Heather Delrene Campbell as Executor of John Peter Campbell (DEC'D) v Ferguson - [2005] WADC 144

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: HEATHER DELRENE CAMPBELL AS EXECUTOR OF JOHN PETER CAMPBELL (DEC'D) -v- FERGUSON [2005] WADC 144

CORAM: CRISFORD DCJ

HEARD: 27-30 JUNE & 1 JULY 2005

DELIVERED : 29 JULY 2005

FILE NO/S: CIV 1198 of 2002

BETWEEN: HEATHER DELRENE CAMPBELL AS EXECUTOR OF JOHN PETER CAMPBELL (DEC'D)
Plaintiff
AND
JAMES WILLIAM FERGUSON
Defendant

Catchwords:

Contract - Breach of lease agreement - Termination - Loss and damage

Legislation:

Rules of the Supreme Court, O 21

Result:

Plaintiff's claim allowed in part
Defendant's counterclaim allowed in part

Representation:

Counsel:

Plaintiff: Mr G T Stubbs
Defendant: In person

Solicitors:

Plaintiff: Dwyer Durack
Defendant: Not applicable

Case(s) referred to in judgment(s):

Codelfa Construction v State Rail Authority (NSW) (1982) 149 CLR 337
DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423
Stevenson v Hook (1956) 73 WN (NSW) 307

Case(s) also cited:

Bowler & Anor v Hilda Pty Ltd (in liq) & Ors (2001) 112 FCR 59
BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266
Fitzgerald v Penn (1954) 91 CLR 268
Frobisher (Second Investments) Ltd v Kiloran Trust Co Ltd [1980] 1 WLR 425
Gillespie Bros & Co v Cheney Eggar & Co [1896] 2 QB 59
Gordon v MacGregor (1909) 8 CLR 316
Hadley v Baxendale (1954) 9 Exch 341
Heimann v Commonwealth of Australia (1938) 38 SR (NSW) 691
Hilbers v Parkinson (1883) 25 Ch D 200
Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41
Hoyt's Pty Ltd v Spencer (1919) CLR 133
Knight v Barber 16 M & W 66
March v E & M H Stramere Pty Ltd (1991) 171 CLR 506
Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17
Reg Glass Pty Ltd v Rivers Locking Systems Pty Ltd (1968) 120 CLR 516
Robinson v Harman (1848) 1 Exch 850
Satiros Shipping Inc v Sameiet Solholt (The Solholt) [1983] 1 Lloyd's Rep 605
Simonius Vischer & Co v Holt & Thompson [1979] 2 NSWLR 322
Solly v Forbes & Ellerman (1820) 2 Brod & Bing 38
Throckmerton v Tracey (1560) 75 All ER 222
Universal Cargo Carriers Corp v Citati (No 2) [1958] 2 All ER 563
Wake v Harrop 1 H & C 202
Wilsher v Essex Area Health Authority [1988] 1 All ER 871

CRISFORD DCJ: Heather Delrene Campbell ("Campbell") sues James Ferguson ("Ferguson") for entitlements she says are due under a lease agreement entered into in about January 2000 between her husband John Campbell and Ferguson.
John Campbell ("the deceased") died on 16 November 2000 and on 25 January 2001 probate of his Will was granted by the Supreme Court of Western Australia to Campbell.
Campbell says the five year lease agreement ("the agreement") was unilaterally breached by Ferguson on 30 January 2001. She seeks to recover the unpaid lease payments and damages which arise as a result of a failure to comply with the terms of the agreement.
Ferguson agrees the lease was terminated in about February 2001. It is his contention that Campbell breached terms implied into the agreement. He denies that he terminated the agreement. He alleges that as a result of the premature termination of the agreement he has suffered a loss. He says that he expended moneys on the basis that the lease would continue for a five year period.
The Court is asked to decide what terms comprise the agreement, the circumstances in which the lease agreement came to an end and the consequences of the ending of the agreement.

