Big Top Hereford Pty Ltd v Gavin Thomas as Trustee of the Bankrupt Estate of Douglas Keith Tyler [2006] NSWSC 1159 (6 November 2006)

Last Updated: 10 November 2006

NEW SOUTH WALES SUPREME COURT

CITATION: Big Top Hereford Pty Ltd v Gavin Thomas as Trustee of the Bankrupt Estate of Douglas Keith Tyler [2006] NSWSC 1159



CURRENT JURISDICTION: Equity Division

FILE NUMBER(S): 4904/06

HEARING DATE{S): 10, 11, 16 October 2006

DECISION DATE: 06/11/2006

PARTIES:
Big Top Hereford Pty Ltd (plaintiff)
Gavin Thomas as Trustee for the Bankrupt Estate of Douglas Keith Tyler (defendant)

JUDGMENT OF: Brereton J

LOWER COURT JURISDICTION: Not Applicable

LOWER COURT FILE NUMBER(S): Not Applicable

LOWER COURT JUDICIAL OFFICER: Not Applicable

COUNSEL:
Ms M Dulhunty (plaintiff)
Mr S Golledge (defendant)

SOLICITORS:
Savage & Love Solicitors (plaintiff)
The Argyle Partnership (defendant)


CATCHWORDS:
PERSONAL PROPERTY – Livestock – Cattle – Agistment – possession of cattle on agistment – commixture of goods – where herd comprises cattle in bankrupt estate, and cattle previously sold by bankrupt’s stock mortgagee to third party, and impossible to ascertain which cattle are in which category

ACTS CITED:
(NSW) Conveyancing Act 1919, s 36A

DECISION:
Herd is mixed goods to which parties are entitled proportionately according to their contributions, plaintiff as to 60% and defendant as to 40%. Direct that parties bring in short minutes to give effect thereto and provide method for division or realisation.


JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION


BRERETON J

6 November 2006


4904/06 Big Top Hereford Pty Limited v Gavin Frederick Crichton Thomas

JUDGMENT

1 HIS HONOUR: For many years Mr Doug Tyler has bred Hereford cattle, on traditional English bloodlines, on two adjoining properties formerly owned by him, known as Big Top and Home Farm, at Tyringham near Dorrigo in north eastern New South Wales. By the early 2000s he had a herd of about 600 to 700 cattle. When he was made bankrupt on 14 February 2003, his real and personal property, including (ultimately) the properties Big Top and Home Farm, and his cattle, vested in his trustee in bankruptcy, the defendant. Between May and August 2003, musters of the property resulted in Wesfarmers Landmark, who held a stock mortgage over the cattle, selling 392 cattle. Thereafter, a few other cattle, belonging to third parties, remained on the properties. At the heart of these proceedings is the issue whether any cattle that belonged to Mr Tyler remained.

2 Of the cattle sold by Landmark as mortgagee, 64 head were ultimately acquired in early November 2003 by the plaintiff Big Top Hereford Pty Limited (“BTH”), as trustee for the Big Top Hereford Trust, of which William Peter Jupp is the beneficiary. Although he maintains that he is independent of Mr Tyler and makes all relevant decisions himself, and that Mr Tyler is merely his caretaker of the herd, this is very difficult to accept: Mr Tyler has obviously played a major role in the management of the herd; invoices and sales advices in respect of the cattle in it are addressed to him; it is he who maintains the stud records; and he appears far better informed than Mr Jupp as to the status and origins of BTH’s herd. But, except as to credit, this is beside the point, because even if Mr Tyler had some beneficial interest in the Big Top Hereford Trust – and there is no evidence that he has – BTH acquired the 64 head from a subsequent purchaser after they had been sold by the mortgagee for value at an arm’s length auction sale, so that if they had found their way back to Mr Tyler – who is now discharged from bankruptcy – his trustee would have no further claim to them.

3 From late 2003, BTH’s cattle were agisted on the property Big Top, which Mr Tyler had, on 10 November 2000, transferred to his nephew Michael Tyler. That transfer has subsequently been declared void as against Mr Doug Tyler’s trustee in bankruptcy. BTH paid agistment to Michael Tyler. Following the avoidance of the transfer of Big Top to Michael Tyler, the trustee became registered as proprietor of Big Top on or about 29 June 2006, and has entered into possession of the property. Subsequently he has mustered the property, and has now removed all the cattle on it, for sale. After about 46 were sold at Dorrigo on 13 September 2006, he was restrained by interlocutory injunction, initially obtained late on 18 September 2006, from selling the remainder, other than steers, and there is no evidence that he has in fact sold any steers. The remaining cattle which were mustered from Big Top number about 253, and are currently held on a property at Seelands, near Grafton.

4 At issue in these proceedings is who has the superior claim to those cattle. BTH contends that the cattle mustered from Big Top in September 2006 were either its property, comprising the 64 purchased in November 2003 and their progeny, or cattle of which it was the bailee from third parties; it submits that this can be inferred from the circumstance that the property was mustered by Landmark in mid-2003, and that the cattle recently mustered from Big Top were necessarily introduced after that date. The trustee contends that while a small proportion of the current herd might be property of BTH, most of the cattle are property of the bankrupt estate, being cattle which escaped the Landmark musters in mid-2003 and their offspring. The trustee submits that this conclusion is warranted by the size of the Big Top herd immediately before bankruptcy, by the presence in the current herd of a large proportion of cattle previously registered to Mr Doug Tyler, and by the absence of any acceptable explanation for how the herd has grown from 64 in November 2003 to its present size. I conclude that some of Mr Doug Tyler’s cattle did escape the 2003 musters, with the result that the trustee is entitled to them and their offspring; that it is not possible now to separate the cattle to which the trustee is entitled from those of which BTH is the proprietor or bailee; and that BTH and the trustee are entitled to the herd in proportions 60:40.

