Farr t/as Palmdale Holsteins v Maparily

[2020] NSWCATCD 21

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Farr t/as Palmdale Holsteins v Maparily [2020] NSWCATCD 21

Hearing dates:

29 July 2019 (submissions closed 9 September 2019)

Date of orders:

23 January 2020

Decision date:

23 January 2020

Jurisdiction:

Consumer and Commercial Division

Before:

K Ross, Senior Member

Decision:

1. Andrew Geoffrey Farr & Christine Elizabeth Farr trading as Palmdale Holsteins is to pay to Maparily Pty Ltd the sum of $63,023.13 on or before 25 February 2020.

2. Each party is to give to the Tribunal and the other party any application for costs and submissions in support by 11 February 2020.

3. The submissions should address whether a hearing should be dispensed with under s 50 of the Civil and Administrative Tribunal Act 2013

4. Each party is to give to the Tribunal and the other party any submissions in reply by 25 February 2020.

Catchwords:

LEASES AND TENANCIES — Agricultural tenancies — Breach — Damages — Rent arrears —Compensation

Legislation Cited:

Agricultural Tenancies Act 1990 (NSW)

Civil and Administrative Tribunal Act 2013 (NSW)

Cases Cited:

Lismore City Council v Green Gro Pty Ltd [2003] NSWCA 19

Texts Cited:

Nil

Category:

Principal judgment

Parties:

Andrew Geoffrey Farr and Christine Elizabeth Farr trading as Palmdale Holsteins (Applicant)
Maparily Pty Ltd (Respondent)

Representation:

Counsel:
Mr Justice (Applicant)
Mr Cashion (Respondent)

Solicitors:
Morrisey Law (Applicant)
Martin Street Lawyers (Respondent)

File Number(s):

COM 18/10286
COM 19/14665

Publication restriction:

Nil

REASONS FOR DECISION

Applications and Jurisdiction

1. This dispute arises from a lease of a dairy property at Denman in NSW between Maparily Pty Ltd (“Maparily”) as lessor and Mr and Mrs Farr trading as Palmdale Holsteins (“Palmdale”) as lessee. The lease was dated 2 February 2015 (“the lease”). It annexed a Property Management Plan at annexure A.

2. Palmdale claims damages for what it alleges to be breaches of Maparily’s obligations under clauses 12.1, 12.2 (a) and (b) and 14.1 (a) of the lease. Palmdale also seeks compensation under ss 6 and 7 of the Act, and costs.

3. Maparily seeks an order for rent arrears, together with mesne profits and alleged damages relating to delay in Palmdale vacating the property upon expiration of the lease. Maparily also seeks damages for an alleged failure to carry out work required by the Property Management Plan, interest and costs.

4. It is not disputed that the lease is one to which the Agricultural Tenancies Act 1990 (“the Act”) applies. The Tribunal has jurisdiction to determine the dispute.

5. Section 20 of the Act provides:

20 APPLICATIONS TO TRIBUNAL RELATING TO DISPUTES

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

(a) a dispute relating to a right or obligation conferred by this Act,

(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.

6. There is a dispute as to when Palmdale vacated the property, but no dispute that they did not do so on expiration of the lease on 1 February 2018. The application by Palmdale was filed on 1 March 2018 and is within time. The application by Maparily was not filed until 28 March 2019, more than 3 months after the end of the tenancy. Accordingly the Tribunal must consider whether to extend time for the bringing of the application by Maparily (see s 41 of the Civil and Administrative Tribunal Act 2013).

7. In addition Palmdale argues that the Tribunal does not have jurisdiction to determine the mesne profits claim or the interest claim. These arguments will be considered below.

8. Finally the Tribunal will need to consider, if an order is made in favour of each party, whether there should be a set off.

Evidence

9. The evidence Palmdale relies upon includes:

1. evidence of Mr Andrew Farr by way of statutory declaration dated 15 November 2018, and affidavits dated 22 May 2019 and 21 July 2019, and

2. expert reports of Anthony Neale dated 19 June 2018 and 23 May 2019.

10. The evidence Marapily relies upon includes:

1. affidavits of Eric Mansfield dated 26 March 2019 and 12 June 2019, and

2. affidavit of Alexander Scott Warburton dated 27 March 2019.

