Brown v The Stables Perisher Management Pty Ltd - [2021] NSWSC 1688 - NSWSC 2021 case summary — Zoe

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Brown v The Stables Perisher Management Pty Ltd

[2021] NSWSC 1688

Supreme Court of NSW|2021-09-27|Before: Bell P

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2021-09-27

Before

Bell P

Catchwords

[1910] HCA 18 Godfrey Constructions Pty Ltd v Kanangra Park Pty Ltd (1972) 128 CLR 529
[1972] HCA 36 Greaves v Wilson (1858) 25 Beav 290
53 ER 647 Hughes v Metropolitan Railway Co (1877) 2 App Cas 439 Jones v Dunkel (1959) 101 CLR 298
[1959] HCA 8 Kay v Playup Australia Pty Ltd [2020] NSWCA 33

Source

Original judgment source is linked above.

Catchwords

[1910] HCA 18 Godfrey Constructions Pty Ltd v Kanangra Park Pty Ltd (1972) 128 CLR 529[1972] HCA 36 Greaves v Wilson (1858) 25 Beav 29053 ER 647 Hughes v Metropolitan Railway Co (1877) 2 App Cas 439 Jones v Dunkel (1959) 101 CLR 298[1959] HCA 8 Kay v Playup Australia Pty Ltd [2020] NSWCA 33(2020) 19 BPR 40,037 Lawrence v Ciantar [2020] NSWCA 89 Legione v Hateley (1983) 152 CLR 406[1983] HCA 11 Mineralogy Pty Ltd v Sino Iron Pty Ltd [2017] FCAFC 55 Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 6) (2015) 329 ALR 1[2015] FCA 825 Stern v McArthur (1988) 165 CLR 489[1988] HCA 51 Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315

Judgment (62 paragraphs)

[1]

Jake Brown (Second Plaintiff) Sam Brown (Third Plaintiff) The Stables Perisher Management Pty Ltd (Defendant) Representation: Counsel:

[4]

Introduction

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: "Without admission and without prejudice to any parties['] rights the Court order[ed] the Plaintiff and the Defendant its servants and agents not to interfere with the ordinary operation of the apartments and any entry into or dealing with the apartments only be in the ordinary course of management of the apartments until further order (without prejudice to either parties right to seek further alteration of the order or to agree in writing any matter not in the ordinary course of operation)."
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.

[6]

The Head Lease

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.

[7]

The 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: "If the Sublessee fails to pay any Outgoing the Head Lessee may pay such amount and any amount paid by the Head Lessee may be recovered by the Head Lessee from the Sublessee as if the amount was rent in arrears."
"Outgoings" were defined in the sublease as: "all amounts, costs, expenses of any kind whatsoever assessed, incurred or levied in relation to the Premises or upon the Head Lessee or the Sublessee on account thereof including: • Rates, Taxes and other charges imposed by any Relevant Authority; • charges for the supply (including charges for installation and connection) of Services to the Premises; • supplying, renting, operating, maintaining, servicing, repairing and replacing Services and upgrading Services to comply with requirements or orders of Relevant Authorities or any Law; • Community Service Contribution; • Environmental Research and Rehabilitation contribution; • Food Premises Charges; and • Any Association levies."
Clause 3.5 of the sublease, entitled "Unpaid Monies", provided that: "3.5.1 On each and every occasion on which the Lessee omits or neglects (for a period of not less than twenty-eight (28) days from the date on which the Lessee is obliged to do the same) to pay any money which the Lessee has covenanted in this Lease to pay then the Lessor may (without prejudice to any rights and powers arising from such default) pay such money and all monies referred to in this clause 3.5.1 and 3.5.2 are recoverable on demand by the Lessor and a certificate by the Lessor as to any amount payable by the Lessee pursuant to this clause is prima facie evidence of the amount payable by the Lessee. 3.5.2 The Lessee must pay interest on any unpaid monies due under this Lease at the higher of the Prescribed Rate and the rate of three per cent (3%) per annum above the current overdraft rate from time to lime charged by an Australian trading bank nominated by the Lessor, on such amounts as may be nominated by the Lessor computed from the due date for the payment of such monies until payment of such monies in full."
Clause 11.1.1, entitled "Required Insurances", provided that: "11.1 Required Insurances 11.1.1 The Sublessee or via its Association must effect and maintain in respect to the Premises from the Commencing Date of the Sublease/Registered Memorandum the following insurances: a) insurance of the Premises against loss, damage or destruction from any insurable risk reasonably required by the Head Lessee including (but not limited to) loss, damage or destruction by fire, lightning, storm, tempest and impact for the full reinstatement cost of the Premises (including extra costs reinstatement); b) insurance of all plate glass, fixed glass and windows in the Premises for its reinstatement cost (including extra costs reinstatement) from loss, damage or injury caused by explosion, earthquake, aircraft, fire, lightning, storm, tempest, impact, act of God and any other insurance risk reasonably required by the Head Lessee; c) a public liability policy covering personal injury and property damage, including financial, economic or consequential loss arising as a result of such personal injury or property damage (in an amount of not less than the amount noted at Item 6 of the Reference Schedule or such other higher amount as the Head Lessee may from time to time require, being the amount which may be paid arising out of any one single accident or event) in connection with the activities of the Sublessee in relation to the Sublease whereby the Head Lessee shall be included as joint insured parties, such insurance to cover against all actions, suits, claims, demands, proceedings, losses, damages, compensation, costs, charges and expenses referred to in clause 12.3 and clause 5.27 and elsewhere in the Sublease/Registered Memorandum; d) insurance against any liability which may arise at common law or by virtue of any relevant workers' compensation legislation in connection with the Premises; and e) such other special insurances as may be appropriate and required by the Head Lessee from time to time."
Clause 11.3 provided that: "Head Lessee May Insure In default of the Sublessee effecting any or all of the insurances referred to in clause 11.1 the Head Lessee may effect such insurances and charge the Sublessee for the costs of the premiums and the Sublessee must upon demand reimburse the Head Lessee for such costs." A question which arises is whether SPM, as head lessee, had in fact effected public liability insurance, as required by cl 11.1.1(c) of the sublease, in accordance with cl 11.3 and, if so, whether SPM's reliance upon the fact that the plaintiffs had not effected such insurance formed a basis for: (a) withholding consent to the transfer by Karen Brown of Apartment 26; and (b) terminating both of the subleases. This issue is considered later in these reasons.
Clause 13.1 of the sublease relevantly provided: "General Restrictions on Assignment Subject to the Sublease/Registered Memorandum, the Sublessee must not assign transfer mortgage charge demise sublet licence or part with possession of the Premises or any part thereof or by any act or deed procure any of the foregoing without first: 13.1.1 producing to the Head Lessee such particulars and information, documentary or otherwise, evidencing or relating to the transaction and the proposed assignee or incoming party as may be required by the Head Lessee; and 13.1.2 complying with all requirements of the Head Lessee in respect to such transaction and the Sublessee's application for consent thereto; and 13.1.3 complying with any covenant or condition of the Sublease which is in default at the date of the Sublessee's application; and 13.1.4 procuring lodgement with the Head Lessee of such guarantees by the proposed assignee or incoming party of its performance of the Sublessee's covenants under the Sublease as the Head Lessee may require; and 13.1.5 receiving the prior written consent of the Head Lessee thereto (which consent is subject to the provisions of clause 1.13); and 13.1.6 procuring payment of the Head Lessee's reasonable legal and administrative costs of and incidental to the giving of such consent, provided that no fine or sum of money in the nature of a fine shall be payable for or in respect to any such consent and provided further that such consent may not be requested by the Sublessee prior to the completion of the Works and matters (if any) as may be required by the Head Lessee to the satisfaction of the Head Lessee."
Clause 1.13.1, referred to in cl 13.1.5 above, provided that: "Head Lessor's consent Where the Head Lessee's consent or approval to do anything under this Sublease is required, and the consent of the Head Lessor would be required under the Head Lease for the Head Lessee to do that thing under the Head Lease, then the Head Lessee cannot grant its consent to the Sublessee doing that thing until the Head Lessee has procured the Head Lessor's consent to the doing of that thing." Clauses 13.1 and cl 1.13 of the sublease had the combined effect that the consent of both NPWS and SPM was required for the assignment or transfer of any sublease.
Clause 3(a) of Schedule 3 (titled "additional covenants") of the sublease standard form provided that: "a) Occupation of Apartments i) No person, other than bona fide on-site managers and/or staff of the premises, shall occupy the accommodation for more than six weeks in any snow season nor for more than twenty-six weeks in any year; ii) Bona fide on-site managers and/or staff are only permitted to occupy the accommodation for purposes associated with the actual management of the accommodation where a full-time presence is essential. The Sublessee is required to obtain the Head Lessee's approval for any long-term occupancy for either management or staff (which approval is subject to the provisions of clause 1.13). Occupancy of the accommodation on the basis of private, residential premises is not permitted."
Clause 3(b) of Schedule 3 provided that: "b) Letting of Subleased Apartments i) Where any Subleased Apartment is not being occupied by members of any Sublessee, the Sublessee must make that accommodation available to the general public on reasonable terms and conditions for holiday lettings in accordance with clauses 3 d) and 3 e) of this Schedule provided that for the purposes of this covenant and the provisions of clauses 3 d) and 3 e) of this Schedule the Sublessee is deemed to have made the Subleased Apartment available on reasonable terms and conditions for holiday lettings to members of the public if it has placed the same in the hands of the Management Company and the Management Company as agent of the Sublessee complies with the requirements of clauses 3 d) and 3 e) of this Schedule."
Clause 3(c) of Schedule 3 provided that the sublessee must: "i) use its best endeavours to actively market and promote the accommodation on the Premises by appropriate means including the use of advertising and travel agency outlets and use its best endeavours to secure the booking and use of such accommodation by the general public; ii) keep upon the Premises a register recording details of all marketing, advertising and promotional activities in relation to accommodation and use by the general public of the Premises and will give to the Head Lessee or his or her agent free access to such register for the purposes of perusing or taking extracts of entries made in that register."
Clause 4 of Schedule 3 in turn provided that the sublessee must not: "a) conduct in respect to the operation of the Premises or any part of the Premises any form of accommodation booking system which results or could result in accommodation preference being given to any particular group of users provided that this clause will not operate to prohibit subleasing of Subleased Apartments in accordance with the Sublease or conventional casual holiday lettings to members of the public; b) conduct or allow by any means, any sale or grant of such matters as memberships, units, shares or any similar interests in the Sublessee or otherwise the consideration or any part of the consideration for any such matter or matters being entitlement or entitlements to accommodation on the Premises; c) make it or allow it to be made a requirement for obtaining accommodation at the Premises that an applicant for such accommodation is the holder of or is required to acquire a membership or memberships or a unit or units or a share or shares in the Sublessee or otherwise become part of or permanently or temporarily associated with the Sublessee."
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: "14.2.1 The following clauses are essential terms of this Lease: … e) the covenant to pay Rent Outgoings and charges throughout the Term of the Sublease at a date not later than twenty-eight (28) days after the due date for the payment of each yearly instalment of Rent (clause 3)."
Clause 14.4 relevantly provided: "Each of the following constitutes a default by the Sublessee under the Sublease: 14.4.1 the rent hereby reserved or any part thereof is unpaid for a period of twenty-eight (28) days after any day on which the same ought to have been paid in accordance with the Sublease (whether or not a formal demand has or has not been made); or 14.4.2. any serious, persistent and continuing Breach; or 14.4.3 failure to comply with an essential term of the Sublease."
Clause 14.6, entitled "Notice of Default", provided that: "14.6.1 Apart from where the Sublessee has repudiated this Sublease, the Head Lessee must not terminate the Sublease unless the Head Lessee serves on the Sublessee a notice: a) specifying the particular default complained of; and b) if the default is capable of remedy, requiring the Sublessee to remedy the default; and c) in case the Head Lessee claims compensation in money for the default, requiring the Sublessee to pay such compensation. 14.6.2 If the Sublessee fails within a reasonable time (as determined by the Head Lessee in his or her absolute discretion) of receipt of that notice by the Sublessee (or the Sublessee's Employees or Agents or any person claiming under the Sublessee) to remedy the default to the reasonable satisfaction of the Head Lessee, if it is capable of remedy, or fails to pay that compensation where compensation in money is required to be paid, then the Head Lessee may terminate the Sublease/Registered Memorandum in accordance with clause 14.5."
Clause 14.5, concerning "Termination after Default", provided that: "The Head Lessee may terminate the Sublease after a default by the Sublessee after the Head Lessee has served a legally effective notice in accordance with clause 14.6 (if applicable) and to effect the termination of the Sublease, the Head Lessee may: 14.5.1 re-enter and take possession of the Premises, using reasonable force to secure possession; and/or 14.5.2 serve on the Sublessee written notice terminating the Sublease; and/or 14.5.3 institute proceedings for possession against the Sublessee; and/or 14.5.4 take such actions and/or proceedings as the Head Lessee may deem appropriate."
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.

