Section 55(2A) of the Conveyancing Act 1919 (NSW) confers a wide statutory discretion to return forfeited deposits that is not confined by analogy with equitable relief against penalties or forfeiture. It is not a precondition for the applicant to show special or exceptional circumstances, but the court must bear in mind that a deposit is an earnest of performance and will not lightly order its return. The court should consider the terms of the contract, the circumstances of the breach, and the relative conduct of the parties. A forfeited deposit should not be characterised as a 'windfall' merely because it exceeds the vendor's proven loss. Separately, under the Fair Trading Act, a plaintiff's failure to take reasonable care for its own interests does not sever the causal chain unless it is the operative cause of a severable part of the loss of which the contravention was not a material cause.
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