The Trustee for Manana Pastoral Unit Trust v Barambah Organics Dairy Farms Pty Ltd [2025] NSWCATCD 164;

(1) compensation in the sum of $500,000 for deterioration of the farms pursuant to s 19A of the Agricultural Tenancies Act 1990 (NSW) ("ATA");

(2) an order for immediate possession of the farms;

(3) an order for the payment of all rent due until the end of the lease term; and

(4) costs.

1. By way of an offsetting claim detailed by their Points of Defence, the Respondents seek orders for payment in the amount of $237,268 for what they say are capital improvements made to the farms.

1. Part 4 ATA provides for the resolution of disputes between owners and tenants of agricultural tenancies. Section 20(1) ATA allows an owner or tenant to apply to the Tribunal for determination of a dispute relating to a right or obligation conferred by the ATA. Section 20 ATA grants the Tribunal jurisdiction to hear such disputes and make a range of orders under s 21 ATA, including orders for compensation and possession.
2. I am satisfied on the evidence that;

(1) the Applicants are an "owner" and the Respondent is a "tenant" for the purposes of s 4 ATA;

(2) the subject properties are collectively a "farm" as defined in s 4 ATA, being land greater than 1 hectare used for agricultural purposes;

(3) the Applicants' claims for compensation for deterioration made under s 19A ATA and for possession of the farm under s 21 ATA arise from rights and obligations conferred by the ATA, and are therefore matters that may be determined by the Tribunal pursuant to s 20(1) ATA;

(4) while the combined monetary relief sought by the Applicants for compensation and unpaid rent, if found, could exceed the Tribunal's jurisdictional limit, the Applicants have confined their total claim to the amount of $500,000, which is the limit prescribed by s 21(3)(a) ATA; and

(5) the application was filed on 17 December 2024, prior to the end of the tenancy on 29 September 2025 and within three months of the breach notices issued, and is therefore within the limitation period prescribed by s 20(2) ATA.

1. In reaching the conclusions in this matter, the Tribunal has had regard to the following evidence relied upon by the Applicants;

(1) the affidavit of Ms Jane Campbell, filed on 14 July 2025, marked as exhibit A1;

(2) a bundle of four spiral bound volumes, lodged on 23 May 2025, which relevantly included valuation reports for the farms from 2019 and 2024, and the expert reports of Mr O'Connor and Mr Hack, marked collectively as Exhibit A2;

(3) a bundle of four spiral bound volumes, lodged on 14 July 2025, containing photographic evidence, the affidavit of Mr Ian Campbell, a builder's quote, and correspondence with Bellingen Shire Council, marked collectively as Exhibit A3;

(4) chronology of events, lodged on or about 23 May 2025 and marked as Exhibit A4; and

(5) sworn oral evidence given at the hearing by Ms Jane Campbell, Mr Ian Campbell, Mr Justin Sutton, and Mr Tony O'Connor.

1. Similarly, the Tribunal has had regard to the following evidence relied upon by the Respondents;

(1) affidavit of Mr Chris John Elliot, marked as Exhibit R2;

(2) affidavit of Mr Bevon Graham Gould, marked as Exhibit R3;

(3) affidavit of Mr Anthony Charles Bernett, marked as exhibit R4; and

(4) the expert report of Dr Moss.

(5) sworn oral evidence given at the hearing by Mr Chris Elliot and Mr Bevon Gould.

1. The specific documentary and oral evidence are described below where relevant to the Tribunal's findings.

1. The Applicants' first and primary claim is for an order that the Respondent pay $500,000 as compensation for the deterioration of the farms. This claim is brought pursuant to s 19A ATA.
2. The central dispute under this claim concerns the physical condition of the farms as the tenancy neared its conclusion. The Applicants allege widespread degradation across numerous aspects of the property, including its pastures, fences, laneways, and key infrastructure such as the dairy and effluent system.

