Haughton v Chang
[2020] SADC 94
•24 July 2020
DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
HAUGHTON v CHANG & ANOR
[2020] SADC 94
Judgment of Her Honour Judge McIntyre
24 July 2020
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS
EVIDENCE - BURDEN OF PROOF, PRESUMPTIONS, AND WEIGHT AND SUFFICIENCY OF EVIDENCE - GENERALLY - ONUS OF PROOF
DAMAGES - GENERAL PRINCIPLES - MITIGATION OF DAMAGES
This matter arises out of a commercial agreement entered between the applicant, Peter Haughton as trustee for The Peter Haughton Family Trust and the respondents, Mr Chang and Ms Kiew.
Mr Chang and Ms Kiew own commercial land at Lonsdale. Mr Haughton wished to lease that land for the purpose of “establishing and developing landfill and green waste treatment”. After some discussions, the parties signed a document prepared by Mr Haughton entitled “Fixed Term Land Lease Agreement” on 22 October 2013 (“the agreement”).
Mr Haughton instituted proceedings seeking damages saying that Mr Chang and Ms Kiew had unlawfully terminated the agreement. Mr Chang and Ms Kiew filed a defence and counter-claimed damages for breach of contract.
At trial Mr Haughton sought to challenge the jurisdiction of the court to hear this matter and to have the matter referred to the Full Court of the Supreme Court of Victoria. He made no submissions and presented no evidence in support of his claim against the defendants. His claim was dismissed. The counterclaim proceeded to trial.
Held:
Respondents to have judgment on the counterclaim in the sum of $364,988.00 inclusive of interest.
Haughton v Australia & New Zealand Banking Group Ltd [2019] SASC 198; Haughton v Australia & New Zealand Banking Group Ltd (2020) SASCFC 14; Southdale Stud Pty. Ltd v. RJR Trading Pty Ltd [2020] SASC 106; Commonwealth Bank of Australia v Haughton [2020] SASC 135, considered.
HAUGHTON v CHANG & ANOR
[2020] SADC 94
This matter arises out of a commercial agreement entered between the applicant, Peter Haughton as trustee for The Peter Haughton Family Trust and the respondents, Mr Chang and Ms Kiew (“the Changs”).
Mr Chang and Ms Kiew are husband and wife. They own commercial land at Lonsdale. Mr Haughton wished to lease that land for the purpose of “establishing and developing landfill and green waste treatment”. After some discussions, the parties signed a document prepared by Mr Haughton entitled “Fixed Term Land Lease Agreement” on 22 October 2013 (“the agreement”).
Mr Haughton instituted the within proceedings, initially in the Adelaide Magistrates’ Court, on 22 July 2015 saying that Mr Chang and Ms Kiew had unlawfully terminated the agreement. Mr Chang and Ms Kiew filed a defence and counter-claim on 31 August 2015. The proceedings were transferred to the District Court in October 2016. I dismissed the applicant’s claim on 1 June 2020.
For the reasons that follow I award the respondents Mr Chang and Ms Kiew the sum of $364,988.00 inclusive of interest in respect of their counter-claim.
Chronology and background
Mr Haughton approached the respondents in early to mid-2013 with a view to leasing their land at Liston Road, Lonsdale. Mr Haughton had an interest in the adjoining land. Mr Haughton produced the document ultimately signed by the parties entitled “Fixed Term Land Lease Agreement” (the Agreement). There are some difficulties with the agreement which I shall describe later. The parties signed the agreement on 22 October 2013. Shortly thereafter, as contemplated by the agreement, Mr Haughton paid an initial amount to the respondents, took possession of the land and commenced depositing landfill onto the Chang’s property. Subsequent payments were to be made on presentation of an invoice from the Changs to Mr Haughton.
Mr Chang and Ms Kiew say that Mr Haughton was late in paying all invoices that they rendered under the terms of the agreement. The last invoice was rendered to Mr Haughton on 15 April 2015 for $21,254.42. Mr Chang and Ms Kiew say that this invoice was due to be paid on 23 April 2015. On 7 July 2015, as the invoice remained unpaid, the Changs instructed their solicitors to terminate the agreement and to serve a notice of re-entry. The locks were changed on the premises; Mr Chang and Ms Kiew resumed possession. Mr Haughton paid the outstanding invoice on 30 July 2015. This did not resolve the matter.
