GRAINFIELDS Pty Ltd v Liebig
[2007] WADC 115
•6 JULY 2007
GRAINFIELDS PTY LTD & ORS -v- LIEBIG & ANOR [2007] WADC 115
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2007] WADC 115 | |
| Case No: | CIV:2812/2005 | 16-18 MAY 2007 | |
| Coram: | EATON DCJ | 6/07/07 | |
| PERTH | |||
| 31 | Judgment Part: | 1 of 1 | |
| Result: | Judgment for the plaintiffs on their claim Defendants' set-off and counterclaim dismissed | ||
| PDF Version |
| Parties: | GRAINFIELDS PTY LTD (ACN 008 983 060) TOOTRA FARMS PTY LTD (ACN 008 983 042) NADJI-MIA PTY LTD (ACN 008 705 619) JOHN JEROME LUSSICK ROBERT WILLIAM LIEBIG BRENDA FAYE LIEBIG |
Catchwords: | Contract Lease of farming land Parole evidence rule Turns on own facts |
Legislation: | Nil |
Case References: | Australian Co-operative Foods Ltd v Norco Co-operative Ltd (1999) 46 NSWLR 267 C G Mal Pty Ltd v Sanyo Office Machines Pty Ltd [2001] NSWSC 445 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 Johnson Matthey Ltd v A C Rochester Overseas Corp (1990) 23 NSWLR 190 Oshlack v Richmond River Council (1998) 193 CLR 72 Skywest Aviation Pty Ltd v Commonwealth of Australia (1995) 126 FLR 61 |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CIVIL
- TOOTRA FARMS PTY LTD (ACN 008 983 042)
NADJI-MIA PTY LTD (ACN 008 705 619)
JOHN JEROME LUSSICK
Plaintiffs
AND
ROBERT WILLIAM LIEBIG
BRENDA FAYE LIEBIG
Defendants
Catchwords:
Contract - Lease of farming land - Parole evidence rule - Turns on own facts
Legislation:
Nil
(Page 2)
Result:
Judgment for the plaintiffs on their claim
Defendants' set-off and counterclaim dismissed
Representation:
Counsel:
Plaintiffs : Mr T J Carmady
Defendants : Mr M W Fatharly
Solicitors:
Plaintiffs : Williams & Hughes
Defendants : Kott Gunning
Case(s) referred to in judgment(s):
Australian Co-operative Foods Ltd v Norco Co-operative Ltd (1999) 46 NSWLR 267
C G Mal Pty Ltd v Sanyo Office Machines Pty Ltd [2001] NSWSC 445
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337
Johnson Matthey Ltd v A C Rochester Overseas Corp (1990) 23 NSWLR 190
Oshlack v Richmond River Council (1998) 193 CLR 72
Skywest Aviation Pty Ltd v Commonwealth of Australia (1995) 126 FLR 61
(Page 3)
1 EATON DCJ: The plaintiffs are the registered proprietors of farming land being several farms collectively known as "Latham Farms" in the northern wheat belt region of Western Australia. The fourth named plaintiff, John Lussick, appears to be in effective control of the first, second and third named plaintiffs. He is a farmer whose farm is called Nadji-Mia.
2 The defendants are husband and wife. They are also farmers. Their farm, called Ellendale, is at east Perenjori, some 16 kilometres from Latham Farms. The Liebigs are predominantly grain growers, that activity comprising some 95 per cent of their farming. They run some stock.
3 Latham Farms comprises some 19,000 acres of farming land, some cleared and some uncleared, some arable and some not arable.
4 By a lease dated 17 May 2004 the plaintiffs leased Latham Farms to the defendants for 1 year commencing on 1 May 2004 at a rent of $213,555 plus GST to be paid in two equal instalments of $106,775, the first being due on 1 May 2004 and the second being due on 1 January 2005.
5 By a Bill of Sale dated 13 August 2004 the defendants granted a charge in favour of the plaintiffs over the defendants' estate and interest in the crop being grown by the defendants at Latham Farms as security for the performance of the defendants' obligations under the lease of 17 May 2004. The terms of the Bill of Sale varied the lease so that the second of the two payments due, under the terms of the lease on 1 January 2005, would become payable at the same time as payment for the crop by AWB Ltd to the defendants was due or on 1 January 2005, whichever first occurred. The Bill of Sale was duly registered.
6 The first instalment of rent, being an amount of $106,775 plus GST of $10,667.50, was the subject of an invoice issued by the plaintiffs to the defendants on 1 May 2004. The defendants made payment in full in the sum of $117,452.50 to the plaintiffs by cheque on 31 May 2004. The second payment due under the terms of the lease was the subject of an invoice issued by the plaintiffs to the defendants on 24 December 2004 for a total amount of $117,452.50. That amount was paid by the defendants to the plaintiffs on 30 December 2004.
7 By a lease dated 13 April 2005 the plaintiffs leased Latham Farms to the defendants for a term of 1 year commencing on 1 May 2005 at a rental of $213,555 plus GST to be paid in three equal instalments of $71,185
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- plus GST, the first being payable on 1 May 2005, the second being payable on 1 August 2005 and the third being payable "at the same time as payment for the crop is due to the grantor from AWB, or 1 December 2005, whichever shall first occur."
8 By a Bill of Sale dated 13 April 2005 the defendants granted to the plaintiffs a charge over the defendants' estate and interest in the crop then being grown by the defendants at Latham Farms as security for the performance of the defendants' obligations under the lease of 13 April 2005. By that Bill of Sale the defendants were obliged to do all that might be necessary to assist the plaintiffs to register the Bill of Sale as security with the Bills of Sale Registry and to notify Cooperative Bulk Handling Ltd and AWB Ltd of the Bill of Sale created. That Bill of Sale was duly registered under the provisions of the Bills of Sale Act on 22 April 2005.
9 The first instalment of rent due under the terms of the lease of 13 April 2005 was the subject of an invoice rendered by the plaintiffs to the defendants on 4 April 2005 in an amount of $78,303.50, which instalment was paid by the defendants to the plaintiffs by cheque on 26 April 2005. The second instalment under the said lease was the subject of an invoice dated 1 August 2005 rendered by the plaintiffs to the defendants, which invoice was paid in full by the defendants to the plaintiffs by cheque on 17 October 2005. The third instalment due under the said lease was not paid.
10 The defendants' failure to pay the third instalment under the lease of 13 April 2005 led to the commencement of litigation. The plaintiffs filed a writ in this Court on 21 December 2005 seeking from the defendants $71,185 plus GST "being rent due from the defendants to the plaintiffs on 1 December 2005 pursuant to the terms of a written lease dated on or around 13 April 2005." Their indorsement of claim also sought an indemnity against all losses, including legal costs and expenses incurred by the plaintiffs as a result of the defendants' alleged breach of the lease referred to. There was a claim for interest.
11 In the litigation so commenced the plaintiffs, in due course, filed a statement of claim and the defendants filed a defence, set-off and counterclaim which was subsequently amended and further amended. The plaintiffs filed a reply and defence to set-off and counterclaim. That pleading was itself later amended.
12 By their statement of claim the plaintiffs referred to certain clauses in the lease dated 13 April 2005, alleging that the third instalment of rent
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- became due and owing on 1 December 2005 and that the defendants had failed to pay that instalment. The plaintiffs allege therefore, that an "event of default" had occurred under the terms of the lease and that in consequence of the breach the plaintiffs had suffered loss being legal costs and expenses. The plaintiffs claim the third rental instalment of $71,185 plus GST and an indemnity against all losses including legal costs and expenses incurred as a result of the defendants' alleged breach of the lease and interest.