The Big Top herd before bankruptcy

5 According to Mr Doug Tyler’s financial statements for FY2000, as at 30 June 2000 he had a total of 719 cattle. Exactly how that figure was derived is not clear; it appears in the livestock trading account in his annual financial statements apparently prepared by accountants, and reflects the impact of reported purchases and sales, natural increase and deaths, on the previous year’s figure. Although Mr Tyler was reluctant to accept it, there is no apparent reason why it would have been overstated. Mr Tyler’s financial statements for FY2001 record that he had 728 cattle as at 30 June 2001. Given that these figures include “natural increase”, I would infer that they include calves.

6 In his affidavit sworn on 25 September 2006, Mr Tyler deposed that in the five years before his bankruptcy, he would generally have in the order of 550 to 700 cattle at Big Top at any one time. Although he was reluctant to concede that in the witness box, that assertion is substantially consistent with his financial statements.

7 On 23 November 2001, Mr Tyler apparently executed a stock mortgage to Wesfarmers Landmark. It records a total of approximately 658 head of cattle, including about 140 stud cows and heifers, 260 commercial cows and heifers, 40 steers, 18 stud bulls, and 200 stud calves under three months. [This is a curious figure: it is difficult to understand how 140 stud cows could have produced 200 stud calves under twelve months, let alone under three months, of age; probably it includes offspring of the commercial cattle also]. Mr Tyler does not admit that he executed the stock mortgage. Although conceding that it appears to be his signature at the foot of the stock mortgage, witnessed by his sister Janet McLennan, Mr Tyler denied that the entries of the stock figures were in his writing. Having compared that handwriting to handwriting which appears in places in the Herd Registration Book, maintained by Mr Tyler, I am compelled to reject his denial; I am comfortably satisfied that the handwriting on the stock mortgage is his, and that he executed it.

8 On 17 April 2002, Mr Tyler purported to enter into a transaction with the estate of the late F Tyler by which he sold to that estate 137 purebred cattle (including 14 stud bulls), and 120 commercial cows with calves. As I understand his evidence, he says that he transferred all his cattle; but the documentation suggests that while the transfer was of the entirety of the purebred herd, it affected only some of the commercial cattle. The youngest of the purebred cattle the subject of the transaction was W140, born 30 March 2001; it can therefore be concluded that calves were not included in the schedule of 137. The figures in the stock mortgage in respect of the purebred cattle are not markedly inconsistent with those in the Landmark stock mortgage; given the approximation involved in the stock mortgage and the incentive for a mortgagor to overstate the security when seeking finance, I am inclined to accept the figures in the estate transaction, where they differ, as being more precise.

9 On 14 February 2003, a sequestration order was made against Mr Tyler, and on 2 April 2003, the executor of the F Tyler estate conceded that the transfer of the cattle to him was void. Accordingly, the 137 head of stud cattle and 120 commercial cattle – a total of 257, plus calves – reverted to the bankrupt estate, but subject to the stock mortgage to Landmark.

10 According to the records of the Australian Hereford Society, Mr Tyler’s Big Top registered (stud) breeding herd as at 28 February 2003 comprised 118 registered females, of whom forty had calves at foot, producing a total of 158. These figures do not include registered bulls, nor unregistered commercial cattle, male calves and steers. Mr Tyler also explained that the registration of some females was allowed to lapse from year to year, to be reinstated if the birth of a heifer calf warranted it.

11 This material suggests that, prior to the date of bankruptcy, and before allowing for attrition by deaths and sales, the Big Top herd comprised, very approximately, 140 purebred cows and heifers (of whom perhaps twenty were not kept registered), with perhaps 85 calves (including bull calves), about 15 bulls, and about 200 commercial cows and heifers, with perhaps 130 calves.

12 What if any sales took place during FY2002 and up to February 2003 is unknown. Although Mr Tyler gave affidavit evidence that one Daryl Lindsay Johnson – who now acts as an agent of the trustee in bankruptcy – removed between 120 and 130 commercial heifers from the property “early in the bankruptcy”, it is now apparent that that took place in or about 1999.

13 Mr Tyler gave evidence that there was a very low natural increase and high attrition rate, with up to 150 deaths, during the year or so immediately preceding 2003, due to the drought. This is corroborated, by Mr Johnson, only to the extent that Mr Tyler pointed out to him about sixty carcasses or graves, of unascertainable age. I am prepared to accept that there was a higher than usual rate of attrition which would explain some diminution in herd size, but not to the extent of the 150 or so that Mr Tyler suggested.

14 In addition, the remoter boundaries of Big Top were not secure. Some cattle roamed. According to Mr Tyler, the stud cattle were kept in secured paddocks, but the commercial cattle roamed freely over the property; some escaped through insecure boundary fences; others were stolen. Other evidence suggests that the so-called secured paddocks were not really secure, and that cattle could easily escape from them also. This also explains some reduction in herd size, particularly in respect of commercial cattle.

