Kingsford Machinery & Stix Farms Pty Ltd v Marks - [2012] SASC 65

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Civil)
KINGSFORD MACHINERY & STIX FARMS PTY LTD v MARKS
[2012] SASC 65
Judgment of The Honourable Justice Kourakis
27 April 2012
MAGISTRATES - APPEALS AND REVIEW - SOUTH AUSTRALIA - APPEAL TO SUPREME COURT
LANDLORD AND TENANT - LEASES AND TENANCY AGREEMENTS - CONSTRUCTION AND INTERPRETATION
Appeal from judgment of a magistrate – appellant (plaintiff) and respondent (defendant) made various claims and counter-claims with respect to lease agreements over agricultural land made between the parties – whether the terms of the lease were confined to the written documents – whether the lease agreement, properly construed, gave rise to various alleged obligations on the appellant and respondent – whether there was any failure to meet any alleged obligations – whether the respondent incurred loss under the first agreement as a result of the appellant’s failure to provide functioning irrigation equipment – whether any such loss was compromised by agreement – whether the respondent incurred loss under the second and third agreements as a result of the appellant’s failure to provide functioning irrigation equipment – whether the extent of loss claimed by the respondent was reasonable in the circumstances.
Held: Appeal allowed – reasons of the Magistrate inadequate – remitted to the Magistrates Court for rehearing save for those findings on the issues raised by paragraphs 5, 7 and 8 of the appellant’s (plaintiff) Statement of Claim.
Phu Hor Ong v Wu You Yang Pty Ltd (2008) 103 SASR 9, considered.

KINGSFORD MACHINERY & STIX FARMS PTY LTD v MARKS
[2012] SASC 65
Magistrates Appeal Civil:

KOURAKIS J: The appellant, Kingsford Machinery and Stix Farms Pty Ltd (Stix Farms) is the owner of rural land near Alawoona on the Loxton to Pinaroo road (the farm). Mr Tigani is the principal of Stix Farms. Stix Farms leased part of the farm, and granted associated licences to use water and irrigation equipment, to the respondent Mr Doug Marks (Mr Marks), for three onion growing seasons in 2007-8, 2008-9, 2009-10. A lease agreement was made for each of those growing seasons.
The rent for the last season was not paid in full. Stix Farms brought an action in the Magistrates Court against Mr Marks to recover the rent. Mr Marks did not dispute the non payment of the rent but he defended the action on the basis that he was not the lessee. He contended that the lessee was a trust, a contention to which I will return shortly. Mr Marks also counterclaimed against Stix Farms for breaching of the terms of each of the lease agreements by failing to provide the irrigation equipment in good working order.
Stix Farms, by its final amended claim, also sought damages for Mr Marks’ failure to return some of the irrigation equipment at the end of the third season and his failure to insure some sheds on the farm which were damaged by storm in that season. Mr Marks disputed each of the additional claims. As to the first of those claims he said that he had left all the equipment on the farm but that some of it had been taken away by third parties for whom he was not responsible. As to the second of the additional claims Mr Marks contended that the applicable lease agreement did not include any obligation to insure the sheds.
The Magistrate found against Stix Farms on the two additional claims and largely in favour of Mr Marks on his counterclaim. Stix Farms complains on this appeal that his reasons for so finding are inadequate. It will be necessary to set out the evidence in some detail in order to properly evaluate the appellant’s complaint. For now it is convenient to foretell, in summary form, the issues which arose for determination out of the pleadings and the evidence given in the Magistrates Court. They were:
1.Whether the terms of the three lease agreements were confined to those appearing in three short documents drawn by Mr Tigani or whether the agreements were partly oral and partly written.
2.The extent of Stix Farm’s obligation, on a proper construction of the written, oral, or implied terms of the lease agreements to provide and maintain the equipment during each season.
3.Whether, in each of the three seasons, there was a failure of the irrigation equipment of a kind for which Stix Farms was contractually liable.
4.Whether Mr Marks had suffered any loss by replacing one of the irrigation systems provided by Stix Farms in the first season with one of his own which was not, at that time, being put to any other use.
5.Whether any liability incurred by Stix Farms for a failure to provide irrigation equipment in accordance with the first lease agreement was compromised by an agreement whereby Stix Farms waived the GST component of the agreed rent for the second season.
6.If Stix Farms was contractually liable for failures of the irrigation equipment in the second and third seasons, whether Mr Marks incurred the cost of hiring replacement equipment from his cousin and whether, if he did so, he acted reasonably when cheaper alternatives were available.
7.Whether Mr Marks failed to maintain the irrigation equipment provided in the second season.
8.Whether on a proper construction of the written terms of the lease agreement for the last season Mr Marks was required to insure the farm sheds against storm damage.
9.The scope of Mr Marks’ obligation, if any, to ensure the security of irrigation equipment provided for his use by Stix Farms.
The Magistrate’s reasons extend to some 21, by and large, short paragraphs. They commence with a complaint that the parties had ignored his encouragement to resolve their dispute at a conciliation conference, and a prophecy fulfilling remark that he would decide the issues between them in accordance with the “relatively straightforward” view of the issues he had taken at that conference. The five ensuing paragraphs deal with some procedural issues, concerning amendments to the pleadings and a notice to admit, which are not in issue on this appeal. The next two paragraphs contain the Magistrate’s assessment, in general terms, of the credibility and reliability of the witnesses.