The Applicants' Submissions - Compensation for Deterioration

1. In support of their claim for compensation under s 19A ATA, the Applicants submit that the Respondent has failed to manage the farms in accordance with its obligations under the Leases and the ATA, resulting in deterioration to the property.
2. To establish the nature of the deterioration and quantify their loss, the Applicants rely on the following primary evidence;

(1) photographic evidence intended to show the condition of the property, including paddocks, fences, gates, and the accumulation of rubbish;

(2) the expert report of Mr O'Connor, which quantifies the cost to remediate the alleged deterioration at $739,194.52;

(3) a letter from the dairy's original builder, Mr Hodgson, which describes the poor condition of the dairy equipment;

(4) documents and images relating to an infestation of Tropical Soda Apple, including a Biosecurity Direction issued by Bellingen Shire Council, which they submit demonstrates a failure by the Respondent to control noxious weeds; and

(5) a Prevention Notice issued by Bellingen Shire Council, which they contend is evidence of the failure of the effluent system and resulting environmental pollution;

1. The Applicants submit that that the evidence establishes that the Respondent has breached its duty to manage the farm and is liable to pay fair compensation for the resulting deterioration.

The Respondent's Submissions - Compensation for Deterioration

1. The Respondent submits that the Applicants' claim for compensation for deterioration should be dismissed. As a threshold matter, the Respondent submits that the claim must fail because the Applicants have not proven the essential measure of compensation required by s 19A(2) ATA, which requires compensation to be calculated as an amount representing the "decrease in the value of the farm". It submits that the Applicants' own evidence, specifically the valuation reports from 2019 and 2024, demonstrates a significant increase in the value of the farm, and therefore the statutory basis for an award of compensation has not been established.
2. In addition, the Respondent submits that the Applicants' right to claim compensation under s 19A has been displaced by the terms of the Leases, pursuant to s 19A(4) ATA. It argues that the Leases are comprehensive commercial agreements that expressly authorise the Respondent's management of the farm, and that the parties therefore contracted for the terms of the Lease to be the complete source of their rights and obligations regarding the farms' condition.
3. In the alternative, the Respondent submits that the claim for compensation is premature. Its position is that it has a contractual right to occupy the property for the full term of the Lease and a corresponding obligation to "make good" the property upon expiry. The Respondent contends that it is actively undertaking these make good works and should be permitted to complete them.
4. In support of this, the Respondent relies on evidence that it has engaged contractors to address the issues raised by the Applicants, including paying an invoice for $36,647 for repairs to the dairy and engaging a specialist contractor for weed management. It further submits that the Biosecurity Direction Order by the local council has now been lifted, demonstrating that its management of the Tropical Soda Apple infestation is considered adequate.
5. The Respondent's overarching submission is that an order for monetary compensation at this stage is inappropriate as it would improperly interfere with its contractual rights and its ongoing compliance with its end of lease obligations.

1. The Applicants' claim for compensation for deterioration is brought pursuant to s 19A ATA. The determination of the claim requires consideration of two primary legal issues raised by the submissions. The first whether the right to claim compensation under the ATA has been displaced by the terms of the Lease pursuant to s 19A(4) ATA, and the second is measure by which compensation is to be determined under s 19A(2) ATA.

Displacement of the Statutory Right to Compensation

1. The ATA establishes a general principle that parties to an agricultural tenancy cannot "contract out" of the rights, powers, or duties created by the legislation. Section 27(1) ATA provides;

27 Contracting out

(1) Any agreement purporting to waive or abrogate any right, power or duty created by this Act, or otherwise to defeat the purposes of this Act, is to that extent void.

(2) Nothing in this section precludes a waiver of rights in accordance with a provision of this Act.

1. However, that prohibition is not absolute. It is qualified by s 27(2) ATA, which permits a waiver of rights where it is done "in accordance with a provision of this Act."
2. Section 19A(4) ATA is such a provision. It creates a specific statutory exception to the general prohibition against contracting out, but only in relation to a claim for compensation for deterioration. It provides that an owner's rights under s 19A ATA are displaced by an agreement in two specific circumstances. The subsection provides;

(4) The rights of an owner under this section are displaced by an agreement-

(a) to the extent that those rights are expressly waived by the agreement, or

(b) to the extent that the management of the farm (being management that is material to any claim for compensation under this section) is expressly authorised by the agreement.

