Murphy Toenies v Family Holdings Pty Ltd as trustee for the Conway Family Trust - [2019] WASC 423

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   MURPHY TOENIES -v- FAMILY HOLDINGS PTY LTD AS TRUSTEE FOR THE CONWAY FAMILY TRUST [2019] WASC 423
CORAM:   SMITH J
HEARD:   8 NOVEMBER 2019
DELIVERED          :   19 NOVEMBER 2019
FILE NO/S:   CIV 2777 of 2019
BETWEEN:   BARBARA HELENE MURPHY TOENIES
Applicant
AND
FAMILY HOLDINGS PTY LTD AS TRUSTEE FOR THE CONWAY FAMILY TRUST
Respondent

FILE NO/S: CIV 2778 of 2019
BETWEEN: STANLEY JOHN LEE
First Applicant
RHONA FLORENCE LEE
Second Applicant
AND
FAMILY HOLDINGS PTY LTD AS TRUSTEE FOR THE CONWAY FAMILY TRUST
First Respondent
AJH PROJECTS PTY LTD AS TRUSTEE FOR THE HOPKINSON FAMILY TRUST
Second Respondent

FILE NO/S: CIV 2780 of 2019
BETWEEN: DRAGAN BOSNJAK
First Applicant
GEMMA ANNE BOSNJAK
Second Applicant
AND
FAMILY HOLDINGS PTY LTD AS TRUSTEE FOR THE CONWAY FAMILY TRUST
First Respondent
AJH PROJECTS PTY LTD AS TRUSTEE FOR THE HOPKINSON FAMILY TRUST
Second Respondent

Catchwords:

Application for extension of caveat - Whether claims have or may have substance - Whether serious question to be tried of caveatable interest in land - Leasehold estate - Long-term head leases entered into between a corporation and owner of the land and long‑term subleases entered into between applicants and the corporation - Applicants in possession - Arguable questions - Whether long‑term head leases and long‑term subleases valid - Whether agent had implied actual authority and/or ostensible (or apparent) authority to enter into long-term head leases - Whether leases abandoned by virtue of disclaimer of onerous property under s 568(1) of the Corporations Act 2001 (Cth) - Constitutional issue, whether s 568D of the Corporations Act and s 60(1) of the Residential Tenancies Act 1987 (WA) inconsistent - Whether head leases have been terminated by being abandoned entitling the owners of the land to possession - Balance of convenience considered - Early trial ordered

Legislation:

Australian Consumer Law, s 18
Commonwealth Constitution, s 109
Competition and Consumer Act 2010 (Cth), s 84(2)
Corporations Act 2001 (Cth), s 5G, s 568(1), s 568D
Judiciary Act 1903 (Cth), s 78B
Property Law Act 1969 (WA), s 81(4)
Residential Tenancies Act 1987 (WA), s 60, s 71, s 74, s 76A, s 76B, s 81
Transfer of Land Act 1893 (WA), s 138C

Result:

Application granted

Category: B

Representation:

CIV 2777 of 2019

Counsel:

Applicant	:	Mr K de Kerloy & Ms M De Abreu
Respondent	:	Mr D J Pratt

Solicitors:

Applicant	:	Herbert Smith Freehills
Respondent	:	Jackson McDonald

CIV 2778 of 2019

Counsel:

First Applicant	:	Mr K de Kerloy & Ms M De Abreu
Second Applicant	:	Mr K de Kerloy & Ms M De Abreu
First Respondent	:	Mr D J Pratt
Second Respondent	:	Mr D J Pratt

Solicitors:

First Applicant	:	Herbert Smith Freehills
Second Applicant	:	Herbert Smith Freehills
First Respondent	:	Jackson McDonald
Second Respondent	:	Jackson McDonald

CIV 2780 of 2019

Counsel:

First Applicant	:	Mr K de Kerloy & Ms M De Abreu
Second Applicant	:	Mr K de Kerloy & Ms M De Abreu
First Respondent	:	Mr D J Pratt
Second Respondent	:	Mr D J Pratt

Solicitors:

First Applicant	:	Herbert Smith Freehills
Second Applicant	:	Herbert Smith Freehills
First Respondent	:	Jackson McDonald
Second Respondent	:	Jackson McDonald

Case(s) referred to in decision(s):

Andrews v Hogan [1952] HCA 37; (1952) 86 CLR 223
Australian Competition and Consumer Commission v Cornerstone Investment Aust Pty Ltd (in liq) (No 4) [2018] FCA 1408
Auxil Pty Ltd v Terranova [2009] WASCA 163; (2009) 260 ALR 164
Bashford v Bashford [2008] WASC 138
Bateson v Jones [2013] WASC 8
Bennett v Elysium Noosa Pty Ltd (in liq) [2012] FCA 211
Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42
Durban Roodepoort Deep, Ltd v Newshore Nominees Pty Ltd [2005] WASCA 231
Freeman & Lockyer (a firm) v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480
Hightime Investments Pty Ltd v Adamus Resources Ltd [2012] WASC 295
Magripilis v Baird [1926] St Qd 89
Masaka Holdings Pty Ltd v Flaxman [2019] WASC 397
Navarac Pty Ltd v Moondancer Holdings Pty Ltd [2009] WASCA 95; (2009) 40 WAR 150
NMFM Property Pty Ltd v Citibank Ltd (No 10) [2000] FCA 1558; (2000) 107 FCR 270
Porter v McDonald [1984] WAR 271
Reynell v Lewis (1846) 15 M & W 517; (1846) 153 ER 954
The Union Credit Bank Ltd v The Mersy Docks and Harbour Board (1899) 2 QB 205
Tiao v Lai [No 2] [2010] WASCA 189
Trade Practices Commission v Queensland Aggregates Pty Ltd (No 3) [1982] FCA 329; (1982) 61 FLR 52
Walpan Pty Ltd v Wallace [1985] FCA 619; (1985) 8 FCR 27
Willmott Growers Group Inc v Willmott Forests Ltd (recs & mgrs apptd) (in liq) [2013] HCA 51; (2013) 251 CLR 592

SMITH J:

Background facts

In each of the applications, the applicants claim they are tenants of properties pursuant to valid residential tenancy agreements with an entity within a group of companies ultimately owned by Sterling First (Aust) Ltd (Sterling Group). Each tenancy agreement:
(a)is a long-term sublease, for a term of five years with seven options of five years; and
(b)was entered into by each applicant after they were provided with a long‑term head lease for the same length of time as the subleases, said to have been validly entered into by the respondents between Sterling Corporate Services Pty Ltd or SHL Management Services Pty Ltd (each entities within the Sterling Group).
Each of the applicants entered into possession of the properties in 2018 and remain in possession.
Pursuant to the terms of the long-term head leases market rent was payable to the respondents. However, the subleases do not require payments of rent, or any other charges, during the first term or during any other term of the sublease, other than a nominal sum for the first two weeks of the subtenancy. This is because each of the applicants, when entering into the subleases, entered into an agreement to pay a lump sum upfront, the majority of which was to be invested in a trust fund, known as the Sterling Income Trust, from which income distributions and capital were to be drawn upon to pay the rent owing on the head lease.
Each of the applicants are seniors. Ms Murphy Toenies is 76 years of age; Mr and Mrs Bosnjak are age 75 and 70, respectively; and Mr and Mrs Lee are age 69 and 66, respectively.
Each of the properties were offered to the applicants and others as part of a Sterling New Life product scheme (Sterling New Life product), which marketed 'life leases' to over 55s, and which was touted to provide secure long-term housing to suit the needs of seniors.
Each of the applicants were shown the respective properties by representatives of the Sterling Group and signed up to the Sterling New Life product by entering into subleases and paying large sums to secure the subleases.
In March and April 2019, caveats were lodged over each of the three properties owned by the respondents. Each of the caveats claim a leasehold estate being a sublease on the terms entered into in the long‑term sublease.[1]
[1] First affidavit of Anthony James Hopkinson, sworn 25 October 2019, attachment TJH-14, pages 86 ‑ 91; second affidavit of Anthony James Hopkinson, sworn 25 October 2019, attachment TJH-29, pages 105 ‑ 110; third affidavit of Anthony James Hopkinson, sworn 25 October 2019, attachment TJH-42, pages 72 ‑ 75.
The Sterling Group of companies and the scheme known as Sterling New Life failed in 2019. On 10 June 2019, joint liquidators were appointed to the Sterling Group of companies.
In July and August 2019, the joint liquidators of Sterling Corporate Services and SHL Management issued 'notices of disclaimer of onerous property', pursuant to s 568(1) of the Corporations Act 2001 (Cth) in respect of each of the long-term head leases and long-term subleases.[2]
[2] First affidavit of Anthony James Hopkinson, sworn 25 October 2019, attachment TJH-12, pages 80 ‑ 83; second affidavit of Anthony James Hopkinson, sworn 25 October 2019, attachment TJH-27, pages 99 ‑ 102; third affidavit of Anthony James Hopkinson, sworn 25 October 2019, attachment TJH-40, pages 66 ‑ 69.

