| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : WILLMOUNT (AUST) PTY LTD & ANOR -v- PRICE [2005] WADC 72 CORAM : MACKNAY DCJ HEARD : 16, 19-23 APRIL 8-10 JUNE, 27 AUGUST 2004 DELIVERED : 22 APRIL 2005 FILE NO/S : CIV 3294 of 2001 BETWEEN : WILLMOUNT (AUST) PTY LTD (ACN 062 846 548) MOUNT STIRLING (AUST) PTY LTD (ACN 064 278 431)
Plaintiffs
AND
DAVID GEORGE PRICE
Defendant
Catchwords: Landlord and tenant - Agreement for lease - Covenants - Option to renew - Whether options exercised - Covenants to keep in repair - Failure to clear land - Negotiations for lease - Whether mis-statement - Set-off
Legislation: Trade Practices Act 1974 Cth s 52
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Result:
Plaintiffs entitled to judgment for $37,560 and interest thereon at 6 per centum per annum from 1 November 2000 Representation:
Counsel:
Plaintiffs : Mr W J Chesnutt
Defendant : Mr A J N Aristei
Solicitors:
Plaintiffs : James Chong & Co
Defendant : B W Duckham & Co
Case(s) referred to in judgment(s):
British Anzani (Felixstowe) Ltd v International Marine Management (UK) Ltd [1979] 2 All E R 1063
Browne v Dunn (1893) 6 R 67
Carr v J A Berriman Pty Ltd (1953) 89 CLR 327
Esso Petroleum Co Ltd v Mardon [1975] QB 819
Foran v Wight (1989) 168 CLR 385
Gardner v Blaxill [1960] 2 All ER 457
Keen Mar Corp Pty Ltd v Labrador Park Shopping Centre Pty Ltd (1988) ATPR 40-853
L Shaddock & Associates Pty Ltd v Parramatta City Council (1981) 150 CLR 225
Mutual Life & Citizens Assurance Co Ltd v Evatt (1970) 122 CLR 628
Philip Collins Ltd v Davis [2000] 3 All ER 808
Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17
Tepko Pty Ltd v Water Board (2001) 206 CLR 1
Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514
Westminster v Swinton [1948] 3 KB 524
Williams v Lewis [1915] 3 KB 493
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Case(s) also cited:
Bailey v DeCrespigny (1869) LR 4 QB 180
Eyre v Johnson [1946] KB 481
In re De Garis and Rowe's Lease [1924] VR 38
Matthey v Curling [1922] 2 AC 180
Maud v Sandars [1943] 2 All ER 783
Reid House Pty Ltd v Beneke (1987) ACLC 451
Scanlan's New Neon Ltd v Tooheys Ltd (1943) 67 CLR 169
Walton Harvey Ltd v Walker and Homfreys Ltd [1931] 1 Ch 274
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Introduction 1 "Arramall" (the property) is a farm of some 2,548 hectares which abuts Brand Highway to the west approximately 40 km south of Dongara. 2 The firstnamed plaintiff (Willmount) has as its principals Yeo Tuck How (Mr Yeo) and Khong Li Cheong (Mr Khong), both residents of Singapore. 3 The secondnamed plaintiff (Mt Stirling) is owned by Mr Khong and Chin Lee Andrew Rick Teo (Mr Teo), the latter also being a resident of Singapore but in 1994 a not infrequent visitor to Perth, with a daughter studying here, whilst he and Mr Khong also owned a farm at Quairading. 4 The secretary of each company was and remains Lim Sim Kwong (Mr Lim), a practising accountant and the principal of Jim Lim & Co Pty Ltd, which firm moved in 1994 to its present address of 266 Hay Street, Subiaco. 5 The directors of Willmount were Mr Khong, Mr Yeo and Richard Soo Hock Chia (Mr Chia), a Perth real estate sales representative, and those of Mt Stirling, Mr Khong and Mr Teo. 6 In 1994 the plaintiffs became the owners of the property, and later in the same year the defendant leased it from them, for a term of two years, with two options to renew, each for a similar period, and with conditions which included one that the defendant clear and pasture at least 2,000 acres of land. 7 The defendant remained in possession of the land until the end of the second option, the plaintiffs say, but did not clear and pasture any land. 8 After his departure the plaintiffs brought a claim for damages in relation to that, and also for alleged breaches of covenants to repair, and for arrears of rent. 9 The defendant then brought a set-off and counterclaim, in which he claimed damages for a loss said to have been caused by misleading and deceptive conduct or negligent mis-statement on the part of the plaintiffs prior to his entry into the lease. 10 That is denied by the plaintiffs.
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11 Following the trial, and on completion of closing addresses, a direction was given that the plaintiffs file and serve an annotated chart in relation to their claim for the repair of fences on the property, and an order was made that the action be adjourned sine die until that was done.
12 No document was, however, provided until 23 March 2005, when a chart making reference to some, but not all, of the relevant evidence was filed. 13 That was the last of a number of difficulties which beset this matter, and others included the pleadings, and amendments to such, the form and extent of the particulars relating to damages, and the general lack of detail about the same, both in the evidence and in closing submissions.
Making of the lease 14 In 1994 Mr Teo saw an advertisement for the property placed by Elders Real Estate, which caused him, he said, to become "quite excited and interested" in it. 15 Mr Teo spoke to Mr Khong who spoke to Mr Chia and asked him to go and expect the property. 16 Mr Chia then went and looked at the property with Mr Max Correy, of Elders Real Estate Geraldton. 17 Prior to that Mr Correy had provided a brochure or information sheet which set out various particulars, including details of a well and six bores and their equipment, with water quantity and quality being described as "excellent quality and abundant supplies" and stock numbers "DSE" 3,500-4,000. 18 Mr Chia said he had no knowledge of farming and had sold only residential properties, and his instructions were to simply look at the size of the property, the plaintiffs being prepared to buy it because it was cheap. 19 Apart from references to buildings and sheds he did not understand the brochure, he said. 20 After his inspection Mr Chia telephoned the directors, told them he was satisfied with the property, he said, and was instructed to buy it. 21 A few weeks later the property was purchased, for the sum of $300,000.
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22 The vendor was J R Investments Pty Ltd, as trustee for the J & R Peters Family Trust, it being said Mr Reginald Peters and his family lived on the property whilst his father, Mr Jeffery Peters, was there the majority of the time.
23 The Peters gave up possession on 30 June 1994. 24 On purchase Mr Chia was instructed by the Singapore directors to lease the property, he said. 25 The property was as a result advertised. 26 He then received a telephone call from the defendant, he said, provided him with the brochure, and met with him at Mr Chia's business premises in Oates Street, Carlisle. 27 As to those things Mr Chia initially said that during the telephone conversation the defendant asked about the property and Mr Chia provided detail from the brochure. 28 At the meeting, a "couple" of days later, Mr Chia said he then gave the brochure to the defendant, told the defendant he was not a farmer and had no understanding of the brochure, and that it was for the defendant to check it and inspect the property and if he was satisfied the parties could go ahead. 29 A copy of the brochure was sent to the defendant on 26 May 1994, under cover of a brief letter, which provided contact details for the agent Max Correy, in relation to any inspection. 30 The defendant later sent a letter dated 14 July 1994 to Mr Chia, proposing terms set out in an enclosure. 31 The letter reads as follows: "I hereby submit my proposal in relation to leasing of the property at South Dongara. The proposal is similar to our discussion at your office on the 7th July, 1994 with an exception of fencing the eastern boundary of the property at my own expense (no 4). Taking into consideration the costs involved with the clearing, instalment of fencing and pasturing of new land along with a yearly fee of $15,000.00. I believe that we will be able to
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32 The enclosure, headed "Lease Proposal Re: South Dongara Farming Property" provides: "1. Lessee to pay Leaser a fixed sum of $ 15,000.00 per year. 2. A minimum of 2,000 acres of bushland to be cleared and pastured within the fixed leasing period at the Lessee's own expense. 3. All shire rates to be paid by the Leaser for the period of the Lease Agreement. 4. The eastern boundary of the property to be cleared and fenced at the Leasees' own expense prior to the expiry of lease period. 5. Lessee to maintain and care for house, sheds, stockyards, existing fence lines and watering points already established on the property. 6. Lease period and yearly payments to commence on the 1st September, 1994 and to expire on the 1st September, 1999. 7. Possession to commence 1st September, 1994. 8. February, 1999 Leaser and Lessee to have negotiations as to the future of leasing or purchasing of property." 33 At the meeting the defendant said he was a farmer, Mr Chia said, but did not let on that he had inspected the property. 34 Mr Chia said he did not recall the matters set out in the defendant's letter or the enclosure, noting that it was "eight years ago" (sic). 35 He definitely recalled telling the defendant to inspect the property at the meeting, he said.
