I S McGeoch Pty Ltd v Sporting Shooters Association of Australia New South Wales Albury Branch Inc

Case •

[2023] NSWSC 369

•

18 April 2023

No judgment structure available for this case.

Supreme Court


New South Wales

Medium Neutral Citation: I S McGeoch Pty Ltd v Sporting Shooters Association of Australia New South Wales Albury Branch Inc [2023] NSWSC 369
Hearing dates: 30 March 2023
Date of orders: 18 April 2023
Decision date: 18 April 2023
Jurisdiction:Common Law
Before: Basten AJ
Decision:

(1)   Declare that on or about 17 March 2021 the plaintiff terminated the lease with registered number AN436833Q in respect of the property identified in Folio Identifier 2/874280 and known as Lot 2, Gravel Pit Road, Ettamogah (the land).

(2)   Give judgment in favour of the plaintiff for possession of the land.

(3)   Grant the plaintiff leave to issue a writ of possession 30 days after the entry of these orders.

(4)   Order that the defendant pay the plaintiff’s costs of the proceedings in this Court.

Catchwords:

LEASES AND TENANCIES – breach – termination – lease of land to club carrying out shooting activities –clause in the lease agreement required affiliation with specific association listed in cl 97 of the Firearms Regulation – whether change in affiliation to a different association constituted breach of the lease

LEASES AND TENANCIES – breach – waiver, affirmation, election – notice of intention to terminate if breach not remedied – whether election not to require remedying of breach – whether right to terminate waived through conduct – whether acceptance of rent during notice period affirmed lease

Legislation Cited:

Conveyancing Act 1919 (NSW), s 170(1)

Firearms Regulation 2017 (NSW), cl 97

Cases Cited:

Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570; [2008] HCA 57

Allianz Australia Insurance Limited v Delor VueApartments CTS 39788 [2022] HCA 38; 97 ALJR 1

Bibby Financial Services Australia Pty Limited v Sharma [2014] NSWCA 37

Owendale Pty Ltd v Anthony (1967) 117 CLR 539; [1967] HCA 52

Category:Principal judgment
Parties: I S McGeoch Pty Ltd (Plaintiff)
Sporting Shooters Association of Australia New South Wales Albury Branch Inc (Defendant)
Representation:

Counsel:
D Parish (Plaintiff)
M Davis (Defendant)

Solicitors:
Keating Avery Solicitors (Plaintiff)
Bartier Perry (Defendant)
File Number(s): 2022/00172856

JUDGMENT

  1. BASTEN AJ: The plaintiff, I S McGeoch Pty Ltd, is the owner of a parcel of land situated some 20kms north of Albury. On 1 July 2017, the plaintiff leased the land to the Albury Wodonga Clay Target Club Inc (the Club) for a term of 10 years, with options to renew, for the purpose of conducting clay target shooting. In 2021, the plaintiff sought to terminate the lease. It now seeks a judgment for possession against the Club.

  2. The Club was incorporated on 7 March 1988. For some 30 years it was known as Albury Wodonga Clay Target Club Inc. On 4 June 2019, it changed its name to Sporting Shooters Association of Australia Albury Branch Inc and, shortly thereafter, on 19 August 2019, it changed its name again to Sporting Shooters Association of Australia New South Wales Albury Branch Inc. The name changes reflect a change in the Club’s affiliation, but are otherwise not significant. The defendant Club is the lessee named in the lease.

  3. The issue of affiliation is of central importance in this case. In order to undertake shooting activities on an approved shooting range, the Club is required to hold an approval pursuant to cl 97 of the Firearms Regulation 2017 (NSW) (“Regulation”). To hold such an approval, the Club must be affiliated with one of the associations listed in cl 97(3)(d) of the Regulation. At the time it entered into the lease, the Club was affiliated with the Australian Clay Target Association Inc (“ACTA”). Its continued affiliation with ACTA was a condition of the lease. In an affidavit sworn on 17 November 2022, Peter John Thomson, the President of the Club, stated that in early 2019 the Club went through a process of changing its affiliation from ACTA to the Sporting Shooters Association of Australia (“SSAA”) which, it may be assumed, was intended to be a reference to the Sporting Shooters Association of Australia (New South Wales) Inc, which was an association listed in the Regulation. On 16 April 2019, the Club passed a resolution at a special general meeting approving the affiliation with SSAA and adopting a constitution as a branch of SSAA.

  4. The plaintiff, through its principal, Ian Stuart McGeoch, took the view that the change in affiliation constituted a breach of the term of the lease which required that the Club remain affiliated with ACTA. The first issue in the proceeding was whether the change of affiliation in fact constituted a breach of the lease.

