Brown v The Stables Perisher Management Pty Ltd

These proceedings concern the legal validity and, to the extent the question of relief against forfeiture arises, the propriety, in the eyes of equity, of the purported termination by The Stables Perisher Management Pty Ltd (SPM or the Defendant) of two valuable long-term subleases of apartments forming part of The Stables resort complex in the Perisher Valley, New South Wales (the Resort) in July 2020.

Indirectly, the proceedings also concern the conduct of SPM in withholding its consent during 2019–2020 to the transfer of one of the apartments (Apartment 26) of which the first Plaintiff, Mrs Karen Brown (Karen Brown or Mrs Brown), is the sublessee. A contract had been entered into on 27 September 2019 for the transfer of that apartment for a consideration of $720,000. SPM’s conduct in withholding consent informs an assessment as to whether the termination of the two subleases involved an abuse of power and/or a want of good faith, to the extent that the power to terminate was required to be exercised in good faith.

The sublease to the other apartment (Apartment 9-1) purportedly terminated in July 2020 was held by Karen Brown’s two adult sons, Jake and Sam Brown, who are the Second and Third Plaintiffs. Apartment 9-1 was said to have value of approximately $450,000.

SPM was not only the sublessor of the two apartments in question but managed them pursuant to separate management agreements with the Plaintiffs. The management of the apartments included letting them out to members of the public during the ski season, which ran from the beginning of June until the end of the October long weekend.

Necessarily bound up with the question of the validity of the termination of the two subleases is what amounts, if any, were owed by the Plaintiffs to SPM at the time of the termination and whether the amounts said to be owing arose under the sublease and/or under the separate management agreements. In relation to at least some of the amounts claimed, questions of estoppel also arise.

The amounts which SPM claimed were owing at the end of April 2020 were in excess of $200,000 in the case of Apartment 26 and just over $100,000 in the case of Apartment 9-1. This was in stark contrast to all previous years in which the subleases had been held. In each of those years (2015–2019), there was a balance of money due and net payments made to Karen Brown and to Jake and Sam Brown. This is to say, the income from the short-term rental of the apartments during the annual ski seasons exceeded the expenses incurred in relation to their management by SPM. When this is appreciated, the level of asserted indebtedness in April 2020 was remarkable.

On 23 July 2020, SPM purported to terminate the subleases and to retake possession of Apartments 9-1 and 26, causing the locks on both apartments to be changed. Notices of Default had been served on the Plaintiffs on 27 May 2020.

Underlying the legal issues outlined above is a deep falling out between Karen Brown’s husband, Mr Shane Brown (Shane Brown or Mr Brown) and Mr Matthew Anstee (Matthew Anstee or Mr Anstee) who is currently and was, at the time of the termination of the subleases, the sole director and shareholder of SPM. Shane Brown was also a director and shareholder of SPM until he was removed as a director and had his shareholding cancelled in late 2019 in circumstances that are disputed. The falling out related to an unrelated failed property development in the Southern Highlands in or around 2018 (the Kangaloon Road Development). Karen Brown, Shane Brown and Matthew Anstee all lived and worked in the Southern Highlands. Matthew Anstee, a licensed real estate agent, was and is the principal of Raine & Horne in the Southern Highlands.

Following the purported termination of the sub-leases on 23 July 2020, Karen Brown and her two sons commenced urgent proceedings by Summons in the Equity Division on 24 July 2020, seeking interlocutory and final relief. On 27 July 2020, an interim regime was put in place by consent whereby:

The case has not proceeded on pleadings. At my direction, however, the Plaintiffs filed a detailed Statement of Issues which set out a large number of issues which were identified as falling for determination. At a pre-trial directions hearing, counsel for SPM accepted the Plaintiffs’ identification of the relevant issues.

The Plaintiffs’ case was that the amounts asserted by SPM to be owed and which underpinned the Notice of Default were not in truth owed and that the purported termination of the subleases and retaking of possession was invalid and of no effect. It was also put that the power of termination had not been exercised for a proper purpose or in good faith. It was contended that Mr Anstee, through SPM, wished to cripple the Brown family financially, to look for any possible ground, whether reasonable or not, upon which to cause the subleases to be terminated, and to thereby recover losses he considered had been caused to him by Shane Brown. It was further contended that Mr Anstee’s intention was to obtain for himself the benefit of the valuable subleases by making impossible and unwarranted demands. The termination followed Mr Anstee’s refusal (on behalf of SPM) to give consent to the sale of Karen Brown’s apartment, Apartment 26, in September 2019 notwithstanding that, in his capacity as principal of Raine & Horne Southern Highlands, he was Mrs Brown’s real estate agent.

Mr Anstee denied that this was his intention and asserted that the termination was not effected for an improper purpose nor in breach of any obligations of good faith to which SPM was subject.

The Resort is the subject of a head lease between the Minister administering the National Parks and Wildlife Act 1974 (NSW) on behalf of the New South Wales National Parks and Wildlife Service (NPWS) and SPM. It comprises a number of apartments and common areas, including a restaurant. The original head lessee was The Stables Apartments Pty Ltd ACN 000 835 503 (SAPL), a company unrelated to SPM.

The term of the head lease was 20 years commencing on 1 July 2008 with an option to renew for a further period of 30 years. The head lease had a public dimension in that the permitted use of the premises was the provision of “apartments providing accommodation to the general public and purposes reasonably incidental to that use”. It specified the maximum number of persons who could stay at the Resort overnight as well as the bed numbers. A base rent was payable under the head lease with complex provisions for rent review. Schedule 5 provided for an additional allocation of beds in return for payment of an Additional Beds Allocation Fee.

The head lease contemplated that the head lessee would either appoint a manager of the Resort or discharge this role itself. The head lease also contemplated that income would be generated by the lessee through the provision, for remuneration, of the accommodation available at the Resort. Importantly for the purposes of the present case, cl 13.2 of the head lease provided for the grant of subleases or licences over or in respect of the Resort or any part thereof for purposes approved by the lessor, provided that any sublease was in terms that enabled the lessee/sublessor to discharge its obligations under the head lease.

The original head lessee, SAPL, had sublet many of the apartments within the Resort prior to transferring its interest in the head lease to SPM. Given the long-term nature of the head lease, and therefore of any sublease granted under it, significant value attached to the subleases and a market was created through which SAPL no doubt raised funds to defray the cost of its Lease Grant Fee and the Additional Beds Allocations Fee under the head lease.

The model for the management of the Resort adopted by SAPL and carried on by SPM was itself to act as the manager of the Resort and to require each sublessee, in addition to the terms of the sublease to enter into a Management Agreement.

SPM was incorporated on 3 April 2014 with Matthew Anstee and Shane Brown being its initial directors and shareholders. According to an ASIC search, each originally held 499 ordinary shares and Matthew Anstee also held two A class shares.

SAPL transferred its interest in the head lease to SPM on 15 December 2015 for a nominal consideration, although it was common ground that SPM acted as manager of the Resort during the 2015 ski season.

In commercial terms, as a result of the transfer of the head lease SPM acquired potentially valuable management rights over the Resort and the apartments of which it was comprised, in return for providing a range of services in respect of the Resort to the “owners” of the subleases pursuant to Management Agreements with them.

By the time of the transfer of the head lease from SAPL to SPM, most if not all of the apartments in the Resort were the subject of subleases. At the time of this transfer, Sam and Jake Brown held their interest as sublessees of Apartment 9-1 (having acquired it in late 2014), Karen Brown had acquired the sublease to Apartment 28 and Matthew Anstee held Apartment 23. Karen Brown, as shall be seen, transferred her sublease of Apartment 28 in December 2017 for a consideration of $495,000 and acquired her sublease in respect of Apartment 26 at the same time and for a slightly lower amount, even though it was accepted that Apartment 26 was in a superior location to Apartment 28.

In addition to their respective subleases, both Jake and Sam Brown and Karen Brown entered into separate Management Agreements with SPM in relation to the management of their apartments. Karen Brown entered into a new Management Agreement in respect of Apartment 26 when she acquired her sublease of that apartment in December 2017. The Management Agreements were in materially identical form.

Before outlining the key terms of the standard form Management Agreement entered into by the Plaintiffs with SPM, it is necessary to identify various provisions of the subleases entered into by Karen Brown (initially in relation to Apartment 28 and then Apartment 26) and Sam and Jake Brown (in relation to Apartment 9-1), noting that insofar as they incorporated Registered Memorandum AJ121195, the subleases were also in materially identical terms. Accordingly, where a clause of one sublease is referred to or set out below, that clause also appears in the other subleases.

The subleases for the Apartments mirrored in their terms those of the head lease and specified bed numbers and the maximum number of persons permitted overnight in the apartment to which the particular sublease related.

Apart from the obligation to pay the yearly rent pursuant to cl 3.1, cl 3.4.1 provided that the sublessee “must pay all Outgoings and when Outgoings become due for payment”. Clause 3.4.2 provided that:

“Outgoings” were defined in the sublease as:

Clause 3.5 of the sublease, entitled “Unpaid Monies”, provided that:

Clause 11.1.1, entitled “Required Insurances”, provided that:

Clause 11.3 provided that:

Clause 13.1 of the sublease relevantly provided:

Clause 1.13.1, referred to in cl 13.1.5 above, provided that:

Clause 3(a) of Schedule 3 (titled “additional covenants”) of the sublease standard form provided that:

Clause 3(b) of Schedule 3 provided that:

Clause 3(c) of Schedule 3 provided that the sublessee must:

Clause 4 of Schedule 3 in turn provided that the sublessee must not:

These provisions had the practical effect that “owners” of the subleases could only use their apartments for personal accommodation for a limited number of weeks during the ski season. Otherwise, the apartments were to be available for letting to members of the public. This was practically achieved through SPM as Manager. As already noted, the head lease contemplated that the head lessee/sublessor could be the Manager and this is what transpired, with each sublessee also entering into a Management Agreement with SPM. The letting of the apartments to members of the public when they were occupied by the sublessee “owners” permitted and enabled the generation of revenue for the sublessees and, as shall be seen, a percentage of this revenue was payable to SPM under the Management Agreement.

The termination provisions of the subleases are of particular importance given the subject matter of this dispute. Clause 14.2.1(e) relevantly provided:

Clause 14.4 relevantly provided:

Clause 14.6, entitled “Notice of Default”, provided that:

Clause 14.5, concerning “Termination after Default”, provided that:

Other clauses of the subleases which are relevant for the purposes of the current proceedings are set out later in these reasons and considered in the context of various disputed charges levied by SPM on the Plaintiffs.

The Management Agreement, which each of the Plaintiffs entered into with SPM, as “the Manager” also contained a large number of provisions relevant to the parties’ dispute. To the extent that obligations or responsibilities under the sublease dealt with subject matter covered by the Management Agreement, the “Entire Agreement” clause (cl 15.5) of the latter “replace[d] and supersede[d] all prior or contemporaneous agreements and understandings whether written or oral.”

Under cl 2 of the Management Agreement, each sublessee granted to SPM:

By cl 3(e)(iii) of the Management Agreement, SPM covenanted to comply with the management provisions of the Head Lease. Those provisions included cl 5.5.1(a), which required SPM (as head lessee) to ensure “that the Premises are actively managed, maintained, conducted, controlled and promoted at all times in good faith and in a proper, orderly, efficient, reputable and businesslike manner for the purposes authorised by [the] Lease”.

By cl 3(g) of the Management Agreement, SPM was obliged, subject to cl 10, to pay all insurances associated with the apartments and the Resort.

Under cl 3(h) of the Management Agreement, SPM was obliged to “account monthly to the [sublessee] reconciling the Monthly Gross Receipts, Allowable Deductions and Monthly Nett Receipts and monthly shall issue to the [sublessee] any relevant GST tax invoices.”

SPM was also responsible for the financial management of the Resort and was required to keep “all receipts of all outgoings and expenses as well as tariffs, weekly banking, maintenance of books of account and statistical data relating to the occupancy and usage of the [Apartment]”: see at cl 3(k)(iv) of the Management Agreement.

Clauses 3(i) and (j) provided that:

By cl 4(a) of the Management Agreement, SPM was entitled to receive by way of remuneration a fee representing 25% of Monthly Gross Receipts in respect of the given apartment. Structuring SPM’s remuneration in this way supplied it with an incentive to rent out the apartments as much as it could during the ski season. Further, the longer a given apartment was rented out to members of the public during the ski season, the higher the revenue that would be generated both for a given sublessee and SPM.

Clause 6(d) of the Management Agreement provided that:

Clause 8 provided as follows:

Clause 10 provided:

Clause 15.6 provided no need for dropped quote that:

It is necessary to set out in considerable detail the background to the parties’ involvement within the Resort and the events leading up to the purported termination of the subleases of Apartments 26 and 9–1.

Matthew Anstee, as has already been noted, is and at all material times was the principal of the Raine & Horne real estate agency in the Southern Highlands.

Shane Brown worked with his wife, Karen Brown, in two cafes they ran in Bowral. Karen Brown was at that time the primary source of the Brown family’s income. Shane Brown had suffered significant financial losses in the global financial crisis.