Background

The Fraser Range Station homestead is located approximately 105 kilometres east of Norseman on the southern side of the Eyre Highway. The station extends to the northern side of the Eyre Highway and has an area of 178,672 hectares including roads and reserves.
Noondoonia Station lies to the east of Fraser Range Station. The Noondoonia homestead is approximately 100 kilometres east of the Fraser Range homestead.
The deceased was raised in this area. As a boy he established an affinity with the Fraser Range country and developed a broad knowledge of it. In 1989 the deceased purchased the pastoral lease of Fraser Range Station because of his links with the area and a desire to focus on wool production. He was married to Campbell and they had a son, Alexander Mark Campbell ("Alexander").
Ferguson commenced running Noondoonia Station on 1 January 1999. In early 1999 he asked the deceased, his next door neighbour, to manage the station on his behalf. Noondoonia Station was involved in the running of sheep for the growing of wool.
The principal business of Fraser Range Station was also the running of sheep for the growing of wool. The deceased owned a variety of tools and equipment to assist in that enterprise. These tools and equipment included a number of motorbikes and a Thruster ultralight T30 aircraft ("ultralight").
The ultralight was manufactured in 1988 and purchased by the deceased in 1995. At that stage he replaced the wing coverings, enclosed the cab with Perspex doors and installed a new engine. He also replaced the propeller and wheels. He carried out his own maintenance on the aircraft. The ultra light was used for mustering sheep, the spotting of sheep from the air whilst a muster was conducted on the ground, for the checking of water points and fences. It had sustained some minor damage from landing on rough airstrips.
During 1999 discussions began between the deceased and Ferguson about the possibility of Ferguson leasing the Fraser Range sheep and the plant and equipment on that station. The discussions were finalised in November and December 1999. A document titled "Agreement for the Lease of Stock and Plant" was prepared by Ferguson. This agreement which is stated to be between Ferguson, Fraser Range Station and John and Heather Campbell was signed by Ferguson and the deceased. Campbell did not sign it. Campbell gave evidence she was not involved in the deceased's business activities. The deceased did not ask her to sign the lease agreement. The agreement started on 1 January 2000. It is apparent that until trial Ferguson was unaware Campbell was not a signatory to the agreement.
The lease provided obvious benefits to both parties. These were touched on in the preamble to the agreement. The deceased would receive a confirmed amount of money from which creditors could be paid. Ferguson would have a flock of sheep and the plant and equipment to run a sheep enterprise without having to expend moneys to purchase those things himself. It is stated "…benefits arise from combining the parties' sheep enterprises."
The terms of the agreement were that Ferguson would lease from the deceased all livestock, plant and equipment on Fraser Range Station for a period of five years from January 2000. Ferguson was to pay to the deceased the sum of $10,000 each quarter in advance. The first payment was made in January 2000 and quarterly thereafter.
Pursuant to cl 3 of the agreement Ferguson warranted that at the termination of the lease the station would be left no worse off in respect of numbers, age and condition of any of the items leased or utilised during the lease.
In order to comply with that condition it was necessary to ascertain the sheep numbers at the beginning of the agreement. It is common ground the August 1999 shearing tally was the starting point for the numbers, age and condition of the sheep. A deduction was made for sheep sold between this shearing and the commencement of the agreement. The evidence was the total sheep number agreed as at 1 January 2000 was about 7,200, made up of wethers, ewes, lambs and rams.
By cl 4 of the agreement Ferguson was to have sole discretion about how the profits and products of the sheep enterprise were to be managed. The day to day management however was to be "consultative and jointly agreed wherever possible."
In the defendant's Amended Defence and Counterclaim filed 14 September 2004 he pleads the agreement was partly in writing, and partly oral (par 16) and was subject to implied terms (par 18). It contends the written part of the agreement is the lease agreement. The oral terms comprise discussions between the deceased and Ferguson at or about the time the lease was entered into during which it was agreed there would be a five year programme for the breeding, shearing and sale of livestock on the station. The implied terms were:
"18.(a) The deceased and his representative (including the plaintiff) would cooperate with the defendant in the operation of the livestock enterprise on the station;
(b)Neither the deceased nor his representative (including the plaintiff) would do anything that would:
(i)hinder the defendant in the operation of the station;
(ii)impede the defendant in the exercise of the rights conferred by the agreement;
(c)Any early termination of the lease would either be:
(i)by agreement; or
(ii)with reasonable notice taking into account the seasonal nature of the business.
('the implied terms')."
At trial Ferguson stated that the agreement comprised the written lease agreement and the implied terms.
In early 2000 Ferguson arranged for the deceased to manage his sheep enterprise on Fraser Range Station in addition to the management duties the deceased was undertaking on Noondoonia Station. He was paid for this.
It is clear from the evidence of both the parties and all of the witnesses that the deceased was a skilled and able pastoralist. He was an excellent manager of the stations and the workers. He had a wealth of knowledge about the pastoral industry. Under his guidance the agreement proceeded smoothly and unremarkably up to 16 November 2000. Ferguson's evidence was sheep leased or belonging to him were run on either station depending on the time of the year, the availability of feed and the phase in the sheep activities. Although the agreement did not involve a sublease of Fraser Range Station the deceased and Ferguson were able to arrive at a common understanding of what and how the equipment and stations were to be used for their mutual benefit.
The yearly schedule of activities adopted for the sheep on Fraser Range Station was continued throughout 2000.
Early in the lease agreement on 14 January 2000 the deceased and Ferguson decided to trade in two motorbikes that had been used by the deceased for mustering. The Yamaha AG200 and the Suzuki Trojan motorcycles belonging to the deceased would be traded in for two new and more suitable mustering motorbikes. Ferguson was to pay the purchase price of the two new Honda motorcycles but would receive credit for the trade‑in value of the deceased's motorcycles. The trade‑in on each of the deceased's motorcycles was $2,000.
On 30 March 2000 Ferguson purchased a number of stud quality ewes and rams from David Campbell, a cousin of the deceased. This flock was at least for some of the time on Fraser Range Station and managed by the deceased.