1. The interplay between those sections establishes that while parties are generally prevented from waiving their rights under the ATA, they are expressly permitted to do so in relation to a claim for deterioration if the terms of their tenancy agreement meet the specific requirements of either s 19A(4)(a) or s 19A(4)(b) ATA. If the conditions for displacement are met, the statutory right to compensation under s 19A gives way to the rights and remedies established by the parties' own contract.

1. The statutory test for the quantum of compensation is set out in s 19A(2) ATA, which provides

(2) For the purposes of determining the compensation payable for any deterioration of the farm, the amount of compensation is an amount representing the decrease in the value of the farm as a result of the deterioration. (emphasis added)

1. Recent decisions of the Tribunal have treated this requirement as an essential element that an applicant must prove to establish an entitlement to compensation. In Parker v Morrison [2022] NSWCATCD 52 ("Parker"), a claim for compensation based on quotations for repair work was dismissed. The Senior Member presiding accepted the tenant's submission that the claim must fail because the owner had provided no evidence of any "decrease in the value of the farm as a result of the deterioration" as required by s 19A(2) ATA. The Tribunal treated the "decrease in value" as a mandatory precondition to an award of compensation under the section.
2. In that matter, the Tribunal held, at [81]-[83];

81 I am satisfied that the "outstanding repairs", other than for the replacement of the padlock and the welder and for water usage, relate to the deterioration of the property during the tenancy owing to the failure of the tenant to manage the farm in accordance with cll 18.2, 18.3 and 18.4 of the tenancy agreement within s 19A(1) of the AT Act.

82 I am also satisfied that the owner is not entitled to claim the amounts in the Pevie Handyman invoice, the 4 May 2021 Prograde invoice, the 6 December 2021 Prograde invoice, the Hawkesbury Fencing quote, and Pevie Cleaning invoice for these breaches of cll 18.2, 18.3 and 18.4 of the tenancy agreement because the amount of compensation prescribed under s 19A(2) of the AT Act is the amount representing the decrease in the value of the property as a result of the deterioration.

1. A similar approach was taken in Sidhu v Sidhu [2022] NSWCATCD 62 ("Sidhu"). In that matter, the Senior Member presiding twice dismissed substantial claims for compensation for removed and deteriorated infrastructure, concluding in each instance that there was no evidence before the Tribunal of the decrease in value of the farm as a result of the alleged deterioration.
2. Both Parker and Sidhou establish that a failure by an applicant to adduce evidence specifically addressing that measure can be fatal to a claim under s 19A ATA, even in the face of satisfactory evidence of costs to repair that deterioration.
3. Whilst it is true that older decisions of General Members of the Tribunal may have accepted that the cost of reinstatement can be a "strong guide" to the diminution in value (see for example Refalo Pty Ltd v Donald Balfour Scott [2014] NSWCATCD 174) those decisions also establish that where such a measure is used, an applicant is not entitled to the full cost of replacing old assets with new ones, and that evidence speaking to the suitable allowance for betterment and depreciation must be adduced by the applicant. Notably, no such evidence was adduced by the Applicants in these proceedings.