Mr Anstee and Mr Brown met in about 2008. During 2013–2014, an opportunity arose to acquire the management rights to the Resort. This opportunity was contingent on the subleases to the apartments (or most of them) being acquired from the then Head Lessee, SAPL. Initially, a third party investor was to be involved but it subsequently pulled out of the proposal. Thereafter, Matthew Anstee and Shane Brown arranged for a number of persons to acquire subleases of various apartments in the Resort. SAPL ultimately agreed to transfer its interest as Head Lessee to SPM, which had been incorporated for this purpose, in early April 2014, (although the transfer of the head lease from SAPL to SPM did not in fact occur until December 2015).

The affairs of SPM were apparently conducted with a large degree of informality. Apart from a minute of a meeting of 28 November 2019, no other minutes of directors’ meetings were in evidence (or produced in answer to Notices to Produce) and it was Shane Brown’s evidence that no board or shareholders’ meetings were held to formalise the management of the Resort.

Shane Brown gave the following evidence about a conversation with Matthew Anstee several months prior to the first ski season, that of June–October 2015, during which SPM assumed management of the Resort:

Matthew Anstee denied this conversation. Mr Brown adhered to his account under cross-examination.

Shane Brown also gave evidence of a further conversation prior to the first ski season as follows:

Shane Brown explained that he sourced eight fulltime staff for the first ski season to assist with the operation of the Resort, as well as casual staff to work as needed. He explained that:

Shane Brown also said that, from the first season, Mr Anstee assumed control over and management of the accounts and that his [Shane’s] role involved the “hands on running of the [Resort] rather than the administration and accounts”. His tasks included, for example, “meeting and greeting” guests, organising staff rosters and duties, pick up and dropping off guests and overseeing the operation of the restaurant and bar.

Matthew Anstee, on the other hand, described Shane Brown in his Affidavit evidence as the “Managing Director” of the Resort until 28 November 2019 but retreated from this somewhat under cross-examination.

As also already noted at [8], Mr Anstee and Mr Brown also had an unrelated joint involvement in the failed Kangaloon Road Development.

It is sufficient for present purposes to note that the two men had a major falling out in relation to this development in or around 2018 as a result of which Mr Anstee claimed to have lost over $2 million. The fact of that dispute rather than the perceived rights and wrongs of it is what is important for the purposes of the present case.

It was the contention of Mr DeBuse on behalf of the Plaintiffs that Mr Anstee was animated in his dealings with them (and ultimately in his decision to cause SPM to terminate their respective subleases) by his falling out with Mr Brown. It was put that he sought to recover from Karen, Sam and Jake Brown some of what he claimed to have lost in his dealings with Shane Brown by raising invoices for amounts which were not in truth owing and which he knew they were not in a position to pay so as to bring about forfeiture of their valuable interests in the subleases. As will appear, this serious allegation is one that I accept. It is reinforced by the unwarranted and spurious nature of the vast majority of the charges sought to be recovered pursuant to invoices purportedly issued by 5.00pm on 30 April 2020.

Jake and Sam Brown are the adult sons of Karen and Shane Brown. Together they acquired the sublease of Apartment 9-1 in the Resort in November 2014.

In the first ski season under the management of SPM, Sam Brown and his then girlfriend (now wife) worked at the Resort and were remunerated for their work.

In his Affidavit of 21 August 2020, Sam Brown gave the following evidence which was unchallenged:

Sam Brown also gave evidence that in or around 2017 he had a conversation with his father, who was at that time still a director of SPM, which has recounted as follows: [1]

The reference to “Tess” in this passage was to Tess Tohu who was once the girlfriend of Jake Brown and who assisted Mr Anstee with the management of the Resort. She was appointed as the General Manager of the Resort during 2018 and evidently still held this position at the time of the trial. [2]

Sam then gave the following account as to how charges were levied thereafter: [3]

Karen Brown acquired the sublease to Apartment 28 on 26 November 2014. She was later to sell her interest in this apartment and acquire the sublease to Apartment 26 which was terminated in July 2020. As will appear below, renovations made to Apartment 28 in 2016 and its sale in late 2017 have a continuing relevance to the matters in dispute.

Although Apartment 28 was purchased in Mrs Brown’s name, she deposed in her Affidavit that “Shane and I purchased Apartment 28 at the Stables” but explained under cross-examination that “that is just a figure of how I speak about myself and my husband.” When asked whether there was a reason that Apartment 28 was purchased in her name alone, Mrs Brown explained that “I have worked my backside off seven days a week for about the last 14 years … So, that was my working, and that was something for me”. [4] Later in her evidence she stated that she supplied the funds to purchase Apartment 28. [5] Shane Brown’s evidence was consistent with this. [6]

Mrs Brown gave evidence that during the first ski season and up until 2017, when she was diagnosed with cancer, she would travel down to the Resort on weekends and during school holidays and assist with housekeeping, in the kitchen, with guest changeovers and cleaning. She was not remunerated for this work and gave frank evidence that she expected to receive favourable treatment in return for this unpaid work. On her case, one aspect of such treatment was not being charged for meals and drinks at the Resort’s restaurant. As she said in evidence that was unchallenged: [7]

Mrs Brown gave further evidence of a conversation with her husband prior to the first ski season (in 2015) in which she recalled him saying to her that: [8]

She gave further evidence (the admission of which was limited to evidence of her understanding) that her husband said to her after the conclusion of the first ski season that: [9]

Mrs Brown gave unchallenged Affidavit evidence that she relied on what Shane Brown had relayed to her about this discussion in permitting the renovations to Apartment 28 to proceed: [12]

Mrs Brown acknowledged that about $50,000 was spent renovating Apartment 28. Under cross-examination she explained the background to the renovations as follows: [13]

Later in her cross-examination, the following exchange occurred: [14]

This evidence was reinforced by evidence given by Shane Brown when under cross-examination: [15]

The sublease over Apartment 26 was acquired by Mrs Brown by way of assignment on 28 November 2017, the same day on which she assigned her sublease over Apartment 28. Mrs Brown gave the following evidence as to these concurrent transactions: [16]

Mrs Brown was not challenged as to her evidence that no agency agreement was signed with Anstee Real Estate Pty Ltd (trading as Raine & Horne Southern Highlands and Bowral) in relation to the sale of Apartment 28.

In the course of his cross-examination, Mr Anstee explained that NPWS had to consent to the transfer of any sublease and that NPWS asked SPM prior to the provision of consent whether there were any defaults, breaches or outstanding moneys in respect of Apartment 28. He was then asked the following series of questions: [17]

The sublease over Apartment 26 was acquired for $470,000, which resulted in a net pecuniary gain of $25,000 for Mrs Brown, the sublease over Apartment 28 having been assigned for $495,000.

As noted at [23] above, the Apartment 26 sublease incorporated the terms and conditions of Registered Memorandum AJ121195 [18] following its assignment to Mrs Brown, which included the requirement to sign a Management Agreement with the sublessor pursuant to cll 1–3 of Schedule 3, specifying “additional covenants” under the sublease. In accordance with those additional covenants, Mrs Brown entered into a Management Agreement with SPM in respect of Apartment 26, [19] (see [42]–[53] above).

Mrs Brown gave evidence that, from 2014–2017, she was not charged any fees, including booking fees, in respect of Apartment 28. This state of affairs was said to have ended with the acquisition of Apartment 26 as, around that time (i.e. November or December 2017) Shane Brown told Karen that “the [S]tables can’t keep paying the fees for the 3 apartments so we’ve agreed that from now on we have to pay the booking charges and park fees”. [20]

The change in circumstances was also raised by Tess Tohu who, according to Mrs Brown, stated that [“]the apartments need to start paying their fees because there’s not enough money in the company to keep covering it”. [21] This accorded with the evidence of Sam Brown referred to at [71] above. The references to “the 3 apartments” and “the apartments” were references to the apartments held by Karen Brown, Sam and Jake Brown and Matthew Anstee.

Mrs Brown gave the following evidence regarding the payment of fees and charges relating to Apartment 26: [22]

Mrs Brown deposed to having received invoices from SPM by email [23] “[from] around 2019”. The emails from SPM ordinarily contained a link to an online “owner’s portal” through which the recipient sublessee could “view and download the detailed report of all income and expenses at [their] owners login”. Under cross-examination, Mrs Brown gave the following evidence as to her ability to access the “owner’s portal”: [24]

The “profit and loss” invoices described by Mrs Brown in the above extracts from her evidence were of a standard form, relevantly containing entries for “bookings”, “property expenses” (including, for example, national park fees charged by NPWS and utilities and services outgoings), “owner disbursements” and “forward bookings”. From these entries a monthly closing balance was calculated for the account in respect of Apartment 26.

For the period from 6 February 2019–29 December 2019, the closing balance for Apartment 26 was recorded on invoices received by Karen Brown as follows:

Mrs Brown gave evidence that she “never actually transferred funds to pay for these invoices as the accounting practice had always been that payment for the invoices was deducted from the income relating to each apartment”. [34] Mrs Brown also gave evidence that the invoices received prior to 2020 “always had a little amount left in our account at the end”. [35] She later clarified that by invoices she meant “owner statements”. She continued “I had never received anything until I think about March or something, 2020, saying that I had monies owing”. [36]

As of January 2020, Mrs Brown no longer received “profit and loss” invoices as described above, instead being issued with “owner statements” by SPM. Instead of recording a monthly closing balance in respect of Apartment 26, the owner statements contained a list of “totals” relating to each of the following categories: “brought forward expenses”; “gross amount”; “income expenses”; “expenses”; “paid to owner”; “outstanding”; “nett amount owing to owner”; “payment withheld”; “carried forward credit”; and “total GST on this invoice”. [37] The expenses typically comprised a percentage of rent and charges payable by SPM under the head lease to NPWS as calculated by reference to a proportionate share for each apartment recorded on a schedule to each sublease, together with SPM’s fee under the Management Agreement and specific expenses relating to particular apartments such as clearing charges. This is reflected in cl 3(j) of the Management Agreement set out at [48] above.

For each of January, February and March 2020, the “owner statements” issued to Mrs Brown in relation to Apartment 26 did not record any unpaid amounts or any debited totals. [38]

In 2019, Mrs Brown decided to sell Apartment 26. She explained that after she was diagnosed with cancer in 2017, it became increasingly difficult for her to work and support her family financially. She stated candidly that she: [39]

Mr Anstee was to act as Mrs Brown’s agent for the sale of Apartment 26. Mrs Brown also retained a solicitor, Ms Deborah Blanckenberg (Ms Blanckenberg) of Newlands Legal in Mittagong, to act on her behalf in respect of the transaction. [40]

Under cross-examination by Mr DeBuse, Mr Anstee gave the following evidence as to his role as Mrs Brown’s agent for the purposes of arranging the sale of Apartment 26: [41]

Mrs Brown entered into an Exclusive Selling Agency Agreement” [42] for Apartment 26 with Anstee Real Estate Pty Ltd (trading as Raine & Horne Southern Highlands and Bowral). Clause 5.1 provided for a listing price of $720,000 and, by Schedule Item B, the parties agreed to an agent’s commission of 3%. Mrs Brown also agreed to pay $957.00 for the marketing of the property online. The term of the agency agreement was stated to be from 13 September 2019–13 December 2019. It was signed by Mrs Brown on 15 September 2019, with Mr Anstee’s signature provided on the following day.

On 23 September 2019, Mr Anstee, on behalf of Raine & Horne Southern Highlands and Bowral, sent a letter to Ms Blanckenberg as follows, notifying her that the sale of Apartment 26 had been arranged and was to proceed to the preparation and exchange of a contract for sale and purchase: [43]

This letter was accompanied by a document titled “Sales Advice”, which recorded the purchaser as Myriad Capital Pty Ltd (Myriad), the date of sale as 23 September 2019, the sale price as $720,000.00 and the gross commission in the sum of $21,600.000 (as estimated in the agency agreement). The Sales Advice document recorded the estimated settlement of the sale as occurring “42 days from exchange”. [44]

A contract for the sale and purchase of land in respect of Apartment 26 was executed by Mrs Brown and Mr Grinham (in his capacity as the sole director of Myriad on 27 September 2019. [45] The contract enclosed a s 66W certificate waiving the statutory “cooling off period” in accordance with s 66T of the Conveyancing Act 1919 (NSW) which was prepared and signed on 26 September 2019.

Clause 50 of the sale contract, titled “completion”, was as follows: [46]

The contract was exchanged via email on the date of its execution. [47] Mr Anstee also notified Ms Blanckenberg, by letter of the same date, that Raine & Horne was holding the deposit of $72,000 in its trust account.

Further, on that same day, Ms Blanckenberg sent the following letter to Myriad’s solicitor Mr Reid: [48]

Immediately following exchange, Ms Blanckenberg commenced the process of obtaining the necessary consents from both NPWS (as Head Lessee) and SPM (as Head Lessee); see [31] above. On 2 October 2019, she sent an email to the Myriad’s solicitor attaching a Deed of Consent to the Transfer of the Sublease and the Management Agreement, and requesting the following actions in respect of those documents: [49]

Upon the completion of these actions, Ms Blanckenberg undertook to “arrange for the other parties to sign the documents and apply to NPWS-OEH for consent to the transfer of sublease”. Ms Blanckenberg also sent the following letter to Mr Anstee (this time in his capacity as a Director of SPM) on 22 October 2019: [50]

Just over a fortnight later, on 5 November 2019, Mr Anstee replied to Ms Blanckenberg’s letter with an email reading as follows: [51]

At the time this email was sent, Mr Anstee was not the sole director of SPM. Shane Brown remained a director and 50% shareholder. Moreover, there was no evidence that amounts of any substance were owing by Mrs Brown to SPM at that time: see [93] above.

