Civil and Administrative Tribunal New South Wales Medium Neutral Citation: James John Bullen v Kathryn Lyall [2014] NSWCATCD 202 Hearing dates: 16 September 2014 Date of orders: 31 October 2014 Decision date: 31 October 2014 Jurisdiction: Consumer and Commercial Division Before: J Ringrose General Member Decision: The respondent is to pay the applicant the sum of $2,590.00 being assessed compensation for the tenant in the sum of $2,800.00 less the sum of $210.00 payable by the tenant to the landlord in a related claim COM 14/31904. Such sum is to be paid within one month of the date of these orders. Catchwords: AGRICULTURAL TENANCY – compensation payable for tenant's improvements – general improvements to a farm by adoption of better farm management by the tenant – compensation for improvement carried out by the tenant with consent. Legislation Cited: Agricultural Tenancies Act 1990 ss 6, 15 Category: Principal judgment Parties: James John Bullen (applicant) Kathryn Lyall (respondent) Representation: The parties appeared in person File Number(s): COM 14/24057 Publication restriction: Nil Judgment BACKGROUND 1. In about September 2012 the property at **** Lambs Valley, was purchased by Marilyn and Graham Hellier who are apparently the parents of Kathryn Lyall. It would appear that Ms Lyall moved into the property in about October 2012. 2. In about December 2012 Neil Thomas (Stock and Station Agent) was approached by the respondent with a view to offering agistment on part of the property. At the end of January 2013 an agistment tenancy was entered into with Danny Cramp for a part of the property comprising approximately 50 acres or 20 hectares allowing for a maximum of 20 head of cattle at $3.00 per head per week. It is claimed that the agistment tenancy was for a period of at least 12 months and in August 2013 Danny Cramp gave notice terminating the tenancy and he removed his stock in September 2013. 3. By late September 2013 Mr Bullen and his wife had negotiated an agistment agreement with the respondent Kathryn Lyall in respect of the bottom paddock of approximately 20 hectares or 50 acres at a price of $40.00 per week for a maximum of 30 head of cattle. The agistment agreement commenced on about 5 October 2013 and came to an end after a written notice purporting to terminate the tenancy was delivered to James Bullen at his residential mailbox. The notice required him to remove his stock and deliver up possession on or before 6 March 2014. All the stock were removed from the property by that date. APPLICATION 1. By an application filed on 9 May 2014 James Bullen claimed compensation pursuant to the provisions of ss 6, 15 and 18 of the Agricultural Tenancies Act 1990. The claim under s 6 relates to improvements carried out by the tenants with the owner's consent and referred specifically to removal of old and dangerous fencing. 2. The claim pursuant to s 15 of the Act appears to relate to the value of improvements to an incoming tenant and appears to relate to the ability to agist horses rather than cattle as a result of the removal of dangerous fencing. 3. The claim pursuant to s 18 relates to the outgoing condition of the property which, it is claimed, arose as a result of understocking during the early periods of the tenancy to provide for good feed over the winter months. Mr Bullen has also claimed a sum of $600.00 as compensation for what he claims to be "lock outs" where his access to the agistment paddock was restricted for periods of time during February and March 2014. APPLICANT'S EVIDENCE 1. In material provided with the application Mr Bullen alleged that a verbal agistment agreement was entered into from the October long weekend in 2013 in respect of the rear portion of a property known as 'Moonabung' comprising approximately 20 hectares. The agistment was for cattle and he understood it to be a long term two to three year lease as he was engaged in buying and selling cattle. A maximum stocking rate was stipulated of 30 head of cattle at any one time although he was informed that the previous owner had rated the paddock at 20 cows and calves. Further, the previous tenant had run 20 grown cattle. 2. Mr Bullen claimed the respondent had agreed if he removed all old, disused and dangerous steel posts and approximately one kilometre of tangled poly braided electric fencing wire and barb wire from the paddock, he would also be able to run some of his spelling horses in the paddock, subject to the maximum total stocking number. He suggested that Ms Lyall had stated that she did not consider it to be a horse paddock and had never attempted to remove the old fencing as she had not wanted to put horses in there. 3. Mr Bullen claimed that prior to the stocking of the paddock he and his wife repaired boundary fencing and cut fallen trees from fences. He was able to source 8 steers and in mid-October he put them on 'Moonabung'. A further 4 steers were added on 22 October bringing the total stocking to twelve. Those cattle were sold on 20 December 2013 to take advantage of the rising market. Four cows and 3 calves were put on the property awaiting further re-stocking opportunities. 4. Heavy rain in November resulted in local flooding and parts of the fencing were washed out, requiring repair. 5. The old fencing was pulled out in December and all reusable materials were stacked in the owners shed. It is claimed that this work took place over four days with approximately three hours per day involving two people and a vehicle. Following the removal of old fencing, two pregnant mares were put into the paddock for spelling. 6. Within a week of the horses being put into the paddock Mr Bullen claims that he received verbal advice that the tenancy was to be terminated. This was followed by written notice on 6 February requiring the lease to be terminated as at 6 March 2014. 