13 In their final pleading the defendants allege that on or about 26 July 2005 John Lussick visited William Liebig and advised him that he had listed Latham Farms for sale, enquiring as to whether the lease then current could be terminated earlier than provided. The defendants allege that those two reached an oral agreement on or about 17 October 2005 to prematurely terminate the lease on or about 1 January 2006. The defendants allege that it was an express term of that agreement that the defendants would "put the arrangement in writing and send it to the fourth named plaintiff". The defendants allege that it was an implied term of the agreement that they would be relieved of the obligation to pay the third instalment of rent due under the lease of 13 April 2005. The oral agreement, say the defendants, is the reason why they did not pay the third rental instalment and why it was not due and payable.
14 In response to the defendants' pleading the plaintiffs replied, admitting that John Lussick and Robert Liebig met on or about 17 October 2005 and that the latter told the former that the defendants were not going to enter into a new lease of Latham Farms at the termination of the then extant lease and that John Lussick had their permission to enter the property with prospective tenants or purchasers so that they might inspect. The plaintiffs deny that there was any agreement for the early termination of the lease of 13 April 2005.
15 By way of set-off and counterclaim the defendants plead that on or about 13 April 2005 the plaintiffs acknowledged to them that the rent for each of the leases entered into in 2004 and 2005 was calculated on the entire area of arable land at Latham Farms, that portions of Latham Farms were not arable, that under the 2004 and 2005 leases the defendants were being charged for land which they were "unable to utilise", that during the term of the 2005 lease the plaintiffs would carry out a GPS survey to identify, with some precision, the land at Latham Farms which was not arable and that an adjustment should be made in favour of the defendants by way of refund for overcharging. Particularising that allegation the defendants plead that John Lussick made the acknowledgment orally to
(Page 6)
- them when they attended his home to execute the 2005 lease on or about 13 April 2005, that he made the acknowledgment on behalf of all plaintiffs and agreed with the defendants that, rather than amend the 2005 lease, he would make an adjustment to the final lease payment to take into account the overcharges following the said survey.
16 The defendants allege that they have been overcharged by the plaintiffs for the periods 1 May 2004 to 30 April 2005 and for the period 1 May 2005 to 31 December 2005.
17 In their reply the plaintiffs deny what the defendants refer to as "the acknowledgment" and plead that the two lease documents executed in 2004 and 2005, respectively, represent the entire agreement reached by the plaintiffs and the defendants as to the tenancy of Latham Farms. The plaintiffs deny the defendants' allegations as to an oral agreement or acknowledgment.
18 In their set-off and counterclaim the defendants plead that pursuant to cl 10.1 of the 2005 lease they were entitled to hold Latham Farms during the term without interruption by the plaintiffs except as provided for in the lease. They claim that in breach of that provision from about October 2005 to 31 December 2005 they were unable to utilise a residence located on Latham Farms due to the plaintiffs having changed the locks to prevent access to that residence. In consequence, say the defendants, they were obliged to make alternative arrangements for the accommodation of a farm worker and, in doing so, they incurred out-of-pocket expenses being the cost of renting alternative accommodation for their worker in the sum of $1,080. In response to that pleading the plaintiffs say that the defendants were not permitted, under the terms of the lease, without the plaintiffs' prior written consent, to use the residence and that there was no consent.
19 Finally, the defendants plead that the time of the execution of the Bill of Sale granted in 2005 John Lussick represented to them that the plaintiffs would not register that security or seek to exercise their rights under it. They plead that they agreed to grant the Bill of Sale based upon that representation and that, in breach of it, the plaintiffs did register the security. The defendants plead that in consequence of the registered Bill of Sale and correspondence passing between the plaintiffs and CBH Ltd they were not paid the sum of $71,186 plus GST and that they were unable to apply that amount to the reduction of their overdraft, leading to further interest being incurred. The defendants' counterclaim a sum to be
(Page 7)
- determined by way of reimbursement of interest paid by the defendants to Landmark Operations Ltd from 23 December 2006.
20 In response, the plaintiffs admit that the Bill of Sale was registered and deny that the representations alleged to have been made were made. The defendants' claim in that regard is denied.
21 The plaintiffs' claim against the defendants is based on the terms of the 2005 lease. The defendants' claims against the plaintiffs are based upon an alleged breach of that lease and agreements, acknowledgements and representations said to have been either made or given orally at meetings between John Lussick and either both defendants or Robert Liebig.
22 With minor variations the 2004 and 2005 leases are in almost identical terms. In each case cl 16.1 provides:
"(a) This lease supersedes all previous agreements in respect of its subject matter and embodies the entire agreement between the parties.
(b) The lessee acknowledges that no representations or warranties in connection with the leasing of the premises have been made by the lessor or by anyone else on the lessor's behalf."
23 The plaintiffs rely upon that clause and the parole evidence rule. That rule applies where the parties have recorded the terms of their contract in a document to exclude the use of evidence of extrinsic terms which "subtract from, add to, vary or contradict the language of a written instrument". (Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 347 per Mason J). The rationale of the rule lies in the desirability of preserving finality in written instruments intended to be final. According to "Cheshire & Fifoot's Law of Contract", 8th Australian edition, by Seddon and Ellinghaus, the parole evidence rule is best understood as conferring a discretion on a court to exclude evidence of extrinsic terms which are patently at variance with that of an obviously complete and unequivocal record of the parties' contract, without requiring the rejection of evidence of manifest substance and relevance. (Page 380).
24 The parole evidence rule has particular relevance in this case in relation to the defendants' claim that their agreement as to the rent to be paid pursuant to both the 2004 and 2005 leases was subject to a precise
(Page 8)
- determination of the amount of arable land at Latham Farms and that, upon that determination, there would be a reckoning based on the rental formula of $15 per arable acre. There would then be an adjustment to the instalment or instalments yet to be paid to reflect any degree of undercharging or overcharging in the case of instalments already paid.
25 So far as the premature termination of the 2005 lease was concerned counsel for the plaintiffs accepted that the parties might at any time agree to a premature termination of the lease. Counsel for the plaintiffs submits that I should find, on the evidence, that there was no such agreement. Whether there was will require an examination of the evidence relating to it.
26 The evidence in this matter was in two forms. With the exception of an expert witness, the witnesses called by the parties presented the substance of their evidence-in-chief in the form of a statement prepared in advance to which, in evidence in chief, each referred and confirmed with, in the case of some witnesses, certain amendments being made to the statement. Cross-examination and re-examination was viva voce. The various witness statements became exhibits.
27 On the subject of the alleged agreement to prematurely terminate the 2005 lease Robert Liebig said that on 26 July 2005 John Lussick telephoned him and asked that they meet because he wanted to list Latham Farms for sale. In consequence, that afternoon, they met at Robert Liebig's homestead at Ellendale. There, John Lussick told him that he would be discussing the sale of Latham Farms with Elders Ltd on the following day and enquired as to whether Robert Liebig would have any problem with vacating the property by January or February of 2006. Robert Liebig says that he responded by indicating that he and his wife would be happy to do so provided that they were not obliged to pay rent following vacation.