1. Having considered the evidence, the submissions of the parties, and the applicable law, the Applicants' claim for compensation under s 19A ATA must be dismissed.
2. The Respondent raised as a threshold issue that the Applicants' right to claim compensation under s 19A ATA was displaced by the terms of the Lease, pursuant to s 19A(4) ATA. That is a significant argument, particularly in the context of a detailed commercial agreement negotiated by represented parties. The Lease contains extensive clauses governing the tenant's management of the farm and provides a contractual mechanism for the landlord to rectify any breach and recover the cost; see clause 15.4. This framework expressly authorises the management of the farm to the extent that it displaces the general statutory remedy, as prescribed by s 19A(4)(b) ATA. However, it is unnecessary to make a definitive ruling on the Respondent's displacement submission, because the Applicant's claim fails on a more fundamental ground.
3. The determinative reason for dismissing the claim is the Applicants' failure to adduce any evidence to satisfy the statutory measure of compensation prescribed by s 19A(2) ATA. As the decisions in Parker and Sidhu make clear, the requirement to prove on the evidence tendered that the deterioration has resulted in a quantifiable decrease in the value of the farm is an essential element of the claim. The onus rests on the Applicants to prove that loss.
4. The evidence adduced by the Applicants in support of the quantum of their claim was directed entirely to the cost of rectifying the alleged deterioration. The valuation evidence before the Tribunal demonstrated a significant increase in the market value of the farm between 2019 and 2024. That it is not to say that the value may not have increased further in the absence of deterioration, but notwithstanding, the Applicants have failed to establish with any particularity the very precondition upon which an award of compensation under s 19A ATA can be awarded, being the decrease in value caused by the deterioration.
5. Further or in the alternative, I accept the Respondent's submission that the claim is premature. The Leases provide a contractual right for the Respondent to "make good" the property upon expiry. The evidence shows that the Respondent has taken steps in that regard, most notably by engaging and paying a contractor to repair the dairy. The Applicants have not established a sufficient basis for the Tribunal to interfere with that contractual process by making a pre-emptive award of monetary compensation before the Respondent has had the full and proper opportunity to comply with its end of lease obligations.

1. The second order applied for by the Applicants' is for an order terminating the tenancy and for possession of the farms, pursuant to s 21(1)(i) ATA.
2. This claim is advanced on two primary factual grounds: firstly, that the Respondent has effectively "abandoned" the farms by ceasing dairy operations; and secondly, that the physical state of the property, particularly the extensive infestation of Tropical Soda Apple, is so severe as to require the Applicants' urgent intervention to prevent further deterioration.

1. In support of the claim for an order terminating the tenancy and granting possession of the farms pursuant to s 21(1)(i) ATA, the Applicants submit that such an order is necessary on two principal grounds.
2. Firstly, they contend the farm has been effectively 'abandoned' as an operational dairy. They submit that the Respondent's removal of its milking herd in September 2024 and the non-operational state of the dairy infrastructure demonstrates that the primary purpose of the tenancy is no longer being pursued. They argue this constitutes a fundamental failure by the Respondent to operate the premises as required by the Leases.
3. Secondly, the Applicants submit that an immediate order for possession is required on the grounds of urgency to prevent further damage to the property. They rely on evidence of a widespread infestation of Tropical Soda Apple, and argue that any further delay in regaining possession will lead to "greater deterioration" of the farm and significant future production losses. The Applicants contend that their intervention is required immediately to mitigate this ongoing harm, which they submit that the Respondent is failing to adequately control.

1. The Respondent submits that the Applicants' claim for an order terminating the tenancy and granting possession should be dismissed.
2. In response to the allegation of abandonment, the Respondent submits that the claim is factually incorrect. The Respondent relies upon evidence that it has continued to pay rent in full, at approximately $30,000 per month, has personnel and contractors attending the site, and that the farms are being used for the agistment of approximately 800 head of cattle. The Respondent submits that agistment is a use expressly permitted by clause 11.4 of the Leases and therefore does not constitute abandonment. The Respondent also points to the expert evidence of Mr O'Connor, who conceded under cross examination that if agistment was a permitted use, the property could not be considered abandoned.
3. In response to the claim of urgency regarding the Tropical Soda Apple infestation, the Respondent submits that it is actively managing the issue in a manner appropriate for a certified organic farm, including through the engagement of specialist contractors. It relies on evidence that the formal Biosecurity Direction Order issued by Bellingen Shire Council has since been lifted, which it argues demonstrates that its management plan is considered adequate by the relevant authority.
4. The Respondent's overarching submission is that an order for possession before the expiry of the lease term would improperly interfere with its contractual right to quiet enjoyment and its corresponding right to complete its make good obligations. It contends that the Applicants have not established any grounds sufficient to warrant such an exceptional order.

