Foxys' Contracting Pty Ltd v Roseneath Stud Pty Ltd

[2021] NSWCATCD 37

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Foxys’ Contracting Pty Ltd v Roseneath Stud Pty Ltd [2021] NSWCATCD 37

Hearing dates:

4 December 2021 and 28 April 2021, submissions closed 11 June 2021

Decision date:

23 July 2021

Jurisdiction:

Consumer and Commercial Division

Before:

S Thode, Senior Member

Decision:

1.The application is dismissed.

2.The applicant shall pay the respondent’s costs of the application on the ordinary basis as agreed or assessed. In the event the parties wish to be heard on costs

3.The applicant shall provide submissions on the question of costs to the Tribunal and the respondent seven [7] days after the date of publication of these orders.

4.The respondent shall provide submissions on the question of costs to the Tribunal and the owner fourteen [14] days after the date of publication of these orders.

5. The applicant shall provide submissions in reply on the question of costs, if any, to the Tribunal and the respondent twenty-one [21] days after the date of publication of these orders.

6. Any question of costs shall then be determined in chambers and on the papers unless submissions are received why costs cannot be determined on the papers.

Catchwords:

LEASES AND TENANCIES — Agriculture — Agricultural Tenancies Act 1990 (NSW) — Standing — Assessment of damages

Legislation Cited:

Agricultural Tenancies Act 1990 (NSW)

Cases Cited:

Hardy v Gillette (1976) VR 392

Rhoden v Wingate [2002] NSWCA 165

Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305

Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298

Category:

Principal judgment

Parties:

Foxy’s Contracting Pty Ltd (Applicant)
Roseneath Stud (Respondent)

Representation:

Counsel:
Mr H Wood and Mr P Horobin (Applicant)
ZM Hillman (Respondent)

Solicitor:
UX Law (Applicant)
Henry William Solicitor (Respondent)

File Number(s):

COM 19/57232

Publication restriction:

Nil

reasons for decisioN

Background

1. Foxy’s Contracting Pty Ltd (the applicant) claims that it entered into an oral agreement in or about late 2013 as tenant or licensee with Roseneath Stud Pty Ltd (the respondent), which owns a rural property at Cobbity, New South Wales (the property).

2. The applicant commenced proceedings in the Consumer and Commercial Division of the Tribunal on 19 December 2019 seeking an order pursuant to section 21(1)(c) of the Agricultural Tenancies Act 1990 (the Act) that the respondent be restrained from acting upon a purported termination on 15 July 2019 of the applicant’s tenancy or license at the property.

3. By the time the matter was listed for hearing the applicant had vacated the property and the applicant’s claim was amended to a claim for damages and compensation under section 6, 7, 15, 17, 20 and 21 of the Act in relation to works (improvements) it claims to have carried out to the property during its occupation of the property from around early 2014 to 3 March 2020.

4. The total amount of compensation claimed by the applicant is $509,000, but noting that the Tribunal has a statutory limit of $500,000, applicant abandoned any amount over that sum. Alternatively, the applicant claimed compensation in the amount of $208,000 excluding GST. That amount is the quantification carried out by the expert Mr Geoffrey Perkins in his reports of 6 and 10 August 2020 in respect of the value of the works carried out by the applicant on the property.

5. The respondent denies it is liable to the applicant for damages or at all.

6. There are number of issues the respondent has put into dispute to be determined by the Tribunal. They are:

1. First, whether there was any agreement between the respondent and the applicant which permitted the applicant’s occupation of the property or whether there was only a licence granted by the respondent for Mr Philip Foxman personally to use the property; If there was no agricultural tenancy agreement between the parties, pursuant to which the applicant occupied the property, it is not able to avail itself of the provisions of the Act which apply to a tenant.

2. Secondly, if contrary to the respondent’s position there was an agreement between the parties for use of the property, the terms of the agreement in respect of the duration of the agreement, the obligations of the applicant to maintain the property and carry out works on it; and whether works, for which the applicant would seek compensation from the respondent, had to be agreed in writing.

3. Thirdly, whether the applicant carried out all the alleged improvements to the property at all, and if improvements were carried out, the value of those improvements.

4. Fourthly, the market rent or license fees the respondent would have been able to obtain for the property.

5. Fifthly, whether the fact that no rent or license fees have been paid by the applicant in respect of its occupation of the property is to be taken into account in determining the fair compensation to be paid for any improvements under the Act.