The remaining 10 paragraphs contain the Magistrate’s reasons for finding in favour of the defendant but there is not a single reference to the written terms of the lease agreements. Nor is there any reference to the first two issues indentified by me. There is a determination against Stix Farms on the third issue but it is made without any finding as to the nature or cause of the breakdown of the irrigation equipment or the terms of the lease agreements pursuant to which responsibility for the breakdown is allocated to Stix Farms. Nor is there any reference to a critical meeting which the parties held before the start of the third season in which the terms with respect to the provision of irrigation equipment for that season were discussed. Mr Tigani on the one hand and Mr Marks and his brother, Mr Rick Marks, provided very different accounts about the terms on which it was agreed that Stix Farms would provide equipment for the third season. No express finding is made about the terms agreed at that meeting.
In short, the reasons take more of the form of an arbitrated award than of a judicial determination of a contractual dispute. In my view the reasons are inadequate. To a large extent the form of the Magistrate’s reasons reflects the failure of counsel at trial to grapple with the precise terms of the agreement. Be that as it may, it remained the Magistrate’s responsibility to give reasons which adequately explained his judicial disposition of the controversy.
As will appear below some aspects of the controversy can be determined by me on appeal by reference to the record of the proceedings below and I will do so. However, other issues depend on an assessment of the testimony of the respective witnesses. Even though the Magistrate expressed a general preference for the evidence of Mr Marks and Mr Rick Marks where they differed from Mr Tigani’s evidence, I can have no confidence, given the inadequacy of the reasons, that when making that finding the Magistrate had turned his mind to their testimony on the particular issues which I have identified. For that reason it will be necessary to remit the greater part of the action to the Magistrates Court, constituted by a different Magistrate, for rehearing.
The Parties
There is perhaps nothing more fundamental to a contractual relationship than the identification of the parties to it, and nothing more important to the proper constitution of an action than the joinder of the parties to the controversy. However, scant attention appears to have been given to those issues in this matter.
The Magistrate found, I think, that Mr Marks was the lessee and Mr Marks has not cross appealed against that finding. The identity of the lessee is therefore not in issue on this appeal but the way in which the question was dealt with below was nonetheless unsatisfactory and calls for some comment.
By the amended defence and counterclaim, the “defendant” purported to describe itself not as Mr Marks, who was the only defendant against whom Stix Farms had brought the action, but as “DC and JF Marks trading trust and RK and RK Marks trading trust, trading as Colmar Enterprises.” The entity so described was the party to the first two lease agreements, and the party to the third was described simply as Colmar Enterprises. An ABN number was then provided. However, an extract from the register of business names received at trial showed that the business “Colmar Enterprises” was carried on by DC & JF Marks Pty Ltd & RK & RK Marks Nominees Pty Ltd. An application to amend the counterclaim to substitute the corporations for Mr Marks was made in the final written submissions of the defendant. Ultimately, judgment was simply entered for the defendant, which presumably means the defendant against whom the action was brought, Mr Marks, and not the entity which purported to file the defence. The only reference in the Magistrate’s reasons to his determination of the proper parties to the action is his cryptic comment that:
In relation to the issue of the appropriate parties it is my view the parties clearly knew with whom they were dealing. Mr Tigani was dealing with the Marks brothers and the Marks brothers were dealing with Mr Tigani I intend resolving the matter on that basis.
Taken literally that passage suggests that Mr Tigani personally and not Stix Farms was the party to the contract and should have been the plaintiff, and that the proper defendants were not the corporate trustees but the Marks brothers. Yet judgment was given for the defendant on the record, Mr Marks, against the plaintiff, Stix Farms. The defendant’s unilateral decision to rename itself by its pleading compounds the ambiguity in the reasons. In the absence of an appeal against the judgment it binds the parties to the action despite the disconformity between the reasons and the judgment. Unfortunately, the unsatisfactory resolution of this issue is symptomatic of the way in which the other major issues were resolved.
The Agreements
The first of the three written lease agreements was made between Stix Farms as “leasor” (sic) and DC and JF Marks trading trust RK and RK Marks trading trust trading as Colmar Enterprises ABN: 71677162574 RMB 56 Mannum SA 5238.” The subject matter of the written lease agreement is described as a house situated at section “33 hundred of Peebinga.” Notwithstanding the written description of the subject land it was common ground at trial that the lease was for the house and nearby farming land sufficient for two crops of onions to be grown by pivot irrigation. The lessor’s responsibilities in the written document included ensuring that “pivots are fully functional serviced prior to commencement.”
The reference to pivots is to centre–pivot irrigation systems which comprise a long length of irrigation pipe, mounted on wheels, which rotates around a central pivot where it is connected to a water source. The pivot irrigation systems in this case were powered by electricity produced by a fuel generator (referred to as a genset) and their movement was regulated by a control panel. The water source was a bore from which the water was drawn by a motorised pump. The written document does not specify the number of pivots but it was common ground that it was agreed that two pivots irrigation systems would be provided for the first season.
The lessor’s obligations under the written lease agreement prepared for the first season included the provision of a genset and pumps. It was also the lessor’s obligation to maintain the pumps throughout the season. However, the written lease agreement provided that it was the responsibility of the lessee to maintain the pivots throughout the season and, perhaps inconsistently with the obligations of the lessor to which I have referred, to service both the pivot and the pump every 200 hours. The period of the lease was recorded to be from 4 June 2007 to 30 June 2008 at an annual rent of $40,000 plus GST, payable by 7 June 2007. In summary, on the written lease agreement, the obligation of Stix Farms was to provide irrigation equipment which was functional at the commencement of the season but it had no obligation to maintain it, other than the pump, during the season.