The within proceedings were issued by Mr Haughton on 22 July 2015 in the Magistrates’ Court. The proceedings were transferred to the District Court on the application of Mr Haughton on 18 October 2016. The matter then had a slow progress through various interlocutory procedures including the filing of new pleadings by both parties.
The matter was listed for trial to commence on 22 May 2018. At this point Mr Haughton was legally represented but Mr Chang and Ms Kiew were not. The trial Judge was informed that the parties were engaged in negotiations and were close to a resolution. Accordingly, the trial did not proceed. Ultimately the matter did not resolve and the trial was relisted to commence on 18 October 2019.
At a directions hearing on 1 October 2019, Mr Haughton’s solicitors were given leave to withdraw. Mr Haughton was not ready to proceed and applied for an adjournment which was opposed by Mr Chang and Ms Kiew. The adjournment was granted and the trial was relisted on 1 June 2020 with 10 days set aside. A directions hearing was set for 9 December 2019. The transcript indicates that Mr Haughton appeared to be raising some form of constitutional challenge to the jurisdiction of the court the precise basis of which was unclear. Mr Haughton was advised by the court that he ought to either bring an interlocutory application or alternatively amend his pleadings to raise this issue. He was given leave to do so within 28 days. He has not issued any application nor has he amended his pleadings.
Mr Haughton did not attend the directions hearing listed on 9 December 2019. Mr Chang and Ms Kiew attended and confirmed that they had not been served with any further documents by Mr Haughton. They wished to have the matter dealt with sooner pointing to the four and a half years that they had been involved in these proceedings. The Court was unable to accommodate an earlier listing but confirmed the trial date previously set. A further directions hearing was set for 10 March 2020. Mr Haughton was advised of these matters by registered mail. Mr Haughton again did not appear at the directions hearing on 10 March 2020. The trial date was confirmed and Mr Haughton was again advised of this by registered mail.
The Claim
Mr Haughton attended on the first day of trial with a large group of people that he described as amicus curiae. Owing to the limited size of the court room, and COVID-19 social distancing requirements, it was necessary for a number of these to sit outside. This caused some contention but ultimately the matter commenced. It did not appear that Mr Haughton was hampered in his submissions by limiting the number of supporters in court.
At the outset, Mr Haughton sought to challenge the jurisdiction of the Court to hear his action. He did not explain why he had not raised this by way of application or amendment of his pleadings. When pressed he said that he did not intend to address or call any evidence concerning the substantive issues raised in his pleadings against the Changs. It was pointed out to Mr Haughton that he had issued the proceedings against Mr Chang and Ms Kiew; he had invoked the jurisdiction of the Court. Mr Haughton disputed this saying “The jurisdiction is fraudulent and I found out after it was invoked by my lawyers”.[1]There was considerably more in this vein. I attempted to have Mr Haughton articulate what his application was with limited success. The following passage of transcript illustrates the difficulty:[2]
[1] T16.
[2] T19-21.
HER HONOUR: Mr Haughton, you brought these proceedings.
MR HAUGHTON: Yeah, but -
HER HONOUR: You sued Mr Chang…
MR HAUGHTON: Can you let me please finish. You keep cutting me off and we could have been past this way by now and you'll actually work out what's going on.
Now, after I paid that 180,000 of bringing all these claims to court on and on and on for - wrecking my life, wrecking everybody's life, what do I find? The Crown's been removed without a referendum and the Australia Acts are invalid, and I've had a really good look at it and no barrister anywhere has been able to challenge it, no-one, because no-one has tested - contested the Australia Act and the State's Request Act. You know, omitted five referendums. So, my issue is that - okay, you tell me I'm wrong because you need to tell me I'm wrong otherwise this court has taken my money and led me along all this time for five years for me to find out that you omitted five referendums in 1995 before even the State - the Australia Act came out.
Now, the Governor was removed from Queensland and Western Australia. I know the case inside out, upside down. I can't be - I wish I could be beaten but I can't because it's fact and you won't get around it. I'd love to be able to run the case so you can actually see what's going on because the way I see today, it's an opportunity for you to do something great and really great because Australia's the best country in the world but it's been run over by idiots in - and the artful ... criminals. We have no referendum for the State's Request Act, Queensland and, in particular, those two States. So, if the Australia Act is a request to create conformity within the status of the States, if the doubling ... referendum in Queensland and Western Australia has been omitted and the people there haven't been told, and s.128 of the constitution has been omitted as well, but even if you run the Australia Act at s.106, then you still need to comply with the State's Request Acts within its constitution because removing the Governor, the signet - these people are running around with a Crown on their thing and it's not valid. That's how big the hoodwink is.