[8]

The Management Agreement

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: "the exclusive right and privilege to rent, lease, licence and administer the Managed Unit on his behalf together with all associated services commonly rendered in connection therewith upon the terms as and conditions set out in this Agreement."
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: "(i) The Manager is to include within the monthly statements all information relating to advance bookings for the [apartment] including the nightly, weekly or other fee to be charged and the period of the booking. The projected rates may vary according to management decisions and circumstances as may exist from time to time eg. A projected 'rack rate' may be subject to commissions and discounts. The projected gross monthly receipts from all bookings will be included in this case. (j) The Manager shall be responsible at all times to pay all costs associated with renting the [apartments] except for the following: a. The [Sublessee's] portion of NPWS charges or any authority substituted for NPWS; b. Those charges incurred under Clauses 8 and 10; c. The cleaning costs associated with the [apartment] when used by the [Sublessee] or his guests."
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: "Should the [Sublessee] sell the [apartment] at any time during the currency of this Agreement or any renewal thereof the [Sublessee] shall procure the Purchaser of the [apartment] to enter into an Agreement with the Manager agreeing to be bound by the provisions of an Agreement for the management of the [apartment] for the unexpired portion of the agreement."
Clause 8 provided as follows: "8. REPAIRS AND MAINTENANCE Should the [apartment] require maintenance replacement or repair, the costs of which would normally, as defined in the Head Lease, be met by the [Sublessee] then the Manager will arrange for such repair, maintenance or replacement PROVIDED HOWEVER that where the costs of such repair maintenance or replacement is likely to be in excess of $200.00 the Man[a]ger will obtain prior consent of the [Sublessee] before authorising the repair maintenance or replacement."
Clause 10 provided: "10. INSURANCE (i) The Manager shall at all times during the currency of this Agreement effect and maintain current insurances for the [apartment] with a reputable company for public liability, worker's compensation and, if appropriate, industrial risks to the [apartment]. The Manager shall maintain replacement costs insurance for the [apartment] in the event of fire or destruction of the [apartment]. (ii) The [Sublessee] shall, within seven days of receiving a written request from the Manager, reimburse to the Manager a proportion of the insurance premiums paid or payable by the Manager for the insurances effected as aforesaid. Such proportion shall be calculated by reference to the percentage that the floor space of the [apartment] bears to the floor space of the other [apartment] at the Resort. (iii) The [Sublessee] shall 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. Such cover shall also contain cover for Public Risk in the sum of not less than ten million dollars in the joint names of the Manager and [Sublessee]."
Clause 15.6 provided no need for dropped quote that: "Any amendment or variation to this Agreement shall be in writing and signed by the parties."

[10]

Matthew Anstee and Shane Brown

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: "[Shane]: We should spend the first season down there. We need to do a clean out, work out who and what we need and where we get everything from. Matthew: That's true but I can't do it. I have Raine & Horne to manage. I'm flat out. [Shane]: I could probably do it. I'll need to speak to Karen about it first, but I'd also need to be paid because I won't be able to do both. Matthew: Yes. How much do you think? [Shane]: I'll need to hire staff at the café to replace me, so that will probably be around $50,000."
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: "Matthew: The business should be able to pay for our park fees and other expenses. Our families should be able to use the restaurant and bar. We won't make a fortune, but at least it won't cost us anything. [Shane]: Sounds good." This conversation was also denied by Mr Anstee.
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: "We cleaned, unpacked and arranged stock for the restaurant and bars and Sam [Brown] ran the over snow during the season. On the weekends, Karen would come to the Stables with Zac [Karen and Shane Brown's youngest son] and she would help with housekeeping and the running of the restaurant. Fridays and Sundays are the main changeover of guest days so Karen would help with the Sunday changeover before returning home to work in the café during the week."
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.

[11]

Jake and Sam Brown and Apartment 9-1

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: "17. From the very first year, I had discussions with my Dad where he said to me words to the effect of 'The Stables will pay for everything for the apartments. We will work there when needed, but the business will cover the expenses'[.] I also overhea[r]d Dad and Matthew speaking at the Stables where they would say things such as 'the Stables will cover that' when speaking about the apartments. 18. During the first season, and every season after that, I observed both my family and Matthew's family consuming evening meals at the Stables restaurant without charge. This arrangement continued whenever I was present at the Stables. 19. Between 2014 to around 2017, the Stables also paid for all expenses regarding Apartment 9_1. This included park fees, compliance fees, cleaning costs, gas and electricity. Jake and I were also not required to make payment of any management fees relating to the booking of apartment 9_1. 20. From 2015 until 2019, I continued to help with the running of the Stables. I would usually visit on the weekends. I was largely responsible for the operation of the over snow and would help my Dad whenever he needed it. Each season I would train the new staff in using the over snow and help to clear the snow on the weekends when I was there. Morgan [Sam's then girlfriend and now wife] would also assist the staff with housekeeping and management. Morgan and I were not paid for any work performed after 2014. 21. I acted in reliance on the discussions I had with my Dad initially in 2014 and understood from those discussions that myself and Jake as well as my Mum and Matthew were not required to make any payments towards our apartments as we worked and provided assistance in the operating of the Stables without pay and therefore would receive the benefits of staying at the Stables free of charge." (emphasis in original)
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] "[Shane]: Tess said that the Stables doesn't make enough money to pay for all of our apartments. We will all have to start paying for the normal fees for the units. [Sam]: Okay, that's fine."
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] "From 2017 onwards Jake and I were charged cleaning fees, park fees, compliance fees as well as 25% of the amount of the booking (the Commission) or if Jake or I stayed at the Apartment, 5% of what the booking would have been had a third party rented the Apartment (the Owner Fee). Jake and I were happy to pay the fees associated with Apartment 9_1 as we would still be able to use the apartment and generate income from it whilst also enjoying the use of the apartment for ourselves during the winter ski season. The accounting for the Stables was undertaken by Tess [Tohu] and Matthew [Anstee]. As far as I am aware, my family was not involved in accounting and bookkeeping. I never observed my Dad involve himself in the finances of the business or perform any accounting or bookkeeping tasks. All communications I received regarding the accounting at the Stables came to me from Tess. If I ever had a question regarding bookings or accounts, I knew to contact Tess. Any charges incurred from 2017 onwards were automatically deducted by Tess from the income generated by the Apartment. I would receive profit and loss invoices from Tess which set out the calculations. … As the amounts were debited prior to any disbursement being paid to us, Jake and I were not required to make payments towards any charges. If there were months w[h]ere the income generated was insufficient to cover the expenses, I would not receive a disbursement payment and the expenses would carry over to the following month and be deducted from the income received that following month. Jake and I would generally receive around three distribution payments during the winter season for the income generated by bookings. As shown on the various invoices and statements, Jake and I were charged commission on the bookings as well as the Owner Stay Management Fee for the times when Jake or I stayed at the Apartment. This Owner Stay Management Fee was deducted as an expense from the income generated. I otherwise did not concern myself with the charges and I trusted that [sic] the amounts calculated by Tess and had no reason to believe that Jake and I were ever charged incorrectly for our Apartment in accordance with the agreement between Dad and Matthew."

