Supreme Court New South Wales Medium Neutral Citation: Secure Funding Pty Ltd v Bee [2016] NSWSC 521 Hearing dates: 6 April 2016 Date of orders: 06 April 2016 Decision date: 28 April 2016 Jurisdiction: Common Law Before: Wilson J Decision: 1. Leave to file an Amended Statement of Claim is granted. 2. The Amended Statement of Claim is dismissed. 3. Order 3 of 6 April 2016, for costs in favour of the defendant, is confirmed. Such costs are payable on an ordinary basis. Catchwords: REAL PROPERTY - Farm Debt Mediation Act 1994 – whether debt was a farm debt incurred by a farmer for the purpose of a farming operation – whether enforcement action void - absence of evidence – the rule in Browne and Dunn COSTS – indemnity costs – liability of legal practitioner for unnecessary costs - costs awarded on an ordinary basis Legislation Cited: Civil Procedure Act 2005 (NSW) Farm Debt Mediation Act 1994 (NSW) Real Property Act 1900 (NSW) Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Browne v Dunn (1894) 6 R 67 Bulstode v Trimble [1970] VR 840 Commonwealth Bank of Australia v Bird [2011] NSWSC 586 Constantinidis v Equititrust Ltd [2010] NSWSC 299 Jones v Dunkel (1959) 101 CLR 298 Category: Principal judgment Parties: Secure Funding Pty Ltd (Plaintiff) Anthony Joseph Bee (Defendant) Representation: Ms F Ashworth (Plaintiff) Mr J A Darvall (Defendant) File Number(s): 2015/00208447 Judgment 1. On 16 July 2015 the plaintiff, Secure Funding Pty Ltd, filed a Statement of Claim in the Registry of this Court against the defendant, Anthony Joseph Bee, in relation to an asserted debt owed by the defendant to the plaintiff, which was secured by a mortgage over land situated at 765 Big Jack Mountain Road at Wyndham ("the property"). 2. On 6 April 2016 the matter came before me for hearing in the Duty List. 3. The plaintiff sought leave to file an Amended Statement of Claim. The relief sought was substantially the same as in the Statement of Claim, being an order for possession of the property, together with an order for payment of the sum of $103,363.82 plus interest. Indemnity costs were sought. 4. I heard and made orders in this matter as follows: 1. Leave granted to file the Amended Statement of Claim. 2. The Amended Statement of Claim is dismissed. 3. Subject to a further order, costs are awarded in favour of the defendant. 1. My reasons for those orders were reserved, and the defendant's application for indemnity costs was adjourned until today, with a timetable fixed for the parties to file and serve written submissions on the latter aspect of the matter. The Amended Statement of Claim and the Defence 1. In its Amended Statement of Claim the plaintiff pleads that it entered into a loan agreement with the defendant, on or about 1 August 2008, wherein the plaintiff agreed to advance the defendant the sum of $102,000 ("the loan monies"). Pursuant to the loan agreement the defendant was obliged to repay the plaintiff in monthly instalments. The defendant agreed to repay the loan monies and interest at a specified rate. There were various other fees and charges associated with the loan agreement. 2. As security for the loan monies, the defendant executed a mortgage in the plaintiff's favour over the land he owns and lives upon at Wyndham. The terms of the mortgage provided for the plaintiff to enter or otherwise take possession of the property in the event of default by the defendant. 3. The plaintiff asserts, and the defendant concedes, that he fell into arrears in repayment of the loan during the course of 2015. 4. On or about 14 May 2015 the plaintiff served the defendant with a notice of exercise of power of sale pursuant to s 57(2)(b) of the Real Property Act 1900 (NSW). 5. The defendant has not given up possession of the property, and the mortgage over it remains in default. 6. The plaintiff pleads that, as at 6 July 2015, the monies outstanding against the loan agreement amount to $103,363.82. 7. On 6 October 2015 the defendant filed a Defence to the Statement of Claim in which he pleaded that the mortgage in favour of the plaintiff over the property at Wyndham was a "farm mortgage" as defined by s 4 of the Farm Debt Mediation Act 1994 (NSW) ("the Act"). Additionally, he submitted that, although the property was a farm property and the defendant himself a farmer conducting a farming operation, the plaintiff had not served a notice upon him as to the availability of mediation as required by s 8 of the Act. 8. The defendant contends that, as a consequence, the proceedings commenced by the plaintiff in this Court are void by operation of the Act. The Act 1. Since the resolution of these proceedings turns solely upon whether the Act applies to the debt owed by the defendant to the plaintiff, it is convenient to set out the object and relevant provisions of the Act here. 2. The object of the Act is set out at s 3 as, "The object of this Act is to provide for the efficient and equitable resolution of farm debt disputes. Mediation is required before a creditor can take possession of property or other enforcement action under a farm mortgage." 