Sterling New Life product

Each of the applicants responded to marketing advertisements for long‑term rental accommodation offered to seniors, referred to as a Sterling New Life product.
The Sterling New Life product was a scheme promoted by the Sterling Group as an affordable option for seniors to rent quality homes in established suburbs at a price that was well below the cost of purchasing an equivalent property. The Sterling Group ran information seminars and advertised properties for rent for a one off sum, in exchange for a lease of 40 years (being an initial period of five years with an option to extend up to seven times). After deduction of a fee, the specified sum was to be invested in a trust fund to generate income to pay the rent to the owner of the property, with any surplus to be reinvested to increase the capital of the initial investment. After payment of the initial sum no further fees or charges, such as council rates, land tax or building insurance, were to be payable.
Before participating in the Sterling New Life product scheme each of the applicants read a document titled 'Sterling New life Lease, Frequently Asked Questions' which stated:[3]
[3] See for example, affidavit Gemma Anne Bosnjak, affirmed 9 October 2019, annexure GAB‑9, pages 145 ‑ 149.
Sterling New Life Lease
What is a Sterling New Life Lease?
A Sterling New Life Lease, is for a total of 40 years, made up of an initial 5 year lease with 7 x 5 year options on the property of your choosing. It has several advantages over a standard property lease including:
1.Security of tenure ‑ up to 40 years.
2.Quiet enjoyment of the premises, with just annual consultations with our property managers to cover off on any maintenance requirements.
3.Pets allowed.
What does it cost?
To secure a Sterling New Life Lease, lessees will be required to pay an initial amount to Sterling, which will be used to pay an initial application fee and the first month's rent, with the balance being invested in a Sterling Fund (currently the Sterling Income Trust). The income from the investment in the Sterling Income Trust is used to pay your rent. At no time can you be asked to make any further cash contributions to your rental payments.
What are the fees?
Upfront Fees ‑ Out of your initial payment, an application fee equal to 8.8% inc GST of the Investment Amount and one month's rent is deducted.
Ongoing Fees ‑ There are NO ongoing administration fees payable.
Exit Fees ‑ there are NO exit fees payable.
Other Fees and Costs ‑ NONE ‑ there are no other fees and costs, and absolutely no requirement for the Sterling New Life lessee to make any regular direct payments themselves. Once the initial investment is made, no further payments will be required.
…
Property Ownership
Who owns the house that I will live in?
The property may be owned by an investor or by Sterling.
Each property is managed by Rental Management Australia, a member of the Sterling group, for the life of the Sterling New Life Lease. Under the agreement Sterling has with the owner, the owner cannot change the property manager whilst the Sterling New Life Lease is in place. If the owner sells the property, the Sterling New Life Lease and the Managing Agent's Agreement are assigned to the new owner. A change in ownership will have NO effect on the Sterling New Life Lease arrangements. Sterling also has a first right of refusal to buy the property from the owner, to provide security of tenure for the lessee.
What happens if the property is repossessed?
If the property is ever repossessed by a lender, that will have NO effect on your Sterling New Life Lease. The Sterling New Life Lease stays with the property and is assigned to a new owner as the ownership passes.
…
Is it possible that cumulated rent arrears may exceed the value of your investment?
The landlord has agreed that any rent that is not paid from the Sterling Fund income distributions be paid either from future income distributions or from the redemption of your investment funds. If the accrued rent exceeds the capital value of your investment, then the payment is capped at the value of the investment at that time. At no time after initial investment can the Sterling New Life Lessee be asked to make any further cash contribution.
…
How much of my initial Sterling New Life Lease outlay will I get back when the lease is terminated?
When you elect to move out and terminate your Sterling New Life Lease, you are entitled to redeem your investment in the Sterling Fund. At that time you will receive the full value of your Investment Amount in the Sterling Fund plus any amounts of distributions that have been re‑invested plus capital growth (if any), less rent arrears (if any). Ongoing distributions received on the Investment Amount firstly go towards paying the rent. If there is a surplus of distributions over and above the rent, this is re‑invested in your Sterling Fund account.
…
How to exit the Sterling New Life lease
What is the term of the lease?
The term of the Sterling New Life Lease is initially 5 years with another seven 5 year options. The lease can be extended on the same terms and conditions, with no further application fee. The Sterling New Life Lease is intended to be for as long as the Sterling New Life lessee requires to occupy the residence. The Sterling New Life lessee can vacate the residential unit at anytime with just 180 days notice. The lessee may choose to move to another Sterling New Life residence and enter into a new Sterling New Life Lease.
…
Property Management
Who is the property manager?
Rental Management Australia, a part of the Sterling group, has been engaged to handle all property management matters.

The owners of the land and the express authorities to enter into the head leases and the subleases

The owners and sublessees of each of the properties are:
(a)Family Holdings Pty Ltd (Family Holdings) and AJH Projects Pty Ltd (AJH) of the property at 4/103 Caridean Street Heathridge, subleased to Mr and Mrs Bosnjak;
(b)Family Holdings and AJH of the property at 2/103 Caridean Street, Heathridge, subleased to Mr and Mrs Lee; and
(c)Family Holdings of the property at 2/8 Observation Road, Craigie, subleased to Ms Murphy Toenies.
Family Holdings and AJH are small building and development enterprises. They sometimes trade as Conway Projects. Their business model is to purchase a parcel of land and construct small strata units on the land and sell each unit once constructed to realise a small profit. Two of their developments were seven strata units at 103 Caridean Street, Heathridge and seven strata units at 8 Observation Road, Craigie. The construction of the units at both sites was completed in mid to late 2017.
In or around June 2017, Mr Don Allen of Don Allen Real Estate was engaged as agent to sell the Caridean Street properties.
In or around early October 2017, Mr Anthony James Hopkinson, a director of AJH, was contacted by telephone by Mr Mark McKeown of the Sterling Group who told him that a group of companies that he works for would be interested in purchasing all of the Caridean Street and Observation Road properties.
After that initial telephone conversation, Mr Hopkinson spoke to Mr McKeown on a number of occasions in relation to giving permission to the Sterling Group to market the properties for sale in conjunction with Mr Allen.
In an email to Mr Hopkinson on 25 October 2017, Mr McKeown stated:[4]
[4] Second affidavit of Anthony James Hopkinson, sworn 25 October 2019, attachment TJH-18, page 28.
Hi Tony
As discussed, here is a summary on what we believe we can achieve for the weekly rents with a Sterling New Life lease.
If you are OK with us looking for Sterling New Life tenants for your villas, can you sign and email back the term sheets and authorities to advertise.
We will endeavour to place SNL tenants into properties that have been sold to investors who are seeking a long term tenant.
The scenario where you take on the SNL tenant and then we sell to an investor later will be an option to consider only where necessary.
Also attached is a copy of the sort of home open ad we place in the Community Newspapers.
I am meeting Don Allen tomorrow morning to discuss the property sales.
If you have any queries, or would like to discuss anything, please let me know.
Regards,
Mark McKeown | Principal Agent
Sterling First Housing Pty Ltd
On the following day, Mr McKeown sent Mr Hopkinson another email in which he stated that he needed Mr Hopkinson to sign the 'authority to advertise' forms so they could proceed with a home open on Sunday, 5 November 2017.
On 27 October 2017, Mr Hopkinson signed authorities on behalf of the owners of the Caridean Street and Observation Road properties, granting Sterling First Projects Pty Ltd (a Sterling Group entity), trading as Sterling New Life, the authority to advertise, conduct home opens and other promotional activity.
The authorities signed by Mr Hopkinson were each in identical terms.[5] The authority for the Caridean Street properties was as follows:[6]
[5] Second affidavit of Anthony James Hopkinson, sworn 25 October 2019, attachment TJH-18, pages 29 ‑ 35.
[6] Second affidavit of Anthony James Hopkinson, sworn 25 October 2019, attachment TJH-18, page 34.
OPEN AUTHORITY TO:-
ADVERTISE, CONDUCT HOME OPENS/VIEWINGS AND OTHER PROMOTIONAL ACTIVITY
Date:                 25th October 2017
AgentSterling First Projects Pty Ltd ACN 162 801 425 trading as Sterling New Life of 23/397 Warnbro Sound Avenue, Port Kennedy WA 6172
Email                 [email protected]
Phone                 08 9523 5800
Fax  08 9523 5811
Owner:               Conway Projects
Address:              PO Box 135 Scarborough WA 6922
Phone:               0410 824 575
Email:                [email protected]
Property/Premises: 103 Caridean St Heathridge ‑ 7 villas
The Owner/s of the above-mentioned property/premises hereby authorises the Agent to advertise, conduct home opens & viewings as well as other relevant promotional activity in order to assist with the procurement of a Lessee wishing to enter into a Sterling New Life Lease (SNLL) from the date of the authority until midnight on 28/2/18 and to do all such lawful things as may be directed by the Owner/s in writing from time to time under this authority.
In the event that the Agent procures a Lessee wishing to enter into a SNLL, the Agent will notify both the Owner/s and the Selling Agent (where applicable) with the Owner/s authorising the Agent to inform Rental Management Australia Pty Ltd ACN 160 167 108 trading as Rental Management Australia (RMA) to contact the Owner/s, or a Purchaser of the property, in relation to entering into an Exclusive Management Authority for Residential Premises authorising RMA to lease the property to a SNLL Lessee and to manage the rental of the property.
The Agent confirms and the Owner/s acknowledges that all costs associated in procuring a SNLL will be borne by the Agent.
On about the same day, Mr Hopkinson signed a 'New Project - Terms Sheet' for the Caridean Street and Observation Road properties.[7] For the Caridean Street properties, the sales price of the units was stated as being: units 1, 2 and 3: $460,000; unit 4: $510,000; and units 5, 6 and 7: $500,000.
[7] Second affidavit of Anthony James Hopkinson sworn 25 October 2019, attachment TJH-18, pages 33, 36.
The terms sheet also recorded:[8]
(a)under the heading, 'Investor SNL Returns', and subheading 'Agreed Investor Rental Yield' for villas 1, 2 and 3: $430 to $450 per week, and villas 4, 5, 6 and 7: $470 to $490 per week, with a rent commencement date as when a SNL lease commences;
(b)under the heading 'Rental Management Agreement' and subheading 'Life Lease Price' for villas 1, 2 and 3: $266,500 to $278,500, and villas 4, 5, 6 and 7: $291,000 to $303,500, with a note that advertised amount will be the higher amounts; and
(c)under the heading 'Other' that SNL leases may be secured with the developer and on‑sold to an investor. Short-term tenancy weekly rent was stated to be in the range of $380 to $400.
[8] Second affidavit of Anthony James Hopkinson sworn 25 October 2019, attachment TJH-18, page 33.