15 Not all the cattle in the Big Top herd were owned by Mr Doug Tyler. Long prior to his bankruptcy, Mr Tyler had made an arrangement with a fellow Hereford breeder, George Cromie, by which Mr Cromie lent some of his cattle to Mr Tyler for breeding purposes, on the basis that Mr Tyler would return to Mr Cromie a heifer calf from each cow so lent. The evidence does not disclose precisely how many cattle were in this class, but the list in a letter from Mr Cromie’s solicitors to the trustee dated 4 August 2006 suggests nine. Moreover, there were some cattle in the herd which belonged to Mr Tyler’s mother, and to his nephew Michael. These cattle grazed on Big Top or Home Farm, and Mr Tyler was, in effect, a bailee of them.

The 2003 musters

16 Between May and August 2003, stock were mustered and removed from the properties, and sold by Landmark. Landmark removed and sold a total of 392 cattle (counting separately the calves in the 62 “cow with calf” combinations). The break-up was as follows:

· 5 calves
· 90 cows
· 1 bull
· 93 steers
· 62 cows with calf
· 79 heifers

17 These sales included 20 cows with calves (which counted only as 20 head in Landmark’s count) and 29 heifers, sold at Tamworth on 2 May 2003. On the same day, George Cromie purchased 69 head, being 20 cows, 20 calves and 29 heifers. These animals in due course were returned to Big Top. Mr Cromie did this at the request of Mr Tyler, who wanted to endeavour to preserve at least part of the breeding herd. On 8 May, Landmark sold a further 23 of Mr Tyler’s cattle, and on 13 June a further 66. On 11 July, Landmark sold 119 cattle, and Mr Cromie purchased another 24, all cows. They, too, ultimately returned to Big Top, so that there were 93 cattle, formerly owned by Mr Tyler but now owned by Mr Cromie on Big Top, in addition to the nine Mr Cromie had under their old arrangement.

18 During July and early August, there were further attempts at mustering the properties. Mr Tyler was unco-operative and frustrated some of these attempts. Although Landmark as mortgagee of the stock appears ultimately to have been responsible, it is also clear that the trustee had some involvement in the musters, and received reports on the sales.

19 One of Mr Tyler’s objections to those musters was that amongst the cattle being mustered were those that belonged to Mr Cromie. On 11 August 2003, 23 cattle (17 cows, one bull and five calves) were trucked from Big Top to Mr Cromie (“the Cromie 23”). Although the evidence is less than compelling, so far as it goes it favours the view that these were Mr Cromie’s cattle; an invoice from the carrier addressed to Mr Cromie provides some corroboration for Mr Tyler’s assertion to that effect, notwithstanding that Mr Cromie gave no evidence on this topic.

20 Over the next couple of days, 13 and 14 August 2003, further attempts were made to muster the property. When the cattle were yarded, Mr Tyler identified a number said to belong to Mr Cromie, his mother, his nephew and his niece, as a result of which 18 mature cattle (including probably two bulls) were left on the property (“the Home Farm 18”). His evidence that the trustee indicated that he wanted nothing to do with them was neither contradicted nor challenged, and on this matter I accept it, although I treat much of Mr Tyler’s evidence with serious reservations - due to his reluctance to admit past statements made by him or on his behalf when they are adverse to his current position (in financial statements, correspondence and even in his affidavit), his proven unreliability on assertions of fact already mentioned (for example, his denial of having written the stock figure entires on the stock mortgage), and contradictions between his past statements and his current version (for example, his assertion in his affidavit that Mr Johnson took four decks of commercial heifers from the properties “early in the bankruptcy” compared to his assertion in earlier correspondence that two decks were taken and the proven fact that they were taken long before his bankruptcy, in 1999), and his combative demeanour.

21 The remaining cattle, which included many of those which had already been purchased by Mr Cromie and returned to Big Top, were transported to the saleyards at Tamworth. Mr Cromie was present at the saleyards and identified amongst the cattle at the saleyards 77 of the 93 which he had already purchased, and had them withdrawn from sale. He sold thirteen of them on 15 August, and placed the remaining 64 on agistment for a time with Mr Poole.

BTH acquires its cattle

22 BTH was incorporated on 2 October 2003, and the Big Top Hereford Trust was settled on the following day.

23 On 2 November 2003, Mr Cromie’s 64 cattle on agistment with Mr Poole were taken to the saleyards and sold on 3 November to an agent, Chris Paterson, who, it transpired, bought them on behalf of BTH (“the Paterson 64”). They were transported to the property Big Top on 4 November. Of the 64, nine were steers, one was a bull, and 54 were cows, or heifers which could have been of breeding age.

24 As well as the Paterson 64, and the Home Farm 18, the Cromie 23 returned to Big Top, precisely when is unclear but probably between September and November 2003. Of the Cromie 23, seventeen were cows; five were calves and one bull. Of the Home Farm 18, it is likely that up to sixteen were females of breeding age, there being nothing to suggest that there were more than two bulls, and much to suggest that there were only two. The Paterson 64, the Cromie 23 and the Home Farm 18 together provide a total of 105 cattle as at about the end of 2003, of which about 87 were females of breeding age, up to four (assuming two of the Home Farm 18) were bulls, 14 were steers, and five were calves.

25 On 3 November 2003, BTH sold two steers at Grafton. These could not have been from the Paterson 64, and must have been from other stock on the property, which had escaped the muster. On 20 January 2004, BTH sold six steers, and on 4 August 2004, two bull calves (presumably born since November 2003). Being of males, none of these sales affected the breeding herd.