  5. Curiously, the evidence was silent as to the mechanism by which affiliation took place and the mechanism by which the Club ceased to be affiliated with ACTA. Although Mr Thomson gave evidence that dual affiliation may have been possible, [1] the matter was not explored. The case proceeded on the basis that the Club was no longer affiliated with ACTA from mid-2019. The Court should act on that common assumption.

    1. Tcpt 30/03/23, p 26(48).

  6. The second issue was whether, despite taking steps to terminate the lease, the plaintiff had in fact, by its conduct, affirmed the continued operation of the lease. Such affirmation, the defendant submitted, removed the basis for termination. The plaintiff accepted that unless the change in affiliation constituted a breach, it had no grounds to terminate the lease. Nevertheless, breach was not itself a ground of termination but rather provided the basis for the issue of a notice to rectify the breach, non-compliance with which provided the ground for termination.

Breach of lease

  1. The lease, inappropriately, used the form of a retail lease. The form required under the Real Property Act 1900 (NSW) for registration of the lease stated that the lease incorporated “the provisions or additional material set out in annexures A & B hereto”.

  2. Annexure A to the lease contained a summary of certain provisions (clause 1) and, in cl 2, alterations or additions to annexure B. Those alterations included cl 2(k) which read:

“(k)   Affiliation

The Lessee must at all times remain affiliated with the Australian Clay Target Association or such organisation as succeeds to the activities of the Australian Clay Target Association.”

  1. The standard terms and conditions were set out in annexure B. Relevantly for present purposes, cl 10 of annexure B stated:

“10.   Default and termination

(a)   If the lessee is in breach of an obligation under this lease, the lessor may serve on the lessee a notice to remedy the default. Such notice must:

(i)   Specify the breach; and

(ii)   Specify the steps required of the lessee to rectify the breach; and

(iii)   Give the lessee a reasonable time to rectify the breach, but such time need not exceed 30 days.

(b)   If the lessor has complied with the previous subclause and the lessee has not remedied the breach to the reasonable satisfaction of the lessor, the lessor may terminate this lease by giving the lessee 14 days written notice.”

  1. Clause 10(c) provided that the lessee “shall on or before the termination date remove its fixtures, fittings and goods from the premises” failing which they are forfeited and become the property of the lessor. Clause 10(d) stated that should the lessor become “entitled to terminate this lease and take possession of the premises” then “the lessee irrevocably appoints the lessor as the lessee’s attorney to do all such acts and things and to sign all such documents as may be necessary to surrender this lease, to give possession of the premises and to convey good title to a third party [in relation to the lessee’s fixtures]”.

Breach of clause 2(k)

  1. As explained above, it was common ground that in mid-2019, the Club ceased to be affiliated with ACTA. Accordingly, the issue was whether the second limb of the clause was satisfied by the Club affiliating with another peak association identified in the Regulation.

  2. The plaintiff’s claim was that the second limb of cl 2(k) was not so satisfied. It submitted that the ordinary meaning of “or such organisation as succeeds to the activities of [ACTA]” envisaged that ACTA might cease to exist or might cease to carry on activities, in which case affiliation with a body which thereafter undertook the activities previously undertaken by ACTA would satisfy the clause. That is undoubtedly the ordinary meaning of the language used. However, the Club submitted that, read contextually, a different meaning was to be preferred. The Club contended that pars (j), (k) and (l) of cl 2 reflected the requirements of the Regulation with respect to approval of clubs, cl 97 of which relevantly provided:

97   Approval of club

(1)   An application for the Commissioner’s approval of a club may be made by the secretary of the club (or other relevant office holder if there is no secretary) by lodging with the Commissioner an application in the approved form, together with—

(a)   a certificate given by the applicant in the approved form setting out the full name, date of birth and residential address of each member of the club, and

(b)   a copy of the rules of the club, and

(c)   such other information and documents as the Commissioner may require.

(2)   The Commissioner may—

(a)   grant the approval either unconditionally or subject to such conditions as the Commissioner thinks fit, or

(b)   refuse the application.

(3)   The Commissioner must not grant an approval unless—

(a)   the club concerned consists of 10 or more active members and has been established for at least 3 months, and

(b)   the Commissioner is satisfied the club has rules that are appropriate, and

(c)   the Commissioner is satisfied that—

(i)   the club has a genuine and proper constitution, and

(ii)   the club will conduct its activities with proper regard to the preservation of public safety or the peace, and

(iii)   the club will conduct regular meetings and activities, and

(iv)   the club will maintain adequate public liability and member insurance, and

(d)   the club is affiliated with one of the following associations, … and the association concerned has recommended the granting of the approval—

…

Australian Clay Target Association Inc

…

Sporting Shooters Association of Australia (New South Wales) Inc

….

  1. Clause 2(j) of the lease stated:

“(j)   Regular Activities

The Lessee must hold regular activities at least monthly on the premises and must at all times have a number of members sufficient to satisfy the requirements of any minimum membership number as required by any relevant government legislation or the order of any relevant statutory authority.”

