HIS HONOUR: The plaintiff is a 95-year-old retired medical practitioner. He gave evidence remotely and was cross-examined. He was entirely unshaken. An attack (such as it was) on his credit failed. To my observation, despite his very advanced years, he retains full mental acuity. Plainly, he was a truthful witness.
On 22 December 2020, the plaintiff sold his rural property at 233 Sunnyside Road, Central Tilba, NSW (Sunnyside) to the defendant family investment company. The plaintiff says his asking price was $2.5 million but they negotiated a price of $2.2 million and a licence entitling him to occupy a part of Sunnyside (being a house and curtilage) (the house) for $1.00 per year until the licence is terminated. [1] Tilba is on the NSW South Coast. The town of Narooma is not far away.
The parties entered into a written Licence Agreement (the Licence) on the same day.
Clause 2 of the Licence provides:
The parties agree that the term of the Licence shall be for the lifetime of the Licensee or such earlier date as nominated by the Licensee at his absolute discretion provided however that if in the reasonable opinion of the Licensor the Licensee has ceased to continue to personally reside permanently in the residence, the Licensor may serve a Notice of Termination of the Licence on the Licensee requiring the Licensee to vacate the property within 30 days of service of the Notice.
For the defendant legitimately and effectively to give notice under cl 2, the relevant opinion must be arrived at reasonably and also be reasonably based on available material. In most cases, this requires natural justice to be afforded: EFG Australia Ltd v Kennedy [1999] NSWSC 922 at [57] per Hodgson CJ in Eq; BUPA HI Pty Ltd v Chang [2019] FCAFC 180 at [64].
On 7 August 2024, by a (three page) letter entitled 'Notice of Termination', the defendant purported to terminate the Licence pursuant to cl 2. It stated that it had formed the reasonable opinion that the plaintiff had ceased to continue to personally reside permanently at the residence. It asserted that the plaintiff's pattern of conduct was to maintain the appearance of using the residence to preserve "flexibilities" and to keep up regular appearances to ground "continuity of association claims". In effect, it asserted that the plaintiff had deliberately falsely sought to convey that he was living permanently in the house when, in fact, he was living at 68 Flying Fox Road, Narooma, NSW (Flying Fox), a property in town, 15 minutes driving time from the house.
The defendant subsequently asserted that the plaintiff is a trespasser, and his electricity was cut off in the circumstances briefly described below.
The defendant again purported to terminate the Licence on 20 August 2024 on the basis that the plaintiff was in breach of the Licence because he permitted others to reside in the house. That complaint was, and is, not pressed.
Things were brought to a head when, on 18 October 2024, solicitors for the defendant wrote to the plaintiff's solicitors saying that it had been served with notice that the electrical connection to Sunnyside is not certified, uninsurable and potentially unsafe (that notice has not been produced). The electricity was cut off on 25 October 2024. It is not altogether clear whether an electrician did this, but I infer that the defendant called an electrician in. It is also not clear to me whether the electricity can be restored without access to the non-licensed part of Sunnyside.
The plaintiff says that the electricity connection to the house comes from a meter box on a part of Sunnyside to which he does not have access under the Licence. When the power was cut off, he called the electricity supplier, Essential Energy, which he says attempted to reconnect the power but was refused access by the defendant to enter the property. Essential Energy have provided him with a small generator which he is currently using. Electricity is needed for his running water and ablution facilities.
On 25 October 2024, Essential Energy issued a Notice of Entry to the defendant to enter Sunnyside to reinstate the electricity. There is a live question whether the defendant refused access and whether Essential Energy has withdrawn the notice. It is not necessary at this point to resolve this.
These proceedings were commenced by the plaintiff on 31 October 2024, as a matter of urgency in light of the cutting off of his electricity, before me, sitting as Equity Duty Judge. In his Summons, the plaintiff sought final declaratory relief that the Licence had not been validly terminated and interim relief that the defendant take steps to restore the electricity. I fixed the matter to be heard on a final basis the following week. The only final relief sought in the Summons was as to the non-entitlement of the defendant to terminate the Licence. I made directions, including for the filing of Points of Claim and Points of Defence. In his Points of Claim, the plaintiff sought to include a claim for final relief in relation to the restoration of electricity to the house, which did not accord with the Summons. I gave the plaintiff leave to amend the Summons to include this as final relief but formed the view that the determination of that issue should best await the outcome of the Licence issue.
Ultimately, I ordered that the Licence issue be determined first, as a separate question. I proposed to stand consideration of how the electricity issue should (if necessary) be dealt with to when I delivered judgment on the Licence issue, which I anticipated would be in the week of 11 November 2024. However, Counsel for the defendant was not available that week and to accommodate him, I ordered that the matter be stood over to 26 November 2024. In light of the situation with the electricity, I raised whether, should the plaintiff succeed on the Licence issue, there should be an interim injunction (against the usual undertaking as to damages) that, until further order, the defendant be restrained from hindering any licensed authorised electricity provider from restoring power to the house. This would cater for the contingency that there is some legal or practical impediment to the electricity being restored. This course was not opposed.