7. Mr Bullen claimed that from 11 February 2014 Ms Lyall attempted to restrict access from time to time to the paddock in which the stock were agisted. He claimed that there were occasions when gates were locked and access was denied for a period of time after 14 February 2014. Mr Bullen detailed other problems with access particularly when he was attempting to remove stock. 8. The applicant submitted that between 5 October 2013 and 6 March 2014 the average stocking rate was 7.9 head of cattle per week up to December and 2 horses from 26 January through to February. He claimed that it was extremely dry in October when the paddock was taken over and feed was short although this improved with over 300mm of rain in November and good rains in February. Mr Bullen claimed that with no stocking following rains in February the paddock had an exceptional amount of feed when the tenancy came to an end on 6 March 2014. Photographs produced suggest that the condition of the paddock was very good compared to paddocks in surrounding properties. 9. A claim is made pursuant to ss 6 and 15 for removal of old and dangerous fencing. The claim relates to labour of two persons, each over 12 hours, plus the use of a vehicle. The amount claimed for that work is the sum of $1,200.00. 10. Mr Bullen claimed further that the financial returns to an incoming tenant following the removal of the dangerous fencing would relate to an ability to agist horses rather than cattle. He claimed that the benefit would be 15 horses at $15.00 per week as compared to a rate of $40.00 per week being the agistment under the agreement. 11. Compensation for lock outs is claimed for 14th, 16th, 18th, 23rd, 25th and 28th February and a total sum of $600.00 is claimed under that head. 12. Compensation is further claimed for general improvement pursuant to s 18 of the Act. Mr Bullen relied on stocking rates and rainfall figures produced as part of his evidence, together with photographs of this property and neighbouring farms. He has submitted that the obvious understocking in the dry season constituted the adoption of better farm management and that the result and sacrifice of the stocking rate would have enabled him to keep good numbers of cattle throughout the winter months when feed was traditionally shorter. He suggested that compensation should relate to a period between March and September for a total of 29 weeks where the need for hand feeding or supplementary feeding would have been eliminated as a result of the understocking in the earlier months. Compensation was claimed for 29 weeks being 30 bales of hay per week at $13.00 per bale representing a total of $11,310.00. 13. The evidence of Mr Bullen was supported by a short witness statement from his wife Petra. She also claimed that, along with her husband, they were only interested in a two to three year term and that they did not expect a month to month tenancy which would never have provided sufficient security to justify the buying and selling of cattle with fluctuations in the market. 14. Photographs of the agistment paddock and paddocks of the subject property and neighbouring properties had been included particularly for the months of February and March of 2014. The applicant also included two letters from the respondent. The first dated 6 February 2014 purported to be a notice of termination which was dated 6 February and noted;- "your agistment tenancy of horses and cattle will therefore end on 6 March 2014 thus giving you one month's written notice." The letter went on to recognise the following;- "however in good faith and acknowledgement of you removing the steel star pickets that were situated in the agist paddock, I will allow your cattle, at the current stock rate, to remain on the property until 6 April 2014 with no agistment payment being required from you from 2 February 2014 until 6 April 2014. Your horses that are agisted on the paddock must be removed by 6 March 2014. Please note that from 7 March 2014 I will be placing my own stock on to the paddock currently occupied by your stock." The offer of agistment until 6 April was withdrawn under cover of a letter dated 17 February 2014 when Ms Lyall required all stock, horses and cattle, to be removed by 6 March 2014. 1. Rainfall records for a period from January 2013 through to March 2014 were included as part of the applicants claim, along with mean rainfall records calculated over using that data and a rainfall chart for a period of between February 2013 and March 2014 taken from an adjoining property occupied by the applicant. RESONDENT'S EVIDENCE 1. Kathryn Lyall provided a timeline which substantially coroborated the evidence of the applicant. She referred to cattle damaging yard rails on 22 October 2013 and horses being put on agistment in a paddock without prior advice. She conceded that the agistment property entrance gate was locked for nine hours on 14 February 2014 and that she had a conversation with a detective in the rural division at Maitland Police Station at that time. It was claimed that agistment was paid up to 1 February 2014 but thereafter no payments were made. Ms Lyall contended that the two horses agisted on the property should have been charged out at $15.00 per horse per week during the time that they were on the property. 2. Ms Lyall moved on to the property in October 2012 after her parents purchased it in September 2012. She claimed that the agistment was always a monthly agistment arrangement and that the flat rate of $40.00 per week had been negotiated with Mr Bullen after she had originally offered the paddock at a rate of $3.00 per steer per week or $5.00 per cow and calf per week. She claimed that she had made it clear to Mr Bullen that she did not want any horses to be agisted on the property as they would have to move in past her stallions' paddocks. 