On 30 October 2017, Mr McKeown sent Mr Hopkinson another email in which he stated:[9]
[9] Second affidavit of Anthony James Hopkinson, sworn 25 October 2019, attachment TJH-18, page 26.
Tony
Thanks for the authorities.
Can you also sign the section that says you have received a true copy.
We will also need a copy of the signed term sheet.
Please note that these are not binding, but just set out the general terms that we refer to.
Attached is a copy of the full page ad that we are putting in this week's Wanneroo Weekender. I am also amending it say From $278,500 for the Caridean villas.
Regards,
Mark McKeown | Principal Agent
Sterling First Housing Pty Ltd
The Caridean Street and Observation Road properties were subsequently advertised by Sterling First Projects in the Wanneroo Weekender Community News on a number of occasions. In an advertisement placed in the Wanneroo Weekender Community News, in January 2018, the Caridean Street properties were advertised for a price from $278,500. The advertisements did not state that the price was for a sublease. The advertisements were titled 'Retire With Choice', and stated that no weekly fees, no council or water rates, no stamp duty, and no exit fees were payable. The advertisements also stated that:[10]
Sterling New Life is an affordable housing solution for senior Australians … Sterling New Life is an innovative housing solution that allows retirees and pre-retirees to resize their accommodation at a fraction of the cost of traditional downsizing. With the savings freed up, many of our residents have gone on to settle their mortgages, pay‑off debt and retire with financial peace of mind.
[10] Affidavit of Melissa Maria De Abreu, affirmed 1 November 2019, annexure MMD-4, page 57.

The put options to sell the respondents' properties to Acquest

On 17 April 2018, Acquest Property Pty Ltd (one of the Sterling Group of companies) and Mr Hopkinson and his wife, as directors of AJH, and the directors of Family Holdings, executed a real property put option agreement for Acquest to purchase 4/103 Caridean Street for the price of $510,000. The expiry date for the option was 4 August 2018.[11] The option was exercised but the sale was not completed by Acquest.
[11] First affidavit of Anthony James Hopkinson, sworn 25 October 2019, attachment TJH-5, pages 36 ‑ 45.
On or about 28 April 2018, Acquest and Family Holdings executed a real property put option agreement for Acquest to purchase 2/8 Observation Road for the price of $500,000. The expiry date for the option was 15 August 2018.[12] The option was exercised but the sale was not completed by Acquest.
[12] Third affidavit of Anthony James Hopkinson, sworn 25 October 2019, attachment TJH-34, pages 35 ‑ 42.
On 11 September 2018, Acquest and the directors of Family Holdings and AJH, executed a real property put option agreement for Acquest to purchase 2/103 Caridean Street for the price of $399,000. The expiry date for the option was 7 November 2018.[13] The option was exercised but the sale was not completed by Acquest.
[13] Second affidavit of Anthony James Hopkinson, sworn 25 October 2019, attachment TJH-19, pages 41 ‑ 47.
In each case it appears the put options were executed shortly after the applicants entered into the long‑term subleases.

The management authorities to enter into the leases and the leases

4/103 Caridean Street - Mr and Mrs Bosnjak

In or around early November 2017, Mrs Bosnjak attended a home open of units at 103 Caridean Street. Inside one of the units, representatives of the Sterling Group gave a presentation on the Sterling New Life product. At the presentation, Mr McKeown gave Mrs Bosnjak a copy of the Sterling New Life frequently asked questions fact sheet.[14]
[14] Affidavit of Gemma Anne Bosnjak, affirmed 9 October 2019 [16] ‑ [17].
On 29 November 2017, Mr and Mrs Bosnjak executed an offer to enter into a Sterling New Life agreement with Sterling First Projects to secure a long term lease over the property at 4/103 Caridean Street.[15]
[15] Affidavit of Gemma Anne Bosnjak, affirmed 9 October 2019, attachment GAB-11, pages 155 ‑ 169.
On 12 April 2018, Mr and Mrs Bosnjak attended a meeting at the Sterling Group offices in South Perth and met with Mr McKeown and Mr Ryan Jones of the Sterling Group. At that meeting Mr Jones and Mr McKeown:[16]
(a)provided Mr and Mrs Bosnjak with a copy of a long-term head lease between Family Holdings and AJH, and Sterling Corporate Services for the property at 4/103 Caridean Street. The head lease was executed by Ms Erin Huxford (a real estate agent employed by Rental Management Australia (RMA))[17] on 11 April 2018, on behalf of the lessors (Family Holdings and AJH) for a period of five years from 13 April 2018 to 12 April 2023, with options to renew for seven subsequent terms, the last of which to expire in 2058 (being a total of 40 years). The rent for the property was specified as $460 a week in advance; and
(b)told Mr and Mrs Bosnjak that:
(i)the money would be put into a high interest investment and the returns would be used to pay their rent under the head lease;
(ii)they would have a secure 40 year lease over the property;
(iii)they would not have to pay any rent for the property;
(iv)they could make improvements to the property and treat it as their home for the rest of their lives; and
(v)any change in the ownership of the property would not impact their sublease because the Sterling New Life product would stay with the property and would pass to any new owners of the property.
[16] Affidavit of Gemma Anne Bosnjak, affirmed 9 October 2019 [22].
[17] First affidavit of Anthony James Hopkinson, sworn 25 October 2019, attachment TJH-6A, page 69_1.
At the same meeting, Mr and Mrs Bosnjak:
(a)entered into a long-term sublease with Sterling Corporate Services for the property at 4/103 Caridean Street, Heathridge. The long-term sublease was for the period starting on 13 April 2018 and was to expire on 11 April 2023, with options to renew for seven terms (each five years) up to 2058. The rent specified in the long-term sublease was one dollar for the first two weeks and no rent or other charges payable thereafter;[18] and
(b)executed a document for the payment of $303,500 payable to Silverlink Investment Company Ltd and Sterling First projects.[19]
[18] Affidavit of Gemma Anne Bosnjak, affirmed 9 October 2019, attachment GAB-3, pages 23 ‑ 74.
[19] Affidavit of Gemma Anne Bosnjak, affirmed 9 October 2019, attachment GAB-12, page 170.
On 17 April 2018, the directors of Family Holdings and AJH executed management authorities granting RMA (one of the Sterling Group entities) authority to act as managing agents to find short-term tenants limited to periods of four months for 4/103 Caridean Street.[20] The term of the management agreement was expressed to be from 13 April 2018 until 12 August 2018.[21] The respondents' claim that this was the only management authority to lease this property that they executed.
[20] First affidavit of Anthony James Hopkinson, sworn 25 October 2019, attachment TJH-6, pages 46 ‑ 68.
[21] First affidavit of Anthony James Hopkinson, sworn 25 October 2019, attachment TJH-6, page 48.
On 18 April 2018, and shortly before they moved into the property, Mr and Mrs Bosnjak were provided with the keys to 4/103 Caridean Street by Mr McKeown. On that occasion, Mr McKeown:
(a)asked Mr and Mrs Bosnjak to sign a short-term residential tenancy agreement sublease for a period of four months, from 18 April 2018 to 16 August 2018, and told them that the short‑term sublease was required to be signed at the request of the owners of the property, but would have no impact on the long‑term lease and that the property was theirs for up to 40 years, and they could treat the property as their own; and
(b)provided Mr and Mrs Bosnjak with a copy of a short‑term head lease for rent of $460 a week, executed on 18 April 2018, by Ms Huxford (of RMA) on behalf of Family Holdings and AJH, and Mr Jones on behalf of Sterling Corporate Services for a period of four months, from 18 April 2018 to 16 August 2018.[22]
[22] Affidavit of Gemma Anne Bosnjak, affirmed 9 October 2019, attachment GAB-14, pages 187 ‑ 202.
On 15 October 2018, Mr Hopkinson served Mr and Mrs Bosnjak with a notice to vacate dated 15 October 2018 which stated:[23]
[23] Affidavit of Gemma Anne Bosnjak, affirmed 9 October 2019, attachment GAB-15, page 203.
Dear Gemma
It is with the deepest regret that we are forced to issue to you this notice to vacate your premises within 60 days ie not later than Friday 14th December 2018.
As you will be aware, we are the builders and owners of this development and we agreed with Sterling New Life to allow you to occupy the house until 30th September 2018, by which time they would have either found an investor to purchase the house or arranged to buy it themselves.
They have not succeeded in doing either of these things even with the extra time we allowed them into October.
We now have to find a buyer ourselves. We have to do this without delay as the holding costs are many thousands of dollars every month and we cannot continue to carry them.
Having allowed your lease to run over its expiry date we are required to give you 60 days notice to vacate. If we leave it any longer, that 60 days will be running close to the Christmas holiday period and we do not want to cause you that extra anxiety and inconvenience.
If, however, SNL should manage to arrange a satisfactory purchase in the very near future, we would be happy to reconsider the situation.