11. Both parties ask the Tribunal to draw inferences adverse to the other in respect of the evidence. These issues will be dealt with later in these reasons.

Issues for determination:

12. On Palmdale’s application the following issues arise for determination:

1. Did Maparily breach its obligations under the lease pursuant to:

1. clause 12.1 to make sure certain works were undertaken at the commencement of the lease;

2. clause 14.1 (a) within 60 days of the commencement of the lease to ensure irrigation pivots 7 and 8 were working properly,

3. clause 12.2 (a) within 6 – 12 months to repair replace and restore the feed system as per the report of Anthony Neale dated 20 June 2014 and

4. clause 12.2 (b) after 12 months to restore an additional 12 bails to the dairy.

2. If so, did Palmdale suffer loss and damage?

3. What is the status of the so called admission by Maparily in the sum of $113,563.58?

4. Did Palmdale carry out any improvements on the farm with the consent of the owner? (see the Act s 6)

5. If so, is an amount of compensation fixed by the agreement? Should the owner pay that amount or is the agreed amount unfair? If no amount is fixed, what is the fair compensation payable?

6. Did Palmdale carry out any improvements on the farm without the consent of the owner? (see the Act s 7). If so, is the improvement mentioned in Schedule 1 or prescribed by the Regulations or has the Tribunal determined it to be suitable and desirable in the circumstances?

7. If so is compensation payable? (see s 7 (2) and (3).

8. Is Palmdale entitled to interest?

9. Is Palmdale entitled to costs?

13. The following issues arise for determination on Maparily’s claim:

1. Should time be extended for the bringing of the claim?

2. What rent is owing to the end of the lease (1 February 2019)

3. Does the Tribunal have jurisdiction to determine the mesne profits claim? If so, is Maparily entitled to mesne profits? If so, at what rate and for what period?

4. Does the Tribunal have jurisdiction to determine the interest claim? If so, is Maparily entitled to interest on these amounts?

5. Did Palmdale’s failure to give vacant possession on 2 February 2019 delay exchange and settlement of the contract for sale of the property? If so, what loss or damage was suffered by Maparily?

6. Did Palmdale breach the agreement by failing to undertake work required by the Property Management Plan?

7. If so, did Maparily suffer loss and damage?

8. Is Maparily entitled to interest?

9. Is Maparily entitled to costs?

PALMDALE’S CLAIMS

Did Maparily breach its obligations under the lease pursuant to clause 12.1 to make sure certain works were undertaken at the commencement of the lease?

14. Clause 12.1 of the lease required that Maparily use its best endeavours to make good the items set out in schedule 4 to the Lease. Mr Farr alleges that Maparily failed to do so.

15. The evidence in respect of this matter is contained in Mr Farr’s affidavits dated 22 May 2019 and 21 July 2019 and in the affidavit of Eric Mansfield dated 12 June 2019. Mr Mansfield relies upon a note signed by R J Thompson, who was the agent managing the property at the time the previous tenants vacated and this lease commenced.

16. Mr Thompson did not provide evidence in these proceedings, and no explanation was given as to why that was. Palmdale asks the Tribunal to draw an inference that his evidence would not have assisted Maparily. I accept that submission. In doing so I take into account the email dated 5 June 2017 which is contained at annexure E to Mansfield’s 12 June 2019 affidavit. In that email Mr Thompson makes a number of comments which support a finding that there were “inherited problems” with the property including problems with the septic, asbestos, and tyre dump. Mr Thompson notes “cow units to go from 28 to 40 – in license - $$$”, irrigation system “not adequate for summer”, and dairy washdown & effluent disposal “a disaster waiting to happen”.

17. Mr Mansfield acknowledged under cross examination that he had no first- hand knowledge of the matters to which he deposes. He relies upon an outgoing report for the previous tenants prepared by Mr Thompson. Mr Farr on the other hand gives first hand evidence in respect of the condition of the property at the commencement of the lease and sets out in his July 2019 affidavit why the previous tenant’s outgoing condition report should not be relied upon as evidence of the condition of the property. I prefer the evidence of Mr Farr on this matter.