[12]

Karen Brown and Apartment 28

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] "I observed Matthew at the Stables during this first season from time to time. On numerous occasions, I heard Matthew and Shane in my presence, say to the employees words to the effect of 'we are the owners'. I believed and acted on the basis that the business was operated jointly by Shane and Matthew, that they made decisions together and treated each other as the others fifty percent partner. Each of the immediate family members of each of Shane and Mat[t]hew's family including me were expected by Shane and Mat[t]hew to help out when needed. In return for working with and helping in the business I enjoyed the benefit of their work by staying, eating and drinking and generally utilising the Stables free of charge." (emphasis in original)
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] "Matthew and I have discussed that one of us should stay at the Stables and manage it for this first season so we know how it all runs and operates. We agreed that I would do it as Matthew can't leave his business. I would be paid $50,000 for the season. Sam can come with me and help out."
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] "we didn't make enough this first year for me to get the $50 grand. Matthew and I spoke and we agreed that we can renovate apartment 28 up to the value of $50,000 and the Stables [SPM] will pay for those works." [10] In this context, Shane Brown gave the following evidence: [11] "As there we[re] insufficient funds to pay me for my services, Matthew and I had the following discussion: [Matthew]: Since we are renovating and you haven't been paid for managing the season, why don't the [S]tables pay towards Karen's unit and she pay anything extra over the $50k. Shane: Ok, that's the same as if the Stables paid [my] wage anyway. It can go under renovation costs."
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] "Had I known that a claim would later be made for the cost of the renovations, I would have considered the extent of the renovations necessary as well as the cost and not spent $50,000 on the Apartment."
Mrs Brown acknowledged that about $50,000 was spent renovating Apartment 28. Under cross-examination she explained the background to the renovations as follows: [13] "[Karen]: My knowledge was that my husband had done the first season leaving our business, which we had to employ two employees to cover him because Matthew couldn't leave his business, and he would manage that season for [$]50,000 for the season. And, the full season, there was no profit, so Matthew had said when we're doing up The Stables, the common areas, 'If you want to use the tradies and renovate - do a little reno on Karen's unit, then I'll reno mine as well'. And, I actually sat in the bar area, and he had said that to me. [Counsel]: What did you hear Matthew Anstee say to you on this topic? [Karen]: He actually said to me, 'Kaz, I know we haven't been able to pay Shane, so if you want to reno your little unit while we've got all the tradies here, and then I'll do mine'. And, I said, 'That's great, Matt. Thanks."
Later in her cross-examination, the following exchange occurred: [14] "[Counsel]: Why do you say in paragraph 58, 'Had I known that claim would be made for the cost of the renovation I would have considered the extent of the renovations necessary, as well as the cost, and not spent [$]50,000.' Why do you say that? [Karen]: Because I wouldn't have been able to afford to do it myself."
This evidence was reinforced by evidence given by Shane Brown when under cross-examination: [15] "[Counsel]: What do you say you would have done differently if you had have known all along you'd be charged for the 50,000? [Shane]: Well, Karen probably would have spent the ten or 15 and painted and carpeted the unit again. [Counsel]: Are you saying she would have or wouldn't have done those things? [Shane]: I'm saying when she renovated she didn't want to spend any money on it, she didn't have the money. And I'm saying she would have spent minor renovations, cause she had ten or 15,000, that's she would have probably just done minimal, repaint and carpet it."

[13]

Sale of Apartment 28 and acquisition of Apartment 26

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] "In around 2017, Matthew [Anstee] was showing a prospective buyer the apartments available for purchase. He showed Apartment 28 to the buyer as an example of a recently renovated apartment. Shane [Brown] and I later had a conversation with words to the following effect: Shane: Matthew [Anstee] showed the buyer 28. They said they wanted to buy it. Me: But we're not selling it. [Shane]: I told Matthew [Anstee] if they pay the right amount you might sell it. At the time, Shane and I were not looking to sell Apartment 28 as I loved it. At the same time, Apartment 26 was available for purchase. I knew the apartment from my housekeeping duties. It was a larger apartment with a better view than Apartment 28. Shane said to me words to the effect of: The buyer has agreed to the price for 28. If you're happy to sell it, we can buy 26 instead. Matthew says it will almost be a swap. I understood 'a swap' to mean that the apartment would sell for around the same price." (emphasis in original)
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] "[His Honour]: Mr Anstee, did that process happen when apartment 28 was sold in late 2017? [Matthew]: Yeah, so, in sorry, which one? [His Honour]: Apartment 28? [Matthew]: Yeah? [His Honour]: Did the process you've just described, namely National Parks and Wildlife contacting you to see if there any defaults or any moneys owed, did that occur with regard to - [Matthew]: I believe, yes, it would have. Whether there was - they were in breach or if there were any issues. [His Honour]: Can I infer that from the fact that the sale went through that you or somebody on behalf of Stables management must have responded that they were not, and there were no moneys owed. [Matthew]: Agreed." This answer was significant given the fact that Mr Anstee was later to seek to claw back costs in relation to the renovation of Apartment 28, as explained later in these reasons.
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).

[14]

Invoices and statements in relation to Apartments 26 and 28

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] "Following the purchase of Apartment 26, I started paying fees and the Booking Fees. Any amounts owed by me in relation to Apartment 26 were deducted by Tess [Tohu] from the income received by the apartment before the funds were released to me, generally each month. I did not usually receive invoices or statements from [SPM]. I would receive a profit and loss invoice each month which showed the amounts received by bookings, the amounts deducted and the balance remitted to me. … From January 2020 I started receiving documents titled Owners Statements. These statements did not include the breakdown like the profit and loss invoices."
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] "Q. Do you agree that you have access to a portal, in the same way as all apartment owners have access to that portal? A. I got my log in to my portal in January [2020]. I logged in, had a look, there was nothing to disclose, which is January, which is fine. The next time I logged in, I could not get in. I … email[ed] Tess to say I needed a log in, no reply. I never got back into that portal again."
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: 1. $0.00 as at 4 March 2019; [25] 2. $0.00 as at 1 April 2019; [26] 3. $-51.85 as at 3 June 2019; [27] 4. $-14,331.58 as at 3 July 2019; [28] 5. $-10,273.21 as at 1 August 2019; [29] 6. $-503.73 as at 4 September 2019; [30] 7. $-1,187.08 as at 8 November 2019; [31] 8. $-3,046.77 as at 4 December 2019; [32] 9. $-3,046.77 as at 29 December 2019. [33]
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]

[15]

The decision to sell Apartment 26

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] "… was still running Palate Palace [a café in Bowral] whilst helping out at the Stables, however the café was starting to run at a loss and I was suffering financially. Shane and I were unable to pay the school fees so I decided that the best way to get our finances back on track was to sell Apartment 26. Shane and I discussed selling Apartment 26 and I left it to him to speak to Matthew [Anstee] about price and arranging the sale. I was not present during these discussions. At this time Matthew and Shane were still on good terms. Shortly thereafter, I recall being in the restaurant at the Stables with Shane and Matthew when Matthew said words to the effect of 'I have a buyer for 26. He's coming up in an hour to have a look.' I observed Matthew show the potential buyer Apartment 26 and afterwards return to me and said words to the effect of 'he loved it and will pay full freight'." (emphasis in original)
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] "Q. Karen signed an agency agreement? A. Correct. The agency agreement was emailed to Shane and collected by Shane for Karen to sign it. Q. Shane acted as a conduit, and that was something that you accepted, that Shane was a director [of SPM] and you permitted him, on behalf of Stables Management to have the organisation of Stables Management relationship with Karen, would you agree with that? A. Yes, well mainly. I accepted that the units were owned by Shane, not Karen but they were owned together. Q. That was your state of mind? A. Yes. Q. But you knew that that was legally incorrect? A. Well, I knew that they were in the name of Karen Brown but Shane was the one that I negotiated and dealt with in relation to the transactions on the units."
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.

[16]

Exchange of contracts

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] "Re: BROWN Sale to MYRIAD CAPITAL PTY LTD Property: 26/20 Candle Heath Road, Perisher Valley NSW 2642 We write to confirm that we have arranged for the sale of the above mentioned property. Enclosed is a copy of the sales advice for the preparation of contracts. We would be pleased if you would advise our office when contracts have been exchanged. If you have any further questions, please don't hesitate to contact me."
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] "50.1 The completion date for this contract is the later of: (a) 42 days after exchange; (b) 7 business days after receipt by either the vendor or the purchaser of the Head Lessee's consent to transfer of the Sublease to the purchaser; and (c) 7 business days after receipt by either the vendor or the purchaser of NPWS-OEH's consent to the transfer of the Sublease to the purchaser. 50.2 The vendor and the purchaser shall notify each other within 48 hours of their receipt of notification of consent of either the Head Lessee or NPWS-OEH. 50.3 Notwithstanding any other provision in this contract, the purchaser acknowledges and agrees that rent, and where appropriate, outgoings payable under the Sublease must be adjusted as paid to the end of the quarter in which completion occurs. 50.4 If the consent of NPWS-OEH to the transfer of the Sublease has not been received within six (6) months after the date of this contract then either party may at any time thereafter, but prior to such consent being received, rescind this contract by notice in writing to the other whereupon the provisions of clause 19 shall apply."
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] "Brown Sale to Myriad Capital Pty Ltd Property: Apartment 26/20 Candle Heath Road, Perisher Valley The contract signed by the vendor, in identical terms to the counterpart dated today, is enclosed following exchange. Particulars of title are as described in the contract. Sadly (perhaps) at this stage these matters cannot be settled via PEXA. I shall shortly forward the necessary consent documents for your client's execution." (emphasis added)

[17]