2/103 Caridean Street ‑ Mr and Mrs Lee

Between 7 September 2018 and 1 October 2018, the directors of Family Holdings and AJH executed management authorities granting RMA authority to act as managing agents to find short-term tenants for the property at 2/103 Caridean Street, limited to a maximum term of two months. The term of the management authorities' agreement was expressed to be from 6 September 2018 until 30 November 2018.
Mr and Mrs Lee accessed the Sterling New Life website and read a copy of the document titled 'Sterling New Life Lease, Frequently Asked Questions'.
After reading the document in 2017, Mr and Mrs Lee met with Mr McKeown on a number of occasions who told them that in addition to the information they had read on the website:[24]
(a)as tenants they would be given a secure lease of up to 40 years and would not be required to pay any rent;
(b)they could treat the property under the Sterling New Life product as their own home;
(c)profits from the money they give to the Sterling Group would be used to pay the rent for the property for the whole 40 years and they would not have to make any additional payments;
(d)properties offered under the Sterling New Life product were owned by investors in the Sterling New Life product who were not allowed to live in the property;
(e)a change in the ownership of the property under the Sterling New Life product could not unreasonably evict tenants; and
(f)they could receive their investment sum back in full by giving 180 days' notice and ending the long term sublease.
[24] Affidavit of Stanley John Lee, affirmed 9 October 2019 [20].
In late July 2018, Mr and Mrs Lee signed an offer to enter into a Sterling New Life agreement to secure a long‑term lease of the property at 2/103 Caridean Street. Pursuant to the terms of the offer they were required to pay $251,400. Mr and Mrs Lee sold their home to invest in the scheme.
On 11 September 2018, Mr and Mrs Lee attended a meeting with Mr McKeown and Mr Jones. At the meeting Mr McKeown and Mr Jones:[25]
(a)stated that SHL Management had signed two leases relating to the property on that day with Family Holdings and AJH, being a long-term head lease and a lease for a term of two months from 11 September 2018 until 10 November 2018 (a short-term head lease);
(b)gave Mr and Mrs Lee copies of both head leases for rent of the property of $380 a week (both head leases were executed by Ms Huxford (of RMA, on behalf of Family Holdings and AJH) and Mr Jones (on behalf of SHL Management));
(c)stated that the short-term head lease was needed while the sale of the property to another Sterling New Life product investor was being completed and completion and settlement of that sale was expected within the period of the short‑term head lease;
(d)the long-term head lease and the short‑term sublease would start as soon as the short-term head lease expired;[26]
(e)a change in the ownership of the property would not affect their lease;
(f)the returns from their investment would be used to pay for the rent under the long-term head lease; and
(g)they could treat the property like their own home and make improvements to the property.
[25] Affidavit of Stanley John Lee, affirmed 9 October 2019 [24].
[26] The long term head lease does not contain a start or finish date for the initial term; affidavit of Stanley John Lee, affirmed 9 October 2019, attachment SLJ‑4, page 80.
At the meeting on 11 September 2018, Mr and Mrs Lee signed a short‑term sublease for the period from 11 September 2018 to 9 November 2018, and a long-term sublease in which SHL Management is named the lessor. The long-term sublease, signed by Mr and Mrs Lee, does not on its face contain a start date, but does state that rent in the amount of $52 a week was payable.[27]
[27] Affidavit of Stanley John Lee, affirmed 9 October 2019, attachment SJL-2, pages 18 ‑ 74.
The reason why a rental amount of $52 a week was to be paid was, at that time, Mr and Mrs Lee could only afford to pay a lump sum of $217,000. To make up the shortfall they agreed to pay a 'rental top up' to SHL Management each week until the shortfall of $34,400 was paid.
A few days after their meeting with Mr McKeown and Mr Jones, on 14 September 2018, Mr and Mrs Lee paid $217,000 to Silver Link Securities Pty Ltd and Sterling First Projects.
In mid-September 2018, Mr and Mrs Lee moved into the property.
On 31 October 2018, Mr McKeown hand-delivered a notice of termination from RMA to Mr and Mrs Lee, requiring delivery of vacant possession by 29 November 2018.
Mr and Mrs Lee did not relinquish possession and continued to pay $52 a week until SHL Management Services Pty Ltd went into liquidation.

2/8 Observation Road - Ms Murphy Toenies

Ms Murphy Toenies, like Mr and Mrs Lee, found out about the Sterling New Life product in late 2017 while she was browsing the internet.
On or around 13 November 2017, Ms Murphy Toenies attended a Sterling New Life product presentation. Ms Murphy Toenies went to a home open held by the Sterling Group at 103 Caridean Street and spoke to Mr McKeown.
A short time later, Ms Murphy Toenies was shown a group of units at 8 Observation Road by Mr Scott Gillespie of the Sterling Group. Mr Gillespie told her that the units in the complex were available as part of the Sterling New Life product.
Ms Murphy Toenies subsequently sold her home to secure a long-term lease of 2/8 Observation Road through the Sterling New Life product.
In early April 2018, Ms Murphy Toenies attended a meeting with Mr Gillespie and Mr Jones of the Sterling Group. At the meeting (which appears to have taken place on 12 April 2018) Mr Gillespie and Mr Jones:[28]
(a)provided Ms Murphy Toenies with a copy of a long-term head lease between Family Holdings and Sterling Corporate Services, for a rent of $460 a week.[29] The term of the long-term head lease, however, does not specify a term start or end date. It was, however, signed by Mr Jones on behalf of Sterling Corporate Services on 12 April 2018, and by Ms Huxford of RMA (on behalf of Family Holdings) on the same date; and
(b)told Ms Murphy Toenies that:
(i)her money would be put into a high interest investment and the returns would be used to pay her rent under the head lease;
(ii)she would have a secure 40 year lease over the property;
(iii)she would not have to pay any rent for the property;
(iv)she could make improvements to the property and treat the property as her home for the rest of her life; and
(v)any change to the ownership of the property would not impact on her sublease because the Sterling New Life product would stay with the property and would pass to any new owners of the property.
[28] Affidavit of Barbara Helene Murphy Toenies, sworn 9 October 2019 [24].
[29] Affidavit of Barbara Helene Murphy Toenies, sworn 9 October 2019, attachment BT‑4, pages 75 ‑ 124, in particular page 78.
At the meeting, Ms Murphy Toenies signed up to the Sterling New Life product by signing:
(a)a document which required her to pay $285,000 to Silverlink Investment Company; and
(b)a long-term sublease with Sterling Corporate Services, dated 12 April 2018, for the property at unit 2/8 Observation Road for a five year term commencing on an unspecified date and end on an unspecified date with options to renew for seven five year terms up to 2058. The rent specified in the long-term sublease was one dollar for the first two weeks and no rent or other charges payable thereafter.
Ms Murphy Toenies subsequently arranged for the payment of $285,000 from the settlement of the sale of her home to Silverlink Investment Company and Sterling First Projects.
On 1 May 2018, the directors of Family Holdings executed a management authority granting RMA authority to act as managing agents to find short-term tenants for 2/8 Observation Road limited to a maximum term of four months.[30] It was a term of the management authority agreement that it was to apply from 1 May 2018 until 30 September 2018.
[30] Third affidavit of Anthony James Hopkinson, sworn 25 October 2019, attachment TJH-35, pages 43 ‑ 54.
In or around early May 2018, Ms Murphy Toenies was given keys to the property and took possession.
On 5 May 2018, Ms Murphy Toenies entered into a short term sublease for the same property for three months and three weeks from 5 May 2018 to 27 August 2018.
In mid to late October 2018, Ms Murphy Toenies received a notice to vacate, dated 15 October 2018, stating that she was required to move out of the property within 60 days.
On 3 April 2019, Ms Murphy Toenies received an email from Mr Jason Tonkin from RMA attaching a notice of termination which stated that she was required to move out of the property by 5 June 2019.

Extension of a caveat ‑ legal principles

The principles applicable to an application for an extension of a caveat were comprehensively summarised by Beech J in Bashford v Bashford as follows:[31]
[31] Bashford v Bashford [2008] WASC 138 [42] - [50]; applied in Bateson v Jones [2013] WASC 8 [17] (Pritchard J), Masaka Holdings Pty Ltd v Flaxman [2019] WASC 397 [23] (Tottle J).
Section 137 of the Transfer of Land Act 1893 (WA) enables a person who claims 'any estate or interest' in land to lodge a caveat. By its nature, a caveatable interest must be a proprietary interest in land: Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42, 50.
A caveat is a form of statutory injunction preventing registration of a dealing against land until the caveator has been given a reasonable opportunity to justify the caveat by pursuing such remedies as he or she may have: J and H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546, 552, 558; Custom Credit (44 ‑ 45); Brogue Tableau Pty Ltd v Binningup Nominees Pty Ltd [2007] WASCA 179; (2007) 35 WAR 27 [68].
Section 138C(2) of the Transfer of Land Act is in the following terms.
On the hearing of an application under subsection (1), the Supreme Court ‑
(a)if satisfied that the caveator's claim has or may have substance -
(i)may make an order extending the operation of the caveat for such period as is specified in the order;
(ii)may make an order extending the operation of the caveat until the further order of the court; or
(iii)may make such other orders as it thinks fit concerning the caveat or the land in respect of which the caveat was lodged;
(b)if not satisfied that the caveator's claim has or may have substance, shall dismiss the application; and
(c)may make such ancillary orders in relation to the application as it thinks fit.
It can be seen that the power of the court to make orders in favour of a caveator arises only if the court is satisfied that the caveator's claim 'has or may have substance'.
The 'caveator's claim' refers to the claim by the caveator of the estate or interest that is claimed in the caveat: Professional Services of Australia Pty Ltd v Mila Properties Pty Ltd [2004] WASC 30 [17].
On an application for an extension, the onus is on the caveator to demonstrate that there is a serious question to be tried as to whether a caveatable interest exists: Custom Credit (48); Jandric v Jandric [1999] WASC 22 [5].
In an application for an extension of caveat it is not appropriate to attempt to resolve conflicts of evidence on affidavit: Porter v McDonald [1984] WAR 271, 276.
The caveat will not be removed unless the claim to an estate or interest in the land appears to be without foundation: Porter v McDonald (276); Custom Credit (48).
The balance of convenience is a factor to be considered in an application to extend the operation of a caveat. However, interlocutory removal of a caveat will be unusual where an arguable case as to the existence of a caveatable interest has been demonstrated. That is because the purpose of a caveat is the protection of a proprietary interest. Removal of the caveat will, in many cases, have the effect of destroying the benefit of the proprietary interest claimed in the caveat: Custom Credit (50).

Have the applicants established that there is a serious question to be tried in respect of the estate or interest in land that they each claim?