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36 Mr Chia said he passed the defendant's letter of 14 July 1994 to Mr Yeo.
37 Mr Teo said that following a discussion with Mr Khong and Mr Yeo about the contents of the letter the others asked him to check it out, he having a "little knowledge" of farming. 38 He then asked for a meeting to be arranged with the defendant, at the office of Jim Lim & Co. 39 The meeting duly took place, Mr Teo said, and at it he informed the defendant that based on the rental he and Mr Kwong received for their other farm a rental of $20,000 was appropriate, the defendant accepting that. 40 The defendant said that he would like to clear a minimum of 2,000 acres, Mr Teo said, and he then said that the defendant would have to clear that and that would be quite good for the owners. 41 Mr Teo said that he told the defendant that the owners had very little experience of farming and the defendant could take the property "as is where is" and the defendant agreed to that. 42 The defendant sought a lease for six years and that was agreed to, Mr Teo said, but on the basis of a two year term with two options. 43 Mr Teo said that he informed the defendant that he would have to see the property to satisfy himself about it and the defendant said he would inspect the property. 44 It was then agreed that there would be a further meeting to sign the lease, Mr Teo said. 45 That took place without incident he said. 46 The defendant said he had been a farmer most of his life. 47 Early in 1994 he had been looking for a property and had seen the following advertisement in a rural magazine:
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48 A telephone call to Richard Chia resulted in the letter of 26 May 1994 and brochure being sent, the defendant said. 49 Contact with Mr Correy followed the following week, the defendant said, and he attended the property with his partner Ms Marion Thompson in about late June 1994 and spent six or seven hours inspecting it. 50 After a further telephone call to Mr Chia there was a meeting with him in July 1994, the defendant said, at which he was told that if a proposal was made a meeting with the owners would be arranged. 51 A meeting was arranged and duly occurred, and his letter of 14 July 1994 discussed, the defendant said, although he could not recall how that was provided, whilst those present included, in addition to Messrs Chia, Teo and Lim, either Mr Khong or Mr Yeo. 52 No agreement was reached at the meeting, the defendant said, but he later spoke to Mr Chia and assented to the proposal put, following which he prepared a form of lease. 53 There was a further meeting and after some changes sought by Mr Teo were made to the lease such was duly executed, the defendant said. 54 The same Singapore based owner was present at that meeting too, the defendant said. 55 Nothing was said by Mr Teo to the effect that the property was being leased "as is where is", the defendant said, nor had Mr Chia previously told him that he would need to go and verify things on the property for himself. 56 He was aware the plaintiffs were not farmers and would not have prepared the brochure, the defendant said, and the requirement that the land be cleared emanated from him.
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57 The low price of the property of about $50 an acre, when other land in the area attracted $200, had originally excited his interest when it was on the market for sale, he agreed.
Findings as to making of the lease 58 The defendant wishes to make use of certain statements in the brochure given to him by Mr Chia, as statements on which he relied. 59 In the further amended reply and defence to counterclaim the plaintiffs plead that any statements sought to be attributed to Mr Chia were made subject to a rider that the plaintiffs had just purchased the property and were not aware whether its condition matched the brochure and the defendant had to check things for himself, in support of a denial that any representations were made to him to induce him to enter the lease. 60 As to those matters, at trial I found the evidence of Mr Chia that he had told the defendant that it was for him to verify the brochure unconvincing. 61 Further consideration of the issue in the light of the other relevant evidence confirms me in that view. 62 As to that, the proposed transaction was a commercial one, for a property of over 2,000 ha, whilst Mr Chia was an experienced real estate sales representative, was in effect acting as a letting agent, had provided the brochure, and might be expected to document an exclusion of the kind alleged. 63 It was not suggested that had occurred. 64 As stated, in the capacity mentioned Mr Chia placed an advertisement in a newspaper and then provided the defendant, as a prospective lessee, with written particulars of the property along with the brochure. 65 Nothing was said in the covering letter to detract from the effect of the brochure. 66 When the parties met the defendant had already inspected the property, with the assistance of the brochure.
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67 Similarly, Mr Teo's evidence that he informed the defendant the property was being leased "as is where is" was, together with other parts of his evidence, also unconvincing.
68 Again, there is no documentary record of any such stipulation, despite the circumstances, which included the fact that the meeting was held in the presence of and office of an accountant, then acting as the secretary of each plaintiff company. 69 Nor was any such matter raised in response to the written complaint of the defendant, on that occurring. 70 An evidentiary onus at least rests on the plaintiffs to demonstrate that the defendant was advised reliance could not be placed on the brochure. 71 However, I accept the evidence of the defendant to the effect that nothing was said which would derogate from the material in the brochure provided by the plaintiffs through Mr Chia to the defendant as a prospective lessee. 72 An attack was made on the credit of the defendant, both in cross-examination and in closing, and as appears elsewhere in these reasons I did not find him in all respects to be a reliable historian. 73 In addition there is no doubt that the rule in Browne v Dunn (1893) 6 R 67 was not always observed on the defendant's behalf, and a number of documents were also produced by him very late in the day. 74 I have given due consideration to those matters and the other criticisms made. 75 However, it seemed to me that the defendant did generally endeavour to tell the truth, albeit often with a degree of rationalisation, as might be expected in the circumstances. 76 The defendant's failure to produce documents in a timely manner was frequently something of hindrance to his own case rather than that of the plaintiffs', as with invoices relating to work on the bores on the property in 1994, and the telephone record. 77 A lack of organisation in the defendant's affairs, past and present, was also apparent. 78 Further, in terms of advantage to the plaintiffs, the lease negotiated by the defendant could scarcely have been improved on. Accuracy is a
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consideration that needs to be borne in mind in relation to the defendant's evidence, but here I am satisfied as to that. 79 It follows that the plaintiffs have failed to discharge that onus.
