McFarland v Common Australia Pty Ltd

[2018] NSWDC 489

District Court

New South Wales

• Amendment notes

Medium Neutral Citation:

McFarland & Anor v Common Australia Pty Ltd [2018] NSWDC 489

Hearing dates:

23 – 24, 30 – 31 August 2018; 3 – 7 September 2018

Date of orders:

07 September 2018

Decision date:

07 September 2018

Jurisdiction:

Civil

Before:

Neilson DCJ

Decision:

(1) Verdict and judgment for the defendant against the plaintiff on the statement of claim.

 

(2) Verdict for the cross-claimant against the first cross-defendant Mervyn Christopher McFarland in the sum of $71,732.38.

 (3) Verdict and judgment for the cross-claimant against the second cross-defendant Wendy Ann Miller for $13,406.38.

Catchwords:

CIVIL – CONTRACT – MORTGAGE – VENDOR FINANCE – Defendant sold rural land to the plaintiffs and provided a loan of $100,000 to the plaintiffs to be repaid by three equal annual instalments, secured by a requested first mortgage – Default by plaintiffs – Defendant enters into possession of land – Property offered for sale by public auction

 

Whether plaintiffs had a statutory claim against defendant under Conveyancing Act 1919 section 111A(4)

 

Whether plaintiff’s had a statutory claim under the National Credit Code – Issues discussed:
(a) what was the credit contract;
(b) was the contract for the personal, domestic or household purposes of the plaintiffs;
(c) whether the contract was incidental to any other business of the defendant

 

Claim by plaintiffs that defendant converted possessions to its own use – Chattels and fixtures left by plaintiffs on the land – No manifestation of any intention of the defendant to keep chattels adversely in defiance of the plaintiffs rights to the chattels

 

Cross-claim by defendant for losses sustained by the defendant because of default under the mortgage

  Cross-claim by defendant for trespass to defendant’s sheep – Claim for loss of stock and loss of profit

Legislation Cited:

Civil Liability Act 2002
Conveyancing Act 1919
National Consumer Credit Protection Act 2009
Real Property Act 1900

Cases Cited:

Avery v Saree Holdings Ltd; Lava Ltd v Avery [2012] NSWSC 463
Bank of Queensland Limited v Dutta [2010] NSWSC 574
Cambridge v Anastasopoulos [2012] NSWCA 405
Dale v Nichols Constructions Pty Ltd [2003] QDC 453
Jonsson v Arkway Pty Ltd and Anor [2003] NSWSC 815
Knowles v Victorian Mortgage Investments Ltd & Anor [2011] VSC 611
Kuwait Airways Corporation v The Iraqi Airways Company & Ors [2002] UKHL 19
Lauvan Pty Limited & Anor v Bega & Ors [2018] NSWSC 154
Mattinson v Multiflow [1977] 1 NSWLR 368
Penfolds Wines Pty Limited v Elliott (1946) 74 CLR 204
Pipicella v Stagg (1983) 32 SASR 464
Sanderson v Dunn (1911) 32 ALT (Supp.) 14; 17 ALR (CN) 9
Smith v Cook (1875) 1 QBD 79

Category:

Principal judgment

Parties:

Mervyn Christopher McFarland (First Plaintiff/Cross-Defendant)
Wendy Ann Miller (Second Plaintiff/Cross-Defendant)
Common Australia Pty Ltd (Defendant/Cross-Claimant)

Representation:

Counsel:
Mr A Fronis (Plaintiffs/Cross-Defendants)
Mr C Simpson (Defendants/Cross-Claimants)

  Solicitors:
A Ace Solicitors (Plaintiffs/Cross-Defendants)
Blue Ocean Law (Defendants/Cross-Claimants)

File Number(s):

2016/310131

Publication restriction:

Nil

Judgment

The plaintiffs buy rural land

1. HIS HONOUR: On 28 March 2014 the defendant conveyed to the plaintiffs that piece or parcel of land which can be described as Lot 10 DP 751520. The parties have conveniently described Lot 10 DP 751520 as, "Lot 10," and I shall hereafter do so. Some 18 months after that conveyance the land was offered for public auction. For that purpose a number of advertisements were placed in press, as well as online, by a real estate agent, Mr Stephen Alford of Alford & Duff trading as First National Tenterfield.

2. The advertisements describe Lot 10 as being in Roberts Range via Mountain Creek Road, Tenterfield. The substance of each advertisement is this:

"Tenterfield Creek Lifestyle

• 192.6 hectares (476 acres) of undulating trap rock country with steeper ridges

• Located approximately 50 kilometres West of Tenterfield via the Bruxner Highway

• Permanent water is the key feature with a terrific 2.5 kilometre frontage to Tenterfield Creek, five gullies, springs and alluvial creek flats suitable for cultivation

• Recreational lifestyle block with great fishing holes ideally suited to fishing enthusiasts

• Adjoins the Queensland/New South Wales border and Sundown National Park

• Sound grazing block with a carrying capacity of approximately 35 breeders or 400 dse

• Fenced into one paddock with fencing in fair to good condition

• The motivated vendor wants this property sold!

3. It would appear from the evidence before me that it was the, "recreational lifestyle block," aspect of this property which brought it to the attention of the plaintiffs. Prior to its being conveyed by the defendant to the plaintiffs, Lot 10 had been part of the property owned by the defendant, known as, "Jackals Hide." The defendant company was incorporated on 9 September 2004 by Mr Rodney James Middleton. At all material times Mr Middleton was the sole shareholder, sole director and secretary of the defendant. Jackals Hide was part of a property owned by Mr Middleton's parents which needed to be sold at the passing of his parents so that it could be divided between Mr Middleton and his siblings. I note that according to the ASIC records Mr Middleton's original address was, "Mt Pleasant Station, Darthula Road, Tenterfield." Exhibit RJM-1 to Mr Middleton's affidavit (exhibit 4) shows the position of Lot 10 vis-á-vis Jackals Hide after Lot 10 had been conveyed to the plaintiffs. I note that Mt Pleasant Station is shown on the left-hand side of the plan which is RJM-1 and that was land described by Mr Middleton as belonging to his sister.

4. After Lot 10 was conveyed by the defendant to the plaintiffs, Jackals Hide consisted of at least three, and perhaps more, parcels of land. It comprised Lot 12 in DP 751520 and may have included Lot 11 in that deposited plan. It also comprised Lots 13, 14 and 15 in DP 789006. Lot 10 is on the northern bank of Tenterfield Creek as is Lot 12 in the same deposited plan. Lots 13, 14 and 15 in DP 789006 are all on the southern bank of Tenterfield Creek. The defendant's business was twofold. According to Mr Middleton at all material times one business was the production of mutton and lamb, that is essentially grazing sheep, and the other business was the provision of a recreational area and services associated with bow hunting, camping and fishing. Those activities can be succinctly described by the acronym, "BCF."

5. A pro forma of the terms and conditions for those using Jackals Hide recreationally is exhibit RJM-4. Hunting on Jackals Hide was restricted to bow hunting but crossbows were not permitted - obviously any form of firearms also not permitted. The conditions of access were these:

"(a) Hunting parties (one party only at a time) have the entire property (Jackals Hide only) to themselves (no alternative hunting/fishing/camping parties will be booked at the same time as a hunting party).

(b) Fishermen have access only to the river area and should be prepared to share the property with other fishers/campers.

(c) Campers have access only to the campsite and adjacent area however, if they pay the fishing fee this can be extended to the river area in its entirety.

(d) Hunters cannot book if campers and and/or fishers are booked."