A summary of the arguments

Each of the applicants claim they have a caveatable interest in their respective properties on grounds:[32]
(a)the long-term head leases were validly executed by the respondents' property manager (RMA) as their agent;
(b)the properties have not been abandoned and the leases have not been terminated;
(c)the liquidators' notices of disclaimer are of no force or effect; and
(d)accordingly, each of the applicants have a proprietary interest in their respective properties which should be protected by the extended operation of the caveats.
[32] Applicants' submissions, filed 1 November 2019 [2]; ts 23 ‑ 24, 8 November 2019.
The respondents claim that the applicants do not have a caveatable interest on grounds that:[33]
(a)RMA had no authority to enter into the long-term head leases and subleases. That is, the respondents did not grant, or authorise the grant of, any long-term lease of the respective properties to Sterling Corporate Services or SHL Management. Accordingly, Sterling Corporate Services and SHL Management never had a long‑term lease and accordingly neither were able to grant a valid long-term sublease to any of the applicants;
(b)if Sterling Corporate Services or SHL Management had any valid long-term head lease, it has been abandoned which effects a termination of any long-term sublease to the applicants; and
(c)the disclaimer of the long-term head leases by the liquidator of Sterling Corporate Services or SHL Management terminated the applicants' long-term subleases.

The proceedings in the main actions

[33] Respondents' submissions, filed 25 October 2019 [10].

On 6 September 2019, Family Holdings commenced proceedings in CIV 2594 of 2019 in this court seeking orders requiring Ms Murphy Toenies to deliver up vacant possession of 2/8 Observation Road. On the same day, Family Holdings and AJH commenced proceedings in CIV 2596 of 2019 seeking orders requiring Mr and Mrs Lee to deliver up vacant possession of 2/103 Caridean Street. On 18 September 2019, Family Holdings and AJH commenced proceedings in CIV 2651 of 2019 seeking orders requiring Mr and Mrs Bosnjak to deliver up vacant possession of 4/103 Caridean Street.
In each matter, the respondents plead that each applicant is in possession of property the subject of the short‑term head and subleases that have expired, in the case of Ms Murphy Toenies, on 27 and 26 August 2018 respectively; in the case of Mr and Mrs Lee, on 10 and 9 November 2018 respectively; and in the case of Mr and Mrs Bosnjak, on 17 and 16 August 2018 respectively.
The respondents do not plead or otherwise refer to the long-term head leases or long-term subleases in the statements of claim.
In the main proceedings, the respondents to these applications (as plaintiffs) claim that the liquidators of the respective Sterling Group companies that are parties to the head leases, as lessees, and the subleases, as lessors, gave notice under s 568(1) of the Corporations Act to the applicants to disclaim the head leases and the subleases.
In the main proceedings, the respondents claim that the disclaimers took effect and all of the respective Sterling Group rights, as lessees or lessors, interests, liabilities and property in or in respect of the head leases and the subleases were terminated. In these circumstances, the respondents plead that in each case the applicants' right to possess the property was terminated. Alternatively, the respondents plead that the sublease in each case was terminable pursuant to s 71 or 74 of the Residential Tenancies Act 1987 (WA).
In the main proceedings, the applicants each claim the following matters that are relevant to their claims that they each have a caveatable interest:
(a)the respondents procured and facilitated the marketing of each of the properties, and other properties owned by the respondents, as property available for long-term rental as part of the Sterling New Life product offered by Sterling First (Aust) Ltd and its related entities (defined in the defences and counterclaims as the Sterling Group);
(b)the respondents, through representatives of the Sterling Group, made representations relied upon by each of the applicants and caused each to enter into the Sterling New Life product by a long‑term residential sublease of 40 years;
(c)the short‑term head lease and sublease pleaded by the respondents is of no force and effect; and
(d)save as to admit receipt of the notice of disclaimer of owner's property from the joint liquidators the effect of the notice of disclaimer is not admitted. Alternatively, the notice was ineffective by reason of s 60(1) the Residential Tenancies Act and s 5G of the Corporations Act.
The applicants, by way of counterclaim in the main proceedings, claim that the respondents themselves, and through representatives of the Sterling Group, engaged in misleading or deceptive conduct and made false representations which were relied upon by each of the applicants which constituted conduct which contravened s 18(1) of the Australian Consumer Law, included in sch 2 of the Competition and Consumer Act 2010 (Cth). The applicants also plead a claim in equitable estoppel by claiming an equitable interest in the land arising from being induced by the respondents' representations and their detrimental reliance on those representations.
The applicants claim they are each entitled to an order vesting tenancy over the property in each case on the same terms as the long-term subleases pursuant to s 81 of the Residential Tenancies Act or s 81(4) of the Property Law Act 1969 (WA), and that each caveat remains in effect until removed by the applicants or otherwise ordered by the court.

Is there a serious question to be tried that the long-term leases are valid?

The short answer to this question is yes.
The long-term head leases and subleases were executed on behalf of the respondents by the property manager, RMA.
RMA was the property manager for all the properties offered as part of the Sterling New Life product scheme and was the property manager for each of the properties. RMA is one of the companies within the Sterling Group.
Sterling First Projects were engaged on behalf of the respondents as their agents to advertise, conduct home opens and viewings in respect of each of the properties, and to undertake other promotional activities in order to assist with the procurement of a lessee willing to enter into a Sterling New Life lease of the properties.
The applicants contend that when the evidence given by Mr Hopkinson in his affidavits is carefully examined, it is apparent that the respondents must have been aware of the terms of the Sterling New Life product lease arrangements, some of the material terms of which were that:
(a)RMA was the property manager for all properties offered as part of the Sterling New Life product; and
(b)in exchange for the upfront payment of the advertised lump sum (for the purpose of investment by the Sterling Group with the investment returns being used to pay the rent under the lease) a long-term lease of the respondents' property (with their consent) of 40 years duration comprised of an initial five year term with up to seven extensions of five years each.
The applicants say that Sterling First Projects' promotional material contained representations that were false and misleading, and that each of the applicants relied upon the representations when entering into the long-term subleases and paid the large sums of money to the Sterling Group companies on the basis of those false and misleading representations.
The applicants contend that the conduct engaged in by Sterling First Projects was, at least, arguably conduct engaged in on behalf of the respondents as their agent within the scope of Sterling First Projects' actual authority. In particular, they say Mr Hopkinson's evidence of actual authority is consistent with the documentary and chronological event in three respects:
(a)the limits of the (actual) authorities to market the properties;
(b)the contemporaneous communications and put options contemplating a sale of the properties; and
(c)the authorities to grant short‑term leases granted by the respondents are inconsistent with there having been any earlier grant of an authority for long‑term leases.
It is said to follow that RMA had ostensible authority to enter into the long-term head leases and long-term subleases.
The respondents contend that as at the date of the respective long-term head leases, RMA had no authority to enter into any lease on behalf of the respondents. They say there was no such authority.[34] It is said to follow that the purported long-term head leases are invalid and that as a consequence Sterling Corporate Services or SHL Management were incapable of granting a valid sublease to the applicants. Accordingly, it is argued that the applicants do not have a caveatable interest based on the long-term head leases and long-term subleases.
[34] First affidavit of Anthony James Hopkinson, sworn 25 October 2019 [33] ‑ [35]; second affidavit of Anthony James Hopkinson, sworn 25 October 2019 [34] ‑ [36]; third affidavit of Anthony James Hopkinson, sworn 25 October 2019 [31] ‑ [33].
In particular, it is said that the documentary record shows that:
(a)the authorities that the respondents granted to Sterling First Projects authorised the Sterling Group to undertake promotional activity with a view to procuring a lessee willing to enter into a lease, but expressly provided that the respondents would need to enter into an exclusive management authority with RMA before a tenancy was entered into;
(b)the respondents had no intention of entering into long‑term leases as they had listed each of the properties for sale; and
(c)the respondents did not grant any authority to RMA to lease any of the properties until after the respective long‑term leases were granted. Further, that such authority only permitted the grant of short-term leases for no more than four months or two months (as the case may be) which mirrored the terms of the short‑term head leases and subleases that were granted.