16 November 2000

On this day a number of the station workers were involved in the mustering of damara sheep on Fraser Range Station for their transport to Perth for sale. They utilised motorbikes in order to bring the sheep in. The deceased was using the ultralight to check on some of the water points. He came over to the site of the muster and assisted by spotting some sheep for the workers on the ground. Evidence of what he was doing was given by Robert George Campbell, the deceased's son from a previous marriage ("Robert"). He was employed by Ferguson as a station hand and was involved in the muster. He was in his early 20's. Communication was carried out by way of UHF radios on the motorbikes and in the ultralight.
During the course of this exercise the ultralight flew into the Fraser Range and John Campbell was killed.
The workers alerted Campbell. She had been at the homestead with her son Alexander who was then 16 years of age. About mid morning Campbell telephoned Ferguson. He came to the station.
This was an unexpected and tragic event. First and foremost there was the loss to Campbell of a husband and partner of 17 years. He had been the family breadwinner for over 10 years whilst Campbell was involved in home duties. There was the loss of a father to Alexander and Robert. There was the loss of a business associate and a highly esteemed station manager. The tragic death brought both emotional and financial consequences for the parties.
The evidence of Campbell and Alexander is that on the day of the accident, after appropriate consolation for their loss, Ferguson proposed that he purchase the pastoral lease for $100,000 to enable Campbell and her son to walk away.
The evidence of Alexander is that whilst Ferguson was at the homestead waiting for Campbell and the workers to return from the accident site he removed a cheque book from the homestead office.
Campbell's evidence is that from the date of husband's death she viewed Ferguson in a different light and had no trust or faith in him as a result of his broaching the subject of purchasing her interest in the station at what she considered to be amongst other things an inappropriate time. Her evidence was she remembered some things about that period of time but not others.
Ferguson agreed he had removed a cheque book at some stage and accepted it may well have been on that day. It was a cheque book for the purpose of his sheep enterprise to which the deceased had been a signatory. He removed it as there was no longer a need for it to remain at Fraser Range Station given the death of his manager.
Ferguson categorically denied using the opportunity to broach the subject of purchasing the pastoral lease from Campbell. His evidence is that he gave appropriate consolation to her and pledged his support both emotionally and financially following the death of her husband. He denied using the opportunity to exploit Campbell in her hour of need.

Agreement between 16 November 2000 and 21 January 2001

Ferguson took over the deceased's role of managing the sheep enterprise. Whilst he had farming experience he lacked the skills of station management and general knowledge in sheep husbandry activities. The dynamics of the situation had changed completely. Ferguson was based at Noondoonia Station as were the station workers he employed. His knowledge of and presence at Fraser Range Station was, understandably, much less than that of the deceased. There was a different way of operating borne of necessity.
In early December Campbell asked Ferguson to provide her with appropriate forms to enable her to make a workers' compensation claim on behalf of the deceased. This met with some disapproval by Ferguson. It was his view that the deceased was an independent contractor and not an employee. His evidence was that the deceased had particularly wanted to operate as an independent contractor and that arrangement had suited both the deceased and Ferguson. He was also concerned because any successful claim for workers' compensation would result in an increase in his premiums. He advised Campbell that he was of the view the claim would be unsuccessful as the deceased was an independent contractor. On the basis that she either did not forward a claim or was unsuccessful in any claim she made he would provide to her the sum of $20,000 in order to provide some financial assistance to her. However, he did provide forms to her on 20 December 2000. They were the incorrect forms. In due course Campbell made an application on the appropriate forms. An insurance payout was made to her.
On 4 December Ferguson made an offer to purchase the sheep the subject of the lease agreement. The following day Campbell refused this offer. The offer made to purchase the sheep by Ferguson signalled to Campbell that he was anxious to take over her pastoral interests. Ferguson explained that the offer was made in the context of Campbell expressing to him her desire not to remain on the station. He explained that his offer to purchase the sheep provided her with an option to leave if she wished.
An agricultural counsellor from an organisation known as AG Crisis was involved in offering advice and discussing options with Campbell during December. At around this time there was talk of Campbell purchasing a residence on the coast at Condingup where her sister lived. An offer had been put in on a house but this was withdrawn.
On 6 December some sheep had been mustered into the yards for the purpose of sending them to Midland for sale. Some ewes were to be sold. Campbell was critical of the manner in which Ferguson conducted this work. Her view was that different aged sheep were being mixed together and there was a comment in her diary: "Working in yards this pm. What a mess, sheep going everywhere."
Campbell explained the entry being made on the basis that sheep were going everywhere as a result of Ferguson's inability to draft them. She viewed the whole day as a circus and an embarrassing episode for Ferguson. She confirmed that she was not impressed with the manner in which the station hands employed by Ferguson worked. There is nothing to suggest they were not the same station hands who worked with the deceased. The sheep that were mustered were loaded onto a road train and sent to Perth on 11 December.
It was Campbell's view that Ferguson was selling the wrong ewes and that it had not been part of the deceased's plan for the sheep. Campbell said that the older ewes should have been sold rather than the younger ewes. When she raised this with Ferguson he said words to the effect that she did not know what she was talking about. Ferguson gave evidence that any plan had been a jointly agreed plan for the station enterprise as between himself and the deceased.
On or about 19 December Campbell had telephoned Ferguson to stress that as a result of a wind drought the windmills would not be pumping water and the sheep may need water. She gave evidence that Ferguson had indicated to her that she should go away and let him run his own business.
Ferguson accepted that he did say something along those lines to Campbell but said she had made many telephone calls at various times to him about the issue. His view was that one telephone call was enough and that it would have been attended to but as a result of Campbell's precarious emotional state at the time she had telephoned him many times. This was unnecessary. He had been alerted to the problem and was of the view he was well able to run his own business.
Over this period of time Campbell had further general criticism of both Ferguson and his workers. It appeared to include the fact they smoked in the yards and would take a break whilst she was working. The evidence of Alexander was she chose to involve herself in the work and "She'd give a suggestion on it if it could be done a better way." She was neither, at that stage, lessor of the sheep nor the manager but Ferguson said she should be accommodated and not upset. She was critical of the language used by the workers. She had a forceful way of expressing her point of view. Robert expressed it diplomatically in these terms:
"The boys and even myself had slight disagreements with Heather and very often, the boys especially, felt uncomfortable around Heather and just didn't want to be there sort of thing."
Alexander gave evidence she was not frightened to make her views plain.
The mustering motorbikes and other equipment used in the sheep enterprise were taken to Noondoonia Station. It appears that at some stage these remained there. It was noticed by Campbell.
It was clear for a number of reasons that a manager would need to be employed to replace the deceased. This subject was broached by Ferguson as early as the day of the ultralight crash. Ferguson sought suggestions from Campbell about a possible replacement. Alan Evans ("Evans") was a name she put forward and she said:
"we planned for him to move into the three bedroom cottage (on Fraser Range Station)."
Ferguson went ahead and approached Evans. He agreed to the role of manager. Arrangements were put in place for him to take over the management of the sheep enterprise from early January.