18. In respect of each of the items in schedule 4:

Boumatic Dairy Plant

1. Provide evidence that all rubber items on the milk line are less than 12 months old – Mr Farr says that the rubber items were in need of replacement. The outgoing report states that the rubber ware was “clean and in good condition”. This is not evidence that all rubber items were less than 12 months old. Maparily has failed to comply with this provision of the lease.

2. Repair bushes in end of detachor swing arm, confirm that all components that form part of the removed 28 bales are now located in the old dairy–Mr Farr makes no comment. The outgoing report states that the bushes were repaired and the parts were present. I accept that they were.

Rapid exit stalling system

1. Repair air leak on right hand side front cylinder – the outgoing report states that it was repaired. Mr Farr says that on the day the lease commenced he observed a leak. I am satisfied that the repair had not been carried out.

2. Strip and replace O rings – there is no evidence that the O-rings were stripped out and replaced. No mention of the O-rings is made by Mr Thompson. I am not satisfied that this work was carried out.

Bulk milk tank

1. Replace missing top compressor – Mr Thompson states that “blue compressor present – date 15/1/15 written on it”. I accept Mr Farr’s statement that it was however not operational, and that the other half of the system broke down on the second day of the lease.

Effluent pump

1. Empty solids trap, service motor/pump, replace float switch – it appears that these items were attended to, but Mr Farr gives evidence that the system was not operational. I accept that evidence.

Feed system

1. Replace safety guards, install new belt, service and obtain a condition report – Mr Thompson notes that the guards were replaced but he could not determine if the new belt had been installed. He noted that he had been advised that the system was worn out and a condition report was “a Sydney person job”. Mr Farr agrees. Maparily has complied in part only with this provision.

Air compressor

1. Service and obtain a condition report –Mr Thompson says that the oil was changed and the filter cleaned but a condition report is a “Sydney person job”. Maparily has complied in part only with this provision.

Flood wash system

1. Replace on/off lever arm – Mr Farr gives evidence that at the commencement of the lease the arm was snapped in half. It is not referred to in the outgoing report. I find that it was not replaced as required.

Irrigation system –

1. Replace 3 sprays (pivot 1 and 8), replace gasket on 4^th tower of pivot 8, service pressure reduction valve pilots on pivots 1 and 3 valves to be adjusted repaired or replaced as appropriate, copy of service report will evidence that pivots are operational (excepting #7 and #8) cap main outlets of removed pivots – Mr Thompson says that 3 sprays were replaced, the gasket was replaced and the valve in pivot 1 was replaced. Where pivots were removed water was sealed off. I accept that these matters were attended to but there is no evidence of a service report, and I can make no finding as to whether the pivots were operational. Maparily has complied in part only with this provision.

Did Maparily breach its obligations under the lease pursuant to clause 14.1 (a) to ensure irrigation pivots 7 and 8 were working properly within 60 days of the commencement of the lease?

19. Mr Farr says that only minor repairs were carried out to pivots 7 and 8, and the repairs were insufficient to have pivots 7 and 8 operational within 60 days. Mr Mansfield gives no evidence in respect of this issue. However clause 14.1 states that Palmdale is to inspect the pivots and satisfy itself as to their condition, and is deemed to have accepted the condition of them in all respects other than matters raised within 30 days. There is no evidence that any matters were raised in this time period. I find that in these circumstances the pivots have been deemed to have been repaired.

20. I note however that Maparily had an independent obligation under clause 14.1 (f) to repair or replace the pivots if they became inoperative or unsafe. Palmdale replaced various tyres and seek reimbursement. This will be dealt with below.

Did Maparily breach its obligations under the lease pursuant to clause 12.2 (a) to repair replace and restore the feed system as per the report of Anthony Neale dated 20 June 2014 within 6 – 12 months?

21. Mr Farr gives evidence (which is not challenged) that Maparily did not repair replace or restore the feed system. I accept that evidence and find that Maparily did not comply with this provision.

Did Maparily breach its obligations under the lease pursuant to clause 12.2 (b) to restore an additional 12 bails to the dairy after 12 months?

22. It is not disputed that Maparily failed to restore the 12 bales to the dairy “after 12 months” as required by clause 12.2 (b) of the lease. I find that Maparily breached this obligation.

Did Palmdale suffer loss and damage as a consequence of Maparily’s breaches of the lease?