The written lease agreement for the second season was expressed to be made between the same parties but on this occasion the subject land was expressed to be “pivot and house with 800 mg water.” It was common ground at the trial that for the second season the lease agreement was for sufficient land for just one onion crop and that only one pivot irrigation system was to be provided.
In the written lease agreement prepared for the second season the responsibility of the lessor is expressed to be:
·to ensure the pivot is fully functional and serviced prior to commencement;
·to make available one gear box and one electrical motor for the pivot;
·the maintenance of the pump throughout the season.
The document again fixes responsibility on the lessee to maintain the pivots throughout the season and to pay certain expenses associated with the house. The term of the written lease agreement is expressed to be from 1 June 2008 at an annual rental of $30,000 plus GST.
The written lease agreement for the third, and final, season states the term of the lease to be 1 April 2009 to 30 March 2010. On this occasion the lessee is described as Colmar Enterprises. The subject matter of the lease is described as:
One 70 Acre Pivot With Genset, Pump
70 Acres Land
300 Megaliters (sic) of Water
Sole Use of Prefab house
Use of sheds
Location: sect ect. 30-33 Hd of Peebinga.
The rent is stated to be $30,000 plus GST payable in three instalments in April, October and February. Immediately after that rental clause, the following words appear:
Any monies eg pump, genset spent on behalf of Kingsford by Colmar to be taken out of October payement (sic).
The lessor’s written obligation is “To supply Pivot, Pump and Genset in good working order.” The lessee’s obligation is to maintain the “Pivot and Genset in good working order and repair any damage done in regards to growing under Pivot (eg). PVC, Slab, Pumping Station, Genset, sheds, fencing and erosion of soil.”
A further written term requires the lessee to “insure Pivot, public liability and any other insurance required whilst under lease” (the insurance term). The lessee is also responsible to pay electricity and telephone bills connected with occupation of the house.
Insurance Claim
It is convenient to immediately deal with one aspect of the claim made by Stix Farms for storm damage to the sheds on the farm which Mr Marks had not insured (the eighth issue). During the third season a shed on the farm was damaged by a storm. Stix Farms claimed against Mr Marks for the damage caused by that storm on the basis that Mr Marks wrongly failed to insure against that damage in accordance with the insurance term contained in the written lease agreement for the third season. In my view, that claim was bound to fail. The Magistrate was right to dismiss it and that part of the action should not be remitted for rehearing.
The Magistrate dismissed the claim because he found that Stix Farms had failed to establish that there was a “clear agreement between the parties that such storm damage was to be included in the insurance.” The Magistrate also noted that the shed was not exclusively used by Mr Marks but was shared with Stix Farms.
The determination of this part of Stix Farms’ claim requires a construction of the written insurance term to which I have referred. There was no evidence of any oral term which touched on this obligation. On one construction it might mean any insurance, which as a matter of practice or custom, a lessee ordinarily obtains. If that is the proper construction of the insurance term there was no evidence to establish that a lessee of land for the purposes of growing vegetables by irrigation, in the area of the farm, was, as a matter of custom or practice, obliged to insure the sheds it used. Alternatively, the insurance term might be construed to refer to insurance which the lessor subsequently, and reasonably, requested the lessee to obtain. Putting to one side the question whether such a term would be sufficiently certain to be enforceable,[1] there was no evidence that Stix Farms had made any such request.
[1] Phu Hor Ong v Wu You Yang Pty Ltd (2008) 103 SASR 9.
The Magistrate’s short reasons for dismissing this part of the claim made by Stix Farms are widely enough expressed to cover both alternative constructions of the term. It would have been better to attempt a construction of the insurance term and to refer to the evidence, or lack of it, bearing on its application. Nonetheless, the plaintiff’s claim must, as I have explained, fail on either view. I affirm the Magistrate’s dismissal of that part of Stix Farms’ claim.
Extraneous Evidence
Mr Tigani gave evidence that Mr Marks signed the written lease agreement to which I have referred. None of the documents actually executed by him were put into evidence. No issue was taken at trial, nor on appeal, about the absence of the executed documents. It was accepted that Mr Marks had bound himself to the terms of the written documents to the extent that those terms were not varied or supplemented by oral agreement. It is to the evidence of those oral agreements which I now turn. It is convenient to set out at the same time the conduct of the parties in execution, or purported execution, of their contractual responsibilities.
Mr Tigani testified that the lease in the first period was for 160 acres of land together with the house, water license and pivots. Mr Tigani testified that at the commencement of the first season he provided two pivots, two gensets and two pumps. He testified that Mr Marks wanted the pivot in “tip top shape.” Mr Tigani engaged a firm, Benparts Pty Ltd (Benparts), which serviced the pivots at a cost of $19,000. The principal of that firm is Mr Bennett. Mr Tigani testified that he saw both systems successfully commissioned by Benparts. He said that everything was working fine when Mr Bennett tested and fired up the pivot system in August 2007.