28 Robert Liebig said that both he and his wife spoke with John Lussick on three or more occasions between 7 August 2005 and 17 October 2005 about their own cash flow problems and that John Lussick was tolerant of those difficulties. They met again at the homestead at Ellendale on or about 17 October 2005 and discussed the outstanding instalment of rent due in accordance with the invoice rendered by the plaintiffs to the defendants on 1 August 2005. Following that, said Robert Liebig, there was a discussion about the possibility of the defendants giving up possession of Latham Farms by 31 December 2005 to give the plaintiffs the opportunity to either lease or sell the property. In his
(Page 9)
- evidence-in-chief Robert Lussick made no reference to the precise terms of the alleged discussion but said that, following the meeting on 17 October 2005, Brenda Liebig wrote a letter to John Lussick confirming "the agreement that we had reached whereby we would vacate the property by 31 December 2005." That letter was sent by facsimile transmission on 1 November 2005. The substance of the letter was as follows:
"This is to confirm our recent discussion that we will not be continuing to lease you (sic) property next year. We will move off of the property by 1st January 2006, so you have the opportunity to either lease to someone else or sell at you (sic) convenience."
30 In cross-examination Robert Liebig said that the meeting on 17 October 2005 was the first time that he had ever discussed with John Lussick the prospect of moving off Latham Farms prematurely.
31 Brenda Liebig, in her evidence-in-chief said:
"The only thing that I remember is that Lussick came to our farm towards the end of the second lease. We sat down in our kitchen and Lussick told us his wife was diagnosed with cancer and she didn't have long to live. He said that he couldn't stay long because he had to take her to an appointment. He asked if we could pay the outstanding invoice, which we did. Rob asked Lussick if it was okay if we left the property early so it gave Lussick an opportunity to release it or sell it. Lussick said that wouldn't be a problem. He told us to put it in writing and fax it to him. We were paying three payments under this lease. My understanding was that if we got off the property by January then we wouldn't have to make the last payment under the lease because we shouldn't have to make a payment under a lease when we don't have use of the land. A few days later I drafted the letter that Lussick requested. I faxed it the same day. Normally I marked a fax as sent when I've sent it – with the
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- time marked as well. We moved out some time in early January, I can't remember exactly when."
32 Brenda Liebig referred to her diaries, of which there were two, a personal diary with 2 days to each page into which entries were made each evening and an office diary with 1 day for each page into which entries were made immediately following telephone calls or to mark appointments. Pages relevant to the subject matter of the trial were tendered at trial. There is no entry in the office diary pertaining to the meeting on 17 October 2005. Brenda Liebig's entry in her personal diary on that day is as follows:
"James into town. Robert to Dalwallinu for parts. Josh & John picked up wool – Chapmans. Pressed wool – buyer from Spearwood. John Lussick called in – wife has cancer – paid him cheque for lease. Blokes working on comb front. Into town to pick up James. Rang Leslie and mum."
- No mention is made in that contemporaneous note of the alleged agreement reached on that day as to the premature termination of the 2005 lease.
33 John Lussick, in evidence-in-chief, said that in October 2005 his wife was diagnosed with cancer. By 17 October 2005 the second rental instalment under the 2005 lease had not been paid. On that day he went to the Liebig homestead at Ellendale. It was, he said, the only time that he could recall going to the homestead. He told them, he said, that he had come to collect the rent which was well and truly overdue. He told them about his wife's diagnosis, that she did not have long to live, that he wanted to spend as much time as he could with her and that he did not want to be pursuing unpaid rent. John Lussick said:
"Mr Liebig said to Mrs Liebig, in effect, give the bastard a cheque. Mrs Liebig wrote out a cheque in the amount of the second rental instalment. Mr Liebig said, in effect, he had had a gutful of the property and he would not be re-leasing it. He said, in effect, that it was too far away from their home farm. He may have said, in effect, that I could bring people onto the property if I wanted to sell or re-lease it but I am not positive of this. I deny that any agreement was ever reached with Mr and Mrs Liebig that the term of the lease would be reduced so that it ended on 31 December 2005 or that Mr and Mrs Liebig would not have to pay rent after 31 December 2005."
(Page 11)
- He said further that he did receive a facsimile from Robert and Brenda Liebig on about 1 November 2005 which, he said, recorded his understanding of the meeting of 17 October 2005 to the effect that the Liebigs would not be renewing the lease in the following year. Further, John Lussick said that in about mid December 2005 he telephoned Robert Liebig again to ask for the unpaid rent, being the third instalment due under the 2005 lease. Robert Liebig told him that they would be leaving and would not pay further rent. John Lussick said that he replied that if they did not he would take action to recover the third instalment. According to John Lussick, Robert Liebig said, in effect:
"Alright we will pay the rent but you and your men keep off the property and get all your shit off it and that is your machinery and that's all your machinery is, shit. That was the end of the telephone conversation."
35 In cross-examination John Lussick was asked whether he sent a tax invoice to the Liebigs for the third instalment under the 2005 lease. He replied:
"I would almost be positive that it was sent because I had been phoning Mr Liebig for money all along and I can't see myself not doing it."
36 Counsel for the defendants put to John Lussick that it was possible that his bookkeeper prepared the original of that tax invoice and gave it to him to send but that it was not sent. He replied:
"I'd be very surprised if that happened because it was an ongoing battle between the Liebigs and myself to try and get them to pay their account."
37 In cross-examination John Lussick denied that on 26 July 2005 he had telephoned Robert Liebig to discuss the listing of Latham Farms for sale. He had no recollection of that conversation. He did confirm that on 17 October 2005 his wife had been diagnosed with cancer and that, at that stage, there was a delay on the part of the Liebigs in payment of the second instalment. He confirmed that he was paid the cheque for that second instalment on that day. He also confirmed that the Liebigs told him on that day that they would definitely not be entering into a further
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- lease of the premises at the expiry of the 2005 lease. He was asked by counsel for the defendants whether there was discussion about the early termination of the lease as at 1 January 2006. He replied:
"No, there was not. There was no discussion of that happening whatsoever and that is very, very wrong to say that. He did say to me that he had had a gutful of travelling the long distance from his farm down to my farm and they would not be renewing that lease again."
"There's no way in the world I'm going to turn my back on that sort of money."
- When referred to the letter which he confirmed receiving by facsimile transmission on or about 1 November 2005, he confirmed that he had been told by the Liebigs that they would not be entering into a further lease of the property in 2006. John Lussick asserted in cross-examination that the Liebigs did not leave Latham Farms on 1 January 2006, commenting that they were still harvesting long after that date. In re-examination he confirmed that in the area of Latham Farms wheat growers often harvest into January.
39 Clearly there is a gulf between the evidence of John Lussick and that of the Liebigs in relation to the content of the discussion had between them at Ellendale homestead. There can be no doubt, in my view, that what motivated the visit by John Lussick to the Liebig property on that day was the fact that his wife had been diagnosed with cancer and, it seems, did not have long to live and that he wanted payment of the second instalment under the 2005 lease without further ado because of his wife's diagnosis. Robert Liebig confirms that the conversation was first about the outstanding rent. Brenda Liebig said that her husband asked John Lussick if it was "okay" for them to leave the property so that John Lussick might have an opportunity to lease it again or sell it. She said, in evidence-in-chief, that John Lussick did not have a problem with that. She made no mention of any discussion as to the early termination of the lease or payment of the third instalment other than to say that her understanding was that if they got off the property by January they would not have to make the last payment. Robert Liebig's evidence-in-chief was that after dealing with the outstanding rent the discussion turned to the possibility of the Liebigs giving up possession of Latham Farms by 31 December 2005 so that the plaintiffs would have an opportunity to
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- either lease to someone else or sell the property. His evidence-in-chief makes no mention of early termination of the lease or of the third and final payment.