Request for consent

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] "complete the contact details for the transferee on page 7 and have the purchase and guarantor sign the Deed, in duplicate"; "complete the contact details for the proprietor on page 11 and have the purchaser sign the Management Agreement, in duplicate"; and "forward the hard copies back to me".
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] "Dear Matt … Please find enclosed the following documents executed by all other parties: 1. Deed of Consent to Transfer of Sublease, in duplicate 2. Management Agreement, in duplicate Would you please have the enclosed documents signed by the Company where indicated by the flags. I am happy to collect the signed documents from your office if you let me know when they have been signed. If you have any questions in relation to the documents, please do not hesitate to contact me."
Just over a fortnight later, on 5 November 2019, Mr Anstee replied to Ms Blanckenberg's letter with an email reading as follows: [51] "I note from your email of 12 September 2019 you are instructed by Shane Brown on behalf of Karen Brown in respect to the sale of the above apartment. I am the director and the controlling shareholder of The Stables Perisher Management Pty Ltd which company holds the head lease in respect on the property which Apartment 26 as a sub lease forms part. The Stables Perisher Management Pty Ltd is in receipt of documents from you requiring the company to consent to a transfer of the sub lease for Apartment 26 The Stables from Karen Brown. Shane Brown has given undertakings in respect to disbursement of funds from the sale proceeds of the sale of Apartment 26 The Stables. The Stables Perisher Management Pty Ltd cannot consider consenting to the transfer of the sub lease of Apartment 26 The Stables until Shane Brown and Karen Brown provide irrevocable undertakings and directions to pay in respect to the proceeds of sale of Apartment 26 The Stables that are satisfactory to me in my sole discretion." (emphasis added)
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] "Dear Matthew Thank you for your email of 5 November 2019. The sublessee of this apartment is Karen Brown, not her husband. I am instructed that the undertakings you request relate to a business venture to which Karen Brown is not a party. While Clause 13 of the sublease requires my client to request the consent of the head lessee to a transfer of the sublease, that consent must not be withheld unreasonably. It would be most inappropriate for the head lessee to refuse or delay giving consent to the transfer of the sublease based on matters which are of no concern to the sublease or the sublessee. The Deed of Consent to Transfer of Sublease was delivered to you on 22 October 2019. Your normal practice has been … to sign the documents and have them available for return within a few days. It is now over 2 weeks since the Deed was delivered to you for signing. As you know, the Deed of Consent to Transfer of Sublease must be signed by all parties before the consent of NPWS-OEH to the transfer can be sought and it can take many weeks for their consent to be provided. The contract for sale has a sunset date of 6 months from exchange ie 27 March 2020. Any delay in the head lessee signing the Deed of Consent to Transfer of Sublease has the potential to cause the sunset date to be passed before the consent of NPWS-OEH has been obtained, giving the purchaser the right to rescind the contract. You are hereby put on notice that if your continued delay in signing the Deed of Consent to Transfer of Sublease due to irrelevant considerations results in any further delay and the los[s] of this sale, my client intends to take action against you to recover any damages suffered as the result of your inappropriate actions. It will of course also be necessary for us to inform NPWS-OEH of the reason for the delay in our requesting the head lessor's consent to the transfer of the sublease. Without prejudice to the above, I am instructed that in addition to your commission on the sale, my client will agree to release to you upon completion of the sale $28,000.00 representing payment for a motor vehicle. Please now sign the Deed of Consent to Transfer of Sublease and return it, together with the signed Management Agreement, as a matter of urgency."
Mr Anstee replied promptly to Ms Blanckenberg's email later that afternoon, emphatically denying her assertions in the following terms: [54] "H[i] Deborah The assertions in your below email are incorrect. Amounts of money are owing to The Stables Perisher Management Pty Ltd by Karen Brown pursuant to her ownership of property at The Stables. A determination of the amounts owing and funds utilised by Karen Brown is currently being determined by the companies [sic] accountants. There is also money owing to entities I own by Karen Brown in relation to the use of a motor vehicle by Karen Brown. You are incorrect to state that any payment would 'represent payment for a motor vehicle'. The amount owing in respect of the motor vehicle is currently being quantified but not assisted by the lack of information from Shane Brown despite numerous requests. Once the amounts of Karen Brown's debt can be quantified you and her will be advised. In the meantime the consent to the transfer of sub lease will not be considered." (emphasis added) The statements in this email that "a determination of the amounts owing and funds utilised by Karen Brown is currently being determined by the companies [sic] accountants" and "[o]nce the amounts of Karen Brown's debt can be quantified you and her will be advised" were telling. Mr Anstee was not able in this email to identify any amounts owing to SPM by Mrs Brown even in general terms, notwithstanding SPM's clear accounting obligations under the Management Agreement: see [47] above. Other than for two comparably small and subsequently withdrawn invoices issued in February 2020, [55] Mrs Brown was not to receive an invoice for any significant sum until late April 2020. When it arrived, as shall be explained below, it was for in excess of $200,000, which was almost than half of the price for which Mrs Brown acquired Apartment 26.
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] "Q. You recall that when you said, in your sole discretion, on 5 November, that Mr Brown was still a director? A. Yes, and I still had to satisfy myself. Q. You understood that it wasn't you making the decision whether Mrs Brown could sell the apartment, it was The Stables Perisher Management, you understood that? A. It was who? Q. Stables Perisher Management? A. Yeah, it was The Stables, yeah and I had to be satisfied that The Stables were not going to incur a debt or a liability by agreeing to that Q. Can I just ask you to go the next page. HIS HONOUR: Q. Sorry, what debt and what liability are you referring to in that answer? A. Any debt or liability that unit 26 had obtained that I could not - that would put me in breach of my head lease by not having insurance, what have you. Q. But there were, am I right in thinking, that at the time you sent that letter or the email rather of 6 November that there were no outstanding invoices had been issued to M[r]s Brown which were unpaid by SPM? A. I think there was outstanding invoices, being land tax and other bits and pieces, but I'd have to go back and look for - Q. Well this is not unimportant, Mr Anstee. None have been, so far as I am aware, adduced in evidence. None are referred to in this email. If there were outstanding charges which had been invoiced, I would have thought that it would be the easiest thing in the world to have identified them, either together with this email, saying here are the outstanding charges which have been outstanding for X months which haven't been paid and/or in these proceedings, to point to invoices which were outstanding at the time in relation to which you wanted to Stables to be paid before you would consent. So, I can't act on the basis of, I'm sure there are invoices, I'm sure there were, in circumstances where you and your legal advisors have been in a position to produce them and point to them and show that they were sent. So - A. Your Honour, there was a situation that I was unaware of what invoices or what costs had been out there. I'd asked [Debra Blackah] and Tess [Tohu] to do an audit of everything and that's where all this came from and it wasn't until later that I found out how severe the charges or activities were. Q. But am I right in thinking that you aren't in a position to point to any invoices which had been sent or raised by 6 November 2019, which were to M[r]s Brown, which were outstanding at that point in time? A. No. Q. For example, in relation to land tax? A. Not that I could put my hands on at the moment." (emphasis added)
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: "any moneys that may be owed by Karen Brown or anyone else to any entity not in connection with the sublease of Apartment 26, are irrelevant to the matter of you signing the Deed of Consent to Transfer of Sublease and Management Agreement with the proposed purchaser. To use any such debt as a reason for refusing to sign the documents would be an abuse of your power and responsibilities as Head Lessee and director of the management company. Any loss suffered by Karen Brown as a result of such improper actions would entitle Karen Brown to claim damages against you."
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] "Hi Jake I have not heard anything further from Matthew Anstee. I have told both the vendor and Matthew Anstee that until this matter is resolved I cannot continue to act for either of them. My client has consulted another solicitor (Aaran Johnson of Marsdens) who has experience in commercial litigation, which I do not. While I have only had one conversation with him, he did suggest a different approach to getting the documents signed which seemed promising to me. That was for you to write on behalf of the purchaser a letter of complaint to Matthew Anstee. I understood that Aaran was going to contact you about doing this. I have given him your contact details. I have also copied him in on this email. My client's husband rang me this morning to tell me that Matthew Anstee had requested that he resign his directorship of the management company [SPM]. I suggested that rather than doing that he contact Aaran again and discuss with him the desirability of asking you to write directly to Matthew Anstee. My hope is that an approach from you on behalf of the purchaser will convince Matthew Anstee to act appropriately and sign the documents so that this sale can proceed."
The following Monday, 2 December 2019, Ms Blanckenberg emailed Mr Anstee as follows: [63] "Dear Matt Last Friday [29 November 2019] Shane Brown left me some documents including a signed letter of resignation as a director of The Stables Perisher Management Pty Ltd. Shane asked me to hand these documents to you in return for the fully signed Deed of Consent to Transfer of Sublease and Management Agreement. Shane told me you would contact me on Friday to arrange this exchange, however to date I have not heard from you. Also on Friday, I was contacted by [Myriad's] solicitor who indicated that if I did not receive the signed documents by today, his client intended to commence action against you in the Supreme Court of New South Wales to compel you to sign the documents. Would you please let me know as a matter of urgency whether you intend to sign the documents and hand them to me in exchange for Shane's signed letter of resignation."
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] "Re: Karen Brown: Sale of Apartment 26, The Stables, Perisher Valley I refer to the above matter and advise that I act for Mrs Karen Brown. Instructions I am instructed that: 1. My client is the owner of premises known as Apartment 26, The Stables, Perisher Valley NSW ('the apartment'). 2. You are a director of the company known as The Stables Perisher Management Pty Ltd ('The Stables') who is the head lessor and manager of numerous subleases comprising a ski lodge known as The Stables. 3. The apartment is subject to a sublease with The Stables. 4. On or about 27 September 2019 my client exchanged a contract for the sale and purchase of the apartment. 5. You are the licensee in charge of Raine & Horne Southern Highlands who is the listed agent managing the sale of the apartment. 6. The sale is characterised as a sale of land but in reality is a transfer/assignment of my client's sublease between it and The Stables to the incoming purchaser. 7. Despite The Stables being the manager of the ski lodge it is in fact owned by the Crown (National Parks). 8. My client engaged a law firm, Newlands Legal in Mittagong, to act on the sale of the apartment. 9. On or about 22 October 2019 Newlands Legal sent to you a Deed of Consent to Transfer Sublease (Consent Deed) and a Management Agreement which was required to be executed by you giving effect to the consent for the transfer of the sublease from my client to the purchaser by The Stables ('collectively the consent documents'). 10. You have refused, as director of The Stables, to execute the consent documents to allow for the transfer of the sublease and giving effect to the sale of the apartment. 11. Once executed the consent documents are provided to National Parks for review and finalisation. 12. Settlement of the sale of the apartment is to be effected in accordance with the sunset date contained in the contract for sale, being 27 March 2020. Your conflict The above information would not be unfamiliar to you given you are both the director of The Stables (head lessor [sic: head lessee] and manager for The Stables) as well as the licensee acting on the sale of the apartment and thereby fully cognisant of all of the facts, matters and circumstances as they exist with respect to the sale of the apartment. Despite your clear and apparent conflict in respect of your position as both director of the Stables and licensee for such a transaction, you have refused to execute the consent documents to allow the ordinary sale of the apartment. Demand Accordingly, I write to formally demand that you execute and thereafter return the attached documents: 1. Deed of Consent to Transfer of Sublease Apartment 26, The Stables, 20 Candle Health [sic: Heath] Road, Perisher Valley NSW 2624 2. Management Agreement between The Stables and Myriad Capital Pty Ltd Should you fail to execute and return the above documentation … to my client's solicitor, Deborah Blanckenberg of Newlands Legal, Mittagong by no later than 4pm, 14 February 2020 then my client will have no other option but to approach the Supreme Court of NSW on an urgent basis without further notice to you in order to seek orders that the Registrar of the Court stand in your shoes and execute all necessary consents given your unreasonable conduct in refusing to sign the consent documents. I also advise that this letter serves as notice that my client will seek her costs be payable by you on a solicitor/client basis and most notably given your conflict both as director of The Stables and licensee in charge of the sale of the apartment. I look forward to receiving your confirmation that the documentation has been executed and submitted to Newlands Legal in the time afforded, I also advise that I have copied both the solicitors for the purchaser, Myriad Capital Pty Ltd and National Parks so that they are fully aware of my client's position in respect of this matter."
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] "We refer to previous correspondence served either upon this office or our client direct. On a 'without admissions' basis, we have been instructed to obtain the consent requirements of the Head Lessor immediately. We have noted our client's instructions that an undertaking was given to our client that upon settlement of the sale of Apartment 26 monies will be paid to our client on account of the relevant commission as agent and also a $28,000 debt arising from a motor vehicle transaction. We will keep you informed of progress with the Head Lessor." (emphasis added)