It can be seen, accordingly, that if Jackals Hide were used for bow hunting only one party of hunters was permitted to use the property at the time, obviously a safety feature for those who were hunting. To suggest that the - that Jackals Hide may have been, "swarming," with bow hunters at any one time is simple hyperbole but there has been much hyperbole in this case.

6. Exhibit RJM-5 and exhibit 7 are a copy of a map which was given to those using Jackals Hide. The area known as Lot 10 has been marked on that map as, "Lease." A large number of fishing holes and features have been marked on the map. It is clear that any land between Lot 10 and Lot 12 in DP 751520 forms part of Jackals Hide.

7. After a disastrous flood the defendants fell into financial difficulties. Mr Middleton listed the property for sale with Mr Alford in 2012. He set the sale price at a non-negotiable $250,000. According to Mr Middleton's affidavit the defendant was not desperate to sell the land but was prepared to wait in order to achieve the price desired.

8. In January 2014 the plaintiffs expressed a desire to purchase the property. Before they purchased the property Mr McFarland had visited the property on three occasions and his de facto wife, the second plaintiff, Ms Wendy Ann Miller, had visited the property on one occasion. On two of the three occasions that he visited Lot 10, Mr McFarland did so in company with Mr Middleton. Mr Middleton then introduced Mr McFarland to the real estate agent in Tenterfield. He was not named by Mr McFarland in his evidence but I understand it was the same real estate agent who later auctioned the property in 2015, Mr Alford.

Vendor finance and “lease back”

9. The plaintiffs had difficulty raising the money to purchase Lot 10. According to Mr Middleton, this occurred:

"23. On 11 January 2014 the Plaintiffs expressed a keen desire to purchase the land. There were two other interested parties at the time attempting to raise finance but the plaintiffs told me they would purchase the land outright and pressed me to make a decision. The other parties could not raise the finance by 20 January 2014 so I, 'shook hands,' with the Plaintiffs.

24. However, on 21 January 2014 the plaintiffs told me, in words to the effect, that they were (suddenly) unable to extract their funds from a, 'large investment,' that they were, 'tied up,' with and now required to reduce their initial outlay.

25. I negotiated for the next three days and finally agreed to their request for a short-term vendor finance loan of $100,000. Even though the documents provided for repayment over 36 months, they told me they would pay off the loan before the end of the year so I provided it interest free…"

10. Later the plaintiffs advised Mr Middleton that they needed to reduce their outlay even further. Mr Middleton then discussed the matter with Mr Alford. Mr Alford told tMr Middleton that it was common to offer a lease back option on a farm sale. Mr Alford told Mr Middleton that that assisted the purchaser to buy the property by reducing the sale price and the vendor as although he received a reduced return, it gave the right to the property's continued use for an agreed period of time equivalent to the rate for a lease. There were then negotiations between the plaintiffs and Mr Middleton and eventually Mr Middleton agreed to reduce the purchase price by $40,000 in return for a five year lease back to enable him to continue grazing sheep on the land. Mr Middleton believed that a yearly rental of $8000 was considered to be generous to the plaintiffs and in his view was more than twice that or the next highest lease value of similar property in the area. In his affidavit at [34] Mr Middleton provided examples of other leases in the area.

11. The evidence does not permit me to find when contracts for the sale of Lot 10 were exchanged. At [40] of his affidavit Mr Middleton told me that the plaintiffs signed the contract on 19 February 2014 and he signed the contract on behalf of the defendant on 28 February 2014. It is common ground that settlement occurred on 28 March 2014. On 31 March 2014 the plaintiffs executed a mortgage under the Real Property Act 1900 in favour of the defendant.

12. The mortgage was duly registered on the title. There are only three clauses in the mortgage. They are these.

"1. The mortgagor will repay to the mortgagee the principal sum by three (3) equal instalments each in the sum of THIRTY-THREE THOUSAND THREE HUNDRED AND THIRTY-THREE DOLLARS AND THIRTY CENTS ($33,333.30) the first of which shall be made on the 31 day of December 2014, the second on the 31 day of December 2015, and balance shall be paid on the 31 day of December 2016.

2. In the event of any instalment not being made on the due date or within twenty-eight (28) days thereof the balance of the principal then outstanding shall become immediately due and payable.

3. The interest rate is fixed at 8% per annum however this interest will be waivered [sic] as agreed in accordance with Special Condition 22 of the Contract for the Sale of Land dated 28 February 2014 provided that the instalments are made on the due date or within seven (7) days thereof. If not the mortgagee may call for interest upon any late payment computed from the due date to the date of payment in full at the rate of 8% per annum and any moneys paid by the mortgager to the mortgagee will be applied firstly in payment of interest (if any) and secondly in the reduction of the principal."

13. Special Condition 19 of the contract for the sale of the land by the defendant to the plaintiffs concerns "Depasturing of stock." The condition is this:

"The vendor has the right to stock the property with cattle for a period of five (5) years from the date of settlement."

No formal agreement relating to this provision for agistment was executed at the time of settlement. Subsequently the defendant asked the plaintiffs to execute a formal lease of Lot 10 back to the defendant but they refused to do so and they refused to do so rightly. If the plaintiffs had executed a lease in favour of the defendant, the defendant would have been permitted to exclude the plaintiffs themselves from the land during the period of the lease but that was never the intention of Mr Middleton or Mr McFarland or Ms Miller. However, Mr Middleton could have properly requested the defendants to enter into a written agistment agreement but that was never attempted.

14. The right of agistment given to the defendant by the plaintiffs in the contract for sale of the land must accordingly be governed by the common law rather than any written agreement. Of course the common law will infer terms into the agreement reached for the defendant to agist its stock on the plaintiffs' land. If there be any express provision concerning the defendant’s right to depasture stock on Lot 10 after it was conveyed to the plaintiffs, it is contained in a statement made by Mr Middleton to the plaintiffs during the negotiations concerning the reduction in the price of the land in return for the lease back:

“38. I told the plaintiffs during these negotiations, in words to the effect, that “leasing the land back to me for sheep grazing will restrict what you can do on the land” and “a sheep flock needs a lot of maintenance so you will frequently have me and others coming on to your land to tend the flock”. They told me, in words to the effect, that they were “not concerned about that at all”.”

15. As I have earlier mentioned the conveyance of Lot 10 to the plaintiffs was completed on 28 March 2014. It was not long until strife arose between the plaintiffs and the defendant. The strife first arose on 4 April 2014.

The plaintiffs caretaker

16. There is another relevant actor in the story underlying the present proceedings. That actor is Mr Paul Giess whose name has often been misspelt as Geiss in the evidence. Mr Giess swore an affidavit on 6 March 2018 which became exhibit C in these proceedings. Mr Giess gave evidence before me on 30 August 2018 and 31 August 2018. In his affidavit Mr Giess referred to himself as, "the caretaker of Lot 10 when it was owned by the plaintiffs." Mr Giess can be described as a, "colourful," character. A photograph of him is exhibit RJM-9. According to Mr Middleton, Mr McFarland told him that Mr Giess was Mr McFarland's, "best mate." He also told Mr Middleton that Mr McFarland and Mr Giess had, "attended school together in Ipswich." Exhibit RJM-9 is a photograph of Mr Giess bare-chested. He has tattooed above his right mamilla a large swastika. He is bearded and moustached and has long flowing locks coming from underneath a beanie. He is otherwise heavily tattooed. When Mr Giess gave evidence he had clearly visited a barber shortly beforehand and was appropriately coiffed and dressed. He is a tall man, albeit that he appeared to have some spinal difficulty when he entered the witness box. Suffice to say that the man shown on exhibit RJM-9 is a tall man whose presence would be daunting to anybody who confronted him. Paragraph [46] of Mr Middleton's affidavit is this.