26 On 20 September 2004, BTH sold five cows and fifteen steers. On 26 October 2004, BTH sold a bull. On 23 November 2004, BTH sold seven cows and one bull. On 7 December 2004, BTH sold two cows. Total sales from the herd from 3 November 2003 until January 2005 were therefore 42 head, of which fourteen appear to have been breeding females. After those sales, and before allowing for natural increase, one might have expected, in January 2005, a herd of two adult males and 78 females of breeding age (assuming the five calves from the Cromie 23 were females and had by January 2005 attained breeding age).

The agistment arrangements

27 In October or November 2003, Mr Jupp approached Mr Michael Tyler about agisting cattle on Big Top, and they agreed that he could do so, for $2,250 per month. According to Mr Michael Tyler, the agistment was increased as the herd grew, and this is corroborated by invoices which show agistment increasing to $2,750 per month with effect from 1 January 2005, and $3,200 from 1 November 2005. Mr Michael Tyler says that when the agistment was increased to $3,200 per month, there were about 200 grown cattle and 100 young cattle on the properties. Invoices evidence the charging of agistment to BTH until 30 June 2006. Pasture Protection Board returns prepared by Mr Michael Tyler record that as at 30 June 2006, there were a total of 352 cattle on the two properties; he said that other than four cows and calves of his own, and perhaps six of Janet McLennan’s, the others all belonged to BTH.

The police muster

28 In January 2005, at the instance of Mr Thomas, who was concerned that there were still cattle belonging to the bankrupt estate on the property, a muster was carried out by the police. Other than 20 identifiable as belong to Sissons, a total of 150 adult cattle were mustered; 129 were females of breeding age. Some were identifiable as belonging to George Cromie (having GC ear tags). There were ten adult bulls, and 52 calves under 9 months; on a rough proportionate allocation according to the number of adult breeding females, 7 of the calves might have been Sissons, leaving 45 as part of the Big Top herd. Including those calves, the Big Top herd was therefore about 195.

29 The Sisson cattle have since been removed from the property. The trustee was unable to establish at that stage that any of the cattle were property of the bankrupt estate. On 12 April 2005, BTH sold ten steers, and on 28 March 2006, BTH sold four steers, one bullock and eight cows. There is no evidence of any further purchases or sales before September 2006. As a result, before allowing for natural increase, one would have expected a herd of 74 breeding females and two adult males to remain from the 105 cattle that BTH originally acquired; or from the police muster a total of 182, of which 121 would be breeding females.

The events of 2006

30 In correspondence to Savage & Love, the solicitors who were acting for BTH and for other persons who claimed to have stock on the properties, the trustee on 26 May 2006 indicated that he had studied accounts produced by BTH and:

The records indicate that approximately 64 cattle were purchased from Chris Patterson for approximately $33,000. As I indicated in earlier correspondence there is a possibility that this purchase can be verified by Mr Jupp and if that is the case it only leaves him with the problem of being able to prove that the cattle are located at Tyringham.

31 The trustee obtained possession of Big Top and Home Farm in or about mid July 2006. On 18 and 19 July the trustee mustered the properties; the evidence does not disclose how many cattle were mustered. In response to communications from Savage & Love (the solicitors who were acting for BTH and for other persons who claimed to have stock on the properties), the Argyle Partnership (the trustee’s solicitors) advised by facsimile letter dated 19 July 2006 that “he had no intention of disposing of any of the stock being mustered on the property”. On 20 July, by a further facsimile letter, the Argyle Partnership informed Savage & Love that despite repeated requests, BTH and/or Mr Jupp had not provided evidence supportive of their claims to the stock; that the trustee had commenced a muster “and will ultimately be looking shortly to sell those items that belonged to the bankrupt and which have now vested in him as trustee”; that the trustee was prepared to allow a further final opportunity until 28 July for provision of evidence to support the claims to the stock; and that in the absence of such evidence the trustee would conclude that the stock belonged to the bankrupt, who until recently had been in possession of the property. Savage & Love responded on 25 July, to the effect that that was probably insufficient time to ascertain ownership of the cattle. There was further inconclusive correspondence, and the trustee also made an inquiry of Mr Cromie. By letter from the Argyle Partnership to Savage & Love dated 8 September, it was asserted that no evidence that would support a claim by Mr Jupp or BTH had been provided, and the trustee was now in the process of arranging for the sale of the cattle.

32 The trustee caused the properties to be mustered on 10 and 11 September. 120 cattle were mustered, of which 49 were sent for sale at Dorrigo on 13 September 2006. A total of 46 were sold, realising $24,086.05 inclusive of GST. The remaining 71 were sent on agistment to a property at Seelands near Grafton on 15 September. A further muster of Big Top was conducted on 16 and 17 September, yarding another 188 cattle. Two were sent directly to a pet food manufacturer as unsuitable for sale. 19 were sent for sale at Grafton on 19 September, where one died. The remaining 167 were sent on agistment to the Seelands property; three died on the way or shortly after arrival. Thus a total of 308 cattle were mustered. There is no evidence of the composition of that herd in terms of a breakdown into male and female, or mature cattle, yearlings and calves.

