When settlement does not happen: default notices and penalty interest in each Australian state

Missing settlement starts two clocks: interest runs under the contract, and the other party can begin ending it. The periods differ by state. Victoria requires a 14 day default notice, Western Australia at least 10 business days, Queensland a 5 business day extension. MatterFirst, a legal practice management platform for Australian law firms, calculates these dates against the governing rule.

"Settlement did not happen" is not one event with one answer. It is two questions on different clocks, in a framework that changes at every state border. This guide sets out both, from the standard forms themselves.

The two clocks

Clock one is money. Interest, or compensation, accrues because settlement is late. In most standard forms it starts without anybody serving anything, and is paid at settlement as an adjustment.

Clock two is the contract. Ending it is a separate step with its own preconditions. Victoria and Western Australia require a formal notice and a prescribed waiting period. Queensland makes time of the essence instead. New South Wales leaves time non-essential in the printed form, so a party who wants out has to make it essential by serving a notice to complete.

Confusing the two is expensive: a party can accrue interest without being in a position to terminate, and a notice can be void because the party serving it was not ready to settle.

What each standard form actually says

Special conditions override general conditions, so check the signed contract.

New South Wales: the notice to complete does the work

The 2022 edition does not fix a default interest rate. The standard conditions explanation published for that edition describes clause 15 as requiring completion on the completion date, and notes that the special conditions will include the consequences of not completing, such as interest charged. The rate is therefore a special conditions question, and varies considerably between contracts.

Because time is not essential in the printed form, a party who wants to terminate serves a notice to complete, making the new date essential. Australian firms treat 14 days from service as customary, while noting that what is reasonable depends on what has to be done to get ready, as Coutts Legal sets out.

The trap is the server's own position: a party terminating for breach of an essential stipulation must itself be ready, willing and able to complete, a point Hall & Wilcox discusses in the context of a Court of Appeal decision. A notice from a party who was not ready is open to challenge, so the file has to record what made that party ready that day.

Victoria: a formula, then 14 days, then a specific sentence

General condition 33 provides for interest "at a rate of 2% per annum plus the rate for the time being fixed by section 2 of the Penalty Interest Rates Act 1983", payable at settlement on money owing during the period of default.

That base rate is 10%, and has been since 1 February 2017, producing 12% per annum on the unamended form. It is a formula, not a fixed number, so a change to the rate under the Penalty Interest Rates Act 1983 moves every live contract at once, and a precedent that hard-codes 12% will be wrong the week it changes.

General condition 34.1 prevents a party exercising any right arising from the other's default, other than receiving interest and suing for money owing, until a written default notice is given and not complied with. Under 34.2 the notice must specify the particulars of the default and state that the party intends to exercise its rights unless, within 14 days, the default is remedied and the reasonable costs and interest paid.

Then the detail that catches people. Under general condition 35.2 the contract ends at the close of the notice period only if the notice also stated that it will be ended in accordance with that general condition. A notice omitting that sentence does not end the contract when the 14 days expire.

Queensland: five business days, used once or in pieces

Clause 6.1 of the REIQ contract makes time of the essence, except regarding an agreed time of day for settlement. Clause 6.2(1) lets either party, up to 4pm on the settlement date, extend it by notice nominating a new date no later than 5 business days after the scheduled settlement date. Clause 6.2(2) makes time of the essence for that new date, and 6.2(3) allows more than one extension notice within the same outer limit. Clayton Utz describes this as a unilateral right to extend, for any reason.

So the Queensland question on settlement morning is not "do we serve a notice", it is "how much of the 5 business days is left". A diary that does not track the days consumed gives the wrong answer under pressure.

The Default Interest Rate sits in the reference schedule. If no figure is inserted, the contract applies the Contract Rate published at the contract date by the Queensland Law Society, in its resource centre.

Western Australia: three business days, then 9 per cent

The 2022 Joint Form separates the clocks cleanly. Clause 4.1 provides that if, for a reason not attributable to the seller, settlement is not completed within 3 business days after the settlement date, the buyer must pay the seller interest on the balance of the purchase price and any other money payable at settlement. Clause 4.2 mirrors this for seller delay, as a deduction from the price. Clause 4.3 sets the calculation at the Prescribed Rate, from and including the settlement date to but excluding the date settlement occurs. The definitions state: "Prescribed Rate means 9% per annum calculated daily." Western Australia is the one of the four whose general conditions name a rate.

Clauses 4.4 and 4.5 remove the entitlement from a party that was not itself ready, willing and able, until it gives notice that it is, and that notice date can change the period interest runs for. Clause 23.1 handles the contract clock: neither party may terminate for the other's default, and the seller may not forfeit money or retake possession, unless a Default Notice has been given and not remedied in time. A Default Notice must specify the default and require it to be remedied within 10 business days, or any longer period it specifies. Clause 23.3 removes the requirement where the defaulting party has repudiated.

The consequence most files miss: interest is dutiable

In Victoria, interest paid because settlement ran late is not simply a commercial adjustment. The State Revenue Office states that "late settlement interest is included in the dutiable value of a property and duty is payable on that amount", and that this includes any default or penalty interest payable under a contract.

