Turner, J.G. v Official Trustee in Bankruptcy; Whitford, C.J. v Turner, J.G
[1991] FCA 790
•09 DECEMBER 1991
Re: JAMES GEORGE TURNER
And: OFFICIAL TRUSTEE IN BANKRUPTCY; COLIN JOHN and JOYCE EVELYN WHITFORD
Re: COLIN JOHN and JOYCE EVELYN WHITFORD
And: JAMES GEORGE TURNER
No. TB 201 of 1987
FED No. 790
Bankruptcy
COURT
IN THE FEDERAL COURT OF AUSTRALIA
TASMANIAN DISTRICT REGISTRY
BANKRUPTCY DISTRICT OF THE STATE OF TASMANIA
GENERAL DIVISION
Sweeney J.(1)
CATCHWORDS
Bankruptcy - sequestration order - applications by creditors and bankrupt for review of decisions by Official Receiver on proof of debt - preliminary issue - whether creditors were creditors of bankrupt estate or of Official Trustee - review of outstanding claims on proof of debt - whether claims recoverable.
Bankruptcy Act 1966
Land and Income Taxation Amendment Act 1983 (Tasmania) Sections 12A; 12B
HEARING
MELBOURNE
#DATE 9:12:1991
Counsel for the Applicant: Mr R. Young
Solicitors for the Applicant: Jennings Elliot
Counsel for the Whitfords: Mr M. Wilkins
Solicitors for the Whitfords: Page Seager
Official Trustee: Mr D. Ross
ORDER
That the Whitford's claim in respect of fencing be upheld to the extent of $395.00.
That their remaining claims be rejected.
That the proof of debt in respect of land tax which the trustee admitted in the amount of $522.00 be reduced by $346.
That the balance of $49.00 be paid by the Official Trustee out of the estate of the applicant to the Whitfords.
Note: Settlement and entry of orders is dealt with in O.36 of the Federal Court Rules.
JUDGE1
A sequestration order was made on 15 June 1987 against the estate of James George Turner ("the applicant") of which the Official Trustee in Bankruptcy, named as the first respondent, is the trustee.
On that date the applicant was conducting farming activities on four properties in the Huon and Glen Huon districts in Tasmania, one of which was held by him on lease from its owners Colin John and Joyce Evelyn Whitford ("the leased property").
On 28 April 1988 a letter was written to the applicant on behalf of the Official Receiver, which read as follows:
"I refer to the discussions of 21 April 1988 between the Official Receiver, the writer, Mr Young and yourself.
This letter confirms the proposal made to you that the trustee of your estate takes no further action in relation to or responsibility for those assets vesting in your bankrupt estate other than the interest in your deceased mother's estate, the C.E.H. Turner Trust and any remaining interest in your father's deceased estate.
The effect of this proposal is that you have control over and responsibility for all the remaining property. This will enable you to continue with your farming and other business activities without reference to the Official Receiver.
Upon acceptance of this proposal you will need to reinstate your own insurance cover on any property in question as I will take steps to cancel insurance cover that I have effected, which will reduce what would be an on-going estate cost.
It would be appreciated if you indicate to me your acceptance of this proposal within 10 days."
By letter dated 30 May 1988 the applicant wrote as follows:
"I accept your proposal and agree from 30th May 1988 I take responsibility for all farming and business activities."
On 1 June 1990, a proof of debt for $29,669.18 was lodged by the Whitfords, which read as follows:
"STATEMENT OF ACCOUNT
Date of Consideration of Amount Vouchers
Transaction Nature (if any)
Claim 1
01.01.87 to (b) Rates: 1987/1988 Lease Cl.3(a) and
31.12.89 Municipality of 399.57 Doc No. 1 -
Kingborough Letter dated
24.05.89 Land Tax: 1987/1988 176.00 Lease Cl.3(a) and
(b)
Rates: 1988/1989 Doc. No.2 Municipality of Lease Cl.3(a) and
(b)
Kingborough 420.25 Doc. No. 3 Land Tax: 1988/1989 176.00 Doc. No.2 Rental for year
01.01.89 to 31.12.89 5,000.00 Lease Cl.1 Half years rates:
01.07.89 to 31.12.89 Lease Cl.3(a) and Municipality of (b) Doc. No.4 Kingborough 240.98
Half years Land Tax:
01.07.89 to 31.12.89 85.00 Doc. No.5 6,497.80
Claim 2
01.01.90 to Rental for half year 30.06.90 01.01.90 to 30.06.90 2,500.00 Lease Cl.1
Half years Rates:
01.01.90 to 30.06.90
Municipality of Lease Cl.3(a) and Kingborough 240.98 (b) Doc. No.4 Half years Land Tax:
1989/1990 85.00 Doc. No.5 Legal fees paid to
Nicol Robinson and Kidd, Doc. No.12 Brisbane 753.50
3,579.48
Claim 3
Damages to the property
due to Bankrupts general
neglect and/or breach of
contract to be confirmed
when we obtain possession
of the property:-
Transaction Nature Amount (if any)
(i) Fence - 700m 2,000.00
(ii) Painting:
maintenance to house
and sheds etc 2,000.00
(iii) Erosion and any
other land degradation
caused by the Bankrupts
neglect 2,000.00
(iv) Superphosphate
replacement for total
of grazing lands 3,000.00
(v) Unauthorised rent
collected from
sub-tenants - payable to
Landlord as principal 7,800.00
(vi) Excess firewood
removed unknown
(vii) Noxious weed
uncontrolled and
over grazing damage unknown
(viii) Interest to be
payable calculated
Claim 4
Costs incurred due to
the attempt to obtain
possession of the leased
premises:-
(i) Petrol
14.01.89 - Middleton General Recpt Doc.
