Austcorp No.459 Pty Ltd v Shaaban; Shaaban v Austcorp No.459 Pty Ltd

[2019] NSWCATCD 46

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Austcorp No.459 Pty Ltd v Shaaban; Shaaban v Austcorp No.459 Pty Ltd [2019] NSWCATCD 46

Hearing dates:

5 February 2019

Date of orders:

30 May 2019

Decision date:

30 May 2019

Jurisdiction:

Consumer and Commercial Division

Before:

T Simon, Senior Member

Decision:

The Tribunal makes the following orders:

 

1. The tenancy is terminated as of 18 January 2019.

 

2. Hussain Shaaban is to pay Austcorp No.459 Pty Limited the sum of $8,785.71 immediately.

 

3. Austcorp No.459 Pty Limited is to allow Hussain Shaaban access on or before 30 June for the purposes of recovery of any remaining trees or greenhouses on the property.

 

4. If either party seeks to make an application for costs, they are to provide to the Tribunal and the other party, either in person or by post, submissions and documents in relation to costs by 14 June 2019.

 

5. Parties are to provide to the Tribunal and the other party any response to the cost's application, either in person or by post, submissions by 28 June 2019.

 6. Costs will be determined on the papers. If either party seeks to be heard in person, they should advise the Registry prior to 20 June 2019, setting out the reasons why and the Registry would advise of the outcome in due course.

Catchwords:

AGRICULTURAL TENANCY– termination – damages.

Legislation Cited:

Agricultural Tenancies Act 1990
Residential Tenancies Act 2010

Cases Cited:

Toll (FGCT) Pty Ltd v Alphapharm Pry Ltd (2004] HCA 52; (2004) 219 CLR 165

Category:

Principal judgment

Parties:

Proceedings COM 18/42861:
Austcorp Pty Ltd (Applicant/Landlord)
Hussain Shaaban (Respondent/Tenant)

  Proceedings COM 19/03594:
Hussain Shaaban (Applicant)
Austcorp No. 459 Pty Ltd (Respondent)

Representation:

Counsel:
D Smith (Landlord)

  Solicitor:
J Fisher (Tenant)

File Number(s):

COM 18/42861 (Landlord’s application)COM 19/03594 (Tenant’s application)

Publication restriction:

Nil

Reasons for the Decision

The Applications

1. These reasons relate to an application and a cross application. The initial application was made by Austcorp No.459 Pty Limited, which the Tribunal shall refer to as the landlord. The application, made on 5 October 2018, was initially made pursuant to the Residential Tenancies Act 2010 (RTA) with the landlord seeking termination of a tenancy. On 22 November 2018 the Tribunal made a finding that the arrangement between the parties was not a residential tenancy agreement and that the Tribunal had jurisdiction to determine the matter pursuant to the Agricultural Tenancies Act 1990 (the Act). The matter was transferred the matter to the Commercial List. The matter again came before the Tribunal on 18 December 2018 and was adjourned part heard. The respondent, which the Tribunal shall refer to as the tenant, subsequently made a cross application.

2. The landlord seeks an order for termination and possession pursuant to s21 (1) (i) of the Act and a money order for the outstanding rent pursuant to s21(1)(e) of the Act. The tenant is seeking a money order for compensation for improvement to the land in accordance with the cause of action contained in s18 of the Act.

3. The Tribunal has been provided with the following from the parties.

1. Exhibit 1 which is a bundle of the landlord’s documents referred to the Tribunal on 29 November 2019 and 25 January 2019.

2. Exhibit 2 - documents received from the tenant on 1 January 2019

3. Exhibit 3 - ledger generated on 5 February 2019

4. Exhibit 4 - Phone video footage

5. Exhibit 5 - Further photographs received form the tenant at the hearing under cover letter dated 1 February 2019.

4. The Tribunal subsequently received submissions from the parties. They are the landlord’s closing submissions and submissions in reply and the tenant’s submissions.