The applicant’s submissions

7. The applicant relies on the provisions of the Act and claims it is entitled to payment, as a tenant who carries out any improvement on the farm with the consent of the owner is entitled for compensation from that owner

8. The applicant relies on the evidence of three witnesses: its director Jacob Foxman, its manager Mr Philip Foxman and Mr Geoffrey Perkins, a valuer. Mr Perkins gave expert evidence on both the quantification of the value of the work carried out and in respect of the rental value of the property both with and without improvements made by the applicant.

9. A summary of the applicant’s evidence as to the specific improvements relied upon is contained at paragraphs 22 to 33 of counsel’s submissions dated 28 May 2021. In summary, it is the applicant’s evidence that the property was in poor condition when the applicant took occupancy of the property. It is submitted that the applicant improved the road to the main house using road base and sand top rock; installed about 2000 metres of fencing to create four yards of about five acres each; upgraded 2300 metres of fencing on the eastern side of the property; installed 1200 metres of internal fencing across the middle of the property to enable cattle, sheep and goats to be kept on the property; upgraded 1740 metres of boundary fencing along western and northern boundaries; cleaned and removed silt from dams; controlled weeds and removed internal fencing and collected and bagged asbestos fragments.

10. It is submitted by the applicant that the respondent alleges that it (through Mr Bart, the director of Roseneath Stud Pty Ltd) would not pay for the work because he had not consented to the performance of the work, not that the work was not done at all. It is submitted that the respondent could have led the evidence of Mr Bob Kerangas, who was a “resident” of the property at the relevant time, and that the failure to call Mr Kerangas is inexplicable and the Tribunal should draw a Jones v Dunkel inference that the evidence Mr Karangas would have given would not have assisted the respondent.

11. It is submitted that the respondent was unjustly enriched and the respondent was content to freely accept the benefit of the work albeit that it had not expressly requested it. In so doing it is submitted that the respondent consented to the work within the meaning of section 6 of the Act.

12. The applicant submits that fair compensation is payable by the respondent whether under section 6 or section 7 of the Act. It is submitted that the respondent did not lead any evidence as to the value of the work constituting the improvements and that the evidence of the applicant should be accepted. Rather, evidence was led by the respondent as to the value of rent of the property.

13. It is submitted that the lack of contemporaneous documentary evidence of the works being carried out is explicable because the earth moving equipment used was owned by the applicant and there was no documentary record of rentals from third parties. The work was done largely by the applicant and not subcontracted to third parties and the Tribunal should be satisfied as to the value of the improvements based on Mr Philip Foxman’s evidence. Mr Bart never refused to consent to the applicant carrying out work on the property even though he was aware that work was being carried out because he went for a drive with the Mr Philip Foxman and Mr Foxman brought the work to Mr Bart’s attention.

14. It is submitted that in determining fair compensation, the purpose of the respondent’s rental valuation evidence is to offset the applicant’s claim in diminution or extinction of the quantum of compensation.

15. It is submitted that the respondent’s evidence to that effect should be disregarded. It allows the Tribunal to identify commercial rent that might otherwise have been payable for a property of like nature. However, the applicant submits that the evidence as to comparable rent is irrelevant, because the agreement between the parties was that rent was not payable provided the property was maintained. The applicant submits that it did maintain the property and did so at a cost to itself of approximately $50,000. The applicant does not claim compensation in respect of that $50,000 in recognition of the fact that that was consideration for the use of the land. It is submitted that a use of the property from 2014 to 2017 was that the applicant merely stored its equipment on the property because the property was in such poor condition that it could not permit large-scale agistment.

16. The applicant submits that in determining fair compensation the Tribunal must attribute a value to the work carried out by the applicant, that is work that did not have to be carried out by an incoming tenant and the benefit of which it would enjoy immediately.