Mr Bennett was called by Stix Farms. Mr Bennett testified that, at the request of Stix Farms, Benparts moved one of the pivots from one circular cultivation patch to another and made both pivots operational. Benparts also automated the connection between the water pump and the driver of the pivots such that if the pivot arm stopped operating so too did the water pump. A letter from Mr Bennett to Mr Tigani was received into evidence in which Mr Bennett confirmed that both generators were fully serviced and in good operational order at the commencement of the first season. In his evidence Mr Bennett referred to the two pivot irrigation systems as the Lindsay and Valley pivots. It was the Lindsay pivot which was moved from one patch to another. Mr Bennett testimonially confirmed the contents of his letter to the effect that after completing his work both of the pivot systems were in a fair and reasonable operational condition for their age.

At the same time that Benparts serviced the irrigation systems for Stix Farms, the company was also engaged by Mr Marks to install computerised control panels which were supplied by him, on the Lindsay and Valley pivots. Computerised control panels allow the rate of rotation of the pivot arm to be controlled, varied or reversed, as required, so that water could be applied in quantities which optimised the growth of the crops. The existing control panels on the irrigation equipment supplied by Stix Farms were placed in a shed on the farm.
In his evidence Mr Marks agreed that at the commencement of the first season one of the gensets was taken away and serviced by Benparts. When it was returned it was placed on what Mr Marks described as the “pivot 1 site”. Mr Marks explained that at the time that he took access to the property he was running short of time to plant his crops. For that reason the Valley pivot system, which had remained on the farm, was used overnight with a chain to mark out the area that would be planted on the pivot 1 crop site. The genset on the Valley pivot used a “whole sump full of oil” during that exercise. For that reason it was removed from the pivot 1 site when the serviced Lindsay pivot was returned by Benparts. The pivot 1 site was planted on 10 July 2007
Mr Marks decided not to use the oil consuming Valley pivot genset on the “pivot 2” crop site. Mr Marks brought onto the farm his own genset which was not being used at the time. Mr Marks’ brother, Mr Rick Marks, testified that the genset brought from their property was, like the genset on the Valley pivot, a “Lister” brand. Mr Marks explained “we brought ours out to get the show under way with the understanding that Mr Tigani would find a replacement as soon as possible.” The pivot 2 site was planted on 28 August 2007.
Mr Marks testified that Mr Bennett was engaged to put a four pin plug on his genset when it was taken to the farm. A computerised control panel was placed on this pivot as well. It is not clear to me whether that control panel had earlier been place on the Valley pivot. Mr Marks testified that his genset was returned to the farm and placed on the Lindsay pivot again after the start of 2008-2009, when the genset on that pivot broke down.
Mr Marks quantified his claim for the use of his genset in the first season by subtracting from the cost of a new genset, its retail value as a second hand genset after one year. The difference so calculated was about $5,300. The evidence which supported that calculation was as follows. A quote provided by a firm “Irrigation Systems and Components” which was received as an exhibit quoted a price, exclusive of GST, of $13,300 for a new genset. The exhibit also quoted a buy back value at the end of one season of $7,980, excluding GST, less a fee for servicing the genset prior to the buy back.
Mr Bennett was cross examined about the availability of a second hand genset. He testified that second hand gensets were not “readily available” and that he generally hired gensets if they were needed but he did not estimate the applicable market rates.
According to Mr Tigani no complaint was made to him during the first season of any problem with either of the two irrigation systems. Mr Marks agreed that he did not complain to Mr Tigani at the time. He testified that he believed that his brother had done so, but Mr Rick Marks gave no such evidence.
During the first season Mr Marks had use of a house on the farm. The house was serviced by a landline telephone. Mr Tigani sent an account for the telephone service which he had received from Telstra to Mr Rick Marks and asked him to pay it. The Telstra account was received as an exhibit and appears to have been sent to the “Colmar” fax machine in October 2007. One of the Marks brothers made a note on it saying “[d]on’t pay until see itemised account”.
The telephone account with the note requesting an itemisation may, according to an imprint made on it, have been faxed back to Mr Tigani on 9 January 2008. Mr Rick Marks testified that he sent a letter by fax to Mr Tigani on 17 January 2008. The letter said to have been sent by Mr Rick Marks carries no imprint to show when it was sent. In the letter Mr Rick Marks claimed that so much of the telephone account that he and his brother were responsible for should be set off against the excessive oil used by the water pumps in the first season and the cost of their repair. No supporting accounts for the pump were sent. The letter also asserted “We have supplied one genset which wasn’t in the agreement …We have run ours at our cost”. The letter complained that Mr Tigani had “made no real effort” to supply a second pivot but no specific complaint was made about the Valley pivot. No monetary amount was claimed.
Be that as it may, the evidence showed that Mr Marks compromised any claim he had arising out of the lease agreement for the first season on the basis that the GST component of the rent for the second season would be forgiven.
Mr Tigani testified that he and Mr Marks agreed during the second season that the outstanding GST for that second season would be set off against amounts paid by Mr Marks for work performed on “the main pump”. Mr Tigani explained that even though in his view it was Mr Marks’ obligation to maintain the equipment he waived payment of the GST because he was anxious to have Mr Marks lease the pivot for a third season. Mr Marks agreed that $3,000 on account of GST for the rent in the second season was not paid by him because it was set off against pump repairs and the supply of his own genset. He testified of the waiver of the GST component in these terms:
not sure how you would see it as being a discount when we had accounts outstanding for pump repairs and there was also an issue that we had supplied a genset and the genset hadn’t been paid so that was in dispute I don’t think it was a discount.
Mr Marks went on to accept that Stix Farms forgave the $3,000 GST payment in “consideration of a number of issues I don’t recall them all but I know there was accounts there for pump repairs but there was also a dispute about the lack of a genset.”