Store 17.30 No.6 - Mobil Lutana Service
Centre 20.60 - Ampol Service Station 16.00 - Allonnah General Store 25.00
January, 1989 (ii) Accommodation 440.00 Recpt Doc.
No.7 and 8
09.01.89 (iii) Car rental 354.00 Doc.9
(iv) Australian Airlines 802.00 Doc. No.14
(v) Agent's Fee - Doc. No.11 Col Hocking, Drover 120.00 Eric Direen, Carrier 100.00 Alex Grahame-Evans,
Supervisor/Drover 380.00 Doc. No.13
(vi) Jacksons Hobart,
Locksmith, new locks
damaged by burglary 260.00
Claim 5
Costs of Legal and Court
expenses implied under
the Lease or granted by
the Courts including
damages for loss of rent
due to damages to the
property - to be unknown assessed
Claim 6
General damages
from Mr Turner's
breach of contract To be and confirmed advised unco-operative conduct
Claim 7
Cost of lease paid 256.00 Doc. by us as a reimbursement. No. 10 Legal costs and
inconveniences and
distress flowing
from Mr Turner's
actions and claims
against our drovers To be and agents advised"
By Notice of Rejection of Proof dated 17 August 1990 the Official Receiver for and on behalf of the Official Trustee rejected part of the proof in respect of $17,344.40 on the following grounds:
"(1) THAT I am not satisfied that you have a debt provable in the estate to the extent of $17,344-40.
(2) You have failed to provide sufficient evidence and in some instances no evidence to establish that the bankrupt is liable for the full amount of costs and damages in claims 3, 4, 5 and 6 of your proof of debt.
(3) You have not quantified parts of your claim as requested by me.
(4) It has not been possible for the trustee to estimate with any certainty the value of a number of items claimed as debts owing by the bankrupt."
In a covering letter of the same date to the solicitors for the Whitfords the Deputy Official Receiver wrote:
"I refer to your letter of 31 July, 1990 and enclose Notice of Rejection of Proof of Debt in relation to part of your client's claim against the bankrupt estate.
In my letter of 29 June, 1990 I sought from you further and better particulars in relation to your client's claim. I advised that I was prepared to allow your client a period of 30 days to provide this further detail following which I would make a decision on the information before me on the amount of your client's claim to be admitted.
I have considered the information contained in your letter of 31 July, 1990 and have arrived at a decision based on the information supplied by and on behalf of your client. In making this decision I have had regard to Section 82 sub-section 4 and where I have been able to I have made an estimate of the value of the debt provable in the bankruptcy. In relation to some of the items claimed it has not been possible to arrive at such an estimate and these claims have been excluded from the amount for which I have admitted the proof of debt $12,324-00.
This amount is made up of:
(1) $6497-80 as per claim 1 on the proof of debt.
(2) $3000-00 as per claim 3, as the estimated cost of superphosphate replacement. This is the only item in claims 3, 4, 5 and 6 which the trustee was able to estimate with any certainty the value of the debt.
(3) $2825-98 as per claim 2 less the amount, $753-00 paid to Nicol Robinson and Kid. As I advised in my letter of 29 June, 1990 I am not convinced that this is an amount which can be claimed as arising from the lease. In view of your clients service of the Notice to Quit in September, 1988, the expiration of the lease term on 31 December, 1989 the basis of Mr Turner's continued occupation of the property is unclear. I have admitted this part of the claim in an effort to compromise Mr and Mrs Whitford's claim and finalize the matter.
Section 104 provides a creditor who is not satisfied with a decision of the Trustee in respect of a proof debt a period of 21 days in which to lodge an application to the court to review the decision of the Trustee.
I have forwarded a copy of this letter and the rejection notice to Mr and Mrs Whitford."
On 20 August the Deputy Official Receiver wrote to the applicant, as follows:
"I advise that I have admitted the proof of debt lodged by C.J. and J.E. Whitford for the sum of $12,324.00 and I have rejected the balance of the claim amounting to $17,344.40. The creditor has 21 days in which to lodge an appeal with the court if they are not satisfied with my decision.
The amount admitted is made up of:
1. $6,497.80 as shown in claim 1 of the details provided with the proof of debt of which you have a copy.