5. Both parties were legally represented at the hearing. Mr Shaaban and Mr Finianos for the landlord had both provided statements with their documents each of them was cross examined at the hearing. All documents, submissions and oral evidence have been considered by the Tribunal in coming to its decision.

The agreement between the parties

6. It is not in dispute that on 5 September 2017, the landlord and tenant entered into a Standard Form Residential Tenancy Agreement, although there was no dwelling on the leased property. It was determined as a preliminary matter that this could not have been a residential tenancy agreement.

7. The front page of the residential tenancy agreement notes the following terms.

1. Under the heading 'Term of Agreement’ it says 1 year from 5 September 2017 to 4 September 2018.

2. Under the heading ‘Residential Premises’ it has 25 Acres (PART OF) 2594-2776 The Northern Road, Luddenham NSW 2745.

3. Under the term ‘Rent’ it says $500 per week payable in advance starting on 5 September 2017.

8. Clause 3.1 of the standard terms of agreement also notes that the tenant agrees to pay rent on time.

9. The landlord’s position is that although the parties entered into a standard form residential tenancy agreement and that was wrong in form, the written agreement itself reflects the actual agreement between the parties. The tenant claims that although he signed the residential tenancy agreement, he signed it because he trusted the respondent and the agreement does not reflect the actual agreement that the parties had agreed on, which was for a lease for 15 years and for 100 acres.

10. The tenant’s position is that he understood the lease agreement to be formed personally with Mr Finianos and that he trusted the lease document would reflect their agreement. He claims signed the lease document without reading it in detail, because he understood that signing the lease document presented by the agent was a requirement of his agreement with Mr Finianos. He stated he trusted him.

11. The tenant submits that the Tribunal should find that although the he had an opportunity to read the lease document presented to him, he did not have the capacity or apprehension of the legal right, to detect the errors, omissions and additions in the document, nor the opportunity to verify the presence or absence of consistency in essential terms as between his agreement reached in Arabic with the landlord and the detailed terms presented to him in English by the agent.

12. The tenant also submits that although it has been held that a person is bound by a lease because he signed it, whether he read it or not: see Toll (FGCT) Pty Ltd v Alphapharm Pry Ltd (2004] HCA 52; (2004) 219 CLR 165 at (45) and (57), it is within the jurisdiction of the Tribunal to make an order about the terms of an agricultural tenancy agreement that is to be reduced to writing: see s 5(2) of the Act.

13. Submissions were made on the tenant’s behalf that the agricultural tenancy agreement was not properly reduced to writing and the terms of the signed lease are void to the extent of inconsistency with the agricultural tenancy agreement reached between the tenant and the landlord in their discussions.

14. Having considered the parties’ evidence on this point the Tribunal accepts the evidence of the landlord. In cross-examination, the tenant did not deny that he had read the lease and he admitted that he signed the lease on every page. However, his claim is that he trusted the landlord and that he believed the lease had been formed by the oral conversations and them “shaking hand’s”. If the tenant believed that was the entirety of the agreement than it is difficult to understand why he signed the lease agreement which clearly identifies that the lease agreement was 12 months. The tenant accepted that the lease was a very important document to him and he accepted that it was his signature on each page of the lease. Given the tenant’s claim’s now about how important his business was to him and how important it was that he enter into a long term arrangement for the sake of his crops, it would be expected that he would have taken an interest in the written agreement he signed to ensure that it reflected any oral agreement. The Tribunal is satisfied that the landlord and tenant entered into the agreement for the agricultural tenancy on the terms reflected in paragraphs 13 and 14 above and not on the terms as identified by the tenant based on any oral agreement.

Breach of the lease agreement by the tenant

15. Section 14 of the Act sets out a regime for termination of agricultural tenancies for the termination of periodic tenancy. Section 14(6) specifically states that:

(6) This section does not apply to termination for a breach of the tenancy or where the tenant and the owner have otherwise agreed on the notice to be given.