"Mr Giess is a heavy drinker and, 'pot,' smoker and rode a Harley Davidson motorcycle. I have witnessed him indulge in these activities on many occasions."

The admission of that piece of evidence was not objected to.

Credibility

17. At this stage it is necessary for me to say a number of things concerning credibility. Reluctantly I have to state that I found the evidence of Mr McFarland neither reliable nor honest. With more reluctance I had to state that I found some of the evidence of Ms Miller unreliable but that may well be explicable by the grave difficulties which she had in 2014 which clearly would have preoccupied her and may have rendered her memory of some events in early 2015 unreliable. The evidence of Mr Giess was also unreliable and at times dishonest. On the other hand, I have no hesitation in accepting what Mr Middleton has told me. He was intimately concerned with what was going on at and near Jackals Hide. He sold Lot 10 reluctantly, parting with land that had once belonged to his family but he needed to do so in order to maintain the viability of the rest of Jackals Hide and to provide an improvement on the property, a house in which he and his de facto wife could live. They were living at all relevant times in a caravan on Jackals Hide. Mr Middleton had been a sheep grazier for 40 years at the time he gave his evidence.

SHORT ADJOURNMENT

18. I am about to make some observations about the credibility of the witnesses. One will recall that I quoted special condition 19, which gave the defendant a right to stock the property with "cattle." However, the defendant did not have a herd of cows. The property, Jackals Hide, had only been used to graze sheep. That is an historical fact. Mr Middleton told me that the defendant had about six head of cattle but they were dairy cattle, which were kept on his sister's property as his sister had dairy bails so that the dairy cattle could be milked. When asked whether the defendant only had sheep, Mr McFarland said that the defendant had cattle. He also said that Lot 10 was not fenced for sheep.

19. Part of the plaintiffs' original case was that the defendant had no right to agist sheep on the property because the contract referred to "cattle." However, that was inconsistent with an admission made by lawyers formerly acting for the plaintiffs, inconsistent with a letter from Messrs Jennings & Kneipp, Solicitors at Tenterfield, who wrote to the solicitors for the defendant on 22 July 2014 in the following terms:

"We refer to your letter of 4 July, 2014 and have now received instructions from our clients that they do not agree to enter into a lease agreement with your client.

We confirm that the Agreement between the parties is that the Vendor has the right to stock the property for a period of five (5) years from the date of settlement. We are instructed that your client currently has sheep and cattle on the property in accordance with the Agreement."

20. The point made by Mr McFarland which he had taken in these proceedings represents "bush lawyering". The Shorter Oxford Dictionary, Fifth Edition, establishes that the English word "cattle" is cognate with the English word "chattel" and its primary meaning is merely "property". It has a subsidiary meaning of "personal property" and a subsidiary meaning of "chattel". The second meaning assigned to the word is "livestock" and then a subsidiary meaning of “animals of the genus Bos”, but also a subsidiary meaning of “livestock, (in stables) horses”. It also has been used in the past to describe “vermin” and “insects”. The primary meaning of “cattle” is any form of livestock. That is consistent with well-established, albeit now antique, law. There existed at common law the tort of cattle-trespass. Higgins, Elements of Torts in Australia, 1970, says this under the heading "What are Cattle?":

"In the context of cattle-trespass, the term 'cattle' is not confined to bulls, oxen and cows but extends to goats, swine, sheep, domestic fowls, geese, ducks, turkeys and even horses and asses."

The learned author goes on to point out that it has been held not to apply to cats, but there is dispute on the case law as to whether it includes dogs. It has been held in England by the English Court of Appeal that it does not apply to dogs but it has been held by the Full Court of the Supreme Court of Victoria that it does apply to dogs. In short, the word “cattle” is apt to describe animals of the genus Ovis as well as the genus Bos.

21. If Mr McFarland had visited the property on three earlier occasions, he must have known that the defendant ran sheep and not cattle. The evidence that Mr McFarland gave about the defendant having cattle and that the property was not fenced for sheep is just mendacious. Mr McFarland also said on oath that the defendant was trying to sell its sheep at $20 per head. That is also untrue. Indeed, there would be absolutely no reason for the defendant to try to sell sheep at that price as in 2016 the defendant was able to sell its ewes for $90 a head and wethers for $78.60 per head. Indeed, in December 2010 the defendant had paid $180 per head for ewes which were either with lamb or heavily pregnant. The idea of selling such stock for $20 per head is risible. Again, on 30 August 2018, when giving evidence in Sydney, Mr McFarland said that the property was not fenced for sheep or for cattle but it was clearly fenced for sheep.

22. He also said on oath that he was the only person who discharged any firearm on his property, but that is inconsistent with the evidence not only of Mr Middleton but also of another witness, Mr Janson, and is inconsistent with admissions that Mr McFarland made to Mr Middleton about Mr Giess discharging a firearm on or about 4 April 2014.

23. Mr McFarland, when cross-examined, admitted that he had been living at Hatton Vale for four or five years. That was the evidence he gave to me in Lismore on 23 August 2018. However, when giving evidence in Sydney about the contents of his caravan, the conversion of which is the subject of one of the plaintiffs' claims, he said that, essentially, he had been rendered homeless and had moved all his goods and chattels into the caravan on Lot 10. The two pieces of evidence are quite inconsistent.

24. A further piece of mendacity can be found in Mr McFarland's affidavit. Paragraph [15] of Mr McFarland's affidavit is this:

"While I was not aware at the time, I have now come to learn that on 17 March 2015 the defendant took possession of my property and sold it on the basis that the mortgage was not paid. I accept that I did not pay the first instalment of $33,333.30 due under the mortgage."

In [18] of the same affidavit Mr McFarland said this:

"I never received any default notice, was provided no opportunity to rectify the default, nor provided any notice about the exercise of the power of sale or that there was to be an auction."

Exhibited to Mr Middleton's affidavit are default notices addressed to both the first plaintiff, Mr McFarland, and the second plaintiff, Ms Miller. They purport to be given pursuant to s 57(2)(b) of the Real Property Act 1900 and s 111(2)(b) of the Conveyancing Act 1919. Each is addressed to the plaintiffs at Lot 22 Woolshed Creek Road, Hatton Vale, Queensland. That is an address that was supplied to the defendant by the plaintiffs' former lawyers. Each bears the date 10 February 2015, but it appears that one of them was sent on the following day. The relevant part of Mr Middleton's affidavit is this:

"104. On 10 and 11 February 2015 the first default notices were issued, one to Mr McFarland…and one to Ms Miller…

105. After on response was received on 26 February 2015, the defendant sent a second round of notices to both Mr McFarland and Ms Miller by registered post to their business/Post Office Box address (signature required). Exhibit RJM-44 is a copy of the screenshot of the Australia Post tracking system showing both notices having been 'delivered' at 13:35pm on 27 February 2015."

Exhibit RJM-44 does establish delivery at the Ipswich Post Office on 27 February 2015 at 13:35.

25. On 17 March 2015 the defendant as mortgagee entered into possession of the land. A notice of entry into possession of land bears date 17 March 2019. The following is stated by Mr Middleton in his affidavit:

"106. Once again, the plaintiffs ignored the default notices and failed to make any payment to the defendant. On 17 March 2015 the defendant forwarded repossession notices and cover letters to Mr McFarland, Ms Miller and Mr Giess. I placed a notice in Mr Giess's mailbox personally.