2. $2,825.98 representing the amount detailed in claim 2 less the amount of $753.50 paid to Nichol, Robinson and Kidd. I am not convinced that the amount of rental, rates and land tax claimed under this item is a debt arising from the lease agreement between yourself and Mr and Mrs Whitford. It is not clear in my mind that there is an on-going liability pursuant to the lease subsequent to the 31st of December 1989, which is the expiration period of the term of the lease. Mr and Mrs Whitford have advised that in September 1988 notices to quit were served upon you, yet you remained in occupation of the property and made the rental payments for the 1988 calendar year. In addition you have advised that you have exercised an option existing under the lease agreement for an extension of the lease.
The basis of your ongoing occupation of the property is not clear however on the basis that you have agreed that you are liable for the debt and the creditor has claimed the debt, I have in an attempt to compromise and finalise this matter admitted that part of the claimed debt.
I have also accepted as a debt provable, the land tax claimed in both claims 1 and 2 on the proof of debt. My enquiries of the Commissioner of Taxes (Land Tax Branch) indicate that for the 1987/88 financial year you were able to have included as part of a combined rural unit, the leased property at Gordon. In addition Mr and Mrs Whitford were also assessed for Land tax on the property at Gordon. I have been advised by the Land Tax Branch that this situation should not have occurred as Mr and Mrs Whitford had not consented to the property being assessed in your hands for land tax purposes.
Under the terms of the lease, you are liable to pay land tax directly to Mr and Mrs Whitford within 7 days of the demand being made. Accordingly, the Whitfords may hold you liable for payment of the land tax assessment on the leased property.
3. $3,000.00 representing the claimed superphosphate replacement. This is the only item detailed in claims 3, 4, 5, 6 and 7 which I have admitted. It is in my view the only item where the trustee can estimated the value of the debt with any certainty. From the details provided by you in your affidavit to the court at the time of your application under Section 178 of the Bankruptcy Act it appears that an amount of $153.00 per ton would be a reasonable cost. On the basis that the property consists of about 197 acres the amount claimed by the creditor of $3,000.00 appears acceptable. I note that pursuant to the terms of the lease you were required to superphosphate the property annually on the basis of 1 ton for every 10 acres. It would appear that the Whitfords have only claimed for the equivalent of one years superphosphating.
If no objection is lodged to the trustee's decision on this matter it will be my intention following the expiration of the 21 day period to make a distribution from your estate in favour of Mr and Mrs Whitford in the sum of $12,324.00.
I enclose for your information a copy of the Notice of Rejection."
By an application filed on 4 September 1990, the Whitfords sought the following orders:
"1. That the Official Receiver be directed to apply to this Honourable Court for leave to disclaim the Lease referred to in the Respondent's Notice Requiring Trustee to Apply for Leave to Disclaim Lease in respect of the estate of James George Turner (No. 201 of 1987/1) dated the 11th June, 1990.
2. That the decision of the Official Receiver dated the 17th August, 1990 in respect of the Respondent's Proof of Debt in the said estate, and the associated rejection of parts of the Proof of Debt, be expunged insofar as it concerns any claim occurring after the date of bankruptcy of the said James George Turner.
3. The said decision of the Official Receiver dated the 17th August, 1990 be reviewed.
4. Such further or other orders as the Court deems appropriate.
5. That the Official Receiver pay the respondent's taxed costs of and incidental to this application."
By an application dated 7 September 1990, drawn and filed by the applicant in person, he sought the following orders:
"1. That the decision of the Official Trustee to pay C.J. and J.E. Whitford's claim for land tax be reversed, or in the alternative be expunged or varied.
2. That the decision of the Official Trustee to pay C.J. and J.E. Whitford's claim for topdressing be expunged or rejected.
3. That as the lease of C.J. and J.E. Whitford's property vests in the Official Trustee, that the Official Trustee be ordered to pay C.J. and J.E. Whitford's monthly rental until such time as this matter is settled, or in the alternative the applicant's bankruptcy is annulled.
4. That the costs of and incidental to this application be paid by the respondents.
5. Such other orders as the Court deems meet."
By an amended application filed on 18 February 1991 prepared by the applicant's solicitors, the applicant sought the following orders:
"1. That the decision of the Official Trustee to pay C.J. and J.E. Whitford's claim for land tax be reversed, or in the alternative be expunged or varied.
2. That the decision of the Official Trustee to pay C.J. and J.E. Whitford's damages claim for not topdressing be expunged or rejected.
3. That as the lease of C.J. and J.E. Whitford's property vests in the Official Trustee, that the Official Trustee be ordered to pay C.J. and J.E. Whitford's monthly rental until such time as this matter is settled, or in the alternative the applicant's bankruptcy is annulled. (Paragraph 3 of this application was later withdrawn)
4. That the costs of and incidental to this application be paid by the respondents.
5. Such other orders as the Court deems meet."
The application of the applicant and that of the Whitfords were heard together by consent.