Over the Christmas period Campbell and her son Alexander left Fraser Range Station. During this period of time no caretaker was engaged to oversee Fraser Range Station. Ferguson and the station workers continued running the sheep and doing any necessary work.

January 2001

On or about 1 January 2001, Ferguson attended Fraser Range Station with a cheque for his quarterly payment in accordance with the agreement. The $10,000 was increased to $11,000 to take into account the GST. Due to Campbell's recent return from Esperance she had not anticipated being near a bank and requested Ferguson to bank the cheque into her account on her behalf. Ferguson agreed and duly banked the cheque into her account some days later.
Despite payment in advance for the next quarter an uneasy atmosphere prevailed. There were increasing difficulties in the running of the sheep enterprise. The easy relationship between Ferguson and the deceased had been replaced by a lack of trust, and an inability to communicate. Any common ground about how things were to proceed had slipped away. There was a blurring of everyone's roles in the enterprise.
On or about 4 January, the day of Ferguson's offer to purchase the sheep, Campbell had contact by telephone with the AG Crisis counsellor. She had also contacted the deceased's solicitor and the deceased's cousin David Campbell. She held concerns about the possibility of Ferguson removing the Fraser Range Station sheep to Noondoonia Station.
She made a request of Ferguson on that day to bring the "straggler" shearing forward, the stragglers being sheep that had escaped muster in the main shear six months previously but which had progressively been located and held in a paddock to await sufficient numbers to justify a further shearing. The stragglers were posing a risk to the degraded state of the yards and there was a lack of feed.
The new manager Evans arrived on 7 January 2000. The following day the house paddock was mustered in preparation for the straggler shearing.
Campbell and Alexander were absent from the property between 10 and 16 January for the purpose of taking a holiday. She again did not engage an overseer to be present on her behalf at the station during this period of time.
At some stage after 16 January but prior to 22 January the station workers were based on Fraser Range Station for the purpose of shearing the straggler sheep and crutching the flock generally. As a result of a particularly good rainfall at Fraser Range Station over the 2000/2001 season a number of sheep in a flock purchased by Ferguson from David Campbell became infected with barber's pole worm.
Such a parasite is unusual in the Nullabore region save and except after a certain set of seasonal conditions. These conditions prevailed and the presence of the barber pole worm was immediately spotted by Ferguson whose farming experience in areas of high rainfall equipped him to identify the problem. Campbell's evidence was she saw no signs of barber's pole worm in the Fraser Range sheep and was very sceptical about its presence. At trial she knew the symptoms but did not believe it was present when Ferguson did.
Alan Donald Peggs ("Peggs") an expert witness with qualifications and experience in the agricultural and pastoral industries confirmed the likely existence of a problem with barber's pole worm. His evidence was that unless sheep affected by the worm were drenched quickly then reasonably high death rates could be expected.
Ferguson was aware the sheep affected by barber's pole parasite needs to be isolated and treated by drenching. Evans attempted to do this. There was some heated exchange between Campbell and Evans.
The exact detail of that exchange was not the subject of evidence but it was quite clear that there was a difference of opinion in the need for some or all of the sheep to be drenched and the use to be made of the Fraser Range Station yards for that purpose.
There was a delay in the station hands working in the yards being able to use the holding paddocks to drench the sheep. There was a number of deaths of Ferguson's own stud flock as a result of the barber's pole worm.