So, can I come to this court and accept money - I believe in law. I want to practice law and I want the law to operate the way it should be, but it doesn't. And it's done - it's really made me sick. Now, I'm just asking if you could please - I'll run this argument. If you can, just listen to it, consider it for the people -
HER HONOUR: What is it that you're asking me to do?
MR HAUGHTON: Well, just listen to what I've got to say because it -
HER HONOUR: I'm prepared to listen to what you've got to say.
MR HAUGHTON: Yeah, thank you.
HER HONOUR: But what I want to understand is what you want me to do. What do you say I should do?
MR HAUGHTON: Well, what I would like you to do is send this case to the Full Court of the Supreme Court of Victoria, where the current 54 criminal defendants are sitting there now and concealed since 2004 all the way up to 2009. Now, one of those - I've got this here but I'd like to run that later in detail, but a brief summary of it is you've basically got the Attorney-General, Robert Hulls, concealing all those criminal charges since -
HER HONOUR: Mr Haughton, I have no jurisdiction to refer a matter to the Supreme Court of Victoria.
MR HAUGHTON: It's not what I read. I could be wrong but that's not what I read.
HER HONOUR: I have no jurisdiction and I decline to do so.
MR HAUGHTON: Well, you can't send any case to the High Court because they're all criminal defendants. So I'm just trying to work out, do we - can someone tell me, because no-one can tell me that we've got jurisdiction. Every time I run this argument, it runs into a dead end because it doesn't - the Crown's been removed and I need to know even - not only for Mr Chang's justice and his wife but mine as well because the court has dragged me here for five years and I can't get justice, can I?
Beyond Mr Haughton’s statement that he wished his case to be referred to the Full Court of the Supreme Court of Victoria, it was difficult to discern what other orders, if any, Mr Haughton was seeking.
Ms Kiew objected to Mr Haughton raising this argument saying:[3]
MS KIEW: He brought us to this court just because he did not pay the rent and all these things and all these years we been dragged by him -
MR HAUGHTON: No, not by me.
MS KIEW:- not anybody else to this court and we are elderly, we are in our 70s. Our life is just ruined for the last five years. So he has to put this correct today and finish it off and I don't want to hear all this nonsense that he's talking about which has nothing to do with this case.
MR HAUGHTON: You don't get it, do you? You have no idea. You've got no idea.
[3] T22.
Mr Chang and Ms Kiew’s position was that they wished the Court to deal with the proceedings brought by Mr Haughton, and their cross application, as set out in the pleadings.
Mr Haughton refused to address the case set out in his pleadings. At one point, he said that whilst his case was “for the loss of the lease” I could not give him “the money because if I accept money from you I will accept money from criminal jurisdiction”.[4]
[4] T24.
I asked Mr Haughton whether he intended to pursue his claim against Mr Chang and Ms Kiew given he did not consider that the Court had jurisdiction. Whilst stating Mr Chang and Ms Kiew were “old people and I want to send them home with whatever”[5], Mr Haughton declined to discontinue his action against them. As far as it was possible to discern his position, it appeared that Mr Haughton wished to continue his action against Mr Chang and Ms Kiew in order to maintain his argument that the Court lacked jurisdiction to hear it. This is not only logically inconsistent but also, arguably, an abuse of process.
[5] T27.
I adjourned for a period to allow Mr Haughton to consider whether he was going to pursue his claim against Mr Chang and Ms Kiew or whether he intended to pursue the jurisdictional argument which had not been the subject of pleadings or application despite the leave granted to him on 1 October 2019. I warned him that he ran the risk of my dismissing his action if he continued in a similar vein.
When the Court resumed, Mr Haughton was asked:[6]
HER HONOUR: Mr Haughton, we've had a break, are you going to address the claim that you have dealt with in your pleadings in relation to Mr Chang and Ms Kiew? Do you intend to address those issues in your opening and do you intend to call evidence in relation to that?
MR HAUGHTON: I can't call evidence. What I've done is I've brought the criminal charges, I'm going to serve them on the court. I'm going to get - could you get your attendant up here because one of those charges in there is your criminal charge.
[6] T29 [2-11]
Mr Haughton then purported to serve criminal proceedings on the Court by leaving a large box of documents on the bar table. He said that he would be seeing me in the Full Court of the Supreme Court of Victoria. I declined to accept service and the box of documents was made available to Mr Haughton to collect.