Statements in brochure 80 There were two primary areas of contention in the brochure. 81 The first concerned water supplies. 82 The second concerned the number of stock which could be run on the property. 83 The defendant pleads that the statements constituted representations as to future matters within the meaning of the Trade Practices Act 1974 (Cwth) s 51A (the TPA) and the Fair Trading Act 1987 (WA) s 9 (the FTA), such were made in circumstances where the plaintiffs did not have reasonable grounds for making the same, and further that such were made negligently. 84 The defendant, it is alleged, acting in reliance on the representations, executed the lease over the property, went into possession and brought stock on to the property. 85 The defendant says that as a result he suffered loss and damage. 86 The plaintiffs deny the defendant's allegations, say the statements are not as to future matters, and further plead in the further amended reply and defence to counterclaim that as any claim under the TPA or the FTA arose more than three years prior to the commencement of the counterclaim, it is "time barred", whilst any other claim arose more than six years prior to that and is "statute barred". 87 In relation to those pleas it is common ground that the defendant's counterclaim was filed on 2 May 2002. 88 The defendant responds to the plaintiffs' pleas that his claim is too late in the amended rejoinder, where he alleges:
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89 There is no substance in the second last of those pleas, while in relation to the last the issue is sufficiently raised in the plaintiffs' further amended reply and defence to counterclaim par 23. 90 Any consideration of the first three issues requires an examination of the evidence as to events which followed the making of the lease and the defendant's entry into possession. 91 As to the pleadings in relation to those events the plaintiffs allege in the amended reply and defence to counterclaim that in 1996 the defendant by letter sought a reduction in rent "in consideration of and in full and final settlement of the alleged lack of operational bores … and that the carrying capacity … was lower than 3,500 dry sheep equivalent", that the plaintiffs "without admission of liability and on a commercial basis" accepted the request and "reduced" the rent in full and final settlement of any claim, and that in 1997 the defendant paid the rent so reduced. 92 In the amended rejoinder the defendant denies that "such reduction" in the rent was "in full and final settlement". 93 As to the evidence the defendant said he telephoned Mr Teo in November 1994 to advise him of problems. 94 It is apparently common ground that in about October 1996, or about two years after going into possession, the defendant then sent a letter to the directors of each plaintiff stating that there was a need for communication as:
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sheep from 3,000 to a mere 1,200 head thus reducing our income by 60%." 95 The defendant further wrote: "If the last 2 yrs are a example (sic) of performance while running only 1200 sheep and 20 cows our yearly gross income is only 12 to 15 thousand yearly. With water installed to all paddocks as stated in the for sale listing this would be all the assistance needed to be able to develop of the Arramall (sic). What I would like to suggest is a 30% reduction of lease payments per annum for a period of the next 4 years. In return I will establish a functionable (sic) watering system for the farm." 96 However, the defendant says he did not hear from the plaintiff or any of its representatives, "soon" or at all. 97 As a result, he said, he sent a further letter, with a cheque for $6,000, and a promise of a further $5,000 within another 30 days, on the basis that such would represent amounts due for November 1996 and May 1997, less 20 per cent, as he had "deducted 20 per cent as per requested in October 1996 for the establishment of new watering points for the farm." 98 He reduced the amount of the deduction, he said, as he did not wish to get too far behind, if in default. 99 The defendant said that action also failed to provoke any response from the plaintiffs, other than acceptance of the money, and that over the time of his occupation there was a history of attempts by him to provoke responses from the plaintiffs, generally unsuccessful. 100 The plaintiffs have a different version. 101 Mr Chia said that the defendant telephoned him towards the end of 1996 to complain about water problems and was asked to write so the matter could be referred to Singapore, and on those things occurring, he was told that Mr Teo would look into the matter. 102 Mr Jim Lim said there was a meeting at his office in October/November 1996 attended by Mr Teo and the defendant, when the defendant said that bores on the farm were not working and needed to be repaired and he wanted a 30 per cent rent reduction for a period.
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103 Mr Teo in response agreed to a 20 per cent reduction, Mr Lim said, on the basis that the defendant would repair the bores.
104 Since the meeting his office had been renovated, Mr Lim said, and as a result he no longer had his diary for the relevant period. 105 No letter of confirmation had been sent to the defendant, he said. 106 He could not recall what, if any, time limit had been agreed for the rent reduction. 107 Mr Yeo said that he and Mr Khong received and discussed the defendant's letter and he then sent a memo to Mr Teo, following which the latter told him there was an agreement with the defendant to deduct 20 per cent or $4,000 in rent that year and $5,000 in the following year. 108 Mr Teo said there was a meeting with the defendant, and on reference being made to the water supply, he reminded the defendant he was leasing the property on an "as is where is" basis and hence might have to meet costs. 109 The defendant was further told his partner had only given him authority to offer a 15 per cent reduction, Mr Teo said, but had also given him the "final say", and "to show him that I have compassion for his operation I give him a 20 per cent reduction for the first year and 25 per cent reduction for the second year", on the basis that the defendant had to "solve all the bore problem and other problem", and that Mr Teo did "not want to hear any more further complaint" (sic). 110 The defendant accepted that, Mr Teo said. 111 A letter of acceptance had also been signed by the defendant, Mr Teo said, but he had not been able to find that, and did not in any event consider that the whereabouts of the letter was important as the defendant had "made payment for the two years and he did not come back with any problem at all". 112 The defendant had not earlier contacted him, in November 1994 or at all, in relation to any problem with the water supply, Mr Teo said. 113 As to that, according to the defendant's telephone account, produced later in the trial, a call of about nine minutes duration had been made on 9 November 1994 to a telephone number said to be that of Mr Teo, the latter not being denied.
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114 I have already indicated that I did not consider Mr Teo to be a satisfactory witness.
115 His account of the alleged meeting with the defendant I found to be quite unpersuasive. 116 No record of any kind in relation to it was produced, despite the assertion that one existed. 117 I note that in the further and better particulars provided by the plaintiffs in relation to the alleged meeting no suggestion of any written acceptance appears, and as stated Mr Lim said no confirmatory document was prepared. 118 I would not rely on the account of either Mr Lim or Mr Yeo or on the document said to be a copy facsimile from the latter to Mr Teo, which I note does not bear any relevant transmission detail. 119 I should say that the whole account seemed designed to fit the objectively known facts, and to dispose of any claim of the defendant. 120 Further, I am satisfied that the defendant first expressed his concern about the condition of the water supply on the property to Mr Teo in November 1994. 121 The account by the plaintiffs' witnesses is also somewhat inconsistent with the defendant's correspondence. 122 The onus of establishing that a meeting was held in about October 1996 between the parties and that at such meeting an agreement to compromise any claim of the defendant was made rests with the plaintiffs. 123 The plaintiffs have failed in that respect. 124 I accept the evidence of the defendant that there was no such meeting and that his subsequent letter enclosing a rental payment less 20 per cent resulted from a unilateral decision in that respect.
Limitation 125 Acceptance of the rental so tendered did not, however, have any effect on the effluxion of time for limitation purposes. 126 In relation to the claim under the TPA or FTA time began to run when the lease was executed: see Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514.
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127 A similar position pertains in relation to the common law claim.
128 Although counsel for the defendant suggested that it would only be damage older than six years which would be affected by any application of the limitation statute to the common law claim it is clear that there is in the circumstances one claim, and one potential loss: see Keen Mar Corp Pty Ltd v Labrador Park Shopping Centre Pty Ltd (1988) ATPR 40-853. 129 The limitation period for the TPA/FTA claim therefore expired in October 1997 and the limitation period for the common law claim expired in October 2000, and the plea by the plaintiffs of such defeats the counterclaim of the defendant.
Set-off 130 That is not the end of it, however, for in the further amended defence the defendant pleads that he "seeks to set-off any damages in respect to the claim of the plaintiff(s) in these proceedings". 131 That embraces a plea of equitable set-off, sounding as it does in damages. 132 The circumstances in which the claim arose are permissive of such a set-off, given the connection between the provision of the brochure and entry into the lease, pursuant to which the plaintiffs bring their claim: see British Anzani (Felixstowe) Ltd v International Marine Management (UK) Ltd [1979] 2 All E R 1063. 133 Equitable set-off is a substantive defence which does not require an order of a court for its enforcement. As a result an equitable set-off may be asserted although the claim on which it is based is no longer enforceable by action because of the expiry of a limitation period: Derham "The Law of Set-Off" 3 ed (2003) 103. 134 The Limitation Act 1935 (WA) s 46 provides: "The provisions of this Act shall apply to any counter-claim or set-off alleged by the defendant in all cases, and to the like extent, and for the same purpose in, to, or for which they respectively would apply if the defendant had instituted an action against the plaintiff or plaintiffs in respect of the same matter." 135 However, in the UK a similar provision has been construed as applicable to a right of legal set-off only so as to leave the position in
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relation to an equitable set-off unaffected: Philip Collins Ltd v Davis [2000] 3 All ER 808, 831. 136 The relevant reasoning would seem to apply to s 46 and I would find the operation of the same is confined to a plea of legal set-off. 137 That being the case the defendant is able to avail himself of any right of equitable set-off here.