17. The applicant submits it is the correct entity to bring these proceedings. In respect of the identity of the licensee, the applicant outlines the contemporaneous documentary evidence that, in its submission, overwhelmingly supports a finding that the licence was with the applicant and not Mr Philip Foxman. This evidence includes invoices issued by the applicant at the applicants bundle (AB) PP. 52 – 53; tax invoices issued by the respondent to the applicant at AB p.47; tax invoices issued by contractors to the applicant AB p. 193 – 196; correspondence from the Department of Primary Industries to the applicant at AB p. 48 and p. 197; an email of 29 November 2018 from Mr Philip Foxman to Mr Bart at AB p. 54. It is Mr Bart’s evidence in cross-examination that he presumed he had paid the applicant and not Mr Philip Foxman. The allegation that there was a licence agreement with Mr Philip Foxman personally only arose once the relationship between Mr Foxman and Mr Bart had deteriorated in July 2019. Accordingly the Tribunal should find that there was an agreement between the parties and that the agreement was enforceable.

18. The applicant is critical of the respondent’s defence. The respondent makes an offsetting claim in the sum of $54,450 for rent outstanding, by reason of the applicant’s alleged failure to maintain the main road leading to the house. It is submitted that this claim is misconceived. Compensation is only payable under section 19A of the Act if the farm has deteriorated and there is no evidence of any alleged deterioration. It is submitted that compensation would only be payable in the event of a decrease in the farm’s value as a result of deterioration and there is no evidence of a decrease in the value of the property.

The respondent’s submissions

19. I refer to the respondent’s submission filed 17 June 2021.

20. The respondent submits that the available evidence does not support a finding that there was an agreement between the parties for use of the property. It is submitted that neither Mr Jacob Foxman nor Mr Philip Foxman are reliable witnesses and that when the bargain was struck between Mr Philip Foxman and Mr Bart, the applicant company, purportedly being the tenant, was not in existence. For those reasons the respondent says that the applicant has no standing to bring the application and the application should be dismissed.

21. For completeness however, the respondent addresses the remaining questions as to compensation. It is submitted that even if an oral agreement existed it was commercially implausible and uncertain that the agreement was to last 10 to 20 years. In the absence of any express agreement as to term there is no reason to hold other than that the licensee had the benefit of a month-to-month license, terminable on demand. Compensation should not be payable because the licensor never asked for the work to be performed other than for the licensee to be required to prepare a road linking the homestead to the main road and keep the property well maintained and that this work would be performed in lieu of rent.

22. In respect of the claim for compensation, it is said that the evidence of Mr Philip Foxman should be discarded as being uncertain and vague. Even the applicant’s own expert, Mr Perkins, attributed a value to the work of $208,000, nowhere near the amount of the claim as filed.

23. The generality of the experts’ opinion supports a finding that the evidence of the applicant is unreliable. The applicant’s expert’s supplementary report in which he sought to give evidence based on his discussions with unnamed local contractors as to the value of items for which the applicant has claimed compensation including the claim for $90,000 for road base. The expert admitted that the value of road base does not fall within his expertise. It is submitted that the applicant should not be compensated for road works because these were not properly performed and significant money was spent repairing the works that the applicant claims to have undertaken.

24. The applicant’s contention that the respondent’s failure to call Mr Bob Kerangas as a witness would give rise to a Jones v Dunkel inference should be rejected. This is because the director of the respondent was able to give evidence as to the state of the property. Therefore it was unnecessary to call other witnesses, particularly not as Mr Kerangas is not a caretaker or groundskeeper but a mere occupant of the homestead.

Legislation

25. For convenience I have set out the relevant sections of the Act as pleaded in the applicant’s points of claim at paragraphs 26 and following:

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.

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).

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).

26. The objects of the Agricultural Tenancies Act are defined in s 3 and these include the provision of a mechanism for settling disputes between parties to agricultural tenancies through applications to the Tribunal.

27. A tenancy is defined in s 4 to mean;-

“a lease or licence, an agreement for lease licence, a tenancy at will or a share farming arrangement or any other arrangement by which a person who is not the owner of the farm has a right to occupy or use it.

28. For the reasons that follow I am satisfied that the present proceedings relate to a dispute between parties to an agricultural tenancy and that the Tribunal has jurisdiction to hear the dispute.

29. Although s 5 of the Act provides that an owner and tenant shall each have the right to have the provisions of any agreement creating the tenancy reduced to writing signed by the other party, it is noted that neither party asserts that the agreement between them was reduced to writing. Although the applicant was under an impression that the tenancy would be likely to continue for a period of 10 to 20 years, that term of the agreement was also not reduced to writing.