It has not been necessary to consider paragraphs 1 and 2 of the Whitfords' application, which were struck out by an order of Morling J. on 21 March 1991.
In a directions hearing held on 26 June 1991, Morling J. directed that the parties, on or before 15 July 1991, file an agreed statement of issues to be determined. On 15 July 1991 a document headed "Statement of Issues of Mr James Turner's application" was filed. It included a statement of issues as to the Whitfords' application.
An amended statement of issues was filed in court on 20 August 1991 by the solicitors for the applicant on the second day of the hearing. It reads as follows:
"A. Superphosphate and Clause 3(S) of the Agreement for Lease 1 Has Mr Turner failed to comply with Clause 3(S) of the Agreement for Lease dated 1st day of January 1987 made between Colin John Whitford and Joyce Evelyn Whitford (hereinafter called Mr and Mrs Whitford) as the Lessor and James George Turner (hereinafter called Mr Turner) as the Lessee (hereinafter called the Agreement for Lease) of the premises being property situate at Dulcia Road. 2 If so have Mr and Mrs Whitford suffered damage as a consequence
3 If so -
a what, and
b to what extent
4 Did they discharge the onus of proving damage and its extent in a sufficient manner to entitle the Official Trustee to admit the claim for damages for breach of contract in 'clause 3' of Mr and Mrs Whitfords proof of debt for 'iv. Superphosphate replacement for total of grazing lands $3,000'. 5 If the answer to either of questions 2 or 4 is no Mr Turner seeks an order that Mr and Mrs Whitford repay all moneys paid to them by the Official Trustee in respect of this item and interest thereon at the rate of 15 per centum per annum (or at some other rate if at all) from the date of payment to them by the Official Trustee to the Official Trustee, and any moneys not yet paid in respect of land tax by the Official Trustee to Mr and Mrs Whitford be not paid. B. Land Tax -
1 Did Mr Turner breach Clause 3(b) of the Agreement for Lease in that he failed to pay land tax in respect of the premises in accord with the provisions of Clause 3(b) of the Agreement for Lease.
2 If yes did Mr and Mrs Whitford suffer damage in respect of the non-payment.
3 If yes did Mr and Mrs Whitford discharge the onus of proving- a the breach of Clause 3(b) and
b the said damage that allegedly flowed therefrom 4 Should Mr and Mrs Whitford pay to the Official Trustee together with interest thereon at the rate of 15 per centum per annum (or at some other rate if at all) - a all moneys paid by the Official Trustee as a consequence of Mr and Mrs Whitford in respect of their land tax claim set forth in their proof of debt dated 1st June 1990
b all credits given to Mr and Mrs Whitford at the State Revenue Office in respect of the premises given in respect of land tax assessed under the provisions of the Land and Income Tax Act.
AS TO MR AND MRS WHITFORDS APPLICATION -
1. Did Mr and Mrs Whitford at the time of lodging the proof of debt discharge the onus of proof of establishing that there had been a breach of the lessees covenants contained in the Agreement for Lease -
a as at the date of the sequestration order, the 15th day of June 1987
b as at the date of the lodgement of the proof of debt the 1st day of June 1990.
2. If yes did Mr and Mrs Whitford prove -
a they suffered damage arising therefrom b the quantum of their loss
3a. If no to question 1(a) above are Mr and Mrs Whitford entitled at a time subsequent to prove -
a the breach
b that they suffered any damage therefrom c the quantum of damage suffered
at a time subsequent to the payment of the final dividend. 3b. If no to question 1(b) above are Mr and Mrs Whitford entitled to at a time subsequent to prove - a. the breach
b. that they suffered any damage therefrom c. the quantum of damage suffered at a timne subsequent.
4. Can the Official Trustee be ordered to pay pursuant to the proof of debt any damage proved
a as at the 15th day of June 1987
b as at the 1st day of June 1990
and quantified in accord with Clause 3 hereof."
Prior to the hearing, the parties filed with the registry an agreed statement which read as follows:
"The parties agree that Mr Whitford has received the following sums:-
Rental from Mr Turner $
For 1.1.87 to 31.12.87 5,000.00
For 1.1.88 to 31.12.88 5,000.00
Interest on late payments 292.31
Total received from Mr Turner $10,292.31
For 1.1.89 to 31.12.89 5,000.00
Rates for 1987/88 399.57
Rates for 1988/89 420.25
Rates for 1.7.89 to 31.12.89 240.98
6,060.80
Rounded to $6,061.00 In Total $16,353.31
The parties further agree that the following sums are owing:-
Alleged amount to be due for occupancy of the property 1.1.90 to 31.12.90 $5,000.00 1.1.91 to 31.7.91 2,916.66 Together with a further amount at the rate
of $416.66 per month until possession
Rates 1.1.90 to 30.6.90 240.98 Rates 1.7.91 to 30.6.91 578.36 Plus rates at $50.61 per month until possession Unpaid Land Tax (in dispute) 216.00 Total to 31.7.91 $8,952.00 Together with ongoing unpaid rates, an amount due by virtue of occupancy, from 31.7.91 until possession."