Defendant's claim for negligent mis-statement 138 It appears from Mr Chia's own evidence that he had no understanding or knowledge of the accuracy of the contents of the brochure. 139 Notwithstanding that, on behalf of the plaintiffs he provided a copy of it to the defendant, for the purpose of inducing the defendant to lease the property. 140 For a mis-statement to be actionable it must be more than wrong and relied upon, however. 141 The information provider "must realise or the circumstances must be such that he ought to have realised" that the information was likely to be acted upon, and second those "circumstances must be such that it is reasonable … for the recipient … to rely upon … the (provider)": Mutual Life & Citizens Assurance Co Ltd v Evatt (1970) 122 CLR 628; Tepko Pty Ltd v Water Board (2001) 206 CLR 1, 17, 23-24. 142 Each of those requirements is satisfied in the present case. 143 There was undoubtedly a duty of care owed by the plaintiffs in relation to the provision of the information in the brochure: see Esso Petroleum Co Ltd v Mardon [1975] QB 819; L Shaddock & Associates Pty Ltd v Parramatta City Council (1981) 150 CLR 225. 144 The plaintiffs are therefore liable in respect of any loss suffered by the defendant as a result of any mis-statement relied on by the defendant. 145 The defendant said in evidence that the "DSE … is very important" and had he believed the position in relation to the property was different to that represented, although he would still have entered into a lease, it would have been at a different rental, as it "would have made a lot of difference".
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146 Further, he had relied on the DSE stated in working out likely returns, he said.
147 I accept that evidence and would find the defendant did rely on, in particular, the statements in the brochure as to the water supply and to the stock carrying capacity of the property. 148 However, before any consideration of the question whether there was any mis-statement, and if so the amount of any loss resulting to the defendant from that reliance it is appropriate to deal with the plaintiffs' claim.
Plaintiffs' claim 149 The plaintiffs' claim against the defendant is sixfold, as follows: For $20,000 in rent For $11,400 to make good buildings and other structures For $12,100 to make good bores For $54,450 to make good the fences For $128,000 being the loss in value resulting from a failure to clear 2,000 acres of the property For $3,000 being the cost of an independent expert review
Rent 150 The lease provided for a term of two years from 1 November 1994 at a rent of $20,000 per annum, with two half yearly payments payable six months in advance. 151 It was also provided that there would be two options of renewal, each for a term of two years. 152 No provision was made for the manner or form in which either option was to be exercised. 153 The plaintiffs plead that each option was exercised, and that the defendant remained in possession, with the term of the lease as renewed expiring on 31 October 2000. 154 It is alleged that the defendant was obliged to make, but failed to so do, payments of rent as follows: - $10,000 on or before 1 November 1999
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- $10,000 on or before 1 May 2000. 155 Alternatively, the plaintiffs plead that the defendant held over as a weekly tenant in possession until at least 31 October 2000, and is liable for rent on that basis. 156 The defendant in the further amended defence does not admit exercising either option to review, pleads that on or before 1 November 1999 he was told by an agent of the plaintiffs, Mr Ron Gilbertson, to vacate the property, as it was then being sold, and says that the lease came to an end in November 1999 in any event, as a result of the defendant's acceptance of the plaintiffs' repudiation. 157 The plaintiffs rely on Gardner v Blaxill [1960] 2 All ER 457, in which Paull J held that a tenant who stayed on and duly paid the rent for the following quarter, which was accepted, following which he continued to pay rent according to the lease, had exercised an option to renew, when no other form was specified. 158 In evidence the defendant said that he regarded the lease as one for a term of six years, was aware that at the end of two years he could have left the property, but stayed in the hope that he could exercise what he believed to be an option to purchase in the lease. 159 Similarly, the defendant agreed that in November 1998 there was a second option and again that he stayed on with a view to exercising the option to purchase. 160 There is no evidence to contrary effect. 161 I would find that the defendant did effectively exercise each option of renewal. 162 As to the allegation of repudiation, the defendant said in evidence that on or about 15 November 1999 Mr Gilbertson, a real estate sales representative, telephoned him to say that Mr Teo had given him instructions to sell the property and that he had a buyer who wished to inspect. 163 The following day Mr Gilbertson attended the property with Mr Ron Clausen, the defendant said, and following an inspection the defendant told Mr Gilbertson that he was the lessee of the property, something Mr Gilbertson had not been aware of, whereupon the two agreed that the property could not be sold.
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164 The defendant said he later instructed Mr Gilbertson to tell Mr Teo "that the lease agreement was finished" and that he would not make the next lease payment unless Mr Teo contacted him otherwise.
165 There was a meeting not long after in Perth, with Mr Gilbertson and Mr Clausen, the defendant said, and Mr Gilbertson said he had passed the information to the owners of the property, and that Mr Teo was very happy about it. 166 His partner and Mr Clausen then made an offer to purchase the property, the defendant said, which they understood would be accepted, and in the meantime he "destocked" the property, as he "didn't want to get a lease payment", and "mothballed the farm", ceasing farming operations on 1 November 1999, and his family then leaving the property, although some equipment was left behind. 167 Mr Clausen said the defendant was apparently still there in 2000. 168 In my view the evidence falls far short of demonstrating that the plaintiffs repudiated the lease, and Mr Gilbertson's statements to the defendant, whether or not such be regarded as the statements of an agent of the plaintiffs authorised to make the same to a lessee, do not have the necessary character. 169 See Carr v J A Berriman Pty Ltd (1953) 89 CLR 327; Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17; Foran v Wight (1989) 168 CLR 385. 170 There is no plea by the defendant that there was any discharge by mutual agreement, nor was the statement said to have been attributed to Mr Teo by Mr Gilbertson at the meeting the defendant said he had in Perth put to him, nor was it suggested to any of the plaintiffs' witnesses that the plaintiffs had agreed to treat the lease as being at an end by mutual consent. 171 In those circumstances I would not rely on any meeting in Perth between the defendant and Mr Gilbertson. 172 It follows that the lease did not come to an end, and the defendant's departure from the property, whenever that was, did not bring the lease, or his obligation to pay rent, to an end. 173 The defendant concedes that no rent was paid after November 1999, and implicitly, that absent termination the rent of $20,000 claimed was
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due, and I find that the defendant is liable to pay $20,000 to the plaintiffs for unpaid rent.
