Shearman v Techin MBS Pty Ltd (No 2)

This Federal Court decision is a follow-on judgment about remedies and costs after an off-the-plan property sale dispute. The purchaser, Mr Scott Shearman, had paid a $650,000 deposit for Apartment 301 at 14 Lascelles Avenue, Toorak. The vendor was Techin MBS Pty Ltd. The deposit was paid into the trust account of Maddocks Lawyers before the contract was signed, and the contract later provided for the deposit to be held and invested with interest ultimately going to the party entitled to the deposit.

The Court had already decided the main liability dispute in an earlier judgment. This No 2 judgment says the purchaser lawfully terminated the contract because Techin committed a repudiatory breach. The reason given in this judgment is that Techin failed to prove a variation agreement or estoppel under which the penthouse apartment would be settled as a "cold shell". The Court said Techin's refusal or failure to settle in accordance with the contract showed an intention not to be bound by it.

That earlier finding mattered because it meant the purchaser was entitled to the return of the deposit. But the parties still disagreed about the financial consequences. The deposit had remained invested in an interest-bearing account held by Maddocks. Techin argued, in substance, that the purchaser should get the deposit back with whatever interest had accrued in that account, but no more. Mr Shearman argued that once he terminated the contract on 31 May 2021, he was entitled to the immediate return of the deposit and had been kept out of his money ever since.

So the No 2 judgment was about what final orders should be made. The two live issues were pre-judgment interest and costs. Those issues often get treated as secondary, but this case shows they can materially change the commercial outcome of litigation.

The judgment sets out several contract and statutory features that shaped the result. The deposit was paid on 14 May 2018 into Maddocks' trust account, before the contract was executed on 22 May 2018. Under special condition 3.2, the deposit was to be held on trust for Mr Shearman in the solicitor's trust account until registration of the plan of subdivision. Under special condition 3.3, the parties authorised investment of the deposit and agreed that any interest would be paid to the party entitled to the deposit when it was released.

After registration of the plan of subdivision on or about 22 June 2020, special condition 3.4 provided that the deposit had to be held or invested by Techin's solicitor as stakeholder for the parties. General condition 12.2 said the stakeholder must pay the deposit and any interest to the party entitled when the deposit is released, the contract is settled, or the contract is ended. General condition 12.3 said the stakeholder may pay the deposit and any interest into court if it is reasonable to do so.

The judgment also refers to the Sale of Land Act 1962 (Vic). It notes that deposit moneys are to be held by a legal practitioner, conveyancer or estate agent as stakeholder, or paid by the vendor into a special purpose account in the joint names of purchaser and vendor. It also notes that where the purchaser rescinds a contract of sale as the result of a default by the vendor, the purchaser is entitled to the immediate return of the deposit moneys.

When Techin purported to terminate the contract in October 2020, its solicitors foreshadowed a claim that the deposit had been forfeited. Mr Shearman's solicitors then asked that the deposit be held in escrow in an interest-bearing account pending the court proceeding, or alternatively paid into court. Maddocks replied on 21 October 2020 confirming that it held the deposit in an interest-bearing account and had instructions to continue holding it pending a court order or joint written direction of the parties.

The first issue was whether pre-judgment interest should be awarded under section 51A of the Federal Court of Australia Act 1976 (Cth), and if so, in what amount. The Court explained that pre-judgment interest is compensatory. Its purpose is to compensate the successful party for having been kept out of money during the relevant period. The Court also noted that good cause not to award pre-judgment interest will be shown only rarely and in exceptional circumstances.

Techin's argument relied heavily on the stakeholder position. It said the deposit had been held by Maddocks as stakeholder under the contract and continued to be held in that capacity during the dispute, subject to duties to retain the money and disburse it only when entitlement was clear. Techin relied on authority stating that where the occurrence of the event entitling payment is disputed, a stakeholder cannot safely pay either party and may retain the money pending resolution of the dispute.

The Court accepted that Maddocks clearly held the deposit as stakeholder at least until 21 October 2020. It said it was less clear whether Maddocks continued to hold the deposit in that capacity after that date, or after the contract was terminated by Mr Shearman on 31 May 2021. The judge discussed several possible characterisations of Maddocks' role after termination. But the Court said the interest application against Techin did not turn on resolving those questions.

That was because Mr Shearman was seeking relief against Techin for breach of contract, not damages against Maddocks for how it performed any stakeholder obligations. The Court said that whatever the nature and extent of Maddocks' obligations in holding the deposit monies, that did not directly affect the measure of damages payable by Techin for its repudiatory breach of the contract.