Actual (implied) and ostensible authority

Authority is implied in an agency relationship because it is impossible, in an agency agreement, to countenance and address the myriad specific matters an agent can perform in order to properly carry out the express terms of his or her engagement.[35] Implied actual authority in the agency relationship may arise in the absence of an express agreement between the principal and agent when the parties conduct themselves in such a way that it is proper to infer that the relevant authority has been conferred on the agent.[36]
[35] Dal Pont GE, Law of Agency (3rd ed) [8.1].
[36] Tiao v Lai [No 2] [2010] WASCA 189 [104].
Despite substantial overlap, implied actual authority is to be distinguished from apparent or ostensible authority. They are separate forms of liability. Notwithstanding any grant of explicit authority pursuant to an agency agreement, an agent will have implied actual authority when it is proper to infer that a principal has, by his or her words or conduct, conferred the relevant authority on an agent such that the agent is taken to have that authority. It is a species of actual authority, which reflects a relationship between the principal and agent.
Ostensible (or apparent) authority is, on the other hand, a legal relationship between the principal and a third party based on a representation, made by the principal, intended to be acted upon by the third party.[37] It is immaterial, in the case of ostensible authority, that the agent had no actual authority or acted in excess of their authority.[38] It is the representation by the principal of that authority that is key, and the scope of the authority which is apparent or ostensible is that which the principal represents or holds out to third parties.[39] The representation of authority operates, in effect, as the same as a real authority given by a principal to the supposed agent[40] and binds the principal to the full extent of the apparent authority.[41]
[37] Durban Roodepoort Deep, Ltd v Newshore Nominees Pty Ltd [2005] WASCA 231 [58] (McLure JA).
[38] Durban Roodepoort Deep, Ltd v Newshore Nominees Pty Ltd [2005] WASCA 231 [58] (McLure JA); Freeman & Lockyer (a firm) v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480, 502 (Diplock LJ); The Union Credit Bank Ltd v The Mersy Docks and Harbour Board (1899) 2 QB 205.
[39] Dal Pont GE, Law of Agency (3rd ed) [20.13].
[40] Reynell v Lewis (1846) 15 M & W 517; (1846) 153 ER 954, 959 (Pollock CB).
[41] Magripilis v Baird [1926] St Qd 89, 92 (Isaacs J).
In Tiao v Lai [No 2], the Court of Appeal explained:[42]
[42] Tiao v Lai [No 2] [2010] WASCA 189 [103] ‑ [105] (Buss JA); see also Hightime Investments Pty Ltd v Adamus Resources Ltd [2012] WASC 295 [172] (Edelman J).
The distinction between actual and apparent (or ostensible) authority was summarised by McLure JA (Steytler P & Murray AJA agreeing) in Durban Roodepoort Deep, Ltd v Newshore Nominees Pty Ltd [2005] WASCA 231. After referring to the analysis by Diplock LJ in Freeman & Lockyer (a firm) v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480, 502 ‑ 506, her Honour said:
'Actual authority and apparent authority are independent, although generally they co-exist and coincide but either may exist without the other. Actual authority is a legal relationship between the principal and agent. Apparent authority, on the other hand, is a legal relationship between the principal and the third party created by representation, made by the principal to the third party, intended to be acted upon by the third party, that the agent has authority to enter on behalf of the principal into a contract of the kind within the scope of the apparent authority, so as to render the principal liable under the contract. The representation which creates apparent authority may take a variety of forms of which the commonest is representation by conduct, that is, by permitting the agent to act in some way in the conduct of the principal's business with third persons. Lord Diplock summarised the law by stating four conditions that must be fulfilled to entitle a third party to enforce against a company a contract entered into on its behalf by an agent who had no actual authority to do so. The four conditions are as follows:
(1)that a representation that the agent had authority to enter on behalf of the company into a contract of the kind sought to be enforced was made to the third party;
(2)that such representation was made by a person or persons who had actual authority to manage the business of the company either generally or in respect of those matters to which the contract relates;
(3)that the third party was induced by such representation to enter into the contract; and
(4)that under its constitution the company was not deprived of the capacity to enter into a contract of the kind sought to be enforced or to delegate authority to enter into such a contract [58].'
Freeman & Lockyer was applied by the High Court in Crabtree‑Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd [1975] HCA 49; (1975) 133 CLR 72.
The actual authority of an agent may be express or implied. The distinction between express actual authority and implied actual authority was explained by Clarke and Cripps JJA in Equiticorp Finance Ltd (in liq) v Bank of New Zealand (1993) 32 NSWLR 50:
'Actual authority arises where a principal grants, and an agent accepts, authority for the agent to perform specific tasks on behalf of the principal - in short there must be a consensual agreement between the principal and agent. Notwithstanding the absence of an express agreement, the parties, that is, the principal and agent, may conduct themselves in such a way that it is proper to infer that the relevant authority has been conferred on the agent.
Accordingly, where the question is whether the agent has implied authority to act in a particular way the court directs its attention to the conduct of the parties in order to decide whether the inference of authority should be drawn (132).'
See also Hely‑Hutchinson v BrayheadLtd [1968] 1 QB 549, 583.
In Statewide Tobacco Services Ltd v Morley (1990) 2 ACSR 405, Ormiston J drew attention to the breadth of the concept of implied actual authority (418). His Honour then cited with approval the following summary appearing in Bowstead on Agency (15th ed) page 93:
'The most obvious cases of implied authority arise in the forms of incidental authority (implied authority to do whatever is necessarily or normally incidental to the activity expressly authorised), usual authority (implied authority to do whatever an agent of the type concerned would usually have authority to do) and customary authority (implied authority to act in accordance with such applicable business customs as are reasonable); there is a further general category of implied authority arising from the course of dealing between the parties and the circumstances of the case.'
In Auxil Pty Ltd v Terranova, Newnes JA explained the nature of representations which create apparent authority:[43]
A representation creating an apparent authority of an agent may be made in a number of ways but the most common form of representation by a principal is by conduct, that is, by permitting the agent to act in the management or conduct of the principal's business. By permitting the agent to act in the management or conduct of the business, the principal thereby represents to anyone dealing with the agent that he or she has authority to do those acts on behalf of the company which an agent authorised to do acts of the kind which he or she is in fact permitted to do normally does in the ordinary course of such business. See Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480, approved in Crabtree‑Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd [1975] 133 CLR 72, 78; Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146, 159, 172. See also Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451, 466, and the decision of the House of Lords in Armagas Ltd v Mundogas SA [1986] AC 717, 777.
[43] Auxil Pty Ltd v Terranova [2009] WASCA 163; (2009) 260 ALR 164 [176].
It is improper, on an application to extend an existing caveat, to attempt to resolve conflicting affidavit evidence or to evaluate the evidence in a kind of preliminary trial. It is important, however, to have regard to the evidence before the court to determine if there is an arguable case for implied or ostensible authority to enter into the long‑term head leases. For the claim to not have substance the claim must be without foundation.[44]
[44] Bashford v Bashford [2008] WASC 138 [49] (Beech J) applying Porter v McDonald [1984] WAR 271, 276, Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42, 48; applied in Bateson v Jones [2013] WASC 8 [17] (Pritchard J), Masaka Holdings Pty Ltd v Flaxman [2019] WASC 397 [23] (Tottle J).
When regard is had to the evidence before the court, it is arguable that RMA had either implied actual authority, or apparent or ostensible authority to enter into long‑term lease arrangements with Sterling Corporate Services or SHL Management with a view to making offers to the applicants, capable of acceptance, that in exchange for the lump sums they would be granted long-term subleases (for the properties owned by the respondents) for the periods of time expressed in the advertisements.
In particular, the email correspondence between Mr Hopkinson (on behalf of the respondents) and Mr McKeown (on behalf of Sterling Corporate Services and/or SHL Management); the authorities signed by Mr Hopkinson together with the terms sheet; and the advertisements for the Caridean properties (which prima facie appear to have been sent to Mr Hopkinson in late 2017) appear to contemplate that Sterling New Life leases would be offered to prospective lessees by Sterling Corporate Services as the head lessee.

It is also the case that the Sterling New Life product only contemplated long‑term leases of up to 40 years in duration for payment of a lump sum upfront and not short-term tenancies. The lump sum was then to be invested with a view to supporting the rental payments on the head lease. The authorities given by the respondents to Stirling First Projects to advertise, conduct home opens and viewings, and organise other promotional activity in respect of each of the properties to assist with the procurement of lessees, was ultimately with a view to securing a Sterling New Life lessee.
In my view, there is an arguable case that may have substance that it can be inferred from the conduct of Mr Hopkinson; as well as from some of the instructions exchanged in the email correspondence; and the nature of the task to be undertaken, namely, ultimately to procure a Sterling New Life life tenant, that RMA was authorised to procure long‑term lessees for the properties by advertising and engaging tenants for the Sterling New Life product.
I am also satisfied that the applicants have an arguable case that may have substance that RMA had apparent or ostensible authority to grant the long-term head leases on behalf of the respondents to Sterling Corporate Services or SHL Management. In each case, the advertising and marketing material, home opens and viewings, and other promotional activity was all geared towards the procurement of a Sterling New Life life tenant. Mr Hopkinson was provided with, or at least the email correspondence suggests he was provided with, a copy of the advertising material. In each case, home opens were conducted at each of the properties to prospective Sterling New Life life tenants, and prima facie, on the evidence before the court taken at its highest, there is an arguable case that by its conduct, Family Holdings and/or AJH held out RMA as having authority to enter into long‑term head leases with a view to securing long‑term Sterling New Life life tenants.
If the long-term head leases are found to have been entered into pursuant to valid authority (whether implied actual or ostensible) then Sterling Corporate Services or SHL Management were able to grant valid long-term subleases to the applicants.
Whether, in fact, each of the authorities provided to RMA implicitly extended to entering into the long-term head leases or not is ultimately a matter for hearing as it is an issue that cannot be determined until discovery and the hearing of the evidence is completed in the main proceedings. Nor can it be determined that representations made by Mr Hopkinson or other representatives of the respondents are sufficient to establish ostensible or apparent authority to enter into the long‑term leases until discovery and the hearing of evidence is completed in the main proceedings. For now, it is sufficient that the applicants have been able to establish, pursuant to s 138C of the Transfer of Land Act 1893 (WA), that their claim of a caveatable interest in each of their respective properties based on implied actual or ostensible authority may have substance.