1. The definitions section is s 4, which relevantly provides, "4 Definitions (1) In this Act: […] "creditor" means a person to whom a farm debt is for the time being owed by a farmer. […] "enforcement action", in relation to a farm mortgage, means taking possession of property under the mortgage or any other action to enforce the mortgage, including the giving of any statutory enforcement notice, or the continuation of any action to that end already commenced, but does not include: (a) the completion of the sale of property held under the mortgage in respect of which contracts were exchanged before the commencement of this Act, or (b) the enforcement of a judgment that was obtained before the commencement of this Act. […] "farm" means land on which a farmer engages in a farming operation. "farm debt" means a debt incurred by a farmer for the purposes of the conduct of a farming operation that is secured wholly or partly by a farm mortgage. "farm machinery" means: (a) a harvester, binder, tractor, plough or other agricultural implement, or (b) any other goods of a class commonly used for the purposes of a farming operation that are prescribed by the regulations as being farm machinery for the purposes of this Act, if the goods are acquired for the purposes of a farming operation. "farm mortgage" includes any interest in, or power over, any farm property securing obligations of the farmer whether as a debtor or guarantor, including any interest in, or power arising from, a hire purchase agreement relating to farm machinery, but does not include: (a) any stock mortgage or any crop or wool lien, or (b) the interest of the lessor of any farm machinery that is leased. "farm property" means: (a) a farm or part of a farm, or (b) farm machinery used by a farmer in connection with a farming operation, or (c) an access licence (within the meaning of the Water Management Act 2000) held by a farmer in connection with a farming operation. "farmer" means a person (whether an individual person or a corporation) who is solely or principally engaged in a farming operation and includes a person who owns land cultivated under a share-farming agreement and the personal representatives of a deceased farmer. "farming operation" means: (a) a farming (including dairy farming, poultry farming and bee farming), pastoral, horticultural or grazing operation, or (b) any other operation prescribed by the regulations for the purposes of this definition […]" 1. The application of the Act is set out at s 5, which is (relevantly) in these terms, "5 Application of Act (1) This Act applies in respect of creditors only in so far as they are creditors under a farm debt […]" 1. Section 6, the section particularly relied upon by the defendant, provides, "6 Enforcement action in contravention of Act void Enforcement action taken by a creditor to whom this Act applies otherwise than in compliance with this Act is void." 1. Finally, s 8 is as follows, "8 No enforcement action until notice of availability of mediation given (1) A creditor to whom money under a farm mortgage is owed by a farmer must not take enforcement action against the farmer in respect of the farm mortgage until at least 21 days have elapsed after the creditor has given a notice to the farmer under this section. (2) Notice to the farmer is to be in writing in a form approved by the Authority (informing the farmer of the creditor's intention to take enforcement action in respect of the farm mortgage and of the availability of mediation under this Act in respect of farm debts). (3) This section does not apply if a certificate is in force under section 11 in respect of the farm mortgage concerned." The Case for the Plaintiff 1. In support of the Amended Statement of Claim the plaintiff read and relies upon an affidavit of Rhett Adrian Kipps of 26 February 2016, and an affidavit of Joe Mercieca of 18 January 2016. 2. Mr Kipps is the solicitor for the plaintiff and by his affidavit produces documentation connected with the proceedings, being Notices to Produce issued by the plaintiff upon the defendant, seeking material connected with a beekeeping operation the defendant pleads that he conducts on and from the property. The plaintiff contends that the defendant's responses to the various Notices issued are significant. That evidence will be further discussed below. 3. Mr Mercieca is an employee of the plaintiff. He deposes to the details of the loan agreement, and produces relevant documents, including a copy of the agreement. He deposes that the defendant fell into arrears on and from 1 November 2014, although the arrears were made good on 5 February 2015. Following that payment, no further repayments were made by the defendant as required by the loan agreement, and a further default notice was served upon him by the plaintiff on 14 May 2015. 