I note that Mr Haughton has sought to agitate the same issues on other occasions in the Supreme Court. Coincidentally, it appears that some of these proceedings relate to land adjacent to the Chang’s property.
One such example are the proceedings brought by the ANZ Bank, as mortgagee, against Mr Haughton as the registered proprietor of land at Lonsdale.[7] Another is proceedings brought by RJR Trading Pty Ltd against Southdale Stud Pty Ltd (“Southdale”) for possession of land.[8] Mr Haughton appeared as the sole director and shareholder of Southdale. Another is in proceedings brought by the Commonwealth Bank of Australia against Mr Haughton personally in respect of his obligations under an agreement dated 29 October 2007.[9] In each case the Court rejected Mr Haughton’s constitutional or jurisdictional claims as being “without merit”[10]; “manifestly misconceived”[11] and “seriously legally flawed”[12]. With respect, I agree with these conclusions.
[7] Haughton v Australia & New Zealand Banking Group Ltd [2019] SASC 198; Haughton v Australia & New Zealand Banking Group Ltd. [2020] SASCFC 14
[8] Southdale Stud Pty. Ltd v. RJR Trading Pty Ltd [2020] SASC 106
[9] Commonwealth Bank of Australia v Haughton [2020] SASC 135
[10] Haughton v Australia & New Zealand Banking Group Ltd [2019] SASC 198 at page 5
[11] Southdale op. cit. para 25
[12] Commonwealth Bank op. cit. para 88
These occasions are however different to the current proceedings as in each matter Mr Haughton was the respondent not the applicant. Further, in each of those matters Mr Haughton had at least attempted to raise the issue prior to the hearing by way of pleadings or application. In the proceedings issued by Mr Haughton against Mr Chang and Ms Kiew, the jurisdictional issue was not raised in his pleadings or by way of interlocutory application despite Mr Haughton being given the opportunity to do so. This was unfair to Mr Chang and Ms Kiew who had attended court to deal with the substantive issues arising out of their agreement with Mr Haughton as set out in the pleadings. They had no forewarning of this argument other than what was said, somewhat incoherently, by Mr Haughton at the directions hearing on 1 October 2019.
Given the position of Mr Chang and Ms Kiew, the prior trial adjournment at the request of Mr Haughton, Mr Haughton’s failure to raise the jurisdictional issue in a proper form prior to the hearing and his stated intention not to address or call any evidence concerning the substantive issues raised in his pleadings I delivered an ex tempore Ruling on 1 June 2020 in which I dismissed Mr Haughton’s claim.
The counter-claim
Mr Chang and Ms Kiew wished to pursue their counter-claim. They were unrepresented although it appears that they had legal representation at some stages of the proceedings; notably when pleadings were drafted. It quickly became apparent that they had an imperfect grasp of the way their claim could be proven. The trial was adjourned for several days to give Mr Chang and Ms Kiew the opportunity to seek legal advice as to how they might best prove their counter-claim and to consider whether they wished to call any witnesses on their case.
When the trial resumed Mr Chang and Ms Kiew did not have legal representation, nor had they spoken to a lawyer. They said that, notwithstanding this, they wished to proceed with their counter-claim. They did not wish to seek an adjournment but rather wanted the matter dealt with without further delay. Their case consisted of evidence given by Mr Chang and several documents tendered as exhibits. Despite his reservations about the Court’s jurisdiction, Mr Haughton attended the hearing of the counterclaim; he cross examined Mr Chang and gave evidence in support of his defence of the counterclaim.
Both Mr Chang and Mr Haughton’s evidence was difficult to follow. Neither appeared to have a proper appreciation of the need to provide their version of events in a sequential and logical fashion. Mr Chang however did respond coherently and cogently to questions put to him by the Court. Mr Haughton did not. Mr Haughton was moreover, somewhat argumentative particularly when being cross-examined by Mr Chang. He was prone to making unsubstantiated assertions which in some respects contradicted other assertions that he made. On balance, I preferred the evidence of Mr Chang to that of Mr Haughton where it conflicted.
Mr Chang summarised the Chang’s counter-claim as comprising:
·Interest under the terms of the agreement
·Payment for landfill deposited on their property
·Damages for loss of expected income, rent and royalties for 13 years and 3 months due to Mr Haughton’s breach of the agreement
·Cost of remediation of their property
·Damage to a fence between their property and that occupied by Mr Haughton
·Legal costs.