That requirement was said to be directed to the terms of cl 97(3)(a) and (c)(iii).

  1. Clause 2(l) stated:

“(l)   Direction of Shooting

The Lessee shall ensure that all participants in activities at the premises shall at all times only shoot in the direction in which shooting is conducted at the date of commencement of this lease. The Lessee shall not allow any change in direction of shooting without the prior written consent of the Lessor and the prior written consent of any relevant authority.”

This requirement, it was submitted, was directed to compliance with cl (3)(c)(ii) of the Regulation.

  1. The Club submitted that once the statutory context was understood, the appropriate purposive construction of cl 2(k) of the lease was that it required compliance with the affiliation requirements of cl 97(3)(d) of the Regulation. Thus, cl 2(k) was complied with by a change in affiliation to another peak organisation which carried on the same or similar activities to those of ACTA.

  2. The underlying purpose of many of the provisions in cl 2 of the lease may be understood as seeking to ensure compliance with the requirements of cl 97 of the Regulation, so as to secure the continuing approval of the Club under that provision. However, the language used in the clause does not closely adhere to the language of the Regulation. For example, cl 2(f) requires that the lessee have public liability insurance. That partly, but not entirely, reflects the requirement of cl 97(3)(c)(iv) that the Club maintain “adequate public liability and member insurance”. Further, cl 2(j), requiring the lessee to hold “regular activities at least monthly on the premises” reflects in part the requirement in cl 97(3)(c)(iii) that the Club “will conduct regular meetings and activities”, but makes no reference to meetings and adds the requirement of monthly activities. Then, to the extent that cl 2(l) is understood to be addressing public safety, it does so in specific terms which bear little relationship to the language of cl 97(c)(ii).

  3. In short, the lease terms in part reflect the language of cl 97 of the Regulation, in part go further than the language of that clause and in part fall short of the requirements set out in the clause. Reliance on the purpose might, for example, allow for a misstatement of the name of the body with which the lessee must remain affiliated, where it can be inferred that the name was intended to refer to a body listed in cl 97(3)(d), but was incorrectly identified in the lease condition. It does not, however, permit the rewriting of cl 2(k) so that it requires affiliation with ACTA “or such other organisation as may be listed in cl 97(3)(d) of the Regulation”. Nor does it assist to suggest that the second limb of par (k) sufficiently identifies any association listed in the Regulation which carries on the same “activities” as ACTA.

  4. Even were that last reading permissible, it appears from the limited material tendered in the proceeding, that the activities of the two organisations are significantly different. The objects of ACTA are restricted to promoting, conducting and administering “clay target shooting”. By contrast, the objects, aims and purposes of SSAA are differently identified, the first being “to promote and improve the sport of shooting in the State of New South Wales through public relations programs”. More relevantly, the fourth identified object, aim and purpose is “to promote and assist in establishing and maintaining firearms shooting ranges suitable for the shooting disciplines of the National Association within the State of New South Wales”. No doubt that object might include the activities of the Club, but it clearly extends well beyond clay target shooting. However, as this approach was not explored in submissions, it need not be addressed further.

  5. The best that can be said for the Club’s position with respect to the operation of cl 2(k) is that the change in affiliation did not jeopardise the approval of the Club by the Commissioner of Police in accordance with the Regulation. That fact does not demonstrate compliance with the express terms of cl 2(k). The ordinary meaning of the clause, noted above, was not engaged by a transfer of affiliation to SSAA, it not being an organisation that had succeeded to the activities of ACTA. The clause cannot be read down as permitting a unilateral transfer of affiliation to SSAA. Accordingly, the plaintiff is correct to assert that the Club has been, since mid-2019, in breach of that term of the lease.

  6. The subsequent steps taken by the plaintiff will be addressed in considering the second issue.

Affirmation of lease by plaintiff

Bases of Club’s submission

  1. The second issue raised in the proceedings was a defence that the plaintiff had at relevant periods, by its conduct, affirmed the validity and continuing operation of the lease. Affirmation was said to have occurred in the course of two, or possibly three, periods. The first period ran from the time when Mr McGeoch, as the controlling mind of the plaintiff, formed the view, in accordance with legal advice he had obtained, that there had been a breach of cl 2(k). The period continued up until the date at which a rectification notice was given under cl 10 of the lease. As to the first period, there is no doubt Mr McGeoch treated the change of affiliation as a breach of the lease.

  2. The second period ran from the day when the notice period expired without rectification of the breach to the giving of notice of termination.

  3. While the oral submissions focused on these two periods, it was also submitted by the Club that affirmation of the continuation of the lease occurred after the notice of termination.