4. Proceedings were commenced by Mr Mercieca on his employer's behalf in July 2015. 5. Referring to the Defence filed by the defendant, Mr Mercieca says, "It is presently not known to me: Whether any farming operation is, or was, conducted from the property; The extent and nature of the defendant's business; Whether the defendant is solely and or / principally engaged in a farming operation; and What debt (if any) of the amount sought by the plainitff was allegedly incurred for the purposes of the conduct of a farming operation." The Case for the Defendant 1. The defendant gave sworn evidence before the Court, having been required for cross-examination by the plaintiff, and additionally relied upon his affidavit of 1 February 2016. 2. In his affidavit, as corrected in oral testimony, the defendant affirmed that he purchased property on Big Jack Mountain Road with his de facto wife in 1979 and moved there to live in 1980. In 1982 he started keeping bees, and his occupation since that time has been as an apiarist. His business was profitable in the 1980s, but has been less so in more recent times. 3. In 1989 the defendant and his wife separated, and the property they had jointly purchased was partitioned. The defendant became the sole owner of a 14.3 hectare parcel of land, this being the property the subject of the loan agreement. Bees have been kept on the property, or maintained from the property, continuously since that time. 4. In 1986 the defendant obtained registration as a beekeeper with the New South Wales Department of Primary Industry. He has continued as a registered beekeeper. 5. In 1988 the defendant bought Eden Beeline Honey, and that is the name under which he labels and sells honey from his hives. He is a migratory beekeeper, as his own property cannot support the number of hives he maintains, on a full time basis. This means travelling with his hives to other locations from time to time, so that the bees can have access to better food plants for a period of time. 6. In 1998 the defendant borrowed a sum of monies from the Commonwealth bank to buy a honey extractor. The loan was secured with a mortgage over the property. In 2005 he borrowed a further sum, from La Trobe Financial Services, which was used to discharge the Commonwealth Bank loan, and buy frames and boxes for the construction of hives. This loan was also secured by a mortgage over the Wyndham property. 7. The current loan agreement was taken out by the defendant to discharge the La Trobe Financial Services facility, and to buy a number of stocked hives. The hives and bees were purchased for $20,000, with the purchase monies deposited into the vendor's bank account. A bank receipt for the deposit is exhibited before the Court. 8. The defendant affirms that he was not invited to participate in mediation by the plaintiff prior to the commencement of these proceedings. 9. Cross-examination was very limited, and was confined to asking the defendant whether he agreed with the following propositions: 1. That he was not engaged in a bee farming operation on 16 July 2015; 2. That he is not presently engaged in a bee farming operation; 3. That he did not use the proceeds of the 1998 loan to buy a honey extractor; 4. That he did not use the 2005 loan to purchase frames and boxes; and 5. That he did not use the 2008 loan to buy stocked hives. 1. The defendant did not agree with any of those propositions. His evidence was not further tested or explored, and he was not asked to provide any explanation for the responses provided by his solicitor on his behalf to the Notices to Produce issued by the plaintiff during the proceedings. The Issue to be Determined 1. The plaintiff concedes that, if the defendant was, as at 16 July 2015 (the date of the commencement of enforcement action), and is currently, a farmer who was conducting a farming operation on a farm property, and he incurred the debt to the plaintiff to fund a farming operation, the provisions of s 6 of the Act have application, and render the plaintiff's action void. 2. Accordingly, what must be decided in the resolution of this matter is whether the debt which is the subject of the proceedings is a "farm debt" within the meaning of the Act. To determine that issue, consideration must be given to: 1. Whether the defendant is a farmer as defined by s 4 of the Act; 2. Whether the property is a farm property as defined by s 4 of the Act; and 3. Whether the debt is a farm debt and the mortgage a farm mortgage as defined by s 4. 1. It is the plaintiff's contention that the evidence does not and cannot satisfy the Court of those propositions in relation to the material times, or that the debt attracts the protection of s 6. 