30. Neither party made a record of the condition of the property at the commencement of the tenancy as required by the provisions of s 12 of the Act and accordingly difficulties have arisen in the determining the value of improvements to the property, in particular in respect of the road leading to the main homestead, fences, gates and other things, their value at the commencement of the agreement and at the time it ended by reason of the applicant vacating the property.

31. The applicant claims compensation for improvements carried out by it with the consent of the respondent pursuant to s 6 of the Act. If, as in this case, compensation is not fixed by the agreement at a fair amount or is not fixed at all, the owner must pay fair compensation to the tenant (s6(3)). Compensation is to be determined in accordance with the provisions of s 15 of the Act in relation to tenant’s improvements

32. So far is as relevant, s 15 provides that 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.

Consideration

33. For the reasons that follow I have decided to dismiss the application.

Does the applicant have standing to bring the application?

34. For the reasons that follow I am of the view that the application must be dismissed because that there was no agreement between the parties and the applicant has no standing to bring or maintain these proceedings.

35. The applicant’s evidence is contained at pages 22 to 40 of the applicant’s bundle. It is alleged by Mr Philip Foxman that he had a meeting in or about late 2013, or possibly early 2014, at the respondent’s Elizabeth Street Sydney office. It is alleged that Mr Philip Foxman’s son Mr Jacob Foxman was also present. It is the evidence of Mr Philip Foxman that the applicant commenced negotiations for an agreement with the respondent in respect to leasing or licensing the property. Mr Philip Foxman deposes that at the city meeting he had a conversation to the following effect:

“Fred [Mr Bart], as you know, things did not go well for me in the Land and Environment Court and it’s only a question of how long I can fight off bankruptcy. I’m going to have to work as a manager for my son’s company, Foxy’s Contracting. Is your farm still available? It’s just lying idle and going to rack and ruin.”

36. It is alleged that Mr Foxman stated he needed the property for the storage of excavation and earthmoving equipment as well is farming machinery, not for himself, but for ‘Jacob’s company’, Foxy’s Contracting. (AB page 24)

37. Mr Foxman alleges that the respondent’s director stated he would give the property to him for 10 to 20 years until he was ready to subdivide the plots. In the meantime it was important for the respondent to prove the land is being used for agricultural purposes. Land used for agricultural purposes will not attract land tax and other charges and the respondent will get tax breaks for stocking the property.

38. I do not accept Mr Philip Foxman’s evidence. I am not of the view that the evidence establishes that the parties entered into an agreement governed by the Act. There was, at best a license agreement entered into between Mr Foxman and Mr Bart.

39. First, based on the evidence of Mr Philip Foxman, I am not satisfied that the applicant company existed when Mr Philip Foxman and Mr Bart met in the respondent’s office in or around 2014 (see cross examination of Mr Foxman at page 47of the TP). Further, it is in my view improbable, on the balance of probabilities, that Mr Bart agreed to enter into a binding agreement with any company that Mr Jacob Foxman thought to register in the future without any relationship between Mr Bart, Mr Jacob Foxman, or Mr Jacob Foxman’s companies. I certainly reject the applicant’s contention that any agreement between Mr Bart and any company, not yet founded, would be for a term of “10 to 20 years” and not other agreed terms.

40. I find that the statement that the respondent entered into an agreement with Foxy’s Contracting cannot be accepted in light of Mr Bart’s evidence that the agreement to license the 349 hectare rural property to Mr Foxman was based entirely on a longstanding relationship between the two men. The evidence of their longstanding but distant relationship is that Mr Bart’s brother went to school with Mr Foxman, Mr Bart and Mr Foxman attended the same place of worship and in 2012 Mr Bart assisted Mr Foxman with the restructure of Mr Foxman’s business affairs. There is no evidence that Mr Bart, or the respondent, had any relationship with Mr Jacob Foxman or any company associated with either of the Messrs Foxman. The applicant has failed to discharge its onus of proof to establish it is the contracting party, and I accept that the likely arrangement was that Mr Bart wanted to assist Mr Foxman with some personal difficulties, and that Mr Foxman was permitted to occupy the property for the sole purpose of storing roadworks equipment, and that in return for allowing the applicant to store heavy earthmoving equipment, Mr Foxman, possibly through the use of third parties, would improve the driveway from the road to the house.