Liability under s 84(2) of the Competition and Consumer Act 2010 (Cth)

The applicants contend that Family Holdings and AJH are otherwise liable for the conduct of RMA by virtue of s 84(2) of the Competition and Consumer Act. Section 84(2) provides:
84. Conduct by directors, employees or agents
…
(2)Any conduct engaged in on behalf of a body corporate:
(a)by a director, employee or agent of the body corporate within the scope of his or her actual or apparent authority; or
(b)by any person at the direction or with the consent or agreement (whether express or implied) of a director, employee or agent of the body corporate, where the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the director, employee or agent;
shall be deemed, for the purposes of this Act and the consumer data rules, to have been engaged in also by the body corporate.
The authorities have discerned in s 84(2) a legislative intention to attribute to a company the conduct of persons which, under the general law, would not necessarily otherwise be attributable to the corporation.[45] That is, s 84(2) appears to extend the general law and make it 'easier' to attribute corporate responsibility for the conduct of agents than the position at common law.[46] For the deeming provision in s 84(2) to apply in a particular case, two questions about the conduct of officers, employees, or agents must be answered in the affirmative, namely:[47]
(a)was the conduct engaged in on behalf of the company?
(b)was the conduct engaged in within the scope of the agent's actual or apparent authority?
[45] Walpan Pty Ltd v Wallace [1985] FCA 619; (1985) 8 FCR 27, 37 (Lockhart J; Sweeney & Neaves JJ agreeing); Australian Competition and Consumer Commission v Cornerstone Investment Aust Pty Ltd (in liq) (No 4) [2018] FCA 1408 [281] (Gleeson J); Trade Practices Commission v Queensland Aggregates Pty Ltd (No 3) [1982] FCA 329; (1982) 61 FLR 52, 66 (Morling J).
[46] NMFM Property Pty Ltd v Citibank Ltd (No 10) [2000] FCA 1558; (2000) 107 FCR 270 [1241] (Lindgren J).
[47] See generally, Bennett v Elysium Noosa Pty Ltd (in liq) [2012] FCA 211 [201] (Reeves J); NMFM Property Pty Ltd v Citibank Ltd (No 10) [2000] FCA 1558; (2000) 107 FCER 270 [1238] (Lindgren J).
In NMFM Property Pty Ltd v Citibank Ltd (No 10), Lindgren J described the requirement that a person be acting 'on behalf of' the corporation for the purpose of s 84(2) as requiring the satisfaction of either one of two conditions, namely the agent engaged in the conduct as 'a representative of' or 'for' the corporation, or did so in the course of the corporation's business, affairs or activities.[48] The phrase 'on behalf of' has been described as being a phrase without strict legal meaning and as being used in a wide range of relationships.[49] The satisfaction of this particular requirement will depend on the circumstances of the particular case. I do not understand the second of the two questions posed above to be applying a different approach to actual or apparent authority than that which is expressed at [80] to [84] above.
[48] NMFM Property Pty Ltd v Citibank Ltd (No 10) [2000] FCA 1558; (2000) 107 FCER 270 [1244] (Lindgren J).
[49] Walpan Pty Ltd v Wallace [1985] FCA 619; (1985) 8 FCR 27, 37 (Lockhart J; Sweeney & Neaves JJ agreeing).
In this case, for the reasons articulated at [86] to [90] above, the applicants in this matter have demonstrated an arguable case that may have substance that Family Holdings and AJH are liable for the conduct of their agent RMA under s 84(2) of the Competition and Consumer Act.

Is there a serious question to be tried that the long-term head leases have not been abandoned and the applicants' long-term subleases have not been terminated?

The short answer to this question is yes. However, whether this issue can ultimately be made out, may well depend upon an issue arising under the Commonwealth Constitution, in particular whether a direct inconsistency arises between s 568D of the Corporations Act and s 60(1) of the Residential Tenancies Act or whether these provisions operate concurrently. As a result of this issue arising, the applicants' solicitors served notices pursuant to s 78B of the Judiciary Act 1903 (Cth).

A summary of the arguments

The respondents contend that if there was ever any valid long-term sublease granted to any of the applicants, then it has been terminated as a result of Sterling Corporate Services' or SHL Management's abandonment of each of the long-term head leases.
On 16 October 2019, the respondents served notices of abandonment pursuant to s 76A of the Residential Tenancies Act on the liquidator of Sterling Corporate Services and SHL Management.
Under s 76B of the Residential Tenancies Act, if a tenant wishes to dispute a s 76A notice the tenant can apply to a competent court for an order setting aside the notice or for compensation. That application must be made within 28 days (or, if the notice is to be set aside, seven days).[50]
[50] Residential Tenancies Act 1987 (WA) s 76B(1) – (3).
The liquidator did not take action under s 76B of the Residential Tenancies Act within seven days of receipt of those notices to dispute them. This is said not to be surprising in circumstances where by that time the liquidator had already disclaimed almost all of the long-term and short-term leases. The respondents claim that the acts of disclaimer, made pursuant to s 568(1) of the Corporations Act, are in themselves acts equivalent to, or evidence of, abandonment.
The liquidator disclaimed:
(a)Ms Murphy Toenies' long-term and short‑term leases by letters dated 24 October 2019 and 1 July 2019 respectively;[51]
(b)Mr and Mrs Bosnjak's long-term and short-term leases by letters dated 1 July 2019 and 12 August 2019 respectively;[52] and
(c)Mr and Mrs Lee's long‑term and short‑term leases by letters dated 12 August 2019 and 1 July 2019 respectively.[53]
[51] Third affidavit of Anthony James Hopkinson, sworn 25 October 2019, attachment TJH‑40, page 66, attachment TJH‑39, page 62.
[52] First affidavit of Anthony James Hopkinson, sworn 25 October 2019, attachment TJH‑27, page 99, attachment TJH‑11, page 76.
[53] Second affidavit of Anthony James Hopkinson, sworn 25 October 2019, attachment TJH‑26, page 95, attachment TJH‑12, page 80.
As a result of not having taken action to dispute the notices within seven days of receipt, the respondents contend that Sterling Corporate Services and SHL Management are deemed under s 76A(3) of the Residential Tenancies Act to have abandoned the properties.
The respondents then contend that it necessarily follows that:
(a)deemed abandonment effected a termination of each of the long-term head leases under s 60(1)(f) of the Residential Tenancies Act, with the consequence that the respondents became entitled to possession of the premises as against Sterling Corporate Services and SHL Management; and
(b)upon the respondents becoming entitled to possession of the premises as against Sterling Corporate Services and SHL Management, the long-term subleases to the applicants were terminated by operation of s 60(1)(d) of the Residential Tenancies Act. This is said to be so because the respondents, being persons with a superior title, had become entitled to possession as against the applicants' lessor, Sterling Corporate Services or SHL Management. Further, that s 60(1)(d) of the Residential Tenancies Act does not require a person having superior title to the lessor to have taken possession.
Section 60(1)(d) and (f) of the Residential Tenancies Act provide:
60.How residential tenancy agreements and tenant's interests in agreements are terminated
(1)Despite any Act or law to the contrary, a residential tenancy agreement shall not terminate or be terminated except in one of the following circumstances ‑
…
(d)where a person having superior title to that of the lessor becomes entitled to possession of the premises;
…
(f)where the tenant abandons the premises;
…
Section 568D of the Corporations Act provides:
568D Effect of disclaimer
(1)A disclaimer is taken to have terminated, as from the day on which it is taken because of subsection 568C(3) to take effect, the company's rights, interests, liabilities and property in or in respect of the disclaimer property, but does not affect any other person's rights or liabilities except so far as necessary in order to release the company and its property from liability.
(2)A person aggrieved by the operation of a disclaimer is taken to be a creditor of the company to the extent of any loss suffered by the person because of the disclaimer and may prove such a loss as a debt in the winding up.
Consequently, it is said that when the long-term head leases came to an end, the long-term subleases also came to an end.
The respondents say that the effect of a disclaimer under s 568(1) of the Corporations Act operates to bring the demise (possessory rights) to an end with the result that a lessee ceases to be entitled to exclusive possession and quiet enjoyment.[54]
[54] Willmott Growers Group Inc v Willmott Forests Ltd (recs & mgrs apptd) (in liq) [2013] HCA 51; (2013) 251 CLR 592 [39] (French CJ, Hayne & Kiefel JJ) [67] (Gageler J).
The effect of the disclaimers are to terminate the long‑term head leases, and when that occurred s 60(1)(d) of the Residential Tenancies Act operates to terminate the subleases, without an order of the court, as in each case the respondents (who have superior title to the applicants) became entitled to possession of the premises. In the alternative, the respondents contend that even if a residential tenancy agreement can only be terminated in accordance with s 60 of the Residential Tenancies Act, the effect of the liquidator's disclaimer was still to bring Sterling Corporate Services' or SHL Management's possessory rights (demise) to an end with the results that the respondents became entitled to possession as against Sterling Corporate Services or SHL Management, which results in the termination of the long‑term subleases of the applicants by operation of s 60(1)(d) of the Residential Tenancies Act. Thus, they contend that no issue of inconsistency arises between s 568D of the Corporations Act and s 60 of the Residential Tenancies Act as these provisions are capable of concurrent operation and fall within s 5G of the Corporations Act.
The applicants disagree. The applicants contend that a direct inconsistency arises between s 568D of the Corporations Act and s 60 of the Residential Tenancies Act, which, because of the operative effect of s 5G of the Corporations Act, renders s 568D of the Corporations Act inoperable. It is contended that the effect, pursuant to s 568D of the Corporations Act, of a disclaimer by a liquidator of a residential tenancy agreement in Western Australia does not terminate the residential tenancy agreement.
The applicants argue that the High Court in Willmott Growers Group Inc v Willmott Forests Ltd (in liq)[55] held that since the tenants' rights or liabilities under leases with the company in liquidation depended on the continuation of the company's contractual obligations, disclaimer of those leases had the effect of terminating the contract and the lease on and from the date the disclaimer took effect. Accordingly, a liquidator's disclaimer of a lease pursuant to s 568(1) of the Corporations Act will have the effect of terminating that lease. This is said to give rise to a conflict between the operation of s 568D of the Corporations Act and s 60(1) of the Residential Tenancies Act because s 60(1) is expressed to prescribe the methods by which a residential tenancy agreement can be terminated 'despite any Act or law to the contrary' and that section does not provide a method for termination by disclaimer as is provided for in the Corporations Act.
[55] Willmott Growers Group Inc v Willmott Forests Ltd (recs & mgrs apptd) (in liq) [2013] HCA 51; (2013) 251 CLR 592.
Consequently, it is said to follow by the applicants that while a lease is a contract that may be disclaimed pursuant to s 568(1) of the Corporations Act, s 568D of the Corporations Act will not have the effect of terminating a residential tenancy agreement under the Residential Tenancies Act. If this contention is accepted it is said that the long-term head leases cannot be said to have been abandoned or terminated, and both the long-term head leases and the long-term subleases remain in force.
It appears to be common ground that s 60(1) meets the criteria for a 'pre-commencement (commenced) provision' pursuant to s 5G(12) of the Corporations Act, the effect of which is that if a provision of a State law is directly inconsistent with the Commonwealth provision, then the Commonwealth provision will not operate (pursuant to s 5G(11) of the Corporations Act). Where the parties depart in their submissions, however, is that the applicants contend a direct inconsistency arises between the two provisions; the respondents argue that no inconsistency arises so as to oust the effect of s 568D of the Corporations Act.