23. Palmdale alleges that it suffered loss and damage as a consequence of Maparily’s breaches of its obligations under the lease. Maparily submits that the evidence provided by Palmdale is insufficient to support its claim.

24. At paragraph 33 of his affidavit dated 22 May 2019 Mr Farr says that Palmdale incurred at least $108,928.56 in undertaking the work required by Maparily under the lease. However a perusal of the invoices attached shows that they do not align with the works required by Maparily under the lease. Despite Mr Farr’s assertion that the monies were expended in doing that work, the invoices cover extensive maintenance and repairs. There is no breakup of the amounts between costs incurred in carrying out the works required by Maparily, general maintenance which is the responsibility of Palmdale under clause 4.3 of the lease and the claims which are later made under the Act for compensation for improvements. The reports of the accountant and Anthony Neale do not assist.

25. Whilst it is noted that Maparily chose not to cross examine Mr Farr and did not put to him that the amounts he claimed were not losses sustained as he alleged, this is not sufficient for the Tribunal to make a finding, on the basis of the evidence provided, that the amounts claimed were incurred in undertaking the works required of Maparily under the lease.

26. Palmdale also claims other losses consequent upon Marapily’s breaches. I am satisfied that there was a loss of milk resultant upon failure of the cooling system and allow the sum of $26,500 claimed. I am also satisfied that the failure to repair the feeding system resulted in lost feed and allow $21,025.00 as claimed.

27. Mr Neale gives evidence that the failure to provide the additional 12 bales after 12 months resulted in additional time spent in milking the herd, and thus additional staff costs. In his report dated 23 May 2019 (which amended his previous report) Mr Neale estimates an additional 2 hours per day per labour unit at $26 per hour would be required. The report of Mr Neale dated 19 June 2018 states that milking was handled by two milking staff.

28. I find that the failure to upgrade the dairy resulted in an additional cost to Palmdale of $104 per day. The work was to be carried out “after 12 months”. Over the remaining two years of the lease this would be a cost of $75,920.00. An allowance of a short period to carry out the work would be appropriate. I am satisfied that I should allow the amount admitted by Maparily (see below).

What is the status of the so called admission by Maparily in the sum of $113,563.58?

29. Palmdale relies upon Maparily’s pleading and says that Maparily admitted to owing Palmdale compensation of $113,563.58. I am satisfied that there is an admission implicit in the pleading. Maparily argues that the so called admission was in fact a settlement proposal, put at a time when Maparily was not legally represented. However, the amount is referred to in Maparily’s points of claim and I am satisfied that it would not be fair to allow Maparily to resile from that admission.

30. In effect Maparily concedes 50% of the claim for loss of milk $13250.00, and concedes loss of grain $21,024.00, wages $69,162.38, and electricity $10,127.20.

What compensation should be ordered as a consequence of Maparily’s breaches of the lease?

31. I am satisfied that an appropriate order of compensation is as follows:

1. Amount admitted by Maparily $113,563.58

2. Additional compensation for lost milk $13250.00

3. Total $126,813.58

Claims under the Act – what does the law provide?

32. The Act provides for compensation to a tenant where improvements are carried out, either with or without the consent of the lessor. The starting point is the definition of improvement as follows:

"improvement" means 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. 

33. Section 6 then provides:

6 IMPROVEMENTS CARRIED OUT BY TENANTS WITH CONSENT

(1) It is a term of a tenancy that the tenant may carry out any improvement on the farm with the consent of the owner.

(2) If an amount of compensation to the tenant for the improvement is fixed by agreement, the owner must pay the tenant the fixed amount, unless the agreed amount is unfair.

(3) If compensation is not fixed by agreement at a fair amount, or is not fixed at all, the owner must pay fair compensation to the tenant.

(4) Compensation payable under this section is payable at the end of the tenancy or at such earlier time as may be agreed or determined by the Tribunal.

Note : Division 1 of Part 3 sets out the way compensation is to be determined for the purposes of this Part.

34. Section 7 provides:

7 IMPROVEMENTS CARRIED OUT BY TENANTS WITHOUT CONSENT

(1) It is a term of a tenancy that the tenant may carry out an improvement on the farm without the consent of the owner only if:

(a) the improvement is mentioned in Schedule 1, or

(b) the improvement is a work or thing of a kind prescribed by the regulations for the purposes of this section, or

(c) the improvement is first determined by the Tribunal to be suitable and desirable in the circumstances.