  4. On 5 March 2019, Mr McGeoch wrote to the President of the Club seeking to have the proposed special general meeting to consider the proposed change of affiliation delayed. The email continued:

“By the way, the moment you vote for the Club to be an SSAA Club, & it is passed, my lease with the AWCTC becomes null & void …. These details need to be looked at & I would have thought by now you would have contacted me & had very serious discussions on this matter.”

The email also raised the possibility of SSAA purchasing the land or, failing that, the Club entering into a new lease.

  1. A notice of breach, pursuant to cl 10 of the lease, was not served until December 2020. The precise date at which the notice took effect was in dispute, but the Club submitted that the first period ended on about 8 December 2020 when the notice of breach signed by Mr McGeoch was emailed by his solicitor. However, in a letter dated 24 December 2020, the Club’s solicitor stated that the notice was not served until 21 December. On that basis, the period expired on 20 January 2021. The plaintiff said it had been extended to 28 February 2021.

  2. The second period commenced with the expiration of the time given in the notice of breach for rectification of the breach (30 days) and ran until the notice of termination was given. That period commenced, the Club contended, on 7 January 2021. The notice of termination was served by way of a letter sent by registered post to the Club on 3 March 2021.

  3. While the first period was lengthy, at that time the plaintiff had no basis to terminate the lease; it is therefore necessary to consider whether the lease can be “affirmed” in such circumstances. The second period was short: if, as the plaintiff contended the period allowed for rectification had been extended, it was a few days. If, as the Club contended, it had not been extended, it was about five weeks. Before considering the evidence, it is convenient to address the principles relating to affirmation.

Affirmation – legal principles

  1. In oral submissions, counsel for the defendant relied upon the following statement in Bibby Financial Services Australia Pty Limited v Sharma:[2]

“115   An election occurs where a person has two truly alternative rights or sets of rights and with knowledge of the facts giving rise to the inconsistent rights acts in manner consistent only with the exercise of one of those rights and inconsistent with the exercise of the other….”

2. [2014] NSWCA 37 (Gleeson JA).

  1. It is, however, necessary for this Court now to follow the guidance given by the High Court in Allianz Australia Insurance Limited v Delor Vue Apartments CTS 39788. [3] That case involved a claim by a body corporate under an insurance policy for repairs to an apartment building damaged by a cyclone. The damage revealed, however, pre-existing defects in the building which had not been disclosed to the insurer. Negotiations were pursued between the body corporate and the insurer with the insurer agreeing to meet the cost of repairing the damaged but defective work. Later, when further defects were revealed, a dispute arose as to whether the insurer had agreed to cover the costs of rectifying all pre-existing defects. Following an unsuccessful attempt to negotiate an agreement as to which costs were covered and which were not, the insurer relied upon the non-disclosures to deny liability under the policy. The question was whether the case fell within the “limited circumstances in which a gratuitous waiver of rights becomes irrevocable”. [4]

    3. [2022] HCA 38; 97 ALJR 1.

    4. Allianz at [4] (Kiefel CJ, Edelman, Steward and Gleeson JJ).

  1. The joint reasons in Allianz reviewed the contractual principles by which a party might be precluded from revoking a promise by election, waiver or estoppel. Estoppel requires that the promisee has acted to its detriment in reliance on the representation; that doctrine did not arise in the present case and may be put to one side. [5] As to “waiver”, the joint reasons stated that “the most common usage of waiver is to describe an unequivocal decision by a party, communicated to the other party, not to insist upon a right or not to exercise a power”. [6] Acknowledging that the term “waiver” could be used in different senses, the joint reasons nevertheless noted that “[b]y itself, a waiver of a right is rarely irrevocable”. [7]

    5. Tcpt, 30/03/23, p 36(15)-(21).

    6. Allianz at [28].

    7. Allianz at [29].

  2. The joint reasons preferred to consider the issue by reference to the doctrine of “election by affirmation”. The reasons stated:

“38   In the law of contract, a party can act in a manner that affirms the existence of a contractual right or rights, by exercising what is commonly described as an election between inconsistent sets of rights. The usual reference to the sets of rights includes all claim rights, privileges, powers and immunities.”

  1. The reasons then noted that cases of election by affirmation could be described as cases of “waiver”, and “although it might be possible to express modern cases involving affirmation of a contract in terms of irrevocable waiver of a power to terminate the contract, the language of ‘waiver’ can distract in this area”. [8] One reason why the language of waiver was disapproved was the need to distinguish between an election between inconsistent rights and other circumstances in which there was said to be a waiver of rights. [9]

    8. Allianz at [39].

    9. Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570; [2008] HCA 57 at [60].

  2. By way of an example relevant in the present circumstances, the joint reasons continued:

“42   One example was where a tenant breached a leasehold covenant that was a condition precedent to the landlord's obligation to afford quiet possession. The landlord could nevertheless affirm the obligation to ensure quiet possession by accepting rent with knowledge of the circumstances amounting to the breach of the condition precedent: it was ‘a contradiction in terms’ to treat a person as a tenant and also as a trespasser.”