The second issue was costs. Mr Shearman argued that costs should follow the event because he succeeded on the central issue, namely that he lawfully terminated the contract and was entitled to repayment of the deposit. Techin argued that the purchaser had failed on the misleading or deceptive conduct claim, and that this occupied a substantial proportion of the time and resources in the proceeding and at trial. The Court therefore had to decide whether to make a standard costs order or some form of reduced or issues-based order.

The judgment reviews the usual principles on costs, including the broad discretion of the Court, the general rule that costs follow the event, and the caution courts usually exercise before splitting costs issue by issue where facts and evidence overlap.

Horan J ordered judgment for Mr Shearman in the sum of $650,000 together with interest under section 51A in the amount of $194,177.26. The Court also ordered Techin to cause Maddocks Lawyers to return the $650,000 deposit, together with any interest that had accrued on it, to Mr Shearman on account of the judgment sum. Techin's cross-claim was dismissed.

On interest, the Court held that it was not in dispute that Mr Shearman was entitled to the return of the deposit when the contract was brought to an end on 31 May 2021. The Court said that at any time since that date, Techin could have given instructions for the deposit to be released to Mr Shearman. Instead, Mr Shearman had been kept out of his money during the period between 31 May 2021, or a reasonable time thereafter, and judgment. In those circumstances, an award of pre-judgment interest could be regarded in substance as interest on the damages for which Techin was liable for breach of contract.

The Court rejected Techin's submission that there was good cause not to award interest. It also rejected the alternative submission that the rate should be fixed no higher than the interest actually accrued in the account. The judge said it was not appropriate to limit interest by reference to the accrued account interest. To compensate Mr Shearman properly, and to advance the object of encouraging settlement of disputes, the Court awarded interest at the rates set out in the Court's interest practice note.

The Court also dealt with the risk of double recovery. Mr Shearman accepted that the interest accrued in the account since 15 June 2021 had to be accounted for, either by deduction from the statutory interest or by crediting the accrued interest towards the judgment sum. The Court chose the more straightforward course of entering judgment for the deposit plus statutory interest, and ordering Techin to cause the deposit and accrued account interest to be paid to Mr Shearman on account of that judgment sum.

On costs, the Court did not make a full costs order in the purchaser's favour. It accepted that Mr Shearman succeeded on the central issue, but also accepted that he failed on the ACL claim. Rather than attempt a detailed issue-by-issue allocation, the Court made a proportionate reduction and ordered Techin to pay 75% of Mr Shearman's costs of the proceeding, including reserved costs, on a party and party basis.

That approach reflects the Court's preference, in many cases, for a practical percentage reduction instead of a complex dissection of overlapping issues, evidence and hearing time.

This case is useful for businesses because it shows that the fight does not end with the main liability finding. If your business wrongly refuses to perform a contract and the other side validly terminates, the financial consequences may include repayment obligations, statutory interest and a substantial costs order. Those consequences can arise even where disputed money has been preserved in a trust or stakeholder account.

The judgment is also a reminder that stakeholder arrangements do not necessarily protect the party in breach from an interest award. The Court did not need to decide every detail of the stakeholder's legal position in order to award interest against Techin. Instead, it focused on the purchaser's loss of use of money he was entitled to once the contract ended. That is a practical point for any business dealing with deposits, retention sums or disputed funds held by lawyers, agents or other intermediaries.

Another practical lesson is about contract changes. The earlier liability finding, as described in this judgment, turned on Techin's failure to prove a variation agreement or estoppel that would have allowed settlement on a different basis, namely as a "cold shell". If your business wants to depart from the written deal, you need clear evidence. Informal assumptions, commercial understandings or incomplete communications can become very expensive if the other side later insists on the original contract terms.

The costs outcome also matters. Winning the main issue does not always produce a full costs recovery, and defeating one claim does not necessarily save the losing party from paying most of the other side's costs. If your business runs multiple claims or defences, think carefully about which ones are central, which ones are genuinely distinct, and how much time and cost they add to the case.

The judgment was delivered by Horan J in the Federal Court of Australia on 21 November 2025. It follows earlier reasons delivered on 14 October 2025. This page is focused on the No 2 judgment because that is the decision that sets out the final orders on repayment of the deposit, pre-judgment interest and costs.

The legal setting is a Victorian land sale contract combined with Federal Court procedure. The judgment refers to the Sale of Land Act 1962 (Vic) for the treatment of deposit moneys and to section 51A of the Federal Court of Australia Act 1976 (Cth) for pre-judgment interest.

The official judgment used for this page is Shearman v Techin MBS Pty Ltd (No 2) [2025] FCA 1446. The reasons expressly refer back to the earlier judgment, Shearman v Techin MBS Pty Ltd [2025] FCA 1243, for the main liability findings.

Because this page is based on the No 2 judgment, the explanation is strongest on remedies and costs. The broader factual narrative of the underlying dispute is limited to what this judgment itself says about the earlier findings.