2. In support of that position, the plaintiff relies upon what was asserted to be the defendant's failure to produce documentation and other material sought by Notices to Produce, and a failure to adduce evidence during the hearing of matters which could establish that the defendant is a bee farmer as he deposed in his sworn evidence. 3. In January 2015 the plaintiff issued three separate Notices to Produce. The documents sought by the plaintiff include council rates notices issued between 2009 and 2016, the defendant's tax returns for 2013 and 2014, tax invoices for supplies paid for with loan monies, applications for registration as a beekeeper, and related notices and records maintained by the defendant as to the movement of hives. 4. There is no dispute that very little of the material sought was produced by the defendant. A copy of a certificate of registration as a beekeeper issued to the defendant for the period April 2014 to March 2016 was provided, and the plaintiff was referred to the Department of Primary Industries as the agency holding applications for registration and related notices and records relevant to the defendant's registration as a beekeeper. 5. The defendant otherwise referred the plaintiff to the relevant local Council for rates notices, and to financial institutions and other commercial entities for copies of business related tax invoices. He advised the plaintiff that there were no tax returns for the specified years. 6. In his sworn evidence, the defendant deposed to the matters affirmed in his affidavit, and swore that he was a beekeeper. 7. The plaintiff dismisses this evidence as nothing more than assertion, incapable, without more, of establishing that the defendant is a farmer, conducting a farming operation, on a farm property. 8. It was submitted that an "absence of evidence" was significant. It was contended that documents and other (potential) proofs of farming activity sought by the plaintiff via the Notices to Produce were not produced because the defendant was not, and is not, a bee farmer as he asserts. Had he been so, it was argued, he would have produced the material sought by the plaintiff, or tendered other evidence to the Court, such as a photograph of his hives. 9. Alternatively, it was argued that, even if the defendant was held to be a bee farmer, he could not be regarded as a bee farmer who conducted a bee farming operation from the property, as he was a migratory beekeeper, rather than one who maintained hives permanently on the property. Since the hives were not always on the property, the property could not be a farm property within the meaning of the Act. Consideration 1. The difficulty with the plaintiff's claim is that it failed entirely to deal with the Defence, which included sworn testimony from the defendant, in which Mr Bee asserted on his oath that he was, and is, an apiarist, who conducts a beekeeping business from the Wyndham property and who applied the loan monies to that business. There is no real reason not to accept the defendant's evidence. Mr Bee presented as a credible witness, and his evidence was intrinsically credible. 2. If Mr Bee's evidence is accepted, the Act applies to the subject debt, and enforcement action is void in the absence of prior mediation. 3. The defendant's evidence is that loan monies obtained by him, from the Commonwealth Bank, La Trobe Financial Services, and more latterly from the plaintiff, were obtained for purposes connected with his beekeeping operation. The original loan from the Commonwealth Bank was sought solely to finance aspects of a beekeeping operation; the loan from La Trobe Financial Services was obtained to discharge the initial facility, and additionally to purchase further equipment connected with the beekeeping operation. The loan the subject of the current litigation both paid out the La Trobe loan, and went to the purchase of stocked hives, necessary for the defendant's beekeeping operation. 4. Mr Bee was required by the plaintiff for cross-examination on his affidavit, and so the Court had some opportunity to see him give evidence, and respond to the propositions put to him by Counsel for the plaintiff. Having had that opportunity, I would not conclude other than that the defendant is an honest and truthful witness, whose testimony should be accepted. I had no doubt, having observed Mr Bee in Court, that he is precisely what he asserted he was, an operator of a small beekeeping business, which he conducts from the property at Wyndham. 