This email was described by Mr DeBuse in opening submissions as “the beginning of [the parties’] dispute”, evincing “a particularly unconscionable use of the power or an unconscionable refusal to perform a function” on Mr Anstee’s part. [52]

The following day, on 6 November 2019, Ms Blanckenberg replied to Mr Anstee’s email as follows: [53]

Mr Anstee replied promptly to Ms Blanckenberg’s email later that afternoon, emphatically denying her assertions in the following terms: [54]

It is apparent that Mr Anstee directed SPM’s accountants to undertake an audit of amounts that potentially could have been but were not charged to Mrs Brown in respect of Apartment 26. This task was undertaken by Ms Debra Blackah (Ms Blackah) of Oxley Partners (Oxley) from around November 2019. [56] During his cross-examination, Mr Anstee acknowledged that the purpose of this audit was to investigate and substantiate the amounts he considered to be owing to SPM by Mrs Brown for the purposes of providing SPM’s consent to the transfer of Apartment 26, and that Ms Tohu (who was the General Manager of the Resort as of November 2019) was also involved in the conduct of the audit: [57]

The only invoice issued to Mrs Brown by SPM in evidence in relation to land tax was dated 12 February 2020 and in the sum of $3854.93, covering the period of 2016–2020. [58] On the same day, Mrs Brown was issued with an invoice in the sum of $376.34 for Gas, electrical, fire safety and pest control charges.

The other telling feature of Mr Anstee’s response in his email of 6 November 2019 to Ms Blanckenberg was its peremptory conclusion “[i]n the mean time [sic] the consent to the transfer of sub lease will not be considered.”

On the evening of 6 November 2019, Ms Blanckenberg notified Mr Anstee that she would “await further instruction from [him] concerning the amounts [he] consider[s] are owed by Karen Brown, and then seek further instructions”. [59]

After a period of six days without reply from Mr Anstee, on 12 November 2019 Ms Blanckenberg sent a further email to him requesting, with urgency, details of the amounts Mr Anstee claimed to be owing to SPM by Mrs Brown following the audit he had commissioned. [60] This request was accompanied by a reiteration of the following:

At the foot of this email, Ms Blanckenberg also raised the possibility of a conflict of interest on her part, given that she also acted for SPM in the preparation of Management Agreements to be signed by incoming sublessees of apartments in the Resort. She foreshadowed the service on both SPM and Mrs Brown of notices of ceasing to act “[i]f this dispute is not resolved quickly”.

Almost immediately after sending her email to Mr Anstee, Ms Blanckenberg sent another email to Mr Reid (Myriad’s solicitor) informing him of the difficulties she had encountered in obtaining SPM’s consent to the transfer of the Apartment 26 sublease. [61] Relevantly, she noted that absent SPM’s consent she was unable to seek the consent of NPWS as “they have told me that they would not proceed with granting consent while there remains a dispute between a sublessee and the management company”.

A fortnight later, on 26 November 2019, Ms Blanckenberg provided the following further update to Mr Reid via email, with Mr Aaran Johnson of Marsdens Law Group (Mr Johnson) copied in: [62]

The following Monday, 2 December 2019, Ms Blanckenberg emailed Mr Anstee as follows: [63]

No such exchange occurred, and no consent was forthcoming.

Curiously (because it was wholly inconsistent with the above email), there was in evidence what purported to be minutes of a meeting of the Directors of SPM (i.e. Mr Anstee and Mr Shane Brown) held at 5.30pm on 28 November 2019. [64] The minutes were signed only by Matthew Anstee as Chairman and stated that Mr Anstee “requested Shane Brown to resign as a director of the company effective immediately”, to which Mr Shane Brown “indicated he was not opposed to resigning as a Director on the basis that Matthew Anstee had the power to remove [him] as a director of the company”.

Following Ms Blanckenberg’s acknowledgement to Mr Anstee on 12 November 2019 of a potential conflict of interest given her engagement on behalf of both SPM and Mrs Brown (see [119] above), on 9 December 2019 Ms Blanckenberg received a letter from Ms Sarah Rodrigues of Bowral Legal confirming that her firm had commenced acting on behalf of SPM in respect of the transfer of Apartment 26 and the dispute surrounding the matter of consent. [65]

The evidentiary record was largely silent as to what transpired in relation to the transfer of Apartment 26 throughout December 2019 and January 2020, see [93] and [96] re owners statements and the only information furnished as to what amounts Mr Anstee and SPM claimed Mrs Brown was owing in relation to Apartment 26 were the invoices referred to in [93] above and the owner statements referred to in [96] above.

On 30 January 2020, a “Memorandum of Resolution of the Sole Director” of SPM was signed by Mr Anstee. This memorandum recorded that the 499 ordinary shares in SPM held by Shane Brown had been cancelled. This left Mr Anstee as the sole shareholder in SPM.

At some point during the approximately two-month period from 9 December 2019–7 February 2020, Mr Johnson was engaged by Mrs Brown to act on her behalf in the dispute regarding SPM’s withholding of consent to the transfer of Apartment 26 (although Ms Blanckenberg also continued to act for her on the conveyance). Mr Johnson sent a letter to Mr Anstee on 7 February 2020 which explicitly foreshadowed the litigation of the consent issue in the event that SPM’s consent was not forthcoming. This letter is reproduced in full below as it contains a detailed summary of the dispute between, and respective positions of, the parties up to and as of that date: [66]

A reply to the above was received on 13 February 2021, when Mr John Dowling of Bowral Legal (which commenced acting for Mr Anstee on 9 December 2019) sent the following email to Mr Johnson, with Mr Anstee copied in: [67]

Prima facie, this appeared to represent a significant shift in SPM and Mr Anstee’s position, from an emphatic refusal to provide consent to the transfer absent “irrevocable undertakings and directions [from Mrs Brown] to pay [SPM] in respect to the proceeds of sale of Apartment 26” (see [109] above) to an effective grant of consent, albeit on a “without admissions” basis in the context of the underlying dispute. However, under cross-examination, Mr Anstee sought to clarify his understanding of the effect of Mr Dowling’s email as follows: [68]

The document referred to at the conclusion of the exchange extracted above was an email from Ms Blanckenberg in reply to Mr Dowling (and copying Mr Johnson) on 17 February 2020 which relevantly confirmed Mrs Brown’s undertaking to pay the sum of Mr Anstee’s sales commission ($21,600.00) in addition to $28,000 relating to a “motor vehicle transaction”.

On 26 February 2020, Ms Karen Field (Ms Field), a Senior Project Officer at the NPWS, sent a letter to Mr Dowling which referred to his “letter dated 18 February 2020 and the application for consent to the assignment of sublease for [Apartment 26]”. [69] Mr Dowling’s letter was not in evidence. Ms Field’s letter specified various documents and materials which SPM was to provide to NPWS in order to consider the application for consent.

Two days later, on 28 February 2020, Ms Blanckenberg wrote to Ms Field “to request the head lessor’s consent to the transfer of the sublease to [Myriad Capital Pty Ltd]”. [70] The letter enclosed copies of the sale contract, the sublease and previous registered transfers, an ASIC company search in respect of Myriad, and a “purchaser’s cheque for $582.00 in payment of NPWS-OEH’s fee”. Ms Blanckenberg concluded by acknowledging that although the standard practice was for the transferor to seek and receive the head lessee’s consent, and only then to the consent of NPWS, such that she “had been holding these documents to send to you together with copies of the signed Deed of Consent to Transfer of Sublease and New Management Agreement”, “so far the management company [SPM] has not returned those documents to me”.

On 3 March 2020, Ms Blanckenberg sent the following email to Bowral Legal, informing it of her direct correspondence with NPWS in pursuit of the requisite consents: [71]

The following afternoon, on 4 March 2020, Mr Dowling replied to Ms Blanckenberg in a revealing email as follows: [72]

Late in the evening of 4 March 2020, Ms Blanckenberg offered the following reply to Mr Dowling’s email and the queries contained therein: [73]

The following day, 5 March 2020, Mr Dowling emailed Ms Blanckenberg expressing his gratitude for the checklist she had provided and noting that he had requested from Ms Tohu an “account adjustment sheet for apartment 26”. [74] Mr Dowling also enquired as to “what, if anything, was done by your buyer [Myriad] concerning insurances and overall liabilities?”

This query in relation to insurance was to emerge as a basis for SPM continuing to withhold consent to the transfer of the Apartment 26 sublease. It was a matter which was repeatedly referred to by Mr Anstee under cross-examination as a basis for withholding consent lest SPM be exposed to insurance liabilities or breaches of the Head Lease. [75] It was notable, however, that the question of insurance was first raised in correspondence of 5 March 2020, many months after SPM’s consent had been requested in respect of a contract which had been exchanged almost six months earlier. No equivalent concern or objection had been raised at the time of the transfer of Apartment 28 in November 2017.

Mr Dowling elaborated upon this concern regarding insurance in the following email sent to Ms Blanckenberg on 6 March 2020: [76]

The statement in this email as to public liability insurance was not accurate. SPM at all material times held public liability insurance cover for the Resort to the value of $20,000,000. [77]

The contents of Mr Dowling’s email of 6 March 2020 echo Mr Anstee’s frequent insistence, throughout his oral evidence under cross-examination, that he refused to consent to the transfer of Apartment 26 throughout early 2020 because “there was insurance indemnities that needed to be provided which would put me in breach with the head lease”. [78] When pressed by Mr DeBuse as to the basis of this understanding, Mr Anstee referred to it being “detailed in the advice from John Dowling”. It was accepted that no specific advice, beyond what was conveyed by Mr Dowling in correspondence with Ms Blanckenberg and Mr Johnson, was in evidence before the Court. [79]

Some two and a half hours prior to Mr Dowling sending the email of 6 March 2020, an inspection and assessment of Apartment 26 was conducted by Robin Ward of NPWS, Ms Tohu and Mr Anstee, for the purposes of the “assignment of [the] sub-lease”. [80] A report of this inspection was in evidence before the Court. It recorded NPWS’s confirmation that “Unit 26 including the loft is generally in accordance with [the Building Code and] Floor plans” such that “[a]part from the use of the dining room and corridor/alcove there are no planning or building code concerns”. NPWS consequently raised “no objections with respect to the assignment of the sub-lease for this unit”. [81]

NPWS’s lack of objection to the assignment of the sublease did not alter SPM’s position. Some five days later, on 11 March 2020, Ms Blanckenberg reaffirmed the urgency of the outstanding consents to Mr Dowling by way of the following email: [82]

The reply to this email was not in evidence but at 9.52am on 13 March 2020, Ms Blanckenberg sent the following email to Mr Dowling: [83]

At 10.55am on 13 March 2020, Bowral Legal sent the following email to Ms Field of NPWS (copying Mr Anstee, Ms Blanckenberg and Mr Dowling) which confirmed SPM’s “formal consent” to the transfer and assignment of the Apartment 26 sublease: [84]

Having received confirmation in principle of SPM’s formal consent to the transfer of Apartment 26, on 23 March 2020 a Deed of Consent to Assignment of Sublease was signed and executed in respect of Apartment 26 by Mr Stuart Schramm on behalf of NPWS as the Head Lessor. [85] By cl 2 of the Deed, NPWS consented to the transfer or the conditions (amongst others) that:

Following receipt of NPWS’s Deed of Consent by SPM and notwithstanding its in principle consent, Mr Dowling continued to raise concerns regarding “outstanding issues”, particularly relating to the allegedly deficient public liability and contents insurance policies, as obstacles to the finalisation of the transfer of Apartment 26. This much was clear from the following email sent to Ms Blanckenberg on 23 March 2020: [86]

With regard to the first of the issues raised, the requirement that the period of risk should run from 29 November 2017 was obviously incapable of being achieved retrospectively, and there was no suggestion that SPM had been exposed to any loss arising from the use or rental of Apartment 26 in the period since its acquisition by Mrs Brown. In any event, as noted above at [140] SPM at all material times had public liability insurance with cover of $20,000,000 in respect of the Resort which necessarily included the apartments of which it was the sublessor.

With regard to the third issue raised by Mr Dowling, namely flood damage to Apartment 26, Mrs Brown gave the following evidence-in-chief: [87]

This account was not challenged in cross-examination, and the issue regarding flood damage appears to have been resolved between Mrs Brown and Myriad by the end of April 2020. [88]

On or around 26 March 2020, Mr Anstee became aware of NPWS’s executed Deed of Consent, [89] following which he prepared and sent a letter to Ms Field requesting the withdrawal of NPWS’s consent to the transfer of Apartment 26 on the basis that Mrs Brown was in default of the sublease “in numerous respects including conditions, covenants and essential terms, payment of rent, outgoings, required insurances and unauthorised occupation”. [90]

The letter, titled “RE: Consent to the Assignment of Sublease – Apartment 26 The Stables Perisher Valley” read as follows:

The letter was signed by Mr Anstee on behalf of SPM in his capacity as the company’s “sole director”. [91] As at the date that this letter was sent, the suggestions that Karen Brown was in default of the sub-lease “in numerous respects” had not been conveyed to her and no demands had been made by SPM in relation to any amounts alleged to be owing. A Notice of Default would not be issued for a further two months.