Plaintiffs' costs of making good buildings and other structures 174 It was a term of the lease that the defendant: "Keep in good order and condition as at the commencement of the lease all buildings erections dividing fences and other improvements for the time being standing or being upon the said lands or any part thereof and not remove nor take away any or part of such improvements." 175 In the statement of claim the plaintiffs allege: "The Defendant failed to: (a) Keep the house in the Property clean inside and out; (b) Maintain and keep in good order the rear flywire door, railings; windows and bathroom and kitchen cabinet doors; (c) Maintain the stove; (d) Keeping the paintwork within the Property in good condition; (e) Maintain the garden within the Property; (f) Maintain the gutter to the East Side of the Shed on the South of the Property; (g) Keep in good condition and maintain the purlins from white ant damage; (h) Maintain and keep in good order the Lister engine; (i) Maintain and keep in good order the door at the single man's room; (j) Maintain and keep in good order the west and north walls of the shed to the house on the Property." 176 Mr Chia said in evidence that he went to the property prior to purchase by the plaintiffs, and after receiving the brochure from
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Mr Correy in March or April 1994, and in the course of a tour of the property inspected the house looking for leaks, damaged walls, broken windows and the like, but did not see any defects. 177 He also looked at the sheds, although from a vehicle, he said. 178 Mr Lim said that he too went to the property, once after the purchase by the plaintiffs, when someone was living there, and on looking into the house from its porch thought the house was in a very liveable condition. 179 Mr Reginald Peters, one of the persons from whom the plaintiffs purchased the property, said that he and his family lived on the property until their departure in June 1994. 180 At that time Mr Peters said the house was in good liveable condition, although the outside could have done with a "brush up". 181 There were two stoves in the kitchen Mr Peters said, a Metters wood stove and a gas stove. 182 As to the possibility of damage being done to the property by outsiders during any period that it was unoccupied, Mr Peters said that "tourists" did come to the house seeking assistance on occasion, and would then "help themselves" to things from the shed. 183 Mr Peters said a Lister engine was working on his departure, but did need oil periodically. 184 Some defects were acknowledged by him, including a missing wall and door from outbuildings, the existence of a machinery scrap heap, albeit described by him as "the treasure chest of the farm", and the absence of rails around house stumps. 185 The plaintiffs rely principally on the report and evidence of Mr Coupe, who said he inspected the property on 23 May 2001, or approximately seven months after the end of the lease. 186 In his report Mr Coupe stated that in "the absence of any record of the condition of the improvements at the commencement of the lease this report assumes that the Lessee is to restore to good average condition where improvements are not beyond repair; where they are beyond repair, to replace with new". 187 That in my view is not the correct approach, given the covenant set out above, and in relation to "buildings, erections (and) dividing fences" at
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least, an inability to determine "condition as at the commencement of the lease" would make it very difficult to say there had been a failure to observe the covenant. 188 Mr Coupe, and the plaintiffs, also include some items of a general farm housekeeping and maintenance nature under this head, and covenants that the lessee "farm … and manage in a proper and skilful manner", not "commit or permit spoil or waste part thereof" and "use the said lands for the normal agriculture farming practices of Western Australia" would seem apt to embrace those items. 189 Mr Coupe said the property was "in very poor, run down condition". 190 Most of household rubbish he saw in a large pile would not have been there at the start of the lease, he said. 191 He "definitely had the feeling that there had been hardly any effort put into maintenance since 94", Mr Coupe said and the farm "had just been let go" and: "It was one of the worst run – being objective, it was one of the worst run down farms I've seen." 192 The defendant said that after he moved on to the property in about the middle of October 1994 the house was repainted inside and out, apart from one wall, and a number of broken windows were replaced, whilst a wood stove was purchased and installed. 193 Prior to departure the house was again painted, the defendant said, and other maintenance was done in the course of the lease, whilst the gas stove was replaced. 194 The defendant said he considered the farm was 50 per cent better on his departure compared to the condition on his arrival. 195 He had carted loads of rubbish for removal, he said, and old machinery referred to by Mr Coupe was used by him, and in any event largely removed in about 2002. 196 As to the house, windows were cracked on his arrival, the defendant said, whilst furniture left behind had been used by the new owner. 197 A gutter on the shed to the south of the house was already rusting at the start of the lease, the defendant said, whilst he had been told it was not necessary to replace an already damaged purlin.
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198 The Lister engine inspected by Mr Coupe belonged to him, the defendant said, and had since been taken, whilst a missing door and missing shed wall complained of had not been present on his arrival.
199 The defendant agreed that there was a lack of money whilst he was in possession of the property, and in my view the evidence does reveal a general lack of inclination on his part to spend money on the property, no doubt for that reason but also perhaps from a desire to keep the value down, ultimate purchase as stated plainly being a primary motive of the defendant. 200 Mr Norman Summers, aged 78 years, farms at "Green Grove" which abuts the property to the south, has been a farmer all his working life apart from war service, and has been in the area for 44 years. 201 He said he first visited the property in 1960, and has been on it from time to time ever since, and although not during the period of the Peters' ownership, within two weeks of the defendant's arrival and also in 2000, perhaps when the defendant left. 202 Mr Summers said in relation to the farm that at the time of the defendant's arrival "it was rather rundown and neglected", while as to the house "the gardens and that had been rather neglected, it didn't appear to have been looked after particularly well". 203 The exterior of the house "looked as though it had been neglected for a good many years", he said. 204 The plaintiffs' claim is particularised in a schedule tendered in evidence, and I do not propose to set it out. My findings in relation to the items under this head are as follows: 205 The principal work associated with this would appear to be removal of old machinery, and given Mr R Peters' evidence that would appear to have been present at the start of the lease, whilst other machinery was removed. 206 I allow $200 for removal of domestic rubbish. Repairs and painting to house and garden maintenance $6,200: 207 The major item is painting and the evidence does not permit of any objective determination in favour of the proposition that painting was justified.
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208 The house had apparently been unoccupied for several months between the end of the lease and Mr Coupe's inspection, and the existence of broken windows and an unkempt garden is as consistent with that as with the property being left in that state.
209 As is dealt with below, the Peters apparently worked the property very hard, and in those circumstances I consider the appearance of the house was not a matter that would have been of great moment. 210 Mr Summers was a witness of impeccable honesty, albeit rather conservative in his views, perhaps particularly those as to farm management, and his opinion of the appearance of the house exterior in 1994 supports that view. 211 I would not find that the condition of the house was markedly different in November 2000 to its condition in November 1994. 212 The condition of the stove at the outset is not something I am able to determine, nor whether the other items of maintenance ought be laid at the door of the defendant. 213 I would not make any allowance under this subhead. 214 I allow these items. Lighting plant room $2,000: 215 The condition of the Lister engine at the outset was worn, and the defendant would appear to have used his own plant during the lease. Mr Coupe inspected the defendant's engine. I do not allow this item. Single man's room $100; shed to NW of house $1,000: 216 As stated Mr R Peters said the door and wall were missing at the outset, and neither is allowed. 217 A total of $600 is then allowed under this head.
Making good bores 218 The plaintiffs seek $12,100 under this head, that again being the sum assessed by Mr Coupe in his report.
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219 In the brochure sent to the defendant by Mr Chia it was said there were six bores and one well on the property, and Mr Coupe apparently identified the same number of water sources.
220 The cost of an asserted need for work on or the supply of equipment to the well and two of the bores makes up all of the claim bar an amount of $100. 221 The well is situated in the north part of the property in a paddock described in the evidence as "Alwyn Downs", whilst the bores are located in "North Illarry" and "East Shed" respectively. 222 The claim for the well can be shortly disposed of. 223 Mr Coupe included an allowance of $4,000 as the cost to equip the well with a "2.4 m windmill head tower and pump". 224 However, the well was not so equipped at the commencement of the lease, as appears from the evidence of the defendant and indeed that of Mr R Peters, and the defendant is not therefore liable for that cost. 225 Similarly, there is a claim for the East Shed bore of $5,500 based on the estimated costs of renewal in circumstances where Mr Coupe reported that the tower was on the ground, with the wheel beyond repair, and the bore and column assumed to be in that state also. 226 However, the defendant said the tower and wheel were on the ground when he arrived, with the column out, and that evidence was confirmed by Mr Whyatt, a local rural contractor who was first contracted by the defendant on 29 October 1994 to remedy various defects in the bores on the property. 227 Mr Whyatt said the windmill was attended on his initial visit and "had fallen over and bent the rod and bent the part at the top end". As the bore was close to another at the house which had a good supply of water it was not reinstated, he said. 228 I considered Mr Whyatt was a very honest and reliable witness and accept his evidence and that of the defendant in relation to this claim, and it follows the defendant was not under any obligation at the end of the lease to carry out the work detailed by Mr Coupe. 229 The amount of $2,500 is claimed for the North Illarry bore pursuant to an allegation that the "flexi column and pump have been pulled out of the bore and are laid around the tank" and as an estimate of the cost of
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provision of a new bore and casing and the reassembly of the pump, mill and other equipment. 230 Mr Whyatt said he inspected the bore on about 7 November 1994 and refitted the column and pump, but there was no water supply, so the column was removed again as the defendant was to "have a look at that himself". 231 In those circumstances the defendant was in my view under an obligation to reinstate the column prior to the end of the lease, some further attempt at obtaining water then being possible, and it not being suggested that was done or that any of the work set out by Mr Coupe is unnecessary I allow $2,500. 232 The defendant denies that there was a need for repair of a rod at the "South Perkins" bore, $100 being claimed for that, and in the absence of evidence that there was such a need at the end of the lease I do not allow that claim. 233 The plaintiffs are therefore entitled to an allowance under this head of $2,500.