(2) The owner must pay fair compensation to the tenant for an improvement carried out by the tenant and referred to in subsection (1) (a) or (b).

(3) The owner must pay fair compensation to the tenant for an improvement carried out by the tenant and referred to in subsection (1) (c) if  compensation is determined by the Tribunal to be payable.

(4) Compensation payable under this section is payable at the end of the tenancy or at such earlier time as may be agreed or determined by the Tribunal.

35. Sections 15 and 17 provide:

15 DETERMINATION OF COMPENSATION PAYABLE FOR TENANTS' IMPROVEMENTS

(1) For the purposes of determining the compensation payable under Part 2 for an improvement carried out by a tenant, the amount of compensation is the value of the improvement to an incoming tenant, taking into account the value of any consideration or benefit given by the owner to the tenant for carrying  out the improvement.

(2) The value of an improvement to an incoming tenant is to be calculated by taking into account the financial returns that might be expected to accrue to a (hypothetical) incoming tenant on account of the improvement or product, if the farm were to be subject to a further tenancy (not being a sharefarming arrangement).

17 FAIR COMPENSATION

In determining what constitutes fair compensation for the purposes of determining the compensation payable under Part 2 for an improvement carried out by a tenant or an owner, regard may be had to the financial resources of the parties, the financial returns that might be expected from the improvement and other factors.

36. In Lismore City Council v Green Gro Pty Ltd [2003] NSWCA 19 the Court determined that the Act was not intended to compensate a tenant for “improvements” which he was obliged to create under his agreement.

Is Palmdale entitled to compensation for carrying out works contemplated by the Property Management Plan?

37. The lease contained clause 15.8c:

It is acknowledged that the performance by the Lessee of the provisions of the Property Management Plan and the works otherwise required to be performed by the Lessee under this lease are contemplated in the amount of the Rent payable under this lease.

38. Applying the reasoning in Lismore City Council v Green Gro Pty Ltd, Palmdale is not entitled to be compensated under the Act for the works it performed under the Property Management Plan (PMP). It has already been compensated for those works in the calculation of the Rent.

What evidence is there that Palmdale carried out any other improvements on the farm with the consent of the owner? (see the Act s 6)

39. Palmdale claims to be entitled to compensation for works it carried out on the irrigation system, improvements to the dairy, improvement of roads and bridges and improvements to residences. Palmdale’s submissions identify all of these as being improvements undertaken under the PMP. No other improvements are identified. Following the reasoning above I am not satisfied that Palmdale is entitled to compensation for these improvements.

If so, is an amount of compensation fixed by the agreement? Should the owner pay that amount or is the agreed amount unfair? If no amount is fixed, what is the fair compensation payable?

40. Palmdale submits that the budget amounts in the PMP could be taken to be the amount of compensation fixed by the agreement. I do not accept that this is a fair reading of the PMP. The PMP contemplated that there would be improvements and contained a budget for those improvements. That budget was taken into account in the calculation of the rent (see clause 15.8 c). The amounts are not expressed to be compensable and I am not satisfied that they are.

41. As I am not satisfied that Palmdale has proven that it carried out any other works with consent, I am not satisfied that any compensation is payable.

Did Palmdale carry out any improvements on the farm without the consent of the owner? (see the Act s 7). If so, is the improvement mentioned in Schedule 1 or prescribed by the Regulations or has the Tribunal determined it to be suitable and desirable in the circumstances?

If so is compensation payable? (see s 7 (2) and (3).

42. There is no evidence of any other improvements carried out, other than alleged improvements under the PMP.

Conclusion

43. It follows that I am not satisfied that Palmdale has proven an entitlement to be paid any compensation under the Act.

MAPARILY’S CLAIM

Should time be extended for the bringing of the claim?

44. Section 20 of the Act requires that an application in respect of a dispute be filed with the Tribunal not later than 3 months after the relevant dispute or other matter arises, or the end of the tenancy, whichever is the later.

45. Some of the disputes arose during the tenancy, whilst others arose at the end of the tenancy (when Palmdale did not vacate). The time for bringing this application was three months after the end of the tenancy (1 May 2018). Maparily filed its application on 25 March 2019.