The terms of the agreement
The agreement was provided by Mr Haughton; it may be that he drafted it. It seems very unlikely, given its content, that it was prepared by a lawyer. The Changs signed it without obtaining legal advice. The agreement is far from clear in several respects.
Mr Chang and Ms Kiew are described as the “Lessor”; the “Lessee” is described as “Mr Peter Haughton of Haughton Family Trust”. This terminology is not however used consistently throughout the agreement.
The most pertinent clauses relate to the term of the agreement, the payment due under the agreement, termination of the agreement and what is required of the parties at the end of the agreement.
The term of the agreement is set out in paragraph III as follows:
III Lease Term
(a) The term of this Lease shall be for a period of 5 + 5 years commencing 22/10/13 and ending 22/10/18
(b) No later than three months prior to the termination/expiry of this Lease, the parties have the option to negotiate a new Lease.
(c) Option for renewal is 5 years + 5 years.
As can be seen there are several different possible interpretations of this clause. I will deal with this issue shortly in context.
The agreement provides for payment as follows:
IV(A) Term of payment – Lease fee, Outgoing and Income for Lessor
(a) The Lessee shall pay the Lessor $17,102.00 that is equivalent to half of yearly lease fee of $15,600.00, half of Land tax $13,453.00 and half of Council rate $5,151,90. The first $4,275.50 is to be paid within 14 days after signing this Agreement.
(b) In addition to the fixed rent mentioned in IV(a) above, the landowners will receive $2.33 +GST or 33% of the fees charged, whichever is higher, for every ton of Clean Fill placed on site, with a guaranteed minimum payment for clean fill only of $66,000.00 including GST per annum, equivalent to guaranteed 25,751 tons of clean dirt placed. This fee will be paid quarterly up front as per financial calendar year. Upon signing the Agreement, $16,500 will be paid within 14 days.
IV(B) Term of Payment – Other Income Streams for Lessor
(c) Land owners will receive 33% net of all other waste income streams regardless of costs of infrastructure and operation which will be borne by Lessee, they are fees for clean fill above 25,751 tons, green waste, solid waste, income of all manufactured products and by-products, recycling items and recycled by-products.
(d) Lessor shall issue invoices monthly
(e) Lessee shall pay the lessor the fixed lease fee and 33% shares of all income due within seven days after the issue of invoices
(f) The method of payment is by direct bank transfer or Bank cheque to (bank account details provided)
(g) All lease fees and income streams shall be due according to the schedule above;
(h) A penalty of 1.0% per month will be assess on late payments for each 30-day period that such payments are past due. This equates to an annual rate of approximately 12% on past due payments.
In other words, there are two types of payment contemplated by the agreement. One for the land and one for activities carried out on the land. The way these are to be calculated and paid is again open to interpretation.
Provision of Information by Mr Haughton
Mr Haughton was required to provide information to Mr Chang and Ms Kiew to assist in the calculation of payments due under the terms of the agreement. Clause VI (b)(ii) sets out his obligation as follows:
(b)(ii)Lessee shall print, provide Lessor a copy of every sale invoice, dump fee receipt, sale dockets for public for business transaction conducted at the premises, and copy of every transportation docket for clean fill from Budget Green Waste depot. Computerised cashier link will be set up for recording sales and receipts.
The Changs say that Mr Haughton did not provide the information required by this clause. Mr Chang gave evidence to that effect.
Mr Haughton said that Mr Chang was present when material was deposited on site and received signed delivery documents. It is not clear if Mr Haughton was asserting that this was sufficient to comply with the terms of the agreement. It does not appear that Mr Haughton says that he provided any other material to the Changs under the terms of the agreement although the evidence from Mr Haughton on this topic was hard to follow. An example can be found in the passage where Mr Chang put his case to Mr Haughton as follows:[13]
[13] T240, lines [10-33]
Q.I put to you that you never give me one copy of your sale invoice and never have the receipt, never have the docket of transportation and never have computerised set-up and no sale receipt.
A.If I did have a computer set-up there'd be nothing in there.
Q.Just answer this one, you did not give me one -
A.The material was stored in that -
Q.- piece in 28 months.
A.You had the signing sheets and the signing sheets came under less.
Q.Answer this one.
