Garratt v Ikeda

Garratt agreed to purchase Ikeda's property for $1.83 million, with a 10% deposit, payable in 3 instalments.

After paying the first two instalments totaling $50,000, Garratt defaulted on the final $130,000 payment due on the deposit. As a result, Ikeda cancelled the sale, and resold the property to another party for $400,000 more than Garratt had agreed to purchase the property.

With the sale now cancelled, Garratt requested Ikeda to refund the $50,000 he had paid on the deposit. Ikeda refused, despite the fact that he had resold the property for a $400,000 profit.

Garratt eventually sued for his deposit back.

The court ruled that section 8(3)(a) did not apply here, as the deposit was a performed obligation at the date of the cancellation. Relief under section 9 for the $400,0000 resale profit, was also refused.