In his final submission, counsel for the Whitfords indicated that the amounts totalling $16,353.31 had all been paid and that they were not seeking to prove in respect of them. As a consequence of this I asked counsel for the Whitfords to amend the proof of debt accordingly.
All sums relating to rates and rental were deleted from Claim 1 of the proof leaving land tax payments which were disputed. Claim 2 was not pressed by the Whitfords although counsel agreed that rental for the half year 1.1.90 to 30.6.90 was due but had not been paid at that stage.
In the light of that agreement I made the following orders:
"... The court orders by consent without prejudice to the question of costs that
a. The Official Trustee as Trustee of the Estate of James George Turner pay to the Applicants, Colin John Whitford and Joyce Evelyn Whitford, the sum of $8,736.00 being compensation in respect of the occupation of their Dulcia Road, Gordon property.
b. On the 16th September, 1991 vacant possession of the property be given to Colin John Whitford and Joyce Evelyn Whitford."
In his final address, counsel for the Whitfords said that only Claims 3(i), 3(iv), 3(vii) and 6 remained on the proof of debt. Claim 3(i) related to fencing; Claim 3(iv) to failure to apply superphosphate; Claim 3(vii) related to failure to control noxious weeds and to overgrazing; and Claim 6 was a claim for general damages said to have been suffered by the Whitfords as a consequence of the applicant's "breach of contract and confirmed uncooperative conduct."
A "Notice of Preliminary issues" was filed on behalf of the applicant on 14 August 1991, which reads, in part, as follows:
"1. That insofaras their claims arise after the 15th day of June 1987 the date of the sequestration order made against Mr Turner's estate Mr and Mrs Whitford are not creditors of the estate but merely creditors of the Official Trustee.
2. That by their action in suing the Official Trustee in Bankruptcy by Writ issued out of the Supreme Court of Tasmania on the 5th day of August 1991 in action number 994 of 1991 claiming inter alia rental to 31 July 1991 payable in respect of the property at Dulcia Road Gordon the subject of the agreement for lease made between them and Mr Turner on the 1st January 1987, they are deemed to have - i waived or alternatively
ii abandoned
their right to prove in Mr Turner's bankruptcy against his estate in respect of any matters arising under or by virtue of the said agreement for lease after the date of the sequestration made against Mr Turner's estate."
I heard argument on these issues but deferred ruling upon them until the evidence had been completed. Two actions in which the Whitfords were plaintiffs and the applicant was defendant and one action in which the Whitfords were plaintiffs and the applicant and the Official Trustee were defendants had been instituted in the Supreme Court of Tasmania. The applicant conducted his part of those actions on his own behalf. In portions of the proceedings in this Court he acted on his own behalf.
In Supreme Court Action 994 of 1991 the Whitfords claimed the following:
"1. Possession of the premises being all that 197 acres situate at Dulcia Road, Middleton in Tasmania.
2. Mesne profits at the rate of $100 per week from 31.7.91 until possession of the said premises is given up.
3. Arrears of rent on the said premises in the sum of $12,500 up to and including 31.7.91."
On 23 August 1991 the parties had this action transferred to the Federal Court (in which it became TG11/91) pursuant to the cross vesting legislation and the following orders were made in this Court by consent:
"1. The Defendants agree that vacant possession of the subject property be given by 16 September 1991 to the Plaintiffs.
2. Compensation for possession from the 1st August to the 16th September 1991 inclusive of first day exclusive of last = 47 days but say 47 days
Money in the nature of -
Rental: $643.84
Rates: 78.20
$722.04
Less Land Tax paid in
advance 9 months at
$645.00 p.a. 510.63
in the sum of: $211.41
such compensation for possession to be paid to Mr and Mrs Whitford by the Official Trustee out of the surplus of Mr Turner's estate.
3. Costs reserved.
4. If there is no agreement as to costs written submissions on same are to be made by all parties within 21 days."
The Court also directed by consent that there be no order as to claim 3.
I am satisfied that the first preliminary issue raised on behalf of the applicant can afford him no comfort. The "agreement" between the applicant and his trustee purported to confer upon the applicant "control over and responsibility for" those assets in his bankrupt estate other than his interest in his deceased mother's estate and to enable him to continue with his "farming and other business activities without reference to the Official Receiver". This purported agreement has no warrant in the law of bankruptcy, under which the property of the bankrupt vests in the trustee of his bankrupt estate and so remains unless disclaimed or otherwise dealt with in accordance with the Bankruptcy Act 1966.
The lease of the Whitfords' property vested in the trustee and was not disclaimed by him. Accordingly it was appropriate that any claim by the Whitfords in respect of that lease should have been brought against the estate of the applicant.
The decision of the Whitfords to institute their action number 994 of 1991 did not amount to a waiver or abandonment of their proof in bankruptcy. In any event that action has now been transferred into this Court and dealt with by consent orders.