  1. Two further aspects of the reasoning in Allianz should be noted. First, the joint reasons stated, “[t]he language of ‘waiver’ in these older cases did, however, direct attention to the revocability of the ‘waiving’ party’s position where an inconsistency had not arisen by the affirmation”. [10]

    10. Allianz at [45].

  2. Secondly, and by way of explanation, the joint reasons in Allianz noted that “if a tenant breached a covenant in a lease entitling the landlord to forfeiture and re-entry, but the landlord, with knowledge of all the circumstances, elected to affirm the lease by a communicated act such as the acceptance of rent, this was an ‘unequivocal recognition of the continued existence of the lease’ which would ‘amount to a waiver of that [power]’ to forfeit the lease. The landlord was treated as having a power, by conduct, to ‘elect to affirm the lease’”. [11]

    11. Allianz at [49] (citations omitted).

Parties’ contentions

  1. The plaintiff submitted that until a notice requiring rectification had been issued and the period provided had expired there was no right to terminate the lease and, accordingly, the lease remained on foot. Any recognition prior to that event on the part of the landlord that the lease remained on foot did not constitute an affirmation of the lease and gave rise to no inconsistent set of rights. The plaintiff further submitted that after the expiration of the (extended) period for rectifying the breach, there was no event capable of constituting affirmation before the notice of termination was given.

  2. The defendant, on the other hand, submitted that a waiver or affirmation could arise at any stage after the right to serve a notice under cl 10 had arisen. Affirmation by conduct during that period would preclude the issue of a notice to rectify the breach.

  3. As to the first period, the defendant’s approach should not be accepted, on two bases. First, conduct affirming the existence of the lease might indicate an intention not to insist on rectification of the breach, but it did not involve a choice between inconsistent rights and was therefore revocable. Secondly, no relevant conduct occurred. Certainly, the mere taking of steps which were consistent with the lease being on foot said nothing about the maintaining or abandoning of the power to issue a notice. On any view, the lease remained on foot. Furthermore, taking steps to pursue alternative remedies did not constitute an irrevocable waiver or election until some alternative remedy was satisfied. As the joint reasons in Allianz stated:

“64   … A plaintiff can take numerous steps consistent only with the choice of one remedy and not the other, but the election will generally only be irrevocable after one remedy is fully satisfied by the entry of judgment.”

  1. As noted at [24] above, the plaintiff (and its principal) were at all stages satisfied that the change in affiliation would be a breach of the lease: the communications with the Club consistently asserted that position. However, as noted at [24], there were two alternative courses which Mr McGeoch was willing to consider, namely the Club (or its registered organisation) purchasing the land, or the Club entering into a new lease. What evidence did the defendant rely upon to demonstrate an irrevocable abandonment by the plaintiff of its entitlement to give notice requesting rectification in the face of what constituted an ongoing breach of cl 2(k)?

The first period: evidence of affirmation

  1. The first matter upon which the defendant placed reliance was a letter sent by Mr McGeoch to the NSW Firearms Registry on 14 July 2019. The letter read, relevantly, as follows:

“I am writing this letter as the Director of [the plaintiff] which owns the land upon which [the Club], affiliated with the ACTA did operate.

This Club has now changed it’s [sic] name & association affiliation to the [SSAA]. The Club is now known as the SSAA Albury Branch Inc & they now lease the land from me & run the range in exactly the same way & still only using shotguns & lead shot size no larger than No 6.”

  1. Read in isolation, each statement in this letter was true and correct, and it made no reference to a possible breach of the lease. In any event, the letter should not be read in isolation.

  2. On 22 June 2019, Mr McGeoch sent an email to Mr Ross Winnel, then Club President. The first half of the email dealt with the fallout zone where lead shot was allowed to land. The second part included the following:

“Also, unless the SSAA enter into a binding contract to purchase the land from me in the next couple of weeks I will be instructing my solicitor to submit an amended lease to the club. This will reflect, as I tried to get you to … understand, that the original lease clearly state … [setting out cl 2(k)].

As the SSAA & the ACTA are 2 different bodies, I have had 2 solicitors look at this clause & both said the same, this lease is now broken. Obviously I wish to get this fixed asap, as presently if I died & my beneficiaries of my will decide to sell the land or whatever, this could leave the club being asked to vacate or stop its activities until such time as the matter was cleared up. Obviously not a good situation for the club to find itself in.”

  1. Some three weeks later, on 14 July 2019, Mr Winnel responded in the following terms:

“While we negotiate the sundry hurdles the Firearms Registry throw at us in relation to the name change we’ve unfortunately had to cancel this weekends [sic] shoot ….