107. I also placed repossession notices on all gateways into the property and on the 'Right of Carriageway' (ROC), a total of six notices, changed the padlocks and notified the neighbours.

(a) Exhibit RJM-45 is a copy of the repossession notice, cover letter and accompanying attachments.

(b) Exhibit RJM-46 is a photograph of the notice taped to the ROW gate at 15:20 on 17 March 2015.

(c) Exhibit RJM-47 is a security camera photograph, of an acquaintance of Mr Giess (while Giess awaits in his vehicle, registration plate 734 REY), removing the possession notice from the gate at 18:59 on 17 March 2015…"

Exhibit RJM-50 to Mr Middleton's affidavit is a letter from A Ace Solicitors of Ashgrove in the State of Queensland, those currently acting for the defendant, bearing date 19 March 2015. It commences thus:

"We act for Wendy Miller and Mervyn McFarland.

Our clients have just been handed a Notice stating that they are in default of their mortgage repayments to your client.

Your client would be aware that our client has been chasing bank account details so that they can commence making repayments, since well before Christmas."

For each of Mr McFarland and Ms Miller to state that they had never received a notice is absolute mendacity.

26. Furthermore, the last sentence of that letter which I quoted raises another issue. There are, in evidence, (exhibit RJM-38) a number of screenshots taken from Mr Middleton's telephone. On the left-hand side are communications sent by Mr McFarland and on the right-hand side are the response messages sent by Mr Middleton. Mr McFarland admitted, receiving all of the messages from Mr Middleton but for the last one. The last message sent by Mr McFarland was sent on 4 November 2014 at 2.13pm. It is this:

"By the way, I need your account details for the payment on the 31st of next month, BSB and Acc number and send them through when ever I will keep them on file."

The response which Mr Middleton said he sent is this:

"Merv, don't even think about trespassing onto our property brandishing firearms, you will be arrested and your guns seized…Acc name, Common Australian Pty Limited, bsb [provided] ac [provided]."

I accept Mr Middleton's evidence that he sent that message. He sent that on 4 November 2014 at 4.14pm, a minute after Mr McFarland sent his message. It is clear that Mr Middleton had provided the requisite banking details to Mr McFarland and for Mr McFarland to have instructed his solicitors that he had been "chasing bank account details so that they can commence making repayments since well before Christmas," was untrue. He had requested them once, they had been provided, and on Mr McFarland's own admission in evidence, he had made no attempt after 4 November 2014 to obtain the banking details of the defendant. The reason when he did not chase them, as he had told his solicitors, was because Mr Middleton had already provided them to him. In this and many other ways, the evidence of Mr McFarland can be found to be wholly unreliable and at many times, patently dishonest.

27. The evidence of Ms Miller was brief, but also suffers from one defect and that concerns the notices. Paragraph [4] of her affidavit is this:

"I never received any notices regarding the sale of our land at Lot 10, Mountain Creek Road, Tenterfield NSW…nor any notices that would give us the opportunity to rectify the default but I do remember him putting padlocks onto the gate to restrict our entry onto the Land including a lock on the main carriageway, which is common property that should be accessible to everyone (especially as it is the main fire escape for a number of lots)."

I accept that each of the plaintiffs was served with a default notice and was provided with the notice of entry into possession. Ms Miller did admit that the post office box to which the notices were sent was one that she and Mr McFarland used.

28. The unreliability of Mr Giess's evidence can be clearly seen when one considers the evidence of Mr Ross Janson. Mr Janson is a person who is independent of the parties. He lives at Torquay on Hervey Bay in Queensland. On any rural property, it is necessary to control vermin. In his affidavit, Mr Middleton said this:

"15. Predator control in the flock is an essential management process. Around the land, the principal predators were:

(a) Wild dogs - canis familiaris (killers of sheep of all ages)

(b) Foxes, European Red (killers of lambs up to three weeks of age)

(c) Feral pigs - sus scrofa (killers of lambs of all ages).

16. Main methods of control the defendant uses are:

(a) '1080' (poison) meat and ejector capsule baiting;

(b) Human deterrents (presence);

(c) Professional hunting contractors.

Baiting is the least effective method because all predators prefer live kills to cold bait.

17. More usually, contractors are hired to facilitate flock management, including deterring and despatching (if possible) predators as I am unable to maintain the workload on my own. Firearms use is prohibited on Jackals Hide so professional hunting contractors are commissioned to do this work.

18. Contractors (and any other willing associate) are also used to maintain a vigil on the flock, report the condition of the flock and create the presence that deters predators."

29. Mr Janson is a professional hunter. He went to Jackals Hide with his son and Mr Wayne Kruger on Thursday 3 April 2014. This incident which involves Mr Giess has sometimes been described as the “two and a half men” incident. Mr Janson's son was turning 13 and for his birthday wished to accompany his father and his father's friend to Jackals Hide and it is clear that this was an arrangement that was convenient to both Mr Middleton and Mr Janson and Mr Kruger. There was an episode that was usually described in another jurisdiction as "back scratching". Mr Middleton permitted Mr Janson and Mr Kruger and Mr Janson's son to camp on the land and hunt predators in return for their not charging him. He gave a free "holiday" to Mr Janson and Mr Kruger; in return, they hunted predators as part of entertaining Mr Janson's son. Mr Janson's affidavit contains this matter:

"2. On [Friday] 4 April 2014 at about 7.30am we were on the land known as the 'Lease' [Lot 10], where the company’s sheep grazed, by instruction of the manager of Jackals Hide, Rod Middleton.

3. A large man with tattoos approached us in a loud vehicle. I later learned this man's name was Paul Giess.

4. This was intimidating and aggressive. He told us we were trespassing on the property and to 'get off'. He threatened us and said he would 'shoot' us if he saw us there again.

5. We immediately left the land and located Mr Middleton. Mr Middleton telephoned the owner of the land. The owner agreed it was the company's right to be on the 'Lease' so, we returned. [Mr Janson admitted in evidence that the last sentence was hearsay.]

6. At about 9am Mr Giess returned in his vehicle and we saw him commence firing a gun from the vehicle. He discharged the weapon at least five or six times as we fled in fear of harm - my son was only 12 years old.

7. We advised Mr Middleton of the incident. He instructed us not to return to the 'Lease' and we did not.

8. The next morning at about 8am, Mr Giess drove, unwelcomed, into our campsite on Jackals Hide and again informed us that the 'Lease' was private property and to 'stay off'.

9. We had no intention of returning to the 'Lease' but we were quite distressed by all of this so we packed up and left Jackals Hide at about 10.30am on the morning of 6 April 2014. We have not returned since."

30. Mr Janson was required for cross-examination and gave evidence in Lismore. I have no hesitation whatever in accepting Mr Janson's evidence. It has been criticised by learned counsel for the plaintiffs in that if Mr Janson and Mr Kruger and Mr Janson's son were in fear, why did they stay at Jackals Hide on Saturday 5 April after they were confronted by Mr Giess at about 8am at their campsite? If they were so distressed, they would have left straight away and not waited until the following morning. However, on the 5th, Mr Giess did not threaten to shoot them, nor was there any evidence that he confronted them with a firearm on that occasion. I accept that they would have been camping at any one of a large number of places on Jackals Hide, one of the many campsites identified on exhibit 7. Mr Giess denied discharging the firearm, as deposed to by Mr Janson, but I accept Mr Janson's evidence and reject the denial of Mr Giess.

