Mongan v Bruce

[2015] NSWCATCD 117

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Mongan v Bruce [2015] NSWCATCD 117

Hearing dates:

On the papers

Decision date:

03 November 2015

Jurisdiction:

Consumer and Commercial Division

Before:

D Bluth, Senior Member

Decision:

1. The respondents are to vacate the Land within 14 days of the date of this Decision.

 

2. The applicants are to submit to the respondents a statement of moneys owed under the Lease showing the calculations. Failing agreement on the amount owed either party can relist before the Tribunal on 7 days’ notice. Payment by the respondents to the applicants must be made within 14 days of submission of the statement unless relisted before the Tribunal.

3. If the parties cannot agree to the amount of compensation under s19 of the Agricultural Tenancies Act 1990 payable by the applicants to the respondents within 28 days of the date of this Decision then either party can relist before the Tribunal on 7 days’ notice.

Catchwords:

Lease under the Agricultural Tenancies Act 1990
Under s 19 of the Agricultural Tenancies Act 1990 payable by the applicants to the respondents

Category:

Principal judgment

Parties:

Michael Peter Mongan and Kathleen Maud Mongan (Applicants)
Andrew Robert Bruce and Lynette Doris Bruce (Respondents)

Representation:

Solicitors: Cassidys Morrison & Teare (Applicants)
David Kotthoff (Respondents)

File Number(s):

COM 15/40995

Publication restriction:

Nil

reasons for decision

1. Michael Peter Mongan and Kathleen Maud Mongan (the Applicants), are the registered proprietors of land in Certificate of Title Folio Identifier [********] Mulwala, New South Wales (Land).

2. Andrew Robert Bruce and Lynette Doris Bruce (the Respondents), entered into a contract for sale of land dated 21 March 2012 to purchase the Land from the Applicants, with the sale of the land to be completed no later than 15 January 2014 (Contract). As part of the sale, the Applicants agreed to lease the Land to the Respondents for a term of two years.

3. A written lease of the Land was entered into between the Applicants and the Respondents for a term of two years commencing on 15 January 2012 and expiring on 14 January 2014 (Lease).

4. On 21 January 2014, the Applicants were advised that the Respondents were unable to complete the Contract on the due date.

5. The Applicants agreed to extend the completion date of the Contract to 15 January 2015. However, the Lease was not renewed and the Respondents continued to occupy the Land as a monthly tenant pursuant to clause 4(c) of Annexure A of the Lease.

6. The Respondents failed to complete the Contract on 15 January 2015.

7. As a result, under the Contract the Applicants served on the Respondents a Notice to Complete the Contract (Notice to Complete).

8. The Respondents failed to comply with the Notice to Complete and, under the Lease the Applicants served on the Respondents a Notice of Termination and to Quit dated 1 April 2015 (Notice of Termination). The Applicants demanded immediate possession of the Land and required the Respondents to vacate the Land on or before 10 May 2015. The Respondents have not vacated.

Applicants' Submissions

9. The Applicants submitted that the Respondents refused to vacate the Land and that they have no legal right to remain on the Land.

10. The Applicants seek orders under ss 21(e) and (i) of the Agricultural Tenancies Act 1990 (Act), being an order for the payment of an amount of money and an order terminating a tenancy respectively.

Respondents’ Submissions

11. Both parties accept the application of the Act in regulating the terms of the Lease.

12. The Respondents agree with the facts as set out in the Applicants’ submissions dated the 3 August 2015, with the exception of the following points:

1. that the Respondents do not have to vacate the Land;

2. proper notice has not been given under the Lease and the Respondents have a right to remain on the Land until proper notice;

3. orders under s 21(e) and (i) of the Act should not be made; and

4. in the event that the Applicants are successful, then the Tribunal to allow a further submission from the Applicants in relation to costs.

13. The Respondents claim that there was substantial farming work carried out by them on the Land prior to 1 April 2015, which included, but was not limited to, clearing, burning, spraying and sowing of the current crop. The Respondents were actively farming the Land and have an ongoing entitlement to the crop.

14. The Respondents contend that the Notice of Termination was ineffective as no grounds were given for terminating the Lease and pursuant to the Act, a notice period of 90 days was required.

15. It is the contention of the Respondents that the intent of the Agricultural Tenancies Bill is to protect the rights of tenants in respect of a cropping program. The Respondents drew the Tribunal's attention to the second reading speech of the Minister in the Parliament which the Respondents submit clearly addresses that 10% of the farmed area in New South Wales is share farmed and only about three per cent is leased.

16. As such, the Respondents claim that the Act was designed to cover tenants’ rights in all regards and they have an ongoing entitlement to the crop they have planted or to compensation for the value of the crop.

Applicants’ Response to the Respondents’ Submissions

17. In response to the Respondents’ submissions, the Applicants contend the following:

1. there is no required notice period of 90 days under the Act;

2. the parties have not entered into a share farming agreement; and

3. in relation to the Respondents' reliance on the second reading speech in Parliament of the Agricultural Tenancies Bill , that the Act goes further than just covering tenants’ rights and was introduced "to provide a new code for regulating the respective rights of agricultural landowners and their share-farmers and other tenants".

18. The Tribunal turns to the first issue which is whether the Notice of Termination of 30 days is effective to terminate the Lease.

Did the Notice of Termination effectively terminate the Lease?