I turn now to the remaining substantive issues, beginning with part of Claim 3(i) which now reads as follows:
"Fence - 700 m (amount) $2,000"
This fencing claim was made pursuant to clause 3(c) of the lease which reads:
"(c) To keep in good repair and condition all fences gates buildings dams wells windmills pumps troughs piping fixtures and fittings and other improvements and all the Lessors fixtures now erected or to be erected on the premises damage by fire (unless such fire is caused by the negligence of the Lessee or the Lessees servants) storm and tempest excepted ..."
The Whitfords, submitted that the clause not only imposed "on Mr Turner an obligation to keep the fences in good repair but also to put the fences into good repair even if they were not" at the time when he took possession.
The Whitfords also submitted that the fences were in good condition at the beginning of the lease.
The Whitfords submitted that the damage that flowed from the applicant's failure to keep the fences in good repair amounted to $1121. This figure was based upon an affidavit of David Armstrong, a qualified agricultural scientist, who first inspected the property on 3 July 1991 for the purpose, amongst other things, of estimating the cost of repair to the fences. In the affidavit, Mr Armstrong divided the fencing into 13 different segments and estimated the cost of repairs for each segment.
He deposed at paragraph 5:
"5. Upon inspection of the property I inspected all boundary fences and internal fences with a view to forming an opinion as to the adequacies of stock proof fences and to estimate the cost to restore the fences to a stock proof condition."
He concluded in paragraph 9 of the affidavit that the overall cost of replacing and repairing the fence would be $2,611.
During examination in chief, Mr Armstrong stated that he again inspected the property on Sunday 18 August 1991. On that day he observed that segment 11 had been repaired to a good condition since his first inspection. He had earlier estimated the cost of repair to this segment at $78. I indicated to counsel for the Whitfords during the trial that I rejected any evidence concerning segments 3 and 4 as these had been destroyed by fire and were outside the ambit of clause 3(c) of the lease. Mr Armstrong had estimated the cost of repairs to this section at $1490. Thus the maximum sum embraced by the Whitford's claim is reduced to $1043.
Another witness, Mr Rawnsley, was called by the applicant to give evidence about the estimated cost of repairing the fences. Unlike Mr Armstrong, Mr Rawnsley was aware of the state of the fences when the applicant first leased the property.
Mr Rawnsley in paragraphs 10 and 11 of his affidavit sworn 16 August 1991 deposed:
"10. The total cost to carry out the above fencing works that I have referred to, to a standard better than existed at the time Mr and Mrs Whitford bought the property would in my opinion be approximately $1,290.00.
11. Almost half of this work has since the 17th July 1991, already been carried out by Mr Turner."
Of this sum $500 consisted of estimated repair costs to the burnt segments 3 and 4.
I accept the evidence of Mr Rawnsley and prefer it to that of Mr Armstrong. Mr Rawnsley, now retired, was a fence contractor for 40 years and is a neighbour of the applicant. He had an intimate knowledge of the state and history of the fences.
Mr Rawnsley's yardstick for estimating costs of repairs was the cost of bringing the fences "to a standard better than existed at the time Mr and Mrs Whitford bought the property". This is a yardstick which is generous to the Whitfords. In my opinion the term "to keep in good repair" the fences did not impose an obligation to put them in good repair.
If one subtracts the sum of $500 (being Mr Rawnsley's estimate of costs of repair to the fire damaged segments 3 and 4) from his estimate of the total cost of $1290, a balance of $790 remains. Accepting, as I do, Mr Rawnsley's estimate that about half this work had been done by the applicant I arrive at a figure of $395, which the Whitfords should recover in respect of this claim.
I turn next to claim 3(iv) which reads as follows:
"Superphosphate replacement for total of grazing lands - $3,000" and to claim 6, stated as follows:
"General damages from Mr Turner's breach of contract and confirmed uncooperative conduct."
The admitted proof of debt by the Whitfords included an amount of $3000 in respect of superphosphate replacement. In his amended application of 18 February 1991 the applicant seeks an order:
"That the decision of the Official Trustee to pay C.J. and J.E. Whitford's damages claim for not topdressing be expunged or rejected."
In relation to the claim in respect of superphosphate counsel for the Whitfords submitted that Claim 3(iv) for $3000 and Claim 6 should be read together, saying that because "the proof has not been amended upwards because it required the consent of the trustee to do so and the trustee has not given that consent it is necessary to make the claim under both paragraph 3 of those specific matters and also under paragraph 6 of the general damages".
The Whitfords claim that the total amount payable to them on this combined claim is $14,121.
The relevant term of the lease in relation to the superphosphate obligation is clause 3(s). This reads:
"... To apply annually no less than one tonne per every ten acres of superphosphate fertiliser to all grazing and cropping areas of the premises ..."
In the applicant's first affidavit, sworn 16.1.91 he referred to the superphosphate issue as follows:
"18. During the period of my bankruptcy I had occupancy of the property the subject of the said lease and organically fertilised the same to bring it up to the standard that would have resulted from the annual application of one tonne per every ten acres of superphosphate fertiliser for all the grazing and cropping areas of the said property.