16. Section 14(6) is not a termination power. It simply excludes the operation of the rest of s 14. The landlord is seeking termination for breach of the tenancy agreement and while they have not been explicit, it is clear that the landlord cannot rely on s14 and any determination in relation to breaches is covered by s20 of the Act which relevantly states:

(1) An owner or tenant may apply to the Tribunal for determination of any of the following:

….

(b) a dispute arising from, or relating to, an agreement creating a tenancy or any other dispute (not being a dispute referred to in paragraph (a)) arising from, or relating to, a tenancy,

(c) any other matter that may be determined by the Tribunal under this Act.

(2) An application to the Tribunal must be made not later than 3 months after the relevant dispute or other matter arises or the end of the tenancy, whichever is the later.

17. Section 21(1)(i) of the Act allows the Tribunal to make an order terminating a tenancy or an order for the possession of a farm. There does not appear to be a requirement for a termination notice to be given for breach of the agreement.

18. There were a series of termination notices given to the tenant by the landlord. In the application to the Tribunal made on 5 October 2018, the landlord had made the application for termination, albeit under the wrong act, for breach of the agreement in that the landlord had not paid rent pursuant to the agreement. In the landlord’s documents at page 60, the landlord provided a copy of a termination notice for non-payment of rent, allegedly sent to the landlord by post on 5 October 2018 seeking vacant possession by 26 October 2018. The notice is given pursuant to the RTA. On page 61 of the landlord’s documents is a copy of a termination notice (again under the RTA) dated 11 July 2018, seeking an order that the tenant give vacant possession on 4 September 2018 for the end of fixed term.

19. After making the application for termination to the Tribunal the landlord has given to the tenant a notice of termination dated 21 December 2018 for two separate breaches of the lease. The first is that the tenant had failed to pay rent since 17 September 2018 (in breach of clause 3.1) and the second is that the tenant has erected an unauthorised structure without written permission (in breach of clause 27.1 of the standard form lease).

20. In his statement dated 10 January 2019, Mr Shaaban states that in August 2018 Mr Diab Finianos called him and asked him to leave the land. He claims that Mr Finianos came the next day and saw the loquat fruits already on the trees. Mr Shaaban recalls at paragraph 29:

I told him that "It's a big loss for me because I paid all my money in this business and I am now in debt as I borrow money to complete this work and what about these trees and my hard working in this land for one year and you promised me to stay 15 years and I didn't get any income from my work here yet and I will begin to harvest the fruits in November". This would mean I could pay all the rent. But he said he didn't care.

21. The tenant submits that the notices of termination that were served on the tenant before the breach notice dated 21 December 2018, destroyed the ability of the tenant to derive any revenue from his agriculture. The tenant also submits that non-payment of rent and the erecting of a shed were not serious breaches it was within the tenant’s power to make good or cure if the agricultural tenancy was allowed to continue undisrupted. Submissions are made on behalf of the tenant that in circumstances where he believed he would lose his orchard, he could not stay on the land to complete and operate it.

Termination for non-payment of Rent

22. The tenant disputes that the landlord is entitled to terminate for non-payment of rent. He states that it was a term of the agricultural tenancy that even though rent was calculated by reference to a weekly amount, the tenant would pay rent flexibly, consistent with timeframe for establishing and operating a productive fruit orchard. At para 10 of his statement dated 10 January 2019, Mr Shaaban states the following in relation to the rent :

10. He asked me how much I can pay for rent and I replied "That up to you" and he suggested $500 a week and I agreed with him without any argument and I asked him that I need 3 months free to start paying the rent to prepare the land and he accepted and we shook hands.

23. At para 76(b) of Mr Shaaban’s statement he states

The agent shows that it was very strict with enforcing rent payments on me but this is different to my understanding with Mr Diab about the project to establish a productive fruit orchard on the land, including that it would take some time to return an income.

24. At paras 25 – 28 Mr Shaaban states:

25.   On 15 May 2018 when we were talking I asked Mr Diab if I can hold the rent for two months as I didn't have any income from this land and I paid all my money in establishment and preparation this land, and he agreed and asked me if I need any help or more time and he will contact the

real estate to hold the rent for two months. Mr Diab said "If you don't want to pay rent you do not have to pay, until the end of the year is OK."

