Reflection 2 Scenario

Facts:

Eric agreed to buy a property from Marija for $1.2 million on a cash contract. A deposit of 10% was paid and Eric agreed to pay the balance of the purchase money at the expiration of 60 days (Friday 12 March 2021).

Immediately following the Contract signing, Marija advised Eric she was going to purchase a property and make the settlement coincide with the settlement of the sale to Eric. Two days later Marija agreed to purchase a house on a cash contract for $900,000 with settlement the same day as Eric's settlement. Eric was told by Marija she was relying on the proceeds from her sale to him to discharge her existing mortgage and to pay the balance of the purchase money on the house Marija was buying. Eric in fact signed a Section 27 Statement under the Sale of Land Act 1962 prepared by Marija agreeing to the release of the deposit on Eric's purchase so Marija could pay the deposit on her own purchase. The Section 27 Statement showed Marija owed $200,000 on her existing mortgage to Queensland Bank.

Eric failed to pay the balance on the purchase price on the settlement date (12 March 2021) and as a result of Eric's failure to pay on the due date, he will be 14 days late with settlement. Marija's conveyancer then arranged an extension of her settlement date on the basis Marija paid penalty interest to her Vendor.

Marija had arranged a 2 week holiday to commence on the proposed settlement date and at the suggestion of friends she still went on the holiday to Bateman's Bay, but she has not had much fun as she has been worrying about the delayed settlement. However, settlement of both her sale and purchase are arranged for high noon on Friday 26 March 2021.

Marija wishes to claim everything she possibly can from Eric for his breach of contract. It is a standard August 2019 copyright form of LIV / REIV Contract of Sale and the relevant General Condition and Special Condition are:

GC 32. Breach

A party who breaches this contract must pay to the other party on demand:

(a) compensation for any reasonably foreseeable loss to the other party resulting from the breach; and

(b) any interest due under this contract as a result of the breach.

Special Condition 2 Interest

General Condition 33 shall be read and construed on the basis the rate of interest shall be 20% per annum (in lieu of the usual wording of GC33: "Interest at a rate of 2% per annum plus the rate for the time being fixed by section 2 of the Penalty Interest Rates Act 1983") is payable on any money owing under the contract during the period of default, without affecting any other rights of the offended party.

Marija's contract with Eric also has the following Special Condition 1:

2. SC1 Reasonably Forseeable Loss
3. The purchaser acknowledges that -
   1. if the purchaser fails to complete the purchase of the property on the due date under this contract, the vendor will or may suffer loss and expense; and
   2. each item of expense described in 1(b)] is agreed to be a "reasonably foreseeable loss" for the purposes of General Condition 32 of this contract.
   3. In addition to the interest chargeable under this contract the purchaser must pay or reimburse the vendor on demand for -
      1. all costs associated with bridging finance to complete the vendor's purchase of another property;
      2. expenses payable by the vendor under any existing loan secured over the property or other property of the vendor;
      3. accommodation expenses incurred by the vendor;
      4. the vendor's legal costs and expenses as between solicitor and client incurred due to the breach; and
      5. penalties and any other expenses payable by the vendor due to any delay in completion of the purchase of another property.
      6. Damages for distress and inconvenience.

Marija wants to claim from Eric as her remedy for breach of contract all the damages she can obtain under the Contract of Sale:

1. Penalty interest at 20% per annum from Eric from 12/3/2021 to 26/3/2021, being 14 days pursuant to Special Condition 2 at the top of this page;

1. Interest on her Queensland Bank loan for 14 days pursuant to Special Condition SC1(b)(ii) above;

1. Her accommodation at Bateman's Bay (SC 1(b) (iii)) above;

1. Her conveyancer's costs as a result of the breach -she has been quoted $400.00 extra costs (SC 1(b)(iv)) above;

1. The 14 days penalty interest she has to pay her Vendor (SC 1(b)(v)) above;

1. Marija wishes to be compensated for her disappointment and distress and suggests $10,000 damages (SC 1(b) (vi) above).
3. Required:
4. Question 1
5. Please provide a letter of advice by your conveyancing firm to Marija, citing contract law cases and authority to support your advice, on:
7. (1) whether she is likely to be successful against Eric for the above claims A to F inclusive above