31. I trust that those remarks are sufficient to draw the attention of both parties, and anyone who reads this judgment once it has been transcribed, as to why I do not accept Mr McFarland and Mr Giess, and although her evidence is limited, why I cannot accept the averment on oath of Ms Miller that she did not receive any notice.

Conflict arises

32. As I said at [15], the relationship between the plaintiffs and the defendants started going amiss on 4 April 2014, shortly after the conveyance was completed.

LUNCHEON ADJOURNMENT

33. The events of 4 April 2014 are also described by Mr Middleton in his affidavit. It is important to note that antecedent to the defendant’s conveying Lot 10 to the plaintiffs bad blood had arisen between Mr Middleton and Giess. In his affidavit Mr Middleton said this:

"48. In March 2014 it was discovered that Mr Giess was stealing equipment from Jackals Hide by inadvertently mentioning during a conversation at a local wedding of friends, being in possession of my de-facto partner's ladder, that had previously and mysteriously gone missing.

49. On 21 March 2014 I found Mr Giess trespassing on Jackals Hide. My de facto partner was present. We both confronted him about the trespass and also requested return of the stolen equipment. He immediately became aggressive and made excuses; he told me he removed the equipment from the property because he didn't think the equipment belonged to us but rather to some of our, (in his words) 'dickhead mates.'

50. At that point, the defendant banned Mr Giess from Jackals Hide and ceased any association with him.

51. Mr Giess threatened us with vengeance and, I believe, has nurtured an enduring grudge ever since."

34. Of the incident 4 April 2014 Mr Middleton said this:

"53. On 4 April 2014 it was reported to me in person, at about 10am by Ross Janson (professional hunting contractor) that Mr Giess had earlier that morning at about 9am orally harassed and intimidated him and his assistants whilst they were performing a, 'Walk through,' on the land (at my request) checking the welfare of the sheep and looking out for potential predators. He told me that Mr Giess then left the land. At about 9.30am he returned with a firearm and discharged it at or within their vicinity. He told me they had fled in fear of their lives.

54. I met Mr Giess on his way out of the land and attempted to talk to him but he was very belligerent and, 'raved on,' about his banishment from Jackals Hide. He spat in my face and reeked of alcohol and marijuana and, with one hand on the steering wheel of his vehicle, the other on a long arm gun which was laying on his lap, he said something like,

'That's Merv's land and I'm the caretaker and you ain't goin' on it…you cunts keep out, that's private property…Merv's my best mate, I'm looking out for him…you send any cunt on Lot 10, there won't be no talkin', it'll be shoot to kill…'"

35. There was a meeting between the plaintiffs and Mr Middleton and his de facto wife on 20 April 2014 that had been arranged by Mr Middleton. In his affidavit Mr Middleton said that this was the heart of the conversation at that meeting:

"Mr McFarland said,

'…[Giess] said the bloke who owns the property [McFarland] and his sons and his mates are all shooters and come Easter time there's going to be shells flying around the place so if you know any mates coming down at Easter time, I suggest that you let 'em know because there's gonna be bullets flying around the place everywhere.' … and that's what Paul told me."

The following was also alleged to have said:

"… cause I said whose gun was it, mate, and he [Giess] said, …

'because if these people do go to the coppers you're all going to get done for unlicensed firearms and being unlicensed yourselves…'"

36. Mr McFarland also told Mr Middleton that Giess had admitted to him that he had discharged a gun twice at the back of Lot 10 and Mr McFarland admitted that Giess ought not to have done that and Mr McFarland told Mr Middleton that he had told Giess that he should not have done that. In other words, there is a clear admission made by Mr McFarland that Giess had admitted to Mr McFarland discharging the firearm.

37. One of the unsatisfactory things about the evidence of Mr McFarland about this issue is that he would not accept that the defendant retained professional hunters to kill predators using bows. He appears to have an a priori view that that was not how professional hunters acted but that was exactly how Mr Janson and Mr Kruger were acting on 4 April 2015. Furthermore, it is not an objection which he took at the meeting on 20 April 2014. He appears to have accepted that the defendant had retained professional hunters to try to control predatory beasts on the property.

38. The next relevant event which can be fixed in point of time was the attempt by Mr Middleton to have the plaintiffs execute a formal lease. That is referred to in [91] of Mr Middleton's affidavit and in [92] he recites that on Anzac Day 2014 at about midday, as Mr McFarland was leaving the property, he said to Mr Middleton that, "He's ain't goin' nowhere." Apparently, Mr Middleton hoped that by the plaintiffs’ executing the lease he could keep Mr Giess off Lot 10 but that it appears to have been one of the reasons that the plaintiffs had for not executing the lease, but, as I have earlier mentioned, they were not obliged to do so in any event.

39. On 13 May 2014 Mr Middleton entered onto Lot 10 in order to mark lambs. Paragraph [67] tells me that on that day at 6am Mr Giess and Mr McFarland were not on Lot 10 so Mr Middleton entered the property, mustered the sheep into the yards for the flock's six week (mid-term) lamb marking operation. According to stock records kept by the defendant 182 lambs were marked at that time. Mr Middleton's affidavit goes on to state this in [64]:

"I noticed quite a few dead sheep in the paddock while I was mustering stock. Notably, I found a number of sheep lying dead in a group, something I had never seen before. I was unable to explain any of the deaths and foul play never crossed my mind. The dead animals had not been attacked by predators and all appeared otherwise healthy. The carcases were no longer bloated and the fleece had, 'slipped,' but the frames were not yet, 'collapsing,' therefore I had assessed that they had been dead for about a week."

In his oral evidence Mr Middleton told me that he did not approach this group of dead sheep closely, for obvious reasons of hygiene, and obviously because of stench. However the beasts would appear to have been otherwise healthy and all dying in a group might suggest that they had been shot. The cause of death for that group of sheep has not been ascertained.

40. On 30 June 2014 Mr McFarland and Mr Giess were not on Lot 10 so between 6am and 8am Mr Middleton mustered the flock on Lot 10 and brought it into the yards on Jackals Hide. He ensured that there were no, "stragglers," remaining on Lot 10 because this was the time of year in which it was necessary to drench the entire flock of sheep. However the headcount for the total flock was only 195 beasts.

40. Allowing for natural increase as at 30 June 2014 there ought to have been 464 ewes, 182 wethers and 11 rams. At the mustering of the flock there were only 139 ewes, 46 wethers and 10 rams. There were losses of 325 ewes, 136 wethers and 1 ram. Mr McFarland in oral evidence conceded that there would be some, "natural predation," of up to 6% per annum which, over a three month period, would represent 1.5% loss. Allowing for natural predation the defendants' flock had lost 320 ewes, 134 wethers and one ram. In a cross-claim filed by the defendant the defendant claims the loss of stock from the plaintiffs who are also cross-defendants.

41. There are photographic exhibits annexed to Mr Middleton's affidavit which show pictures of dead sheep taken in May and June 2014. They only display, as far as I understand it, 17 dead beasts.

42. One of the reasons why Mr Middleton took the flock from Lot 10 is an event that occurred on 15 June 2014. This is described in [100] of Mr Middleton's affidavit. On 15 June 2014 at 12.10pm there was a conversation between Mr Middleton and Mr McFarland over the telephone. Mr Middleton referred to this as another occasion on which it was reiterated that the defendant through its servants or agents could not enter the property. Mr Middleton said that Mr McFarland told him that he did not have to do anything, that Mr Giess was the plaintiffs' caretaker and he was on the plaintiffs' property to keep, "everyone," out and Mr McFarland pointed out to Mr Middleton that there was no lease and that he did not have “any rights to the land", which is quite inconsistent with the agistment agreement.