26.   But after a couple of hours the real estate agent called me and said words to the effect "Don' t come to the land tomorrow if you cannot pay the rent."

27.   I was surprised what happened and I called Mr Diab to check why the real estate did that, and he replied that he changed his mind about holding the rent and he agreed with the real estate agent.

28.   After two hours Mr Diab called me again and said he agreed to hold the rent. On the next day he

came to the land and he was friendly and said to forget what happened yesterday and he said that "my mind is very busy and I am confused as I have a building business of 500 workers and my brain is very busy".

25. Submissions were made on behalf of the tenant that by issuing the tenant with the earlier termination notices as well as the notice on 21 December 2018, the landlord had deprived the tenant of the ability to receive revenue from the fruit tree business, so that having been required to remove his assets from the land there was no possibility of paying the rent going forward.

26. The notice of termination for non-payment of rent dated 5 October 2018 sought possession on 26 October 2018. The ledger contained at page 83 of the landlord’s documents shows that the last payment received by the landlord was on 12 September 2018 and that the rent has been paid up to 17 September 2018. The tenant does not challenge that the rent has only been paid up to 17 September 2018. In his statement Mr Shaaban states:

29.   In August 2018 Mr Diab called me and asked me to leave the land and he came the next day and he saw the loquat fruits already on the trees and I told him that "It's a big loss for me because I paid all my money in this business and I am now in debt as I borrow money to complete this work and what about these trees and my hard working in this land for one year and you promised me to stay 15 years and I didn't get any income from my work here yet and I will begin to harvest the fruits in November". This would mean I could pay all the rent. But he said he didn't care.

30.   In December 2018 I have paid all the rent up to September 2018.

31.   In the beginning of September 2018 Mr Diab called me and asked me to leave the land directly without any reason, and I couldn't do anything about it. I began to remove the trees from the land.

32.   I did not understand why Mr Diab told me to leave the land as the agreement was to renew my lease year after year for 15 years and when he agreed to lease the land to me Mr Diab understood it was for growing fruit trees to harvest fruit and this takes more than a year for the orchard to reach full production.

33.   Mr Diab promised to make up my losses if he sells the land but he has said nothing about this now and his lawyers have sent me a letter on 21 December 2018 saying the tenancy is terminated and they will charge me costs for removing things from the land. A copy of the letter is attached at Annexure G.

27. In his statutory declaration, Mr Finianos states that after he was visited by a Mr Case who had also previously been a landlord of the tenant and had heard comments about the tenant from Mr Case he felt that the tenant had embarrassed him (at 50, 51). This contributed to his decision to terminate the tenancy. In cross-examination Mr Finianos initially seemed confused about who Mr Case was, but later recalled the visit. He stated that the reason he wanted the tenant to leave the land was because "he give me headache".

28. On 21 December 2018 the solicitor on behalf of the landlord sent a letter to the tenant headed “Termination of Agricultural Tenancy’ giving the tenant 28 days to terminate the tenancy. The notice is on the basis that the tenant had failed to pay rent since 17 September 2018 which by that point made the rent 95 days in arrears and that the tenant had erected an unauthorised structure on the property.

Consideration

29. Having considered the submissions and evidence of the parties the Tribunal is satisfied to terminate the tenancy. The Tribunal is not satisfied that there was a separate oral agreement between the parties that the tenant would be pay rent flexibly. That assertion is inconsistent with the agreement that the tenant signed which the Tribunal accepts was for $500 and states that the rent is payable in advance each week. While the Tribunal accepts that the lease is silent on that rent being weekly, the Tribunal accepts from the evidence that was the rent agreed between parties as payable weekly. However, the Tribunal does not accept that that it was agreed that this would be paid flexibly. The landlord has gone to efforts to engage an agent and have them collect the rent and record the rental payments. That is not consistent with an agreement between parties that the tenant would pay rent be paid flexibly. Further, after the standard terms of the lease (page 37 of the landlord’s documents), is a condition signed by both the tenant and the agent on behalf of the landlord which is headed “zero tolerance rent arrears policy. The term relevantly states:

Continual late payments will not be tolerated & we expect your rent to be made top priority.

