts or the signing of one contract by both parties.
The buyer argued that:
The buyer drew attention to the comments in Brien v Dwyer of:
The buyer also referred to Hill v Sydney3 in which Jersey J found that the requirement that a deposit be paid “forthwith” upon execution of the contract by a purchaser should be read as meaning “as soon as reasonably practicable” and envisaged “speed rather than tardiness”.
Judge Dick was persuaded by the buyer’s argument, finding that the buyer was “ready, willing and able” to complete the contract of sale and had indicated that by payment of the deposit on the evening of 19 October 2016.
Judge Dick concluded that the deposit had been paid in accordance with the contract because the buyer, by arranging the electronic transfer of funds on the evening of 19 October 2016, had demonstrated the buyer was “ready, willing and able” to complete the contract.
The judge’s decision did not specifically address the question of whether the deposit should have been considered to be paid when transferred from the buyers’ account on 19 October 2016 or when it was receipted into the deposit holder’s account the next day.
While, ultimately, the answer to this question was not critical to Judge Dick’s decision, it is important to consider in the context of future transactions because the case would not have arisen if the buyer had paid the deposit to the deposit-holder by cheque at the time the buyer instead transferred the deposit by electronic means.
In the context of settlements, the courts previously have not excused buyers from meeting their payment obligations at settlement on the basis that a third party, such as a financier, was not able to provide the funds in time.4
However, in Tanwar Enterprises Pty Ltd v Cauchi,5 for example, the High Court made such a finding on the basis that it was reasonably within the contemplation of the purchaser that there might be a failure by the third party to provide finance.
By contrast, there is a strong argument that the treatment of deposits should differ from payments at settlement because of the uncertainty of the date on which a sale contract might be accepted and the deposit become payable, whereas a settlement date is agreed by the parties to allow the necessary arrangements to be made.
The House of Lords’ decision in R v Preddy6 suggests that the deposit would not be considered to be paid until the funds are credited to the receiving account.
However, as most contracts are constructed, the purchaser is obliged to pay the deposit without reference to the timing of receipt, so the position, as we have seen in this case, remains unclear.
The obvious major difference between payment of the deposit by cheque and payment be electronic funds transfer is that payment by cheque is effected by delivery to the recipient (and not by payment of the cheque into a bank account). Whereas the electronic delivery is effected by payment into the relevant bank account.
The lessons from this case and the current law are:
 Long v Hijazi  QDC 187.
 Brien v Dwyer (1978) 141 CLR 378.
 Hill v Sidney  2 Qd R 547.
 Tanwar Enterprises Pty Ltd v Cauchi  HCA 57 .
 R v Preddy  AC 815.