3. Ms Lyall denied that Mr Bullen had mentioned the need for a written agistment agreement at any time during the course of their negotiations and she claimed that after discussions a verbal agreement had been reached for cattle only at $40.00 per week with a maximum of 30 head of cattle being placed on the agistment paddock at any one time. 4. The respondent agreed that Mr Bullen and his wife had discussed with her an option of putting horses into the agistment paddock and she agreed that he had asked whether, if he removed the metal star pickets in the agistment paddock, he could put a couple of horses in there. After this discussion an agreement was reached to the effect that, as he was removing metal star pickets, he could put a couple of brood mares on to the paddock at no additional cost. 5. Ms Lyall agreed that there had been discussions with police at Maitland after she had attempted to lock the property entrance gate and she conceded that she was advised that she could not lock the front entrance gate to restrict Mr Bullen's access to the agistment paddocks. 26 Photographs of various paddocks on the property taken in March and June of 2014 were attached, along with an aerial map of the agistment property at *******, Lambs Valley. 1. The respondent included a Statutory Declaration of Danny Cramp who was the previous tenant on the property. He claimed that he had repaired all sections of fencing when he moved into the property in January 2013 and that he wound up all electric wire tape in the metal post line and placed them around several posts. He continued to agist his cattle on the property until September 2013 when he gave a month's notice to end the agistment. He claimed that when he moved from the property there was still "exceptional feed" which would have continued to feed his 20 steers without a supplementary feeding. 2. A statutory declaration of Neil Thomas, stock and station agent, was also provided. Mr Thomas claimed that the stocking of the property for buying and selling of small numbers of cattle did not amount to good management having regard to the feed the paddock which was not being used but which was being paid for. This observation overlooks the prospect of feed diminishing rapidly over the winter months and the additional costs associated with providing hand feeding. 3. The respondent also produced a quote for repairs to damaged fences, repair and restraining of fences where necessary and removal and replacement of a rail in the stockyard. It is appropriate to note that for removal of galvanised star pickets the quote allowed for two men at a rate of $70.00 per hour each plus GST. DECISION 1. The objects of the Agricultural Tenancies Act are defined in s 3 and these include the provision of a mechanism for settling disputes between parties to agricultural tenancies through applications to the Tribunal. 2. A tenancy is defined in s 4 to mean;- "a lease or licence, an agreement for lease licence, a tenancy at will or a share farming arrangement or any other arrangement by which a person who is not the owner of the farm has a right to occupy or use it. A farm is defined as a piece of land not less than one hectare in area occupied or used by a tenant and which is wholly or mostly used or intended to be used for agricultural purposes. The definition of agricultural purposes includes grazing." I am satisfied that the present proceedings relate to a dispute between parties to an agricultural tenancy and that the Tribunal has jurisdiction to hearing the terminal dispute. 1. Although s 5 of the Act provides that an owner and tenant shall each have the right to have the provisions of any agreement creating the tenancy reduced to writing signed by the other party, it is noted that neither of the parties sought to enforce that right in the present instance. Although the applicant was under an impression that the tenancy would be likely to continue for a period of two to three years, that assumption was not protected by any written agreement. Neither party saw fit to define the term of the tenancy or any other terms of the agreement in writing. In such circumstances the termination notice given by the respondent to the applicant was adequate for the purposes of s 14 of the Act. 2. Neither party saw fit to make a record of the condition of the property at the commencement of the tenancy as required by the provisions of s 12 of the Act and accordingly difficulties have arisen in the determination of the condition of the property, buildings, fences, gates and other things at the commencement of the tenancy and at the time when the tenancy came to an end. 3. The applicant claims compensation for improvements carried out by him with the consent of the owner pursuant to s 6 of the Act. If, as in this case, compensation is not fixed by the agreement at a fair amount or is not fixed at all, the owner must pay fair compensation to the tenant [s 6 (3)]. Compensation is to be determined in accordance with the provisions of s 15 of the Act in relation to tenant's improvements. 4. So far is as relevant s 15 provides that the amount of compensation is the value of the improvement to an incoming tenant, taking into account the value of any consideration or benefit given by the owner to the tenant for carrying out the improvement. 5. Mr Bullen claims compensation pursuant to s 6 of the Act for removal of old and dangerous fencing, being work carried out with the consent of the respondent, who was for practical purposes, the owner of the property. His claim is based initially on the cost of removal of dangerous fencing, including removal of posts, wires and electric fencing, cable and storage of any goods capable of being reused in the shed. He has claimed a total of 12 hours labour for two people at a rate of $50.00 per hour which includes the use of a vehicle. 