Default under the mortgage

44. The next relevant event is the failure of the plaintiffs to pay the instalment of $33,333.30 payable on 31 December 2014. Mr McFarland said that he had explained to Mr Middleton that his de facto, Ms Miller, was gravely ill and that he was in financial straits because of his need to stay out of work and care for Ms Miller. Mr McFarland said in evidence that Mr Middleton told him that it would be all right if he were unable to make the repayment on 31 December 2014 but he would still have to pay the interest accruing on the unpaid instalment. Mr Middleton said that exchange did not occur prior to 31 December 2014 and I accept his evidence in that regard. Furthermore, what Mr McFarland said is inconsistent with his asking Mr Middleton for the banking details to enable payment of the instalment and Mr Middleton’s giving him the relevant details in the telephone message exchange of 4 November 2014 to which I have earlier referred. Clearly, at that time, Mr McFarland must have been intending to make the payment.

45. According to Mr Middleton's affidavit the defendant received no communication from either of the plaintiffs at all, so on 16 January 2015 he contacted his then solicitors in Inverell inquiring as to whether payment had been made to them. The solicitor at Stuart, Cook & Braham, Mr Roger Braham sent an email to Mr Middleton on 20 January 2015 at 5.35pm. The email is this:

"Sorry I haven't replied earlier. I did get your email but as you would probably realise the first couple of weeks after the office has been closed for two and a half weeks is flat out. Notice will have to be given to the mortgagor of intention to repossess et cetera. It is in a position then to pay up with penalty interest if any. If he doesn't then proceedings can be taken."

In other words, this email confirms that antecedent to 20 January, the defendant through Mr Middleton had been in contact with its solicitors concerning the unpaid instalment.

46. The default notices which are dated 10 February 2015 were issued not by Mr Braham but by Messrs Davis Lawyers of Ashgrove in the State of Queensland. It is clear that the notice of entry into possession was posted by that firm to the plaintiffs at their Post Office box in Ipswich, Queensland on 17 March 2015. What never happened was any payment made to or on behalf of either of the plaintiffs to the defendant in satisfaction of the default notices or any attempt to diminish the Plaintiffs' liability to the defendant.

47. That led to the defendant’s entering into possession of the land or attempting to do so after 17 March 2015. Notwithstanding the defendant’s purported entry into possession, the plaintiffs still attended the property over the Easter weekend in 2015. Good Friday on that year was 3 April 2015 and Easter day was clearly 5 April 2015. The relevant piece of Mr Middleton's affidavit is this:

"116. On 4 April 2015, I watched (and videocaptured) Mr McFarland and others use an electric grinder and portable generator to cut the locks and chains off a gate and 'break in,' to the land. They also ripped off the 'Entry into Possession' notice as they proceeded.

117. I was repairing fences at the time and as they entered, they sped toward me so I fled and contacted the police. Exhibit RJM-51 is a still picture extracted from the video of Mr McFarland cutting off the lock and chain with a grinder and generator. Exhibit RJM-52 is a still picture extracted from the video of Mr McFarland ripping off the possession notice.

118. Mr McFarland and others also trespassed through Lot 17. I telephoned the owner, Stuart Morgan, who told me that he was too fearful to approach them to tell them to 'leave' his land. They 'broke' into the land at the position marked with a blue C in the red circle on the title plan are the portions that made up ‘Jackals Hide’ [Refer exhibit RJM-1].

119. Mr McFarland, Mr Giess and others traversed the entire boundary of the land and cut every single lock and chain of every gate they came across. They left behind (in the dwelling) a large pile of broken locks and pieces of chain. They roamed the land spotlighting and shooting all night, every night for three nights and drove in and out of the land all day every day for three days.

120. I sent my de facto partner away from the farm due to the dangerous situation and stayed up all night with every night remaining vigilant.

121. The police maintained, 'it was a civil matter,' and refused to intervene.

122. On 7 April 2015 at 10.30am, Mr McFarland and others vacated the land.

123. On 8 April 2015 at 6am I tentatively entered the land to inspect it. I found quite a few dead sheep and rubbish everywhere. Exhibits RJM-53 and 54 are copies of photographs of some of the dead sheep and rubbish as are exhibits RJM-35 and 36 to which I have previously referred."

This Easter weekend was the last occasion on which the plaintiffs visited Lot 10.

48. As ought be clear from what I said earlier, Mr Alford was retained to sell the land at public auction. Paragraph 36H of the amended statement of claim filed by the plaintiffs is this:

"Further, or alternatively, the Defendant breached the duty owed to the Plaintiff pursuant to the Conveyancing Act 1919 s 111A and/or at common law as:

(b) The auction was not advertised to the general public.

(c) The auction was held in a location called, 'TBC Auction Room,' but no address was advertised for this auction room.

(d) The, 'TBC Auction Room,' does [not] exist on any map or internet search engine, even if further defined - even if further defined [sic scil. refined] to Tenterfield, NSW.

(e) The auction was not held in a public place.

(f) The auction was not held on the property so that it could be inspected.

(g) The property was sold to an associate and family friend of Mr Rodney Middleton being Mr Krecic."

I am not here dealing with any legal issues but factual issues. Each of the particulars given under s 36H of the pleading is factually incorrect and that is yet another way in which the evidence of the plaintiffs can be seen as being untruthful.

49. Paragraphs [127] and [128] of Mr Middleton's affidavit are these:

"127. On 22 May 2015, given the right under the Real Property Act 1900 section 58, we advised all parties the land would go to auction on 4 July 2015 if the default remained unserviced.

128. However, on 26 June 2015 I elected to postpone the auction until 26 September 2015 and allow the plaintiffs an additional three full months to rectify the default."

Mr Middleton was not challenged to say that the notice to which he had referred in [127] in his affidavit was not given.

50. The sale of the property was advertised by Mr Alford in the Tenterfield Star, the Northern Star, the Country Leader and the Southern Downs News Weekly. One hundred brochures were printed. The sale of the property was featured in internet sites, in particular, domain.com and realestate.com. At the commencement of these reasons I used one of the advertisements to describe Lot 10. When the property was advertised inspections were offered by appointment. An advertisement in the Country Leader on 31 August 2015 told those reading the advertisement that the property was to be auctioned on Saturday 26 September 2015 at 10am at the Tenterfield Bowling Club. An advertisement published in the Tenterfield Star on 2 September 2015 indicated that the venue for the auction was the Tenterfield Bowling Club. There are before me a number of other advertisements for the property all indicating it was to be auctioned at the Tenterfield Bowling Club. One advertisement does not have the venue for the auction but it gives the auction day, Saturday 26 September 2015 at 10am and gives details of a "Web ID" and also gives the name of Mr Alford and his mobile telephone number. Any person who wanted to attend the auction could clearly easily find its location. The advertisements can be found as exhibit SA5 to the affidavit of Mr Alford, which is exhibit 2.

51. The public auction was held at the Tenterfield Bowling Club on the advertised date, 26 September 2015, at 10am. Even if there were one advertisement which said that the venue of the auction was to be advised or the like, nearly every advertisement before me does indicate that the auction was to be held at the Tenterfield Bowling Club. The Tenterfield Bowling Club for that purpose was open to members of the public. The auction was not required to be held on the property. The property was open for inspection by anyone wishing to inspect it, by appointment. Holding the inspection on the property would not have been in anybody's interests because it may have been difficult for some persons to get there if they wished to participate in the auction.