Making good fences 234 As appears the obligation of the defendant under the lease was to keep in good order all dividing fences and other improvements "as at the commencement of the lease". 235 In June 1994 the state of the boundary fences on the property was "generally good", Mr R Peters said, with the exception of two sections, and there was in place a fencing schedule which involved doing a certain amount each year, with an aim to eventually replace all the fencing, both boundary and internal, and he said about three quarters had already been done. 236 Fences did require repair "all the time" because of wildlife, particularly emus, but also because of stock and trees, he said. 237 Mr R Peters conceded that in November 1994 there were sections of fencing that probably did need work, although "I wouldn't say 12 kilometres of it". 238 Mr Correy said most of the fences were "reasonably old, but the Peters family had put a lot of time into upgrading the fences … in some cases replacing fences as new fences, mostly into upgrading fences".
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239 He had seen the Peters working on the fences, he said, and prior to the sale to the plaintiffs in 1994:
240 In about January 1998 Mr Correy said he inspected the property at the request of Mr Chia, and in the course of that looked at the fencing, and: "I guess the major difference between the fencing then and back in 1994 when the property was sold to the then owners was mainly the fact that there didn't appear to have been any new fencing or any upgrade on fencing. It was more of a maintenance situation and a lot of the fencing had become overgrown." 241 Mr Coupe also said, as stated, that he thought there had hardly been any effort put into maintenance since 1994, the property had just been let go, and "the poor condition of the fencing (was) mainly caused by lack of maintenance … ", and not the climate. 242 Had the fences not been properly maintained and not been in reasonable condition in 1994, he agreed it would be unreasonable to attribute their condition to the plaintiffs. 243 Nonetheless, Mr Coupe acknowledged he "couldn't say what they were or not in 1994", although his "feeling" and his experience was that with regular maintenance it was "amazing how long they last". 244 The fences on the property were 35 years old, Mr Summers said, and in 1994 most were past their "use by" date and should have been replaced earlier. 245 Mr Peters had not replaced the highway fence, to the best of his knowledge, Mr Summers said, but he thought the Peters could have put in one or two fences running east and did put a wire fence around the 1500 section, Mr Summers said.
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246 Fencing was a major item of maintenance with emus, kangaroos and bush all a problem, he said, and when adjacent to bush fences did tend to get overgrown with scrub.
247 Mr Clausen, a farmer, saw the property as an interested potential buyer in about September 1999 and said the fences were then of reasonable age and he expected that within some years they would have to be replaced, "just through the age of the fences". 248 In his report Mr Kirk said that in December 2003 the original fencing was in very poor condition, and the environment was a harsh one, so that his conclusion was that the "present state of disrepair" was due in the main to age and the environment. 249 Further, he said the fences beyond repair had rusted posts and broken wire due to age and corrosion, and it was unreasonable to assume all that occurred whilst the defendant was there, and those fences would have been in an "advanced state of disrepair" in 1994. 250 In cross-examination he agreed there was no evidence of trees having been cut back where such were growing through fences, and that there was a need for constant maintenance in the area. 251 The defendant said he did carry out maintenance to fences, and "over the five year period" spent on average a day a week on that task. 252 The plaintiffs' claim again accords with the report of Mr Coupe, and I turn to a consideration of the individual items identified by him. 253 In his report and accompanying plan Mr Coupe asserted that 10 man days of maintenance, in particular clearing vegetation and repairing fences, was required along the west boundary fence, at an estimated cost of $3,000. 254 Mr Coupe did not further elaborate on that assertion, and he was not cross-examined about it. 255 The defendant's expert Mr Kirk agreed with Mr Coupe that there was a need for repair and clearance of fence lines along the west boundary fence, and also agreed with the estimate of $3,000. 256 The defendant, however, said that when he left the property the west boundary fence was stock proof and there were no trees on it.
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257 I would not find that the picture of the fences, and the Peters' endeavours as to such, was as good as portrayed by them or Mr Correy.
258 In 1994 most of the fences were old and many were probably due for replacement sooner rather than later, although they were stockproof, and had been maintained. 259 Given the age of the fences, and the encroachment of vegetation, particularly on the boundaries, maintenance was essential. 260 I have no doubt there was a significant failure by the defendant in that regard. 261 Whether that was principally due to a lack of funds, or assistance, or a desire not to improve the property if that was to increase its value when he hoped to buy it, is not necessary for me to determine, although I think all of those things probably played a role. 262 Certainly the defendant thought a fence renewal programme was for an owner rather than a tenant. 263 I note that for part of his tenure of the property the defendant also engaged in outside paid employment in addition to his duties on the property, whilst for the last year he was rarely there, so that no maintenance would have been carried out during that time. 264 I should also record that the defendant did not plead, or submit, that if replacement of a fence was necessary the covenant set out above did not, on a proper construction, require him to bear that expense. 265 The defendant prepared most of the lease, and given the age of the fences at the outset, would have been well advised to have specifically dealt with that. 266 However, as with other matters, the defendant, far from the protection of his own interests, seems to have voluntarily sought and acquired unnecessary burdens. 267 There is agreement between the experts as to the need for repair of the west boundary fence and the costs thereof and I allow the sum of $3,000. 268 Mr Coupe said that the north boundary fence, a length of 5.85 km, needed to be cleared and refaced, at a cost of $22,420, but with an
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obligation on the neighbour to pay half, so that the estimated cost attributable to the defendant was $11,200. 269 The main problem with the fence was that it was overgrown with bush, he said, and replacement was the only practical alternative. 270 If part of the fence had been replaced in 1994 that would not surprise him, Mr Coupe said, as the vegetation, particular black wattle, could grow very quickly, and within two or three years. 271 Mr R Peters said that in 1994 the north boundary fence along Swamp was old, and due to be replaced. 272 The rest of that boundary fence had been replaced by them and the neighbour, he said. 273 Mr J Peters also said that had been done within two or three years of their departure. 274 On the other hand Mr Bailye, whose resume appears later, said he knew the north boundary fence "and its still the same. I saw it the other day. … The scrub's been holding it up ever since I've known it and that goes back sort of 17 years ago". 275 Mr Kirk said only 2.35 km of the fence was original and that was in poor condition due to its age. 276 In evidence he said, however, inspection was not wholly possible due to thick bush, but he had seen most of it and the fence which he understood had been replaced by the neighbour in about 1994 had a condition consistent with that age. 277 3.35 km of fence did need to be replaced, he said, although that should not be all at the cost of the defendant. 278 The defendant said that the north boundary fence was new in 1994, and in 2004 was still in good condition. 279 The defendant did fail to keep the fenceline clear, I find, so that replacement of part of the 1994 fence became necessary, and I prefer Mr Coupe's view as to the extent, given Mr Kirk's limited inspection. 280 The Swamp section should not be laid at the defendant's door, however, and if that be regarded as approximately half of the eastern
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section of the fence, I ought allow the plaintiffs the cost of replacement of 4.775 km, a sum of $9,180. 281 The third item referred to by Mr Coupe was the repair of the south boundary fence of 2.4 km, and that too involved some new material and four man days, with the cost to be shared with the neighbour, so the net estimated cost was $1,100. 282 The strainers were the main problem, Mr Coupe said, and the fence "just needed extensive general maintenance". 283 Mr J Peters said the Peters had replaced half the South Illarry boundary fence within four years of departure, and Mr Summers was to replace the other half, whilst the balance of the south boundary fence had been renewed by them at the same time. 284 Mr Kirk said he agreed that the section of the fence below South Illarry required repair. 285 The defendant, however, said it was "quite a good fence", in that it was stock proof, and he had replaced strainer posts whilst there. 286 I think the defendant's notion of what constituted a good fence on the property was a benign one and I allow $1,100. 287 Mr Coupe's fourth item was an estimate of $1,600 for the cost of repair to internal fences, being in total 1.7 km of fence dividing Alwyn Downs from Swamp and North Perkins from Mill. 288 Mr Coupe was not asked by either party to elaborate on this item. 289 Mr Kirk said he inspected most of the internal fences and agreed with each assessment of Mr Coupe, whether in relation to an assessed need for repair or in relation to an assessed need to replace. 290 He also agreed with the cost of repair or replacement in each case, Mr Kirk said. 291 Most of the fences which required replacement were original fences, he said. 292 The defendant disagreed any such repair work was required, and said the fences were quite stock proof when he left.