41. Secondly, it is not controversial that Mr Philip Foxman was a director of the company from 28 February 2014 to 1 January 2015. However, until presented with a historical company extract, Mr Foxman’s evidence had been that he was never a director of the applicant company. On Mr Philip Foxman’s version of events, the Tribunal is asked to find that Mr Bart, or the respondent, had agreed to enter into a contract with any company headed by Mr Jacob Foxman in futuro, even though no such company was registered at the time the agreement was formed. In my view the evidence of Mr Philip Foxman is unconvincing in this regard as he was giving oral evidence vastly different to that contained in his statement of 2 March 2020 after being presented with the historical company extract whilst under cross-examination. Where Mr Bart and Mr Foxman’s recollections differ as to the formation of the agreement, I prefer the evidence of Mr Bart.

42. I am further convinced that the evidence of both Mr Philip Foxman and Mr Jacob Foxman is unreliable, as it appears that Mr Jacob Foxman’s statement was almost entirely deposed to lend credibility and weight to Mr Philip Foxman’s recollection of the critical meeting. Both Messrs Foxman deposed that Jacob was present at the 2014 meeting. However, under cross-examination Mr Jacob Foxman readily conceded that the statement had been made “by mistake” and that he was never present at the critical meeting with Mr Philip Foxman and Mr Bart. For this reason I find that the evidence of Mr Jacob Foxman is unreliable and I am satisfied that Mr Philip Foxman and Mr Jacob Foxman tailored their evidence so that one statement would corroborate the other to give the impression of a connection between the parties in 2013/2014, in circumstances where the applicant company had not yet come into existence. Unless there is extraneous contemporaneous evidence to support their version of events I afford neither of their statements much weight. Neither Mr Philip Foxman nor Mr Jacob Foxman were impressive witnesses.

43. Further Mr Philip Foxman was an undischarged bankrupt at the time that proceedings were commenced and personally would have been unable to pursue a claim for damages as at 14 November 2019. I am satisfied that a tactical decision was made to commence proceedings in the applicant’s name, to arrange Mr Foxman’s affairs to shift the position between Mr Foxman and his companies to suit the circumstances to permit Mr Foxman to negotiate his bankruptcy and allow the company to pursue a claim for damages at the same time [see TP page 54].

44. Mr Philip Foxman was on notice that the respondent challenged the applicant’s standing to bring these proceedings when Mr Bart filed his statement in March 2020, or alternatively when the defence was filed shortly thereafter. However, no application was made to substitute or add an applicant at any stage of the proceeding. I am persuaded on balance that Mr Philip Foxman had a personal relationship with Mr Bart, and in order to assist him in tough times, Mr Bart permitted Mr Philip Foxman to occupy the premises as a licensee and to store equipment on the premises, and in lieu of rent, Mr Philip Foxman would build a road to the homestead using the equipment he was permitted to store.

45. On balance I am satisfied that the applicant is not a party to any agreement with the respondent and I am satisfied that the applicant had no standing to commence proceedings for damages. Accordingly the application must be dismissed.

46. However, if I have erred and for reasons of completeness I turn to consider the applicant’s claim for damages under the Act.

What is the value of the improvements carried out on the property?

47. The applicant states at paragraph 7 of its amended points of claim:

“it was an implied term of the agreement and is necessary to give business efficacy, that if Foxy’s Contracting’s entitlement to occupy the property was terminated by Roseneath Stud before a subdivision was obtained, then Roseneath Stud would compensate Foxy’s Contracting for any improvements and for any work performed on the main road from the front gate to the main house. (See p 18 AB)”.

48. In particular the applicant claims that it obtained 6000 tonnes of road base and 2000 tonnes of sandstone rock to build and upgrade the main road from the front gate to the main house. Foxy’s Contracting claims compensation for the improvement pursuant to ss 6, 15, 17, 20 and 21 of the Act.

49. The applicant seeks an amount of compensation for improvements carried out with the alleged consent of the respondent or Mr Bart pursuant to section 6 of the Act. The applicant relies on paragraph 41A of the statement of 2 March 2020 which lists ten improvements made, and estimating a value associated with each improvement claimed. The evidence provided by Mr Philip Foxman in respect of each improvement is a mere list of costs unsupported by evidence such as invoices. The bare assertion by Mr Foxman as to the value of such works is rejected.

50. It is not contested that the licensee was required to prepare a road linking the homestead to the main road and keep the property well-maintained and that this would be done in lieu of rent.

