This was published in the Sydney Morning Herald in April 27, 1947 by Bill Beatty and seems to based on the Henry Kendall (An Australian Poet who had cousins at Kiama and wrote about nine poems set around Kiama) poem below.
This possibly is further based on the murder of Robert Fox by James (or John) Tobin at the Marks farm near Jamberoo. This was reported in the Sydney Morning Herald of Friday May 13, 1836, (stated it happened April last)
http://ndpbeta.nla.gov.au/ndp/del/article/2204369
and in a later article reported him hung. Both were ticket-of -leave men and Tobin had claimed that three bushrangers had broken into the house previously, stole the only gun,and then returned some days later and murdered Fox with two axes. The story fell apart based on the condition of the axes and Tobin’s previous death threats. It is conceivable that a garbled and enhanced account of this was passed down and reached Henry Kendall’s ears. In some accounts the Inn is specificically mentioned as the ex-cedar getter David Smith’s Gum Tree Inn, in Kiama, which is regarded as the first structure built in Kiama, and David Smith as Kiama’s first official European resident.
http://www.janesoceania.com/australia_bush_tales/index.htm
This one is from the Historic Australian Newspaper archive
http://ndpbeta.nla.gov.au/ndp/del/home
A GHOST STORY. – The following is from the
Kiama Pilot :-One night last week, a young
man was coming from Shoalhaven, when he
beheld what he believes was a ghost, or some-
thing very like one. On crossing Mount Plea-
sant, he was riding leisurely along, the night
being dark, but sufficiently light enough to
enable him to discern objects, when, without
any previous intimation, his horse started at
something. Simultaneously, a strange noise was
heard, and on looking down to the side of the
road he beheld the spectre. The head was only
visible, and he describes it as being larger in
size than a cow’s. The ears were as long as a
person’s arm, while the eyes appeared as large
as a man’s fist, and kept whirling round and
round. The horse immediately started, and did
not halt till near Kiama. We have been informed
that another individual observed something
startling one Sunday night, not long ago, about
the small hours, He was returning home,and
when between Mount Pleasant and Kiama,
a creature in the form of a man, about six
feet in height, with black stripes down each
of his legs, and minus a head, made its ap-
pearance very near his horse’s head. The indi-
vidual looked at it, and continued his course, but
several times he noticed it following him at a
brisk pace. He immediately put spurs to his
horse, and the ghost, taking the hint, quickened
his pace. They raced for some distance, when
suddenly the spectre “vanished into thin air.”
Such are the circumstances as related to us.
We refrain from giving any opinion on the
matter. They were related to us in all sincerity
on the night of the occurrence, and the witness
was very nervous, and ” all of a shake
SYDNEY, Thursday.
The police have received a re-
port that a holidaymaker at Kiama
was confronted by a lioness while
shooting in the scrub to-day. It
made no attempt to molest him
but made off into the bush.
The description corresponded to
that of an animal which has
caused the death of many sheep
in the district
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