40 Brenda Liebig's note made in her personal diary that evening recorded "John Lussick called in – wife has cancer – paid him cheque for lease." She made no mention of what would have been a significant agreement.
41 The letter of 31 October 2005 written by Brenda Liebig to John Lussick purporting to confirm the recent discussion confirms that the Liebigs "will not be continuing to lease you (sic) the property next year." Given that they had leased the property for 12 months in 2004 and for 12 months in 2005 I understand that statement to mean that they would not be entering into a further lease of the property in 2006. Her statement to the effect that the Liebigs would "move off the property by 1st January 2006, so you would have the opportunity to either lease to someone else or sell it at you (sic) convenience" does confirm an intention on the part of the Liebigs to vacate the property and relinquish possession before the expiry of the term of the lease but falls well short of evidencing or confirming an agreement for premature termination of the lease without the need for payment of the final instalment. Certainly, John Lussick's call to collect the final instalment was consistent with his stance that no such agreement had been reached.
42 The Liebigs were principally grain growers. That was the main purpose of leasing Latham Farms. Given their clear intention not to enter into a further term at the expiry of the 2005 lease, the completion of the harvest, in or about January 2006, of crops planted by them at Latham Farms would have, in all probability, substantially, if not completely, reduced the utility of Latham Farms so far as the Liebigs' farming enterprise was concerned. On all of the evidence I am not persuaded on the balance of probabilities that the discussion on 17 October 2005, following disclosure of John Lussick's wife's ill health and the handing over of a cheque for the second instalment of rental, went any further than advice by Robert and Brenda Liebig that they would not be entering into a further lease of the premises in 2006 and that they expected to vacate following the completion of harvesting in or about January 2006. I find that John Lussick did not, on behalf of the plaintiffs, enter into an agreement with the defendants to prematurely terminate the 2005 lease as at 1 January 2006 such that the third instalment of rent would not be payable by them. I find that the case brought by the plaintiff for recovery
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- of that third instalment is proven. It remains now to consider the terms of the defendants' counterclaim and set-off.
43 As earlier mentioned, at par 17 of their set-off and counterclaim, the defendants plead what is described as the "acknowledgment". That is alleged to comprise an acceptance by the parties that although the 2004 and 2005 leases each specified, with precision, the rent to be paid there was an agreement reached between the parties that during the term of the 2005 lease the plaintiffs would perform a GPS survey to identify that part of the land the subject of the lease which was not arable and that an adjustment would be made, based on that survey, which would involve a refund to the defendants of rental overpaid by them pursuant to the 2004 and 2005 leases.
44 The 2004 lease begins with a recital that the lessor owns the land and that the parties have agreed to lease the premises on the terms set out in the lease. "Land" is defined to mean the land described in Item 1 of the Schedule. Item 1 refers to the land described in cl 2.2. Clause 2.2 refers to the premises known as "Latham Farms" the subject of the lease which are said to comprise various locations in each case being the whole of the land comprised in a particular Certificate of Title, the volume and folio number of each title being specified. If follows that the land the subject of the lease was clearly defined within the lease.
45 Clause 2.3 provides that the lessee may not without the consent of the lessor use the premises for any purpose other than the permitted purpose and acknowledges that the lessee has relied on its own enquiries as to how the premises may be used and not any representation from the lessor. Clause 2.3 also provides that the lessor does not give any warranty of any kind that the premises are suitable for any purpose for which the lessee intends to use them.
46 Clause 9.3 of the 2004 lease is entitled "Farming Provisions". That clause provides that at all times during the term the lessee must:
"(a) keep the livestock in good condition and free of all diseases including external and internal parasites.
(b) manage, cultivate and work the Premises as a farm in a proper and skilful manner and according to the most approved methods and to keep all cleared parts of the premises clean and free from noxious weeds, suckers, scrub and undergrowth and generally manage the
- premises so as to keep the Premises up to its present value.
- (c) use all reasonable measures by fumigating and poisoning for exterminating and keeping the Premises free from rabbits and other noxious animals and to comply with the provisions of (1) The Vermin Act 1919, (2) The Plant Diseases Act 1924, (3) The Noxious Weeds Act 1933, (4) The Bush Fires Act 1954 and any other law of a similar kind for the time being in force in Western Australia relating to or affecting the Premises or the occupier or owner of the Premises.
(d) not fell, destroy or injure any growing or standing timber or trees on the Premises other than: (1) those required by the lessee to carry out the lessee's obligations under the lease and (2) suckers undergrowth or second growth likely to interfere with cropping and harvesting of crops grown on the Premises.
(e) adopt all reasonable and proper precautions by maintaining fire breaks on the Premises prior to the statutory date in each year during the term such work to be done to the specifications of the District Fire Officer and of the Shire to prevent the outbreak and/or spread of fires onto or from the Premises.
(f) apply superphosphate fertiliser as deemed necessary by good agricultural practice or soil test.
(g) ensure the Premises are farmed in accordance with modern farming practice, but in recognition of conservation practices."
47 Clause 16.1 of the 2004 lease provides under the heading "Entire Agreement" that the lease supersedes all previous agreements in respect of its subject matter and embodies the entire agreement between the parties and that the lessee acknowledges that no representations or warranties in connection with the leasing of the premises have been made by the lessor or by anyone else on the lessor's behalf.
48 The 2005 lease contained identical terms to those mentioned above.
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49 Robert Liebig, in his evidence-in-chief, said that in early April 2004 he was told by a Russell Macpherson that there might be a farming property available for cropping. Pursuant to arrangements made by Russell Macpherson Robert Liebig met John Lussick about a week later at a homestead on a property known as "Rocky Ridge". He says that he confirmed to John Lussick that he was interested in obtaining a year-to-year lease. He says that John Lussick told him that he would be prepared to lease farming land on the basis of $15 per arable acre. When asked how many arable acres the property comprised John Lussick told him that he was not exactly sure but that he would arrange for a survey to be undertaken and would advise Robert Liebig. He said that some three or four days later Russell Macpherson telephoned him to advise that John Lussick would be willing to lease the property "on the terms discussed at our meeting at Rocky Ridge". He says that he told Russell Macpherson that he would be prepared to do so and that Macpherson replied that John Lussick would arrange through his solicitors to draft a lease to commence on 1 May 2004 and that immediate possession would thereafter be granted.
50 Robert Liebig said that on or about 16 April 2004 when passing through Wubin he visited Russell Macpherson who told him that earlier that day he had received a facsimile from John Lussick that set out the number of arable acres on the land. He was given a copy. He says that he assumed that the information contained within the facsimile was the results of the survey spoken of by John Lussick. He subsequently read the document and calculated that the number of arable acres of the land was 14,327. In early May 2004 the Liebigs moved onto the property. At the end of May 2004 they received, in the post, a lease prepared by John Lussick's solicitors. He read the lease and noted that the rental was specified to be $213,000. He said:
"It appeared to me that that sum had clearly been calculated on the basis of Lussick's statement at our very first meeting that he wanted $15 per arable acre. In accordance with the facsimile it seemed clear to me that there were 14,327 arable acres."
51 There was a document faxed by John Lussick to Russell Macpherson dated 16 April 2004 and faxed on that day at 10.36 am. It became Exhibit 9. It comprised a facsimile transmission face sheet and four handwritten pages apparently referring to various areas on the several farms comprising Latham Farms in terms of particular acreages. On the final page is the figure 14,237 which almost corresponds with the additions carried out by Robert Liebig. He said that he had collected the
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- document from Russell Macpherson when passing through Wubin on about 16 April 2004. I infer that he could not have done so before 16 April 2004.