The Second Season
Mr Tigani gave evidence of his discussions with Mr Marks before agreement was reached on the terms of the lease agreement for the second, 2008-2009, season. He testified that they both agreed that 300 megalitres of water was not enough for two pivots and that the second lease agreement would be for an area sufficient to grow a single onion crop irrigated by one pivot irrigation system. They agreed the rent at $30,000 plus GST. Mr Tigani testified that he did not cause any further work to be performed on either of his two pivot irrigation systems in preparation for the second season. He denied that Mr Marks had complained about the condition of either of the pivot irrigation system before the season commenced. Mr Tigani testified that $30,000 was paid at the beginning of the season with the expectation that the GST of $3,000 would be paid at the end of the season but it was not paid because of the agreement to compromise to which I referred in [39] to [41] above.
Mr Tigani testified that he visited the property once or twice in the second season. He noticed that the genset on the Lindsay pivot irrigation system, which was being used by Mr Marks, was not the genset which was on that system in the first season. Mr Tigani thought that Mr Marks may have replaced the original genset on the Lindsay pivot system with the genset from the Valley pivot. Mr Tigani agreed that Mr Marks told him that the original genset from the Lindsay pivot had been sent off for repairs, but testified that he was not told anything about the nature of its mechanical problem. Mr Tigani decided that he would wait to be informed about the condition of the Lindsay pivot at the end of the season.
Mr Marks gave evidence that he commenced the second season using the Lindsay pivot with the genset which had been serviced by Benparts but that in October 2008, the genset broke down and was taken to a neighbour, Mr Pedler, who was known to do some mechanical work. Mr Pedler removed the head. Mr Marks gave a hearsay account, without objection, of Mr Pedler’s opinion that the rings had deteriorated from age related wear and tear. Mr Marks testified that he brought his genset, which he had used in the first season, back to the farm and placed it on the Lindsay pivot. He chose to use that genset because it was reliable and the computerised control box, which had been installed by Benparts in the first season, was still attached to it. Mr Marks explained that he had been using that genset on his own farm at the time and that he therefore had to hire another genset to replace it.
Mr Marks hired the additional genset from his cousin and neighbour. An invoice dated 7 October 2009 from Caurnamont Farms Pty Ltd (Caurnamont) in the sum of $11,550 for the hire of a genset for the second and third seasons was received into evidence. A bank statement recording an internet banking transfer made on 25 November 2009 from Mr Marks’ account to an account held by Caurnamont in that amount was also received into evidence. Mr Marks’ cousin was the principal of Caurnamont but he was not called to give evidence.
Mr Marks denied that the break down of the genset was due to his failure to maintain it. Mr Marks did not claim that he had informed Mr Tigani of the break down of the genset during the second season.
Mr Marks testified that in January 2009, agents acting for receivers (the agents), came onto the farm and seized items of plant and machinery which belonged to either Stix Farms, or Mr Tigani’s family and related entities. Mr Marks testified that he pointed out to the agents that the genset on the Lindsay pivot he was using was his. Mr Marks saw the agents take and cut up the Valley pivot. They also took the original control box which had been on the Lindsay pivot before Benparts had replaced it with the computerised control box. Mr Marks testified that he told the agents that the control unit belonged to the Lindsay pivot irrigation system he was using. One of the agents replied that it did not matter because that too would be taken when Mr Marks had finished with it. Mr Marks later saw the control box offered for sale at an auction conducted by the receivers.
Mr Tigani also gave evidence about the agents seizing goods from the farm. His recollection was that they came onto the land in December 2009, however a copy of an order of the District Court, received into evidence, shows that the receiver and manager of a company, TomDan Nominees Propriety Limited, obtained an order in the District Court on 24 December 2008 allowing him to enter the farm for the purpose of locating certain plant and equipment set out in a schedule to the order. By that order a number of defendants, including Mr Tigani, were restrained from removing the specified property from the farm.
Mr Tigani explained that the agents had entered the land in connection with a claim against his sons. He testified that, as a result of legal action taken by him, over a period of six to eight months equipment including the disassembled Valley pivot which had been taken by the agents was subsequently returned. Mr Tigani testified, however, he did not believe that the control panel was amongst the property which was taken or subsequently returned to him.
The Third Season
Mr Marks testified that he met Mr Tigani at the Pretoria Hotel before the commencement of the third season, and that he and his brother told Mr Tigani that there was no working genset. Mr Rick Marks testified that he and his brother met Mr Tigani at the Pretoria Hotel before agreeing to a lease for the third season. They discussed Mr Tignai purchasing another genset and agreed to make enquiries about the cost of another genset. According to Mr Rick Marks, Mr Tigani also informed them of the steps he had taken to secure the return of the Valley pivot from the receivers. According to Mr Marks, Mr Tigani drafted a written lease agreement for the third season after that meeting. Mr Marks testified that after the document was drafted he specifically added to that document the lessor’s obligation to supply a genset. There is no obvious amendment to the document that was received as an exhibit. It may be that the written lease agreement was retyped to incorporate his suggested term.
Mr Rick Marks said that he paid the second, October instalment in accordance with the terms of the written lease agreement in the third season but without any deduction, on account of the hire of his cousin’s genset, as provided for by that document because he felt pressured by Mr Tigani to do so. He testified however that he told Mr Tigani that there would have to be a reckoning on the last instalment for the genset which they had hired for that season.