Moreover, SPM generated and issued Tax Invoices to Mrs Brown for the periods 1 February–29 February 2020 and 1 March 2020–31 March 2020 which showed that no moneys were owing and that SPM was holding two forward bookings for Apartment 26 for the forthcoming ski season. [92] (It is convenient to note that Jake and Sam Brown received equivalent Statements/Tax Invoices/“Owners Statements” for the same periods showing no amounts owing and multiple forward bookings). [93]

This attempt by Mr Anstee to have the transfer process halted by the withdrawal of the necessary consent by NPWS at the eleventh hour was unsuccessful, as on 15 April 2020 Ms Field emailed Ms Blanckenberg as follows (notwithstanding that the sunset date specified in the sale contract, namely 2 March 2020, had passed in the interim): [94]

Ms Field subsequently confirmed in an email, sent later that afternoon, that “a letter was sent to Mr Anstee this afternoon confirming that NPWS is not withdrawing our Consent to the Assignment of Sublease as the issues raised by Matthew Anstee are between the head lessee and sublessee”. [95] Although the relevant letter from Ms Field to Mr Anstee was not in evidence before the Court, Mr Anstee accepted in cross-examination that he was aware that Ms Field had refused to withdraw the consent of NPWS. [96]

The email correspondence between Ms Field and Ms Blanckenberg on 15 April 2020 was forwarded to Mr Dowling during the following afternoon, accompanied by an indication that “[Mrs Brown] wishes to proceed to settlement ASAP. Please have [SPM] provide the necessary outgoings information so that adjustments can be calculated”. [97]

Mr Dowling provided the following reply to Ms Blanckenberg on the morning of 17 April 2020: [98]

Clause 13.1.3 of the sublease, under the heading “General Restrictions on Assignment”, precluded its assignment in the event that the sublessee is in default of any covenant or condition of the sublease as at the date of the application for assignment (see [30] above).

By way of contrast to prior experience (see [73] above), there was in evidence a Statement/Tax Invoice for the period of 1–30 April 2020 disclosing amounts said to be owing in respect of Apartment 9–1 in the total sum of $110,679.01. [99] There was also in evidence a Statement/Tax Invoice for the same period in respect of Apartment 26 for the sum of $210,053.04. [100] These two documents were produced by SPM in answer to a Notice to Produce on 11 March 2021. There was no evidence as to whether they were ever sent to or received by Sam and Jake Brown or Karen Brown.

These Statements/Tax Invoices also contained information in relation to forward bookings of the two apartments. Apartment 9-1 was shown as having eight forward bookings to the value of almost $18,000, whilst the monetary value of the two forward bookings for Apartment 26 was not quantified.

Also in evidence were two Tax Invoices (Invoices 770 and 735) purportedly issued to Jake and Sam Brown and Karen Brown respectively in relation to the two apartments. Both of these invoices also purported to have been issued by SPM on 30 April 2020 but they were in slightly different amounts to the two Statements/Tax Invoices referred to above. Invoice 770, in relation to Apartment 9–1, was in the sum of $106,659.31 and Invoice 735, in relation to Apartment 26, was in the sum of $203,230.47. Both invoices specified the “due date” of 15 May 2020.

It is necessary to reproduce the components of Invoices 735 and 770 in full.

This invoice, issued to Karen Brown in respect of Apartment 26, comprised the following components: [101]

This invoice, issued to Jake and Sam Brown in respect of Apartment 9-1, comprised the following components: [102]

Both Karen and Sam Brown denied receiving these invoices and said that the first time that they became aware of them was on receipt of the Notices of Default on 27 May 2020 (see further below). Neither was challenged in cross-examination in respect of these denials.

One feature of Invoice 735 was that it included a charge for legal fees in the sum of $3,363.15. This apparently related to an invoice from Bowral Legal, which was acting for SPM at that time. The invoice for this amount to SPM was, however, dated 7 May 2020, [103] a fact which Mr DeBuse, for the Plaintiffs, seized on to raise an issue as to whether Invoice 735 could in fact have been issued, if it was ever sent, on 30 April 2020 given that it included a precise amount for which SPM had not at that point apparently been billed. In view of my ultimate conclusions, it is not necessary to determine whether the invoice was prepared, still less issued, on the date it bears.

On 27 May 2020, Karen Brown was served with a Notice of Default (sub-titled a “Notice to remedy breach of sublease pursuant to clause 14.6 of [the Apartment 26 sublease]”. This Notice, which was dated 20 May 2020 and signed by Mr Anstee in his capacity as “Sole Director and Secretary of The Stables Perisher Management Pty Ltd”, particularised the purported breaches under the headings of “monetary breach” and “non-monetary breach”.

In respect of the “monetary breach” said to have been committed by Mrs Brown, the following particulars were provided: [104]

In relation to Invoice 646, Mrs Brown’s unchallenged evidence was that she had reviewed her records and was not able to locate a copy of the invoice or any email from around the date of its purported issue, on 12 February 2020.

In relation to Invoices 644 and 648, her Affidavit evidence was that she assumed that the amounts had been calculated correctly and that she was willing to pay them. She also said that she otherwise would have expected that the invoices would have been deducted from income generated by Apartment 26. This was how payments for such amounts had previously been collected, as had been explained by Sam Brown in his evidence referred to above (at [73]). Invoice 644 related to a percentage share of land tax for the years 2016–2020. [105] Invoice 648 related to gas, electricity, pest and fire safety service compliance costs. [106] Invoice 735, referred to in the Notice of Default, was obviously in a quite different category in terms of its quantum. This invoice, and its components, are considered in greater detail below.

One feature of this Notice of Default (as well as that issued to Jake and Sam Brown) was that it treated the non-payment of amounts said to be payable pursuant to the Management Agreement as a breach of the sublease. This was evidently on the basis that costs under the Management Agreement were treated as falling within the definition of “Outgoings” under cl 3.4.1 of the sublease: see [25]–[26] above.

The purported “non-monetary breach” said to have been committed by Mrs Brown was particularised as follows: [107]

SPM indicated in the Notice of Default that it intended to exercise further “contractual and other rights” unless the asserted monetary breach was remedied by the payment of the total amount of $210,053.04 to a bank account nominated by SPM in addition to the provision of a cash bond of $20,000 “pursuant to Clause 3.6 of the Memorandum”. [108]

In relation to the demand for a cash bond, cl 3.6 of the sublease did provide for the provision by Karen Brown of a bank guarantee, but only in the sum of “$5,000, if demanded”. [109] No contractual basis was identified to warrant a demand for the provision of a cash bond of $20,000.

On the terms of the Notice of Default, the non-monetary breach was to be discharged by the provision of “a copy of a commercial insurance policy as required by Clause 11.1 of the Memorandum … including … Public liability insurance with the Head Lessee included as joint insured party for a period of not less than 12 months with evidence the premiums have been paid in full and a current Certificate of Currency for such policy”. [110] This was different to the demand which had been made in Bowral Legal’s correspondence of 23 March 2020 which called for the provision of proof of insurance backdated to 2017 in respect of Apartment 26: see [147] above.

14 days were given to remedy the purported breaches following service of the Notice of Default on 27 May 2020. In the event that this did not occur, the sublease was to be terminated “pursuant to its terms”. [111]

A separate Notice of Default was served on Jake and Sam Brown on the same day, namely 27 May 2020, in respect of the Apartment 9-1 sublease. The “non-monetary breach” particularised by SPM was identical to that contained in the Notice of Default served on Mrs Brown. The only material difference between the two notices concerned the relevant “monetary breach”, which was particularised against Jake and Sam Brown as follows: [112]

In relation to Invoices 640, 645 and 647, Sam Brown gave the following unchallenged evidence: [113]

As noted at [161] above, a Statement/Tax Invoice for the period of 1–30 April 2020 disclosed forward bookings of Apartment 9-1 to the value of almost $18,000, which was very significantly in excess of the combined total for Invoices 640, 645 and 647.

In addition, Sam Brown deposed to having received Owner Statements for the periods 1–28 February 2020 (generated on 2 March 2020) and 1–31 March 2020 (generated on 7 April 2020) showing a nil balance as owing in respect of Apartment 9-1. [114] These Owner Statements were both in evidence.

As with Invoice 735, purportedly issued to Mrs Brown, Invoice 770, which was noted on the Apartment 9-1 Notice of Default in the sum of $106,659.31, was in a very different category to the other invoices contained therein.

The Notice of Default in relation to Apartment 9-1 also specified that the discharge of the asserted breach required the payment by Jake and Sam Brown of a cash bond of $10,000 “pursuant to Clause 3.6 of the Memorandum”. [115] As with the Apartment 26 sublease, SPM had the right to demand a bank guarantee but again only in the sum of “$5,000, if demanded”.

On 5 June 2020, Mr Johnson wrote to Bowral Legal, which acted for SPM, as follows: [116]

Mr Dowling of Bowral Legal responded on 9 June 2020 rejecting the assertions in the third paragraph of Mr Johnson’s letter and asserting the validity of the Notice of Default served on Karen Brown.

On the same day Mr Johnson responded by email as follows: [117]

Mr Dowling responded by email the following morning as follows: [118]

On 11 June 2020, Mr Johnson pursued Mr Dowling by email, asking him to “please confirm when will I receive the requested underpinning material”. Mr Johnson followed this up with a letter later that day: [119]

More than a week passed until 19 June 2020, when Mr Dowling sent the following email to Mr Johnson: [120]

A number of matters may be noted about this email. First, the accompanying schedule only particularised total expenses of $60,424.01 and did not supply supporting documentation. Secondly, all of the expenses for which a claim was made were incurred in 2016. Thirdly, the email left wholly unparticularised the balance of the amounts said to be owing under the invoices referred to in the Notices of Default, especially Invoice 735.

On 1 July 2020, Mr Dowling wrote to Mr Johnson as follows, in an email the tender of which attracted no objection: [121]

Mr Johnson responded to Mr Dowling on the following day in a detailed six-page letter. Salient portions of this letter included the following: [122]

The letter then provided detailed responses in relation to the specific components of Invoice 735 as elaborated upon slightly by the schedule to Mr Dowling’s 1 July email (see Appendix A to these reasons). Many of the objections raised were repeated during the course of the hearing and will be assessed later in these reasons.

Mr Johnson completed his letter of 2 July 2020 by making the following open offer: [123]

Shortly after receipt of Mr Johnson’s letter, Mr Dowling inquired as to whether Mr Johnson held any instructions in relation to Sam and Jake Brown in respect of the Notice of Default and invoices issued to them.

Mr Johnson responded, reminding Mr Dowling that he had previously promised to provide an itemisation schedule for Invoice 770 but had not done so. Mr Dowling candidly responded “[y]es, you are right. Another thing I am waiting on.” This was presumably a reference to a request for information from Mr Anstee and SPM.

On 6 July 2020, Mr Dowling sent Mr Johnson a copy of Invoice 770, stating that he had “requested particulars from our client as to calculations.” As events transpired, no itemisation of Invoice 770 was ever supplied.

On 8 July 2020, Ms Antoinette Campbell of Bowral Legal responded to Mr Johnson’s letter of 2 July 2020. [124] This letter briefly addressed each of the 14 items comprising Invoice 735. It also rejected the offer made by Mr Johnson on behalf of Karen Brown and noted that “SPM requires payment of the various amounts in the Default Notices as served on your client plus additional interest for the delay in payment by 4pm, 10 July 2020.”

Notices of Termination were served on Karen Brown and Sam and Jake Brown on 23 July 2020.

The Notice of Termination served on Karen Brown was accompanied by a letter which read as follows: [125]

The Notice of Termination of the Apartment 9-1 sublease was accompanied by a letter drafted in relevantly identical terms and both Notices were signed by Mr Anstee in his capacity as the “[s]ole Director” of SPM. [126]

These proceedings were commenced by way of Summons filed on the following day seeking, inter alia, declarations that the Notices of Default and Notices of Termination in respect of the two Apartments were of no effect; injunctions restraining SPM from seeking to take possession of or re-enter the Apartments; and, alternatively, relief against forfeiture.

As noted at [9] above, an interim regime was put in place shortly after the commencement of proceedings to maintain the status quo.

On 29 July 2020, Mr Johnson wrote to Mr Kevin Rodgers of Brock Partners (Mr Rodgers), the firm which by that time was acting for SPM and continued to act for it in the proceedings. Mr Johnson’s letter relevantly was as follows:

On 6 August 2020, Ms Kendall Fairley (of Brock Partners) responded, conveying her instructions that SPM would consider the proposal set forth in Mr Johnson’s letter of 29 July 2020 after all of Karen Brown’s evidence had been served. In this letter, Ms Fairley noted the following conditions of SPM’s consent to any assignment of the sublease of Apartment 26 as follows: [127]

Tellingly, no insistence on a public liability insurance policy being procured was raised.

It is against the background of this unavoidably lengthy recital of facts that attention is now turned to the key issues for determination.

Not all of the issues raised in the Plaintiffs’ Statement of Issues in fact required determination. The key issues which are dealt with in the balance of these reasons are as follows:

Most of these issues turned on findings of fact, a number of which depended on considerations of witness credibility. Accordingly it is that topic that must first be addressed.