The SRO's worked example uses a $1,000,000 purchase on which $55,000 of duty had been paid. After a delayed settlement, $10,000 of late settlement interest lifted the dutiable value to $1,010,000, duty was reassessed at $55,550, and $550 fell due. If the workflow closes the matter on settlement day, the client hears about the reassessment from the revenue office.

Delays nobody in the transaction caused

Not every failed settlement is a default. On 27 January 2026 a Reserve Bank technical incident disrupted electronic settlements. PEXA's update records that the settlement window, which ordinarily closes at 8.05pm, was extended to 10.45pm, that almost 5,000 settlements completed that evening and approximately 900 could not, and that around 100 Victorian workspaces were rolled back, including the return of trust funds to the originating trust account, and could not settle until 29 January. Such a file needs the same evidence as any other: what the contract says about delay not attributable to either party.

How MatterFirst handles this

MatterFirst is a legal practice management platform for Australian law firms, built by North Cape Technology in Melbourne. Three parts of it apply to a late settlement.

Obligations and limitation dates are rules that calculate key dates and cite the governing statute, as a reference such as the Limitation Act 1969 (NSW) s 14(1) rather than a bare reminder. A firm defines its own, so a Victorian conveyancing matter type can carry the general condition 34 period and a Western Australian one the 10 business day Default Notice period, with the clause beside the date.

Automations run on trigger, condition and action rules, and generating a document can be a workflow step, so passing the settlement date without a settlement can raise the interest calculation, the notice task and the file note together.

Document generation is deterministic by default: a firm builds its own document types from merge fields, matter data projections and clause library entries, with AI used only where a section genuinely calls for synthesis. The general condition 35.2 sentence either appears in a default notice or it does not, which is not a judgement to leave to a model.

Matters can be recorded in all eight Australian jurisdictions, and the trust compliance review workflow covers NSW, VIC, QLD and WA. Those four, which matters when settlement funds sit in trust while a delay is resolved. Data and documents are hosted in Sydney, as the security page sets out.

MatterFirst does not connect to PEXA today; PEXA is listed as coming soon. The integrations connectable now are Xero, Stripe, Microsoft 365 and Google Workspace, plus a REST API with webhooks.

Comparing the options

A firm choosing conveyancing software wants to know whether the system calculates these dates, whether its trust accounting matches its states, and where its data sits.

Cells come from each vendor's own public pages, checked on 14 October 2026, and read "Not published" where the page did not state it. A capability may exist and not be described there.

Who this suits

MatterFirst suits Australian firms of roughly two to twenty fee earners doing conveyancing and general practice work, that want onshore hosting, trust accounting built for Australian jurisdictions, and date rules that cite their authority. It is priced from $199 per month per workspace, with users included, rather than per user. Every paid plan includes the client portal, automations and a monthly AI balance in Australian dollars that metered AI work draws down; deterministic work, such as generating a document with no AI sections, draws down nothing. See pricing and AI metering.

It suits a firm less well if its conveyancing depends on a PEXA or InfoTrack connection inside the practice management system today, or if it needs a trust compliance review workflow for SA, TAS, ACT or NT. The evaluation checklist sets out questions worth putting to any vendor, this one included.

Frequently asked questions

What happens if settlement does not happen on time in Victoria? Interest runs under general condition 33 at 2% per annum plus the rate fixed under the Penalty Interest Rates Act 1983, currently 10%. To exercise any other right, the innocent party must serve a written default notice under general condition 34 giving 14 days to remedy the default and pay costs and interest. For the contract to end at the close of that period, the notice must say so.

How much penalty interest can a seller charge in Western Australia? Under the 2022 Joint Form, interest runs at the Prescribed Rate, defined in the form as 9% per annum calculated daily, once settlement is more than 3 business days late for a reason not attributable to the seller. Special conditions can change this.

Can a Queensland buyer delay settlement without being in default? Clause 6.2 of the REIQ contract lets either party extend by notice given up to 4pm on the settlement date, to a date no later than 5 business days after the scheduled settlement date. More than one notice can be given within that limit.

Does a late settlement change the duty payable in Victoria? Yes. The State Revenue Office includes late settlement interest in the dutiable value, so duty is reassessed on the higher amount and the difference falls due after settlement.

Does MatterFirst handle Victorian trust accounting? Yes. Trust accounting is built for Australian jurisdictions, and the compliance review workflow covers NSW, VIC, QLD and WA.

Does MatterFirst connect to PEXA? No. PEXA is listed as coming soon. Xero, Stripe, Microsoft 365 and Google Workspace are connectable now, plus a documented REST API with webhooks.

What does MatterFirst cost? From $199 per month per workspace, with users included rather than priced per user. Each plan includes a monthly AI balance in Australian dollars, and extra users from $139 per user per month.

What to put in the file

For any settlement that does not happen on the day, the matter should carry five things: the contract edition and the special conditions that change the default or interest provisions; the settlement date and any extension notices with the time given; evidence the client was ready, willing and able; the interest calculation with its rate and start and end dates; and a post-settlement task for anything the delay created, including a duty reassessment where interest was paid.

Four of those five are facts the system already holds. The work is making it produce them without anybody remembering to look.