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293 Again, Mr Kirk, the defendant's expert is in accord with Mr Coupe, and I allow $1,600.
294 Finally, Mr Coupe attributed an estimated cost of $37,550 to an asserted need to clear and replace 12 km of internal fences. 295 The fences in question, according to a plan prepared by him, comprised that which divided North Perkins from South Perkins, the latter from Ram, Back from North Illarry, the latter from South Illarry, Swamp from Mill, Mill from Central, East Shed from Barneys, 1,500 acres from Barneys, the west boundary fence of Barneys, the west boundary fence of 1,500 acres, and that which divided the latter from Barneys. 296 Again, there was neither elaboration nor challenge by counsel. 297 Mr R Peters said the fence between North Illarry and South Illarry in 1994 was about seven years old, and probably had another five years "left in it". 298 The fence between Back and North Illarry was quite a good fence, he said, and had 8-10 years of life left. 299 The west boundary fence of Barneys was a six line ring lock fence in good condition with 10 years left, he said, and the fences which divided that paddock on the north from East Shed and 1,500 acres were in average condition. 300 Mr R Peters said the west boundary fence of 1,500 acres was, where it bordered East Shed in average condition, with patches of rust in it, and it had "a couple of years life in it". 301 The fence between South Perkins and Ram was in good condition, he said. 302 Between Mill and Central the fence was in good condition, he said, but the west boundary fence of 1,500 acres was in average condition, with five years life left. 303 Mr R Peters said the fence between Swamp and Mill was in good condition. 304 The north boundary fence of South Perkins was plain wire but in good condition, he said.
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305 Mr J Peters indicated the west boundary fence of 1,500 acres would have been replaced within two years, had the Peters remained.
306 Mr Correy also gave some evidence as to particular fences. 307 The defendant said the fence which divided North Illarry from South Illarry, and the south section of the west boundary fence of Barneys, had maintenance work done on them by him. 308 Other fences, including the north section of the west boundary fence of Barneys were due for replacement but had been patched, he said. 309 The fence from Swamp to Mill was renewed, the defendant said, whilst the west boundary fence of 1,500 acres was patched. 310 New fences put in by him including a fence between East Shed and Central and out to the boundary, the defendant said, and the fence between Mill and Central to the boundary. 311 The west boundary fence of 1,500 acres was beyond repair, the defendant agreed, and that was the reason he had erected another fence between Swamp and Mill. 312 The defendant agreed that the total number of strainer posts put in on the fences on the property by him was 30, whilst there were in excess of 200 strainer posts on the property. 313 Mr Kirk's agreement to the extent and cost of internal fences referred to in relation to the previous item extended to this also. 314 The west boundary of 1,500 acres ought be excluded, however, as it was practically in need of replacement at the commencement of the lease, and if that be regarded as about 3 km of fence the plaintiffs are entitled to $28,160. 315 The total allowance for making good fences is then $43,040.
Land clearing 316 It was a condition of the lease that: "The lessee to have a minimum of 2,000 acres of virgin bush cleared and pastured by the end of the six year period." 317 The plaintiffs plead that term in the statement of claim and allege that in breach thereof the defendant failed to have any virgin bush cleared
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and pastured by the end of October 2000, and that as a result the plaintiffs suffered a loss of "$128,000, being the resulting loss of property value". 318 In response to that the defendant in the further amended defence raises the alleged repudiation, which I have already dealt with, and also pleads: "At all material times it was unlikely, or alternatively impossible that the authorities (including the Department of Environment, the Environmental Protection Authority and the Commissioner of Soil and Land Conservation) would approve the clearing of 2,000 acres on the property." 319 The plaintiffs' response in the further amended reply and defence to counterclaim, apart from a denial, is to allege: "The Plaintiffs never received any application or approach regarding permission to clear land. The Plaintiffs state further that Condition 2 of the Lease obliged the Defendant, at the Defendant's responsibility to clear the Property pursuant to the Lease. The effect of Condition 2 of the Lease was to impose an absolute obligation on the defendant to do all things that were necessary to have a minimum of 2000 acres cleared and pastured by the expiration of the 6 year term." 320 The defendant said in evidence that in or about April 1996 he carried out preparatory burning of 1,500 acres in the Palm Valley, and did the same to about two-thirds of Barneys in May 1997. 321 Then at Christmas 1997 the defendant said he went to Geraldton to seek a form to complete for permission to clear land but none was available and he was told the owners ought apply. 322 The defendant said he then wrote to Mr Chia asking for him to arrange for the plaintiffs to obtain a permit, but nothing further occurred. 323 He was also told by a CALM officer that it would be difficult to obtain permission, and nothing further was done. 324 The defendant did acknowledge an awareness that an application to clear land could be made by a tenant, as well as an owner. 325 What in fact occurred, in my view, was that the defendant planned to put the pasture in at the end, and was thus in no hurry. By the end, although still legally in possession, he was effectively no longer there.
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326 The plaintiffs denied that the matter was raised with Mr Chia.
327 The defendant did not seek to raise any issue of illegality. 328 Notwithstanding the factual assertion in the further amended defence set out, there is no issue raised in the defendant's pleading as to frustration, or to the effect that on a proper construction of this provision the defendant was bound to do no more than use his best endeavours, and had done that, as counsel expressly conceded that in his closing address, nor could there have been, on the evidence. 329 The defendant through his legal representatives does seek to raise the plaintiffs' misrepresentations in relation to this claim, it being said in the defendant's written outline of submissions that he was justified in terminating the lease because of the same, and leave being sought to amend the pleadings to allege that "if necessary". 330 Given the histories of both the dispute and the action, particularly the conduct of the defendant's part of it, such an application is unmeritorious. 331 I would not grant leave, the application being far too late, and susceptible of further evidence if allowed. 332 Counsel for the defendant did expressly concede that if the lease had not been terminated there was an obligation on the defendant to perform the condition that he clear and pasture 2,000 acres. 333 The plaintiffs' claim as set out is brought on the basis of the loss of value to the reversion resulting from the absence of an additional 2,000 cleared acres, and Mr Coupe, who is also a licensed valuer, assessed the loss in that way. 334 Mr Kirk, who is not a valuer, in his report adopted the same approach for the defendant. 335 Counsel for the defendant in closing referred to the report of Mr Kirk by way of submission as to the appropriate measure of damage. 336 McGregor on Damages 15 ed (1988) par 1034 says that in a case like the present the normal measure of damage remains the diminution in value of the reversion, although the cost of reinstatement may also be an available measure: see Westminster v Swinton [1948] 3 KB 524, 534; Williams v Lewis [1915] 3 KB 493.