33 On the evening of 18 September, BTH obtained an ex parte injunction, restraining the trustee from selling the cattle. As a result the sale on 19 September did not proceed and the 18 cattle which had been sent for sale were transferred to Seelands. The injunction was continued following an interlocutory hearing on 27 September 2006, when it was ordered that, upon BTH by its counsel giving to the Court the usual undertaking as to damages, and undertaking to pay into court to the credit of the proceedings the sum of $4,500 to be security for the undertaking as to damages, the trustee be restrained until the hearing or earlier further order from by himself his servants and agents selling or offering for sale, or otherwise alienating or encumbering, any of the Hereford cattle removed from the property Big Top and now located at a property near Seelands near Grafton, other than such of those cattle as were, at the time of their removal from Big Top, steers.

34 There are now approximately 253 cattle from Big Top at Seelands. In substance, BTH seeks orders restraining the trustee from selling or otherwise dealing with those cattle, and commanding him to deliver them up to BTH. The essential question is whether BTH or the trustee has the superior right to possession of the cattle.

The Cromie 23, the Home Farm 18 and the Paterson 64

35 BTH purchased the Paterson 64 through auction at arms-length, they having previously been sold by Mr Doug Tyler’s mortgagee. There is transport documentation which proves that they were delivered to Big Top on 4 November 2003. BTH has plainly established title to them. BTH is also entitled to their offspring, being natural increase resulting from pregnancy of the dams [Case of Swans [1572] EngR 403; (1592 7 CoRep 15b; 77 ER 435].

36 An agreement for the agistment of livestock may take different legal forms. It may involve a bailment, if the owner of the stock has no right to enter the land on which the stock will be grazed [R v Croft (Inhabitants) (1819) 3 B&Ald 171; 106 ER 625] and is not responsible for their care [Australian Breeders Co-op Society Ltd v Corporation of the City of Marion [(1992) 76 LGRA 175]; in that case the owner of the property on which the stock are agisted is the bailee and has possession of the cattle, and must take reasonable and proper care of the stock [Smith v Cook (1875) 1 QBD 79; Coldman v Hill [1919] 1 KB 443; Robinson v Waters [1920] WALawRp 12; (1920) 22 WALR 66; Spring v Young [1923] SASR 115; Backhouse v Judd [1925] SAStRp 3; [1925] SASR 16; Humphrey v Phipps [1974] 1 NZLR 650; Pipicella v Stagg (1983) 32 SASR 464; McArdle v Vadim Nominees Pty Ltd (1984) 2 SR(WA) 156]. Or it may involve a licence, by which the owner of the cattle has permission to graze his cattle on the licensor’s land and to enter the land to care for them [Sinclair v Judge [1930] StRQd 220; Helton v Sullivan [1968] QdR 562]. In such a case, the owner of the stock retains possession of the cattle while they are on the licensor’s land. Or it may involve a lease, if exclusive possession of the land is granted [Streatfield v Winchcombe Carson Trustee Co (Canberra) Ltd [1981] 1 NSWLR 519].

37 An important distinction between bailment and licence is whether the agistor (landowner) undertakes responsibility for care of the stock. In the present case, I favour the view that the agistment was a licence. The indicia are the ease with which BTH was able to bring cattle to and sell them from the property; the absence of any formal delivery of possession; the circumstance that Mr Michael Tyler did not himself reside on the property, and that BTH’s caretaker Mr Tyler continued to reside on the property and look after the cattle, and that (at least for some of the time) Mr Jupp also resided on the property; and the absence of any evidence or even suggestion that Mr Michael Tyler had any obligation of care in respect of the cattle. It follows that, as between Mr Michael Tyler and BTH, the cattle agisted on Big Top and Home Farm were in the possession of BTH.

38 The Cromie 23 and the Home Farm 18 were, at least for the most part [there may be an exception in the case of the Farmer bulls] not the property of Mr Doug Tyler at the date of his bankruptcy; they were property of Mr Cromie, or in some cases relatives of Mr Tyler, but they had been “lent” to Mr Tyler and ran with his herd. They were in his custody, and, at least until his bankruptcy, he was the bailee of those cattle.

39 When, following his bankruptcy and the 2003 musters, they were left on or returned to the properties, in circumstances that Mr Michael Tyler was being paid agistment by BTH in respect of them, BTH became a bailee of them.

40 Although there are circumstances in which a person in possession of land is entitled against anyone other than the true owner to possession of things on the land, whether or not he or she knows of the existence of those things that is not universally so; it depends upon a manifest intention on the part of the possessor of the land to exclude unauthorised interference [South Staffordshire Water Company v Sharman [1896] 2 QB 44, 46-7; Pollock and Wright, Essay on Possession in the Common Law, p 41; Bridges v Hawkesworth (1851) 21 LJQB 75; Parker v British Airways Board [1982] 2 WLR 503, 509-510; Flack v Chairperson, National Crime Authority [1997] FCA 1331 (26 November 1997, Hill J)].

41 In my judgment, a person who obtains possession of land upon which the stock of others is agisted under a licence does not thereby obtain lawful possession of the stock. When, as a result of the order of the Federal Magistrate’s Court, the transfer to Michael Tyler of the real property was set aside, and the trustee obtained possession of the real property, that did not confer on the trustee a right to possession of the cattle. To the contrary, the trustee had no right to the Paterson 64, the Cromie 23, the Home Farm 18 and their offspring, and sale of them by the trustee would be conversion.

42 While the claims of others, including Mr Cromie, to these cattle, may be superior to those of BTH, as against the trustee BTH has the superior right to possession of them and their offspring.

Does the herd contain other cattle?