19. Mr Whitford's proof of debt annexed to the affidavit of Brett Richard Geoffrey Harrison does not adduce any evidence of damage suffered by Mr Whitford as a result of any alleged failure to comply with Clause 3S and as a result of the alleged failure to super phosphate ..."
The applicant gave evidence that at the start of 1987 he applied some superphosphate to a section of irrigated land on the leased property and repeated that procedure in the next two years at the beginning of each year. I accept that evidence.
The Whitfords submitted during the course of the final address that the sum of $14,121 represented the cost of applying superphosphate in accordance with 3(s).
The sum of $14,121 was derived from paragraph 24 of Mr Armstrong's affidavit which reads:
"24. In my opinion, annual application of 15.8 tons per year is required for the 64 hectares of the property. The current cost of this I understand, supplied, carted and spread by areas approximately $4,707. This should be done for approximately three years as required by the Lease, and therefore a total cost of $14,121."
Counsel for the Whitfords relied upon part of the evidence given by Robert Reid, who was called by the applicant. He was a Senior District Agricultural Adviser who inspected the leased property and stated that the whole property was being used for grazing. The Whitford's contended that the applicant's obligation extended to "the top run". This was a steep, rocky area of low productivity, which covered approximately 70% of the property and which was covered in "brown top" an inferior species of low productivity pasture. Mr Reid deposed that on the property "there were limited amounts of sown improved pasture species ..."
In his final address, counsel for the Whitfords stated that there "is evidence of damage" from a lack of application of superphosphate to the leased property, but he acknowledged that superphosphating the "top run" would have resulted in no beneficial response to the brown top area.
I prefer the view that "all grazing and cropping areas" did not include "the top run". I reject the ingenious contention that the Whitfords may recover in respect of superphosphate under the heading of "general damages". In my opinion they should not recover more than the sum of $3000 which was the amount of their original proof.
I turn next to claim 3(vii) which reads "Noxious weed uncontrolled and overgrazing damage".
In the proof of debt the amount claimed under this heading was described as "unknown" and the trustee rejected the claim. In his letter to the applicant dated 20 August 1990, he referred to the superphosphate claim in claim 3 as "the only item where the trustee can estimate the value of the debt with any certainty."
Clause 3(d) of the lease is the relevant clause in relation to this claim. It reads:
"to keep the premises clear from all noxious growth which in the lessors opinion may lessen the utility of the premises for agricultural horticultural or pastoral purposes so as to maintain the premises in no lesser condition than as at the commencement of the term."
During the course of the trial, the Whitfords claimed that they were entitled to receive $400 in respect of this claim. This calculation was based on paragraphs 11 and 12 of Mr Armstrong's affidavit which read:
"11. Generally on inspection, the pastures were in poor condition. There are limited amounts of sown improved pasture species such as white clover, perennial rye grass and cock's foot. In addition there is a predominance of inferior species of low productivity such as brown top, bracken, blackberry, rushes, buzzie and flat weeds. In the top paddock there are thistles including spear and Californian species.
12. In my opinion Californian thistle should be controlled as a secondary weed under the Noxious Weed Act. This would require a herbicide called, Lontrel. The estimated cost is $200 per year for two years."
In relation to this issue, Mr Reid agreed with the above paragraphs and admitted that on his inspection of the property he noticed Californian thistle and "some dry plants". I am not satisfied that the premises were in any worse condition in respect of noxious weeds than they were at the commencement of the term. This claim is rejected.
Claims 1 and 2 included a claim in respect of unpaid land tax. In paragraph 1 of the applicant's amended application filed on 18 February 1991 he seeks an order that:
"... the decision of the official trustee to C.J. and J.E. Whitford's claim for land tax be reversed, or in the alternative be expunged or varied."
In claim 1 of the proof of debt, the Whitfords sought land tax for the 1987/1988 period of $176, for the 1988/9 period of $176, and $85 for the period of 1 July 1989 to 31 December 1989. In claim 2, they sought $85 in respect of land tax for six months of 1989/90.
All these sums were admitted by the Official Receiver. In his letter to the applicant dated 20.8.90 he referred to the land tax issue as follows:
"I have also accepted as a debt provable, the land tax claimed in both claims 1 and 2 on the proof of debt. My enquiries of the Commissioner of Taxes (Land Tax Branch) indicate that for the 1987/88 financial year you were able to have included as part of a combined rural unit, the leased property at Gordon. In addition Mr and Mrs Whitford were also assessed for land tax on the property at Gordon. I have been advised by the Land Tax Branch that this situation should not have occurred as Mr and Mrs Whitford had not consented to the property being assessed in your hands for land tax purposes.
Under the terms of the lease, you are liable to pay land tax directly to Mr and Mrs Whitford within 7 days of the demand being made. Accordingly, the Whitfords may hold you liable for payment of the land tax assessment on the leased property."