A.No, let me finish the answer to your question please. Now, I was supposed to pay you for 'X' amount of tonnes a month which came to $17,000, correct, or $17,800, roughly that much, but each month I was putting less than that in there, because if I had to lease for 15 or 18 months and there's only 28,000 tonnes in there, I've overpaid you for 10,000 tonnes and you tried to sue me for an extra $150,000 that's not there. It's not there. It's not there and -
OBJECTION: MR CHANG OBJECTS
MR CHANG: I object to all this now, it's irrelevant.
Having considered the whole of the evidence, I prefer the evidence of Mr Chang. I do not accept that Mr Haughton provided the information to Mr Chang and Ms Kiew as required under the terms of the agreement.
There is no dispute that all invoices rendered by Mr Chang and Ms Kiew were paid by Mr Haughton but there is dispute as to whether Mr Chang and Ms Kiew are entitled to an additional payment for the landfill deposited on their land and whether they are entitled to interest for delayed payment. I will deal with each of these issues in turn.
Payment under the Agreement for Landfill
Mr Haughton’s failure to provide the information required under the agreement left Mr Chang and Ms Kiew in the situation that they did not know how much material was deposited on their land. Mr Chang said that in those circumstances they invoiced Mr Haughton for the guaranteed minimum amount of $66,000 per annum inclusive of GST set out in paragraph IVA(b) of the agreement.
The process they adopted for the first four invoices, dated 22 October 2013, 22 January 2014, 22 April 2014 and 21 July 2014, was to divide the annual sum of $66,000 by four and deduct 10% for GST; arriving at a figure of $15,000. To this sum was added amounts for rent and water supply. GST of 10% was applied to this sub-total. The remaining three accounts of 20 October 2014, 15 January 2015 and 15 April 2015 adopted a different methodology where the guaranteed minimum payment for landfill was stipulated as $16,500 inclusive of GST. Mr Haughton appears not to have taken any issue with either methodology adopted by Mr Chang and Ms Kiew at the time of the delivery of the invoices as he paid all seven.
Mr Chang and Ms Kiew say that Mr Haughton deposited more than the minimum agreed amount of landfill; that is, more than “25,751 tons of clean dirt” per annum and that accordingly they are entitled to a further payment for the landfill. Mr Haughton appeared to be saying that he deposited considerably less landfill than the minimum amount specified in the agreement. Mr Chang and Ms Kiew bear the onus of proof in this topic but did not call any evidence capable of proving their contention that more landfill was deposited on their land than the minimum set out in the agreement. These issues of proof were raised during the trial and the deficiencies in their case pointed out to Mr Chang and Ms Kiew. Nonetheless they did not seek to rectify this by calling evidence to support their contention.
Mr Chang and Ms Kiew say that the landfill deposited on their land was not “clean dirt” as required by the agreement. Mr Haughton again disputes that this is the case. The term “clean dirt” is not defined in the agreement. Mr Chang and Ms Kiew again bear the onus of proof on this topic. Beyond tendering some black and white photographs of the landfill[14] there was no evidence tendered by the Changs in support of their contention. I am unable to assess the quality of the material deposited based upon the photographs. The Changs have not proven that the fill was not “clean dirt”.
[14] Exhibit D13
I am unable to find that Mr Haughton deposited more than 25,751 tonnes of clean dirt per annum on their land. Accordingly, I am not satisfied that the Changs are entitled to a payment beyond the agreed minimum payment.
Interest under the terms of the agreement
The first payment made by Mr Haughton was $20,775.50 on 22 October 2013 comprising the initial payments of $4,275.50 and $16,500.00 required within 14 days of signing the agreement.
The agreement is unclear as to when invoices for subsequent payments were to be rendered. In one paragraph, the agreement states invoices are to be rendered monthly[15] but in another that payment was due quarterly.[16] Mr Chang and Ms Kiew rendered invoices on a quarterly basis under the terms of the agreement as they understood it to be. I accept that this was appropriate noting that it is arguably more favourable to Mr Haughton than monthly invoices.
[15] Clause IV(B)(d)
[16] Clause IV(A)(b)
The invoices were dated 8 January 2014, 17 April 2014, 10 July 2014, 20 October 2014, 15 January 2015 and 15 April 2015. These are summarised in a table prepared by Mr Chang[17] and copies of all invoices were tendered during his evidence.[18] As indicated above, it is common ground that all invoices were paid by Mr Haughton but Mr Chang and Ms Kiew say that all were paid late.