46. Pursuant to s 41 of the Civil and Administrative Tribunal Act 2013 gives the Tribunal power to extend the time. In Jackson v NSW Land and Housing Corporation, the Appeal panel identified the principles to be considered:

(3) Generally, in an application for an extension of time to appeal the Appeal Panel will be required to consider:

(a)The length of the delay;

(b)The reason for the delay;

(c)The appellant's prospects of success, that is usually whether the applicant has a fairly arguable case; and

(d)The extent of any prejudice suffered by the respondent

47. In this matter the dispute filed by Palmdale was already before the Tribunal when Maparily filed its application. Whilst there was a delay of almost 11 months, the issues had been put before the Tribunal by way of set off to the Palmdale claim. I am satisfied that Palmdale does not suffer any prejudice in these circumstances. Furthermore, I am satisfied that as substantial parts of Maparily’s claim have reasonable prospects of success, it would work an injustice if time was not extended.

48. Accordingly I grant leave for the application by Maparily to be brought out of time.

What rent was owing to the end of the lease (1 February 2019)

49. There is no dispute that there was rent owing at the end of the lease. Maparily in its submissions says that rent of $745,978.20 was payable during the term of the lease, and says that $642,405.00 was collected. It is not clear where these figures come from. Palmdale says that the rent payable was $745,968.00 and says that $657,405.00 was paid.

50. When the accruals ledger provided by Palmdale is compared to the schedule provided by Maparily, the difference is that Palmdale says that it paid $22,495.00 on 15 January 2016. Marapily gives credit for a payment of $5,995.00. I prefer the evidence of Palmdale on the basis that if the rent was short paid, one would have expected there to be correspondence from John Flood Real Estate in respect of that short payment. There is no evidence of any such correspondence. I take into account that Mr Warburton did not personally handle the rent ledger, and Mr Mansfield had no involvement at that time, whilst Palmdale has provided its accounting records to support its contention.

51. I accordingly accept the evidence of Palmdale and find that the rent arrears amounted to $88,536.00.

Does the Tribunal have jurisdiction to determine the mesne profits claim? If so, is Maparily entitled to mesne profits? If so, at what rate and for what period?

52. There is no dispute that upon Palmdale indicating to Maparily that it did not intend to exercise the option contained within the lease, Maparily gave notice to Palmdale that it required vacant possession upon expiry of the lease. There is also no dispute that Palmdale did not vacate the property in accordance with the notice. Section 20 of the Act gives the Tribunal jurisdiction to determine a dispute arising from or relating to a tenancy. The claim for mesne profits arises from the failure of the lessee to vacate in accordance with the conditions of the lease. I am satisfied that the dispute arises from the tenancy and the Tribunal has jurisdiction to determine it.

53. I am also satisfied that it is appropriate to calculate the compensation payable by reference to the amount of rent being paid at the end of the lease period. Palmdale had the benefit of occupying the property for that period. There was no agreement that it could occupy the property at any lesser occupation fee. Any such agreement reached with a prior tenant is irrelevant. However, as the lease no longer applied, I am not satisfied that there is any basis to apply a CPI or percentage increase to that sum.

54. Both Mr Mansfield and Mr Farr state that the property was vacated on 10 June 2018. The lease expired on 1 February 2018. The rent payable at the end of the term was $23,169.85 per calendar month. Accordingly an amount of $99,575.18 is payable made up as follows:

February 2018 $22342.35

March 2018 $23169.85

April 2018 $23169.85

May 2018 $23169.85

June 2018 $7723.28

Does the Tribunal have jurisdiction to determine the interest claim? If so, is Maparily entitled to interest on these amounts?

55. The lease provided that interest was payable on any rent or other monies payable to the lessor which remained outstanding after 30 days (clause 25.2) at the rate equivalent to the interest on unpaid judgements under the Supreme Court Rules. I accept that the appropriate rate is 7.5%. The outstanding rent is an amount owing under the lease and the Tribunal has jurisdiction to award interest on it. However I do not accept Marapily’s calculations as they do not take account of the 30 days, and include a calculation on the amount of $10,505.00 which I have found not to be owed.

