Describe the issue

The problem is, the error message: 'ERROR: Error reading proxy response' in the debug.log file.
I wanted to simply run bitcoin over TOR. So in the bitcoin.conf file i had the following lines:
bind=127.0.0.1
port=8333
upnp=0
proxy=127.0.0.1:9050

Then i started bitcoind in terminal, i monitored the debug.log file and i saw that error message described above every minute or so while i was getting a new 'update tip' block.

To test if TOR was really working, i stopped the TOR service and i immediately got countless errors:
connect() to 127.0.0.1:9050 failed after select(): Connection refused (111)
connect() to 127.0.0.1:9050 failed after select(): Connection refused (111)
connect() to 127.0.0.1:9050 failed after select(): Connection refused (111)

So i realized that TOR was working, yet the original unknown error of:
'ERROR: Error reading proxy response' occurred.

Please note: my intention was not to use a hidden tor service.
My intention was to simply torify outgoing connections as described in the first step here:
https://github.com/bitcoin/bitcoin/blob/master/doc/tor.md#1-run-bitcoin-behind-a-tor-proxy
and here:
https://bitcointalk.org/index.php?topic=623868.0

Expected behaviour

The expected behaviour should have been that bitcoin would run over tor without a proxy error while tor is actually working.

What version of bitcoin-core are you using?

sudo apt-add-repository ppa:bitcoin/bitcoin (https://launchpad.net/~bitcoin/+archive/ubuntu/bitcoin)
sudo apt-get install bitcoind

Machine specs:

• OS: Ubuntu 16.04
• Disk Type (HD/SDD): SSD

If there should be some other type of config that i am missing in bitcoin.conf please let me know.