51. The parties disagree whether consent in writing was to be obtained before improvements could be made. Mr Foxman agrees, however, that if improvements were to be made, he needed the consent of Mr Bart. This is supported by the evidence.

52. I accept the respondent’s submission that at least in respect of boundary fences the respondent would need to obtain its neighbour’s consent to any boundary fence work including any agreement to pay for 50% of the boundary fence work. As such I accept and prefer the evidence of Mr Bart that he fully expected to be consulted before 2000 m of boundary fencing would be erected on his property.

53. I therefore reject any contention that any amount for improvements can be awarded under section 6 of the Act as they were no improvements carried out by consent. The applicant must therefore establish an entitlement under sections 7 and 15 of the Act. Insofar as necessary I find that the agreement, although undefined and not in writing falls within the very broad description of what constitutes an agricultural tenancy, ie, any other arrangement by which a person who is not the owner of the farm has a right to occupy or use it. Clearly Mr Bart had afforded Mr Foxman the right to occupy the property, and in return Mr Foxman, or in the alternative the applicant, would improve the road from the homestead to the main road.

54. The applicant’s expert, Mr Perkins attributed a value to the work of 208,000.

55. The applicant also obtained a supplementary expert report as to the value of the improvements to an incoming tenant calculated by taking into account the financial returns that might be expected to accrue to a hypothetical incoming tenant on account of the improvement if the farm were to be the subject to a further tenancy.

56. I do not accept the proposition that by reason of an implied term of the oral agreement the applicant was permitted to make any improvement without reference to the respondent and that the respondent would nevertheless be liable for any associated costs for a period of 10 to 20 years. There is no independent evidence to support this contention other than the assertions of Mr Foxman and for the reasons set out above where he and Mr Bart’s recollection of events differ, I prefer the evidence of Mr Bart.

57. The applicant submits that ‘to the extent that the Tribunal is not satisfied as to the quantum based on [Mr Philip Foxman’s] evidence it should readily accept the evidence of Mr Perkins (see counsel’s submissions paragraph 54). It is also stated that no evidence was led by the respondent to contradict Mr Perkin’s evidence and in those circumstances the Tribunal should accept that evidence in accordance with the decision in Hardy v Gillette (1976) VR 392 in which Anderson J said at 396 – 7:

…on general principles, where uncontradicted evidence, which is inherently reasonable, probable, and conclusive of the matter has been given, the court is bound to accept it. It is unnecessary to examine the many cases to that effect which are in the reports, and it is sufficient merely to refer… There is the qualification, of course that no judge or tribunal is bound to accept evidence which is in itself inherently improbable and unreasonable which is hesitating, shuffling, inconclusive and unconvincing.… But that is not the position in the present case.”

58. I am however persuaded that the evidence of Mr Perkins is inconclusive and unconvincing. As a matter of fact, the respondent incurred further costs because the road was in such bad condition that in order to traverse it the respondent was required to expend in excess of $57,000 after he took possession of the property because the applicant had refused to provide adequate drainage. In answer to the submission that the evidence as to improvement should be accepted in light of the decision of Hardy v Gillette (supra), I find that Mr Perkins’ report was prepared on the undisclosed instructions of Philip Foxman, particularly with respect to assumptions of the amount of road base supplied and extent of fencing carried out. Mr Perkins states at page 223 of the applicant’s bundle that he was unaware of the state of any internal roads to the property prior to completion of road works and before his inspection of 21 February 2020. He assumes (emphasis added) that these road works were necessary and that approximately 6000 tonnes of recycled road base and 2000 tonnes of crushed sandstone were indeed used.

59. The expert states further that based on the instructions given if indeed (emphasis added) 6000 tons of road base was required enquiries with (unidentified) local contractors reveals that $15 per ton for recycled road base is reasonable. Hence, Mr Perkins concludes, $90,000 (plus GST) for road base would be appropriate as the value to an incoming tenant. Further down in his report he again states that he has been advised that approximately 4000 linear metres of new fencing had been installed solely by Foxy’s Contracting and some 3900 linear metres of fencing repair had taken place. Elsewhere in the report the certified practising valuer states that he considers the total value of the improvements to an incoming tenant as outlined above to be in the order of $208,000 plus GST. Mr Perkins was instructed by Mr Philip Foxman but the content of the oral instructions remains largely undisclosed.