Mr Tigani agreed that he met both the Marks brothers at the Pretoria Hotel. The terms of the lease agreement for the following season contract and late payments were discussed. Mr Tigani testified that the written term providing for deduction from the October payment of any money expended by the Marks brothers on the pump and genset was intended to cover any unusual repairs over and above the maintenance of the genset. He testified that he expected to be notified of any such expenditure. Mr Tigani also gave evidence that in negotiating the lease agreement for the third season Mr Marks asked that the rent be paid in instalments to assist his cash flow. Mr Tigani agreed and that term was incorporated in the written lease agreement to which I have referred.
Mr Tigani’s evidence was that he believed there was a pump and genset in good working order on the property at the time he signed the written lease agreement for the third season. He asked rhetorically, and in my view with some force, “why would they continue the lease if it wasn’t so”. He testified that before the written lease agreement for the third season was signed he was not notified that the Lindsay pivot and genset was not working. Mr Tigani testified that he inspected the property and the pivot system at the commencement of the third season. The pivot was not in operation at the time but it appeared to him to be workable.
Mr Tigani testified that he received the first two payments of $11,000 in accordance with the written terms of the lease agreement. It was only when the final instalment fell due that Mr Marks told him that he would not pay it because of an $11,000 hire charge for his cousin’s genset. Mr Tigani testified that he was shown the account and that it struck him as absurd. Mr Tigani testified that there was some heated discussion but that Mr Marks later sent him $6,000 or $7,000.
The date of the Caurnamont invoice relative to the instalment payments and the growing season is of some importance. If it was received before the October instalment was paid it is difficult to see why Mr Rick Marks made the payment at all, despite any verbal pressure Mr Tigani may have applied, because it was more than offset by the invoice. If it was received shortly after the instalment was paid it is difficult to understand why it was not immediately sent to Mr Tigani, or, at least, sent at the time payment was made to Caurnamont. The parties had exchanged faxes to which I earlier referred, over the outstanding phone account and other matters during the first season. However, a salient feature of this evidence, which was left unexplained at trial, is that the account for Caurnamont was sent halfway through the final growing season and before the heaviest use of the pivot in the driest months of the season between October and December. Yet the account was presented as the hire charge for the entire season. Not surprisingly, Mr Marks struggled to apportion the charge between the two seasons when he was pressed in cross-examination.
Mr Marks accepted that he withheld $4,850 from the final payment. Mr Marks testified that at the end of the third season he left a spare wheel for the irrigation systems in a shed on the farm. The wheel is similar to a large tractor tyre which moves the arm of the pivot. Mr Tigani testified that he did not find the wheel in the shed.
Mr Tigani testified that at the end of the third season he leased the farm to a Mr Tsimiklis. Mr Tsimiklis engaged Benparts to repair the Lindsay pivot irrigation system. According to Mr Tigani at that time the Lindsay genset was in a “thousand pieces” and the “computer board” or “control panel” was missing.
Mr Bennett’s evidence was that in around August 2010 he examined the genset for the Valley pivot. On account of the other evidence I am, however, satisfied that Mr Bennett’s reference to the Valley pivot was mistaken or an error on the transcript and in fact the relevant genset was that which was on the Lindsay pivot. He advised Mr Tsimiklis that because of a number of missing parts it was not worth repairing and that he should purchase a second hand genset. He procured a second hand genset at a cost of approximately $6,000. The genset was procured in August 2010 but payment was made in September 2010. The genset was installed together with a main control panel to make the pivot system operational. The further work cost about $10,000. Mr Bennett also testified that at that time he saw the remnants of the Valley pivot on the side of the road.
Mr Marks denied that the genset at Pedlers was in a “thousand pieces.” According to him Mr Pedler had only removed the head. Mr Marks testified that the Lindsay genset left at Pedlers was returned to the farm at the end of the season. Mr Marks testified that he had not seen any point in spending money repairing it unless and until Mr Tigani gave the go ahead.
Stix Farms claimed the cost of a replacement for the Lindsay genset from Mr Marks on the basis that he had breached his obligation to maintain it by leaving it in a dismantled condition.
I have already referred to Mr Marks’ evidence that the receiver’s agents had taken the original Lindsay pivot control panel. He also testified that he did not reinstall the original control panel on the Valley pivot because that pivot had been disassembled by the receiver’s agents.
Inadequate Reasons
The Magistrate’s assessment of the relative credibility and reliability of the witnesses was as follows:
I do make a comment in relation to my observations of the respective witnesses. Mr Bennet was the only witness who might be considered to be independent and I have no reason to doubt anything Mr Bennett told me on the matter. I formed some reasonably strong views as to the respective reliability of the other witnesses however. I make it clear that I found the defendants both the Marks brothers to be genuine, honest and reliable witnesses. They gave their evidence in a straightforward manner and to a very large extent I felt their evidence had the ring of truth to it.
I had some concerns about aspects of Mr Tigani’s evidence. At times I found he was somewhat evasive and argumentative in his answers and I found Mr Tigani to be a far less impressive witness to the extent that I make it clear that where there is any dispute on the facts I prefer the version provided by the Marks brothers. That, of course, becomes significant when I start to address the issues between the parties.
The Magistrate’s general credit findings are problematic in a number of respects. First, Mr Bennett’s evidence, which was, for good reason, accepted by the Magistrate, was inconsistent with the evidence of Mr Marks that he had to replace the Valley pivot genset because of its poor condition during the first season. Mr Bennett’s evidence was also inconsistent with Mr Marks’ claim that the Lindsay pivot genset had been returned to the farm intact but for the removal of the head. Secondly, it is difficult to understand how the demeanour of the witnesses allowed to the Magistrate to form such a strong preference for the “version” of the Marks brothers without considering, also, the inherent probabilities and improbabilities of the matters in dispute, a number of which told strongly against their testimony.