6. Ms Lyall addresses the cost of this work through the quotation of Mr Hollingshed who suggested that it would only take two men one hour to remove 34 galvanised star pickets. For the purposes of that quote Mr Hollingshed allows $70.00 per hour plus GST for each man whilst in his quote for other fencing work he charges out at a rate of $100.00 per hour plus GST in the same document. Mr Bullen claimed that the removal of the steel posts included the electric fence wire insulators and that insulators were removed from the posts, bagged and placed in the shed. Some wire that had been tangled around the posts was freed but most of the wire was lying in the grass and tangled up in flood debris in the creek. He claimed the job was time consuming and large bundles of posts up to a total number of almost 80 were not taken into account. Mr Bullen also alleged that the claim made by Mr Cramps in his evidence, suggesting that it would take three minutes to pull a steel post, would be possible in soft ground but it did not reflect the work which was carried out to complete this task. 7. Considering the whole of the evidence in relation to this claim I am satisfied that it is appropriate to allow for a total of 8 hours for 2 persons at a rate of $50.00 per hour. The cost of carrying out the work represents the most effective means of assessing compensation in respect of this claim as the benefit to the owner or the incoming tenant should not be carried forward over a number of years or even a year when the actual cost of carrying out the necessary work is far less. For this part of the claim the respondent is to pay the applicant the sum of $800.00. 8. The second claim made by the tenant relates to compensation for general improvement in accordance with the provisions of s 18 of the Act. Section 18 of the Act provides as follows;- 18 Compensation for general improvement to farm (1) It is a term of a tenancy that the owner must pay fair compensation to the tenant if there have been general improvements to the farm by the adoption of better farm management by the tenant; (a) that is normally practised on farms of the same character, and in the same neighbourhood as the farm concerned, or (b) that is required by any agreement (2) The compensation is to be reduced by any amount of compensation paid or agreed to be paid or determined by the Tribunal, for a particular improvement that caused or contributed to the general improvement. (3) In determining what constitutes fair compensation for the purposes of determining the compensation payable for a general improvement carried out by a tenant, regard may be had to the financial resources of the parties, the financial returns that might be expected from the improvement and other factors. 1. Mr Bullen relies on evidence of the stocking rates and rainfall prior to and during his tenancy which have been included in the evidence. He submitted that photographs provided of neighbouring farms showed that the understocking in the dry season he had applied, constituted the adoption of better farm management than was practised on all of the neighbouring properties. Even with an excess of rain in November and February, the neighbouring properties did not display the growth of pasture which was evident in the paddock which had been provided to him for agistment. Mr Bullen submitted that he had reduced the stocking rate and profit early to enable him to have feed to get through the winter and to be able to buy cattle during the traditional winter feed shortage. He claimed that, regardless of the feed in the paddock at the start, he had use of the paddock for 22 weeks with permission to run up to 30 head of cattle which would have eaten the paddock bare under the seasonal conditions. He pointed out that Ms Lyall had obtained the benefit of the paddock full of feed and that she had in fact started taken advantage of it by moving her horses into the paddock over winter. 2. Mr Bullen assessed compensation on the basis of the ability to agist or feed 15 horses over the winter months and to the end of September for a period of 29 weeks. He calculated the value as based on two bales of hay per week for each horse at a cost of $13.00 per bale representing a total claim of $11,310.00. 3. There is no specific evidence to support those specific claims and although the respondent disputed the evidence of the condition of the property at the commencement of the tenancy and the extent of feed at the end of it, it is clear from the photographs which have been produced that the paddock of approximately 50 acres was in far better condition than surrounding paddocks. 4. Although it may not be appropriate to assess the compensation based on the estimated cost of hay bales, it is, I am satisfied, taking into account all of the evidence, that the pasture would have been capable of agisting 20 head of cattle at $5.00 per week during a period when feed was otherwise short. Reviewing the rainfall of statistics of the other evidence it is appropriate to take that benefit forward for a period of at least 20 weeks and I assess compensation in a sum of $100.00 per week reflected by the enhanced agistment prospect for a period of 20 weeks through until August 2014. On the basis of this finding, compensation of $2,000.00 is payable under this head. 5. I am not satisfied that compensation is payable for what was described as 'lock outs' and it follows that the respondent is to pay the applicant a sum of $2,800.00 as compensation for overall improvements. It is appropriate to offset any monies payable by the applicant tenant to the respondent in the related claim COM 14/31904. 1. The appeal is therefore dismissed. J Ringrose General Member Civil and Administrative Tribunal 31 October 2014 I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 05 February 2015