52 The defendants called Russell Macpherson who described himself as a farmer and stock agent of Wubin. He said, in his evidence-in-chief, that he was aware that Robert Liebig was looking for a significant property to lease in the Perenjori area and that he put Robert Liebig in contact with John Lussick in April-May 2004. Thereafter, he said, they dealt directly with each other. He said that he was present at a meeting between John Lussick and Robert Liebig at which there were general discussions regarding paddocks along with cropping issues. There was discussion concerning partially cleared blocks and whether or not they were able to be cropped. He said:
"The general agreement between Liebig and Lussick was that Liebig would eventually be able to measure how many arable acres were on the farm through the machinery that he used (namely, his seeder and sprayer). I remember Liebig saying that he could work it out and then let Lussick know. It was an amicable meeting. Lussick appeared to me to be cooperative and eager to get the property leased."
53 In viva voce evidence-in-chief Russell Macpherson referred to Exhibit 9 and confirmed that it was a facsimile transmission received by him from John Lussick. When asked as to his understanding of that document he said: "It's just probably a fairly rough, rude outline of acreages. I'm not sure if it's arable acreage or total acreage. It's just a rough idea of areas or paddocks on each farm." When asked when it was sent to him he said it would have been sent when John Lussick was considering leasing his farm and that it was probably sent to him to give him an idea of what was actually available.
54 When asked in cross-examination as to the date of the meeting at which he was present he referred to his diary and confirmed that it was 27 April 2004. Robert Liebig was present with a man called John. John Lussick was also present.
55 Brenda Liebig said in her evidence-in-chief that she remembered that a big area came up for lease in 2004 and that it had a big house where the workmen could stay overnight if needs be. She was aware that her husband had met with John Lussick and Russell Macpherson at Rocky Ridge to talk about leasing that area but, she said, she did not attend.
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56 In his evidence-in-chief John Lussick agreed that on 16 April 2004 he did send the facsimile transmission (Exhibit 9) to Russell Macpherson setting out the approximate areas of Latham Farms which he believed were suitable for cropping. He had based that information on detail provided to him by contractors and share farmers who had cropped Latham Farms as well as his own experience in cropping Latham Farms over a period in excess of 20 years. It was, he said, his own internal calculation so he could determine how much rent he wanted for the property. He sent it to Russell Macpherson, he said, for his information only and was not aware that a copy would be provided to Robert Liebig. He was not aware that a copy had been provided to Robert Liebig until after commencement of the proceedings in this Court.
57 I conclude as a matter of fact that the meeting at Rocky Ridge, at which Russell Macpherson was present, took place on 27 April 2004. Brenda Liebig recorded in her office diary that on 3 May 2004 John Lussick telephoned to ask for the Liebig's full names for the purposes of the agreement. I take that to be a reference to the 2004 lease. The 2004 lease document (Exhibit 10) bears that date at the foot of each page. I take that to be a reference to the date upon which the document was created. The 2004 lease was executed by the parties, according to the lease itself on 17 May 2004. Robert Liebig said that, on that day, he raised what he described in evidence-in-chief as "the problems with the lease". He said that John Lussick responded that he would "sort it out by survey and a deduction would be made on the second lease payment if he had been overcharged on the first lease payment". At that stage there was no second lease.
58 Robert Liebig said, in his evidence-in-chief, that as the termination of the 2004 lease was drawing near he and his wife met with John Lussick at the latter's farm on 25 March 2005 and informed him that they wanted to lease the land for a further year, enquiring as to whether John Lussick would be willing to agree to rent being paid by way of three, rather than two, instalments as in the 2004 lease.
59 In his evidence-in-chief John Lussick agreed that the Liebigs attended his home on 17 May 2004 to execute the 2004 lease. One John Rose was also present. John Rose worked for the Liebigs and wanted to put in a crop on a portion of Latham Farms during the 2004 lease. There was discussion over whether John Lussick would require a lien over that crop. Beyond asking whether Robert Liebig had taken the opportunity to have a look at the land, John Lussick denied that the topic of arable land was discussed. He denied that he was ever shown any map and that he
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- told Robert Liebig that he would have a survey completed. He denied specifically that he had told Robert Liebig at that meeting that there would be a deduction made in relation to the second lease if the Liebigs had been overcharged in the course of the first.
60 Although Brenda Liebig was said to be present for the execution of the lease, and clearly was, she had no particular recollection of that event. In evidence-in-chief she said that she left all of the business decisions as to the lease and its negotiation with her husband Robert. She confirmed that they took possession of the property before the lease was signed. She said that she probably read the lease when it was received could not remember doing so. She could not remember anything specific being mentioned about "per arable acre lease payments". She could not remember the meeting at which the documents were signed and had not made a note in her diaries.
61 On 18 May 2004 a John Thompson of Peter Lark & Co, a firm of solicitors, wrote to John Lussick confirming their meeting on that day and that the executed lease documents had been lodged for assessment of stamp duty.
62 Exhibit 18 is a tax invoice from the plaintiffs to the defendants which purports to be dated 1 May 2004 but, at the foot of the page, indicates that it was produced on a word processor on 17 May 2004. It was an invoice for the first instalment of rent being the sum of $117,452.50 due on 1 May 2004 under the terms of the lease. On 28 May 2004 Jonathon Eastoe, solicitor, wrote on behalf of the plaintiffs to the defendants noting that the first instalment of rent due on 1 May 2004 had not been paid and demanding payment. Payment was made on 31 May 2004 by cheque drawn by the defendants.
63 John Lussick and Robert Liebig give different accounts as to the negotiations leading up to the execution of the 2004 lease. Clearly, they met first to discuss whether and on what terms the property might be leased and, second, to execute the lease document prepared by John Lussick's solicitors. It seems clear that the second meeting was on or about 17 May 2004. I have already concluded that the first meeting took place on 27 April 2004. Clearly, the facsimile transmission by John Lussick to Russell Macpherson on 16 April 2004 preceded the first meeting and yet Robert Liebig said that, having been given that document by Russell Macpherson on or after 16 April 2004, he assumed that the information contained in it was the result of the survey spoken of by John Lussick. Clearly, it could not have been as, according to my
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- findings, that they had not met prior to 16 April 2004. That is in accord with Russell Macpherson's evidence that the document was sent to him when John Lussick was considering leasing his farm and was sent, in all probability, to give Russell Macpherson some idea of what land was actually available.
64 There can be no doubt that John Lussick intended that the rental for the 2004 lease would be calculated on the basis of $15 per arable acre. The figure 14,237 does appear on the last page of the facsimile transmission of 16 April 2004. 14,237 acres at $15 per acre equates to an annual rental of $213,555 which was the rental, without GST, to be paid by two instalments in the 2004 lease. Robert Liebig said that he read the lease and discovered two errors. He made a change to cl 4.2 and to cl 3 of the schedule. Those changes were accepted and initialled by the signatories.
65 Both the 2004 and 2005 leases contain, as already mentioned, an "entire agreement" clause. Of such clauses the authors of Cheshire and Fifoot's Law of Contract (op cit) at [10.7] asked:
"Does such a clause (often called a merger clause) conclusively establish that the document is a final and complete record of the contract, so that evidence of extrinsic terms is definitely excluded? If a document which is ostensibly complete must be accepted as such …, this conclusion should follow a fortiori from an express statement to that effect. Moreover, the rule that a collateral contract must be consistent with the main contract appears to preclude evidence of such a contract in the face of a merger clause."