52. It is true that Mr Jason Krecic, the buyer of Lot 10 from the defendant in possession, was known to Mr Middleton but that was because he was a Tenterfield "boy" and, according to Mr Middleton's affidavit, as a matter of coincidence two of his children went to school with Mr Krecic's older sister, Ms Mellissa Krecic, which had been about 15 years earlier and therefore he was familiar with Mr Jason Krecic's sister. He had otherwise never associated with her brother, Mr Jason Krecic. There was no challenge to Mr Middleton's evidence about that. The factual allegation made in the statement of claim is purely incorrect and must arise from mere speculation by the plaintiffs.

The claims of the plaintiff

53. The questions which remain are what is the nature of the plaintiffs' claim and what is the nature of the defendant's cross-claim. At the end of the case, the plaintiffs' claim is for a loss due to the unlawful repossession and sale of Lot 10 based upon an allegation that there had been a breach of the National Consumer Credit Protection Act 2009 because the defendant failed to provide a default notice pursuant to the National Credit Code s 88(2) prior to taking possession and that was a necessary precondition for the defendant's entering into possession and selling the land. In the alternative, the plaintiffs bring an action for damages pursuant to s 111A(4) of the Conveyancing Act 1919 in the alternative to the claim under the National Consumer Credit Code failing.

54. The plaintiffs also claim loss due to the conversion of chattels. The sum claimed for conversion is $19,860, being the total value of the chattels referred to in [28] of Mr McFarland's affidavit, exhibit A, but excluding $12,500 for a caravan, which the plaintiffs now accept was a fixture on the property.

Conversion of goods

55. It is convenient to deal with the claim in conversion first. The first item listed in [28] of exhibit A is a white 18-foot caravan with a silver stripe valued at $12,500. This is what is accepted as being the fixture on the property. The title to a fixture on the property passed on the completion of the sale to Mr Krecic: quicquid solo plantatur, solo cedit.

56. There are then items numbered (b) to (tt). I shall recite a list and indicate the evidence of Mr Middleton about the item:

(b) A fridge in the caravan - $150. Still there.

(c) 15-inch TV - $100. Still there.

(d) Assorted DVDs - $500. About one dozen DVDs still there.

(e) Fold out lounge - $100. Not there.

(f) White storage cupboard - $800. Not there.

(g) One 9-kilogram gas bottle with heater attached - $200. One gas bottle still there.

(h) Assorted linen - $200. Not there.

(i) Assorted cooking utensils - $200. Still there.

(j) Power leads - $100. One power lead there.

(k) One gas barbecue - $100. Still there.

(l) Wooden table and chairs - $300. One wooden table and four chairs still there.

(m) 1 outside lounge - $80. Still on deck of annex to fixture.

(n) 1 twin-cab HiLux ute - $1,500. Still there.

(o) 2 x 1000-litre water pods - $160. Two water pods still on property, one containing water and one containing sewage attached to the toilet.

(p) Four wheelie bins - $80. Two or three broken bins still there.

(q) Assorted building piles - timber, tin steel posts (for constructing a double carport) - $2,000. Some offcuts still there.

(r) Water pump 240 volts - $400. Still there, connected to the fixture on the concrete slab.

(s) One generator - $100. Not there.

(t) One jackhammer - $400. Not there.

(u) Assorted tools, drills, grinders, saws, nuts, bolts, worktables, benches, etc - $1,000. Not there.

(v) One antique display cabinet - $1,000. Not there.

(w) Two wooden bedside tables - $50. In the caravan, maybe part of the caravan, the caravan being a fixture.

(x) One large wooden shoebox - $200. Not there.

(y) Two wooden wardrobes - $400. Not there.

(z) Assortment of vases - $200. Not there.

(aa) Assortment of clothing - $500. Not there.

(bb) Assortment of lamps - $200. Not there.

(cc) Outdoor setting - $100. Not there.

(dd) One large caravan annexe - $1,800. Inside the caravan.

(ee) One flatpack glass shower cubicle, not assembled - $100. Present in back of HiLux.

(ff) 1 6-metre Pantech - $800. Present.

(gg) 1 steel homemade firepit barbecue $50. Present, roughly made.

(hh) 1 twin-tub washing machine still in the box - $400. Not there.

(ii) 3 bed mattresses - $200. Not there.

(jj) 1 double stainless steel outdoor sink - $50. Present.

(kk) Number of photograph albums - priceless. Not there.

(ll) Personal papers - passports, certificates, resumes - $400. Not there.

(mm) 1 rocking chair - $120. Not there.

(nn) Chainsaw - $300. Not there.

(oo) 20-foot ladder - $180. Half a ladder present only.

(pp) Three folding tables - $60. Present.

(qq) Large roll of blue rope - $80. Not there.

(rr) Chains and dogs - $200. Not there, only chains and locks cut by Mr McFarland.

(ss) Assorted jewellery - $200. Not there.

(tt) Personal family keepsakes - photos, books, cards, toys - $200 (photos are priceless). Not there.

57. The first thing to note is that if Mr Middleton said the items were not present, I accept that evidence. The next thing to note is that it would appear to me that the 1000-litre water pods are fixtures, the water pump may also be a fixture. The next thing to note is that at no time prior to the commencement of these proceedings was any demand made by the defendant for the return of any of these items. Indeed, Mr McFarland was cross-examined to the effect that he took most of these items with him when he finally left the property on 7 April 2014.

58. The most recent authoritative exposition, as far as I am aware, of the law of conversion is contained in the decision of the House of Lords in Kuwait Airways Corporation v The Iraqi Airways Company & Ors [2002] UKHL 19. The basic features of the tort, according to Lord Nicholls are that the defendant's conduct must be inconsistent with the rights of the owner or other person entitled to possession of the goods, that the conduct must be deliberate and not accidental, and that the conduct must be so extensive an encroachment on the right of the owner or other person entitled to possession as to exclude him or her from the use and possession of the goods.

59. Going back to the well-known case of Penfolds Wines Pty Limited v Elliott (1946) 74 CLR 204 Dixon J (as he then was) said that:

"The essence of conversion is a dealing with a chattel in a manner repugnant to the [actual possession or the] immediate right of possession of the person who has the property or special property in the chattel." (at p 229.)

His Honour then went on to give several examples of interferences with chattels that would amount to a "dealing" sufficient to constitute the tort:

"it may take the form of a disposal of the goods by way of sale, or pledge or other intended transfer of an interest followed by delivery, of the destruction or change of the nature or character of the thing, as for example, pouring water into wine or cutting the seals from a deed, or of an appropriation evidenced by refusal to deliver or other denial of title."

60. The 10th Edition of Fleming's Law of Torts discusses conversion by withholding possession or failing to return goods. The relevant part of the text [4.110] is this:

"Merely being in possession of another's goods without authority is not tort. If lawfully acquired, possession of goods alone does not become a wrong in the absence of some manifestation of intent to keep them adversely or in defiance of the owner's rights. A bailee who merely holds over may thus be liable for breach of contract, but commits neither conversion nor detinue; and the finder of chattel, not knowing the true owner, commits no wrong by simply keeping it for safe custody.

For the possession or withholding to be conversion, it must be in some way in defiance of the claimant's rights. Normally (though not invariably), this is shown by evidence that the claimant demanded the chattel and that the defendant either refused to comply, or imposed conditions he was not entitled to, as by unlawfully making delivery dependent upon payment or (in the case of a railway) refusing to deliver up until a strike was settled. But even here refusal must be categorical, furthermore, a defendant faced with a demand for goods is normally entitled to a limited time to make inquiries into the rights of the claimant.