30. The term then sets out the process the agent will follow when rent is late, including applying to the Tribunal when the rent becomes 15 days in arrears.

31. The landlord commenced its application to the Tribunal for orders against the tenant on 5 October 2018 and while it was an application made under the RTA, it was clearly for non-payment of rent. The Tribunal accepts that on the same day as lodging the application with the Tribunal the landlord sent a notice of termination for non-payment of rent and that by that time was in arrears of rent from 17 September 2018.

32. The tenant simply stopped paying rent after 12 September 2018. In cross-examination the tenant's evidence was that he does not consider he is obliged to pay rent, despite continuing to exercise access to the land. When asked whether he had paid rent since mid-September 2018, the tenant said words to the effect:

"That is my business... yes, I do not pay any rent, they kick me off the land so why pay".

33. The Tribunal finds that the failure to pay rent was a sufficiently serious breach in light of the written agreement that the parties entered in to justify that the landlord had the right to terminate for the non-payment of rent.

33. In relation to the building of the shed or the comments about Mr Case, they do not justify the tenant simply stopping the payment of rent. If the tenant had issues with the comments from the landlord then he had the opportunity to continue to pay rent and remain on the property. No steps were taken by the landlord to take possession except for the commencement of the proceedings for termination. Instead in his statement as paragraph 37 the tenant states that he started removing his orchard and continued not paying rent. That is not consistent with someone who believes he should stay on the premises. He now indicates he does want to stay on the premises, yet for reasons that are not entirely clear is not paying rent.

34. The Tribunal is satisfied that based on the notice of 21 December 2019, that the tenancy was terminated as of 18 January 2019 and will make the order accordingly. The Tribunal will also make an order for the outstanding rent to that date which totals an amount of $8785.71.

Tenants Claim for Compensation

36. The tenant submits that he is entitled, under s 6(1) and 6(3) of the Act, to compensation for improvements carried out on the land with the landlord’s consent. The tenant submits that the Tribunal should find that the landlord knew and approved of the tenant establishing fruit trees as the predominant agricultural use of the land. The Tribunal has already found that the parties only ever agreed to a 1-year lease and not to a lease for 10-15 years as alleged by the tenant. The Tribunal does not accept as has been submitted that the tenant understood that the initial one-year term of the lease was a technical matter in the documentation and that this did not affect his agreement he had with the landlord.

37. A tenant might be entitled to compensation for improvements to land used for agricultural purposes under s 6 of the Act if the improvements were carried out with the landlord's consent.

38. ‘Improvement’ is defined in s 3 of the Act as:

any work or thing carried out on a farm in the course of a tenancy, being a work or thing that would be of value to an incoming tenant, but does not include the repair or replacement of any work or thing on the farm when the tenant first became a tenant, except as provided by this Act.'

39. Section 17 of the Act provides that in determining what constitutes fair compensation for an improvement, regard may be had to the financial resources of the parties, the financial returns that might be expected from the improvement and other factors. The tenant submits that he does not had the resources, including the necessary time, to obtain a valuation to support his application for compensation in respect of the shed and that the Tribunal should, having regard to the facts and equities of the matter find that the tenant was entitled to include the value of a shed in the improvements for which compensation may be ordered in these proceedings. The tenant was legally represented and no application was made to adjourn his matter to obtain any valuations. The Tribunal does not find that the tenant’s failure to obtain a report due to his resources is relevant to its determination of the case.

40. Having considered the matter, especially the photographs provided and the evidence given by the parties about what is on the land, the Tribunal finds no improvements that would be of value to an incoming tenant. The tenant admitted that he stopped tending to the orchard. He says he did so because the landlord served notices of termination. Yet, oddly, at the same time, the tenant states he considered the notices of termination were ineffective and he wishes to continue with the lease. His actions in removing the trees he had planted does not demonstrate that.