66 In Johnson Matthey Ltd v A C Rochester Overseas Corp (1990) 23 NSWLR 190 McClelland J (at 196) expressed the view that entire agreement clauses were effective to exclude an estoppel by convention:
"The effect of any particular clause will of course depend on its own terms and context, but in general it may be said that except in the case of fraud, and subject to any statutory provision, an 'entire contract' clause will bind the parties in accordance with its terms, properly construed. Such a clause itself gives rise to an estoppel by convention which excludes any antecedent estoppel which might otherwise have had effect."
67 That passage was endorsed by Miles CJ in Skywest Aviation Pty Ltd v Commonwealth of Australia (1995) 126 FLR 61, by Bryson J in
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- Australian Co-operative Foods Ltd v Norco Co-operative Ltd (1999) 46 NSWLR 267 and Young CJ in C G Mal Pty Ltd v Sanyo Office Machines Pty Ltd [2001] NSWSC 445.
68 Clause 16.1 of the 2004 lease provides that it "supersedes all previous agreements in respect of its subject matter and embodies the entire agreement between the parties" and further includes an acknowledgement by the lessee that "no representations or warranties in connection with the leasing of the premises have been made by the lessor or by anyone else on the lessor's behalf".
69 Both the 2004 and 2005 leases stipulate precisely the rent to be paid being in each case, $213,555 plus GST. Very clearly in his evidence-in-chief, Robert Liebig contends that there was, prior to the execution of the lease, an agreement reached between he and John Lussick at the meeting at the homestead at "Rocky Ridge" that the basis of the rental to be charged would be $15 per arable acre and that in order to determine the precise rental to be paid John Lussick would undertake a survey to provide the precise number of arable acres being leased. His understanding was that John Lussick had complied with the agreement by undertaking a survey and providing the results in the form of the facsimile transmission handed by Russell Macpherson to Robert Liebig. I have already concluded, as a matter of fact, that receipt of that document by Robert Liebig preceded the meeting at Rocky Ridge. In any event, it does seem to me that what lies behind the defendants' pleaded acknowledgement is a contention that John Lussick misrepresented the number of arable acres being leased to the defendants and that under the terms of the 2004 lease the defendants were being charged for portions of land that they were unable to utilise by reason of those portions not being arable.
70 I conclude that cl 16.1 of the 2004 lease prevents the defendants from now relying on any such misrepresentation. Further, to the extent that it might be said that the parties entered into a collateral contract to the effect that a survey would be undertaken to determine the final rental to be charged, the evidence does not support the contention and, in any event, if there were such a collateral contract it would be quite inconsistent with the terms of the lease executed on 17 May 2004 and evidence of it should be, in the light of the terms of cl 16.1, excluded. I do conclude, having considered all of the evidence relating to the negotiation of the 2004 lease that the Liebigs were not only anxious to obtain further land for cropping but were anxious to get their plant onto the land so that seeding could take place. They were in possession of the subject land well before execution
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- of the documents on 17 May 2004. Robert Liebig clearly read carefully the lease before it was executed.
71 The alleged acknowledgement is based upon a meeting said to have taken place at John Lussick's farm on 25 March 2005. Both Robert Liebig and Brenda Liebig attended. They informed John Lussick that they were seeking a further lease of one year but would prefer to pay by three equal instalments rather than two. Robert Liebig said that he raised the matter of arable acres and that John Lussick told him that the third rental payment under the 2005 lease would be adjusted to take into account any overpayments made during the 2004 lease and by way of the first two payments of the 2005 lease. Robert Liebig said that in April 2005 he received a copy of the new lease and a bill of sale and that on 13 April 2005 he and his wife executed the bill of sale. The 2005 lease is dated 13 April 2005.
72 Brenda Liebig recorded in her personal diary that on 25 March 2005 she and her husband travelled to Miling to see John and Daphne Lussick. In her evidence-in-chief she said that she recalled a meeting at John Lussick's farm and did so because there was, on that occasion, a snake on the carpet in John Lussick's office. She said that, in that office, her husband queried John Lussick about the "arable acre payments". She said that John Lussick responded that it would be sorted out and the dollar difference would be taken off at the end of the second lease.
73 In his evidence-in-chief John Lussick agreed that he met with Robert and Brenda Liebig at his farm on 25 March 2005. John Lussick said that Robert Liebig raised the issue of acres cropped. John Lussick pointed out that the Liebigs had not cropped the best 1000 acres. When asked where that was John Lussick indicated that it was where the Liebigs were running sheep. Specifically, John Lussick denied that he told Robert Liebig that there would be any adjustment, for any reason, in relation to the rent payable under the two leases.
74 The 2005 lease, as with the 2004 lease, stipulated in the schedule that the rent for the entire period of the lease would be $213,555 plus GST. The 2005 lease contained the same "entire agreement" clause as in the 2004 lease.
75 Paragraph 18 of the defendants' further amended defence, set-off and counterclaim asserts:
"During the term of the 2004 lease and the lease the defendants were unable to utilise certain portions of the land the subject of
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- the 2004 lease and the lease and as a consequence the defendants have been overcharged under the terms of the 2004 lease and the lease for the periods 1st May 2004 to 30th April 2005, 1st May 2005 to 31st August 2005 and 1st September 2005 to 31st December 2005 (the 'overcharges')."
76 In cross-examination Robert Liebig accepted that there was no reference in either lease document to the phrase "arable acres" or any like phrase.
77 By the time of the meeting on 25 March 2005 the Liebigs had harvested a crop and run stock on the leased land. They were keen to lease the land for a further 12 months for the principal purpose of further cropping although, no doubt, parts of the land would have been available for pasturing stock. Once again the lease stipulated, with precision, the rental to be paid. It was open to the parties, if there was the agreement as to adjustment of rental, as alleged by the defendants prior to the execution of the 2005 lease, to embody that agreement within the lease document so that it reflected precisely the terms of their agreement. It certainly did not. Again, the document made no reference to arable acres or to any basis for adjustment of any of the three instalments payable. I hold that the effect of cl 16.1 of the 2005 lease is such as to exclude any contention of a collateral contract, representation or warranty to the effect that the rent to be paid during the 2005 lease was not as stipulated in the schedule but rather was subject to adjustment based, presumably, on the further undertaking of a survey to be conducted by the lessors to determine the precise amount of arable land at the leased premises. I conclude, to the contrary, that there was no such agreement, in any event. I have regard again to the fact that on 25 March 2005 the defendants were anxious to secure a further lease so that they might begin seeding at the leased premises with the onset of the first winter rains.
78 In conclusion, I am not satisfied with respect to either the 2004 or the 2005 lease that there was any concluded agreement or specific representation given by John Lussick beyond a general discussion at the meetings held on 27 April 2004 and 25 March 2005 as to paddocks, cropping and stock. The defendants' set-off and counterclaim, so far as it relates to the alleged overcharging of rental for the 2004 and 2005 leases is dismissed.