There were three principal witnesses who were cross-examined: Karen Brown, Shane Brown and Matthew Anstee. Sam Brown was also cross-examined briefly.

In addition to the evidence of these witnesses, the Plaintiffs relied upon a number of Affidavits of Mr Johnson which principally recorded attempts that he had made, both before and after the commencement of proceedings, to obtain documents and financial records from SPM in order to substantiate the amounts claimed in Invoices 735 and 770.

SPM also relied upon an Affidavit of Ms Blackah, who was a chartered accountant and partner of Oxley, which had served as the accountants for SPM since October 2015 and undertook the so-called “audit” which led to the issue of Invoices 735 and 770. Much of this Affidavit was objected to and not admitted into evidence. No reference was made to it by Mr Moore, for SPM, in closing submissions.

Mrs Brown gave clear and direct answers when under cross-examination. She was candid about the financial difficulty her husband had found himself in following the global financial crisis, and it is clear that her own financial position and security had been affected by the demise of the couple’s finances.

At the time she gave her evidence, and for the last two years, she had been working as a cook in an aged-care facility in the Southern Highlands. She had been the family’s principal bread winner for at least the last decade. She explained, and I accept, that Apartment 28 (and then Apartment 26) was purchased with her own savings. She did not deny that renovations to Apartment 28 had been undertaken to the value of about $50,000 but explained her understanding as to how that cost came to be met by SPM. She explained, and I accept, that she would not have been able to afford to undertake renovations to that value had it not been for her understanding that SPM would meet these costs as a quid pro quo for Shane Brown not having received remuneration for his work at the Resort during the 2015 ski season.

I found her to be an impressive witness and I accept her evidence.

Shane Brown also gave clear, candid and consistent evidence. He fully accepted that work had been done on Apartment 28 and volunteered under cross-examination which particular invoices (forming part of an exhibit to Mr Anstee’s Affidavit of 20 November 2020) related to the renovations. He also accepted that he and his family had never paid for meals at the Resort’s restaurant.

Even though, as is pointed out below, Mr Anstee said on a number of occasions in his oral evidence that undercharging of the Plaintiffs occurred as a result of Mr Brown directing Ms Tohu to do so, this was never put to Mr Brown in cross-examination by Mr Moore and Ms Tohu was not called to give evidence. The closest the cross-examination of Mr Brown came in this regard was in the following passage: [128]

For the reasons given at [237]–[246] below, I preferred Mr Brown’s evidence to that of Mr Anstee in relation to key conversations disputed between them. These conversations related to an alleged agreement or understanding that Mr Brown would be paid $50,000 for working full time at the Resort for the first ski season (in 2015); an arrangement for SPM to fulfil this obligation by covering the costs of the renovation of Apartment 28 to the value of $50,000; and an agreement or understanding in relation to expenses at the Resort’s restaurant.

No adverse submission was made by Mr Moore about Mr Brown’s credit in final address.

Sam Brown was briefly cross-examined by Mr Moore on behalf of SPM. His credit was not attacked and he gave clear and straightforward evidence. There is no reason not to accept him as a wholly reliable witness.

In particular, it is noted that Sam Brown was not challenged in respect of his evidence that he did not have any records of ever receiving Invoice 770.

I did not find Matthew Anstee to be an impressive witness. It was evident that he continued to regard Shane Brown as responsible for losses he claimed to have sustained in relation to the Kangaloon Road Development and was quick to blame Mr Brown for accounting discrepancies and incorrect charges in relation to Apartments 9-1 and 26, saying on more than one occasion that Shane Brown had told Tess Tohu to charge those apartments in a particular way: see [217] above. But Ms Tohu, who is the current General Manager of the Resort, was not called to give any such evidence to support these second-hand assertions, and this allegation did not form part of Mr Anstee’s Affidavit evidence nor was it put to Shane Brown in cross-examination.

It was also evident that Mr Anstee had not been closely involved in the calculation of amounts claimed to be owing and which were the subject of Invoices 735 and 770. To his credit, he accepted this at various points in his evidence. On the other hand, his inability to explain a large number of the charges was not impressive given his position as the sole director of SPM from December 2019 and, it can only be inferred, as the principal driver of the decision to issue the Notices of Default and to terminate the subleases. There was no explanation, for example, from Mr Anstee or any other witness as to why documents described as “Owners’ Statements” issued by SPM to Karen Brown and Jake and Sam Brown for the period 1 January 2020 to 31 March 2020 showed no amounts as owing (see, for example, [96] and [181] above).

A large measure of responsibility must also lie with Mr Anstee for what appeared to me to be the clear failure by SPM to produce significant categories of documents sought by way of Notices to Produce. These deficiencies were outlined in correspondence between the parties’ legal representatives in 2020 and it is unnecessary to go into detail about those shortcomings save that they were ultimately to the detriment of SPM, as the non-production of various documents caught by the Notices to Produce undermined any reliance that could be placed on assertions in invoices as to amounts said to be owing.

In terms of his answers given under cross-examination, Mr Anstee was at times evasive and inconsistent, as is illustrated by the following passage which concerned his payment of an invoice relating to works done to Apartment 28 in 2016: [129]

This passage illustrates Mr Anstee shifting his evidence when asked questions in an attempt to avoid the obvious. Thus, he changed his evidence in relation to what he understood the Chris Brauer account related to in order to seek to explain away the obvious proposition that, if he thought the invoice was to the Browns’ account, he would have insisted on its payment out of the proceeds of the transfer of the Apartment 28 sublease.

Nor did I find plausible Mr Anstee’s subsequent and inconsistent answer that he had “forgotten about” the debt or “hadn’t thought about it” at the time of the sale of Apartment 28. [130] Much more likely, in my view, was that he did not pursue the Browns for the payment of Mr Brauer’s account because he and Mr Brown had agreed that renovations up to $50,000 could be made to Apartment 28 in lieu of payment to Mr Brown for his work at the Resort during the 2015 ski season.

Mr Anstee also made claims that were not sustained by any documentary evidence. For example, he asserted that, at the time he demanded a direction to pay SPM from the sale proceeds of Apartment 26 (on 5 November 2019: see [109] above), there were “serious defaults for land tax” on the part of Karen Brown. [131] It emerged however, that a bill in respect of land tax had not been levied at that time, and the first such bill was not levied until 12 February 2020, although Mr Anstee said he thought that it was in 2019. Mr Anstee was asked when and where it was demanded of Karen Brown to which his answer was:

Also of relevance is the following passage of evidence: [132]

It will be recalled that Mr Anstee had asserted to NPWS that Mrs Brown was in breach of her obligations in “numerous respects” in his letter of 26 March 2020, including in relation to non-payment of outgoings even though this did not reflect the true position at the time nor was it reflected in any invoices that had been sent to Mrs Brown at that time: see [152] above.

More generally in relation to Mr Anstee’s credit, I have no doubt that he was the principal architect of the idea to issue crippling and unjustified invoices to both Karen Brown and Jake and Sam Brown in May 2020 for some amounts which he knew were not warranted or could not be justified, and others which were specious or problematic, as will be explained in greater detail below. This observation applies to each of Invoices 735 and 770.

In respect of the latter invoice, it was particularly telling that no particulars were ever supplied in relation to Invoice 770 prior to termination of the sublease even though they had been reasonably requested and SPM’s solicitor had sought instructions in this regard: see [195]–[198] above. This was not reasonable on any view of the matter, especially in circumstances where the income from the Apartments had historically always exceeded expenses.

To the extent that I have resolved various disputed factual questions against Mr Anstee by reference to considerations of objective probability (see at [237] ff below), it follows that where those disputed matters turned upon conversations which Mr Anstee denied took place, I have rejected his evidence as being inconsistent with objective probability.

As noted earlier in these reasons, the current General Manager of the Resort is Ms Tohu, who is paid $80,000 a year to perform that role. It was Ms Tohu who, it emerged, played a principal role in providing the accounting information which fed into Invoices 735 and 770 and it was her upon whom Mr Anstee relied for many of the underlying calculations. He made frequent reference to her when asked questions about the bases for amounts charged to Karen, Sam and Jake Brown.

Ms Tohu was not called to give evidence. Given her position as General Manager of the Resort, her evident role in the preparation of the accounting information underlying the invoices and Mr Anstee’s inability to explain how many of the figures had been derived, or to what they related, I infer that Ms Tohu’s evidence would not have assisted SPM’s case.

The same observation may be made in relation to Ms Blackah, whose largely inadmissible Affidavit did not address or provide a reasoned basis for the levying of many of the charges that were sought to be imposed on the Browns through Invoices 735 and 770. An inference may also be drawn that Ms Blackah was not in a position to give evidence which assisted SPM’s case: Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389.

I find on the balance of probabilities that Matthew Anstee and Shane Brown did reach an agreement that Mr Brown would work full time at the Resort during the first ski season and would be paid $50,000 in that respect when SPM was in a position to pay him.

I reach this conclusion not only by reason of my assessment of the relative credibility of each of Matthew Anstee and Shane Brown but also by reason of a number of additional matters.

First, Shane Brown had to hire replacement staff to perform his front of house role at one of the two Bowral cafés he and Karen were running at the time, in 2015, for a period of some four months. This was a substantial cost to them and their business. By contrast, Matthew Anstee continued to work full-time in his real estate business. True it is that he used some of his staff to assist with invoices and accounting matters but it was not seriously suggested that this was an equivalent contribution to that which Shane Brown was making in the first season, or that it required Mr Anstee to incur the cost of hiring additional staff.

Secondly, as to the value of what was agreed, there was evidence that the current General Manager of the Resort is paid $80,000 a year. Shane Brown’s evidence was that, in 2015, $50,000 was approximately the amount that managers of ski resorts were being paid per season.

Thirdly, given the full-time, “hands on” role of Shane Brown during the critical first season of SPM’s management of the Resort, and given the amicable relations between the two men at the time, it was entirely reasonable and plausible that Matthew Anstee would agree to Shane Brown being paid for his work. Indeed, the contrary position was far less plausible.

Mr Moore, on behalf of SPM, sought to argue that Mr Anstee also contributed to the management of the Resort in 2015 by providing the services of some of his employees at Raine & Horne Southern Highlands and Bowral to assist with accounts and bookings, as has been noted above. The point was made that they were not paid. This may be accepted but no attempt was made to establish how much work was undertaken by such staff in attending to bookings and accounts, and the value of that work. It is most unlikely that it represented nearly as much of a commitment as Shane Brown’s full-time management throughout the ski season.

Furthermore, as noted at [76] above, Karen Brown provided considerable unpaid assistance in the running of the Resort through the first ski season (and subsequent seasons) on weekends and in school holidays.

I further find that a conversation between Matthew Anstee and Shane Brown, as set out at [78] above, occurred in relation to a “contra” deal for Shane Brown’s unremunerated labour in the first ski season, namely that SPM would meet costs of up to $50,000 for the renovation of Apartment 28 during 2016, in lieu of payment to Shane Brown for his work in running the Resort in the 2015 ski season. Again, apart from general questions of credit, this conclusion is strongly fortified by the fact that it was not until mid-2020 that SPM first sought to recover any amounts in respect of the renovation costs for Apartment 28, some four years after they had been incurred and with no suggestion that they had been the subject of any earlier demand for repayment.

The conclusion is further fortified by the fact that, when the renovated Apartment 28 came to be sold in late 2017, neither SPM nor Matthew Anstee sought to recover or recoup any amount in respect of renovation costs. This was entirely consistent with agreement having been reached between Matthew Anstee and Shane Brown of the kind asserted by Shane Brown and attested to by Karen Brown. Mr Anstee’s evidence as to why he did not seek payment when Apartment 28 was sold, which has been set out at [225] above, was unconvincing and inconsistent.

Incidentally, the failure to raise any issue in late 2017, when Apartment 28 was sold, in relation to the costs of its renovation also reinforced the first key finding made at [237] above, namely that the two men had agreed that Shane Brown was to be remunerated in the sum of $50,000 during the first ski season.

Next, I find that an agreement or understanding was reached at the outset between Matthew Anstee and Shane Brown that SPM would cover the food and beverage costs incurred by the two directors and their families at the Resort. In other words, I reject Mr Anstee’s denial of the conversation set out at [61] above.

In reaching this conclusion, I have had regard to Karen Brown’s evidence noted at [76] and the unchallenged evidence of Jake Brown referred to at [70] above. I have also had regard to the complete lack of any evidence other than Invoice 735 itself demonstrating any earlier attempt by SPM to recover the costs of unpaid food and beverages from any member of the Brown family for the previous five years when they had regularly attended the Resort and eaten at the restaurant.

As part of the task of considering the validity of the Notices of Termination, it is first necessary to identify and make findings in relation to whether any of the amounts said to be owing under Invoices 735 and 770 were in fact owing at the time of the issue of those invoices and at the time of the issue of the respective Notices of Default and subsequent purported terminations of the subleases.

