Richard Pitt & Sons Pty Ltd v Hydro Electric Commission

• Jurisdiction: Tasmania
• Judge: Cox CJ,Underwood J
• Judgment Date: 06 June 2000
• Court: Supreme Court of Tasmania
• Date: 06 June 2000
• Docket Number: FCA 67/1999

[2000] TASSC 61

SUPREME COURT OF TASMANIA (FULL COURT)

Cox CJ, Underwood J and Crawford J

FCA 67/1999

Richard Pitt & Sons Pty Ltd

and

Hydro Electric Commission

REASONS FOR JUDGMENT

FULL COURT

Cox CJ

1 The appellant company, the shareholders of which are members of the Pitt family, held leases of three tracts of land owned by the respondent Commission in the Bronte area and used them for grazing purposes. Members of the family had occupied two of the tracts as lessees for some 30 years prior to 1981 at a relatively modest rent. In 1981, the respondent advised the appellant and other lessees in the district that new conditions and increased rentals were to be imposed. After negotiation, leases of these two tracts were entered into in late 1981 and after a successful tender by the appellant in respect of the third tract, a lease of it was likewise entered at that time. All leases were in similar form for a period of six years, with provision for an extension for a further term of six years from 1 June 1987. In 1993, the leases were extended by another two years and later by yet another 12 months, being finally terminated by notice to quit in 1997. The leases contained provisions for review of rental by the respondent Commission after the first three years. Effectively the Commission was in a position to dictate the quantum of rent every three years until 1993 and thereafter to set it for the two extensions it granted. The leases also contained provisions requiring the lessee to erect and maintain stock-proof boundary fences and to manage the lands in a good and husband-like manner and to keep them at all times in good heart and condition and not to allow any part to become impoverished.

2 Not long after the signing of the leases in February 1982, a fire occurred causing significant damage to the leaseholds. The learned trial judge found that fencing was destroyed and much of the pasture rendered unfit for grazing. In an action by the respondent Commission against the appellant seeking recovery of the land and payment ofmesne profits from the termination of the leases in 1997, the appellant raised a counterclaim seeking payment of sums expended by it after the fire in re-seeding and fertilising the properties with superphosphate and also in re-erecting fences and stock yards. This expenditure involved the outlay of $52,000 for purchasing, carting and spreading seed and superphosphate in February/March 1982 and $29,000 therefor in March—June 1983; while in 1982 $20,000 was expended on fencing and yards. Further sums amounting to $52,000 were spent on superphosphate in 1985 and in 1987.

3 The appellant pleaded its counterclaim on a number of bases which arose out of discussions between its secretary, Mr Richard Pitt, and an officer of the respondent Commission, Mr Linton, in March 1982. The appellant's adviser, Mr Douglas Dickinson, was also present at the meeting. The first plea alleged an agreement to the following effect:

‘22 On 5 March 1982 at the Websters property office in Hobart, the plaintiff by its servant, agent or officer John Linton, and the defendant by its director Richard Pitt orally agreed:-

1. (a) that the defendant would immediately re-sow the leased land with grass seed and apply super-phosphate;

2. (b) that the costs of effecting such works would be borne by the plaintiff; or alternatively

3. (c) that the plaintiff would reduce or not increase the rental of the leased lands for such period sufficient to enable the defendant to recoup the costs of effecting such works.

(hereinafter referred to as “the agreement”).

Particulars of Conversations Comprising the Agreement

The substance of the conversations comprising the agreement were that Mr Linton said to Mr Richard Pitt that he was concerned about the damage done to the leased lands by the fire and said that Mr Pitt should carry out re-sewing with seed and supering immediately at the Hydro-Electric Commissions expense to stop the property eroding and the top soil being lost. Mr Linton also told a Mr Doug Dickinson (who was also present at the meeting) that he should write a letter to the Hydro-Electric Commission with the initial costs of re-seeding and supering to formalise what had been discussed. Mr Linton also said to Mr Pitt that the Hydro would assist with the payment for works and would reimburse Mr Pitt through a reduction of rent or payment of compensation or both. To all of these propositions Mr Pitt and Mr Dickinson assented.

22A In the premises of paragraph 22(c) hereof, it was an implied term of the agreement that the plaintiff would not require the defendant to quit the leased lands unless and until the defendant had recouped the costs of effecting such works (hereinafter referred to as “the implied term”).