79 The defendants' set-off and counterclaim includes a claim based on the covenant for quiet enjoyment in the 2005 lease. Clause 10.1 of that lease provides that if the lessees comply with their obligations under the
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- lease, they may hold the premises during the term without interruption by the lessors except as provided in the lease. By par 22 of the further amended defence, set-off and counterclaim the defendants allege that, in breach of that clause, from in or about October 2005 to 31 December 2005 they were unable to utilise a residence located on the property the subject of the lease due to the plaintiffs changing the locks. In consequence of the alleged breach the defendants plead that they were required to make alternative arrangements for the accommodation of a farm worker engaged to work at the leased property. The defendants claim $1,080 by way of out-of-pocket expenses for the accommodation of one Colin Williams.
80 In their re-amended reply and defence to set-off and counterclaim the plaintiffs assert that the defendants were not permitted, without the plaintiffs' prior written consent, to use the residence as a residence and that no written consent had been given by the plaintiffs to do so.
81 The permitted use of the leased property was "mixed farming". The lease makes no reference to a residence. The lease recites that the parties had agreed to lease the premises. The premises mean the land and the lessors' property. The latter means all the plant and equipment, fixtures and fittings in or fixed to the premises other than the lessee's property. The lease does not purport to exclude improvements to the premises in the form of buildings, sheds or houses.
82 In evidence-in-chief Robert Liebig said:
"The day before we first moved into the property we were given keys to all of the premises/buildings on the property so that our workmen could live there. In or about May 2005 we found that all the locks had been changed. I rang Lussick and asked him why this had happened and he said that the workmen were messy. We ended up moving the workmen into a house of our own on Ellendale Farm."
83 In evidence-in-chief John Lussick denied that the Liebigs were ever given permission, in writing or otherwise, to use any of the living quarters on Latham Farms for their workmen. He said that they were given a key to the living quarters as a courtesy so that they could use the telephone there and in case of emergencies. In April 2005, he said, he found that one of the living quarters had been "trashed" by workmen in the employ of the Liebigs. He arranged for those premises to be cleaned. He later found that they had again been treated badly and again he arranged for the
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- premises to be cleaned and for the locks to be changed. He agreed that Robert Liebig telephoned him and asked him why the locks had been changed. John Lussick said that he replied that the Liebigs were not entitled to have their workmen resident at the premises and that the locks had been changed because of the way the living quarters had been treated by workmen.
84 In cross-examination Robert Liebig agreed that he had never been given any written consent to use or occupy residential premises. I have no doubt that the residence or living quarters at Latham Farms form part of the premises subject to the lease. Clause 2.3 of the lease provided that the lessee could not, without the consent of the lessor, use the premises for any purpose other than the permitted use, that being mixed farming. By cl 2.3(b) the lessee acknowledged that they had relied on their own inquiries as to how the premises might be used and not on any representation from the lessor. The permitted use did not extend to residential use, but was confined to mixed farming. It follows that the Liebig's were not permitted, without the consent of the lessors, to use the premises for any purpose other than mixed farming. They would require, therefore, permission to use the premises for residential purposes.
85 In cross-examination Robert Liebig was asked whether John Lussick had ever given his written consent to the Liebigs' workmen residing at the property. He agreed that he had not. When asked whether John Lussick had ever said words to him to the effect that his workmen could use any premises as a residence, he replied, "Not to me exactly, no". The matter was taken no further in re-examination.
86 Under cross-examination John Lussick agreed that he told Robert Liebig that he could use the premises for residential purposes. He said:
"The Liebigs could use it, yes, if they wished, because it's a usual thing that if a farmer has men and that he doesn't usually camp down with the men, they usually have somewhere else to sleep."
87 When asked whether that would have been taken to mean that those working for the Liebigs could also reside at the premises he said:
"Well, it's possible. I'm not going to argue about that because I don't think I've got an argument, you know. When you do those sort of things you do it and hope that it'll be looked after properly, that's all."
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88 It does seem to me that John Lussick gave his consent on behalf of the plaintiffs to the use of premises at Latham Farms for residential purposes and that those premises were used by Robert and Brenda Liebig to house their workmen for a period during the 2005 lease. The consent given by John Lussick was to a variation to the permitted use of the premises. It seems that he, in effect, withdrew that consent as a result of the residential quarters having to be cleaned twice following ill-treatment by workmen in the employ of the defendants. It does seem to me to be appropriate to imply, in these circumstances, a term to the effect that the consent of the lessors to a variation in the permitted use of the premises might be withdrawn for reasonable cause. John Lussick's evidence that the residential quarters were "trashed" on two occasions leading him to, at his own expense, undertake cleaning and change the locks was unchallenged. I accept that he granted permission for a variation of the use of the leased premises for the purpose of using the residential quarters and that he later withdrew that permission for reasonable cause. I do not regard those circumstances as giving rise to a breach of the covenant for quiet enjoyment which provided that the lessees should hold the premises during the term without interruption by the lessors. The defendants did hold the premises without interruption by the lessors so far as the permitted use of the premises was concerned. Given that there was consent to and subsequently, for reasonable cause, withdrawal of consent to a variation of the permitted use of the premises there was, in all of the circumstances, no breach of cl 10 of the lease.
89 The final claim by the defendants in their set-off and counterclaim relates to the bill of sale dated 4 March 2005 registered on 5 April 2005 (Exhibit 11). The defendants allege that, in agreeing to execute the bill of sale the defendants relied upon representations made prior to its preparation by John Lussick that the plaintiffs would not seek to register the bill or exercise their rights under it. By par 24(d) of the defendants further amended defence, set-off and counterclaim the defendants assert that without their consent and in contravention of an agreement made with the plaintiffs the plaintiffs registered the bill of sale and in December 2005 sought to rely upon it to require CBH Group Ltd to pay to them the sum of $71,186 plus GST, being part proceeds payable to the defendants arising from the sale of the defendants' grain to Grain Pool Pty Ltd and AWB Ltd.
90 During the term of the 2004 lease the defendants granted a bill of sale to the plaintiffs (Exhibit 5). The document recited that the plaintiffs had leased the premises to the defendants and that the parties wished to secure payment of rent under the lease by the grant of a bill of sale in the
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- terms embodied in the document. It provided for a crop lien whereby the defendants charged in favour of the plaintiffs all of the defendants estate and interest in the crop grown on the premises during the term of the lease, including the harvest. The charge was granted as security for the performance of the defendants' obligations under the lease (as varied by the bill of sale). Clause 3.3 required the defendants to do all that was necessary to assist the plaintiffs to register the bill of sale as a security with the Bills of Sale Registry. That bill of sale was executed by the parties on 13 August 2004.
91 At the time of execution of the 2005 lease the parties executed a further bill of sale dated 13 April 2005. It recited again that the plaintiffs had leased the premises to the defendants on the terms and conditions contained in the lease made on the same date. The premises comprised Latham Farms as described in the lease. Clause 2 provided for a crop lien whereby the defendants charged in favour of the plaintiffs all of the defendants estate and interest in the crop to be grown on the premises during the term of the lease, including the harvest. The charge was granted in favour of the plaintiffs to secure performance of the defendants' obligations under the lease and, in particular, to pay the rent in the sum of three instalments of $71,185 plus GST in advance. The first payment was said to be due on the commencement date, the second on 1 August 2005 and the third at the same time as payment for the crop was due to the defendants from AWB Ltd or 1 December 2005, whichever should first occur. As with the previous bill of sale the defendants were required to do all that was necessary to assist the plaintiffs to register the security with the Bills of Sale Registry.