In paragraphs 5, 7, 10, 11, 13 and 15 of his affidavit sworn on 16.1.91 the applicant refers to this claim as follows:
"5. Mr Whitford stated to me both orally and in writing that if I proved that I had paid the land tax for the year 1987/88 that he would sign the form addressed to the land tax authority for the year 1988/89 authorising the merging of the land tax for the farming properties occupied by me so that they would be assessed as a single unit ...
7. I paid the land tax for the year 1987/1988 I sent the receipt and the requisite form to Mr Whitford together with a bank cheque for the land tax for the year 1988/1989 for him to sign and send to the land tax authorities. ...
10. For the year 1989/1990 I sent to Mr Whitford a letter by registered mail enclosing the requisite form for him to sign to enable the properties to be merged for land tax purposes for that financial year. I asked him to return them to me so that I could send the same with a cheque for the land tax to the requisite authorities.
11. The registered letter was not accepted by Mr Whitford and was returned to me. ...
13. Similarly for the year 1990/1991 I sent a form to Mr Whitford for him to sign so the properties could be merged with a reply paid envelope and the said form has not been returned. ...
15. Accordingly I believe Mr Whitford is estopped from making a claim against my estate for the land tax."
Clause 3(b) of the lease agreement relates to the applicant's obligation to the Whitfords to pay land tax and reads:
"3. The lessee agrees with the lessor:
(b) to pay all rates taxes and assessments payable in respect of the premises including land tax same to be paid directly to the lessor within 7 days of demand being made by the lessor."
The applicant's submissions are based on section 12A and 12B of the Land and Income Taxation Amendment Act 1983 (Tasmania) and on the affidavit of Allan Double, a Senior Executive Officer of the Tasmania Revenue Office.
Section 12A(1) of the Land and Income Taxation Amendment Act reads:
"12A-(1) Two or more persons who are owners of different estates or parcels of rural land may, in any year of tax, apply to the Commissioner to treat those estates or parcels for the purpose of land tax in respect of that year as if they were a single estate or parcel."
The affidavit of Mr Double was sworn on 11 July 1991. In the affidavit he deposes that after a discussion with the applicant and Mr Whitford on 5 July 1991 he formed the view that sections 12A and 12B of the above Act applied in relation to the leased property. As a consequence of this assessment, he said, the applicant would have been liable for land tax on the whole parcel of land occupied by him including the property leased from the Whitfords, and the amount of tax would not have been increased as the result of the Whitford's property being treated as part of that parcel.
Paragraph 7 and 8 of the affidavit refer to a retrospective credit on land tax given to the Whitfords. They read:
"7. As the result of Mr James George Turner paying the whole of the Land Tax in respect of all the parcels occupied by him including the property of Colin John Whitford and Joyce Evelyn Whitford situate at Dulcia Road, Colin John Whitford and Joyce Evelyn Whitford have a credit at the State Revenue Office which credit will result in a cheque being forwarded to them for $658.80.
8. That credit is in respect of the years 1st July 1989 to date."
I am satisfied that the proof in respect of land tax, which the trustee admitted in full, should be reduced by the amount of $346, which would not have been payable, had Mr Whitford acted reasonably. This amount is arrived at by subtracting $176, in respect of the 1987/88 year from the sum of $522, being the total amount admitted by the trustee.
In this case the question of costs has not been easy to decide having regard to the history of the proceedings and their mixed outcomes. The applicant failed to establish his preliminary submissions, which occupied half of the first day of the trial. The fencing claim in the proof of debt of the Whitfords was for $2,000. This was not admitted by the official trustee. At the hearing the respondents claimed $1,121 and I have allowed a figure of $395.
The respondents, in their proof of debt alleged that a sum of $3,000 was due to them in respect of an alleged failure by the applicant to apply superphosphate. This proof was admitted. At the hearing the Whitfords claimed $14,121 (which included the $3,000) and I have allowed nothing more than the $3,000 already admitted.
The alleged sum due on the noxious weed claim was "unknown" at the time the proof of debt was lodged and no amount was admitted by the trustee. During the hearing, the respondents made a claim for $400 which I have rejected.
The Official Trustee admitted an amount of $522 for land tax paid by the Whitfords and owing by the applicant. At trial they claimed a further $216. I have disallowed the latter amount and reduced the former amount by $346.
Bearing in mind the history of the litigation between the applicant and the Whitfords in this Court and in the Supreme Court, I am of opinion that there should be no order for costs in respect of the present applications or of the transferred actions. I also make no order in respect of the costs of the trustee, who appeared in person.
The orders of the Court are:
1. that the Whitford's claim in respect of fencing be upheld to the extent of $395.00.
2. that their remaining claims be rejected.
3. that the proof of debt in respect of land tax which the trustee admitted in the amount of $522.00 be reduced by $346.
4. that the balance of $49.00 be paid by the Official Trustee out of the estate of the applicant to the Whitfords.
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