22 January 2001

The difficulties in relation to the drenching of the sheep and the use to be made of the holding paddocks came to a head on 22 January 2001. Ferguson sought a meeting with Campbell and Alexander. Detail of this meeting is lacking. Ferguson gave evidence that it lasted some time – about an hour. Campbell and Alexander gave evidence it was a short meeting. What is not in contention is that during the course of the meeting Ferguson said words to the effect that in eight days he would be out of Fraser Range Station. Campbell and Alexander said they took this to be Ferguson terminating the lease. At trial Campbell said she had nothing to gain by the lease not proceeding.
At about that time Campbell held a view that Ferguson's intention was to remove all the Fraser Range Station sheep to Noondoonia. This was a concern to her. Some sheep had gone to Noondoonia at the same time others had gone to Perth for sale on 11 December 2000.
Ferguson said he was led to believe during the course of the meeting that Campbell and Alexander were wanting to continue the sheep operation on Fraser Range without his involvement. His evidence was his indication he would be off Fraser Range Station was something they welcomed. It was something they, indeed, had sought. It was his very clear impression that they wanted to take over the running and control of the livestock.
He accepted that indicating he would be out of there in eight days may well have given her an impression that it was a final decision. The import of his evidence was that whilst he did say the words it was more with a view to bringing the situation to a head and trying to work out a future way of operating without the difficulties that had been encountered since the deceased's accident. He was, in any event, going to be crutching on Noondoonia after 30 January and would be "out of there" as he stated albeit temporarily.
Unfortunately the relationship had broken down irretrievably. Ferguson, as a result of the response of Campbell and her son, was of the view that it was well nigh impossible to go on.
Despite this his men continued to work at the yards and with the sheep on Fraser Range Station.
Ferguson believed it would be impossible to continue with the lease without the cooperation of the owner of the station. However, with the deceased a rough breeding programme to cover the five years of the lease had been discussed and he was of the view there was still some prospect that, as he put it, things could be put back on the rails.
To this end he made telephone contact with the deceased's solicitor in Esperance and sent a letter to David Campbell in the hope that some meaningful discussions could take place.
On 25 January 2001 probate of the Will and Testament of the deceased was granted to Campbell who was the executor appointed under the Will.
On 30 January 2001 Campbell left Fraser Range Station in order to take Alexander to the Narrogin Agricultural College. During this time she had a friend Alan Longbottom caretake the property. He said he had been approached by her in early to mid January to come for that period of time. He said he was aware the lease agreement was being terminated and he had been told by Campbell of that when he arrived on 30 January. He had heard rumours about it in early January.
His evidence was that the men employed by Ferguson were crutching the sheep on the property. He said that Evans and the station workers were present on Fraser Range Station during the day checking water points and doing repairs. As a result of the heavy rains it was too wet for them to finish the crutching and as a result of that they left the station early to go to Noondoonia which was experiencing less rainfall. They could do their work on Noondoonia and would then return to finish the crutching at some later stage.

February 2001

Campbell returned to Fraser Range Station on 7 February 2001. Two days later she put a lock on the front gate of the property. Her evidence was that it was her practice to padlock the front gate if no‑one else was home with her. She accepted that the majority of the time the gate was unlocked and the padlock was kept in the kitchen. She gave evidence that the other station gates were locked and the keys to those gates were in the station vehicles available to the workers.
Early one morning about 11 February station workers perhaps "Dan" or "Pete" had come from Noondoonia to Fraser Range to collect some wool from the shearing shed. They arrived by motorbike and were angered by the locked gate. She said they were abusive to her. She unlocked the gate and allowed them access to the shearing shed to obtain the wool. As a result of this exchange she sent a facsimile to Evans requiring that 24 hours notice be provided of any requirement to have the gate open.
Ferguson gave evidence that as a result of being denied easy access to Fraser Range Station without first telephoning Campbell it was inconvenient. If she was not answering the telephone or just not there then there would be further delays in carrying out necessary work for the sheep enterprise. Thus, access was very difficult through the main entry points and whilst a side gate could be used trucks or other equipment would not be able to enter through that way.
Campbell's evidence was that no new locks had been placed on the front gate. It was an existing lock and keys were available to unlock it. However, in her evidence she said that she "changed locks after I got abused".

Robert and Neville Cotter another station worker employed by Ferguson had also gone to do some work on the station. This was likely to have been in February. Both gave evidence that most of the gates were locked and whilst a key was usually available at the base of the gate post it was not there at the time. It appeared to be a different lock to the earlier lock.
Due to the inability to have practical access to the station Ferguson's continuing involvement ground to a halt. His men did not thereafter return to carry out duties in relation to the sheep enterprise.

22 February 2001

This was the day of a meeting attended by David Campbell, Julie Starcevich who was the deceased's sister, Ferguson and Campbell. The evidence of the purpose was to discuss the management of the termination of the lease. Each was clear that the understanding was the lease had been terminated. However, neither in his nor her evidence indicates at whose instigation the lease was terminated. It is simply a clear understanding that the lease would not continue:
"FERGUSON: David, we had – was it your opinion that we had agreed to a termination of the lease?‑‑‑I don't think it was necessarily agreement but it looked like the inevitable.
FERGUSON: Right?‑‑‑I don't think it was necessarily stated that, you know, 'that's it, it's terminated' but it did not look good."
After some discussion Ferguson agreed that he would return to Fraser Range Station the same numbers, age and condition of sheep that had been present at the commencement of the lease. By and large items belonging to Fraser Range were agreed to be returned to Fraser Range. Some options were put forward about how to deal with the motor cycles including Campbell having the trade‑in value returned to her.
The ultralight was a difficult matter. Ferguson was of the view that because the deceased had crashed the aircraft it was not something that should be left at his feet. He accepted he was liable for any wear and tear but a complete destruction of the subject matter of the lease agreement at the lessor/owner's own hand was not something he felt was fair and equitable.
Some of the questioning of witnesses at trial by Ferguson was aimed at suggesting the deceased was mustering sheep when he met his death. He was not licensed to muster in the ultralight. Ferguson was also of the view that the deceased was an independent contractor and that this would have a bearing on his liability to replace the ultralight. This was a very delicate matter and not capable of resolution.
Ferguson wished to canvass various matters including a return to him of the advance lease payment he had made and a reimbursement to him of either money or equipment he had utilised at Fraser Range on the basis of the lease continuing for five years. It was Ferguson's understanding that Campbell would get back to him having had the opportunity of considering all issues. This did not happen.