19. Clause 4(c) of Annexure B of the Lease states that “should the lessee continue to occupy the demised property after the termination date otherwise than pursuant to the grant of a further lease then he shall do so as a monthly tenant upon the same terms and conditions hereof as are appropriate and such tenancy shall be determinable by either party giving to the other at any time one month’s notice in writing to that effect”.

20. It is clear then from the Lease that it is determinable by one month’s notice. The question is whether any provisions of the Act override the written agreement between the Applicants and the Respondents.

21. The relevant provision in relation to the termination of a periodic tenancy is found in s 14 of the Act.

“(2) A periodic tenancy (other than a tenancy from year to year) cannot be terminated unless written notice of termination is served by a party on the other party so as to give notice at least equivalent to the length of the tenancy period.

(3) In addition to the requirements of subsection (2), a periodic tenancy (other than a tenancy from year to year) cannot be terminated unless written notice of the termination is served by a party on the other party so as to give notice of at least:

(a) in the case of a sharefarming arrangement for crop growing - a period of 1 month, ending at least 1 month after the end of the annual cropping program; and

(b) in any other case - a period of 1 month.”

…

22. According to the Respondents, as no grounds were given for the termination of the Lease by the Applicants, pursuant to the Act a notice period of 90 days is required.

23. This requirement submitted by the Respondents is not found anywhere in the Act. The Tribunal notes that under s85 of the Residential Tenancy Act 2010 (NSW), if the fixed term of the lease has expired and there is no new agreement in place, the minimum period of notice that a lessor is required to give a lessee to terminate the lease is 90 days.

24. However the Lease is an agricultural lease and not a residential lease. Consequently, the minimum notice period of 90 days for a periodic tenancy is not applicable. Whatever was mentioned in the second reading speech on introduction of the Bill, there is no requirement for 90 days’ notice nor can a 90 day notice period be implied because of an understood benefit to tenants only. As an aside, the Retail Leases Act 1994 (NSW) is not just for the protection of retail lessees but rather for the benefit of both retail lessors and lessees.

25. Therefore, the Lease can be terminated in accordance with the provisions of the Lease on the Applicants giving one month's notice to the Respondents before termination.

Is the Lease a share farming agreement?

26. An ancillary issue raised by the Respondents was that the Lease was a share farming agreement and hence the Respondents have an ongoing entitlement to the crop they have planted on the Land.

27. Clause 6 of the Lease sets out the permitted use of the Land, which includes “for a dwelling and all or any farm business conducted on a sustainable basis according to good farming practices and without deterioration of the property…”

28. Nowhere in the Lease does it state that the agreement between the Applicants and the Respondents is a share farming agreement, which is an agreement where the owner supplies the land and assets and the share farmer (tenant) provides the labour, expertise and fertiliser and both parties share in the income generated by the share farmer. The Respondents have also not put forward any evidence that the agreement is a share farming agreement.

29. The Applicants' response to the Respondents' submissions is that "the parties have not agreed to share in the expenses of the land nor have the Respondents ever paid any profit from the land to the Applicants. There is no evidence to suggest the parties entered into a share farming agreement or arrangement."

30. As such, the Tribunal finds that there is no share farming agreement or arrangement between the Applicants and the Respondents.

31. As the Tribunal has found that the Lease is not a share farming agreement, there is no need to decide whether the Notice of Termination by the Applicants complies with the requirements of s 14(3)(a) of the Act. In any case, s 14(6) of the Act states that "this section does not apply to termination for a breach of the tenancy or where the tenant and the owner have otherwise agreed on the notice to be given".

32. As found, the agreement between the Applicants and the Respondents is in clause 4(c) of Annexure B of the Lease which specifies that the period of notice to be given for the termination of the Lease when the Respondents are holding over is one month's notice.

Compensation

33. The issue of compensation for farming by the Respondents is covered in the Act. Under s 19 of the Act, the Respondents as lessees are entitled to compensation for any "products" left on the Land at the end of the tenancy and the amount of compensation is determined under s 19(2) of the Act.

34. The Act defines "products" to mean "grain, hay, silage, fertiliser or any other useful commodity, whether or not a product of the soil”. It appears then that crop is a product of the soil and is a useful commodity and is therefore a "product" under the meaning of s19 of the Act. If, as the Respondents claim, they had a crop on the Land at the end of the tenancy, then they may be entitled to compensation.

Conclusion

35. There is no provision in the Act which contradicts the contractual terms of the Lease. As such, the Applicants are entitled to terminate the Lease with one month's notice pursuant to the terms of the Lease.

36. In relation to the issue of share farming, the Tribunal holds that there is no evidence of a share farming agreement between the parties. However, under the Act, the Respondents are entitled to compensation under s 19 of the Act.

37. The Applicants are entitled to a monetary order under s 21(e) of the Act and an order that the tenancy is terminated and the Respondents must vacate the land under s 21(i) of the Act.

38. The Respondents may be entitled to compensation under s 19 of the Act.

Orders

1. The Respondents are to vacate the Land within 14 days after the date of this Decision.

2. The Applicants are to submit to the Respondents a statement of moneys owed under the Lease showing the calculations. Payment by the Respondents to the Applicants must be made within 14 days of submission. Failing agreement on the amount owed, either party can relist before the Tribunal on 7 days’ notice.

3. If the parties cannot agree to the amount of compensation under s19 of the Act payable by the Applicants to the Respondents within 28 days of the date of this Decision, then either party can relist before the Tribunal on 7 days’ notice.

D Bluth

Senior Member

Civil and Administrative Tribunal of New South Wales

3 November 2015

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Decision last updated: 11 November 2015