60. It is my view that although Mr Perkins is a certified practising valuer his expert opinion may be discarded if the underlying assumptions provided to the expert are not made out. I have had regard to the letter of instruction provided by the applicant’s instructing solicitor. The assumptions are prepared under the hand of the applicant’s instructing solicitor and the expert is to assume the repair and construction of internal roads which included the supply and compaction of about 6000 tonnes of road base and the further supply and compaction of about 2000 tonnes of crushed sandstone to stop the roads/tracks from degrading after heavy rain. The expert is not provided with any extraneous evidence such as invoices, contemporaneous diary notes, time sheets or payslips, or any other external evidence as to the quantities of road base and crushed sandstone delivered to the property at the expense of the applicant. This in my view, is enough to substantiate a finding that the assumptions underlying the opinion are not supported and that the opinion should therefore not be accepted. Opinion evidence is only admissible if there is evidence which, if accepted, is capable of establishing the truth of the assumptions: Rhoden v Wingate [2002] NSWCA 165 at [86].

61. I am not satisfied that the expert report satisfies the principles in Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305 revised - 17/09/2001 and in particular the well-known reasons enunciated by Heydon JA, as he then was:

64 The basal principle is that what an expert gives is an opinion based on facts. Because of that, the expert must either prove by admissible means the facts on which the opinion is based, or state explicitly the assumptions as to fact on which the opinion is based. If other admissible evidence establishes that the matters assumed are “sufficiently like” the matters established “to render the opinion of the expert of any value”, even though they may not correspond “with complete precision”, the opinion will be admissible and material: see generally Paric v John Holland Constructions Pty Ltd [1984] 2 NSWLR 505 at 509-510; Paric v John Holland Constructions Pty Ltd (1985) 59 ALJR 844 at 846. One of the reasons why the facts proved must correlate to some degree with those assumed is that the expert’s conclusion must have some rational relationship with the facts proved.

62. In my view there is no sufficiently like evidence that establishes the matters assumed. The evidence is somewhat circular. Mr Philip Foxman instructs his solicitor. The solicitor instructs the expert, but the instructions contain no independent documentation that that would permit the valuer to arrive at an independent expert opinion. In the absence of any other contemporaneous evidence as to the purchase of the 6000 tonnes of road base in 2000 tonnes of crushed sandstone I do not find the underlying assumptions established. Mr Foxman further concedes that the road base was arranged from Botany Building Recyclers Pty Ltd and that Mr Philip Foxman was a director of that company. One would expect that either the applicant or Botany Building Recyclers Pty Ltd could provide some evidence to support the contention as to an amount of road base that was purchased and delivered.

63. Under the circumstances I reject the evidence of Philip Foxman as unpersuasive and in turn afford the evidence of Mr Perkins little or no weight.

64. In the alternative, even if Mr Perkins’ evidence was to be accepted, because the underlying assumptions could be established, the claimed ‘improvements’ such as improvements to the road leading from the main road to the homestead, were works the applicant was obliged to create under the agreement, in lieu of a licence fee, and no compensation is payable. It follows therefore that there should be no award for the applicant.

What is the value of the license fee to use the Roseneath property?

65. In light of these findings it is not necessary for me to make any findings as to the market rent or license fees for a licence to use the Roseneath Stud property. It is the submission of the respondent that Mr David Bird provides a valuation of the rent for the property for each year from 3 March 2014 to 3 March 2019 in a range between $116,669-$132,000 gross per annum. I find that this evidence is irrelevant. In light of the fact that I make no award in favour of the applicant and it is not necessary for me to consider the value of the benefit to the applicant, or whether any set off may be accounted for by way of defence or equitable set off.

66. I turn to the applicant’s submission that the respondent’s failure to call an occupant of the farm’s homestead, Mr Karangas, to give evidence, should lead to a Jones v Dunkel inference that Mr Karangas’ evidence would not have assisted the applicant.