23 Pursuant to the agreement, between February 1982 and December 1986, the defendant re-sowed, or alternatively caused the leased lands to be re-sowed with grass seed and applied or alternatively caused the application of, super-phosphate (hereinafter referred to as “the works”).

Particulars of Causing Re-sowing and Application

The grass seed and super-phosphate were respectively sowed and applied by a partnership known as Messrs R B K Pitt & Partners (“the partnership”) at the direction of the defendant.

Particulars of Works

See annexure “B”

24 (a) The cost of the works was $150,000;

Particulars of Cost of Works

See annexure “B”

(b) the works effected an improvement in value to the leased lands (“the increase in value”) full particulars of which shall be provided prior to trial herein.

Particulars of Improvements

See annexure “B”.’

In the alternative, it was pleaded:

‘28 Further or alternatively:—

1. (a) on or about 5 March 1982 the plaintiff by its servant, agent or officer John Linton orally represented to the plaintiff (sic) that

   1. (i) the defendant had its authority to perform the works; and

      Particulars of Authorised Works

      The plaintiff authorised the defendant to undertake the re-sewing of grasses and the application of super-phosphate sufficient to effect the stabilisation and protection of the soils, and to facilitate the recommissioning of the leased lands for the grazing of stock.

   2. (ii) the plaintiff would bear the costs of the works; or alternatively

      Particulars of Costs to be Borne

      All material and labour costs associated with the re-sewing of grasses and application of super-phosphate.

   3. (iii) that the plaintiff would reduce or not increase the rental of the leased lands for such period sufficient to enable the defendant to recoup the costs of effecting such works.

   such that the relationship of principal and agent was established between them (“the relationship”) from which relationship the plaintiff would not be free to withdraw;

   Particulars of Service, Agency or Office of Linton

   Mr Linton was employed by the plaintiff as its property manager, and as such had actual and apparent authority to negotiate, make representations on behalf of, and bind by contract, arrangement or understanding the plaintiff.

   Particulars of Conversations Comprising the Representation

   The defendant repeats and relies upon the particulars sub-joined at para22 hereof.

   Particulars of Relationship of Principal and Agent

   The terms of the agency, other than those implied by operation of law, were as follows:

   1. A That the defendant had the plaintiff's authority to perform works on the leased lands on behalf of the plaintiff;

   2. B That the plaintiff would bear the costs of the works so performed, either by direct reimbursement of the defendant or by reducing or not increasing the rental of the leased lands for such a period sufficient to enable the defendant to recoup the costs of effecting such works.

   (b) acting in reliance on the relationship, the defendant performed the works;

   (c) it is unconscionable for the plaintiff to deny:

   1. (i) the existence of the relationship; or

   2. (ii) its liability to bear the costs of the works performed by it agent; or

   3. (iii) that it may not require the defendant to quit the leased lands without affording the defendant any recoupment of the costs of effecting the works;

   (d) in the premises the plaintiff is estopped from denying

   1. (i) that in performing the works, the defendant was its agent; and

   2. (ii) its liability to bear the cost of the work;

   3. (iii) that it may not require the defendant to quit the leased lands without affording the defendant any recoupment of the costs of effecting the works.’

4 The learned trial judge rejected the claim that there was a binding agreement as pleaded in par22 of the defence and counterclaim. He found that a meeting had occurred as particularised and that Mr Pitt raised with Mr Linton the question of the cost of rehabilitation of the properties and that Mr Linton agreed that the work was necessary and could be undertaken with the approval of the Commission. Mr Pitt did not need the Commission's permission and his Honour observed that the appellant may well have been obliged by the terms of the lease to undertake at least part of the work involved. Nevertheless, Mr Linton expressed general approval of the appellant's intended action. His Honour found that:

‘Mr Pitt was entitled to believe, at the conclusion of the meeting, that Mr Linton, as property management officer, would ensure that the Commission would act in good faith and would make some future accommodation in recognition of his expenditure of capital. But there was no concluded or binding agreement. Even if the version of Mr Pitt is accepted in full, it is impossible to identify the terms of the agreement in any precise or enforceable manner. On his version, it is not certain that the Commission would pay the entire sum expended by him, whether future rental would be reduced by a specified amount, or that his tenure would be for an identified period. At best, Mr Pitt had an expectation that some...