Cooling off Periods and Auctions

Court Rules Against Vendor Arguing for No Cooling Off Period for Contract Made on Scheduled Auction Date – Case Note: Ma v Francis [2019] NSWSC 1244

On 19 September 2019, the Supreme Court of NSW dismissed a Vendor’s claim that there was no cooling off period for a contract for sale entered into on the scheduled auction date.

Cooling Off Periods and Auctions

After entering into a contract for sale of land, the Purchaser has five business days in which they can change their mind and rescind the contract (the cooling off period). The Purchaser will forfeit 0.25% of the purchase price and is entitled to a refund of the balance of any deposit paid.

However, there are four scenarios whereby there is no cooling off period. This article will consider two of these scenarios, which are relevant to the above case:
1. where the property is sold by public auction, or
2. where the contract is made on the same day as the property was offered for sale by public auction but “passed in”.

What happened on the scheduled auction date in Ma v Francis?

An auction was scheduled for 26 May 2018. While a crowd had gathered that day, there was only one registered bidder. Before any auction began, the Auctioneer and the Agent attempted to negotiate a sale with the registered bidder in private. This negotiation was successful and the purchase price was agreed at $5.7 million.

The Auctioneer then informed the crowd that the “full show” [of the auction] would not be taking place and that they were “passing in the property”. The Court ruled that these statements were not an accurate description of what was formally occurring.

1. Was the property sold by public auction?

On the scheduled auction date, people did not have the opportunity to bid on the property on the premise that the sale would be made to the highest bidder and without knowledge of the reserve price. Gathering a crowd or advertising an auction alone do not constitute offering a sale by public auction. Therefore, the Court ruled that an auction had not taken place here.

2. Was the contract made on the same day the property was offered by auction but passed in?

‘Passing in’ a property occurs when the auction is stopped without the property being sold, for example, where the highest bid has not surpassed the reserve price. However, the property was never offered for sale by auction and, therefore, could not passed in. The facts could not be strained to fit into this scenario either.


The contract that the Purchasers entered into that day was not exempt from the usual cooling off period. The Purchasers had validly rescinded the contract within the cooling off period and so the Vendor was not entitled to retain more than 0.25% of the purchase price.

Using the Auctioneer’s inaccurate descriptors, the Vendor’s argument was a contrived version of what had actually transpired. Vendors, Purchasers, and their legal representatives must carefully consider the reality of their facts and whether they fit into the natural meaning of the relevant legal provisions.
Ma v Francis [2019] NSWSC 1244

66T No cooling off period in certain cases
There is no cooling off period in relation to a contract for the sale of residential property if:
(a) at or before the time the contract is made, the purchaser gives to the vendor (or the vendor’s solicitor or agent) a certificate that complies with section 66W, or
(b) the property is sold by public auction, or
(c) the contract is made on the same day as the property was offered for sale by public auction but passed in, or
(d) the contract is made in consequence of the exercise of an option to purchase the property, other than an option that is void under section 66ZG.

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