1Whether a contractual deposit constitutes an unenforceable penalty involves a mixed question of fact and law requiring leave under s 40 of the Local Court Act 2007 (NSW), not an appeal as of right under s 39.
2Where a vendor's interests against non-completion are already substantially protected by separate contractual mechanisms (here, a Service Agreement containing indemnities, equipment return obligations, and breach remedies), a non-refundable deposit may be found to serve no legitimate commercial interest beyond punishing the purchaser, rendering it a penalty void ab initio.
3The absence of evidence as to how a purchase price was formulated, the value of fixtures and goodwill, and income/expenditure figures at the time of contracting supports a finding that a deposit calculated as a fraction of that price was not a genuine pre-estimate of loss.