1. Section 21(1)(i) ATA confers on the Tribunal a discretionary power to make the order sought by the Applicants.
2. However, the exercise of that power is not merely a matter of finding a breach of the lease. It is a power that must be exercised judicially, having regard to established legal principles, most notably the doctrine of relief against forfeiture. The doctrine allows a court or tribunal to prevent a landlord from terminating a lease and retaking possession, even where a breach by the tenant gives rise to a contractual right to do so.
3. The jurisdiction of the Tribunal to grant relief against forfeiture is well established; Steak Plains Olive Farm Pty Ltd v Australian Executor Trustees Limited [2014] NSWCATAP 85 at [27]- [29].
4. The considerations applicable on an application for relief against forfeiture, at least in this general context, were summarised by Keane JA (as his Honour then was) in Ace Property Holdings Pty Ltd v Australian Postal Corporation [2010] QCA 55 ("Ace Property Holdings") at [163], as involving the conduct of the applicant for relief, including whether the default was inadvertent or wilful; the gravity of the breaches; the damage to the covenantee or lessor; the relative loss to the covenantor or lessee; and the disparity between the value of the property forfeited and the damage caused by the breach.
5. Therefore, when considering an application for possession, the Tribunal must undertake a two stage inquiry. First, it must determine whether a breach has occurred that gives rise to a right of termination. Second, if such a right is established, it must then weigh the considerations outlined in Ace Property Holdings to determine whether it is just and equitable to grant the landlord possession, or whether relief against forfeiture should prevent that order.

1. The Applicants' primary relevant contention is that the Respondent has abandoned the farms. I am not satisfied that has been established. The undisputed evidence shows the Respondent continued to pay rent, had personnel and contractors on site, and was using the land for agistment, a use permitted under the Lease. A change in commercial strategy from dairying to agistment does not constitute a breach of the covenant to use the premises for the "operation of a dairy farm" in a manner that amounts to abandonment.
2. The Applicants also rely on the general deterioration of the farms as a breach of the Respondent's obligations under Clause 9 of the Lease to "keep and maintain the Premises...in good and tenantable repair". I am prepared to accept, based upon the evidence, that the state of the dairy, the effluent system, and the extent of the Tropical Soda Apple infestation constituted a breach of this repair and maintenance covenant at the time that the application was filed.
3. Having found a breach of the repair covenant, the Tribunal must consider whether it is appropriate to grant relief in the nature of forfeiture. As discussed above, the relevant principles that guide this discretion are those set out in Ace Property Holdings. The key considerations are the conduct of the parties, the gravity of the breach, the nature of the damage caused to the lessor, and the proportionality of the loss that would be suffered by the lessee if the lease were to be forfeited.
4. Applying those principles, I am not satisfied that an order for termination would be a just outcome in this case. The breaches relate to the physical condition of the property, and the damage caused to the Applicants is primarily financial in nature. The evidence does not suggest a wilful or contumacious disregard for obligations by the Respondent. Rather, it shows an intention to rectify the issues, demonstrated by the engagement of contractors to repair the dairy and manage the Tropical Soda Apple. The Respondent has a contractual right under the Lease to complete these make good obligations before the end of the term.
5. A key consideration is the disparity between the damage caused by the breach and the value of the property right that would be lost. An order for termination would have deprived the Respondent of its right to quiet enjoyment for the remainder of the term, and more particularly, to its right to make good under the terms of the lease, for which it was paying substantial rent. That would have been a disproportionate penalty for a breach that could be adequately remedied by performance of the make good obligations or, if necessary, by a later award of damages.
6. For the reasons above, the Tribunal considers that the application for orders for termination and possession of the tenancy is without merit, and that the parts of the application related to those issues must be dismissed.
7. In any event, the Leases have now expired by the effluxion of time on 29 September 2025, and any order for possession would therefore moot.

