Woollahra's $10.6m failed sale offers a lesson in contract law

Woollahra's $10.6m failed sale offers a lesson in contract law

When physiotherapist Helen Gibson sold her Woollahra home for $10.6 million mid-last year, the timing couldn’t have been better: it doubled her purchase price of a few years earlier and coincided with the high point of the Sydney property boom.

If only the buyer hadn’t pulled out of the deal.

Not only did private lending specialist Vanessa Jabbour fail to complete her purchase, but she hasn’t paid the full 10 per cent deposit, leaving Gibson without the requisite $1.06 million to show for it.

Instead, when Jabbour exchanged to buy the 525-square-metre property across the road from Centennial Park, she did so on a deposit of just $100,000 through then-selling agent Maclay Longhurst, of Sotheby’s International.

Almost a year later, the failed sale has turned into an expensive cautionary tale for Gibson. She is not only counting the costs of the outstanding deposit, but a multimillion-dollar loss on the value of her home as well as the expense of having moved out and back in a few months later.

The John Street house has since been returned to the market, this time with a $9 million guide in line with fallen market values, and in the hands of McGrath Double Bay agents.

The five-bedroom, five-bathroom house with approved plans for a rebuild by Ergo Architecture was put on sale in April last year with a $10 million guide, which offered a strong rise in value since 2020 when Gibson paid $4.8 million for it.

The sale promptly turned into a good news story about the strength of the market when it was reported as sold for $10.6 million.

But behind the scenes, the $1.06 million deposit owed on the exchange was fast becoming a matter of contention given claims Jabbour’s first cheque bounced, and the sale was later secured by a bank transfer of $100,000. That equates to less than 1 per cent of the purchase price.

As Longhurst pursued his buyer for the outstanding amount, Gibson claimed she only became aware Jabbour had paid a fraction of the deposit until more than six weeks after the deal was due to settle, by which time they had already given Jabbour more time to finance her purchase, and the market had started its downward trajectory.

Gibson further claims she enlisted Longhurst on a 1.1 per cent commission, but that he reduced that by $16,000 after he broke the non-disclosure agreement by emailing his database with the bullish sale price. The commission was never paid.

The details behind the failed sale are set to be contested in the Supreme Court in coming months after Gibson launched legal proceedings in a bid to recoup her losses against Jabbour, Longhurst, and the agency’s director, Michael Pallier.

Like Longhurst, Jabbour declined to comment for this story, so it remains unknown why she didn’t complete on the sale, although their defences in the matter have been lodged with the court.

Pallier said he is included in the summons purely because he is the Sotheby’s licensee and had nothing to do with the sale.

But Pallier did back his leading agent Longhurst, ranking him among Sotheby’s – and Sydney’s – top sales guns.

Longhurst’s purchase of an almost $27 million home in Vaucluse recently made headlines in The Australian Financial Review, given it was the former home of Telstra executive director Maxine Brenner and her husband, One.Tel founder Jodee Rich.

Longhurst has form when it comes to selling high-end houses on a minimal deposit. Two years ago, he set a then-house price record in Paddington of $14 million when he sold the historic double terrace Brompton to Monte Carlo-based art adviser Richard Thompson.

But Thompson never settled on the purchase, and the seller Jacqueline Bailey was left with less than a 5 per cent deposit and the need to move back into the house before she relisted it a year later.

It eventually sold last September after what was ultimately a more than 18-month campaign, and for nearer to $12.5 million.

The binding nature of a sale contract and the 10 per cent deposit that is owed (regardless of what is agreed as an initial deposit) was most famously laid bare by Hollywood star Toni Collette and her former husband, musician Dave Galafassi in 2011, when they exchanged to buy a Paddington terrace for $6.35 million.

In Supreme Court proceedings that followed, it was revealed that they later pulled out of the deal because they did not have the money.

The sellers Industrie Clothing co-founders Nick and Susie Kelly later resold the house for $5.5 million, and sued Collette and Galafassi for the difference. The celebrity former couple not only had to forfeit their 10 per cent deposit, but more than $600,000 in damages.

Lucy Macken, The Sydney Morning Herald