41. The tenant’s submissions that the remaining orchard is worth $500,000 is simply not supported by the evidence. There is no evidence of his financial position with the documents. The photos do not demonstrate a flourishing, fruit-bearing orchard of several thousand semi-mature trees. The tenant has also provided a statement from a Mr Srour, who makes statements about the removal of trees. Mr Srour was not made available for cross examination and his evidence does not assist the tenant as it does not establish any actual value of the alleged orchard on this particular property and more importantly any value which could be passed on to an incoming tenant. The tenant says he has known Mr Srour for 16 years. Mr Srour is not an independent expert and other than stating in his letter that he is an ‘Agricultural/horticultural consultant’, no other details of his qualifications are provided.

42. Moreover, the tenant’s s statement that the value of the trees in the first year of production is somewhere over $600,000 and over 10 years the value of the orchard to an incoming tenant would exceed $69 million, is simply not corroborated by any independent evidence nor does the evidence even establish that there was such an orchid on the property. The photos and brief video evidence show some trees, but nor a sprawling orchid as indicated by the tenant.

43. Further, the Tribunal prefers the landlord’s evidence that he did not consent to the orchard, rather he thought the tenant would grow fruit and vegetables like eggplants, watermelons, zucchinis and broad beans. The Tribunal finds that growing an orchard was inconsistent with the one-year term of the lease and if the tenant did plant some trees it was not with the landlord’s consent.

44. The tenant states that he planted 5,280 trees and started removing plants in about September 2018 including removing pomegranates, guavas, jujubes and 1,600 loquats. The photos and videos of the land show that it is overgrown with weeds. The tenant said in cross-examination that he had ceased tending to the plants when the landlord sought to terminate the lease. The tenant accepted that the land was overgrown with weeds and did not contain fruit-bearing trees. The photos do not show fruit-bearing orchard of several thousand, at best they show a few random trees. The Tribunal finds that even if there had been trees on the land, the tenant has removed the majority of them and the land has fallen into disrepair. The tenant indicated to the Tribunal that whatever trees were left needed to be removed in the cooler months. While the photos show only a few trees remain on the property, given the time of year, the Tribunal will permit the tenant access pursuant to s 21(1)(j) of the Act for the purposes of recovery of any remaining trees on the property.

45. The tenant also claims compensation for a shed. The shed has been dismantled and can have no value to an incoming tenant. No evidence was adduced of the value of the shed.

46. The tenants also claims compensation for greenhouse structures. In relation to the greenhouse structures, the photographic and video evidence shows a small number of greenhouse frames on the land, yet there is very little evidence of any value. The landlord claims in his statutory declaration at paragraphs 34-35 and 64 that the greenhouses are unenclosed, of cheap and easy construction, and temporary. The tenant states that he has built six greenhouses with 3,000 square metres of $135,000. The only support for this figure are documents attached at annexure D to the tenant’s statement. That documents are undated, and the shipping address noted is not the address of the land the subject of this dispute.

47. The tenant states that the greenhouse structures were constructed in March 2018. The quote is provided on the second page of annexure D a has been cut off where the logo of the company exists. It is not a payment receipt.

48. The Tribunal is not be satisfied from those documents that they relate to greenhouse works on the property the subject of this lease. It was put to the tenant at the hearing that he did not have the $135,000 at his disposal and he did not provide a responsive answer. The Tribunal is not satisfied that the greenhouse sheds would be of any value to an incoming tenant. The photos show a small greenhouse on the property. The Tribunal is satisfied that to allow the tenant to access the land for the purpose of removing the greenhouse structures. The Tribunal will permit the tenant access pursuant to s 21(1)(j) of the Act for the purposes of recovering the greenhouse

49. Accordingly, the tenant’s application for compensation is dismissed.

Costs

50. At the hearing, the landlord indicated to the Tribunal that they would be seeking costs. Directions have also been made for the exchange of documents in relation to any cost’s application.

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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Decision last updated: 19 July 2019