I’ll apologize if Tony Brandt has already asked for this …. We require a letter from yourself as landowner authorizing SSAA Albury to operate a shooting range on the site. If you could prepare that for us I’d appreciate it ….”

  1. It is apparent that Mr McGeoch wrote the letter to the Firearms Registry at the request of the Club in order to allow the Club to continue to operate on the land. This was consistent with the approach taken by Mr McGeoch that he wanted the Club to continue to operate on the land, so long as its activities did not extend to land not subject to the lease, and so long as the terms of the lease with respect to affiliation were complied with. The letter to the Firearms Registry indicated no different intention. It could not be read as a waiver of the breach by the change in affiliation.

  2. The second act of affirmation (or waiver) occurred on 10 June 2020, when Mr McGeoch sent an email to the Club with respect to its application to the local consent authority for “range approval”. The purpose of the application is not entirely clear but the reference to a previous development approval, given on 14 November 1996, suggests that a further approval was needed because of the change of name of the Club, or its change in affiliation, or both. The application referred to the approval issued by NSW Firearms Registry. Mr McGeoch’s email merely stated:

“I am happy to grant permission for this submission to go in as the owner of the land … leased to the SSAA Albury Inc Club.”

  1. For the reasons indicated in relation to the letter to the Firearms Registry, this action by Mr McGeoch on behalf of the plaintiff cannot be construed as a waiver of the breach, or an election not to require rectification of the breach, or abandonment of his proposed alternative remedies. (Indeed, it was not entirely clear from the defendant’s oral submissions that it was relied upon for this purpose. [12] ) There was no unequivocal and irrevocable abandonment of the power to require rectification of the breach before the notice was sent in December 2020. Indeed, there was no conduct or communication at all capable of conveying abandonment of that power.

    12. Tcpt, 30/03/23, p 42(15)-(45).

  2. The next conduct relied upon as affirmation or waiver was the acceptance on 9 January 2021 of rent for the months of January, February and March 2021.

  3. As the lease undoubtedly remained on foot at that time, the basis for treating acceptance of the rent as “affirming” the continued existence of the lease was not self-evident. However, the Club relied on the acceptance of rent as occurring after the Club had failed to rectify the breach and, therefore, as abandonment of the right to terminate.

  4. On 8 December 2020, the solicitors for the plaintiff had sent to the Club (initially by email) a copy of a notice signed by Mr McGeoch on behalf of the plaintiff noting that the Club was in breach of cl 2(k) of the lease and requiring the Club to remedy the breach within 30 days. According to the defendant, that period expired no later than 7 January 2021. Accordingly, any step taken thereunder on the basis that the lease remained on foot constituted a waiver of the plaintiff’s entitlement to terminate the lease for failure to comply with the notice under cl 10.

  5. Before addressing that bold submission, some further account of the events which had taken place during the second half of 2019 and 2020 is in order. As noted above, Mr McGeoch had proposed alternative steps to deal with the situation created by the disaffiliation from ACTA. Mr McGeoch indicated that steps were taken to arrange a proposed purchase of the land by SSAA (NSW). [13] By 11 November 2019, negotiations with respect to the sale of the land had proceeded to the stage where Mr McGeoch had instructed his solicitors to draw up a contract for sale of the land to SSAA. Details of the purchaser’s conveyancer were included.

    13. Second affidavit of I S McGeoch, 21 December 2022, par 13.

  6. On 21 May 2020, Mr McGeoch wrote to the President of the Club asking him to sign a surrender of the lease to assist with the sale. On 4 September 2020, the plaintiff’s solicitors wrote to Mr McGeoch advising that they had heard nothing further in respect of the matter but stating that they would leave the file open hoping the matter will “find momentum at some stage”. Mr McGeoch stated that negotiations with SSAA (NSW) had continued for some 12 months, but had broken down when SSAA (NSW) had proposed a reduction in the price offered because they had been unable to negotiate new lease terms with the Club which would warrant a higher price.

The second period: evidence of affirmation

  1. Significantly, in seeking to have the Club sign a surrender of the lease, Mr McGeoch reiterated his view that the lease was, in his terms, “null and void” because of the breach relating to affiliation.

  2. Accordingly, from mid-2019 until late 2020, the plaintiff had been pursuing other steps to deal with the breach of the lease by the change of affiliation, but they had come to nothing. No reliance was placed by the defendant on these events, but they are relevant to a consideration of whether the acceptance of rent in January 2021 demonstrated an unequivocal affirmation of the lease at a time when it was open to the plaintiff to terminate it.

