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Was a farmer entitled to a perpetual lease over land he sold to a mining company? Which case won?
09 Aug | Which Case Won

Was a farmer entitled to a perpetual lease over land he sold to a mining company? Which case won?

by Madison Burns, Tamworth

The Facts

Farmer sells land to mining company to build haul road

In March 2007, a farmer sold his rural property near Gunnedah in NSW to a mining company. The mining company used the land to build a haul road for its mining operations. The same lawyer acted for both the mining company and the farmer on the property sale. 

A clause in the contract for sale allowed the farmer to remain in his home on the land for no more than one year from 6 March 2007.

Farmer fails to vacate land one year after sale

When the year was up, the farmer failed to vacate the property. The mining company did not attempt to remove him for a further year.

In April 2010, the mining company served a notice on the farmer to vacate the property by 31 May 2010. The farmer refused, saying that the mining company had agreed that he could live on the property indefinitely. 

In September 2010, the mining company again served notice on the farmer and the farmer again refused to vacate the premises.

Mining company takes legal action to remove farmer from land

After this refusal, the mining company commenced proceedings in the Consumer, Trader and Tenancy Tribunal (now known as the NSW Civil and Administrative Tribunal or NCAT) to remove the farmer from the land. 

The initial application failed on jurisdictional grounds and the matter came before the Supreme Court of NSW, where the farmer represented himself. 

It was up to the court to decide whether the farmer had been granted a perpetual lease by the mining company, or whether he should be ordered to vacate the property.

casea
The case for the mining company
  • Under the written contract for sale, we granted the farmer a licence to occupy the property for one year only after the sale.
  • That one year period has expired and so the farmer no longer has a right to occupy the property.
  • The farmer claims that we had previously agreed to a perpetual lease and so the contractual one year term does not apply. We did not agree to a perpetual lease, but even if we did, the farmer was correctly advised by his solicitor that the terms of the contract superseded any previous negotiations between us.
  • We were more than accommodating to the farmer. We allowed him to stay in occupation much longer than he was entitled to, although we were not required to do so. We offered him $4,000 towards moving and clearance sale costs, and we even offered him a licence for a further six months, but he refused.
  • The court must now grant us possession of the property and require the farmer to vacate.
caseb
The case for the farmer
  • Even though it has been more than one year since completion of the property sale, I still have the right to occupy the property.
  • I have a verbal agreement with the mining company granting me a perpetual lease at no rental cost. The mining company’s community liaison officer told me that it was common practice for mining companies to allow the former owner to stay on the property as long as the mining company’s requirements were met (in this case, to build the haul road). We agreed that after the sale I would be entitled to remain in occupation of the property indefinitely and to continue my farming activities, including running stock. It is only on this basis that I relinquished my title to the property.
  • The mining company asserts that this verbal agreement was superseded by the licence provision in the contract of sale. But that provision was never intended to be operative. As my solicitor explained to me, it had just been included in the contract as a tax planning device. By including the provision, the mining company would not have to pay GST because the property would be seen as a continuing rural operation.
  • The mining company let me continue living on the property for more than a year following the end date of the licence in the contract for sale, which is evidence that the provision in the contract was not operative.
  • The court must dismiss the mining company’s application for possession of the property.

So, which case won?

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Expert commentary on the court's decision

Madison BurnsParalegal
“This case shows the importance of ensuring that you understand the formal written contract and that any agreements made are expressly included in it. Most of the time, the land sale contract overrides any previous verbal or written agreements, unless expressly stated otherwise. The written contract usually constitutes the entire agreement between the parties.”
Court rules in favour of mining company, requiring farmer to vacate property

In Whitehaven Coal Mining Ltd v Tomaska [2012] NSWSC 1445, the Supreme Court of NSW ruled in favour of the mining company, Whitehaven Coal Mining Ltd. 

The farmer, Mr Tomas Tomaska, was required to vacate the property.

Farmer also required to pay damages

Whitehaven also claimed damages, being rent going back to 6 March 2007. This was the date Mr Tomaska was required to vacate under the contract for sale. 

However, the court pointed out that Whitehaven had willingly allowed Mr Tomaska to stay on the property until 31 May 2010 with no occupation fee. 

Damages were therefore calculated at $26,000, being $200 per week from 31 May 2010 to the date of judgement. 

Mr Tomaska was also ordered to pay Whitehaven’s legal costs.

Court favours mining company’s evidence over farmer’s evidence

The court noted that there was significant conflict in the evidence given on behalf of Whitehaven and by Mr Tomaska. 

Unlike Mr Tomaska’s evidence, which the court found unpersuasive, Whitehaven’s evidence was seen as generally consistent and in accordance with the objective facts. 

The court found it improbable that Whitehaven would have bound itself to a lease for an indeterminate, potentially lengthy period. It accepted the evidence of Whitehaven’s community liaison officer that he had never offered Mr Tomaska a perpetual lease. 

The court also accepted the general principle put forward by Whitehaven: 

…that a person who signs a document which it is apparent is intended to have legal consequences will be bound by its terms. That is whether or not he or she has read the document or is relying on another for his or her understanding of the document – Gallie v Lee [1969] 2 Ch 17 at 36-7. 

Further, the court accepted the evidence of the lawyer who had acted on the sale. She confirmed that she had explained to Mr Tomaska the effect of the one year licence in the contract and that he had made no objection to it. 

She also confirmed that she did not advise Mr Tomaska that the one year licence was merely included so that the sale did not attract GST. 

Based on its assessment of the evidence, the court concluded that it was more likely than not that the agreement of the parties was that contended for by Whitehaven and contained in the contract for sale.

Written contracts usually override previous agreements

This case shows the importance of ensuring that you understand the formal written contract and that any agreements made are expressly included in it. 

Most of the time, the land sale contract overrides any previous verbal or written agreements, unless expressly stated otherwise. The written contract usually constitutes the entire agreement between the parties. 

It also usually contains a special condition stating that the purchaser cannot rely on any conduct, statement or representation made by the vendor, agent or other third party, other than those made within the contract.

Each party should have independent legal advice

Whitehaven and Mr Tomaska were represented by the same lawyer on the conveyance. 

It is usually more appropriate for each party to have their own lawyer, so that everyone receives proper, clear and appropriate advice as to the consequences of the contract they are entering into.

Be cautious about representing yourself

Mr Tomaska represented himself in the Supreme Court. 

Not only was his evidence viewed as unpersuasive, but the Supreme Court also commented that the original defence filed by him was “struck out as embarrassing”. 

Mr Tomaska then filed two amended defences, to which the court said: “They are also objectionable but in the interests of the matter proceeding [Whitehaven] did not seek to strike them out…”

Mr Tomaska may still have lost this case had he been properly represented, but it is a good reminder to be cautious about representing oneself in legal matters.

As we know from the quote sometimes attributed to Abraham Lincoln, “he who serves as his own counsel has a fool for a lawyer and a jackass for a client”.

NOTICE: This article is accurate as at the time of publication and does not constitute legal advice. Please see our legal notices page for more information. Information related to coronavirus can be outdated very quickly.
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