1. The Applicants sought an order that the Respondent pay all rent owing for the remainder of the term of the lease, from the date of the hearing until the expiry date of 29 September 2025. That portion of the claim was made under s 21(1)(e) ATA, which empowers the Tribunal to make an order for the payment of money.

1. Noting that the term of the Leases expired on 29 September 2025, any claim for future rent from the date of hearing is moot.
2. Notwithstanding, at the time of the hearing, the undisputed evidence was that rent had been paid punctually and consistently throughout the term. The Applicants did not provide a rent ledger or any other evidence to suggest that the Respondent was in arrears at that time, or that there was a reasonable basis to apprehend that any then future rent would not be paid. An order for the future payment of rent is a remedy typically sought where there has been a history of default or repudiation by a tenant. Neither of those circumstances were established here.
3. For these reasons, that part of the application must also be dismissed.

1. The Respondent sought an order that the Applicants pay compensation for improvements made to the farms during the tenancy. In its Points of Defence and Cross-Claim, the Respondent asserted an entitlement to compensation in the sum of at least $237,268.
2. That claim comprised of two primary items of work which the Respondent submits were capital improvements;

(1) upgrades to the roads surrounding the dairy at a cost of approximately $170,000; and

(2) an increase to the size of the machinery shed at a cost of $67,268, which the Respondent asserts was done with the consent of the Applicants.

1. The claim is brought pursuant to ss 6, 7 and 18 ATA.

1. The Applicants submit that the offsetting cross-claim should be dismissed. In relation to the road upgrades, Ms Campbell argued that this work constituted maintenance for which the Respondent was already responsible under the terms of the Lease, not a capital improvement for which compensation is payable. She submitted that clause 8.3(f) of the Lease requires the tenant to take reasonable measure to prevent soil erosion and damage to laneways.

1. The Respondent submits that the road and shed works were substantial capital improvements that went beyond mere maintenance, and that it is entitled to compensation under ss 6 and 7 ATA for the expenditure it incurred.

1. A tenant's right to compensation for improvements is established by Part 2 ATA. Section 6 provides for compensation for improvements carried out with the owner's consent, while s 7, read with Schedule 1 ATA, provides for compensation for certain improvements a tenant may make as of right, such as relevantly, the "Making or improvement of necessary roads or bridges".
2. The measure of compensation for a tenant's improvements is prescribed by s 15 ATA. The provision is reproduced below;

15 Determination of compensation payable for tenants' improvements

(1) For the purposes of determining the compensation payable under Part 2 for an improvement carried out by a tenant, 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. (emphasis added)

1. This statutory test requires an assessment of the value added for a hypothetical new tenant, which may differ from the actual cost of the work performed.

1. To succeed in its claim, the Respondent bears the onus of providing evidence that satisfies the measure of compensation prescribed by s 15 ATA. This requires evidence as to the "value of the improvement to an incoming tenant". The Respondent has provided evidence of its expenditure on the road and shed works, but it has not tendered any valuation evidence, expert or otherwise, addressing the specific statutory test of the value these works might represent to a hypothetical incoming tenant.
2. As previously explained in these reasons, the failure to provide valuation evidence that properly grounds a claim for compensation pursuant to s 21(1) ATA is fatal to the claim; Foxys' Contracting Pty Ltd v Roseneath Stud Pty Ltd [2021] NSWCATCD 37. The Tribunal cannot speculate as to the value of the works to an incoming tenant. In the absence of any evidence addressing this essential element of the claim, the offsetting cross-claim cannot be quantified and must be dismissed.

1. As the respondent was successful in the proceedings, costs should follow the event and the applicants shall pay the respondent's costs of the proceedings on an ordinary basis as agreed or assessed unless either party wishes to be heard on the question of costs, in which case the parties may provide submissions in accordance with orders 3 to 6.

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.