43 The critical question is whether the Cromie 23, the Home Farm 18 and the Paterson 64 and their offspring account for all the cattle recently mustered from Big Top. The trustee submits that the 2003 musters did not result in the whole of the Big Top herd being removed from the property, and that 200 – 300 animals remained, which formed part of the bankrupt estate. A number of factors, not all of them consistent, inform the answer to this question. They include:

· The number of stock on the properties prior to the 2003 musters;
· The efficacy of the 2003 musters;
· The steer sales;
· The number of stock at the time of the police musters;
· The number of stock which formed part of Mr Doug Tyler’s herd which are now in the BTH herd;
· The bulls;
· The expected rate of natural increase.

44 The first is the number of cattle on the properties before the 2003 musters. I have concluded above that, prior to the date of bankruptcy, and before allowing for attrition by deaths and sales, the Big Top herd comprised, very approximately, 140 purebred cows and heifers (of whom perhaps twenty were not kept registered), with perhaps 85 calves (including bull calves), about 15 bulls, and about 200 commercial cows and heifers, with perhaps 130 calves - a total of 570 (including calves). Although there was evidence of at least a significant number of deaths in the year preceding the date of bankruptcy, and some evidence of theft of cattle from the properties by others, this favours the view that immediately prior to the mid-2003 musters, there were significantly more cattle on the property than the 392 (including calves) that were mustered and sold by Landmark in 2003.

45 The second is the efficacy of the 2003 musters. Although the attempted muster on 13 August 2003 was frustrated, the second on 14 August was, so far as the participants could tell, a “clean muster”. Mr Poole, who was involved in the muster, and gave evidence in the trustee’s case, said that he believed that the whole property was covered. According to Michael Tyler, he travelled over the property some time later and other than a couple of bulls at the house (which appear probably to have been the Farmer bulls), he noticed only two cows on the property. Although Mr Michael Tyler accepted that he could not say from his own observation that the musters had collected all the cattle on the property, his evidence that he did not think cattle could have been hidden on Big Top from musters in any numbers, and that when he drove around the property after the 2003 musters he saw only two head, favours the view that the 2003 musters substantially cleared the properties of cattle. According to Mr Doug Tyler, the property was clear of cattle, except for the Home Farm 18, following this muster; the evidence of Mr Poole and Mr Michael Tyler tends to support the view that the 14 August muster was indeed a clean muster. However, it is not conclusive; there remains the possibility that cattle could have been missed, particularly in remoter and more rugged parts of the property; and that some had escaped through the inadequate fences to neighbouring properties.

46 The third is the number of steers sold by September 2004 – a total of 23 – which significantly exceeds the number of steers that could possibly have been in the original 105, and implies that some must have escaped the muster. There is no other explanation for the two that were sold on 3 November 2003

47 The fourth is number of stock at the time of the police muster in January 2005. The 129 adult females mustered significantly exceeded the 78 which one would have expected to remain from the original 87 after the sales totalling 14 cows in September, October and November 2004, after adding the 5 calves from the Cromie 23 on the assumption that they were females which had attained maturity by January 2005. The police mustered 10 adult bulls; three of them were born in 2003, possibly after the properties were re-stocked following the musters of that year; nonetheless even adding them to the two one would otherwise have expected to remain of the original four, after the sales, so that five might have been anticipated, ten is still significantly more.

48 There is no apparent explanation for the difference other than that stock escaped the muster, either in remote areas of Big Top or on other properties. There is no evidence of any further acquisitions. Mr Tyler, and to some extent Mr Jupp, sought to suggest that other cattle had been acquired by BTH through Ian Morgan Livestock, but it became clear that these were in fact the sales to Mr Cromie of 69 and 24 which predated the August muster, and the cattle purchased were mustered again in August – or at least most of them; such of those cattle as remain are included in the Paterson 64, the Cromie 23 and the Home Farm 18. At one stage it was also suggested that other cattle were purchased by BTH through Ray Donovan, but it became apparent that these transactions were sales by BTH, not purchases. Natural increase cannot explain the difference, because all females of whatever age in the original 105 are accounted for in the calculations which result in the 78, and heifers born since 3 November 2003 could not have attained adult status by January 2005. Moreover, there were otherwise five yearling heifers and 45 calves in the muster to be accounted for by natural increase. No other source of the additional cattle has been advanced, and given that they all apparently derive from Mr Doug Tyler’s former herd, the overwhelming inference is that they escaped the 2003 musters. This implies that 51 of the 129 adult females in the police muster (40%) had escaped the 2003 musters, and likewise at least five of the ten adult males (50%).

49 The fifth is that in the herd now registered in the records of the Hereford Society to BTH, there are 44 animals which were previously registered to Doug Tyler, and another 34 which are progeny of animals formerly registered to Doug Tyler. The trustee submits that this supports the inference that the BTH herd includes cattle that escaped the 2003 musters.