5. Whilst the plaintiff was critical of the asserted absence of persuasive independent evidence from the defendant as to his conduct of a beekeeping business, I did not conclude that the "absence of evidence" was particularly significant. In his affidavit, Mr Bee demonstrated familiarity with the conduct of a beekeeping business, and deposed to the manner in which he maintains his bees by moving his hives from place to place, including on the property, in pursuit of food plants. He deposed to the purchase by him (using loan monies) of a honey extractor, frames, hives, and bee stock, and of a honey label, which he uses to sell honey produced from his hives. He tendered and relied upon a Certificate of Registration as a Beekeeper from the Department of Primary Industries. 6. Beekeeper certification does not, as submitted by the plaintiff, provide incontrovertible proof that the registered individual is in fact a beekeeper, but it is supportive of such a proposition. The fact that the defendant's status as a registered beekeeper has been current for some decades rebuts any possibility that his registration was obtained recently for deceitful purposes connected with falsely holding himself out to be a beekeeper. 7. Additionally, there was some evidence adduced by the plaintiff which gave some broad support to the defendant's assertion that he was a beekeeper, including the loan application completed by the defendant. The latter was in evidence as part of the case for the plaintiff. 8. The loan application, annexed to Mr Mercieca's affidavit, was completed by the defendant prior to the payment to him of loan monies by the plaintiff. In the application, the defendant listed his liabilities as including the La Trobe facility, which was described as a "Business/Investment" loan. Such a description, given by the defendant in June 2008, is entirely consistent with his assertion in evidence that the La Trobe loan had been taken out to discharge the earlier Commonwealth Bank loan (which was in itself a business loan connected with his beekeeping business), and to purchase equipment connected with the conduct of his beekeeping business. 9. The defendant described himself in the application as a "Sole Trader" whose income was derived from a "business". That also is consistent with the conduct of a small scale rural farm venture. 10. Whilst it was evident that the defendant's business is peripatetic, conducted on a very modest scale, and not profitable, none of that takes his farming business outside the operation of the Act. 11. The Act does not require any particular level of economic activity, or profitability of a farming activity before it is a farming operation within the meaning of the legislation. Nor does it require that all aspects of the farming operation must be conducted exclusively on the farm property. 12. On the evidence of Mr Bee, he has kept bees on his property since soon after moving there to live in the 1980s. He has been a registered beekeeper for much of that time, and has been self-employed as a bee farmer. He maintains his bees and hives on the property, travelling with the hives from time to time to find food for the bees. He sells honey extracted from hives he operates, under the label of Eden Beeline Honey. The defendant obtained and used the loan monies to discharge an earlier loan secured for purposes connected with beekeeping, as well as to purchase stocked hives. 13. Whilst the defendant moves his hives from time to time to follow the flowering of food plants, necessarily taking the hives off the property, the base of his operation is the Wyndham property. That is the place where the hives are moved from and returned to and, inferentially, where equipment connected with beekeeping is stored and maintained. I do not accept the plaintiff's submission in that regard that, because the bees are not always on the Wyndham property, it cannot be a farm for the purposes of the legislation. That argument is akin to one which would suggest that a cattle farmer ceases to be a cattle "farmer", or the cattle farm a "farm", at times when the cattle are moved off the property by the farmer, such as when droving in search of feed. That simply cannot be correct, and there is nothing in the Act to support such an interpretation. It would, in any event, be wholly contrary to the objects of the Act if farmers were to be denied the protection of the Act simply because a farming operation was not tied entirely to one location. 14. The onus of establishing that he is a farmer conducting a farming operation, and that the loan monies are a farm debt secured by a farm mortgage, falls upon the defendant: Commonwealth Bank of Australia v Bird [2011] NSWSC 586 at [16], per Schmidt J. It is necessary to examine those issues in light of both present and past circumstances: Constantinidis v Equititrust Ltd [2010] NSWSC 299 at [13] - [14], per Barrett J. 15. It was Mr Bee's sworn evidence that he was a farmer, who conducted a farming operation, and that the loan was one secured for purposes connected with beekeeping. Although some broad propositions were put to Mr Bee by the plaintiff's Counsel at the hearing of the matter, the plaintiff chose not to test or seek to controvert the defendant's evidence, despite having required him for cross-examination. Importantly, it was not put to the defendant that the assertions he had made in his affidavit were false, and that he did not produce supportive documentary evidence because he was not a farmer as he asserted. 