In this respect, Mr Moore relied upon cl 3.5.1 of the subleases which has been set out at [27] above and which relevantly provides that “a certificate by the Head Lessee as to any amount payable by the Sublessee pursuant to this clause is prima facie evidence of the amount payable by the Sublessee”. That clause, as it states, only permits prima facie acceptance of amounts stated to be owing. The present case is one where the prima facie position is and was readily rebutted. That was so for a number of reasons. First, as has been noted above, for many months preceding the issue of the two invoices, Karen Brown and Sam and Jake Brown had received Statements/Invoices showing nil amounts owing, and the amounts historically charged were very substantially lower than the amounts which suddenly materialised on Invoices 735 and 770 and which had never before been claimed even though in many respects they were for charges alleged to have been incurred many years prior.

Secondly, in respect of many of the categories of charges itemised on the Invoices, there was an incomplete response both to contemporaneous solicitor correspondence and to subsequent Notices to Produce issued on behalf of the Plaintiffs in respect of source documents supporting the charges. This was particularly striking given SPM’s responsibilities both under the Head Lease and the Management Agreement in relation to record keeping.

Thirdly, in respect of Invoice 735, it took Mr Dowling of Bowral Legal many weeks to supply particulars in respect of the charges purportedly levied in that Invoice, and when these “particulars” were supplied, they were largely exiguous. To say that is not a criticism of Mr Dowling. He evidently could not obtain meaningful instructions as to what particular charges related to or were levied for. That raised doubt as to the integrity of the invoices and the amounts claimed therein.

The position was even more extreme in relation to Invoice 770 where no particulars whatsoever were supplied, despite requests for these particulars and an indication that they were being sought. The only available inferences are that SPM could not supply those particulars and any underlying source documents or else chose not to do so because the charges could not in truth be substantiated.

As a further general observation, a document which was exhibited to Mr Anstee’s Affidavit of 20 November 2020 and is Appendix B to these reasons provides some further insight into the calculation of some of the line items on Invoices 735 and 770. In particular, it shows that particular items charged for the first time in May 2020 related to purported expenses going back as far as 2015. This was particularly problematic in relation to Invoice 735, as Apartment 26 was only acquired by Mrs Brown in November 2017.

Attention is now turned to the validity of the specific line items claimed in the two invoices.

Dealing first with Invoice 735, the line items and amounts contained in this invoice have been reproduced at [164] above. There were 14 line items, each of which needs to be considered. The largest line item charged was for $54,930.94, described as “renovation costs”.

It was not controversial that these costs related to the renovation of Apartment 28, the sublease of which Karen Brown transferred in late 2017 with the consent of SPM.

The renovations, as has been noted earlier in these reasons, were undertaken in or around 2016 and, whilst Karen Brown accepted under cross-examination that they were to the value of approximately $50,000, it was equally uncontroversial that SPM had never claimed any entitlement to reimbursement of any of these expenses until the issue of Invoice 735, almost four years after the renovations had been completed and almost two and a half years after Apartment 28 had been transferred to new sublessees.

The explanation proffered by Karen Brown for the non-payment of the renovation costs of Apartment 28, supported in this respect by her husband’s evidence, was that she was of the understanding that Shane Brown and Matthew Anstee had agreed, following Shane Brown having worked at the Resort for no remuneration during 2015, the initial ski season in which SPM was managing the Resort, that the Browns could use tradesmen who were performing other renovations at the Resort on their own renovations, up to a value of $50,000. It was not suggested that Shane Brown did not work full-time at the Resort for the first season for no cash remuneration in circumstances where Matthew Anstee was not able to assist in the practical day-to-day running of the Resort because of his real estate business in the Southern Highlands. It was also not suggested that Mr Brown had been otherwise remunerated.

It will be recalled that Shane Brown’s evidence in this regard was as follows:

I have found that such an arrangement was made: see [244]. The fact that SPM sought no payment or reimbursement of this amount for approximately four years is powerful evidence supporting the existence, and Karen Brown’s understanding, of the “contra” arrangement between Shane Brown and Matthew Anstee as deposed to by Shane Brown.

It follows from my finding in relation to the agreement between Mr Anstee and Mr Brown that SPM had no entitlement to recover costs of the renovation of Apartment 28 in the amount of $54,930.94. Alternatively, SPM was estopped from claiming such expenses in light of what I have accepted were Matthew Anstee’s representations to Shane Brown which were relied upon by Karen Brown in renovating Apartment 28 (see the evidence extracted above at [79]–[82], which I accept).

Even if, contrary to the foregoing, the renovation costs incurred were not the subject of an agreement between Matthew Anstee and Shane Brown in 2015, on no view were the costs incurred “outgoings pursuant to [the] sublease” or “amounts payable pursuant to [the] Management Agreement” in respect of Apartment 26 (see [169] above). There was no basis for their being charged under either the sublease or the Management Agreement relating to Apartment 26.

To the extent that interest was purportedly charged on the “renovation costs” amount of $54,930.94 in Invoice 735, there was also no basis for so doing.

The next largest component of Invoice 735 was described as “Allowable Deductions as per management agreement.” This was for an amount of $44,077.59. To understand the purported basis for this charge, it is necessary to return to the provisions of the Management Agreement.

Clause 4(a) of the Management Agreement provided that “[t]he Manager shall be entitled to receive by way of remuneration a fee representing 25% of Monthly Gross Receipts.”

“Monthly Gross Receipts” was defined as “the total rentals received (including non-refundable deposits) during the relevant month by the Manager in respect of the management of a Managed Unit pursuant to this Agreement.”

It is also relevant to note the definitions of “Monthly Nett Receipts” and “Allowable Deductions”. These two terms were defined as follows:

Mr Anstee gave evidence that in early 2020, he received advice from Hall Chadwick (an accounting firm) and Bowral Legal that, although sublessees of apartments at the Resort had been charged a 25% fee under cl 4(a) of their respective Management Agreements, the Management Agreement in fact allowed SPM to charge each sublessee an additional fee of 25% of Monthly Gross Receipts for Allowable Deductions.

It was evidently on the basis of this advice that Invoices 735 and 770 contained line items described as “Allowable Deductions as per management agreement”. Mr Anstee’s evidence was that, as at the time of the hearing of these proceedings, he had commenced to charge all sublessees this additional charge but, unlike Karen Brown (and Sam and Jake Brown), had not done so retrospectively. In this regard, based upon Mr Anstee’s spreadsheet (Appendix B), the amounts charged to Karen Brown as “Allowable Deductions” were calculated against the Monthly Gross Receipts as received from 2015 through to 2020 and reflected in the following table:

Pausing there, the amounts charged in respect of 2015, 2016 and 2017 were not referable to Karen Brown’s sublease of Apartment 26 at all, but rather were calculated by reference to Monthly Gross Receipts for Apartment 28. The Management Agreement in respect of Apartment 26 did not permit any charges to be recovered in relation to Apartment 28 whatsoever. There was no legitimate basis for the charging of “Allowable Deductions” in relation to 2015, 2016, and 2017, and no basis for the charging of interest on those amounts.

That leaves to be considered the “Allowable Deductions” charges for 2018–2020.

SPM’s entitlement to charge a fee of 25% for “Allowable Deductions”, on top of its remuneration fee pursuant to cl 4(a) of the Management Agreement, for the years 2018–2020 involves a question of the construction of that agreement. The relevant principles relating to the construction of a contract such as the Management Agreement are well established and were conveniently summarised by Bathurst CJ in Lawrence v Ciantar [2020] NSWCA 89 at [98]–[99] as follows:

There is no operative clause of the Management Agreement providing for the recovery of Allowable Deductions as a separate charge. “Allowable Deductions” is simply a defined term the only role of which in the Management Agreement is to form part of another defined term, namely “Monthly Nett Receipts”: see [268] above. Nor does “Allowable Deductions” relate solely to 25% of Monthly Gross Receipts; it is a composite concept comprising “25% of Monthly Gross Receipts received by the Manager” together with the sublessee’s proportion of NPWS’s charges and other charges under the Head Lease. The use of the language “received by the Manager” prompts the question of what is the legal basis or the source of the right of the Manager to receive 25% of Monthly Gross Receipts?

The only contractual basis permitting receipt by the manager of 25% of Monthly Gross Receipts is cl 4(a) of the Management Agreement, just as the contractual right to charge a proportion of NPWS’s charges is derived from cl 3(j) of the Management Agreement. Mr Moore could provide no satisfactory answer to the question I put to him on several occasions in final submissions as to the location of the contractual provision, in addition to cl 4(a) of the Management Agreement, which entitled SPM to charge an additional 25% of the gross receipts. The entirely general and unhelpful submission he made was that “[t]he source really comes from looking at the head lease, the sub‑lease and the management agreement. They’re intertwined.” [133] Apart from being devoid of content, this answer ignored the fact of the entire agreement clause in the Management Agreement (cl 15.5), and that the concept of “Allowable Deductions” only appeared in the Management Agreement.

Furthermore, the effect of SPM’s interpretation of the Management Agreement was that it would have been entitled to 50% of Gross Monthly Receipts by way of remuneration. However, this result would fly in the face of the express wording of cl 4(a), which is to the effect that 25% of Gross Monthly Receipts is to be paid to the Manager “by way of remuneration”.

It follows that SPM had no entitlement to raise a separate charge for “Allowable Deductions” in addition to a remuneration charge pursuant to cl 4(a) of the Management Agreement. If advice was in fact received from Hall Chadwick and Bowral Legal to the effect described by Mr Anstee (and none was produced or tendered in evidence), it was based upon a mistaken legal interpretation of the Management Agreement.

It follows that the amount charged on Invoice 735 in respect of Allowable Deductions was not owing, nor was any interest owing on that amount.

This item was evidently claimed as commission for the sale of Apartment 28 in December 2017 although this was not apparent on the face of Invoice 735 nor Appendix A, which simply described the charge of $12,375.00 plus GST as relating “to cost paid for on behalf of K Brown”.

No such amount had ever been claimed previously either by SPM or by Matthew Anstee in his capacity as a real estate agent acting for Karen Brown.

In SPM’s opening written submissions, it was put that “the commission is owed by [SPM] to Matthew Anstee Real Estate”. No evidence was given by Matthew Anstee as to the existence of any such agreement, whether oral in writing, between either him or SPM with Karen Brown (or Shane Brown for that matter) in relation to the payment of commission on the sale of Apartment 28. This position may be contrasted with Apartment 26, for the sale of which Karen Brown had entered into a written agreement with Raine & Horne Southern Highlands and Bowral (of which Matthew Anstee was the agent and licensee) in September 2019 (see [100] above).

Furthermore, no evidence was adduced of any agreement giving rise to a liability on the part of SPM to Matthew Anstee, in his capacity as a real estate agent, to support SPM’s opening submission as noted above.

In the course of final submissions, Mr Moore was constrained to concede that the absence of evidence of any agreement for commission in respect of Apartment 28 meant that this claim could not succeed. [134] That concession was rightly made and the attempt to charge Karen Brown for commission (and interest on commission) in Invoice 735 had no basis whatsoever, which was so for any number of reasons.

Even if there had been some agreement to pay commission in relation to the sale of Apartment 28, any liability to pay such an amount, even on the part of Karen Brown, would not have been payable pursuant to the sublease of Apartment 26 or the Management Agreement in respect of Apartment 26 (see [169] above).

That this claim was made, and its non-payment was used as a basis for the purported termination of the sublease in respect of Apartment 26, was not only wholly misconceived but supplies an insight into and support for what it was argued that Mr Anstee, through SPM, was in fact trying to achieve by the issuing Invoice 735 and subsequently purporting to terminate the sublease by relying on its non-payment (see [230]–[231] above). The same observation may be made in respect of the claim for the renovation costs in relation to Apartment 28 and the fact that Mr Anstee did not charge the misconceived additional 25% “Allowable Deductions” fee retrospectively to any sublessees other than Karen Brown and Sam and Jake Brown.

The relevant amount claimed in Invoice 735 was $4,058.00. This was said to relate to food and beverage costs which had been incurred by Mrs Brown but not paid for at the restaurant/bar at the Resort.

There are various difficulties with this claim.

First, it was said to be supported by a printed copy of various food and drink orders between July and September 2019. Some but not all of these entries make reference to “Shane”, it being submitted that this was a reference to Shane Brown and that it was a record of food and drink that he had ordered on account, as it were. Accepting that submission as correct, any liability for food and drink that Shane Brown may have incurred is not a liability of Karen Brown.

The business records relied on to support this charge only contained eight references to “Karen”. [135] Assuming, which I do, that these are references to Karen Brown, the combined total of those entries (in the sum of $355.00) falls well short of the $4058.000 charged for “food supplies” in Invoice 735.

I have also found that Matthew Anstee and Shane Brown agreed, at an early stage of their involvement with the Resort and SPM, that their families would not be charged for food and drink consumed at the Resort restaurant (see [247]–[248] above). Karen Brown, moreover, was aware of this agreement or arrangement and acted on the basis of it, including by undertaking unpaid work for the Resort on weekends and during school holidays: see [76] above.

It follows, for the foregoing reasons, that this component of Invoice 735 amounting to $4,058.00 was not due and owing by Karen Brown, nor was any interest charged on this amount.

The next amount forming a component of Invoice 735 was in the sum of $6,557.97, described as a “10% undercharge on management fees and charges as per management agreement.” Appendix A described this amount as follows:

Mr Johnson referred to this item in his letter of 2 July 2020, stating that “[t]his item relates to a claim against Mr Brown and is irrelevant to my client and the current dispute; it is not agreed by our client.”