  3. The first issue was when did the right to terminate arise? Counsel for the defendant relied on evidence of the current president, Peter Thomson, (who had not been the president in December 2020) that the email with the notice of breach was received on 8 December 2020. [14] However, the precision relied on by the defendant, which was essential to its contention, was not supported by the evidence. First, Mr Thomson’s affidavit did not say when the document was served, but only that the letter was sent by email to the Club “on or about 8 December 2020”. The attached document was wrongly identified; the date of the attached document was wrongly identified. While the copy of the letter from the plaintiff’s solicitors is in evidence, it does not bear a facsimile imprint. I am prepared to accept that it was sent on or about 8 December 2020, but the letter says in bold capitals, “BY REGISTERED POST”.

    14. Affidavit, Peter Thomson, 17 November 2022, at par 21.

  4. I infer from the terms of the letter that the document was intended to be served by post as it was addressed to the Club at the post office box recorded as the address of the Club on the front page of annexure A to the lease. The lease itself provided for service by delivery to the address of the lessee shown on the first page of annexure A, or by a means described in the Conveyancing Act 1919 (NSW). [15] Section 170(1)(e) of the Conveyancing Act permits service by email, but only “to an email address specified by the person to be served for the service of notices of that kind”. There was no evidence that the Club had specified an email address for service.

    15. Lease, cl 11(h).

  5. On 24 December 2020, the Club’s solicitor wrote to the plaintiff’s solicitors stating:

“I refer to the Notice you served on my client [the Club] on 21 December 2020.

Leaving aside for the moment the fact that your client agreed to the change of affiliation to Sporting Shooters which makes the Notice likely invalid, your client is demanding that a re-affiliation occur in a 30-day period encompassing the Christmas New Year holiday period.

That requirement is unreasonable both to the local Association and also to the [ACTA] and again likely makes the notice invalid.

Nevertheless, please inform your client that the local Association is moving with all due haste to re-affiliate with the [ACTA].”

  1. It is not open to the defendant, when it suits it for the purposes of litigation, to suggest that the notice (with which it did not comply) was served some two weeks earlier than its solicitor asserted at the time. The solicitor’s understanding as to service confirms the analysis set out above. Accordingly, I find that the notice of breach was served on 21 December 2020 and that the 30-day period expired on 20 January 2021.

  2. Acceptance of rent (on 9 January 2021) in accordance with the terms of the lease during a period when the Club was, according to its solicitors, seeking to remedy the breach, could not constitute an election between inconsistent rights. The right to terminate had not yet arisen and, as then understood, might never arise.

  3. The next event recorded in the evidence is a meeting between Mr McGeoch and the President and Secretary of the Club (Mr Brandt and Ms Langley) on 10 February 2021. After the meeting, Mr McGeoch wrote to them on the same day:

“I would like to give formal notice to you & the committee that if the club has not re affiliated with the ACTA by February 28th, 2021, I will give my solicitor instructions to starting proceedings to have the lease removed from the title.

I take no pleasure from saying this but I believe as per the letter that I gave you & Robyn that I have been more than patient.

…

However you did say that for affiliation to occur with the ACTA that the club would need to change its constitution & that in your words ‘that is not going to happen’.

I understand about the time over the Christmas period making it difficult to get all the paperwork finished to comply with the ACTA affiliation & this is why I have set the time at the end of February, 2021. If the Club is not re affiliated by then, then I am sorry but I cannot wait any longer or allow any more excuses as to why affiliation has not happened.”

  1. The extension of the period allowed to rectify the breach was, no doubt, a waiver, for a period, of the right to serve a notice of termination. It could not invalidate a notice served after the indulgence had expired. Nor was it submitted that anything occurred between 20 January and the meeting on 10 February which constituted a waiver of the plaintiff’s entitlement to proceed with the notice of termination in due course. There were clearly some discussions which resulted in the meeting and possibly the sending of another letter prior to the letter of 10 February, although no other letter is in evidence.

  2. Accepting the indulgence allowed by the plaintiff for the Club to attempt reaffiliation at any time up to 28 February 2021, there was no delay in serving the notice of termination, which occurred on 3 March 2021. That notice, also served by registered post and “initially by email”, required that the Club vacate the property within 14 days.

The third period: evidence of affirmation

  1. Thereafter, various steps were taken by each party. First, on 31 March 2021 the plaintiff gave notice by email to the Club confirming termination of the lease and advising that a notice had been fixed to the front gate stating that the Club was now “closed indefinitely” and prohibiting unauthorised access. A chain and lock were placed on the gate. Further, NSW Firearms Registry was informed of the withdrawal of permission. A copy of the letter to the Firearms Registry was annexed. Perhaps unbeknown to the plaintiff at that time, on 14 March 2021 the Club had caused its solicitor to register a caveat over the property. In May the plaintiff filed a lapsing notice, but on 31 May 2021, the Club registered a second caveat. Steps were taken in late July to settle the dispute, but no agreement was reached.