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337 Given that the measure of damage adopted by each of the plaintiffs and the defendant was that of diminution in the value of the reversion I will utilise that approach also.
338 Two methods of valuation were said to have been adopted by Mr Coupe, the first involving an analysis of the price agreed to be paid by the present owners, albeit with some apparent use of comparable sales evidence, and the second involving some brief analysis of a small number of other sales, on the basis that such were comparable. 339 The conclusion in each was based on an erroneous view of the amount of cleared land on the property. 340 As a recalculation by Mr Coupe showed, however, the actuality would have a tendency to increase the assessed value of the cleared land on the property. 341 That error, however, casts doubt on the overall reliability of the assessment made by Mr Coupe. 342 That can be seen from Mr Coupe's statement in his report that the price for the property was $220 per cleared hectare which was comparable to the sales he referred to, when in fact, based on his estimate of uncleared land value, the actual price per cleared hectare was $322, almost 50 per cent more. 343 Neither of the sales of uncleared land relied on to provide that estimate of uncleared land value was part of a farm, on the information provided. 344 Various possibilities are open, given the error, including the possibility that the estimate for uncleared land value was too low, and that is no less compelling than any other, in my view. 345 Mr Kirk sought to justify his ability to express an opinion on his work as a farm consultant, which he said had over a 15 year period involved advice on the value of proposed acquisitions by clients, with experience of land in the general area and the use of comparable sales, and on that basis he was permitted to express a view. 346 In so doing Mr Kirk did acknowledge that Mr Coupe was a licensed valuer and said that he had in fact adopted the value per acre for both cleared land and uncleared land used by the latter.
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347 In the circumstances, given the error by Mr Coupe, the conclusion he reached from sales of cleared land he regarded as comparable, and Mr Kirk's concession, I would proceed on the basis that a reasonable value for land that had been cleared and pastured on the property would be of the order of $220 per hectare, subject to the following.
348 As the pasture would be only one year old, without a fertiliser history or a phosphate bank, and with a need for a phosphate bank to be built up and trace elements to be applied at a rate of 200 kg at a cost of $60 per hectare to bring the land up to full production, Mr Kirk said, however, he thought there ought be a discount of 40 per cent from that assessed value. 349 The absence of the need to make any improvements to the land to be cleared was also a factor, Mr Kirk said. 350 In cross-examination Mr Kirk said: "… my point is you could go down the road and buy country already established at (Mr Coupe's) figure of $89 an acre." 351 After taking into account his discount Mr Kirk arrived at a loss due to the failure by the defendant to clear and pasture 2,000 acres on the property of $56,800. 352 The amount of the loss set out in Mr Coupe's report was $128,000, which was in fact similar to an estimate, given in evidence, for clearing, fertilising in the first year and sowing clover of $60 per acre, or $120,000 for 2,000 acres. 353 Mr Coupe said he disagreed with the suggestion of Mr Kirk that there ought be a discount because the land would have been just cleared and pastured, and had not observed that over the years, whilst older land had a "very heavy weed bank", whereas recently pastured land would have suitable pasture varieties and would provide very good feed. 354 The onus is on the plaintiffs to establish any claimed loss. 355 It is the case that Mr Coupe made no allowance for the absence of internal fencing or bores from the notionally cleared land, and in my view some ought be made, as Mr Kirk observed. 356 Further, I accept Mr Kirk's evidence that pasture that had just been established would require some additional expense, and as a matter of commonsense it seems to me that a prudent farmer purchasing the land may wish to factor in that cost.
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357 Mr Coupe's evidence to contrary effect was unsupported by any specific sales evidence to demonstrate the absence of any difference.
358 Further, I have embarked on a consideration of this matter based on a concession rather than reliance on the views of Mr Coupe per se given the above. 359 I am not able to find that the loss to the plaintiffs resulting from the failure of the defendant to clear and pasture 2,000 acres was greater than the sum of $56,800 acknowledged by Mr Kirk. 360 I allow $56,800 under this head.
Cost of independent expert review 361 There is no provision of the lease which permits the plaintiffs to claim the sum of $3,000 sought under this subhead, and in the absence of any evidence as to it, or any attempt to justify the claim on some other basis I do not allow.
Summary of plaintiffs' claim 362 As stated I allow the following amounts in respect of the plaintiffs' claim:
Rent $ 20,000 Costs of making good buildings and other structures $ 600 Making good bores $ 2,500 Making good fences $ 43,040 Clearing land $ 56,800 Cost of independent expert review $ - Total $122,940
Claim by defendant 363 As stated the plaintiffs made representations in the brochure sent by the plaintiffs' agent Mr Chia to the defendant that there was an abundant water supply and that the property had a DSE of 3,500-4,000, and those things were relied on by the defendant when he entered into the lease. 364 The defendant pleads that each was a mis-statement, and that he suffered loss as a result, the measure of that loss being said to be the trading loss he suffered through the representations being untrue.
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365 The plaintiffs do not say that is an inappropriate measure and I will therefore approach the claim on that basis.
366 In his outline of submissions in closing counsel for the defendant put forward the claim as one in negligence, and I will therefore consider it as such. 367 I do not intend devoting a great deal of attention to the question of the water supply. 368 The reason for that is that notwithstanding the defendant's letter seeking a rent reduction, the subsequent letter tendering a reduced rent, and the defendant's pleadings, in evidence the defendant complained principally about a lack of feed rather than a lack of water on the property as the cause for his claimed inability to run a larger number of sheep. 369 In that regard, in evidence-in-chief the defendant said that notwithstanding an absence of stock on the property for all of the previous year, in 1995 the pasture was poor and he was only able to run 1,250 mated ewes and a dozen rams, and in addition to do 800 acres of "pasture renovation", which included putting in a crop. 370 "It was quite evident that the property had been overstocked for a number of years", the defendant said, as the "paddocks were eaten out", only natural grasses surviving. 371 He also fertilised, the defendant said, with a view to improving the pasture. 372 Sheep numbers remained the same for the second year, 1996, the defendant said, and thereafter. 373 Efforts were made to increase the number of sheep on the property, the defendant said, but such were unsuccessful, as "(t)here wasn't enough grass, there wasn't enough pasture to feed any more". 374 The actual DSE of the property, based on the sheep he ran, was about 2,000, the defendant said he believed. 375 I asked the defendant in relation to his first letter: "The other thing, you have read this letter. When I read the second half of the first page, what I understand you are saying is that the carrying capacity of the farm is not 3000 sheep but is 1200 sheep because of the lack of water and you make no
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reference to pastures. Is that the case?---That is the case then, sir. Yes, all right. Does that mean that when you wrote this letter that was your belief?---No, sir. I was trying to explain to the owners of the property who didn't have much – if I had started talking to them about pasture ratings, they wouldn't know what I was talking about, so I was using the bores to get a message across. I really wanted them to come and have a meeting with us or let them come and visit the farm so I could communicate with them one on one. So you are saying you deliberately made no reference to pastures?---Yes." 376 He was then asked by his own counsel: "Mr Price, just in relation to the last question that you were asked – when you say, 'Deliberately made no reference to pastures,' what was the position with pastures when you wrote the letter that's in exhibit 5?---There was lack of. There was a lack of pastures on the property. Lack of pastures in what sense – in terms of the amount of actual pasture or the type of pasture – I guess just some detail on what you mean by - - -?---Well, a bulk of any type of pasture, enough to feed the sheep through all year round." 377 The following exchange with counsel for the plaintiffs later occurred: |