50 However, given the origin of the BTH herd and the manner of its acquisition, there is nothing surprising about the circumstance that its animals were previously registered to Doug Tyler; indeed, it would be surprising if they were not. I do not think that these figures demonstrate any particular implausibility as to the source and origin of the Big Top herd. Cromie had purchased 44 mature females (and 29 heifers, some of whom may have been of breeding age), from the Big Top herd at the sales. The Paterson 64 included 23 mature females and 31 heifers, at least a few of whom may have been born as early as 2001, given the apparent flexibility of the range of ages and calving status which attaches to the word heifer. In addition, the Cromie 23 contained 17 cows. The evidence – including correspondence on behalf of Cromie before proceedings were commenced, which appears to have been frank – indicates that nine cows to which he was entitled – some of them bearing the Big Top prefix and some bearing his own “Creebank” prefix - were in the herd; these were likely to be amongst the Cromie 23 and the Home Farm 18. According to the records of the Hereford Society Mr Tyler’s registered female herd had comprised a total of 118 females, plus 40 calves as at 28 February 2003. And while it is correct that another 34 animals in the BTH herd are the progeny of animals previously registered to Mr Tyler, only 11 of them were born before November 2003; all those were born after October 2002 and would plainly have qualified as heifers at the time of the sales. Forty-four adult females and 11 heifers can be accounted for by the Paterson 64 (23 cows and 31 cow/heifers) and the Cromie 23 (17 cows and five calves).

51 The sixth is the bulls. Only one bull was sold by Landmark in the mortgagee sales; it was not purchased by Mr Cromie. The bull which was in the Paterson 64 was not a stud bull, according to Mr Jupp. There was one bull in the Cromie 13. The two Farmer bulls were probably in the Home Farm 18. There is no evidence of other acquisition of a bull, and Mr Jupp conceded that he had never bought a registered bull. But during 2004/2005, at least five mature bulls bearing the Big Top stud prefix were servicing the BTH herd (not including AI sires): Big Top Elect (U81), Big Top Farmgee (U90), Big Top Farmer 2 (U91), Big Top Farmer (U93) , Big Top XElect (X012), and Big Top Farmer 1 (X023). Four of them were born in 1999, bearing the designator U for cattle born that year; the remaining two were born in 2002, bearing the X designator, and could have passed as calves in mid 2003. Mr Jupp was quite unable to explain how BTH had acquired these animals. He thought that the bulls were progeny of the cows in the Paterson 64, born some years earlier, but he accepted that he had no first-hand knowledge about their acquisition. He thought there may already have been a bull on the property (presumably, the bull in the Cromie 23). The only explanation is that (unless there were more than two bulls in the Home Farm 18, of which there is no evidence), at least one mature registered bull (in addition to the two Farmer bulls in the Home Farm 18, and the bull in the Cromie 23), escaped the 2003 musters. There were almost certainly more, as evidenced by the finding of ten mature bulls in the police muster; although three of them bore Y ear tags, indicating that they were not born until 2003.

52 Mr Tyler explained that the two Farmer bulls were born by embryo transplant, using semen from an AI sire provided by Mr Cromie. The bulls were born before Mr Tyler’s bankruptcy, and were registered to him, using the Big Top prefix. Mr Tyler seems to suggest that they belong to Mr Cromie, who has lent them formerly to him and now to BTH. Mr Tyler said that the two Farmer bulls were shown to Mr Thomas at the muster who, in response to being told that they belonged to Cromie, said he was not interested in them and they were not sent to sale. Mr Tyler says that again in January 2005 at the time of the police muster Mr Thomas said “take them back to Home Farm, they belong to Home Farm”. He said that cow 725, Big Top Bridesmaid, was the dam of the two Farmer bulls by an embryo flush. He suggested that that cow had been transferred to Mr Cromie; but that assertion is uncorroborated; Mr Tyler did not in his earlier evidence which identified certain cows or cow families as Mr Cromie’s include any Bridesmaid, and Mr Cromie’s evidence – neither in the witness box nor his letter to the trustee which identified the cows to which he had a claim – referred to any Bridesmaid animal. It appears that both Farmer bulls were born of Bridesmaid, by an AI sire, as a result of an embryo flush. While the legal owner was probably Mr Tyler, as owner of the dam, I can accept that the product was the result of a joint venture between Mr Tyler and Cromie. I think Mr Tyler’s earlier version that in effect the bulls were owned in partnership originally between him and Mr Cromie is probably correct. Upon his bankruptcy, his half interest vested in the trustee.

53 However, Mr Tyler’s evidence that on two occasions Mr Thomas disclaimed interest in these bulls – of which there was ample notice, since there was reference to it in his affidavit evidence as well as orally – is unchallenged and uncontradicted. It may be that this was done under a misapprehension, but the trustee thereby delivered those cattle into the possession of Mr Cromie and/or Michael Tyler (as occupier of the properties). To the extent that Mr Thomas was possessed of the bulls, he delivered possession to Mr Cromie at that time; if he had until then any animus possidendi of the bulls, he parted with them at that point. In the events which have happened, BTH now possesses them as Mr Cromie’s bailee, and has a superior right of possession to the trustee.

54 The last is the rate of natural increase. There was extensive evidence about the “drop rate” which the cattle might have achieved. This is relevant to ascertaining whether the current herd size is explicable by natural growth from the Patterson 64, the Cromie 23 and the Home Farm 18.

55 Mr Doug Tyler initially suggested that a drop rate of 98% was to be expected. However, in his oral evidence, he suggested that the best evidence would be his registration book, which would show cow by cow for a year how many have calves. That exercise indicates that 46 of 60 registered cows calved during the year 2004/2005 and had live calves, corresponding to a drop rate of slightly in excess of 75%. Net natural increase would be less, due to deaths.

56 Mr Johnson analysed the figures in the police muster to conclude that the drop rate was 34% (52 calves from 149 adult females, including the Sisson cattle). This was based on calves under nine months rather than twelve months; if the figures are extrapolated for that the rate increases to 43%. It also does not allow for any poddy calves which might have escaped the policy muster. It is based on a count at a single snapshot of time, and not over a period. It is likely to be an understatement.