[17] Exhibit D5
[18] Exhibit D4
Clause IVB(e) provides that payments are to be made within 7 days of the issue date of the invoice. The agreement provides for a penalty on late payments for each 30-day period “that such payments are past due”. During Mr Chang’s evidence, it became apparent that the due date on some invoices was not within 7 days. The dates on the invoices are as follows:
Date Issued
Date Due
8 January 2014
22 January 2014
17 April 2014
22 April 2014
10 July 2014
21 July 2014
20 October 2014
22 October 2014
15 January 2015
22 January 2015
15 April 2015
22 April 2015
Accordingly, in some cases the due date stated on the invoice was less than 7 days and in others more than 7 days. Mr Chang provided a table[19] in which he calculated the number of days and arrears as follows utilising what he says are the correct due dates. This provides as follows:
[19] Exhibit D5
Due Date
Date Received
Days in Arrears
16 January 2014
8 February
23
25 April 2014
22 May 2014
27
18 July 2014
26 August 2014
29
28 October 2014
4 December 2014
37
23 January 2015
18 March 2015
54
23 April 2015
30 July 2015
100
I did not understand Mr Haughton to dispute the dates upon which Mr Chang gave evidence that the invoices were rendered or paid. I accept Mr Chang’s evidence as to the date invoices were sent and the date payment was received. I also accept his calculation of the days in arrears.
I have already indicated the minimum payment claimed for landfill deposited on their land. I do not consider that Mr Chang and Ms Kiew are entitled to receive interest on GST amounts. I do consider it appropriate that they be paid interest for the delayed payment of the minimum payment together with the other payments required under the terms of the lease.
I accept Mr Chang’s evidence as to the quantum of the quarterly rent and his calculation as to entitlement for land tax and rates under the terms of the agreement. On three invoices Mr Chang and Ms Kiew also charged the amount of $108 for “Emergency Levy”. Mr Chang explained that this was the Emergency Services Levy. Mr Chang accepted that this was not payable under the terms of the agreement. Accordingly, I will not include this in the calculations. The amounts due for the quarterly rent, land tax and rates, excluding GST, are therefore as follows:
Date of Invoice
Amount
8 January 2014
$4,275.60
17 April 2014
$4,876.95
10 July 2014
$4,582.75
20 October 2014
$4,618.20
15 January 2015
$4,646.42
15 April 2015
$4,646.42
I will utilise the GST exclusive quarterly minimum payment used by the Changs in the first four invoices namely $15,000. The amount payable by way of penalty or interest is set out in paragraph IV(B)(h) reproduced above. This paragraph is somewhat less than clear. I will take a broad axe to the calculation of interest utilising approximately 12% per annum for the overdue days calculated by Mr Chang. I award Mr Chang and Ms Kiew the sum of $1800.00 inclusive of interest for late payment of invoices.
Damages for loss of expected income, rent and royalties
Mr Chang and Ms Kiew claim damages for Mr Haughton’s breach of the lease claiming for loss of expected income under the terms of the agreement for a period of 13 years and 3 months. As will be apparent from reading clause III set out above, the term of the agreement is far from clear. Is it for 5 years with an option to renew for a further 5 years (on possibly more than one occasion) or is it for 10 years with an option to renew for a further 10 years or for a further two periods of 5 years?
The parties’ pleadings reflect this lack of clarity. In the second statement of claim Mr Haughton says that the initial term of the lease was 10 years together with two rights of renewal of 5 years each. The Chang’s defences say that the lease provided an initial term of 5 years from 22/10/2013 to 22/10/2018 with two rights of renewal. Their pleadings further contend that the renewal is not automatic and that a new lease may or may not materialise because the negotiation may fail. This is at odds with their current position.
I consider that the position set out in Mr Chang and Ms Kiew’s defences is the correct interpretation of the relevant clause and that, in any event, the respondents ought not be allowed to depart from their pleadings. Accordingly, I find that the lease provided an initial term of 5 years with two rights of renewal that are not automatic.
The termination provisions in the agreement are set out in paragraph IX of the agreement. These include that either party may terminate the lease only upon certain defined default events by the other. Those events are set out in paragraph IX(b) and relevantly include a failure by the lessor to “pay the lease fee and allocated shares of income streams when due monthly”. As indicated above, the agreement is inconsistent as to whether payment is due monthly or quarterly. The Changs interpreted the agreement as requiring payment quarterly and rendered invoices accordingly. I have accepted that this was appropriate. Mr Haughton did not pay “the lease fee and allocated shares of income streams” when they were due; that is, he did not pay them within 7 days of the date of the invoice. I consider therefore that Mr Haughton was in breach of the agreement at the time of its termination by failing to pay the invoice dated 15 April 2015. I find that the Changs were entitled to terminate the agreement on 7 July 2015.
