When a property deal falls over - risks for purchasers

In a recent Supreme Court of New South Wales decision, STM123 No. 16 Pty Ltd v Wang [2025] NSWSC 444, the Court considered the financial consequences of a purchaser’s failure to complete an off-the-plan luxury apartment purchase. With a purchase price of $16.5 million, the case illustrates the serious risks for buyers who default — particularly in a declining property market.

For anyone involved in high-value property transactions, especially developers, agents, or purchasers of premium real estate, this case serves as a timely warning of the legal and financial implications of breaching a contract for sale. In this blog, we unpack the background, legal reasoning, and takeaways for buyers and their legal advisors.

Background: The Deal That Didn’t Complete

On 8 June 2023, STM123 No. 16 Pty Ltd (the vendor) entered into a contract for sale with Mr Yejian Wang (the purchaser) for a luxury off-the-plan apartment in Point Piper, one of Sydney’s most prestigious suburbs. The purchase price was a staggering $16.5 million. As is typical, a 10% deposit was agreed, payable in two instalments of $825,000 each (that is, 5% on exchange, and 5% on completion).

The contract set 18 July 2023 as the completion date. The first instalment of the deposit was paid, but Mr Wang failed to pay the second instalment on time.

The vendor responded swiftly:

• On 19 July 2023, a notice was served demanding payment of the outstanding deposit by 26 July 2023, and a notice to complete requiring settlement by 7 August 2023.

• Mr Wang failed to comply with either notice, and on 8 August 2023, the vendor terminated the contract.

The Re-Marketing Effort and Resale

After termination, the vendor re-engaged an agent, Michael Pallier of Sydney Sotheby’s International Realty, to remarket the property. The sales campaign commenced in October 2023 and lasted more than a year, involving:

• Bi-weekly open inspections and private appointments,

• Approximately 93 separate buyer inspections,

• Constant reassessment of the asking price in response to a shifting market.

Despite the vendor’s substantial efforts, only two contracts for sale were issued. Eventually, the property sold on 11 November 2024 — more than 15 months after termination — for $12.82 million, a significant $3.68 million shortfall from the original contract price.

Legal Issues: How and When to Measure Damages

The vendor commenced proceedings in the Supreme Court of New South Wales, seeking both liquidated and unliquidated damages.

Initial Judgment

In November 2024, Peden J awarded:

• $825,000 for the unpaid second deposit instalment,

• Interest of $91,938.67,

• Costs, with further damages to be assessed separately.

Final Damages Assessment

In May 2025, the case returned before Pike J for assessment of unliquidated damages. The legal question was: How should the Court calculate the vendor’s losses from the failed sale?

This required the Court to determine:

• Whether damages should be assessed as at the date of breach (i.e., August 2023), or

• At the later resale date (November 2024), even though this was more than 12 months after termination — outside the default period allowed under clause 9.3.1 of the standard NSW contract for sale.

Clause 9 of the Standard Contract: Vendor’s Remedies

Clause 9 of the standard contract provides a mechanism for vendors to recover losses when a purchaser defaults. Specifically:

• Clause 9.3.1 allows recovery of the deficiency on resale, provided the resale occurs within 12 months of termination.

• Clause 9.3.2, however, allows recovery of general damages under the common law where the resale occurs after 12 months.

Since STM123 No. 16 Pty Ltd resold the property 15 months after termination, clause 9.3.2 applied. This opened the door to arguments about how damages should be measured under general legal principles.

The Court’s Reasoning: When the Date of Breach Isn’t Fair

Ordinarily, damages for breach of contract are assessed at the date of breach — here, 8 August 2023. However, the Court recognised an exception where this would lead to an unfair result.

Drawing on a series of earlier decisions (including Ng v Filmlock Pty Ltd and Liggins v Park Trent), Justice Pike accepted that luxury apartments like the one in Point Piper do not have an "immediately available market". The resale of such properties typically involves:

• Limited buyer pools,

• Extended sales campaigns,

• Market volatility, particularly at the prestige end.

The plaintiff's expert valuer, Jason Field, confirmed that the August 2023 market value was $13.5 million, but that the market had declined further by late 2024.

Justice Pike held that using the August 2023 value would under-compensate the vendor, given that no sale was realistically possible at that time. Instead, the actual resale price in November 2024 was accepted as the proper measure of value loss.

The Final Numbers

Based on the November 2024 resale, Justice Pike assessed the vendor’s unliquidated damages as follows:

Mr Wang did not appear at the hearing and took no steps in the proceedings, despite having been served.

Lessons for Purchasers: What This Case Means

This case is a powerful reminder for property buyers — especially those purchasing high-value or off-the-plan properties — to proceed with caution. Some key takeaways include:

1. Deposit Obligations Are Serious

Even though Mr Wang paid the first half of the deposit, his failure to pay the second instalment gave the vendor the right to terminate and sue for substantial damages. The Court will enforce deposit terms strictly.

2. Termination Doesn’t End the Matter

When a purchaser defaults, the contract’s termination doesn’t protect them from financial exposure. In fact, that’s when the real liability kicks in. Here, Mr Wang’s failure to complete resulted in over $2.4 million in damages, despite the vendor ultimately reselling the property.

3. Prestige Property Markets Are Unique

For properties in the luxury market, resale may take time and require pricing adjustments. Courts recognise this and may deviate from the standard “date of breach” rule when assessing damages. However, vendors must prove that a later valuation is necessary to achieve fairness.

4. Buyers Shouldn’t Assume They Can Walk Away

Especially in a falling market, buyers may be tempted to pull out of deals hoping for a better price later. This case shows that walking away from a contract can be financially devastating if the vendor suffers a loss on resale and enforces their rights.

5. Vendors Must Mitigate Losses Proactively

This case also illustrates the importance for vendors to:

• Engage reputable agents,

• Maintain detailed records of all marketing efforts,

• Justify pricing decisions with evidence.

By doing so, they maximise the chances of recovering losses — as STM123 No. 16 Pty Ltd did here.