July 2001

On 2 July 2001 Campbell commenced court proceedings to finalise matters.
After a muster conducted by Campbell, Alexander and a group of friends shearing commenced on 17 July 2001. This was the first full muster of sheep after the termination of the lease. It would provide a comparison of sheep numbers with those at the commencement of the lease.
Campbell's evidence was that the shearing was brought forward a few weeks. She needed Alexander home to help with the muster. Bringing it forward a few weeks coincided with his school holidays. However, as a result of the early muster the lambs were very small and Campbell decided against the traditional practice that the lambs be shorn in this shearing. She was prepared to re‑muster at some time in the future to ensure the lambs were shorn. In any event her view was there were very few lambs on the property at the time of the shearing. She was of the view that there were just a little over 1,000 lambs and around 4,000 ewes. This was a 25 per cent lambing which was very poor. She said breeding ewe numbers were down so lamb numbers were down.
The total sheep count was 5,972. The difference between the sheep at the commencement of the lease and the sheep at the end of the lease was 1,247. The deficit was made up of mixed sex lambs, wethers and rams. Whilst Ferguson was dissatisfied with some of the ram and wether count his main dispute was with the low number of lambs. The deficit in lambs was said to be 1,018.
John Michael Matthews ("Matthews") a shearing contractor of 40 years provided shearing services for Noondoonia and Fraser Range Stations over the relevant times. His team conducted the July 2001 shear. Campbell had instructed him not to shear the lambs. He thought there would have been 2,000 plus lambs.
His evidence was that the sheep numbers were down because the lambs were not shorn. However, he came to realise some lambs were shorn.
The shearing tally book for the 2001 season was produced in evidence. It was an unsatisfactory document in terms of assisting the Court to ascertain the lamb numbers. The tenor of Matthews' evidence confirmed the difficulty interpreting the book which by and large was compiled by his wool classer. It is clear that someone else had made notations in the book. There are deletions and the use of liquid paper. The book suggests that 416 mixed lambs were actually shorn. These were ram lambs or some larger lambs.
A further quantity of lambs were identified but not shorn. The book supports that number to be 640 lambs. The claim for lambs sets out that 115 mixed sex lambs were shorn. This comprises the 416 mixed lambs and a further 699 lambs. I had difficulty understanding how the unshorn lamb figure was made up.
Peggs gave evidence that the rainfall for the 2001 season was well above average. This would provide better nutrition and he would have expected an above average lambing. By above average lambing he meant between 60 to 70 per cent – far higher than Campbell's 25 per cent.
Ferguson said the tally book did not represent the number of lambs present on the station in July 2001. He was of the view that there may well have been over 3,000 lambs on the station at the particular time. His view was based on the fact that the previous year there had been near to 3,000 lambs and the present season was much better. He had better rams and more of them, the ewes were in better condition and it was a much better season overall. He was not satisfied that the numbers in the tally book were correct or that the lambs had been counted correctly.
He was also of the view that between shearing and selling of the property in October there were substantial losses in the livestock. He was sceptical about the quality of the muster due to the fact that an inexperienced team had been called in to carry out that task.

October 2001

On 17 October 2001 on behalf of the estate of the deceased Campbell entered into a contract for the sale of the pastoral lease over Fraser Range Station. The sale price was $700,000. This included plant and a minimum of 5,000 adult sheep and 1,000 lambs.
Between shearing and the sale of the property Campbell disposed of 493 adult sheep.

Findings of fact

The agreement

The written agreement was prepared by Ferguson after considerable discussions which continued through 1999. The agreement was deliberately kept simple. The agreement was for the lease of stock and plant. The preamble makes it clear that the parties intended to combine their sheep enterprises. It was specifically stated that the parties did not intend it to be a sub‑lease of Fraser Range Station.
By his counterclaim in par 16(d) the defendant pleads an oral term of the agreement. Even without his concession, I would not find this term to be part of the lease agreement. I accept there were such discussions. They were part of a five year plan discussed between the deceased and Ferguson in respect of long term management and not part of the agreement for the lease of the sheep or day to day management.
The written agreement did not preclude Ferguson from running the leased sheep wherever he chose. He could run the whole flock on Noondoonia if he wanted to. He could use the equipment where he wished.
The possibility that Ferguson was likely to remove the sheep he had leased from Fraser Range Station was of concern to Campbell. She saw the removal of the sheep from the station as totally de‑stocking it. She did not appear to understand how the lease could work.
It was put to her that when the station workers wanted to take the sheep from the yards to Noondoonia for drenching she said there was a court injunction preventing this removal. She had no recollection of this.
I find it likely that Campbell, due to her concern about the sheep being removed from the station, did indicate to Ferguson through his station workers that she had a court injunction preventing their removal despite the fact that, at that stage, he only sought to remove his own sheep purchased from David Campbell.
Apart from an implied term common to most like agreements that each party will do all things as are necessary to enable the other to have the benefit of the agreement I find the contract to be contained within the written terms of the lease agreement. Provision for termination was not included when it could have been.
Although the written lease agreement is the agreement, the history and background of the relationship and the conduct of the parties to the agreement is important. The surrounding facts and circumstances assist in interpreting the agreement. (Codelfa Construction v State Rail Authority (NSW) (1982) 149 CLR 337).