The defendant's avowed basis for forming the necessary opinion is the observations principally of a director, Mr Timothy Byrne (Mr Byrne), and, to a lesser extent, his son Riley (Mr Byrne Jr), together with what are said to be conversations had with the plaintiff's neighbours and other licensees of parts of Sunnyside, which were corroborative of the fact that the plaintiff was not permanently living in the house. Precisely what was said by the neighbours and when it was said was not the subject of evidence.
An initial observation is that Mr Byrne is not the defendant's sole director. His wife is also a director. There is no evidence that the board of directors formed the relevant opinion. I proceed on the footing (albeit unproved) that Mr Byrne's mind represents the mind of the defendant.
Both Mr Byrne and Mr Byrne Jr gave evidence and were cross-examined.
Mr Byrne was an unpersuasive, unconvincing, manifestly self-serving and less than frank witness. Nevertheless, there are some respects in which I accept his evidence. I deal more fully with his evidence below.
Mr Byrne Jr gave evidence within a narrow compass, in particular, about one alleged conversation he says he had with the plaintiff on 19 June 2024 at Sunnyside during which he says the plaintiff said, "ok time to head back home to Flying Fox Road". This conversation is said to be one of the circumstances upon which the defendant relies in forming what it says is its reasonable opinion that the plaintiff had ceased to personally reside permanently in the house because his words indicated that his "home" was somewhere else.
The plaintiff has no recollection of, and disputes, that he would have said those words. I am not persuaded that those words were said. But if they were said, they are peripheral at best given that the word "home" could connote a number of different things, including home for the week. Additionally, if those words were said and (as portrayed) intended to convey that the plaintiff's home was somewhere else, not Sunnyside, this is destructive of the defendant's accusation that the plaintiff was engaged in a deception that he was living in the house and not elsewhere, one of the avowed matters underpinning the formation of Mr Byrne's opinion. [2] Either way, there is no comfort for the defendant's position to be found in the evidence of Mr Byrne Jr. In any event, I find that the plaintiff was personally residing permanently in the house. The requirements of physical presence and an intention to reside there permanently were satisfied. Absence for periods, even long periods, is not necessarily inconsistent with permanent residence.
In its Notice of Termination, the defendant says that, during the month of June 2024, it conducted "seven separate random spot checks on the [plaintiff's] overnight habitation patterns" and that, on all seven occasions, the plaintiff resided overnight at Flying Fox. His evidence was that he drove to Flying Fox each time at night and in the morning to conduct this surveillance.
Mr Byrne gave evidence that he visited Sunnyside on numerous occasions (in the order of 50) in the months and weeks leading up to 7 August 2024 and that he saw the plaintiff there only about 10% of the time. Mr Byrne Jr was also there on many occasions.
Mr Byrne's conclusion that the plaintiff was at Sunnyside at any given time was based mostly on the fact that his car was there. He seldom actually saw the plaintiff. This is unsurprising given that, according to the plaintiff, when he is at Sunnyside, he is indoors 95% of the time. Mr Byrne's observations are, in these circumstances, of little or no probative value.
The observations said to have been conveyed by neighbours were not articulated but appeared to be along the lines that they had not seen the plaintiff there much.
The plaintiff gave evidence, which I accept, that his wife (since 2014) is disabled and that he purchased Flying Fox as a residence in town for her and her full-time carer (her daughter, a registered nurse). He says that in June 2024, the carer went away for some time, during which he slept at Flying Fox to be able look after his wife for 7, 8 or 9 nights. Each day, however, he went back to Sunnyside to attend to his usual tasks, such as reading his emails (his only access to his emails is at the house), to get clothes for the next days and to get food for his dog. He says that, when the carer returned to Flying Fox, he returned to sleeping at Sunnyside. This coincides with the period of the defendant's spot checks. He has lived and continues to live in the house at Sunnyside.
He says that, in May, he did stay over at Flying Fox after he sustained a head injury.
He gave unchallenged evidence that he is away from Sunnyside for very short periods of time when he visits his family.
He gave unchallenged evidence that all his possessions, household items and his dog remain at Sunnyside, and he is continuing to reside there, notwithstanding the difficulties he is experiencing relying only on power provided by the generator. He did, however, move some items of furniture to Flying Fox to make it more liveable for his wife.
The plaintiff owns a number of (at least four) vintage motor vehicles which are stored at Sunnyside. There are not sufficient sheds at Flying Fox to store them.
The plaintiff gave unchallenged evidence that the defendant has gathered substantial fencing materials at Sunnyside and he is concerned that if he leaves for any meaningful period of time, the defendant will block his access. In all the circumstances, his concern is understandable.
He gave unchallenged evidence that, in 2023, Mr Byrne and he had discussions about him leaving Sunnyside for a payment of money, but no agreement was reached.