57 Mr Wright, an expert called by the trustee, opined that the herd would achieve a drop rate of about 40%. This was based on a single inspection and was unelaborated by any rationale.

58 The total cattle at the time of the police muster (excluding the Sisson cattle, which have since been removed) amounted to 195, of which 129 were breeding females. In the approximate 20 months since the police muster until the trustee’s muster in September 2006, the herd grew to about 308 (it would have been 331 but for the sales in 2005). That implies a natural increase of about 136 over 20 months, which implies an annual net rate of natural growth during that period of 67% for the 121 adult females which remained after the March 2006 sales. While in some respects that overstates the rate - because (1) the 8 cows sold in March 2006 were in the herd for a year after January 2005, and (2) some of the cattle not yet of breeding age at the time of the police muster would have attained breeding age during the interim, and at least the five that were yearling heifers as at January 2005 would have done so – it, unlike the others, is a net natural increase figure which takes into account deaths.

59 In my view, the figures derived from the herd registration book, and a comparison of the police muster with the September 2006 muster, provide the most reliable information. I think a drop rate of 70% for breeding females, and a death rate of 6.67% for the entire herd (based on an assumed average lifespan of 15 years), is as good an estimate as can be made on the available evidence.

60 As at November 2003, the herd comprised, from the Patterson 64, 54 females of breeding age; from the Cromie 23, 17 females of breeding age; and from the Home Farm 18, about 16 females of breeding age. That represents a total of 87 females of breeding age. At a drop rate of 70%, they would have produced 60 calves per year. Half of those calves would be female and the first year’s drop could itself have bred once by mid-2006, producing an additional 30. Allowing two-and-a-half cycles for the original cattle, the total increment would have been in the order of 180, which added to the original herd of 105 would produce a projected herd size of 285. Total sales during the period November 2003 to March 2006 were 65, reducing the projected herd size to 220. Deaths at 6.67% (applied to 105 for the first year, 160 for the second year, and 215 for the third year) would account for another 32, reducing the projected herd to about 188. That represents about 61% of the 308 mustered in September 2006, a figure which is very consistent with the proportion which female breeding stock from the original 105 bore to the total female breeding stock in the police muster.

61 Although the evidence of Mr Poole and Mr Michael Tyler to which I have referred supports the view that the 14 August 2003 muster was a “clean muster”, the steer sales up to November 2004, the presence of stud bulls and most especially the results of the police muster, are conclusive that the BTH herd, at the time of the police muster, included stock which were not derived from the original 105, and must have somehow escaped the 2003 musters. The evidence does not permit it to be ascertained which of the cattle in the herd mustered in September 2006 were sold by Landmark as mortgagee (or are their offspring), nor which escaped the muster (or are their offspring).

62 Where goods are intermixed or confused so as to become indistinguishable, the mixture belongs to the former proprietors in common in proportion to their respective contributions [Sandeman & Sons v Tyzack and Branfoot Steamship Co Ld [1913] AC 680, 694-5; Indian Oil Corp Ltd v Greenstone Shipping SA (Panama) (The Ypatianna) [1988] QB 345; Coleman v Harvey [1989] NZCA 47; [1989] 1 NZLR 723]. If the intermixing is the fault of one owner, then it must bear any cost associated with separation of the shares [Buckley v Gross (1863) 2 B&S 566, 575; 122 ER 213; Jones v Moore [1841] EngR 276; (1841) 4 Y&C Ex 351; 160 ER 1041], and the innocent proprietor will be awarded the largest proportion consistent with the evidence, and if there is no evidence as to its share, even the whole of the goods [Indian Oil Corp v Greenstone].

63 Although Mr Golledge submitted that the mixture was the fault of BTH and that all doubtful issues in quantifying the respective contributions of BTH and the bankrupt estate should be resolved adversely to BTH, in the circumstances of this case I am not satisfied that that is an appropriate course. BTH was paying agistment for the whole herd. The trustee knew that there were disputed claims to ownership in respect of at least some of the animals, but unilaterally embarked upon the muster and sale, and if not restrained would have converted BTH’s property. I am unpersuaded that BTH was relevantly at fault in the events which led to the mixture.

64 The results of the police muster, and the conclusions I have reached about natural increase, point to about 60% of the BTH herd being derived from the original 105 cattle, to which BTH is entitled, and 40% from cattle which escaped the muster, to which the trustee is entitled.

Conclusion

65 Accordingly, I conclude that as between themselves, the parties were entitled to the herd, as mustered in September 2006, in proportions BTH as to 60% and the trustee as to 40%, and I will make a declaration to that effect.

66 It will be necessary for the trustee to account to BTH for 60% of the proceeds of the sales which have so far taken place, and for the remaining cattle to be divided 60/40 between the parties. The court can make orders to give effect to this pursuant to Conveyancing Act, s 36A, which provides as follows:

36A Power to direct division of chattels
Where any chattels belong to persons jointly or in undivided shares, the persons interested to the extent of a moiety or upwards may apply to the court for an order for division of the chattels or any of them, according to a valuation or otherwise, and the court may make such order and give any consequential directions as it thinks fit.


67 Alternatively, if a pragmatic solution cannot be agreed, the court might order the sale of the remaining herd, and the distribution of the proceeds in accordance with the parties’ entitlements.

68 I direct that the parties bring in short minutes to give effect to this judgment, at which time the question of costs may be argued.




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LAST UPDATED: 09/11/2006