Termination

Peggs gave evidence that a lease of sheep is not a common arrangement. It is more common to sub‑lease a property. The agreement dealt with stock and chattels. The deceased's role as manager was not part of that agreement but it assists in showing how matters proceeded until his death.
He and Ferguson were able to carry on an enterprise for a period of 11 months without any difficulties. It is clear that the deceased was able to manage the station workers, work well with Ferguson and instil confidence in his wife about how the station was operating. Underlying this was the lease agreement. His death changed the dynamics of how the lease would work.

Neither Ferguson nor Campbell was sure or confident of the role each was forced to undertake after the deceased's accident. They do not appear to have separated the operation of the lease from the overall management role of the deceased. They did not understand how the lease could continue to operate. Although there is not one defining event it is clear that there was a breakdown in the relationship and as a result the operation of the lease ground to a halt.
In the first day or so of January 2001 both Ferguson and Campbell accepted the lease would continue. By 4 January Campbell's attitude had changed. The meeting of 22 January signalled the beginning of the end.
Campbell at trial said she took Ferguson indicating he was "out of there" to categorically signal his intention to breach the agreement, albeit in an anticipatory fashion.
Ferguson accepts he said the words but explains they were said more to bring matters to a head. He says the words reflected his movements in that he was to leave the station in eight days in any event to continue crutching work on Noondoonia. Despite his words the station workers continued to work on the station with Longbottom and continued until they were effectively thwarted by Campbell from continuing. Attempts by Ferguson to discuss matters and resolve issues were unsuccessful.
The Courts have frequently been concerned whether in a particular case one party to a contract has been released from its performance by the conduct of the other. As Street CJ and Herron J in Stevenson v Hook (1956) 73 WN (NSW) 307 at 313 said:
"The basic statement of the law on this point is contained in the judgment of Coleridge CJ in Freeth v Burr (1874) LR9CP 208. If one party by his acts and conduct has evinced (an intention no longer to be bound by the contract), then the other party may accept that as a repudiation of the contract by an anticipatory breach, and is, himself, thereafter freed from any further obligation.
A repudiation has been defined in different terms – by Lord Selbourne as an absolute refusal to perform a contract; by Lord Esher as a total refusal to perform it; by Bowen LJ in Johnstone v Milling (1886) 16 QBD 460 as a declaration of an intention not to carry out a contract when the time arrives, and by Lord Haldane in Bradley v H Newsom, Sons & Co Ltd 119 LT 239 as an intention to treat the obligation as altogether at an end. They all come to the same thing, and they all amount at any rate to this, that it must be shown that the party to the contract made quite plain his intention not to perform the contract.
. . .
The nature of the contract and the circumstances of the case are all important and the repudiation of the contract must appear clearly and without ambiguity. It is not to be lightly inferred."
I do not find that Ferguson acted in such a clear and unambiguous way. Despite Campbell and Alexander's evidence at trial I accept that as at 22 February 2001 they wanted Ferguson "out of there". Campbell purported to treat the agreement as terminated as a result of Ferguson's breach.
These views were expressed in the case of DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 where Stephen, Mason and Jacobs JJ at 434 said:
"Thus the contract in the present case was still on foot on and after 25 July 1974. Neither party had effectively rescinded. But there can be no doubt that by 5 December 1974 when these proceedings were commenced, neither party, whatever may have been their reasons, regarded the contract as being still on foot. Neither party intended that the contract should be further performed. In these circumstances the parties must be regarded as having so conducted themselves as to abandon or abrogate the contract."
On 22 January 2001 the lease was still on foot albeit functioning with difficulty. It was not impossible for it to function. I have carefully considered the meeting of 22 January 2001. I am of the view that neither party effectively rescinded the lease. However, after that day judging by their conduct neither party intended that the lease should be further performed.
Whilst for a period of time Ferguson and his men made some attempt to continue some form of operation I formed the view it was simply pending resolution of the detail of the completion or handover of the lease.
By 22 February 2001 the lease was considered over.

16 November 2000

The only evidence from anyone present at the time and place of the accident was Robert Campbell. His evidence, which I accept, was that the deceased was spotting sheep for Ferguson's musterers. Whilst Robert gave evidence his father had on occasions mustered sheep using the ultralight this was not the case on 16 November. The deceased was carrying out management duties for Ferguson on Fraser Range Station when he died. He was not operating the ultralight in his capacity as the owner/lessor but as Ferguson's manager. On that basis the terms of the lease agreement require him to return the aircraft in the same condition as at the commencement of the lease.