Mr Byrne deliberately did not raise with the plaintiff or discuss with him his clandestine observations of the plaintiff or the discussions he says he had with others. He says his reason was not to "tip him off that we were observing him". [3] They did not "want to indicate that we were looking at his patterns of habitation". [4] I believe him in these respects. However, I do not consider this behaviour to be that of a person reasonably endeavouring to form a reasonable opinion. It amounts to a deliberate failure to obtain available (and as it turns out critical) material.
Counsel for the defendant sought to justify the defendant's failure to communicate with the plaintiff (which would have afforded him natural justice) on the grounds that the plaintiff had a motive to lie, in that if had he, in fact, ceased to personally reside permanently in the house, he would have been exposed to losing the Licence and the inconvenience of losing his storage space for his cars. Even if it were true that the defendant had a motive to lie, which I do not accept, this was no justification for the defendant not to give him an opportunity to respond. After all, the plaintiff had given what I have found is the true explanation for his having stayed over at Flying Fox. I think it is inherently more likely that the plaintiff had a motive to continue to reside at the house rather than one to mislead about residing there. He gave evidence of the need to reside there to avoid the Licence being terminated.
Mr Byrne denied that his intention was to get rid of the plaintiff. I disbelieve him. I find that the defendant's conduct in deliberately not alerting the plaintiff to its alleged concerns and in not giving the plaintiff an opportunity to deal with them (which would amongst others revealed why he had stayed at Flying Fox) was part of an endeavour to entrap the plaintiff and put the defendant in a position to terminate the Licence and rid itself of the plaintiff from Sunnyside.
Mr Byrne gave evidence that he did not know that the plaintiff's wife was living at Flying Fox or that she was disabled. He did not know that the plaintiff was there looking after his wife. But his position was that had he known that she was living there, was disabled, and had a carer who wasn't there, he would have still formed the opinion that it was reasonable for the plaintiff to go because his "reasonable opinion was over a longer period than just the seven days". [5] In this respect, I also believe him. I consider this attitude to be consistent with an intention to get rid of the plaintiff, irrespective of whether his avowed opinion was reasonable or not.
Mr Byrne gave evidence that his motivation in serving the Notice of Termination was to ensure strict compliance with the Licence. I disbelieve him. His motivation was to bring the Licence to an end. His stated motivation is inconsistent with his evidence that he did not want to "tip" the plaintiff off. He did not want the plaintiff residing in the house - he wanted him gone. There are a number of additional circumstances which point compellingly to his motivation to get rid of the plaintiff:
1. the earlier failed negotiations for the plaintiff to leave;
2. deliberately not alerting the plaintiff to its concerns or giving him an opportunity to explain or elucidate;
3. Mr Byrne's evidence (which I believe) that for the first three years it suited the defendant having the plaintiff living there, but it no longer suits the defendant; [6]
4. the presence of the defendant's fencing materials at Sunnyside;
5. sending a second Notice of Termination based on an assertion that the plaintiff had breached the Licence by allowing others to stay at the house (which is not a breach of the Licence anyway), upon which the defendant no longer relies; and
6. taking steps resulting in the plaintiff's electricity being cut off.
I have concluded that, if the defendant company, in fact, came to hold an opinion that the plaintiff had ceased to continue to personally reside permanently in the house, that opinion was neither arrived at reasonably nor reasonably based on available material.
I make the following orders:
1. The Court declares that the defendant was not entitled to issue the Notice of Termination dated 7 August 2024 or the Notice of Termination dated 20 August 2024 and that the plaintiff has at all times been entitled to and remains entitled to occupy the part of the property known as 233 Sunnyside Road, Central Tilba in NSW, being the land in Certificate of Title 21/1046699 and 529/752155 as specified in clause 1 of the Licence Agreement dated 22 December 2020.
2. Upon the plaintiff through counsel having given to the Court the usual undertaking as to damages, until further order, the defendant be restrained from hindering any licensed electrician or authorised electricity provider from restoring power to the house.
3. Until the Court determines the plaintiff's case with respect to the provision of electricity on a final basis, on any return date, the question whether the injunction is to continue is a matter in respect of which the plaintiff bears the onus, and the defendant does not attract any onus in relation to the extension which the defendant otherwise would not have had on the original application for interim relief.
4. I stand the matter over for directions on 26 November 2024.
5. Liberty to apply on 24 hours' notice in relation to the operation of the injunction and otherwise on 3 days' notice.
6. Reserve costs.
I will hear the parties on whether the electricity issue should be made the subject of an urgent mediation between them.
[2]
Endnotes
If the reduction was in consideration of the grant of the licence, amortising the amount over the past four years is equivalent to $75,000 per year - which will obviously progressively reduce the longer the Licence stays on foot.
T 30.42.
T 29.41, 31.36-39.
T 30.26.
T 36.9.
T 31.26, 32.9-11.
[3]
Amendments
12 November 2024 - [25] amended Sunnyside to Flying Fox
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Decision last updated: 12 November 2024