67. The seminal High Court case of Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 dealt with the steps which should be taken by a trial judge, when a witness who could have been called was not called. At p 308 Kitto J stated:

… His Honour told the jury that the fact that Hegedus had not gone into the box left them in this position, that they could accept the facts given by the plaintiff as proved, and that the question for them then was whether they thought that from the proved facts an inference of negligence ought to be drawn. It was right enough to point out, in effect, that the evidence given might be the more readily accepted because it had been left uncontradicted, and that the omission to call Hegedus as a witness could not properly be treated as supplying any gap which the evidence adduced for the plaintiff left untouched. But what should have been added, and not being added was in the circumstances as good as denied, was that any inference favourable to the plaintiff for which there was ground in the evidence might be more confidently drawn when a person presumably able to put the true complexion on the facts relied on as the ground for the inference has not been called as a witness by the defendant and the evidence provides no sufficient explanation of his absence. The jury should at least have been told that it would be proper for them to conclude that if Hegedus had gone into the witness-box his evidence would not have assisted the defendants by throwing doubt on the correctness of the inference which, as I have explained, I consider was open on the plaintiff's evidence.” [emphasis added]

68. In the present case the evidence concerning as to what, if any, improvements had been carried out is entirely reliant on the evidence of Mr Philip Foxman. In particular he alleges that he brought the improvements to Mr Bart’s attention when Mr Bart attended Roseneath Stud. The evidence is strongly denied. Mr Bart states he visited the property twice in the entire time during Mr Foxman’s occupation of the farm, and he did not note any improvements (see TP 141). I am satisfied Mr Bart gave truthful evidence that he did not observe and was not aware that tracks and roads on the property had been upgraded and that he had not discussed or approved the fencing work.

68. Further Mr Bart denies that prior to the applicant’s fencing work stock could not be agisted on the property Mr Bart states that stock could always be agisted on the property and another tenant, Mr O’Grady, had successfully kept live stock on the property. Either way it is not in dispute that land improves in value if it is of a quality that permits the keeping and agistment of livestock. It is agreed that the ability to agist stock would be of considerable benefit to any incoming tenants.

69. Having regard to the principles enunciated in Jones v Dunkel and applying them to the facts in this case, the evidence of Messrs Philip and Jacob Foxman concerning the improvements on the property is contradicted because Mr Bart has been called as a witness. The conflict in the evidence between Mr Foxman Sr and Mr Bart, as to whether agistment is possible is at best general, on both sides. However it was upon the applicant to establish, on balance, that agistment was not possible before occupation and is now possible. The applicant has not discharged its onus in this respect. I have had regard to the explanation as to why Mr Karangas was not called. Mr Karangas had not been an employee of the respondent for over a decade and was permitted to occupy the caretaker’s cottage if he “kept an eye on things”. There is no evidence before me to establish that Mr Karangas would have been in a better position to give evidence as to improvement, agistment or value. There is no evidence that Mr Karangas is a farmer or has any experience relevant to these enquiries. Under those circumstances I do not think it is open to the Tribunal to draw the Jones v Dunkel inference that if Mr Karangas had been called to give evidence, his evidence would not have assisted the respondent.

Conclusion

71. I find that there was no agreement between the parties for the use of Roseneath property.

72. Even if I have erred and there was an agreement between the parties for the use of Roseneath property, any improvements to the property required an agreement between the parties as the nature and extent of the improvements.

73. The Tribunal is not satisfied that the applicant carried out improvements to the property, or that if improvements were carried out, the improvements were quantifiable.

74. In light of my findings, it is not necessary to determine the value of the benefit obtained by the applicant as a result of its use of the property.

75. As a result of these findings the application is dismissed with costs.

COSTS

76. As the respondent was successful in the proceedings, costs should follow the event and the applicant shall pay the respondent’s costs of the proceedings on an ordinary basis as agreed or assessed.

77. If either party wishes to be heard on the question of costs, the parties may provide submissions in accordance with orders 3 to 6.

Orders

1. The application is dismissed.

2. The applicant shall pay the respondent’s costs of the application on the ordinary basis as agreed or assessed.

3. The applicant shall provide submissions on the question of costs to the Tribunal and the respondent seven [7] days after the date of publication of these orders.

4. The respondent shall provide submissions on the question of costs to the Tribunal and the owner fourteen [14] days after the date of publication of these orders.

5. The applicant shall provide submissions in reply on the question of costs, if any, to the Tribunal and the respondent twenty-one [21] days after the date of publication of these orders.

6. Any question of costs shall then be determined in chambers and on the papers unless submissions are received why costs cannot be determined on the papers.

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

79. Registrar

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: 16 August 2021