Since the reason for normally insisting on a prior demand is to ensure that a defendant be informed of the defect in his title and have the opportunity to deliver without liability, there is some support for dispensing with the requirement when the defendant, with full information, categorically denies the plaintiff's right in some other way so as to show that a prior demand would in any event have been refused.

It should be noted that strictly speaking, a defendant's duty in any case of withholding is strictly just to let the plaintiff collect the goods. The possessor is under no duty actually to deliver them."

61. The defendant lawfully took possession of the land (an issue to which I shall return later). The plaintiffs subsequently entered upon the land on the Easter weekend 2015 but they failed to remove certain of their goods. They never asked for the goods to be returned to them. There is no evidence that the defendant has done anything to deny the plaintiffs title to any goods in question. The defendant merely exercised its right to sell the property and did so and the plaintiffs had adequate notice of the auction and of the sale of the property. Indeed, there was no actual exchange of contracts at the auction on 26 September 2015. The exchange of contracts did not occur until 15 December 2015 and the conveyance was completed on 12 February 2016. There has been no manifestation of any intention by the defendant, through Mr Middleton, to keep the chattels adversely in defiance of the plaintiffs' rights to the chattels. Rather, everything speaks of the plaintiffs having merely abandoned the chattels.

102. The problem here is one of pleading. There is no pleading in bailment. The Second Edition of Palmer on Bailment (1991) tells me this at p 811:

"An agister will be liable if he puts an animal in a place inhabited by others of a dangerous disposition, if it is foreseeable that injury will result. In a recent case, the Jockey Club were held liable for keeping a racehorse in a box containing straw, as a result of which the horse ate the straw and contracted a cough."

There are a number of cases cited to support that proposition made by the author. They are Smith v Cook (1875) 1 QBD 79, Sanderson v Dunn (1911) 32 ALT (Supp.) 14; 17 ALR (CN) 9, Pipicella v Stagg (1983) 32 SASR 464. At p 813, the learned author of the text which I am citing said this:

"An agister must take reasonable steps to ensure that his land is safe for animals to roam upon, and will be liable for any direct loss which results from a breach of this duty. Thus, he must use ordinary diligence to ensure that there are adequate fences and to see that the place is free from hazardous conditions in which such animals are likely to fall or otherwise become injured."

For that proposition, the author cites Halestrap v Gregory [1895] 1 QB 561, Turner v Stallibrass [1898] 1 QB 56, Grubb v The Cascade Brewery Co Ltd (1903) 2 N & S (Tas) 133, as well as cross-referencing other cases. The index to the work refers to learning on p 863. It is not in particular about agistment but it is a principle that must be borne in mind:

"We submit liability in respect of such events [deliberate damage, destruction or misuse] should follow the principles dictating liability for unlawful misappropriation. Accordingly, the bailee should be answerable for a deliberate injury to bailed goods which is committed by any servant, agent or independent contractor to whom the bailee has delegated the whole or any part of his duty of care in relation to those goods, but he should not be answerable if such injury is committed by an employee or delegate whose employment merely affords him an opportunity of injuring the goods without involving any actual entrustment of them to him."

Finally, it should be noted that on p 877 the following is said about agisters and, although I am not concerned with a lien in this case, another principle of law is stated:

"The common law rules that an agister has no particular lien over animals bailed to him is upheld by substantial authority in England, Australia and New Zealand. The justification is that, 'unless the bailee can establish improvement, he has no lien'. An agister does not normally improve animals agisted to him but merely provides for their day to day maintenance and survival."

In other words, the duty of the agister is to provide for the day to day maintenance and survival of animals bailed to his care. However, as I said, there is no pleading in bailment.

103. The relevant pleadings are these:

"10. From about April 2014, the cross-defendant, in breach of the Contract, refused the cross-claimant, by its servant and agents, access to the Land for the purposes of tending to the sheep depastured on the Land.

PARTICULARS

(a) On or about 4 April 2014, Paul Alan Giess, a servant or agent of the cross-defendants, discharged a firearm in the direction of the cross-claimant's servants and agents (R. Janson, W. Kruger and B. Kruger) while they were tending the flock, causing them to flee the Land in fear for their lives;

(b) From that date, Mr Giess also regularly trespassed on Jackals Hide land to harass and intimidate the cross-claimant's servants and agents and to prevent them accessing the Land.

11. By reason of the said breach, the cross-claimants suffered substantial stock losses (as particularised below) due to predation on the flock by foxes, wild pigs and wild dogs and lack of care for the flock.

12. Further, during the period from 4 April 2014 to 30 June 2014 the cross-defendants destroyed a number of the cross-claimant's sheep by shooting the sheep with rifles and shotguns."

104. The losses claimed are alleged to have been caused by predation by foxes, wild dogs and wild pigs and by the shooting of sheep, not by Mr McFarland and Mr Giess and Mr McFarland's friends, but merely by the cross-defendants, Mr McFarland and Ms Miller. As I said, I am not persuaded that Ms Miller shot any sheep, but I am persuaded by the evidence that sheep were shot by Mr McFarland, Mr Giess and Mr McFarland's friends, those he admitted onto the property.

105. The pleading does not state that the cross-defendants suffered, permitted or allowed others, including Mr Giess, to shoot the defendant's sheep on the plaintiff's land. An attempt was made by the cross-claimant to amend the cross-claim to make the allegation, but that was successfully opposed by Mr Fronis, who appears for the plaintiffs/cross-defendants. He referred me to the decision of Cambridge v Anastasopoulos [2012] NSWCA 405 in which the leading judgment was given by Meagher JA with whom Barrett JA and Sackville AJA agreed. Commencing at [51], his Honour pointed out that the claims there involved consecutive tortfeasors and concurrent tortfeasors and were concerned with a bailment and a sub-bailment and the provisions of s 34(1)(a) of the Civil Liability Act 2002. It became clear to me when reading the judgment during the course of argument on Wednesday that if I allowed the amendment to the cross-claim, the cross-defendants would be entitled to amend their defence, raising the question of an apportionable claim and inviting the Court to apportion liability between each person who may have shot the sheep on the property, and might involve the joining of Mr Giess as a party in these proceedings as on another cross-claim by either the current cross-claimant or by the cross-defendants themselves. In other words, making an amendment would have opened the proverbial, "can of worms," and for those reasons I refused the amendment.

106. However I do accept that Mr McFarland excluded the cross-claimant from the property. That issue has been discussed. That led to an increase in natural predation on Lot 10. I also accept that Mr McFarland himself shot some of the sheep and I also accept that he permitted others to shoot some of the sheep but he cannot be held liable in these proceedings for such losses there is no claim raised in bailment and the cross claim does not allege trespass to the sheep by anybody other than the cross-defendants themselves. I have reached the view, however, that in light of the - Mr McFarland's excluding Mr Middleton from the property that there was an increase in predation and I also accept that Mr McFarland shot a large number of sheep himself. The appropriate position to adopt, in my view of the evidence, is to place liability for half the losses on Mr McFarland.

107. Now half of the loss of stock is $19,966 and half the loss of profit is $38,360. Those sums plus the loss pleaded under par 25 of the cross-claim amounts in total to $71,732.38.

108. For those reasons I make the following orders:

1. Verdict and judgment for the defendant against the plaintiff on the statement of claim.

2. Verdict for the cross-claimant against the first cross-defendant Mervyn Christopher McFarland in the sum of $71,732.38.

3. Verdict and judgment for the cross-claimant against the second cross-defendant Wendy Ann Miller for $13,406.38.

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Amendments

21 March 2019 - 1. Typographical correction in "Catchwords"

2. Typographical correction in [63].

Decision last updated: 21 March 2019