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] "Q. Can I ask you to go to 13 February? … Do you see 'We refer to previous correspondence served upon this office or our client direct', do you see that? A. Yep. Q. It says, 'We have been instructed to obtain the consent requirements of the head lessor" and they have noted, "Our client's instructions that are undertaking to pay the relevant commission and a $28,000 debt'? A. Yep. Q. They don't raise any consideration that would have effect or be detrimental to the interests of Stables Perisher management in that, do they? A. But under ‑ under the agreement, for us to move forward the National Parks only needs to give consent first, prior to The Stables Perisher management to give consent. So we've moved forward with the head lessor getting the consent, and then we still have the right to ‑ whether we have to give consent, after they do. Q. It would be mighty misleading of Mr Dowling if he knew that you were not proposing to give consent because there was money outstanding, for him to be saying that they were moving forward in circumstances where you weren't granting consent, wouldn't it? A. I was always hoping to get consent satisfied to not being in breach myself. Q. You see there on 17 February? A. Which one is that? Q. It's page 840. Ms Blanckenberg confirmed the undertaking. Was that conveyed to you, that the undertaking to pay the $28,000 had been given? A. I knew about the undertaking for the $28,000".
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] "I am well aware of the head lessor's requirements for giving consent to transfer of sublease. They are a standard inclusion in the contracts for sale of the subleases. As the sublessee/vendor is the party wishing to transfer the sublease, it is the sublessee whom the head lessor requires to make the application for consent to the transfer. As I act for the sublessee/vendor I have already applied to the head lessor for its consent, and forwarded to it all the documents which I had, including the proposed new sublessee/purchaser's cheque in payment of the head lessor's fee for considering the application. Normally the sublessee/vendor's solicitor would send all of the head lessor's requirements together ie including the signed Deed of Consent to Transfer and new Management Agreement. However, due to the lack of co-operation we have received in this matter from your client over many months, I was instructed to send what documents I could. It is now 3 weeks[sic months] since I was told by your firm that you are now acting for the sublessor/management company. Kindly advise when your client will be providing the signed Deed of Consent to Transfer and new Management Agreement."
The following afternoon, on 4 March 2020, Mr Dowling replied to Ms Blanckenberg in a revealing email as follows: [72] "As explained to you on a 'solicitor to solicitor' basis we were clueless when we received instructions exactly where our client and the matter was up to do and we applied to the Head Lessor/National Parks accordingly. So therefore it seems that these elements remain to be completed so that your client and the purchaser can settle: 1. Some adjustment figures to be furnished by our client's staff, namely Tess [Tohu] (and to furnish directions concerning the commission and the car debt etc). 2. An executed Deed of Assignment of the Sub Lease to be held by you in escrow pending settlement. 3. A New Management Agreement between the Manager and the purchaser. Is this so? Are they only impediments to a settlement? If so, is it the case that the 'usual' management agreement previously existing as between the manager and your client and now to be executed fresh by the buyer has been approved by [NPWS]? Is it a condition of your sale contract that the fresh management agreement is required to be in exactly like terms?"
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] "Hi John Yes I understand that you have been placed in a difficult position and I am willing to help you, on the understanding that I do not receive any more emails like the one I received from Sarah [Rodrigues] on 26 February 2020. Current procedure The current procedure from receipt of the agent's sales advice to settlement I have summarised below. I'm not saying I agree with all aspects of how the transaction is done, but this is the way it was done when I inherited it and neither NPWS nor Matt [Anstee] has told me they want it done otherwise. 1. vendor's solicitor prepares contract for sale of leasehold estate. Contract contains inter alia, head lease documents, sublease documents, form of Deed of Consent to Transfer of Sublease (Deed), form of Management Agreement (MA), NPWS-OEH's list of requirements, and special conditions which cover a lot of things including requiring purchaser to enter into the Deed and MA and satisfy NPWS-OEH's requirements 2. after exchange, vendor's solicitor sends Deed and MA to purchaser's solicitor for signing. Upon receipt, together with purchaser's signed Transfer of Lease (TL) and cheque for NPWS consent fee, vendor's solicitor has vendor sign Deed and TL. Vendor's solicitor then sends Deed and MA to Matt for signing. Both documents usually returned in a few days 3. vendor's solicitor then sends to NPWS copies of Deed, MA and other things NPWS wants, together with cheque and request for consent 4. eventually (it can take a long time, especially during the ski season) NPWS tells either vendor's or purchaser's solicitor that they are ready to give consent and to provide the financial records 5. vendor's solicitor asks Tess [Tohu] for records. Last time this took 2 weeks. Some of the records have to come from Oxley Partners. Their fee is paid by the vendor at settlement 6. vendor's solicitor sends financial info to NPWS and NPWS sends vendor's solicitor their consent document 7. vendor's solicitor communicates NPWS consent to purchaser's solicitor together with notice nominating settlement date in accordance with contract for sale 8. to prepare for settlement, vendor's solicitor asks Tess to provide a statement of the outgoings under the sublease, which are then adjusted in accordance with the contract 9. settlements are done the old fashioned way, not via PEXA 10. after settlement, vendor's solicitor dates Deed and MA and distributes copies to the relevant parties … Brown sale As to settlement of the Brown sale, yes we need Tess [Tohu] to provide the financial info to NPWS and also the outgoings info to me. I would expect to hold both the signed Deed and signed MA until settlement. The purchaser's solicitor has not provided me with a TL and it will take a few days for my client to sign, so I'll get onto that tomorrow. I may be able to prepare one, have my client sign it and hand it over at settlement. The MA you hold has already been signed by the vendor and purchaser. I have never been told that NPWS has to 'approve' the MA. All Karen Field has told me is that she needs to see that the management company has consented to the transfer of sublease. Hence the holdup in settlement with this matter." (emphasis added)
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] "We are instructed that the Head Lessee (Stables) takes out all insurances (subject to the approval and requirements of National Parks) other than each apartments' contents and public liability insurances attaching to the contents and the use and occupation of the apartment. The public liability amount in both insurances to be not less than $10m. Therefore Stables recovers as an outgoing each apartment's proportion of the 'other insurances' and requires evidence of the currency of contents and public liability insurances as outlined above and noting the interest of The Stables Perisher Management Pty Ltd as manager and sub-lessor. Said in another way, our client is not insured for risk that might occur for owner contents and/or use and occupation of their apartments. You might enquire that that is in place for both apartments 16 and 26. Our client will require that your Vendor [Karen] Brown show evidence of currency of these insurances so that risk under her ownership are covered before and as at settlement. In addition of course please have the incoming purchaser produce evidence of the insurance as described above." (emphasis added)
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] "Hi John and Ashlei Our purchaser has requested that we settle this matter on 1 April 2020. My client has agreed to this request. Obviously we need both the management company and NPWS to consent to the transfer of sublease before then. Would you please let me know whether your client has signed the Deed of Consent and Management Agreement. If it has, has this been communicated to NPWS? If not, please advise when it will sign. Further to your email of 6 March 2020, I have asked my client to provide the requested evidence of insurance and will forward it to you once I receive it with Mr Johnson copied in."
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] "Hi John Thank you for your email. With the greatest of respect to you, I do not think that a satisfactory reply. We have been waiting 5 months for these documents to be signed. The sunset date under our sale contract is 2 weeks away. Even if your client signs the documents today and sends copies of them to NPWS, we will be lucky to obtain their consent to the transfer of sublease by the end of the month. My client is therefore facing the potential loss of this sale. I therefore think it only reasonable to request, and I do request, that you advise me by 4:00pm today whether your client has signed the documents and submitted them to NPWS, or not."
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] "Dear Karen, We write concerning the sale and transfer of apartment 26. Our client formally consents to the Transfer and Assignment of the applicable sub lease. Of course, this is subject to the usual conditions: 1. Execution of the Conveyancing documents and subsequent normal settlement procedures. 2. The payment of all outstanding fees due to your office and generally. 3. The taking out of appropriate contents and public liability insurances. Would you kindly advise if there are any other outstanding issues you require to be satisfied." (emphasis added)
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: "the Lessee [SPM] shall in respect to the subleased premises accept full responsibility for the action of the Sublessee and the agents and employees of the Sublessee and the Head Lessee shall make good any omissions or acts of the Sublessee that contravene the terms of the Lease or the provisions of the plain of Management existing from time to time for the Park."
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] "We refer to previous correspondence. We are [sic] that there are outstanding issues concerning consent to the transfer of the sub lease: 1. The proposal insurance documentation appears to be deficient and not in accordance with the sub lease in that: (A) Stables Perisher Management Pty Ltd is not noted as an interested party. (B) It is not in fact current in that the policy seems to be contingent on a 6th April payment. (C) The period of risk should run from the 29th November 2017. 2. Please have the incoming purchaser produce contents insurance plus public liability coverage for use and occupation noting the interest of the sub lessor. 3. Having regard to recent flooding issues, Clause 7, inter alia, of the sub lease requires that repairs be satisfactorily completed. Our client has been briefed only with invoices from an electrician and a plumber (and direct from those contractors) and requires evidence that the evidence that the repairs have been completed satisfactorily. We have received a copy of the Consent to Assignment of Lease from National Parks and will attach it in a following email. It is to be held in escrow of course. We have been told today that adjustment figures ought to be with us shortly."
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] "Following this allegation, the purchaser did not wish to proceed to settlement until such time as the damage was repaired. I did not visit Apartment 26 to inspect the alleged flood damage. I did however arrange for the water damage to be repaired, which included removing all of the downstairs carpet, replacing the underlay and the carpet. The purchaser was of the view the repairs were unsatisfactory. As such, in order to move settlement along however, I agreed to a reduction of $17,346 in the purchase price in order to cover the cost of the repairs".
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: "I have received a copy of the attached Consent to Assignment of Sublease from Bowral Legal that was sent by you to Ashlei Paget by email on 23rd March 2020 at 1:23pm. The attached Consent to Assignment of Sublease must be withdrawn forthwith as it does not cover the true circumstances in the following respects; A. Background 1. The Lessor did not grant consent of the Assignment of the Sublease of Apartment 26 to Karen Brown on 16th October 2015 2. Sublease AJ 483926 dated 5th May 2015 for Apartment 26 was granted by The Stables Apartments Pty Ltd to Philby Pty Ltd. 3. Philby Pty Ltd transferred sublease AJ 483926 to Dickson Super Investments Pty Ltd by transfer AJ 956581 dated 21st October 2015 4. Dickson Super Investments Pty Ltd transferred Sublease AJ 483926 to Karen Brown by transfer AN 149497 dated 29th November 2017. 5. The Assignor has not requested the consent of the Lessor to the assignment of Apartment 26 the Head Lessee has requested the consent to the assignment prior to the Head Leasee [sic] considering whether it will consent to the assignment as required by Clause 1.13.1 of the Head Lease. B. Operative Part (2) 1. The Head Leasee [sic] is not prepared to accept full responsibility for the actions of the Subleasee [sic] and/ or make good the contraventions of the terms of the Sublease other than obligations of the Head Leasee [sic] as set out in the Head Lease. 2. The Sublessee is in breach/ default of the Sublease in numerous respects including conditions, covenants and essential terms, payment of rent, outgoings, required insurances and unauthorised occupation. (7) 1. The dates of the Gross Annual Revenue Certificate and Statement provided in the consent are incorrect. 2. An updated Gross Revenue Certificate and statement needs to be provided for this unit that accurately reflects the facts as the Annual Gross Revenue Certificate provided by the Assignor/ Sublease may not reflect the actual position of Annual Gross Revenue. (10) 1. While Sublease AJ 483926 for Apartment 26 is entitled to a maximum of seven (7) persons to occupy Apartment 26 overnight the approved plans do not make provisions for the level of occupation at seven (7) persons. 2. Attached is a copy of the Inspection and assessment Stables (Apartment) 26 for assignment of Sublease which you provide to the solicitor for the Assignor/ Sublease by email on 13th March 2020 at 11:19am. 3. Your email of 13th March 2020 11:19am indicated that a condition about occupation for sleeping accommodation would be incorporated in the Assignment Consent conditions. This is not contained in the conditions of the Assignment Consent. Further by Clause 2 of the conditions of approval of the Assignment Consent you require the Head Leasee [sic] to be responsible for defaults and breaches of the Sublease which the Head Leasee [sic] is not prepared to accept. It is the intention of the Head Leasee [sic] to issue a Notice of Default to the Subelasee [sic] pursuant to Clause 14.6 Notice of Default provisions of the Sublease forthwith. The Head Leasee [sic] will not be providing Consent to the Assignor/ Sublease to assignment of the Sublease until the Subleasee [sic] complies with 13.1.3 of the Sublease. In regards to the withdrawal of consent you are at liberty to provide the same to the parties you have provided a copy of the consent to assignment of sublease. In all other respects I request that in future you correspond with me only in respect to Head Lease and any Consent to Assignment of Apartment 26." (emphasis added)
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] "Hi Deborah I intend on sending an email to Matthew Anstee today advising that NPWS will not withdraw the Consent to Assignment of Sublease. NPWS exercised the appropriate due diligence in the grant of consent and ensured the head lessee was compliant with the head lease and up to date with lease obligations to NPWS."
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] "We are instructed to advise you that no consent will be forthcoming until breaches under s13.1.3 of the Sub Lease are rectified. I am awaiting full particulars thereof from our clients." (emphasis added)
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).