  2. The Club continued to make quarterly payments of rent from 9 April 2021. In its amended defence, the Club relied upon the acceptance of rent on a quarterly basis as irrevocably treating the lease as remaining in force. The conduct was stated in written submissions to be an unequivocal recognition of the continued existence of the lease. Reliance was placed on the judgment of Windeyer J in Owendale Pty Ltd v Anthony. [16]

    16. (1967) 117 CLR 539; [1967] HCA 52.

  3. Acceptance of rent after the notice of termination was not addressed in oral argument, nor was the application of Owendale. The passage relied on appears to have been in the judgment of Windeyer J at p 557. However, the right which was said to have been waived by the acceptance of rent in that case was a right of re-entry on account of a breach of covenant by the lessee. In the present case, the rent in question was received after re-entry and after the defendant had asserted a continuing interest in the land by filing a caveat. Physical attempts to lock the defendant out had failed. How the acceptance of rent could be seen as a waiver of the entitlement to enforce the termination of the lease and obtain possession of the land was not explained.

  1. Acceptance of rent in these circumstances was equally consistent with acceptance of payment of an occupation fee equivalent to the rent which would have been paid had the lease remained on foot. In terms of principle, Owendale (which was referred to only in two footnotes in Allianz), must be seen as subject to the statements in the joint reasons in Allianz.

  2. An alternative approach put forward by the plaintiff was that cl 2(d) of the lease provided for a monthly holding over following termination. Clause 2(d) stated:

“Should the lessee continue to occupy the premises after the terminating date otherwise than pursuant to a renewed lease then this lease shall continue on a month-to-month basis and may be terminated by either party giving to the other, at any time, one month notice in writing.”

  1. There may be an issue as to whether the reference in cl 2(d) to the “terminating date” is a reference to the terminating date identified on the front page of the lease, which was 30 June 2027. If so, that date has not yet arrived. The plaintiff submitted that it meant the date on which the lease was in fact terminated. If the latter construction is correct, then the continued occupation by the Club may amount to a monthly holding over. However, that is a somewhat artificial construction in so far as it allows either party to terminate the arrangement by one month notice in writing to the other. The inference may be that occupation pursuant to the holding over period was to be consensual, not a circumstance which arose after termination for breach.

  2. So far as the facts were concerned, the first two payments, on 9 April and 9 July 2021 were returned. Rent proffered on those dates was not accepted.

  3. On 28 July 2021 the plaintiff’s solicitors wrote to the solicitor for the Club proposing an interim arrangement whereby the plaintiff would inform the NSW Firearms Registry of its consent to shooting over the land and that the Club would recommence rental payments. The letter stated that it was “without prejudice and reserving all rights with respect to its position that your client is in breach of the lease” and, after proposing the interim measure, continued:

“This proposal is made on an interim basis only in order that the parties might continue to explore the scope for resolution of the broader dispute by way of a purchase negotiation. On that aspect our client is procuring further appraisals in order to properly consider the offer put in your letter.

Our client maintains that your client is in breach of the lease and reserves its right to commence proceedings for a declaration that the lease is inoperative.”

  1. In these circumstances, it is not possible to construe the acceptance of the rental payments, following termination and re-entry, as waiving any rights to recover possession of the land. None had been accepted prior to the letter of 28 July, which expressly reserved the plaintiff’s rights.

Conclusion

  1. It follows that the plaintiff is entitled to a judgment for possession.

  2. The relief claimed in the amended statement of claim filed on 16 March 2023 was, relevantly:

  1. A declaration that the plaintiff validly terminated the lease to the defendant registered AN436833Q in respect of the property identified by Folio Identifier 2/874280 (the land) on or about 17 March 2021.

  2. A declaration that on and from 18 March 2021, the defendant has been holding over on a month-to-month basis, terminable on one month of written notice.

  3. Leave to issue a writ of possession within one month of the giving of written notice to terminate the month-to-month tenancy.

  1. For the reasons already explained, I am not persuaded that the current possession by the Club is pursuant to a holding over period under cl 2(d) of the lease. Further, it is not clear that any benefit is to be obtained from a declaration in the form of proposed order 1, but, as suggested in the course of the hearing, the appropriate substantive order is a judgment for possession. The defendant did not dispute that proposition. A declaration, however, is not inappropriate.

  2. The Court makes the following orders:

  1. Declare that on or about 17 March 2021 the plaintiff terminated the lease with registered number AN436833Q in respect of the property identified in Folio Identifier 2/874280 and known as Lot 2, Gravel Pit Road, Ettamogah (the land).

  2. Give judgment in favour of the plaintiff for possession of the land.

  3. Grant the plaintiff leave to issue a writ of possession 30 days after the entry of these orders.

  4. Order that the defendant pay the plaintiff’s costs of the proceedings in this Court.

**********

Endnotes

Decision last updated: 18 April 2023

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Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57
Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57
Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57