The lease is silent as to the consequences of such termination. I consider that it is appropriate to award the Changs damages for the loss of the benefit of the agreement. Mr Chang says that it has not been possible for he and Ms Kiew to relet the land owing to the state in which it was left by Mr Haughton. I accept that evidence and find that there has been no failure on the part of the Changs to mitigate their loss.
Mr Chang and Ms Kiew are entitled to damages from the date the agreement was terminated on 7 July 2015 until 22 October 2018 the date the agreement was due to expire: a period of 3 years, 3 months, 15 days. The loss of expected income is the minimum amount provided for depositing clean fill on the property less GST which I assess at $60,000 per annum and the agreed lease fee inclusive of land tax and council rates which is set out in clause IV(A)(b). I assess that at $34,204.00 per annum. The cost of water rates is not a fixed amount and varies depending upon usage I make only a minimal allowance for that. I award damages for loss of expected income under the terms of the agreement in the sum of $350,000 inclusive of interest.
Cost of remediation
Mr Chang and Ms Kiew seek the cost of remediation of their land relying on clause IX(a) which states that “upon termination of the lease the lessor must leave the land in “satisfactory and useable condition”. The Changs further say that Mr Haughton did not obtain all applicable permits or abide by all local State and Federal laws and regulations as required by the lease and that he was required at his own cost to “clean up, remove all contaminations and resettle the land according to the standard and approval of EPA and Onkaparinga City Council”.[20]
[20] Clause VI (e)(ii)
No evidence was called in relation to this topic other than Mr Chang saying that Mr Haughton did not clean up, remove all contaminations and resettle the land, nor did he leave it in a satisfactory and useable condition. The photographs tendered in evidence lend support to this contention but fall short of proving the Chang’s contention. There was no evidence relating to the asserted failure of Mr Haughton to comply with the law or to obtain necessary approvals and permits. Even if there was, it is challenging to see how this breach could sound in damages. There was further no evidence as to the cost of remediation. Accordingly, I decline to award any damages for this head of loss.
Damage to a fence
Mr Chang and Ms Kiew say that there was a fence between their property and the adjoining property owned by Southdale Stud Pty Ltd. of which Mr Haughton was the sole director and shareholder. Mr Chang described the fence as a rural fence and supplied photographs of what remains of this fence together with a map showing its location on the property.[21] Mr Chang said that the fence was fully functional at the time Mr Haughton took possession of the property. The fence was mostly removed and not in a functional condition when the Changs resumed possession of the property.
[21] Exhibit D8
There was considerable evidence on the topic of the fence from both Mr Chang and Mr Haughton. Mr Haughton also tendered photographs that he said were taken on the morning of trial.[22] These showed, in some parts, a functional fence and in others a derelict fence. Mr Haughton contended that he had put up the functional fence and that the other photographs showed the state of the fence as it was when he took over the property. The photographs taken by Mr Haughton were put to Mr Chang. Mr Chang did not agree that they were taken in the locations asserted by Mr Haughton and did not agree that they showed the relevant fence.
[22] Exhibit P14
Having considered the evidence, I prefer the evidence given by Mr Chang. Accordingly, I find that Mr Chang and Ms Kiew are entitled to damages for the reconstruction of the fence between the two properties.
Mr Chang tendered, as part of his evidence, a quotation from McNamara Fencing Contractors dated 4 June 2020.[23] The type of fence referred to in that quote is a rural style fence of the type I accept was removed by Mr Haughton. The quotation is subject to an onsite inspection and is based on a clear and level fence site. It was not clear to me why a site inspection had not taken place. The photographs tendered by Mr Chang show that the site is not level. Doing the best I can with the evidence before me I assess this head of damage at $12,000.
[23] Exhibit D10
Legal costs.
Mr Chang and Ms Kiew claimed all their legal costs associated with this action. I Indicated that this would have to be the subject of an order at the conclusion of this matter. They did, however, incur costs prior to the actions in respect of the non-payment of rent by Mr Haughton and further termination of the agreement. Mr Chang gave evidence that these costs amounted to $1,188.00 and tendered the relevant invoice.[24] I award Mr Chang and Ms Kiew that amount by way of damages.
[24] Exhibit D15.
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