The Magistrate’s findings as to the failures of the irrigation systems in the first season and the liability of Stix Farms for those failures were as follows:
I do accept what the Marks brothers have told me about the issues that they had in the first year of their agreement with Mr Tigani. Notwithstanding the work done by Mr Bennett there were problems with the machinery provided and they needed to make use of one of their own. I also find and accept their evidence that Mr Tigani was notified of those problems and I make specific reference to Exhibit D3.
I note in general terms there is no real dispute as to the unpaid rent to Mr Tigani that forms part of the plaintiff’s claim. On that same issue the defendants have counterclaimed for some depreciation and costs of some pump maintenance.
In my view those respective claims cancel one another out. There is no real dispute that the rent was unpaid so some money seemingly is owed to Mr Tigani for that first year. At the same time the defendants want to claim for some depreciation. I find the evidence to be inadequate as presented on behalf of the defendant in relation to that depreciation. It seems to be based on some advice but that advice wasn’t made clear to me nor were the tax scales that were referred to. It may be they are entitled to some depreciation. It is difficult to put an exact figure on that. I note the invoices in relation to the issue of pump maintenance.
My determination is that the plaintiff’s claim for the unpaid rent and the defendant’s counterclaim for the depreciation and cost of pump maintenance largely off-set one another and both those claims will be dismissed.
I observe first that the Magistrate has not attempted at all to identify the terms of the lease agreement for the first season which governed the parties’ respective obligations. The Magistrate has proceeded on an implicit and therefore unexplained findings against Stix Farms on the first three issues.
Secondly, the Magistrate also failed to explain how he moved from the tentative view that Mr Marks may be “entitled to some depreciation” to the view that it set off to some unspecified extent the unpaid rent. There was just no evidence that Mr Marks suffered any loss by the use of his genset in the first season. Theoretically conceivable charging methods cannot be substituted for an assessment of the loss actually suffered. Nor does the Magistrate even mention the evidence that any claim for use of the genset and the water pump maintenance was compromised, let alone explain why he did not act on it. Indeed the Magistrate appears to have proceeded on the basis that the unpaid rent related to the first season. Finally, it is not obvious to me that Mr Marks’ claim for damages under the lease agreement for the first season can be set off against the claim of Stix Farms for unpaid rent under the third lease agreement.
The reasons of the Magistrate on the fourth and fifth issues are inadequate. Even though the evidence that the claim was compromised appears to me to be very strong in all of the circumstances, the safest course to adopt is to remit this part of the plaintiff’s claim, and the defendant’s counterclaim, for rehearing in the Magistrate Court.
As to the claim by Mr Marks for damages for failure to provide an irrigation system in accordance with the lease agreement in the second and third seasons the Magistrate found:
I turn to the other aspects of the defendant’s counterclaim. They have claimed for hiring of a genset for the remainder of years 2 and 3. They have sought the sum of $11,550. In my view that sum is excessive. In my view whilst it was reasonable for them in all the circumstances to make arrangements to hire a genset I note the evidence given by the plaintiff and a second-hand genset could be purchased in the vicinity of $6050 and I note the defendant’s evidence that a new one could be purchased for about $13,300 or something in that vicinity. I also note the evidence that such equipment is at times difficult to locate but it seems to me that very little effort was made. Also I don’t have much evidence before me, if any at all, that there was much effort to mitigate their loss or their overall situation over years 2 and 3. Given the cost of a new one and given the cost of a second-hand one I find that their $11,550 is excessive. I think they are entitled to some claim because as I say I have preferred their evidence as to that of the plaintiff Mr Tigani and I find that they were having problems with the machinery and were entitled to hire one. Adopting an admittedly broad axe approach I would allow a sum of $9000 for the cost of hire of the genset for the remainder of the years 2 and 3.
It will be observed that the Magistrate has dealt in the above passage only with the question of the quantum of Mr Marks’ claim. The only reference to the issue of liability is an observation in an earlier paragraph that “there were problems with the machinery.” The written terms of the lease agreement required only that the pivot was “fully functional and serviced prior to commencement.” On Mr Marks’ evidence it was functional although Mr Tigani conceded he did not service the Lindsay pivot again at the commencement of that season. The evidence, such as it was, was that the Lindsay genset broke down because of age related wear and tear. Both Stix Farms and Mr Marks knew the genset was old. The critical question was whether they had, objectively viewed, agreed who should carry the risk of age related failure. The answer to that question required careful analysis of the document and the conversations between Mr Tigani and Mr Marks. A further question as to whether any term should be implied also arose. Those questions were not adverted to, let alone decided. The Magistrate’s reasons as to the first and second issues as to the lease agreement in the second and third year were inadequate.
The Magistrate also failed to make a finding as to the cause of the break down of the genset on the Lindsay pivot. Responsibilities for failures of different kinds may fall on one or the other of the parties depending on the scope of any applicable express or implied term. On this matter, the third issue, the Magistrate’s reasons were again silent and therefore inadequate.