[19]

Invoice 735

This invoice, issued to Karen Brown in respect of Apartment 26, comprised the following components: [101] Description Quantity Unit Price GST Amount AUD OEH Sales Based Rent - Adjustments to 4.26% as per sublease (previous charge 3.96%) 1.00 1,414.409 10% 1,414.41 OEH MSU Charges, Contribution & Levies - adjustments as per sublease 1.00 3,723.89 NIL 3,723.89 Land Tax - Adjustment 1.00 593.79 NIL 593.79 Allowable Deductions as per management agreement 1.00 44,077.59 10% 44,077.59 Unpaid Cleaning Fees 1.00 382.64 10% 382.64 Unpaid Owner stay Fees 1.00 1,263.91 10% 1,263.91 Unpaid Reimbursement of owner refund to U33 - 29 November 2016 1.00 5,109.00 10% 5,109.00 Renovation Costs 1.00 54,930.94 10% 54,930.94 Commission Costs 1.00 12,375.00 10% 12,375.00 Food Supplies 1.00 4,058.00 10% 4,058.00 Accounting Costs 1.00 6,600.00 10% 6,600.00 10% undercharge on management fees and charges as per management agreement 1.00 6,557.97 NIL 6,557.97 Legal Fees - Interim Invoice 1.00 3,363.15 10% 3,363.15 Interest as per sublease agreement 1.00 45,422.72 NIL 45,422.72 Subtotal 189,873.01 TOTAL GST 10% 13,357.46 TOTAL AUD 203,230.47

[23]

Total Amounts outstanding and overdue: $210,053.04".

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] "Failure to insure the premises as required by cl 11.1 of the Memorandum … including Clause 11.1.1 c) Public liability Insurance with the Head Lessee included as joint insured party."
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] "Non-payment of Outgoings pursuant to Sublease and Non-payment of amounts payable pursuant to Management Agreement as follows: Invoices Issued on the following dates and not paid despite numerous requests for payment; 4th Dec 2019 29th Dec 2019 Reissued and new invoices 12th Feb 2020 INV0645 $1197.52 12th Feb 2020 INV0640 $2307.53 12th Feb 2020 INV0647 $376.34 30th April 2020 INV0770 $106,659.31 30th April 2020 $138.31

[25]