56. I calculate the interest payable on the outstanding rent as follows:

$3.73 per day from 02/09/2017 for the period 02/09/2017 to 01/10/2017, ($111.90) $7.46 per day from 02/10/2017 to 01/11/2017, ($231.26), $11.19 per day from 02/11/2017 to 01/12/2017 ($335.70), $14.92 per day from 02/12/2017 to 01/01/2018, ($468.52) and $18.65 per day from 02/01/2018 to the end of the lease 01/02/2018 ($578.15) making a total of interest owing to the end of the lease of $1,725.53.

57. I am not satisfied that the Tribunal has jurisdiction to award interest on the mesne profits as those amounts are not payable under the lease.

Did Palmdale’s failure to give vacant possession on 2 February 2019 delay exchange and settlement of the contract for sale of the property? If so, what loss or damage was suffered by Maparily?

58. Mr Mansfield alleges in his affidavit dated 26 March 2019 that Palmdale’s failure to give vacant possession on the expiration of the lease delayed the sale of the property for approximately 3 months from when negotiations began. He provides as evidence of this contention copies of correspondence between the solicitors acting for the proposed purchaser and the solicitor acting for Marapily dated 13 March 2018, 15 March 2018 and 21 March 2018, and correspondence between Marapily and its solicitor dated 27 March 2018 (which sought instructions from Mr Mansfield in relation to a letter dated 26 March, a copy of which is not in evidence).

59. The correspondence which Mr Mansfield provides does not support the contention that the failure to give vacant possession “delayed the sale by 3 months from when negotiations began.” The proposal put by the purchaser was that it would enter into a contract providing for settlement on 21 May 2018 on the basis that vacant possession would be available on completion. There is mention of exchange of an option agreement being dependent on vacant possession of the land in that agreement, but it is not clear from the correspondence that the purchaser was not prepared to enter into the two documents independently.

60. The correspondence supports a finding that negotiations were not concluded at the time of the letter dated 27 March 2018, and there is nothing provided to indicate when negotiations were concluded. Furthermore there is nothing in the correspondence to explain why contracts were not exchanged until 29 June 2018. I cannot find that it was Palmdale’s failure to vacate the property which caused the delay in the exchange of contracts. If it was that the purchaser was not prepared to exchange contracts for the purchase until vacant possession was given, this is not clear from the correspondence provided, and there is no explanation for the further delay between 10 June (the last of the dates on which it is alleged that Palmdale vacated ) and 29 June when contracts were exchanged.

61. In these circumstances it is not necessary for me to consider whether Maparily suffered loss or damage, as I am not satisfied that Maparily has established the necessary causal link. However I note that in any event Maparily could not obtain an order for both the occupation fee or mesne profits and loss and damage calculated by reference to the alleged delay in obtaining the proceeds of sale, as to do so would put them in a better position than they would have been.

Did Palmdale breach the agreement by failing to undertake work required by the Property Management Plan? If so, did Maparily suffer loss and damage?

62. Clause 7.1 (a) of the lease required Palmdale to carry out various improvements to the property in accordance with the property management plan. Clause 7.1 (b) required Palmdale to keep Maparily advised in respect thereof. Maparily asserts that Palmdale failed to do so. Palmdale denies this and relies upon the invoices as evidence of its compliance with these obligations. Further Palmdale submits that its dealing were with Bob Thompson who was kept advised by them at all times as required.

63. I am not satisfied that Maparily has proven its claim against Palmdale in respect of this issue. There is simply an assertion that the work was not done, but no evidence provided (including no evidence from Mr Thompson) to support that assertion.

Is Maparily entitled to interest?

64. It follows that the claim for interest on this amount must fail.

Amounts owing

65. I am satisfied that Palmdale owes Maparily the following:

1. Rent arrears to the end of the lease $88,536.00

2. Interest on the rent arrears to the end of the lease $1725.53

3. Mesne profits $99575.18

4. Total owing $189,836.71

66. I am satisfied that Palmdale is entitled to set off against these amounts the following:

1. Amount admitted by Maparily $113,563.58

2. Additional compensation for lost milk $13250.00

3. Total $126,813.58

67. The appropriate order is an order that Palmdale pay Maparily the sum of $63,023.13.

COSTS

68. Both parties have been partially successful. I will provide that any application for costs be provided to the Tribunal and the other party within 14 days, and for submissions in reply.

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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: 29 March 2022