No further elucidation of this charge was furnished by SPM either in Appendix B or in written submissions during the trial.

Mr DeBuse, for Mrs Brown, said in final address that “I just don’t know what that is intended to pick out”. [136] Nor do I. It was not the subject of any evidence or explanation in any of the solicitor correspondence. In submissions, when asked what this charge related to, Mr Moore said “[t]hat’s the GST issue”, to which I responded “[h]ow would a recipient of that invoice know that that was relating to GST?” to which Mr Moore responded “[y]es, I don't think I can fairly assist your Honour with that one.” [137]

Both Mrs Brown, in the context of the demand for payment of Invoice 735, and the Court, in the context of considering the issues presented in the case, have been left in the dark as to what this generalised amount relates and for which years. This is quite problematic in circumstances where amounts were charged in respect of Apartment 26 which pre-dated its acquisition by Mrs Brown.

In the absence of any evidence or meaningful explanation, I find that there was no basis for levying this charge.

The amount charged in respect of this item on Invoice 735 was $1,414.41. The explanation provided for this charge on Appendix A was that it related to “adjustment to 4.26% as per the sublease previously charged at 3.96%”. The reference to 4.26% is a reference to the share of particular charges that were payable by the Resort and shared rateably by the various apartment sublessees. It would appear that SPM’s contention was that Mrs Brown had been undercharged by 0.3% in relation to such levies.

A claim in the invoice for $593.79 in relation to land tax was advanced on a similar basis.

Portions of this amount claimed for “OEH Sales Based Rent” appeared from Appendix B to relate to the years 2016 and 2017, prior to Mrs Brown acquiring her interest in Apartment 26. I asked Mr Moore why the amounts for these years were payable under the Apartment 26 sublease (and Management Agreement), if payable at all, for the apartment held in those years, namely Apartment 28. Mr Moore’s candid response was that he could not advance any reason, saying “I hear what your Honour has put to me, in the period up to when 26 was acquired and 28 was sold.” [138]

That, however, left the Court in the dark as to what amounts related to the years 2018–2020. No breakdown was supplied.

I did not understand Mrs Brown to dispute that, if there had been an error in the calculation of what she was charged, she would meet that expense and any outstanding proportional share of land tax and so much would have been more than comfortably covered by her offer to pay $20,000 on settlement of the sale of Apartment 26: see [194] above. But if there had been an undercharge, that was in no way the fault of Mrs Brown and to raise the non-payment of this amount, which had never previously been claimed, as a basis for termination of the sublease was somewhat breathtaking.

The amount charged in respect of this item on Invoice 735 was $3,723.89.

Appendix A described this charge as being for “an adjustment MSU Charge as this charge is based on the number of beds per apartment not the percentage”. This description was not illuminating and no illumination was supplied either in Appendix B or any other evidence or in submissions advanced on behalf SPM.

What did appear from Appendix B, however, was that portions of the amount claimed in respect of this charge appeared to relate to the years 2015, 2016 and 2017. This charge at least for these years attracts the same criticism and objection as referred to above in respect of other charges. It was not validly claimed in relation to Apartment 26 and was therefore unjustifiable.

As to what was due, if anything, and if so in what amount, in relation to the years 2018–2020, no submissions were advanced and I cannot be satisfied that any amount was owing. SPM was the party in a position to explain this charge and it failed to do so.

The only information supplied in Appendix A in relation to this quantum was the statement that “this charge relates to the provision of apartment annual gross revenue certificates and costs associated with reconciling accounts”. The charge was for $6,600 plus GST.

No amount in respect of Accounting Costs in anything like this amount had ever previously been charged. No further explanation was provided prior to termination and no documentation in relation to this charge was supplied either prior to termination or following the commencement of proceedings.

Notwithstanding that such documentation had been requested by Mr Johnson and was also the subject of various Notices to Produce, a copy of an invoice for $6,600 + GST, addressed to SPM from Oxley, was only produced on the third day of the hearing. It became Exhibit D1. The narrative on this invoice (dated 20 April 2020) was as follows:

On its face, this invoice did not relate solely to Apartment 26. The $6,000 charge was for “general advisory and consulting services” and evidently included attendances to legal issues in relation to Apartment 9-1. No evidence was led giving any breakdown of the $6,000 amount.

It is reasonable to infer that much of this fee related to the so-called “audit” which Mr Anstee said he had commissioned Oxley to undertake in relation to Apartment 26. But this was the audit which led to Invoice 735, the components of which I have found not to have been owing.

In circumstances where SPM had a contractual responsibility under the sublease and Management Agreement to maintain accounts, invoices and to attend to financial management, this was not a cost which could, in my opinion, reasonably be charged as an outgoing in relation to Apartment 26. I put as much to Mr Moore during final submissions, in the following exchange: [139]

There was no proper basis in my opinion for raising this charge, at least to the extent of $6,000, as an amount owing to SPM. Mrs Brown had not requested the audit. Rather, the audit had been commissioned by Mr Anstee to seek to substantiate his claim in early November 2019 that Mrs Brown was in default of her payment obligations under the sublease, being the reason why he was not prepared to consent on SPM’s behalf to the transfer of Apartment 26. As will be recalled, the withholding of consent occurred in a context where Mr Anstee had made it plain that his consent was conditional upon an unconditional undertaking by both Karen and Shane Brown that the proceeds of the transfer be directed to him.

The cost of reconciling accounts was one to be borne by SPM, which had contractual responsibility to keep and manage accounts in a competent way. The cost of doing so was no doubt one of the services for which the 25% remuneration fee was charged pursuant to cl 4(a) of the Management Agreement.

This cost, attempted to be passed on to Mrs Brown, was in truth incurred to further Mr Anstee’s improper purpose in seeking to bring about forfeiture of the subleases to recompense him for the losses for which he held Shane Brown responsible in relation to the Kangaloon Road Development.

Much the same analysis applies to the attempt to pass on to Mrs Brown the costs of Bowral Legal’s invoice of 7 May 2020 in the sum of $3,363.15 plus GST: see [167] above. The largest entry on this invoice was for $2400 on 3 April 2020, which carried the narrative “drafting and advices; correspondence and telephone conferences”. This charge was described in Appendix A as relating to legal fees “in relation to the proposed assignment of Unit 26 and other fees related to K Brown and the sublease.”

The bulk of the costs of Bowral Legal’s invoice were incurred after Mr Anstee had written to NPWS on 26 March 2020, objecting in effect to NPWS consenting to the transfer and alleging, contrary to the fact, that Mrs Brown had committed “numerous breaches” of the sublease: see [151]–[152] above.

If, as I consider and will explain in further detail below, SPM’s withholding of consent to the transfer of Mrs Brown’s sublease was unreasonable and motivated by Mr Anstee’s desire to force her to capitulate to his demands to recompense him for moneys which he considered Mr Brown had caused him to lose in the failed Kangaloon Road Development, it cannot have been reasonable or legitimate for SPM to seek to foist on to Mrs Brown legal costs incurred in relation to that exercise in frustration.

Once again, no clear explanation was proffered on behalf of SPM as to why this charge was legitimately raised to Mrs Brown’s account. In any event, it may be noted that in his letter to Mr Dowling on 2 July 2020, Mr Johnson indicated that Mrs Brown was willing to pay any reasonable outstanding costs as required by the sublease. This amount, too, would have been comfortably covered by the $20,000 which Mrs Brown had offered to pay to meet any sundry charges in order to secure the sale of Apartment 26: see [194] above.

This item on Invoice 735, in the sum of $5,109 plus GST, was not legitimately charged to Mrs Brown. It had nothing to do with Apartment 26 or the Management Agreement in relation to it. It related to an alleged unpaid amount from more than 12 months prior to Mrs Brown’s acquisition of Apartment 26.

To the extent that the amount charged had some connection with Apartment 28, SPM consented to the assignment of that sublease, including warranting that no amounts were in default: see [85] above.

These two items appearing on Invoice 735 were in the sums of $382.64 and $1,263.91 respectively. These two charges were utterly unparticularised and the provision of Appendix A provided no elucidation as to what they related and/or when they were incurred.

In his 2 July 2020 letter, Mr Johnson said as to the first of these charges that, although unparticularised, his client did not intend to trifle with such a small amount and proposed that it be taken up in the offer to pay $20,000 contained in that same letter: see [194] above.

With regard to the other charge, he indicated that its unparticularised nature meant that his client was not in a position to respond to it. This claim remained unparticularised right through to the trial and final submissions and I do not accept, in the absence of any evidence as to the dates, occasions and apartment to which it related, that any amount was properly owing in relation to Apartment 26.

Interest in the sum of $45,422.72 was charged to Mrs Brown in Invoice 735. Precisely how this charge was calculated, including principal amounts and relevant dates, was never explained either prior to the commencement of proceedings, by Mr Anstee in his evidence or in final address.

Clause 3.5.2 of the sublease has been set out at [27] above.

In the course of submissions, Mr Moore accepted that this clause did not permit interest to be computed or charged until the due date for payment of moneys had passed, and he accepted that most of the amounts in Invoice 735, and all of the amounts in Invoice 770, had not been raised until the purported date of these invoices, namely 30 April 2020.

It was and is perfectly apparent from the sizeable amounts charged in respect of interest in those two invoices, $45,422.72 and $18,469.91 respectively, that they were calculated on principal sums for various items from much earlier points in time than 20 April 2020 but which had never been the subject of a demand or charge.

Mr Moore was constrained to concede that these interest charges could not be sustained, even if the principal amounts by reference to which they had been calculated were otherwise payable. In the course of final address, I had the following exchange with him in this respect: [140]

And, of course, most and certainly all of the substantial sums upon which interest had evidently been calculated such as the renovation charges, the “Allowable Deductions” and the “Commission Costs” were not amounts owed by Karen Brown at all.

It follows that with the exception of de minimis amounts referred to in [302], [319] and [322] above, which had never previously been charged, and which Mrs Brown in effect offered to pay by Mr Johnson’s letter of 2 July 2020 (see [194] above), Invoice 735 comprised charges which had no valid legal or factual basis.

Further, any de minimis amount of the kind I have identified would have been comfortably offset by income earned from rentals during the 2020 ski season, in the way such expenses had been set off in previous years. Forward bookings for at least two weeks in July 2020 existed for Apartment 26: see [154] above.

The narrative to this invoice has been set out at [165] above.

Following service of the Notice of Default for non-payment of this Invoice, as noted earlier in these reasons, Mr Johnson requested that Bowral Legal provide some detail and supporting documents for the invoice, which exceeded $100,000 in total value but was sparse as to detail: see [184]–[189] above. This was never forthcoming, notwithstanding that Mr Dowling had indicated that he would seek instructions: see [196]–[197] above.

The single largest component of Invoice 770 was for “Allowable Deductions”. This was charged on the same basis as a similarly described amount was levied against Karen Brown. As with Invoice 735, this charge was retrospective, dating back as far as 2015. It was for a sum of $51,423.37.

For the reasons given at [273]–[278] above, I do not accept that, on its proper construction, the Management Agreement permitted the levying of a separate charge in respect of “Allowable Deductions”, constituting 25% of Monthly Gross Receipts, on top of the 25% of Monthly Gross Receipts already payable by way of remuneration pursuant to cl 4(a) of the Agreement.

Further, had I not been of this view, I would have held that SPM was estopped from raising this charge retrospectively as it did for Karen, Sam and Jake Brown (but not for any other sublessees at the Resort). As Sam Brown said in his relevantly unchallenged evidence: [141]

In other words, Sam Brown’s evidence was that, had he known what he would be charged for “Allowable Deductions” (assuming it to be legitimate), he would have given more thought to having the apartment rented out commercially so as to generate income to defray this significant additional expense.

The next item on Invoice 770 was in respect of “unpaid gas supply 2015-2020” in the sum of $5,629.20. There was no direct or documentary evidence supporting the claim that Jake and Sam Brown had not paid for their gas supply over the course of their sublease. Sam Brown’s evidence was that, prior to 2017, it had been paid for by SPM as, in effect, a “contra” for work performed for the benefit of the Resort, and that subsequently it had been billed and paid for. This evidence was unchallenged in cross-examination and rebutted any presumption that may otherwise have arisen pursuant to cl 3.5 of the sublease. Indeed, if any presumption arose, it was that SPM, as the party responsible for levying accounts, would have raised this as a charge if it was due and had not been paid, and would have been able to point to demands for its payment or invoices by which it had been charged. No such evidence was led. I am not satisfied that $5,629.20 was owing.

The next item on Invoice 770 was for a sum of $18,864.28 said to be for “Unpaid Electricity Supply 2015-2020”. Many of the same points as made above apply to this charge. Mr Moore was not able to assist the Court by pointing to any evidence to support the legitimacy of this charge. [142] Appendix B, moreover, contrary to the narrative on Invoice 770, suggested that this charge was referable not to 2015–2020 as the invoice suggested, but solely to 2020.

Sam Brown was not cross-examined in relation to these charges and there was deafening silence from SPM both before and after the commencement of the proceedings as to what in fact such amounts related. Again, because of the unsatisfactory nature of the evidence relating to charging generally, I am not prepared to act on the prima facie position contemplated in cl 3.5 of the sublease, namely that amounts charged were owing and that an invoice issued by SPM was “prima facie evidence of the amount payable by the Sublessee”.