Events following issue of Notices of Default

On 5 June 2020, Mr Johnson wrote to Bowral Legal, which acted for SPM, as follows: [116] "I act for Ms Karen Brown and understand you act for The Stables Perish[er] Management Pty Ltd. My client was purportedly served with a Notice of Default on Wednesday 27 May 2020 (although the Notice is dated 20 May 2020) (Notice) by your client in respect of their sublease at Apartment 26, The Stables Perisher Valley. My client disputes the Notice both as to substance and form and does not consider it to be a valid Notice under the Sublease. It is my client's position that your client is not entitled to act on the Notice in any way (including the termination of the Sublease). Please confirm the Notice is withdrawn by return correspondence no later than close of business Tuesday, 9 June 2020. Should your client act in accordance with the Notice, my client reserves their rights to treat any action as a repudiation of your client's obligations under the Sublease. My client is otherwise seeking to finalise the settlement of the sale of the Apartment to its purchaser. I confirm the Purchaser has provided to your office the signed Management Agreement and the Head Lessor (National Parks) has provided its consent to the assignment of the Sublease. My client considers itself in a position to proceed to settlement and will do so once we obtain the agreement of the Purchaser. Any attempt by your client to interfere with that sale process will be actionable against your client and my client reserves their rights accordingly, including seeking damages if the purchaser terminates the Contract due to actions of your client."
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] "Thanks for this letter John Can you please provide by 10am tomorrow a complete breakdown of the amounts referred to in the Default Notices including full particulars of how those amounts are said to be due and payable by my client. I request this information be provided urgently given I anticipate being instructed to proceed to Court urgently seeking appropriate interlocutory relief and final orders/declarations. I do wish to avoid the costs that will be visited upon our clients with such action if your client has a plausible explanation in respect of the charges that have been levied, recorded in statements and which are the subject of the default notice then it may be the matter can be resolved without court intervention. Look forward to your prompt response."
Mr Dowling responded by email the following morning as follows: [118] "We are instructed that we are unable to obtain instructions on your request until this afternoon when a staff member of our client company becomes available. In the meantime your client has access to her owner's portal. Those access details were emailed to her about mid May." As noted above at [91], Mrs Brown gave evidence that she was unable to access her "owner's portal" after January 2020 and that this issue was raised with Ms Tohu, from whom no reply was ever received.
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] "I refer to: 1. your letter dated 9 June 2020; 2. my email in response to you 9 June 2020 at 4:52pm; and 3. my telephone discussion with you earlier today (11 June 2020). As at the time of sending this letter to your office, your client has not adequately particularised with any supporting documentation, the amounts claimed in the Notice of Default dated 20 May 2020. The failure to do so can only show an unwillingness on behalf of your client to properly identify its claim and for that reason our client maintains that the Notice is invalid and has been issued on an improper basis. Your letter 9 June 2020 asserts the validity of the Notice and therefore it would reasonably be expected that you had reviewed all of the underpinning source documentation that gave rise to the significant charges levied against my client and that this source documentation would easily be procured or be provided on request. Despite repeated requests no source documentation has been provided as at the time of dictating this correspondence. In that regard: 4. my client makes a final request for provision of the source documentation and proper particulars of the amounts of the monetary breaches claimed in the Notice; 5. please provide a copy of the signed Management Agreement by the Purchaser (which we have been advised has been provided to your office) and its consent to the assignment of the Sublease to our client's purchaser; and 6. please provide a statement of Audited Gross Receipts from your client's accountant. This is not to refer to the amounts specified in the Notice as they are separate and unrelated matters. Should your client not provide the above by 2pm, Friday 12 June 2020, I expect instructions to apply for urgent declaratory relief in respect of the Notice that it is invalid, and that for orders requiring your client to provide its consent to the sale to our client's purchaser together with an order as to costs on a solicitor client basis from your client and its directors. My client reserves their rights."
More than a week passed until 19 June 2020, when Mr Dowling sent the following email to Mr Johnson: [120] "We have been instructed to serve the attached schedule of renovation/works paid by Perisher Stables and treated as an outgoing and otherwise repayable under the sub lease incurred on behalf of your client. Please advise whether you hold instructions to accept service of process for both Mrs Brown and the two sons who owe substantial monies as well and who have not responded to the Notice of Breach served upon them."
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] "'[W]ithout prejudice save as to costs' Further to our telephone conversation I attach particulars of Invoice 0735. Our client's opening position is to assert that the whole of the Notice amounts of $110,679.01 and $210,053.04 are due and payable and can be satisfied upon settlement of the current sale of apartment 26. I am awaiting an itemization of Invoice #0770. I am shortly leaving for afternoon appointments and will be absent from my computer and phone until very late afternoon." (emphasis added) A copy of the schedule of particulars referred to in the email is reproduced as Appendix A to these reasons. What is of note, however, is the similarity of this position to that which Mr Anstee had adopted and communicated almost eight months earlier (on 5 November 2019), namely that SPM's consent to the sale of Apartment 26 was contingent upon a then unspecified portion of the proceeds of the sale being directed to him (see [109] above). It will be recalled that he had at that point in time said that: "The Stables Perisher Management Pty Ltd cannot consider consenting to the transfer of the sub lease of Apartment 26 The Stables until Shane Brown and Karen Brown provide irrevocable undertakings and directions to pay in respect to the proceeds of sale of Apartment 26 that are satisfactory to me in my sole discretion." It is also noteworthy that nowhere in the email of 1 July 2020 was there pressed any requirement for insurance. That was hardly surprising in circumstances where SPM had public liability insurance and Mrs Brown was (and had been for nine months) endeavouring to sell her apartment so that, if SPM had any genuine concern that additional public liability insurance needed to be obtained, that concern should have been directed towards the incoming sublessee.
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] "4. We note that the monies now alleged to be owing relate to claims stretching back over many years. Your client had the obligation to calculate and establish, through evidence, the amounts claimed both in previous invoices: (i) which showed the amounts owing as zero from time to time; and (ii) in respect of the recently rendered invoice which are inconsistent to those previously provided. We refer to clause 3(h) (i) and (m) of the management agreement. We note that the arrangements for deductions of payments and rendering of accounts by SPM is done for its own benefit and as the agent of the sublessee. These arrangements have also existed for many years. 5. Our client has acted on the basis of the invoiced amounts that have previously been given to her from year to year which did not include the amounts now claimed. It should be noted that Mrs Brown's reliance extended to selling Apartment 28, which she previously owned and which was purchased at the time your client became the head lessor. Apartment 28 to which much of the default notices relate was sold on the basis of management fees that were provided at the time of settlement. 6. You have provided us with a breakdown of the largest of the invoices (No. 735) relied upon in the default notices issued to our client. For the reasons we elaborate below our client does do not regard the claims made in this invoice as correct. … 9. As you are aware Mrs Brown has been in the process of selling her Apartment pursuant to a contract for sale of the sublease for over 6 months. A real estate company which Mr Anstee controls acted on the sale. It is very surprising, and we consider it an important matter in any future litigation, that Mr Anstee sold the unit as our client's agent without disclosing the alleged amounts which SPM now claims. 10. This dispute has now delayed our client's sale for too long and we are instructed to commence proceedings unless SPM consents to the sale. We are instructed in an effort to properly establish any legitimate indebtedness to make this final attempt at resolution by identifying the various ways in which your client's position is unjustified. 11. We have set out below our client's assumptions in relation to the basis of the items allegedly particularised and claimed in invoice 735 (noting we are still awaiting the basis of claims made in invoice #770 issued in respect of Apartment 9.1). None of the particulars have ever included third party invoices or a description of any work services or goods which have been provided and for that reason alone they fail to satisfy the requirements of any claim for payment under the sublease or management agreement."
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] "38 Our client is prepared to pay from the proceeds of sale of the Apartment the sum of $20,000.00 in full and final satisfaction of all claims made against her by SPM in respect of Apartment 26. Our client would consider any claim made by SPM in relation to Apartment 26 only which is substantiated by third party invoices. " 39 In the event this offer is not accepted by 4pm, 9 July 2020 we are instructed to commence urgent proceedings in the Real Property List of the Supreme Court seeking inter alia: A. Declarations in respect of wrongful withholding of consent by SPM; and B. An injunction to effect the assignment and/or damages in lieu; and C. The Joinder of National Parks to the proceedings in orders that they be bound by any orders of the Court; and D. Costs."
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."

[26]

SPM purports to terminate subleases

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] "As you are aware sublease AJ483926 incorporating memorandum AJ121195 (under registered transfer of lease AN149147) was TERMINATED by Notice of Termination dated 23rd July 2020 served on you … You were also served by email from Matthew Anstee at 5:05pm on 23rd July 2020. In accordance with the Notice of Termination dated 22nd July 2020 and clause 14.5.1 of Memorandum AJ121195 the Sublessor re-entered and taken [sic] possession of Apartment 26 at 10:00am on 24th July 2020. The lock codes have been changed and you are no longer entitled to possession of Apartment 26. TAKE NOTICE you are not entitled to any access to Apartment 26 as and from 10:00am on 24th July 2020. It is acknowledged that you may have personal possessions and contents within Apartment 26. We are advised that Shane Brown removed from Apartment 26 recently any possessions and contents you required".
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: "I understand from discussions between our respective counsel that there is the possibility that your client is now prepared to provide its consent to my client's sale of the apartment (to be effected by way of transfer of sublease) on the basis that our client agreed to quarantine in trust the sum of $210,053.04 being the amount of your client's claim pending the orderly resolution of these proceedings. Please confirm this is your client's position. If it is your client's position then we have instructions for the monies to remain in our trust account pending determination of the proceedings or earlier resolution."
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] "1. Karen Brown procures from the purchaser the Deed of Guarantee and Acknowledgement to the terms of the Management Agreement and an agreement to pay the Bond payable; 2. Confirmation from NPWS about the terms of occupation of Apartment 26 and Apartment 9-1 by a Sublessee; 3. Any amount to be set aside to provide for the claims in respect of Apartment 26 and Apartment 9-1 and potential legal costs; 4. Karen Brown's undertaking to pay for the lease of the car and related legal costs of approximately $31,000 to be paid at settlement or authorised to be deducted from the deposit; 5. The sales agent's commission to be deducted from the deposit."
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.

[27]

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: "1. What amount, if any did the Plaintiffs owe to the Defendant in respect of monies due under the Sublease in respect of Apartment 26 owned by the First Plaintiff and Apartment 9.1 owned by the Second and Third Plaintiffs? 2. Was the Defendant estopped from making a claim against the First Plaintiff for the alleged cost of the renovation of a different apartment (being Apartment 28) owned by her as that apartment had … previously been sold without that cost being claimed? 3. Was the claim with respect to the costs of the renovations already satisfied, set off or released by work undertaken for the Defendant by the First Plaintiff's husband (a former Director of the Defendant) without remuneration, under an agreement with the Defendant? 4. Was there any entitlement to an amount representing the Selling Agents fees for the sale of the First Plaintiff's Apartment 28 by the sole director of the Defendant, in circumstances where there was no compliance with the Property and Stock Agents Act NSW 2002? 5. Is the Defendant, by the conduct of its Sole Director in acting as the First Plaintiffs agent on the sale of apartment 28, estopped from asserting that the Defendant had: (a) thereafter validly issued invoices for sums not previously disclosed at the time of the sale of Apartment 28; or (b) in purporting to terminate the Sublease of the First Plaintiff so as to prevent the sale of Apartment 26 proceeding? 6. Was there an agreement between the Defendant and the Plaintiffs not to charge for food and beverages by reason of the relationship of the Parties? 7. Have the costs and expenses the subject of the invoices been correctly calculated and is the calculation in accordance with the subleases? … 11. Was the Defendant's management of the records and accounts of the Plaintiffs' Apartments and the representation as to the state of those accounts a representation upon which the Plaintiffs relied to their detriment? … 14. Was the power of termination of the Subleases and re-entry used unconscionably by the Defendant and in breach of the power for which it was given by the subleases to secure payment? 15. Did the Defendant validly terminate the Subleases for the Plaintiffs' Apartments? ... 18. Should there be relief against forfeiture and, if so, on what terms (if any)."
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.

[32]

Matthew Anstee

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] "[Matthew]: No, I paid Chris Brauer because I ran into him at the pub in Bowral and he accused me of not paying my bills. And I said, 'Mate, I don't know what you're talking about. What are you talking about?' And he said, 'You and your mate Shane haven't paid me for five or six months. Who do you think you are?' I looked into it and I paid it two or three days later. [Counsel]: When you say you looked into it-- [Matthew]: ... (not transcribable) … I was about to say, I asked, 'What's this about?' He's [Shane's] gone, 'Oh, I've got to pay him. I haven't got the money.' And I said, 'Mate, I don't need people making assumptions or comments. I'll pay it and we'll sort it out later but you know you've got to pay the bills.' [His Honour]: What did you do to sort it out later between March 2017 and May 2020? [Matthew]: Well, it was always the case that it was to be repaid. [His Honour]: What did you do to sort it out later between March 2017-- [Matthew]: I haven't followed up anything to sort it out. [His Honour]: You hadn't? [Matthew]: I haven't followed up anything to sort it out, it was something that I needed to address with him. I knew Shane was in financial stress so I wasn't pushing any more onto him. [His Honour]: What about when apartment 28 was sold? [Matthew]: Yes. [His Honour]: Had you forgotten about this? [Matthew]: No, wouldn't say forgotten about it but, you know, a lot of those things, you see, like with the Chris Brauer stuff, I thought that was related to common areas as well and then I find out it was about unit 28 work. I'd always, up until recent times, I always assumed that Shane had paid his own bills in relation to his unit, not charging them to The Stables. [His Honour]: But hold on, I thought you said that in 2017 or early 2017 you paid it because even though it was Mr Brown's bill, and you were going to fix it up later? [Matthew]: Yeah, that's right. I paid it because he was, he was not in a position to pay it and it needed to be paid. [His Honour]: But you knew in 2017 that it was his bill, not The Stables' bill, is that right? [Matthew]: Correct."
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: "[Matthew]: So it would've been sent in an invoice for, attributed to - I'd have to find the invoice, your Honour." No such invoice was produced.
Also of relevance is the following passage of evidence: [132] "[His Honour]: But am I right in thinking that you aren't in a position to point to any invoices which had been sent or raised by 6 November 2019, which were to M[r]s Brown, which were outstanding at that point in time? [Matthew]: No. [His Honour]: For example, in relation to land tax? [Matthew]: Not that I could put my hands on at the moment."
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.