Notice of a constitutional matter - section 78B of the Judiciary Act 1903 (Cth)

On 18 October 2019, the applicants' solicitors gave notice to each of the Attorneys General of the Commonwealth and the States under s 78B of the Judiciary Act of a constitutional matter as follows:[56]
[56] See generally, affidavit of Danilo Dragovic, sworn 7 November 2019.
(a)section 568D of the Corporations Act has the effect of terminating a lease that has been disclaimed by a liquidator on behalf of a company;
(b)section 60(1) of the Residential Tenancies Act codifies the methods by which a residential tenancy agreement can be terminated 'despite any Act or law to the contrary', and that section does not provide a method for termination of a residential tenancy agreement by disclaimer pursuant to the Corporations Act;
(c)there is a potential conflict between the operation of s 568D of the Corporations Act and s 60(1) of the Residential Tenancies Act, within the meaning of s 109 of the Commonwealth Constitution;
(d)section 5E(1) of the Corporations Act provides that the Corporations Act is not intended to exclude or limit the concurrent operation of a State or Territory;
(e)section 5E (4) of the Corporations Act provides that: (i) this section does not apply to the law of the State or Territory if there is a direct inconsistency between the Corporations legislation and that law; and (ii) 'section 5G prevents direct inconsistencies arising in some cases by limiting the operation of the Corporations legislation';
(f)section 5G(3) of the Corporations Act provides that s 5G applies to the interaction between a provision of a law of a State or Territory and a provision of the Corporations Act only if the State provision meets the conditions set out in the table of that subsection; and
(g)section 60(1) of the Residential Tenancies Act meets the criteria for a 'pre-commencement (commenced) provision' pursuant to s 5G(3) of the Corporations Act and, accordingly, pursuant to s 5G(11), the Corporations Act will not operate to the extent of the inconsistency with s 60(1) of the Residential Tenancies Act.

Abandonment

In the absence of a comprehensive argument on the constitutional issue, the court is not in a position to express a view on whether a direct inconsistency arises between s 568D of the Corporations Act and s 60(1) of the Residential Tenancies Act or whether the provisions operate concurrently.
However, it could not be said that the argument put by counsel for the applicants is without foundation. A lease is a form of contract; liquidators clearly have the power to disclaim leases, from which point the rights and liabilities under the lease are terminated.[57] This is at least arguably inconsistent with s 60(1) of the Residential Tenancies Act which outlines the manner in which a residential tenancy can be terminated in Western Australia (of which, disclaimer is not one of them). The parties agree that s 60(1) of the Residential Tenancies Act is a pre‑commencement (commenced) provision pursuant to s 5G(12) and, pursuant to s 5G(11), if the two provisions are inconsistent, s 568 of the Corporations Act will apply only to the extent that it is not inconsistent with s 60(1) of the Residential Tenancies Act.
[57] Willmott Growers Group Inc v Willmott Forests Ltd(recs & mgrs apptd) (in liq) [2013] HCA 51; (2013) 251 CLR 592 [57] (French CJ, Hayne & Kiefel JJ).
Leaving the constitutional issue aside, at common law a lease may come to an end by surrender. An example of surrender of the lease is where a tenant abandons possession and the landlord, by words or conduct, unequivocally accepts that abandonment.[58] In Western Australia the common law has been replaced by the Residential Tenancies Act.
[58] Andrews v Hogan [1952] HCA 37; (1952) 86 CLR 223, 253 (Fullagar J).

Section 76A(1) of the Residential Tenancies Act provides that if a lessor suspects on reasonable grounds that a tenant has abandoned the residential premises, the lessor may give a written notice to the tenant terminating the agreement.
Section 76A(3) of the Residential Tenancies Act provides that if a tenant does not take action to dispute the notice within seven days after being given the notice, the tenant is deemed in effect to have abandoned the premises.
Section 3 of the Residential Tenancies Act prescribes the 'reasonable grounds' on which a lessor can suspect that a tenant has abandoned the residential premises. It prescribes those 'reasonable grounds' to be that the tenant has failed to pay rent under the residential tenancy agreement, and that at least one of the following has occurred: (a) the presence at the premises of uncollected mail, newspapers or other material; (b) reports from neighbours of the tenant or from other persons indicating that the tenant has abandoned the premises; (c) the absence of household goods at the premises; (d) the disconnection of services (including gas, electricity and telephone) to the premises.
In addition to a failure to pay rent, in order for a lessor to form a suspicion that a property has been abandoned, at least one of the factual circumstances set out in (a) to (d) in the definition must have occurred. Each of those factual circumstances prima facie appear to relate to the actual occupation of the residential premises.
In circumstances where the lessees of the head leases (Sterling Corporate Services or SHL Management) were not in actual occupation of the residential premises it is arguable whether s 76A(1) of the Residential Tenancies Act can have operative effect so as to enable the respondents to invoke s 60(1)(f) of the Residential Tenancies Act to effect a termination of the long-term head leases, which on the respondents' argument to terminate the long-term subleases must occur.

Conclusion ‑ the applicants have a caveatable interest as their claim has or may have substance

For the reasons I have expressed, I am of the opinion that each of the applicants have an arguable case that may have substance that they each have a proprietary interest in the land the subject of each caveat, being a claim that they have an interest in a long-term sublease that was validly executed and has not by operation of law been terminated nor abandoned.

Balance of convenience

I am of the opinion that the balance of convenience favours the extension of each of the applicants' caveats pending the determination of the main proceedings.
Section 138C of the Transfer of Land Act confers a discretion on the court to extend a caveat. In exercising that discretion the court must balance the injustice that might be suffered by the respondents if the application to extend the caveats are granted and the applicants later fail at trial, against the injustice that might be suffered by the applicants if their applications are refused and they later succeed at trial in establishing their leasehold interest.[59]
[59] Masaka Holdings Pty Ltd v Flaxman [2019] WASC 397 [25] (Tottle J).
In Navarac Pty Ltd v Moondancer Holdings Pty Ltd, Pullin JA said:[60]
It is true that experience shows that parties are most commonly in dispute about the existence of a caveatable interest. Balance of convenience issues are usually of little or no significance where the caveator claims an estate in fee simple or a leasehold estate. In those fairly common cases, it is 'unusual', as Owen J states, that once an arguable case is made out by the caveator that there is such a caveatable interest, that balance of convenience issues will result in removal. However, if for example the interest claimed by the caveator is a security interest or an interest in competition with another claimant against the registered proprietor, then balance of convenience issues may become decisive.
[60] Navarac Pty Ltd v Moondancer Holdings Pty Ltd [2009] WASCA 95; (2009) 40 WAR 150 [22] (Miller & Newnes JJA agreeing).
In these matters the uncontested matters relevant to the exercise of the court's discretion are that:
(a)the applicants' claims are claims in a leasehold estate;
(b)each of the applicants are in actual possession of the properties, which they each came into possession of after relying upon misleading representations made to them by representatives employed by the Sterling Group entities that they could live in the properties and make them their homes for the rest their lives without incurring any rent or other charges;
(c)each of the applicants have suffered emotional and financial distress as a result of signing up to the Sterling New Life product;
(d)Mr and Mrs Lee have paid for and made improvements to the property that they occupy;[61]
(e)the respondents are not receiving any rent from the applicants or Sterling Corporate Services and SHL Management, and are required to meet ongoing loan and other expenses such as rates;[62] and
(f)Mr Hopkinson is himself in poor health and suffering significant stress as a result of these proceedings.[63]
[61] Affidavit of Stanley John Lee, affirmed 9 October 2019 [30].
[62] First affidavit of Anthony James Hopkinson, sworn 25 October 2019 [60] ‑ [63]; second affidavit of Anthony James Hopkinson, sworn 25 October 2019 [60] ‑ [62]; third affidavit of Anthony James Hopkinson, sworn 25 October 2019 [53] ‑ [56].
[63] First affidavit of Anthony James Hopkinson, sworn 25 October 2019 [20] ‑ [21]; second affidavit of Anthony James Hopkinson, sworn 25 October 2019 [20] ‑ [21]; third affidavit of Anthony James Hopkinson, sworn 25 October 2019 [18] - [19].
It is also relevant that each of the applicants have offered undertakings as to damages. The respondents claim that the applicants' undertakings are of limited utility given their financial circumstances. I do not, however, accept this to be the case.
Firstly, Ms Murphy Toenies has funds of approximately $103,000 invested in a fixed term deposit.[64] Mrs Lee has $71,000 in a savings account.[65] Whilst Mr and Mrs Bosnjak have limited means, Mrs Bosnjak is employed.[66]
[64] Affidavit of Barbara Helene Murphy Toenies, sworn on 9 October 2019 [43(d)].
[65] Affidavit of Stanley John Lee, affirmed 9 October 2019 [42(f)].
[66] Affidavit of Gemma Anne Bosnjak, affirmed 9 October 2019 [40].
Secondly, there is no evidence before the court that the ongoing loan and rate expenses for each of these properties is of such magnitude that the applicants would not be in a position to satisfy an award of damages to cover these costs.
In any event, I am of the opinion that the proceedings in respect of the claims in the main proceedings should be expedited. In these circumstances, there should be an early trial which will determine the respective rights of the applicants and the respondents.
I will hear the parties as to the orders that should be made as to these applications and costs.
I will also hear from the parties as to the orders that should be made to program the main proceedings for an expedited trial, including setting aside trial dates early in the New Year.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
EH
Research Associate/Orderly to the Honourable Justice Smith
19 NOVEMBER 2019