The next item on Invoice 770, for a sum of $4,255.33 plus GST, was said to be for a “10% undercharge on management fees and charges as per management agreement”.

For the reasons given in relation to the equivalent charge on Invoice 735 (see [292]–[297] above), there was no proper basis for this charge.

In relation to the interest charge of $18,469.91 on Invoice 770, Mr Moore accepted that none of the other items in this invoice in respect of which interest was calculated had ever been the subject of any demand prior to the issue of that invoice. [143] For the same reasons as applied to Invoice 735, the interest charge sought to be claimed in Invoice 770 was quite unjustified, and would have been unjustified even if any of the other amounts claimed in that invoice were in fact due and payable (which they were not).

It follows from the analysis of these two invoices that, apart from some de minimis charges in relation to Invoice 735, the amounts claimed in each of the invoices were not in fact owing and had been illegitimately and unjustifiably charged.

To the extent that the termination of the subleases was founded on non-payment of amounts said to be owing, the termination was invalid and of no effect.

Even if the amounts claimed on Invoices 735 and 770 were owing, their non-payment would have had to constitute a repudiation of the sublease (which was not suggested) or a “serious, persistent and continuing breach” to justify the termination of the valuable subleases (see cl 14.4.2 of the sublease at [38] above).

To the extent that the termination was said to have been warranted by the failure to furnish the guarantees demanded, for the reasons already given at [175] and [183] above, there was no proper contractual basis for the provision of the amounts so demanded, which were four times (Apartment 26) and twice (Apartment 9-1) the size of what SPM was entitled to demand under the respective subleases.

To the extent that SPM relied on the failure of the Plaintiffs to take out public liability insurance and personal contents insurance over the Apartments, a number of observations may be made which support the conclusion that the termination of the subleases was not justified on this basis.

First, cl 11.3 of the sublease permitted SPM to take out public liability insurance in the event that a sublessee had not done so, and to charge this back to the sublessee on a rateable basis: see [29] above.

Second, SPM held a public liability insurance policy for the Resort to the value of $20 million.

Third, there was evidence in the form of past invoices which showed that SPM had passed on the cost of insurance to sublessees including Karen Brown (see, for example, an invoice for the period 3 June 2019–3 July 2019 which charged Mrs Brown $1911.49 plus GST for “industrial special risk and liability insurance”; see fn 28 at [93] above).

Fourth, any breach was not “serious” in circumstances where SPM had in fact secured public liability insurance and was contractually entitled to levy a referable charge for it under cl 11.3 of the sublease.

Fifth, Mrs Brown signed a contract for the transfer of her apartment, which was entered into in September 2019, in respect of which Mr Anstee refused to give SPM’s consent. A bona fide concern about public liability insurance would be directed to insurance going forward. I find that Mr Anstee latched on to Mrs Brown’s failure to have secured public liability insurance for her apartment as a pretext for withholding his consent to its transfer with a view to causing her to capitulate to the demand he had made in November 2019, namely that the proceeds of sale be directed to him.

Sixth, as emerged from the correspondence set out at [205] above, SPM’s counter-offer of 6 August 2020 contained no requirement for the effecting of public liability insurance, consistent with the fact that such insurance was already in place.

Seventh, personal contents insurance was a matter for the sublessees of each apartment. Under cl 10(iii) of the Management Agreement, the sublessee was required to “maintain and keep current a policy of insurance for his contents of the [apartment] in such sum as the [sublessee] sees fit to cover the contents on a replacement basis.” If the sublessee did not wish to obtain any cover, that was a matter for the sublessee.

Although this issue is strictly not necessary to decide in view of my conclusion that the purported termination of the subleases was invalid, I have also reached the view that the Notices of Termination were issued for an improper purpose and were of no effect for that reason. The same reasoning informs the alternative conclusion that, even if the Notices had been valid, this was a case where it would be appropriate to grant relief against forfeiture. A brief identification of relevant principles is appropriate.

In Gardiner v Orchard (1910) 10 CLR 722; [1910] HCA 18 (Gardiner), one of the questions before the High Court was whether a vendor had validly rescinded a contract for the sale of real property. At 739–740, Isaacs J observed that:

Gardiner was followed and applied in Godfrey Constructions Pty Ltd v Kanangra Park Pty Ltd (1972) 128 CLR 529 at 543, 552; [1972] HCA 36 (Godfrey). Stephen J pointed out that in Greaves v Wilson (1858) 25 Beav 290 at 293 (53 ER 647 at 649), Sir John Romilly MR said that such conditions were introduced to meet the case where a vendor finds that he or she is to be put to "so much expense and trouble as to make it unreasonable that he [or she] should be called upon to do it."

Both Gardiner and Godfrey were cited by Edelman J in the context of the purported termination of Facilities Deeds associated with a valuable leasehold in Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 6) (2015) 329 ALR 1; [2015] FCA 825 at [1028] (Mineralogy). The validity of some four termination notices was at issue in that case. Edelman J gave a number of reasons why these termination notices were not valid: see at [798]. These included that:

The reference in the second of these reasons to a “serious or persistent” breach was a reference to cl 33(c) of what were referred to as the Facilities Deeds, which provided for their termination where there had been a “serious or persistent breach” and a notice had been given (see [796]):

Edelman J also held at [1029] that Mineralogy “acted unreasonably or without good faith within [a] limited implication of reasonableness”. His Honour required, by reference to, amongst other authorities, Gardiner and Godfrey, Mineralogy’s issue of a termination notice to be bona fide for the purpose of ensuring that serious breaches were remedied or that compensation was paid for serious breaches that could not be remedied.

His Honour reached this conclusion for six reasons at [1031]–[1036], which included: what he described as the “farcical nature” of some of the breaches relied upon which cast “serious doubt” upon whether or not the termination notices were issued bona fide for the purposes of requiring a breach to be remedied; the delayed nature of the issue of the termination notices referrable to the breaches alleged; the unreasonable time given to remedy the breaches; the context in which the termination notices were issued, including collateral proceedings which Mineralogy had commenced to wind up Sino Iron; and the fact that submissions made by Mineralogy in the proceedings founded an inference that the termination notices were issued to provide a lever for future negotiations between the parties.

An appeal from Edelman J’s decision was dismissed: see Mineralogy Pty Ltd v Sino Iron Pty Ltd [2017] FCAFC 55. At [419] of the joint judgment of the Full Court (Besanko, McKerracher and Beach JJ), referring to the contractual power to terminate the Facilities Deeds, their Honours said that “a discretionary contractual power ought be exercised for the purpose for which it has been conferred. In other words, the contractual power has within it that implicit constraint.” Their Honours also agreed (at [420]) with Edelman J’s reasons for concluding that the power to terminate had been exercised for an improper purpose, other than that aspect of his Honour’s reasons relating to the provision of an unreasonable time for remedy.

As to relief against forfeiture, in Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315; [2003] HCA 57 at [36], the plurality endorsed the articulation of principle in relation to relief against forfeiture by Mason and Deane JJ in Legione v Hateley (1983) 152 CLR 406 at 442–448; [1983] HCA 11 (Legione), and by Mason CJ in Stern v McArthur (1988) 165 CLR 489 at 502–503; [1988] HCA 51. Fraud, mistake, accident and surprise were instanced as elements which may make it inequitable for a party to insist on termination of a contract for failure to observe its strict terms. In Legione at 449, Mason and Deane JJ had identified a series of subsidiary questions which informed the relevant analysis as follows:

The learned authors of Meagher, Gummow & Lehane’s Equity: Doctrines and Remedies (5th ed, 2015, LexisNexis Butterworths) make reference in this context to the decision of the House of Lords in Hughes v Metropolitan Railway Co (1877) 2 App Cas 439 at 448–449. To pick up their description at [18-255], this was a case where the House of Lords:

As Brereton JA observed in Kay v Playup Australia Pty Ltd [2020] NSWCA 33; (2020) 19 BPR 40,037 at [103]:

A number of the features which led Edelman J to conclude in Mineralogy that the purported termination notices in that case had not been issued bona fide for the purpose of ensuring that serious breaches were remedied were also present in the current case.

A number of the charges purportedly levied were farcical, especially those which had no relationship at all with Apartment 26 and which on no conceivable view could have been said to be owing under the sublease for that apartment or pursuant to the Management Agreement. These included the entirely undocumented claim in relation to commission for the sale of Apartment 28.

The context of the issuing of the two invoices was also of great significance. The immediate context was Mrs Brown’s attempt to sell Apartment 26 and Mr Anstee’s almost immediate insistence that his consent to the sale was contingent upon Mr and Mrs Brown agreeing to direct sale proceeds to him. When this was resisted, Mr Anstee started to make assertions that Mrs Brown was in default of payments under her sublease but took almost six months to raise Invoice 735. I have found that, but for a small number of items which Mrs Brown had never resisted paying and which were conventionally debited from a running account, being netted off against income from forward bookings, none of the items on this invoice was legitimately charged.

The same conclusion was reached in respect of Invoice 770 as issued to Jake and Sam Brown, but this invoice was perhaps more extraordinary. Despite justifiable (and polite) requests for its particularisation, none was ever forthcoming.

SPM’s decision, through Mr Anstee, to charge the additional so-called “Allowable Deductions” fee retrospectively and selectively to Mrs Brown and her sons but not to any of the other sublessees was also telling and cast strong light on Mr Anstee’s true commercial purpose, namely to seek recompense from Mrs Brown for the failed Kangaloon Road Development for which she had no responsibility.

Many of the other charges sought to be raised against Mrs Brown were inconsistent with what I have found were longstanding arrangements as to food and beverage expenses as well as the renovation costs of Apartment 28. These were expenses that SPM and Mr Anstee had never pursued prior to Mrs Brown, through her solicitor, declining to succumb to Mr Anstee’s opportunistic insistence on withholding SPM’s consent to the sale of her apartment unless the sale proceeds were directed to him. In light of my findings, those claims were contrived.

Further, in relation to the alleged unpaid renovation costs, the attempt to claw those amounts back was entirely inconsistent with SPM’s consent to the transfer of Apartment 28 at the end of 2017.

A similar observation may be made about insurance. This had never previously been raised as an issue prior to Mr Anstee seeking to frustrate the transfer of Apartment 26. As at the time of the hearing, SPM had $20 million worth of public liability cover in place, and had similar cover in previous years. Mrs Brown had, moreover, been charged a rateable share for that cover.

So too the demands for the provision of bank guarantees by Karen Brown and Jake and Sam Brown in the sums of $20,000 and $10,000 respectively had no contractual foundation. They were an attempt to squeeze Karen Brown and her sons financially, in circumstances where Mr Anstee knew full well that the Brown family’s financial position was poor.

To this may be added Mr Anstee’s active attempts to convince NPWS to withhold its consent to the transfer of Apartment 26 notwithstanding, inter alia, his obvious conflict of interest as the real estate agent engaged on the sale.

In summary, the raising of Invoices 735 and 770 for amounts which vastly exceeded any amount which had ever before been levied, which were not in truth owed and in many respects were entirely contrived, together with unwarranted demands for bank guarantees in sums to which SPM was not entitled, was a heavy handed course followed by Mr Anstee to extract amounts from Mrs Brown and her sons for which they were not liable and to which SPM was not entitled. That course of conduct was deliberate, calculated to apply pressure to capitulate or to force capitulation, and utterly unconscionable.

This conclusion was only reinforced by SPM’s continued withholding of consent to a transfer of Apartment 26 even after Marsdens, on behalf of Karen Brown, had offered to quarantine $210,053.04 from the proceeds of sale of Apartment 26 pending determination of SPM’s claimed entitlement to any part of this amount: see [204] above. This suggested that SPM’s ultimate aim was to secure the forfeiture of both apartments in order to apply maximum leverage on Mrs Brown and her two sons.

It follows from my reasons that I am not satisfied that the individual amounts said to be owing in Invoices 735 and 770 were owed by Karen Brown in respect of the first invoice and by Jake and Sam Brown in relation to the second invoice, and declarations to that effect should be made.

It also follows from my reasons that no legally effective Notices of Default were issued, and declarations to that effect should also be made.

It also follows that the respective Notices of Termination were invalid, and the purported terminations of the subleases pursuant to those Notices were invalid and of no effect. Declarations should also be made to that effect.

Even if I had been satisfied that the amounts owing (or some of them) were in fact due, I would have granted relief against forfeiture in respect of both apartments. This was a plain case of “surprise” as that concept is used in this area of the law. The levying of invoices for extremely large amounts in relation to expenses said to go back for a period of five years and which had never previously been the subject of claim or invoice, especially in the context in which they were issued which has been described at length above, supplies a classic example of a case where equity will intervene to relieve against the forfeiture of valuable rights through strict insistence upon legal rights.

For the avoidance of any doubt given that, as a result of this decision, SPM will be bound to account to the Plaintiffs for their respective incomes and expenses in relation to Apartments 26 and 9-1, there should also be a declaration that, on the proper construction of the Management Agreement, SPM is not entitled to charge the Plaintiffs an “Allowable Deductions” fee or to charge a further 25% of Monthly Gross Receipts in addition to the charge of 25% of Monthly Gross Receipts payable under cl 4(a) of the Management Agreement.

As foreshadowed at the hearing, I will hear the parties on costs in light of these reasons.