On the face of the transcript there is very little evidence that Stix Farms assumed an obligation to maintain the genset in working order throughout the year. It is perhaps more arguable that there was an implied term of fitness for purpose, but again no finding was made as to whether the genset was at the commencement of the season fit for the purpose of irrigating another crop. The failure to direct attention to these questions during the trial persuades me that the better course is to also remit this part of Mr Marks’ counterclaim to the Magistrates Court.
The issue in the third year was more complex. First, it was necessary to decide whether, as Mr Marks and his brother Rick testified, Mr Tigani agreed to procure another working genset because the Lindsay pivot was considred to be beyond repair. If a firm agreement to that effect was made I find it very difficult to understand why Mr Marks did not complain very loudly at the very commencement of the season when another genset was not produced. He did not. Not only did Mr Marks not complain, he and his brother paid the first two instalments in full and paid most of the third instalment even though the hire fee charged by their cousin more than set it off. The Magistrate appears not to have noticed, and certainly did not consider in his reasons, this glaring improbability in their account. On the other hand it is inherently probable, as the Magistrate found, that the Marks brothers pressed the problems with the Lindsay pivot genset much more strongly than Mr Tigani admitted. Mr Marks testimony that he insisted on an express term requiring Stix Farms “to supply Pivot, Pump and Genset in good working order” is inherently probable having regard to the evidence that the genset had been taken to Mr Pedler in the second season. However, the failure to complain and/or withhold payment at the beginning of the season strongly suggests that the written term obliging Mr Tigani to provide a working pivot irrigation system was premised on an understanding that the Lindsay pivot would be repaired but that if it could not be repaired another would be supplied. The special term for deductions from the second instalment is consistent with an assumption that Mr Marks would attend to the repair of the Lindsay pivot genset. I suspect that both Mr Tigani and Mr Marks found it simpler to continue with Mr Marks’ genset instead of attending to the repair of the Lindsay genset left with Mr Pedler or sourcing another. Indeed, Mr Marks referred in his evidence to his reluctance to instruct Mr Pedler to do, as I noted earlier, the work unless Mr Tigani committed to that course first.
The difficult factual issues raised by the conflict in the evidence and the inherent probabilities to which I have referred are not adequately dealt with by the finding, which the Magistrate did make, that Mr Tigani was aware of the breakdown of the genset. The question was, what had they agreed to do about it? In my view the Magistrate has again failed to make necessary findings on the first three issues with respect to the third lease agreement.
Assuming the written term to provide a working pivot irrigation system was breached, the next question which had to be addressed on the issue of damages was whether Mr Marks had entered into an arrangement with his cousin which bound him contractually to pay a hire fee for the use of his genset. No express finding to that effect was made. There was much reason to doubt Mr Marks’ evidence that he had so bound himself. I have already referred to the timing of the invoice and the failure to send it to Mr Tigani before the end of the growing season. The quantum of the hire fee itself appeared to be grossly disproportionate to the cost of a second hand genset. However rare they might be the scarcity of supply is reflected in their price. It is difficult to accept that the cost of hire of a genset for one season is the same as the cost of purchasing it. Notwithstanding the real doubt about the genuiness of the invoice raised by those objective circumstances, and the failure to call their cousin, the Marks brothers’ testimony was accepted without even recording a finding to that effect. The Magistrate’s reasons on the sixth issue were inadequate.
Having found by implication that Mr Marks had hired his cousin’s genset and that it was reasonable for him to hire it, the Magistrate reduced the damages payable on account of their loss from $11,550 to $9,000. If it was reasonable to contract to hire the Caurnamont genset at the price agreed between the Marks brothers and their cousin then there was no basis upon which to award less than the invoiced amount. If it was unreasonable of the Marks brothers to contract with their cousin at such a high hire fee then a real question must arise as to the genuiness of the arrangement.
I referred in [60] to the claim by Stix Farms for the value of the Lindsay genset which Mr Bennett said was beyond repair when he inspected it in 2010. There was on the evidence a prima facie case that by leaving the Lindsay genset in a dismantled condition Mr Marks had failed to maintain the genset and that his failure to do so resulted in the loss claimed by Stix Farms. The Magistrate did not advert to this part of Stix Farms’ claim at all in his reasons. The Magistrate’s implicit rejection of that part of Stix Farms’ claim, the seventh issue, is obviously enough not accompanied by any reasons, let alone adequate ones.
This part of the matter must also be remitted for rehearing.
As to the ninth issue the Magistrate’s finding as to the missing control panel and spare wheel were:
I turn to the other aspects of the plaintiff’s claim. I refer to the issues of the control panel and the spare wheel. I deal with these issues together. The intervention of the receivers and the fact that there is some uncertainty as to exactly what happened to some of the equipment has led me to find that the plaintiff has not proved or established those aspects of his claim.
I accept what the Marks brothers have to say in relation to certainly the spare wheel having been left in the premises when they vacated the premises. I accept their evidence about that. If the spare wheel was subsequently not there then they are not responsible for that. As to the control panel – I note the evidence given by the Marks brothers about the receivers attending and their efforts in that regard. I prefer their evidence to that of the plaintiff. I find that the plaintiff has not proved either of those aspects to his claim and I dismiss those claims.
In my view this finding should be affirmed. Mr Tigani was not in a position to, and his evidence did not, contradict the testimony of the Marks brothers. In my view the Magistrate correctly decided the ninth issue and has adequately explained his reasons.
Conclusion
The matter other than the claims made in paragraphs 5, 7 and 8 of the plaintiff’s Statement of Claim is remitted to the Magistrates Court for rehearing.