92 In his evidence-in-chief Robert Liebig said that in about April 2005 he received a copy of the 2005 lease and a bill of sale in the post. He said that on 13 April 2005 he and his wife executed the bill of sale in the presence of Douglas Gearing at John Lussick's farm. He said that, at that meeting, John Lussick told he and his wife that the plaintiffs would not seek to register the bill of sale and that "he required us to sign the document to cover himself for the second lease". He said that he and his wife signed the bill of sale because of the undertaking that it would not be registered.
93 Brenda Lussick said, in evidence-in-chief, that she could remember John Lussick asking them to sign a crop lien and that he said that he would not use it. John Lussick said, according to her, that he would contact Robert and Brenda Liebig if he needed to "use it". Douglas Royal Gearing did indeed witness the execution of the bill of sale by the
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- defendants on 13 April 2005. In evidence-in-chief he said that he attended a meeting on 13 April 2005 at John Lussick's farm at Nadji-Mia. The meeting, he said, was attended by Robert and Brenda Liebig, by John Lussick and himself. He confirmed that during the meeting the Liebigs and John Lussick signed a lease in relation to Latham Farms and a bill of sale and that he witnessed their signatures. He said:
"My memory is that little was said during the course of the meeting. Mr and Mrs Liebig read through the documents and then signed them. I have no memory, and I am confident my memory is correct, that Mr Lussick ever said to Mr and Mrs Liebig in my presence that the bill of sale would not be registered."
"I accept that I told Mr Liebig that I wanted a crop lien over the crop Mr and Mrs Liebig intended planting during the new lease. However, I deny that I ever said to Mr Liebig during the meeting, or at any other time, that the crop lien would not be registered. A bill of sale had been executed by Mr and Mrs Liebig in relation to the crop planted during the term of the previous lease. This bill of sale was executed on 13 August 2004."
95 He also said:
"I agree that I met with Mr and Mrs Liebig at my home farm on 13 April 2005. An employee of mine, Mr Douglas Gearing, also attended the meeting. I deny that I ever told Mr and Mrs Liebig at that meeting, or at any other time, that I would not seek to register the bill of sale or that I only required Mr and Mrs Liebig to sign the document to cover myself for the second lease."
96 When it was put to John Lussick in cross-examination that he had told Robert Liebig that he would not register the 2005 bill of sale, he replied:
"I can't believe that anybody would say that. Why would you get a crop – it cost me money to get the lien, why wouldn't I register it? That's where your insurance comes from if anything goes wrong. It's no good going along with a lien that hasn't been registered."
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97 He denied that there was any such agreement.
98 In cross-examination Robert Liebig agreed that he and his wife had executed a bill of sale in favour of the plaintiffs as security for performance of the 2004 lease and that it had been registered. When asked as to whether there was any change in circumstance as between the first and the second lease in terms of the giving of security for performance, he said, in effect, that there was not. Both Robert Liebig and Brenda Liebig, in cross-examination, suggested that the undertaking not to register or use the bill of sale against them was volunteered by John Lussick without prompting by them and that he gave no reason for doing so.
99 Perusal of the 2005 bill of sale (Exhibit 11) confirms that it was executed on 13 April 2005. The document was then presented to the plaintiffs' mortgagee, Home Building Society Ltd, for its consent. On 21 April 2005 Home Building Society Ltd gave its consent to the bill of sale, acknowledging that the plaintiffs would have the right, title and interest to the crop secured to them by the bill of sale in priority to the right of Home Building Society Ltd. The document was then stamped on 22 April 2005 at a cost of $945. Shortly after it was presented and registered, on that day, under the Bills of Sale Act. The same procedure had been followed with the 2004 bill of sale. The stamp duty paid on that occasion was less by reason of the fact that the bill secured only the second instalment due under the 2004 lease, the first instalment having been paid on 31 May 2004.
100 I do not accept that the plaintiffs would have gone to the trouble and expense of having their solicitors prepare a bill of sale, of attending to its execution, of returning to their solicitors for the purpose of obtaining the mortgagee's consent and paying stamp duty on it only to leave it unregistered. I do not accept that John Lussick, at its execution on 13 April 2005, said to the defendants or either of them on that day, or at any other time, that he would not register the security or that he would not "use it". It does seem inconceivable that he would make such a concession. Neither defendant proffered any reason as to why that concession might have been made.
101 It is the case that by letter of 23 December 2005 CBH Group Ltd informed the defendants that the plaintiffs had made certain demands with respect to the final payment of $71,186 plus GST pursuant to the bill of sale. CBH Group Ltd indicated that it was unable to say whether grain delivered by the defendants to its receival points was the subject of the bill
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- of sale and that it proposed, in those circumstances, to withhold payment of the amount in dispute. The defendants claim that the amount would have been paid in reduction of their overdraft facility and that, in consequence of the withholding of those funds, they incurred interest which would not have been paid by them if the funds had been made available to them and applied in reduction of their overdraft. The defendants claim a sum to be determined by the Court by way of reimbursement of interest paid by the defendants in that regard.
102 I reiterate that the defendants' assertions as to John Lussick's concession concerning the use and/or registration of the bill of sale are not credible in all the circumstances. I hold that the defendants' set-off and counterclaim in that regard must fail. It follows from the foregoing that their set-off and counterclaim in toto must fail.
103 Returning to the plaintiffs claim against the defendants there is, pursuant to cl 11.5 of the 2005 lease, an indemnity granted by the defendants to the plaintiffs against any loss suffered or incurred by the plaintiffs arising from or in connection with an event of default. An event of default is defined to mean any of the events specified in cl 11.2. That clause provides that an event of default occurs if the rent or any other payments payable by the lessee under the lease is at any time unpaid for 14 days after becoming due, whether formally demanded or not.
104 Clause 11.7 of the 2005 lease provides that if a party fails to pay an amount payable under the lease on the due date for payment, that party is to pay interest on the unpaid amount at the higher of the default interest rate or the rate (if any) fixed or payable under any judgment in relation to or which includes that amount, from the due date, until the amount is paid in full. "Default interest rate" means, according to the definition section of the lease, the rate 4 per cent above the corporate overdraft reference rate published by the Commonwealth Bank of Australia from time to time. The published Commonwealth Bank corporate overdraft reference rates are Exhibit 2. The interest claim, according to the plaintiffs' written submissions, amounts to $15,037.50 to 16 May 2007. According to the plaintiffs' submissions interest on the amount outstanding from 17 May 2007 to the date of judgment should be calculated at 14.85 per cent per annum.
105 The plaintiffs claim a full indemnity in relation to their legal costs pursuant to cl 11.5(a)(1) and/or cl 13.1(b)(2) of the 2005 lease. Clearly, the plaintiffs are entitled to judgment on their claim against the defendants in the sum of $71,185 plus GST. I propose to ask counsel to confer and
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- agree the final calculations with respect to interest thereon. In effect, the plaintiffs claim costs on an indemnity basis. The general rule is that a successful party to a proceeding recovers his or her costs on a party/party basis. Ordinarily, indemnity costs are ordered where there has been some unreasonable or delinquent conduct on the part of the party against whom the order is made: Oshlack v Richmond River Council (1998) 193 CLR 72 at 89. The event of default complained of in this case is the failure to pay the final instalment of rent plus GST under the 2005 lease. The indemnity is with respect to any loss suffered or incurred by the plaintiffs arising from or in connection with an event of default. The plaintiffs, having made demand, sued to recover the amount unpaid under the terms of the lease and, having been successful, are entitled to party/party costs. In effect, the plaintiffs' prayer for relief seeks recovery of both party/party costs and solicitor/client costs pursuant to the terms of the alleged indemnity. I will hear counsel in that regard.
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