Sheep numbers

I accept the evidence insofar as it relates to the number of sheep missing for wethers and rams. The real question is how many lambs were on the property as at shearing in August 2001. All parties have accepted that this is the relevant time at which the numbers should be calculated.
It is necessary to say something about the credibility of the witnesses. I did not find any witness to be other than credible and doing all possible to give an account of what happened to the best of his or her ability. However, the reliability of each witness' evidence varied.
Campbell gave evidence that she did not remember everything that happened around the time of her husband's accident. The time from his accident until the end of the lease was an emotionally traumatic time for her. Her actions and reactions may not have been in character. Additionally, she was not a pastoralist. Alexander, 16 years old at the time, was closely aligned with his mother and their joint loss. Ferguson had a manner of communicating that may have given an impression not intended. Matthews the shearing contractor whose lengthy experience was uncriticised accepted that his memory was poor. The account keeping of some of the witnesses was extremely ad hoc and unhelpful. The accounts were kept by and for people who understood them and not for later interpretation by a court of law.
Ferguson left the station in February 2001. Conditions then may well have been ideal for an excellent lambing. However, he was not on the station over the crucial period of the lambing and through to shearing. He was not part of the muster or the shearing. There is no evidence to suggest that there was anyone at the station besides Campbell during that period of time to manage the Fraser Range sheep enterprise. This was not her role. Despite the fact she may have worked from time to time with her husband her knowledge and experience was clearly lacking.
David Campbell, whose evidence I found to be balanced and credible, said that in February 2001 the ewes were lambing but he questioned their ability to survive. He set out a number of factors that could affect survival rates including feed quality, condition of the ewe at the time that she actually drops her lamb, the number of predators around – foxes, eagles, dingoes.
I find there to be a number of possible reasons the potentially better than average lambing is unlikely to have eventuated. I find the plaintiff's claim proved on the balance of probabilities in this regard.

Consequences of the termination

Plaintiff's claim

Given the findings in relation to how the lease was terminated, the plaintiff's claim for unpaid lease agreements must fail. This is not the end of her claim. Clause 3 of the agreement provides "the lessee warrants that at the termination of the lease Fraser Range station is to be left no worse off in respect to numbers, age and condition of any of the items leased or utilised during the lease". The parties have acknowledged this clause is applicable.
The parties agree that the appropriate method of dealing with the issue of the motor cycles, at this stage, is to allow Campbell their trade‑in value.
As a result of my findings in relation to the events of 16 November 2000 Ferguson is to bear responsibility for the ultralight. The ultralight was never subject to an appropriate valuation. The evidence of the plaintiff was unsatisfactory in this regard. However, the ultralight did have some value and doing the best I can the value to be attributed to it will be the value as at the date of purchase, without taking into account the improvements made by the deceased. These improvements I have offset generally against wear and tear.
The evidence in relation to the value of the sheep loss was given by Peggs. Whilst there was some challenge to aspects of his evidence the value to be attributed to the sheep not returned was not. On the basis of the sheep not returned (offset with the additional ewes) he calculated a loss to Campbell of $35,944.
Peggs goes on to provide possibilities for an increase in that figure on the basis of interest costs on any income foregone from the sheep and also a cost to Campbell if she was to bring her flock up to its original number given any purchase and transport associated with that exercise. The station was sold in mid‑October. Sheep were sold in the interim and despite this there was at least 5,000 sheep and 1,000 lambs on the station.
I do not see it as appropriate to add on any additional amount to the value of the sheep not returned. There is no evidence before me apart from some speculation by Peggs that it may be appropriate to increase the amount owed by Ferguson. In the circumstances of this case I do not agree it is appropriate.
The loss to Campbell in accordance with the agreement is:
·Motor cycles  $ 4,000
·Ultralight aircraft  $ 7,500
·Sheep loss  $35,944
·Total loss suffered by the plaintiff        ______
for plant, equipment and sheep             $47,444

Counterclaim

In view of the findings I have made in relation to the lease and its termination I have not considered certain aspects of the defendant's counterclaim for loss and damage.
At no stage in the proceedings did the defendant claim for a return of the lease payments made in advance and to cover a period when the lease had effectively ceased to operate.
I am of the view that as a result of the findings such a claim would have merit. In fact it is the only claim that has merit, as I have said, given my findings of what the lease agreement is comprised.
Payment of $11,000 was made in early January to cover the first quarter of 2001. This amount included GST and it was banked into Campbell's account by Ferguson at Campbell's request.

If the pleadings had reflected such a claim it would be allowed as follows:
·     Quarterly payment   $10,000.00
(1 January 2001 to 31 March 2001)
·Currency of lease
(30 January 2001 = 30 days)  $ 3,333.00
·   Balance of lease  $ 6,667.00
((31 January to 31 March)
·   Plus return of GST  $    666.70
Total reimbursement of lease payments               $ 7,333.70
On the basis Ferguson makes an application to amend the pleadings to include a claim for the return of lease payments made in advance for a period during which the lease did not operate I would consider making orders as follows:
1.The defendant's counterclaim is allowed in the sum of $7,333.70.
2.The defendant's counterclaim otherwise be dismissed.
Pending consideration by the defendant of these reasons for judgment I will make the following orders.

Orders

1.The plaintiff's claim is allowed in the sum of $47,444.
2.The plaintiff's claim otherwise be dismissed.

I will hear the parties in relation to any further orders each may wish to seek.