16. For the plaintiff to succeed in its claim, the Court had to find that a debt was owed by the defendant to the plaintiff, and that the debt was not one to which the Act applied. Given the defence raised, to conclude that the debt was not a farm debt, it would be necessary to find that the defendant had not established to the civil standard that he was a farmer, and the debt a farm debt. 17. To establish his defence, the defendant relied upon his own evidence and the plaintiff was on notice of that. The plaintiff, whilst proceeding with enforcement action in the face of the defence asserted by the defendant, did not in its case specifically dispute that the defendant was a farmer. Its position, as noted by Mr Mercieca in his affidavit, was that it could not say whether the defendant was a farmer conducting a farming operation or not. The plaintiff did not, until closing addresses, advance a case in which it was contended that the defendant's evidence could not be accepted. The only basis upon which it was contended that the defendant's evidence could not be accepted was the absence of supportive evidence led by the defendant. 18. Unfortunately, none of the matters raised in address in criticism of the defendant's evidence, and the defence raised by him, were put to the defendant in cross-examination. The cross examination was very brief, and can be readily reproduced here in its entirety. "Q. Mr Bee, on 16 July 2015 you were not engaged in a bee farming operation, do you agree? A. No. Q. You are not currently, and by currently I mean as at today, you are not currently engaged in a bee farming operation, do you agree? A. No. Q. Mr Bee, I am going to ask you some questions about the property, being the property in which you currently reside at 765 Big Jack Mountain Road, Wyndham, so when my questions refer to "the property", that is the property I am talking about. Do you understand? A. Yes. Q. On 16 July 2015 you did not engage in bee farming on the property, do you agree? A. No. Q. You are not currently engaging in bee farming operations on the property, do you agree? A. No. Q. I am now going to ask you some questions about the various loans that you deposed to, that you give evidence of in your affidavit. The first of those is a loan from the Commonwealth Bank in 1998. Do you recall that loan? A. Yes. Q. You did not use the proceeds of that loan to purchase a honey extractor, do you agree? A. No. Q. In relation to the loan you obtained in 2005 from La Trobe, you did not use part of the proceeds of that loan to purchase frames and boxes for the construction of hives, do you agree? A. No. Q. In relation to the Liberty loan, that is the loan the subject of these proceedings, in 2008 you did not use part of the proceeds to purchase stocked hives, do you agree? A. No" (T8-9: 29-22). 1. The plaintiff submitted that the Court could not find that the defendant was a farmer on the relevant dates, or that the loan monies constituted a farm debt used to finance a farming operation. It was contended that, had the defendant, in fact, been a farmer engaged in a farming operation, he would have produced and tendered documentary evidence of it, and if he did not, it was because he could not. These were conclusions Mr Bee was not given an opportunity to respond to by raising them with him in cross-examination. 2. Whilst there has been some qualification in recent years to the application of the rule in Browne v Dunn (1893) 6 R 67, notably in the context of criminal trials, it remains a rule of basic procedural fairness that should ordinarily be observed in civil matters. Lord Halsbury, at pp 76-77, observed, "To my mind, nothing would be more absolutely unjust than not to cross-examine witnesses upon evidence which they have given, so as to give them notice, and to give them an opportunity of explanation, and an opportunity very often to defend their own character, and not having given them such an opportunity, to ask the jury afterwards to disbelieve what they have said, although not one question has been directed either to their credit or to the accuracy of the facts they have deposed to." 1. The rule has been formulated in various ways (see for example, Bulstrode v Trimble [1970] VR 840 at 846-848, where some of the many formulations are collected) but, however expressed, what is required is that, where a witness is to be contradicted, the contradictory proposition should be put to him or her so that the witness has an opportunity to explain the contradiction. 