[35]

Agreement as to payment of Shane Brown for 2015 ski season

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.

[38]

Moneys alleged to be owing under Invoices 735 and 770

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.

[40]

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: "As there we[re] insufficient funds to pay me for my services, Matthew and I had the following discussion: Me: Since we are renovating and you haven't been paid for managing the season, why don't the [S]tables pay towards Karen's unit and she pay anything extra over the $50k. Shane: Ok, that's the same as if the Stables paid your wage anyway. It can go under renovation costs."
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.

[41]

Allowable Deductions

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: "'Monthly Nett Receipts' means the Monthly Gross Receipts referred as herein defined less Allowable Deductions. … 'Allowable Deductions' means 25% of Monthly Gross Receipts received by the Manager plus the Proprietor's proportion of NPWS charges or other Governmental or semi-Governmental bodies or statutory authorities that may be substituted for NPWS."
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: "2015 $2,815.00 2016 $10,169.70 2017 $5,962.63 2018 $10,248.48 2019 $8,386.25 2020 $6,495.54"

[42]

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: "98 The principles surrounding the construction of commercial contracts in this country are well established. In Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 at [35], the plurality (French CJ, Hayne, Crennan and Kiefel JJ) stated that '[t]he meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean' in context. The Court stated that 'it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract': see also Mount Bruce Mining at [46]-[49]; Simic v New South Wales Land and Housing Corporation (2016) 260 CLR 85; [2016] HCA 47 at [78]; Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12 at [16]; Victoria v Tatts Group Ltd (2016) 90 ALJR 392; [2016] HCA 5 at [51]. 99 In Mount Bruce Mining it was pointed out at [46] that context includes 'the entire text of the contract as well as any contract, document or statutory provision referred in the text of the contract'."
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.

[43]

Commission Costs

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.

[49]

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] "HIS HONOUR: Should I infer that that charge related to the audit which led to the schedule at 1176, for example, and 1177? MOORE: Well, it certainly in part would. Yes. In part two, the fact that the percentages were wrongly charged previously, yes. HIS HONOUR: Why should a tenant, in circumstances where SPM has contractual obligations under the management agreement to conduct the accounts and manage the books et cetera, why should a tenant pay for mistakes which were made by the manager in letting charges? MOORE: I don't think I can contend anything over and above that they were the ones who were getting - they had received the benefit, which Mr Anstee perceived to be wrongful, but I understand your Honour's question. HIS HONOUR: Yes. All right."
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.

[53]

Interest

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] "HIS HONOUR: How can it be due if it hasn't been asked for? MOORE: That's right. I accept that, your Honour."
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.

[54]

Invoice 770 to Jake and Sam Brown

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] "I cannot say how I would have acted differently had I known that I would be charged this amount as I do not know what it relates to. I otherwise may have given more thought to the times that I stayed at the Stable[s] to ensure that I received a maximum rental return."
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).

[56]

Termination of the subleases was invalid

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.

[58]

Legal principles

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: "In considering whether such a clause justifies a vendor in any given case in cancelling his contract, the Court must bear in mind three things: First, the purpose of every such condition, which is a matter of law and is stated in the passage quoted from Greaves v. Wilson [1858] EngR 455; (1858) 25 Beav 290 (53 ER 647); next, the necessity for bona fides on the part of the vendor in using his power for that purpose: see also Woolcott v. Peggie (1889) 15 App Cas 42. This is a question of fact, and is admitted here. The third essential is that the cancellation must be reasonable. Reasonableness is a question of fact, dependent on the whole of the circumstances, though one of those circumstances consists always of the wording of the contract itself."
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: 1. none of the termination notices involved any breach of the relevant deeds relied upon to justify the termination; 2. any breach that existed as alleged in the termination notices could not have been "serious or persistent"; and 3. the termination notices were all invalid because a reasonable time was not provided to remedy any breach.
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]): (i) specifying the breach; and (ii) if remediable, requiring Sino Iron to remedy the same within a specified reasonable time; or (iii) if not remediable, requiring Sino Iron to pay reasonable compensation to Mineralogy within ninety days of the giving of the notice, and, if Sino Iron shall fail to remedy the breach or pay compensation as aforesaid, the Deed shall terminate on the expiration of the period specified in that notice.
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: "In the ultimate analysis the result in a given case will depend upon the resolution of subsidiary questions which inevitably arise. The more important of these are: (1) Did the conduct of the vendor contribute to the purchaser's breach? (2) Was the purchaser's breach (a) trivial or slight, and (b) inadvertent and not wilful? (3) What damage or other adverse consequences did the vendor suffer by reason of the purchaser's breach? (4) What is the magnitude of the purchaser's loss and the vendor's gain if the forfeiture is to stand? (5) Is specific performance with or without compensation an adequate safeguard for the vendor?"
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: "was concerned with situations in which a corporate lessor by its own act or with its consent entered upon a course of negotiation which had the effect of leading the lessee to believe that the strict rights arising under the lease would not be enforced, or would be kept in suspense, or held in abeyance. A situation of that type had occurred, persuading the House that the lessor was estopped from asserting its legal right to forfeit the lease. Though the lessor had not intended to defraud the lessee, the lessor's conduct amounted to equitable fraud. Turning from the lessor to the lessee in such a case, the lessee may coincidentally have acted under a mistake or suffer surprise." (footnotes omitted)
As Brereton JA observed in Kay v Playup Australia Pty Ltd [2020] NSWCA 33; (2020) 19 BPR 40,037 at [103]: "In a case where the object of the provision for forfeiture is to secure the payment of money, the discretion to grant relief against forfeiture is ordinarily exercised in favour of granting relief if the default is cured (with interest if appropriate). Relevant discretionary considerations include the gravity of the breach, whether it was wilful, whether there is a history of default and the risk of future defaults; whether reliance on the forfeiture is coloured by equitable fraud, accident, mistake or surprise; and whether the forfeiture would result in a windfall."

[59]

Consideration

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.

[62]

Endnotes

CB p 48 at [25].
Tp 179.
CB p 49 at [27], [33].
Tp 47.
Tp 64.
Tp 69, line 42.
CB p 63 at [41].
CB p 65 at [55].
CB p 62 at [30].
CB p 65.
CB p 22 at [47].
CB p 66.
Tp 48, lines 2-13.
Tp 56, lines 25-29.
Tp 94.
CB p 66 at [59]-[64].
Tp 126.
CB p 273.
CB p 536.
CB p 67 at [69].
CB p 67 at [70].
CB p 67 at [72]-[75].
See, for example, CB pp 752, 819; CB p 71 at [102].
Tp 59.
CB p 622.
CB p 625.
CB p 630.
CB p 649.
CB p 713.
CB p 743.
CB p 750.
CB p 798.
CB p 815.
CB p 71 at [103].
Tp 56.
Tp 56.
CB p 822.
CB pp 822, 831, 844.
CB p 68 at [78]-[80].
CB p 68 at [82].
Tp 124-125.
CB pp 762-765.
CB p 766.
CB p 767.
CB pp 768-782.
CB p 780.
CB pp 783, 785.
CB p 783.
CB p 786.
CB p 787.
CB p 788.
Tp 22.
CB p 789.
CB p 790.
See [115] below.
CB p 117 at [69].
Tp 136-137.
CB p 834.
CB p 791.
CB p 800.
CB p 801.
CB p 806.
CB p 801.
CB p 807.
CB p 817.
CB pp 828-830.
CB p 839.
Tp 139.
CB p 841.
CB p 843.
CB p 844.
CB p 869.
CB p 870.
CB p 871.
See, for example, Tp 127, 137.
CB p 872.
See Exhibit P7.
Tp 193.
Tp 193-194.
CB p 873.
CB p 873.
CB p 878.
CB p 879.
CB p 880.
CB pp 882-884.
CB p 881.
CB pp 70-71 at [98].
CB pp 915-916.
CB p 885.
CB p 1118-1119.
CB p 1119.
CB p 844. See also [96] above.
CB p 845
CB p 892.
CB p 893.
Tp 146.
CB p 894.
CB p 987.
CB p 888.
CB p 887.
CB p 910.
CB p 909.
CB p 921.
CB p 928.
CB p 834.
CB p 835.
CB p 928.
CB p 929.
CB p 349; Tp 198-199.
CB p 929.
CB p 929.
CB p 930.
CB p 51 at [44]-[45].
CB pp 51-52 at [47].
CB p 931.
CB p 949.
CB p 952.
CB p 953.
CB pp 956-957.
CB p 962.
CB p 967.
CB pp 975-976.
CB p 979.
CB p 989.
CB p 1003.
CB p 1004.
CB p 1025.
Tp 75, lines 19-23.
Tp 122-123.
Tp 124, line 11.
Tp 127, line 8.
Tp 137, lines 41-48.
Tp 275.
Tp 290.
CB pp 719-740.
Tp 259.
Tp 293.
Tp 281.
Tp 290.
Tp 294.
CB p 55 at [74].
Tp 293.
Tp 295. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 December 2021

Brown v The Stables Perisher Management Pty Ltd

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Cases Cited (26)

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