A licence to occupy to a
family member needs careful drafting
Arrangements to provide a family member with a place to
live are common. But unless the terms are clear, disputes
can arise and protracted litigation can result, as a recent
decision in the Supreme Court of NSW illustrates.
In Cross v Cross-Boyd  NSWSC 977 (10 August 2021) his
Honour Justice Davies decided on four contentious issues
arising from a Deed of Family Arrangement which gave a
daughter a licence to occupy her deceased’s father’s home.
The Deed of Family Arrangement
In his Will made on 17 December 1999, the late Horace
Sylvester Cross established a trust for his daughter Kathryn
(who was one of six children) “for her special needs arising
out of her disability”. The trustees were to provide her
with a place to live (without payment of a fee), initially
the deceased’s principal place of residence at 16 Flower
Street, Maroubra (the “Property”), and sufficient income to
ensure her well-being. The Property could be sold, but if
so, an alternative property would need to be purchased or a
fund provided for Kathryn’s accommodation. He died on 24
February 2016, his wife having pre-deceased him.
On 22 August 2018, family provision proceedings brought
against the estate by another daughter (Virginia) were
settled, and a Deed of Family Arrangement was signed with
In the Deed of Family Arrangement, the right of occupancy of
the Property was given to Virginia, who was to reside there
with Kathryn (the “Protected Person”). The terms were:
1. [Virginia] shall have the following right:
- A licence to reside at the Property for such period as
the Protected Person may reside there on the following
- [Virginia] to reside at the Property … for such period as
the Protected Person and/or her appointed guardians and
managers consent to such residence;
- [Virginia] is to pay the sum of $150 per week as
contributions toward expenses for the maintenance and upkeep
of the Property (“the Contribution”) … commencing on and
from 1 August 2018;
- If the Property is sold and the Protected Person moves
to assisted accommodation, the licence shall terminate
immediately upon settlement of the sale of the Property;
- In the event that [Virginia] fails to make payment of the
Contribution for a period of 4 or more consecutive weeks,
the Executors shall be entitled to give notice in writing
terminating the licence agreement immediately;
On 29 May 2020, the trustees commenced Supreme Court
proceedings against Virginia for possession of the Property.
The trustees claimed that Virginia was in default under the
Deed because she was in arrears for four or more weeks. No
orders were sought to disturb Kathryn’s possession.
The Court considered four issues.
Issue #1 Was there a default in payment of the Contribution?
Virginia made the payments of $150 per week irregularly. On
20 February 2020, the executors issued her with a Notice of
Termination on the basis that the payments were in arrears
for more than 4 weeks.
The Court found that the Notice of Termination of Licence to
Occupy was not valid. It said that although the payments
were in arrears for more than 4 weeks, Virginia was not in
default under paragraph 1 c. because there was no 4 week
period during which she failed to make a payment.
By the hearing, all payments were up to date, so it was
unnecessary for the Court to decide whether Virginia was
able to offset amounts she paid for repairs and maintenance.
The Court said that if it had been necessary to decide that
issue, it would have found that no offset was available
because it would need to have been provided for, but was not
provided for, in the Deed.
Issue #2 Was the requirement in the Notice to continue the
payments a waiver?
The Notice of Termination required Virginia to continue to
make the payments until she vacated. Virginia argued that
this waived the requirement for her to vacate the Property.
The Court said that the requirement to make payments was
“nothing more than a reminder” that her obligations
continued until she vacated. It did not operate as a waiver.
Issue #3 Was relief against forfeiture available?
The Court said that had it found the Notice of Termination
to be valid, Virginia would not have been entitled to relief
against forfeiture, because the trustees have not “taken
unconscientious advantage of Virginia in seeking to evict
her because of asserted defaults under the terms of the
Issue #4 Was the Deed of Family Arrangement a Residential
If it were a Residential Tenancy Agreement, s 119 of the
Residential Tenancies Act 2010 (NSW) would apply, and the
proceedings should not have been commenced in the Supreme
s 119 is as follows:
119 Prohibition on certain recovery proceedings in courts
A landlord or former landlord must not commence proceedings
against a tenant or former tenant of the landlord in the
Supreme Court, the District Court or the Local Court to
obtain recovery of possession of residential premises
subject to a residential tenancy agreement.
The term residential tenancy agreement is defined in s 13 as
13(1) A residential tenancy agreement is an agreement under
which a person grants to another person for value a right of
occupation of residential premises for the purpose of use as
The Court found that the Deed fell within s 13 because the
trustees granted Virginia “a right of occupation in the
property for use as a residence, and in return she was to
pay $150 per week”.
None of the s 7 or s 8 exemptions in the Act applied. Note
that the s 8(1)(c) exemption of an agreement under which a
person boards or lodges with another person, does appear to
have been argued in this case.
Therefore s 119 was a complete defence to the claim.
This decision illustrates that where, as in this case, there
is “bad feeling within the family”, where a person (in this
case Virginia) “feels aggrieved about how she perceives she
has been treated by the [trustees]”, then disputes will
arise unless the terms of the licence to occupy are clearly
The term for termination for default needs to be drafted
clearly to apply where payments are in arrears for a set
period of time. So does the term for repairs and maintenance
need careful drafting.
And if the Residential Tenancies Act 2010 is to be excluded,
then the Deed must be drafted to fall within an exemption,
such as the boarding or lodging exemption under s 8(1)(c) of