2. The plaintiff's submission to the Court was that, if the defendant was a farmer conducting a bee farming operation on a farm, as he claimed in evidence, he would have tendered to the Court some documentary proof of his engagement as an apiarist on the property, and some better documentary proof than that advanced that the loan monies had been used for purposes connected with a beekeeping operation. 3. The Court was, in effect, invited to disbelieve the defendant's sworn testimony, on a basis not raised with him and about which he was given no notice or opportunity to comment. That is the sort of unfairness Browne v Dunn decries. Whilst the defendant had more general notice, by the simple fact of the continuation of the proceedings after he had filed his Defence that the plaintiff contested that Defence, that is not sufficient in my view. 4. It may be that, had Mr Bee been asked about the matters raised in criticism of him by the plaintiff, he would have been able to address them. 5. Whilst it is open to the Court to conclude, as the plaintiff urged, that supportive evidence was not adduced because the defendant's claims to be a farmer were without foundation, I would not draw that conclusion in circumstances where the proposition was not put to Mr Bee in cross-examination. 6. Although a Jones v Dunkel (1959) 101 CLR 298 inference may well be available to the Court given the absence of direct documentary proof of the defendant's conduct of a beekeeping operation, I would not draw such an inference where the defendant was not asked about the absence of documentary proof, nor given an opportunity to respond to the criticism levelled against him by the plaintiff . Neither would I would draw the inference where the defendant gave credible evidence of his beekeeping operation. 7. I accept Mr Bee's evidence that he was, and is, a beekeeper who conducts a small migratory bee farming operation, on and from the Wyndham property, and that the loan monies obtained from the plaintiff were applied to that business. The debt is therefore a farm debt and the mortgage to the plaintiff a farm mortgage. 8. That being so, the Act applies to the subject mortgage and, as the plaintiff accepted at the outset, if the Act applies, there was an obligation on the plaintiff to engage in mediation prior to enforcement. The failure to do so renders the enforcement action void pursuant to s 6. 9. Accordingly, I made the orders set out at [4] above. Costs 1. At the completion of the hearing, after orders were made, the defendant made an application for costs pursuant to s 99 of the Civil Procedure Act 2005 (NSW) ("the CPA") or, alternatively, on an indemnity basis against the plaintiff. 2. Although very briefly put, as I understood the application, it was advanced on the basis that the plaintiff's action could not have succeeded in light of the Defence filed, and the plaintiff's legal advisers should have advised the plaintiff to discontinue the litigation. That was particularly the case in circumstances where the plaintiff accepted in evidence that it did not know whether the defendant was a farmer or not (evidence of Mr Mercieca, set out at [24] above). Alternatively, an order for indemnity costs was sought. 3. The plaintiff has provided written submissions, directed to indemnity costs rather than the question of unnecessary costs pursuant to s 99. That focus is understandable, given the truncated nature of the defendant's application. 4. The plaintiff submits that there has been no delinquency in the conduct of its case, or other departure sufficient to warrant an order for costs on an indemnity basis. It is submitted that the plaintiff was entitled to put the asserted defence to proof, and have the opportunity to test the evidence before the Court. 5. I do not regard this case as a matter falling within the provisions of s 99 of the CPA. The power to order costs under that section is plainly a power to be exercised only where there is serious professional misconduct. I have no hesitation in concluding that such is not the case in the present matter. 6. The ordinary rule is that costs follow the event: r 42.1 of the Uniform Civil Procedure Rules 2005. Section 98 of the CPA provides that costs are at the discretion of the court, and may be awarded on an ordinary or indemnity basis. 7. As to the question of indemnity costs, whilst minds might reasonably differ as to the prudence of the continuation of the plaintiff's suit after receiving notice of the nature of the defendant's defence, I do not conclude that it was not open to the plaintiff to seek to test that defence before the Court. 8. Accordingly, I propose to order costs on an ordinary basis. orders 1. Order 3 of 6 April 2016, for costs in favour of the defendant is confirmed. Such costs are payable on an ordinary basis. ********** 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: 28 April 2016